§ 19-326. Fees and taxes

(a) Franchisee acknowledges and agrees that the city may require users of revenue-producing services to pay a utility users' tax ("utility tax") to the city pursuant to this Code. If the services are subject to the provisions of a utility tax, franchisee agrees to collect the tax from service users and remit such tax to the city in accordance with this Code.

(b) Franchisee shall be solely responsible for the payment of all lawful fees and utility charges in connection with the exercise of franchisee's right, title, and interest in, and the attachment, installation, operation, and maintenance of radios, and the rendering of services under the franchise.

(c) As compensation for the franchise, franchisee shall pay to the city on a quarterly basis an amount equal to five (5) per cent of franchisee's gross revenues which amount will be collected from subscribers of the services and remitted to city as provided herein. The compensation required by this section shall be due on or before the forty-fifth day after the end of each calendar quarter or fraction thereof. Within forty-five (45) days after the termination of the franchise, compensation shall be paid for the period elapsing since the end of the last calendar quarter for which this compensation has been paid. Franchisee shall furnish to the city with each payment of compensation required by this section a statement executed by an authorized officer of franchisee or his or her designee showing the amount of gross revenues for the period covered by the payment. If franchisee discovers that it has failed to pay the entire or correct amount of compensation due, the city shall be paid by franchisee within fifteen (15) days of discovery of the error or determination of the correct amount. Any over-payment to the city through error or otherwise shall be offset against the next payment due from franchisee. Acceptance by the city of any payment due under this section shall not be deemed to be a waiver by the city of any breach of the franchise recurring prior thereto, nor shall the acceptance by the city of any such payments preclude the city from later establishing that a larger amount was actually due, or from collecting any balance due to the city.

(d) Franchisee shall keep accurate books of account at its principal office in Los Gatos or such other location of its choosing for the purpose of determining the amounts due to the city under this section. The city may inspect books of account at any time during regular business hours on five (5) days' prior written notice and may audit the books from time to time at city's sole expense, but in each case only to the extent necessary to confirm the accuracy of payments due under this section. The city may require quarterly or annual reports from franchisee relating to its operations and revenues within the city. City agrees to hold in confidence any non-public information it learns from franchisee in accordance with applicable law.

(e) Franchisee shall reimburse the city at city's standard rates for all reasonable expenses relating to the preparation, issuance, implementation, renewal, and administration of the franchise, as set by resolution of city council.

(f) As additional compensation for the franchise, franchisee shall pay to the city an annual fee ("annual fee") in the amount set by the franchise agreement approved by city council for the use of each city-owned pole or other city-owned property upon which a radio has been installed pursuant to the franchise and designated in the franchise agreement. The initial annual fee shall be due and payable not later than the date of installation of the first radio on a city-owned pole or other city-owned property pursuant to the franchise ("installation date"), and shall equal the number of radios franchisee then estimates it will install on city-owned poles or other city-owned property during the succeeding twelve (12) months multiplied by the annual fee. The annual fee for subsequent years shall be due and payable not later than thirty (30) days following each anniversary of the installation date and shall equal the number of radios then installed on city-owned poles or other city-owned property pursuant to the franchise, multiplied by the annual fee, adjusted for the prior year adjustment, as described below. The prior year adjustment shall either increase or decrease a subsequent year's annual fee to account for the installation or removal of radios during the prior year, and shall equal the difference between (i) the number of radios used to calculate the prior year's annual fee multiplied by twelve (12), and (ii) the actual number of radio months which occurred during such year, multiplied by one-twelfth (1/12) of the annual fee.

(g) The annual fee shall be increased effective January of the first year of each renewal term hereof based on the percentage change in the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index of all items, Base 1982-1984, for the Los Angeles-Anaheim-Riverside, California area which occurred during the previous term or renewal term.

(h) Notwithstanding subsection (f), in lieu of the annual fee and solely with respect to the first fifty (50) radios installed (or radios installed in substitution for any such radios) by franchisee on city-owned poles or other city-owned property, city shall be entitled to receive:

(1) Up to fifty (50) subscriptions to use franchisee's radio services in the city for so long as franchisee maintains such radios in use on the appropriate number of city-owned poles or other city-owned property pursuant to this franchise. Such option may be exercised by city in increments of one (1) subscription in lieu of the annual fee for one (1) radio. Franchisee shall provide such subscriptions at such time as franchisee is providing commercial service in such area, provided that prior to such service date city shall not be entitled to receive the annual fee or other compensation in lieu thereof. In the event the city elects to receive fifty (50) or less subscriptions, franchisee will not be required to pay the annual fee for the number of radios installed on city-owned poles or other city-owned property equal to the number of subscriptions the city elects to receive. The number of radios installed on city-owned poles or other city-owned property in excess of the number of subscriptions the city elects to receive shall be subject to the annual fee set forth above. City's use of the subscriptions shall be subject to franchisee's standard radio service terms and conditions. City shall be required to purchase at its sole cost and expense any equipment and software required to use the radio service; or

(2) Up to twenty (20) subscriptions to use franchisee's radio services and the use of up to twenty (20) franchisee modems for so long as franchisee maintains such radios in use on the appropriate number of city-owned poles or other city-owned property pursuant to the franchise. Such option may be exercised by city in increments of five (5) subscriptions and five (5) modems in lieu of annual fees for twelve (12) radios. Franchisee shall provide such subscriptions and equipment at such time as franchisee is providing commercial service in such area, provided that prior to such service date city shall not be entitled to receive the annual fee or other compensation in lieu thereof. The number of radios installed on city-owned poles or other city-owned property in excess of the number of subscriptions/modems the city elects to receive shall be subject to the standard terms and conditions set forth in the terms and conditions packaged with the modems. City shall be required to return to franchisee any equipment provided to city upon termination of any free subscriptions in good condition, ordinary wear and tear expected.

(3) City shall be required to make an election under this section within thirty (30) days of the effective date or each anniversary of the effective date as the case may be. Such election shall be applicable for the longer of the following one (1) year period or until a subsequent election is made in accordance with the previous sentence. City shall use all subscriptions and equipment provided pursuant to this section solely for its own use, and shall not be entitled to resell, distribute or otherwise permit the use of the same by any other party.

(i) Should franchisee enter into an agreement with another similarly situated jurisdiction of the same size or smaller in the Los Angeles-Anaheim-Riverside, California area containing financial benefits for such jurisdiction which, taken as a whole, are substantially superior to those in the franchise, city shall have the right to require that franchisee modify this franchise to incorporate the same or similar benefits. Franchisee shall supply copies of relevant agreements upon written request by the city. The benefits of such superior agreement shall be made available to city and become effective on the date franchisee receives the city's request for such superior agreement with such other jurisdiction.

(Ord. No. 96-16, § 2, 1-6-97)