§ 8-87. Franchise fee

(a) Franchise required. No solid waste enterprise shall collect or haul any solid waste along or across any public highway in the City of Costa Mesa without first obtaining and maintaining in effect a solid waste hauling franchise from the city for the use of such streets to conduct its business activity.

(b) Grant of franchise. The city hereby grants a solid waste hauling franchise to any solid waste enterprise upon the issuance to it of a permit issued pursuant to section 8-77 of this article. The term of the franchise shall run concurrently with the term of the permit and shall end upon the termination of the permit. The valid possession of such a permit shall be deemed to make a solid waste enterprise a franchisee under this section.

(c) Franchise types. Franchises for solid waste hauling, generally (class A), and franchises for affixed container vehicle operators hauling construction and demolition waste (class B) may be issued under this section.

(1) Holders of class A franchises ("class A franchisees") may operate any type of solid waste collection vehicle licensed and permitted by the State of California to collect, transport, remove, dispose and/or recycle any type of solid waste material generated by commercial, single-family residential, multi-family residential or industrial units within the city's waste disposal jurisdiction, except as provided in section 8-77(e)(7) of this article. Such franchisees have the exclusive right to place and collect bins and roll-off containers at commercial, single-family residential, multi-family residential and industrial locations, excepting recycling firms that collect materials free of charge or pay net positive revenue (inclusive of hauling fees) for the materials collected.

(2) Holders of class B franchises ("class B franchisees") may operate only affixed container vehicles permitted by the State of California to collect and transport non-putrescible and inert waste generated at construction and deconstruction sites. Class B franchisees are not allowed to provide drop-off containers or bins at these sites or any other site within the city's waste disposal jurisdiction. Class B franchisees are allowed to utilize sub-contractors to perform waste hauling services provided that those sub-contractors only operate affixed container vehicles.

(d) Franchise fee. Every holder of a franchise issued pursuant to this section ("franchisee") shall pay a franchise fee as set by city council resolution based on the percentage of annual gross receipts. The purpose of the franchise fee is to provide funds to the city to pay for the maintenance and rehabilitation of the public highways in the city and for other general revenue purposes. Class A franchisees shall pay an annual minimum franchisee fee in the amount of ten thousand dollars ($10,000.00). This fee shall be prorated in the amount of two thousand five hundred dollars ($2,500.00) per quarter beginning with the quarter in which the franchise is granted. Class B franchisees shall pay an annual minimum franchisee fee in the amount of one thousand five hundred dollars ($1,500.00), which shall not be prorated. Such annual minimum franchisee fee payments shall be paid to the city upon issuance of a permit pursuant to section 8-77 of this article and, thereafter, by January 1 of each calendar year. Failure to timely pay franchise fees shall result in a penalty in the amount of five (5) per cent of the delinquent franchise fee owed, plus an additional one and one-half (1.5) per cent of the fee for each month, or any portion thereof, that payment is late. Failure to timely pay franchise fees may also result in the commencement of permit revocation proceedings. The annual minimum franchisee fee shall be credited only toward the franchise fees that accrue during the same calendar year in which the minimum fee is paid.

(e) Franchise fee reports. Every franchisee is required to submit a quarterly franchise fee report. Failure to submit a report within forty-five (45) days of the end of each calendar quarter shall result in a fine of one hundred fifty dollars ($150.00) for each non-submittal. Submission of an incomplete report shall constitute a failure to submit a report and shall be subject to the one hundred fifty dollars ($150.00) fine for non-submittal.

(f) Records requirements. Every franchisee shall maintain all records relating to its solid waste handling services pursuant to this section, including, but not limited to, customer lists, billing records, services requests, cash receipts records, records demonstrating compliance with the requirements of section 8-84(b) of this article, and other documents and materials that reasonably relate the franchisee's compliance with this section. Upon five (5) business days' notice, such records shall be made available for city inspection at the franchisee's regular place of business. If the franchisee's regular place of business is not located within the county, the franchisee shall make such records available for city inspection at a location within the county, as determined by the city.

(g) Audit requirements. An independent auditing firm shall perform an audit, at the city's expense, of any franchisee's records (the "city audit") to ensure compliance with the provisions of this section on an annual and/or as-needed basis, to be determined by the city. The scope of the city audit shall be set by city council resolution. If a city audit determines that a franchisee has not paid its full franchise fee, the city shall invoice the franchisee for the amount of the net deficiency plus a penalty fee equal to twenty (20) per cent of the net deficiency.

(h) Exemption. The franchise fee imposed pursuant to this section shall not be imposed upon any solid waste enterprise that has a franchise or contract with the Costa Mesa Sanitary District for any revenue the solid waste enterprise earns under that franchise or contract.

(Ord. No. 04-12, § 1(A), 11-15-04 ; Ord. No. 07-19, § 1, 12-4-07 ; Ord. No. 08-3, § 1, 1-15-08 )