Division V Administration And Enforcement

All cable operators shall pay a franchise fee to the city based on the cable operator's gross revenues in an amount equal to the maximum amount permitted under law unless the city council shall by majority vote elect to receive a lesser franchise fee. For reference purposes only, and without creating any limitation, at the time of adoption of this chapter, the maximum amount permitted under law is five percent of the cable operator's gross revenues. The cable operator shall make franchise fee payments on the first day of each quarter year, or at such other times specified in the franchise agreement. Franchise fee payments shall be submitted together with documentation of the cable operator's gross revenues in such form as may be required by the city from time to time.

All cable operators shall pay compensation to the city for use of public property in percentage equal to the franchise fee determined in HMC § 5.22.266 based on the cable operator's gross noncable revenues. Payments shall be submitted to the city on the first day of each quarter of each calendar year together with documentation of the cable operator's gross noncable revenues in such form as may be required by the city from time to time.

In consideration of the use of public property, any person other than a cable operator who provides cable service or any other telecommunications service over a cable system for which charges are assessed to subscribers but which are not received by a cable operator shall pay a fee to the city in an amount equal to the percentage equal to the franchise fee determined in HMC § 5.22.266, based on that person's gross revenues and gross noncable revenues. The cable operator whose cable system is used by such person shall collect the foregoing fee from such person no later than the tenth day prior to the close of each calendar quarter and shall remit the fee to the city no later than the first day of the following calendar quarter. If the cable operator fails to collect or remit all or part of this fee, the cable operator shall be directly liable to the city for payment of the uncollected or unremitted fee.

Consistent with HMC § 5.22.271, the city shall have the right to inspect and audit all of the cable operator's books and records and those of its affiliates relevant to an accurate determination of the total amount of the cable operator's gross revenues and gross noncable revenues. The cable operator shall make such records available to the city within 14 days of the city's request. Such records shall be available for inspection by the city at the cable operator's office within the city during normal business hours. Such records shall be retained by the cable operator for a period of at least five years. The city will bear the cost of any such audit; provided, however, that if such audit indicates a franchise fee underpayment of three percent or more of the amount due, the cable operator shall reimburse the city for all reasonable costs relating to the audit. Any additional amount due to the city as a result of the audit shall be paid within 30 days following written notice to the cable operator, which notice shall include a copy of the audit report. If the cable operator believes the audit report is in error, it may send a written response to the city describing the error in lieu of making the payment. If the city disagrees with the response, it shall notify the cable operator in writing, after which the cable operator shall pay the additional amount due within 30 days. The city may elect to perform such audit jointly with one or more other government agencies which regulate affiliated systems.

In the event that the cable operator does not make any of the payments required by this code on or before the date due, a late payment penalty shall accrue at a rate of one and one-half percent per month on the unpaid amount until paid.

The cable operator shall maintain at its local office within the city, and shall make available for inspection and auditing at that office within seven days after receipt of a written request by the city, complete and accurate books, records, maps, plans and other materials of the cable operator which are reasonably related to the city's review of the cable operator's compliance with this code and the franchise agreement. To the extent that an affiliate of the cable operator aggregates information relating to the cable system together with information about other cable systems, the cable operator shall have copies of such records available for inspection and auditing at the local office within seven days after receipt of a written request by the city. The city shall maintain the confidentiality of any of the foregoing records to the extent that they are not public, contain sensitive business information, and confidentiality is permitted by law.

The cable operator shall at all times during the existence of any franchise issued hereunder maintain in full force and effect at its own cost and expense the following policies of insurance:

The cable operator shall indemnify, defend and hold harmless the city and its officers, officials, employees, agents and volunteers from and against any and all liability, loss, damage, expense, costs (including without limitation costs and fees of litigation) of every nature arising out of or in connection with the cable operator's enjoyment of the franchise hereunder, or its failure to comply with any of its obligations contained in the franchise agreement or this title, or arising out of the construction, installation, maintenance, operation or removal of its cable system, except such loss or damage which was caused by the sole negligence or willful misconduct of the city.

Within 30 days after the effective date of a franchise agreement, the cable operator shall deposit with the city an irrevocable letter of credit in the amount set forth in the franchise agreement in a form and with an institution approved by the city. The letter of credit may be drawn upon by the city for the purpose of remedying any noncompliance by the cable operator with any provision of this code or the franchise agreement.

The granting of a franchise pursuant to this title may create an interest subject to property taxation pursuant to California Revenue and Taxation Code Section 107 et seq. The cable operator shall be solely responsible for payment of any such taxes.