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SALT LAKE CITY ORDINANCE
No. 84 of 1999
(Granting to McLeodUSA Telecommunications Services, Inc. and its successors, a telecommunication franchise)
WHEREAS, McLeodUSA Telecommunications Services, Inc. , an Iowa corporation (the “Company”) desires to provide certain telecommunication services within Salt Lake City, Utah
(the “City”), and in connection therewith to establish a network in, under, along, over and across present and future streets, alleys and rights-of-way of the City, consisting of telecommunication lines and cables, together with all necessary appurtenances; and
WHEREAS, the City, in the exercise of its police power, ownership, use or rights over and in the public rights-of-way, and pursuant to its other regulatory authority, believes it is in the best interest of the public to provide to the Company, and its successors, a non-exclusive franchise to operate its business within the City; and
WHEREAS, the City and the Company propose to enter into a Franchise Agreement, the substantially final form of which has been presented to the City Council at the meeting at which this Ordinance is being considered for adoption; and
WHEREAS, the City desires to approve the execution and delivery of such Franchise Agreement and to otherwise take all actions necessary to grant the referenced Franchise to the Company; and
WHEREAS, the City believes this Ordinance to be in the best interest of the citizens of the City,
NOW, THEREFORE, be it ordained by the City Council of Salt Lake City, Utah, as follows:
SECTION 1. Purpose. The purpose of this Franchise Ordinance is to grant to the Company, and its successors and assigns, a non-exclusive right to use the public streets, alleys and rights-of-way, for its business purposes, under the constraints and for the compensation enumerated in the Franchise Agreement attached hereto as Exhibit A, and by this reference incorporated herein, as if fully set forth herein (the “Franchise Agreement”).
SECTION 2. Short Title. This Ordinance shall constitute the McLeodUSA Telecommunications Services, Inc. Franchise Ordinance.
SECTION 3. Franchise Description. There is hereby granted to the Company, and its successors and assigns, in accordance with the terms and conditions of the Franchise Agreement, the right, privilege, and franchise (collectively, the “Franchise”), to construct, maintain and operate in, under, along, over and across the present and future streets, alleys, and rights-of-way and other property of the City, all as more particularly described in Section 3.1 of the Franchise Agreement, together with all the necessary or desirable appurtenances (including, but not limited to, underground conduits and structures, poles, towers, wires and cables, for its own use) for the purpose of supplying telecommunication services to the City, the inhabitants thereof and persons
and corporations beyond the limits thereof. The Network will consist of telecommunication lines and cables (including without limitation, fiber-optic and copper lines and cables). This Franchise Ordinance does not relate to, and does not authorize or govern the operation by the Company to provide cable television services as defined in the United States Cable Communication Policy
Act of 1984, as amended to any customer in the City without a Franchise.
SECTION 4. Term. The term of the Franchise is for a period from and after the
effective date of this Ordinance and its acceptance by the Company, until January 1, 2011.
The Company shall pay all costs of publishing this Ordinance.
SECTION 5. Acceptance by Company. Within thirty (30) days after the effective date of this Ordinance, the Company shall file an unqualified acceptance of this Ordinance, in a form approved by the City Attorney, with the City Recorder of Salt Lake City; otherwise, this Ordinance and the rights granted hereunder shall be null and void.
SECTION 6. Consideration and Payment Dates.
(a) The Company shall pay to the City for the Franchise a franchise fee
(the “Franchise Fee”), equal to the greater of either:
(i) The annual sum of Five Thousand Dollars ($5,000.00); provided, however,
that the Franchise Fee payable for calendar year 1999 shall be prorated on a monthly basis and payable only for the months or portion thereof during such calendar year for which this Franchise Agreement is in effect. The initial payment shall be due and tendered concurrent with the execution and delivery hereof. Thereafter, the Franchise Fee shall be due on or before January 1 of each year, and shall be considered payment for use of the Franchise for such calendar year. On each payment date, the Franchise Fee payment shall be increased or decreased by the one year percentage increase or decrease, if any, in the Consumer Price Index herein specified. The Consumer Price Index used for this purpose shall be the U.S. City Average Geographic Index for the components including “all urban consumers” based on “all items” as published for the month of October of each year by the U.S. Department of Labor, Bureau of Labor Statistics. If publication of said Consumer Price Index should cease, such annual percentage increase shall be determined by reference to such similar index as shall replace it, or as agreed upon by the parties.
OR
(ii) An amount equal to six percent (6%) per annum of the Company’s Annual
Gross Revenue; provided, however, that any sum paid by the Company as a gross receipts or Gross Revenue based tax (including, by way of example and not limitation, the Utility Revenue Tax under the provisions of Section 5.04.170 et seq. of the City Code, or any successor provision), shall be credited against any fee due under this Section 6(a)(ii). In the event the statutory limit on gross receipt based taxes or other charges imposed by Section 11-26-1, Utah Code, or any successor provision, is increased above six percent (6%), the Company shall, at the request of the City, enter into an amendment to this Agreement increasing the Franchise Fee to the level requested by the City, but not to exceed the increased statutory limit; provided, however, in no event shall the Company be obligated to pay a higher percentage of Gross Revenue than is paid by other similarly situated franchises within the City, including U.S. West or its affiliates.
(b) The Company shall annually submit to the City, on or before December 31, a certificate signed by a corporate officer of the Company certifying whether or not the Company has derived Gross Revenue in the City during the preceding calendar year. If the Company has earned Gross Revenue during such period, the Company shall provide to the City at the earliest possible date, but in no event later than March 1, an auditor’s statement detailing such Gross Revenue. Failure to properly report any Gross Revenue or provide the required certificate and statement shall be grounds for termination of the Franchise, in accordance with Section 9, Early Termination or Revocation of Franchise, hereof.
SECTION 7. Rights Reserved to the City. Without limitation upon the rights that the
City might otherwise have, the City expressly reserves the following rights, powers and authorities to: (a) Exercise its governmental powers now or hereafter to the full extent that such powers may be vested in or granted to the City; (b) Grant additional franchises to the same property covered by the Franchise within the City to others, under competitively neutral and nondiscriminating basis as conditions acceptable to the City; or (c) Exercise any other rights, powers, or duties required or authorized, under the Constitution of the State of Utah, the law of Utah, or the City ordinances.
SECTION 8. Extension of City Limits. Upon the annexation of any territory to the City, the right and Franchise hereby granted shall extend to the territory so annexed to the extent the City has authority. All facilities owned, maintained, or operated by the Company located within, under, or over streets, alleys and rights-of-way of the territory so annexed shall thereafter be subject to all terms hereof.
SECTION 9. Early Termination or Revocation of Franchise.
9.1 The City may terminate or revoke the Franchise and all rights and privileges herein provided for any of the following reasons:
(a) The Company fails to make timely payments of the Franchise Fee as required under Article II of this Agreement and does not correct such failure within twenty (20) business
days after receipt of written notice by the City of such failure;
(b) The Company by act or omission, materially violates a term or condition herein set
forth within the Company’s control, and with respect to which redress is not otherwise herein
provided. In such event, the City, acting by or through its City Council, may after public hearing, determine that such failure is of a material nature; and thereupon, after written notice given
Company of such determination, Company shall, within twenty (20) days of such notice,
commence efforts to remedy the conditions identified in the notice, and will have six (6) months from the date it receives notice to remedy the conditions identified in the notice, and will have six (6) months period and failure to correct such conditions, the City may declare the Franchise forfeited and this Agreement terminated, and thereupon the Company shall have no further rights or
authority hereunder; provided however, that any such declaration of forfeiture and termination
shall be subject to judicial review as provided by law, and provided further that in the event such failure is of such nature that it cannot be reasonably corrected within the six (6) month period
above, the City shall provide additional time for the reasonable correction of such alleged failure;
(c) The Company becomes insolvent, unable or unwilling to pay its debts, is adjudged bankrupt, or all or part of its facilities should be sold under an instrument to secure a debt and is
not redeemed by the Company within sixty (60) days; or
(d) In furtherance of the Company policy or through acts or omissions done within the
scope and course of employment , a member of the Board of Directors or an officer of the Company knowingly engages in conduct or makes a material misrepresentation with or to the
City, that is fraudulent or in violation of a felony criminal statute of the State of Utah.
9.2 Nothing contained herein shall be deemed to preclude the Company for pursuing
any legal or equitable rights or remedies it may have to challenge the action of the City.
No Franchise revocation or termination may be effected until the City Council shall first adopt an ordinance terminating the Franchise and setting forth the reasons therefor, following not less than thirty (30) days prior written notice to the Company of the proposed date of the ordinance adoption. The Company shall have an opportunity on said ordinance adoption date to
be heard upon the proposed termination.
SECTION 10. Severability.
10.1 If any section, sentence, paragraph, term or provision of the Franchise Agreement or this Franchise Ordinance is for any reason determined to be or rendered illegal, invalid, or superseded by other lawful authority including any state or federal, legislative, regulatory or administrative authority having jurisdiction thereof or determined to be unconstitutional, illegal or invalid by any court of competent jurisdiction, such portion shall be deemed a separate, distinct, and independent provision and such determination shall have no effect on the validity of any other section, sentence, paragraph, term or provision hereof, all of which will remain in full force and effect for the term of the Franchise or any renewal or renewals thereof, except for Section 6 hereof and Article II of the Franchise Agreement.
10.2 Section 6 hereof and Article II of the Franchise Agreement are essential to the adoption of this Ordinance and should they be challenged by the Company, or determined to be illegal, invalid, unconstitutional or superseded, in whole or in part, the entire Franchise shall be voided and terminated, subject to the following: (a) in the event of a judicial, regulatory or administrative determination that Section 6 hereof or Article II of the Franchise Agreement is illegal, invalid, unconstitutional and superseded, such termination shall be effective as of the date of a final appealable order, unless otherwise agreed upon by the City and the Company; (b) in the event of any legislative action that renders Section 6 hereof or Article II of the Franchise Agreement unconstitutional, illegal, invalid or superseded, such termination shall be effective as of the effective date of such legislative action.
10.3 Notwithstanding the foregoing, if the City stipulates in writing to judicial, administrative or regulatory action that seeks a determination that Section 6 hereof or Article II of the Franchise Agreement is invalid, illegal, superseded or unconstitutional, then a determination that Section 6 hereof or Article II of the Franchise Agreement is invalid, illegal, unconstitutional or superseded shall have no effect on the validity or effectiveness of any other section, sentence, paragraph, term or provision of the Franchise, which shall remain in full force and effect.
10.4 In the event this Franchise Ordinance or the Franchise Agreement is terminated pursuant to paragraph 10.2 hereof or paragraph 21.2 of the Franchise Agreement, the City grants to the Company a lease according to the same terms and conditions as set forth in the Franchise Agreement. Accordingly, the Company shall pay, as fair market rental value, the same amounts, at the same times, required for the payment of the Franchise Fee pursuant to Section 6 hereof and Article II of the Franchise Agreement and shall be bound by all other terms and conditions contained herein; provided, however, that in no event will the Company be obligated to pay a higher percentage of revenues derived from the sale of telecommunication services within the City than is paid by other fixed public utilities serving within the City.
SECTION 11. The City is currently considering the preparation and adoption of a telecommunications ordinance which shall address various aspects of the telecommunications industry. Such ordinance may affect the manner in which franchises such as this Franchise Agreement are issued, and may affect the terms and conditions of such franchises. The Franchise Agreement is being issued, and this Ordinance is being adopted, prior to the adoption of such
Ordinance as an accommodation to the Company so as to avoid delay pending the adoption of the ordinance. Accordingly, the Company recognizes and agrees that this Ordinance and the Franchise Agreement are and shall be subject to the terms and conditions of such ordinance; provided, however, that the Company shall have the right to terminate the Franchise Agreement upon ninety (90) days prior to written notice in the event the terms and conditions of the ordinance are unacceptable to the Company, and provided further that the provisions of such ordinance shall apply to the Company only to the extent that (i) such provisions are generally applicable to other similarly situated providers of telecommunication services, or (ii) if such is not the case, application of the ordinance to the Company does not place the Company at a competitive disadvantage as to those telecommunication providers to which the provisions of such ordinance does not apply.
SECTION 12. This Ordinance shall take effect immediately upon publication.
Passed by the City Council of Salt Lake City, Utah, this 12th day of October, 1999.
Bill No. 84 of 1999.
Published: October 22, 1999.