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(a) A franchise agreement may require that the franchisee post with the city a cash security deposit letter of credit or a bond in a form acceptable to the Law Director in an amount of not less than twenty-five thousand dollars ($25,000.00), to be used as a security fund to ensure the faithful performance of all provisions of this chapter, the franchise agreement and other applicable law, and compliance with all orders, permits and directions of the city, and the payment by the franchisee of any claims, liens, fees or taxes due the city which arise by reason of the franchisee’s construction, operation or maintenance of a cable system in the city. A franchise agreement may provide for a security fund greater than the minimum specified in this section where the city determines, under circumstances existing at the time, that such larger security fund is necessary to protect the public or to provide adequate incentive to the franchisee to comply with this chapter and the franchise agreement. If a security fund is required by a franchise agreement, it shall be posted as a condition precedent to the franchise becoming effective.
(b) Unless a franchise agreement provides otherwise, the entire balance of the security fund shall be deposited by the franchisee in the form of a certified or cashier’s check made payable to the city.
(c) The city shall place the security deposit in an interest-bearing account. The interest will accrue to the benefit of the franchisee, but may not be withdrawn by the franchisee. All interest will be added to and become part of the security fund during the term of the franchise.
(d) If a franchisee fails to pay the city any fees or taxes, liquidated damages, damages, or costs or expenses incurred by the city by reason of any act or default of the franchisee, or if the franchisee fails to comply with any provision of the franchise agreement or this chapter that the city determines can be remedied by an expenditure of the security fund, the city may, after ten calendar days prior notice to the franchisee, withdraw that amount with any interest or penalties from the security fund. After such withdrawal, the city shall promptly notify the franchisee of the amount and date of the withdrawal.
(e) Within 30 calendar days after notice to the franchisee that an amount has been withdrawn by the city from the security fund, the franchisee shall deposit a sum of money sufficient to restore the security fund to the total amount in the fund immediately prior to the withdrawal. If the franchisee fails to restore the security fund to the original amount within 30 calendar days, the entire security fund remaining may be forfeited and/or such failure may be considered a material breach of this chapter and may be used as grounds for revocation of the franchise.
(f) The security fund will become the property of the city in the event the franchise is revoked. The franchisee is entitled to the return of the balance of the security fund that remains following expiration of the franchise, provided that there is no outstanding default or unpaid amounts owed to the city by the franchisee.
(g) The rights reserved to the city with respect to the security fund are in addition to all other rights of the city, whether reserved by this chapter or authorized by other law, or the franchise agreement, and no action, proceeding or exercise of a right with respect to such security fund will affect any other right the city may have.
(Ord. 97-2, passed 1-9-1997)