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A. The city finds that the public ways to be used by utility or telecommunications carriers and operators in the operation of utility or telecommunications systems within the boundaries of the franchise are valuable public properties, acquired and maintained by the city at great expense to its taxpayers, and that the grant of use of said public ways is a valuable property right, without which franchisees would be required to invest substantial capital in public way costs and acquisitions; therefore, franchisees shall pay the city as a general compensation for the use of the public way during each year of the term of a franchise a franchise fee as determined by city council, not to exceed six percent of gross revenues for each quarter of each calendar year. Franchisees shall pay the franchise fee mandated by this chapter but the city acknowledges and understands that such amount (and any other fees, assessments, or taxes imposed on franchisees not described in subsection E of this section) shall appear as a line item on the bill sent to, and shall be collected from, the subscribers; provided further, that the compensation required from any telecommunications operator or carrier engaged in the “telephone business,” as defined in RCW 82.04.065, shall be consistent with RCW 35.21.860.

B. Annual Franchise Fee Adjustments. The initial annual franchise fee percentage shall be the amount permitted by applicable law of gross revenues unless and until it is further adjusted by city council. Any such adjustment shall occur at least 60 days before any subsequent annual anniversary date. Any adjustment shall become effective on the subsequent annual anniversary date.

C. Quarterly Payment. Franchisees shall forward by check, cashier’s check, other certified funds or electronic payment in the form of a wire or direct deposit (ACH) an amount equal to this quarterly payment by the fifteenth day of the second calendar month immediately following the close of the calendar quarter for which the payment is calculated.

D. Late Payment. In the event any quarterly payment is made after noon on the date 10 days after the date due, franchisees shall pay a late payment penalty as shown in the city’s fee schedule.

E. Fees and Compensation Not a Tax. The fees, charges and fines provided for in this title and any compensation charged and paid for the franchisee’s use of the public ways, whether “fiduciary or in kind,” are separate from, and additional to, any and all federal, state, local and city taxes as may be levied, imposed or due from a utility, telecommunications carrier, operator, or provider, its customers or subscribers or on account of the lease, sale, delivery or transmission of utility or telecommunications services.

F. Ruling of Unenforceability. The compensation required from any utility, telecommunications carrier, operator, or provider shall be as provided by applicable law. In the event any franchise fee shall be held unenforceable by a court of law which has jurisdiction over the city, franchisees shall pay the equivalent amount paid in franchise fees as a city utility tax which shall be applied retroactively to time periods during which the franchise fee was determined to be unenforceable.

G. Quarterly Report. In order to properly determine the gross revenues received by franchisees, the franchisee shall, on the same date that each quarterly payment is made, file with the director of finance a sworn copy of a report, in a form acceptable to the city, in sufficient detail to itemize revenues from each of the revenue categories. The city may, if it sees fit and at its own expense, have the books and records of franchisees examined by a representative of said city to ascertain the correctness of the reports agreed to be filed herein. Neither the acceptance of any payment nor any subsequent review shall be deemed an agreement by the city that the correct payment was paid, absent a fully authorized written release by the city on any such payments or on such reports. Any necessary prorations shall be made in the first and last year of each term of the franchise. Any city request for access to books and records shall be allowed by the franchisee at reasonable times and for reasonable purposes. Such information shall be held in strict confidence by the city as allowed by applicable law and used only for the purpose stated herein.

H. Recalculation at End of Compensation Year. At the end of each calendar year, franchisees shall recalculate the total general compensation actually due. If additional amounts are due the city by franchisee, said amounts shall be paid by the fifteenth day of February following the calendar year during which such amounts were originally due. If amounts are found to be due the franchisees by the city, said amounts shall be credited by the fifteenth day of February during which such amounts were originally due. Any necessary prorations will be made.

I. Taxes Are Not to Be a Credit. The compensation paid under this franchise shall be exclusive of and in addition to all special assessments and taxes of whatever nature which are applicable to all other persons or entities doing business within the city, including, but not limited to, ad valorem tax, sales tax, corporate or business occupation taxes or other taxes or fees imposed or levied by any governmental entity.

J. Utility Tax Liability – Franchise Fees. Revenues derived directly or indirectly from sources within the city shall be subject to applicable utility taxes as of the time of commencement of such operations. Franchise fees shall be in addition to any utility tax, but shall be collectible only to the extent as then allowed by applicable law, and in no event may the combined utility tax and franchise fee exceed six percent of gross revenues in accordance with RCW 35.21.870. Franchise fees, if applicable, shall be levied on a nondiscriminatory basis.

K. Rights of City. Payment of money under any franchise shall not in any way limit or inhibit any of the privileges or rights of the city, except insofar as city’s privileges or rights are expressly limited or inhibited by the terms of a franchise.

L. Annual Report. Franchisees shall file annually with the director of finance, no later than 90 days after the end of franchisee’s fiscal year, an unaudited statement of revenues (for that fiscal year just ended) attributable to the operations of the franchisee’s utility or telecommunications system within the city pursuant to the franchise agreement. The statement shall present a detailed breakdown of gross revenues and uncollectible accounts for the year. The city may, if it sees fit, have such report audited by an independent certified public accountant of its choosing. If the audit reveals an error in payment by franchisees of more than two percent unless otherwise agreed to in a franchise agreement, then franchisees shall pay for the costs of the audit. If the audit reveals an error in payment of two percent or less, the city shall pay the costs of the audit. The report will summarize those accounts reconciled to be within the franchise area by the city’s quarterly review.

M. Circumventing Payments. Any transaction(s) which have the effect of circumventing payment of the required franchise fees and/or evasion of payment of franchise fees or any payments due the city under a franchise by noncollection or nonreporting of gross revenues, bartering, or any other means which evade the actual collection of revenues for business pursued by franchisees are prohibited. (Ord. 6798 § 3 (Exh. C), 2020; Ord. 6718 § 3 (Exh. C), 2019; Ord. 6546 § 8, 2014; Ord. 5271 § 1, 1999; Ord. 5034 § 1, 1998. Formerly 20.06.180.)