323.04 FRANCHISE FEE.
   (a)   Franchise Fee.
      (1)   Company shall pay to the City an amount equal to five percent (5%) of the Gross Revenue received from the operation of its Cable Television System in the City. In the event that federal law is amended to authorize a franchise fee higher than five percent (5%), the City may, at its discretion, direct Company to pay a higher Franchise fee. Any increase in the Franchise fee so directed shall be implemented as soon as practicable, but no later than sixty (60) days following the receipt of written notice from the City requesting the increase. Such written notice shall be accompanied by a copy of the resolution or ordinance authorizing the increase. Conversely, if the maximum Franchise fee allowed by the FCC is reduced or eliminated, then the amount of the said fee shall conform to the federal law or regulations.
      (2)   Notwithstanding any other provisions of this article, it is the intention of Company and City that City shall receive an annual franchise fee at the highest rate and levied upon all sources of revenue from all services upon which the City is allowed by law to levy a franchise fee.
   (b)   Allocation of Revenue. City’s annual franchise fee shall be determined by adding the sums obtained in subparagraph (b)(1), (2) and (3) below:
      (1)   Five percent (5%) of the Gross Revenue received by Company from subscribers derived from the operation of the Cable Television System within the City.
      (2)   If any non-subscriber revenue received by Company is not directly allocable to the City, Company shall calculate said revenue as follows:
         A.   Five percent (5%) of the non-Subscriber revenues attributable to the City where revenues received by the Company are not directly related to the number of Subscribers using a service of the cable system within the City. (i.e. revenues from advertising, home shopping channels or similar revenue based programs). For purposes of this subparagraph (b)(2), non-Subscriber revenues attributable to the City shall be determined by:
            1.   Dividing the number of City Subscribers by the total of City plus non-City Subscribers; and
            2.   Multiplying the quotient obtained in subsection 1. above by the total revenues received by the Company which were not directly related to the number of Subscribers using a service of the cable system in the City.
         B.   Five percent (5%) of non-Subscriber revenues which are attributable to the City where the revenues received by the Company are directly attributable to the number of customers receiving a particular service (i.e. water company revenues). For purposes of this subparagraph B., non-Subscriber revenues attributable to the City shall be determined by:
            1.   Dividing the number of City customers and non-City customers receiving the service; and
            2.   Multiplying the quotient obtained in subsection 1. by the total revenues received by Company which were attributable to providing said service.
   (c)   Payment of Franchise Fees. Payment of the aforesaid Franchise Fee shall be made on a quarterly basis within thirty (30) days after the end of March, June, September and December of each year of service. Failure to pay after ten (10) days notice of default shall result in the addition of a ten (10%) percent penalty charge.
   (d)   Quarterly Franchise Fee Report.   Company shall accompany each quarterly franchise fee payment with a written report containing an accurate statement of the Gross Revenues received for the quarter in connection with the operation of Company’s Cable System in the City and a brief report showing the basis for computation of fees. The report will contain a line item for every source of revenue received for which a franchise fee is due and the amount of revenue from each source. The report shall be certified by a financial representative of Company.
   (e)   Certification. Within ninety (90) days after the close of each calendar year, Company shall provide to City a certification by the Chief Financial Officer of the Company to the correctness and accuracy of the Franchise Fee payments made during the year. In addition, Company, at City’s expense, shall permit City to have a certified public accountant conduct an audit of the last four years of the Company’s records and of the accounting procedures followed to assure that there is proper payment of the correct sums to the City. If the audit reveals that the amount due City was greater than the amount reported and paid by Company the Company shall pay the additional Franchise Fee owing within ten (10) days. Company shall pay interest on the amount of the underpayment at the prime rate until paid if the underpayment was less than three percent (3%) of the amount owed or interest at prime plus seven and one-half percent (7.5%) until paid if the under payment is greater than three percent (3%) of the amount owed. In addition, if the underpayment was greater than three percent (3%) of the amount paid, the Company shall reimburse City for the full cost of the Audit.
(Ord. 11-2005. Passed 2-15-05.)