a. Franchise fees. As compensation for the benefits and privileges granted under a franchise agreement and in consideration of permission to use the city’s streets, each cable franchise grantee shall pay as a franchise fee to the city, throughout the duration of a franchise agreement, an amount equal to five percent (5%) of the grantee’s gross revenues derived from the operation of the cable system to provide cable service in the franchise area. Accrual of such franchise fees shall commence as of the effective date of the franchise agreement. The franchise fees are in addition to all other fees, assessments, taxes or payments of general applicability that the grantee may be required to pay under any federal, state or local law. The franchise agreement and the franchise fees paid thereunder are not in lieu of any other generally applicable required permit, authorization, fee, charge or tax.

b. Payments. A grantee’s franchise fee payments to the city shall be computed and paid annually unless a more frequent schedule is provided for by franchise agreement.

c. Acceptance of payment and recomputation. No acceptance of any payment shall be construed as an accord by the city that the amount paid is, in fact, the correct amount, nor shall any acceptance of payments be construed as a release of any claim the city may have for further or additional sums payable or for the performance of any other obligation of a grantee.

d. Franchise fee reports. Each payment shall be accompanied by a written report to the city, containing an accurate statement in summarized form, as well as in detail, of the grantee’s gross revenues and the computation of the payment amount.

e. Annual franchise fee reports. A grantee shall furnish to the city annually by such deadline as shall be set forth in the franchise agreement a statement stating the total amount of gross revenues and all payments, deductions and computations for the period covered by the payments. Such statement shall be reviewed by an independent certified public accountant prior to submission to the city.

f. Audits. On an annual basis, upon thirty (30) days’ prior written notice, city shall have the right to conduct an independent audit of a grantee’s records reasonably related to the administration or enforcement of a franchise agreement, in accordance with generally accepted accounting principles. The commission may hire an independent certified public accountant to audit the grantee’s financial records, in which case the grantee shall provide all necessary records to the certified public accountant. If the audit shows that franchisee fees have been underpaid by four percent (4%) or more, the grantee shall pay the total cost of the audit.

g. Interest on late payments. In the event that a franchise fee payment or other sum is not received by the city on or before the due date, or is underpaid, the grantee shall pay in addition to the payment, or sum due, interest from the due date at a rate equal to the interest rate specified for judgments entered in the Superior Court of the State of Washington.

h. Alternative remedies. A cable franchise agreement may provide for alternative remedies for the city and the cable franchise grantee in the event that any section, subsection, paragraph, term or provision of a cable franchise agreement or of this ordinance or of any other ordinance, law, or document incorporated therein by reference is held by a court of competent jurisdiction to be invalid, unconstitutional or unenforceable. The purpose of such alternative remedies shall be to place the parties, as nearly as possible, in the position that they were in prior to such determination, consistent with applicable law.

i. Additional commitments not franchise fees. No term or condition of a franchise agreement shall in any way modify or affect the grantee’s obligation to pay franchise fees to city. Although the total sum of franchise fee payments and additional commitments set forth in a franchise agreement may total more than five percent (5%) of a grantee’s gross revenues in any 12-month period, the grantee shall be required to agree that any such additional commitments are not franchise fees as defined under any federal law, nor are they to be offset or credited against any franchise fee payments due to the city.

j. Tax liability. Payment of the franchise fees shall not exempt a grantee from the payment of any generally applicable license, permit fee or other generally applicable fee, tax or charge on the business, occupation, property or income of the grantee that may be imposed by the city.

k. Payment on termination. Upon termination of a franchise agreement for any reason, the grantee shall file with the city within ninety (90) calendar days of the date of the termination, a financial statement, certified by an independent certified public accountant, showing the gross revenues received by the grantee since the end of the previous fiscal year. The city reserves the right to satisfy any remaining financial obligations of the grantee to the city by utilizing the funds available in a letter of credit or other security provided by the grantee. (Ord. M-3371, 1998)