013 of 2001 - Sierra Pacific communication telecommunication franchise 0 01-1
. C 00-821
SALT LAKE CITY ORDINANCE
No. 13 of 2001
(Granting to Sierra Pacific Communications
and its successors, a telecommunication franchise)
WHEREAS, Sierra Pacific Communication, a Nevada 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 and desirable 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 present and future
streets, alleys, viaducts, bridges, roads, lanes and public way within and under control of the City
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 Sierra Pacific
Communications 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, a network consisting of telecommunication lines and cables, together with all the
necessary or desirable appurtenances (including without limitation fiber-optic and copper lines
and cables, underground and above ground conduits and structures, poles, towers, wires and
cables) (the "Network"). The Network shall be used by the Company for the purpose of
providing any of the following telecommunication services to the City, the inhabitants thereof
and persons and corporations beyond the limits thereof: Services permitted to
telecommunications carriers under the 1996 Telecommunications Act and involving any
switched or other one-way or two-way transmission of voice or data, including but not
necessarily limited to (i) services interconnecting interexchange carriers for the purpose of any
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transmission of voice or data; (ii) services connecting interexchange carriers or competitive
access carriers to local exchange providers for the purpose of any transmission of voice or data;
(iii) services connecting interexchange carriers to any entity, other than another interexchange
carrier or the local exchange provider for the purpose of any transmission of voice or data; (iv)
service providing private line point to point service for end users for the purpose of any
transmission of voice or data; (v) video, video conferencing or point to point private line service,
or (vi)_any service regulated by state regulatory agencies of the FCC which the State of Utah or
FCC has authorized the Company to provide. This Franchise Ordinance does not relate to, and
does not authorize the Company to provide, or govern the operation by the Company of, 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 separate 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,
subject to Section 11 hereof.
The Company shall pay all costs of publishing this Ordinance.
SECTION 5. Acceptance by Company. Within sixty (60) 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:
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(i) The annual sum of Five Thousand Dollars ($5,000); provided, however,
that the Franchise Fee payable for calendar year 2000 shall be prorated and payable only for the
months of October, November and December. 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 the Franchise Agreement and this Ordinance
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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 Qwest or its affiliates.
(b) The Company represents to the City that one of the purposes for entering
into this Agreement is to obtain authority to build a metropolitan network within the City to
provide service to customers within the City. Upon completion of the Network, the Company
will actively market customer services and generate local Gross Revenue. The Company
represents that it expects to generate more than a nominal amount of Gross Revenues from local
customers, and that the use of the Network as a long-haul carrier, or to otherwise provide
services to customers located outside of the City, is not the sole or preeminent objective of the
Company. The Company represents that it intends to immediately construct, or has already
commenced construction, of a component of the Network that will be part of Company's long-
haul interstate services. The Company agrees that in the event the Franchise Fee payable to the
City hereunder does not exceed $15,000 per year prior to December 31, 2002, the City may
terminate the Franchise Agreement and the Company's rights under this Franchise Ordinance.
Upon such termination, the Company shall, at the option of the Company, either (a) remove or
abandon the Network, as provided in Section 4.17 of the Franchise Agreement, or (b) enter into
the City's standard form Telecommunications Lease, which shall provide for the lease by the
City to the Company of the portions of the City rights-of-way occupied by the Network, at fair
market rates.
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(c) 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, 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.
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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 (other than
as provided in (a) above) herein or in the Franchise Agreement 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 to Company of such determination,
Company shall, within thirty (30) 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. After the expiration of such six (6) month period and failure to correct such conditions,
the City may declare the Franchise forfeited and the Franchise Agreement terminated, and thereupon
the Company shall have no further rights or authority hereunder or under the Franchise Agreement;
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
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not redeemed by the Company within sixty(60) days;
(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;
(e) The Franchise Fee payable to the City does not exceed $15,000 per year prior to
December 31, 2002;or
(f0 Upon adoption of a new ordinance as described in Section 11 hereof, which new
ordinance shall operate to extend the Franchise pursuant to the terms of such new ordinance,
upon acceptance thereof by the Company.
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 is 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
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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 or thereof, 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; and (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.
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10.4 In the event this Franchise Ordinance or the Franchise Agreement is terminated
pursuant to paragraph 10.2 hereof or paragraph 20.2 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 similarly situated franchisees 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
Ordinance are issued, and may affect the terms and conditions of such franchises. The Franchise
Agreement is being executed, 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 temporary in nature and shall be replaced by, and shall be subject to the
terms and conditions of, such new ordinance; provided, however, that the Company shall have
the right to terminate the Franchise Agreement upon ninety(90) days prior 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
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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 13th day of March ,
2001.
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v
V ICE CHAIRPERSON
TEST AND COUNTERSIGN:
CHIEF DEPUT C RECORDER
Transmitted to the Mayor on March 14, 2001.
Mayor's Action: XApproved Vetoed
YOR
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ATTEST AND COUNTERSIGN:
CHIEF DEPUTY CIael.,14.4„.m...4.0.
CORDER
(SEAL) , ='-.tc _...,.
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Bill No. 13 of 2001.
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Published: March 22, 2001 E_. t_i s
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EXHIBIT A
[Here attach form of Franchise Agreement.]
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