Req.#7483
O"INANCE NO. 26465
2 AN ORDINANCE granting a non-exclusive franchise to Level 3 Communications,
LLC to construct, operate, and repair a telecommunications system
3 throughout the City of Tacoma- setting forth provisions, terms and
1
4 conditions of the grant of franchise, specifically making such grant subject
to the provisions of Title 16 of the Tacoma Municipal Code and the
5 Tacoma City Charter; providing for City regulation of the
Telecommunications System; prescribing liquidated damages and certain
6 other remedies for violation of franchise provisions in addition to those
7 specified pursuant to the Municipal Code and the City of Tacoma Charter.
8 WHEREAS, Level 3 Communications, LLC is a telecommunications
9 utility currently involved in the construction of a telecommunications network
10 utilizing fiber optic technology, and
11
WHEREAS, as part of such network, Level 3 Communications, LLC has
12
designed a system of fiber optic cable a portion of which will pass through the
13
14 City, and
15 WHEREAS, Level 3 Communications, LLC has applied to the City for a
16 Franchise to install fiber optic cable within the City streets and public
17 rights-of-way, and
18
WHEREAS, the City Council has determined to grant a franchise to
19
20 Level 3 Communications, LLC upon certain terms and conditions which the
21 Council deems necessary due to the unique nature of fiber optic cable, and
22 WHEREAS this City of Tacoma Telecommunications Franchise
23 Ordinance contains the following:
24
25
26
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LEG 004 (11/89)
I SECTION 1. DEFINITIONS
2 1.1 City4
1.2 City Manager4
3 1.3 Communications facility4
1.4 Communications system4
4 1.5 Construction, operation, or repair5
1.6 Customer5
5 1.7 Facilities or Installations5
6 1.8 Franchise5
1.9 Franchise area5
7 1.10 Franchisee5
1.11 Gross receipts6
8 1.12 Operator6
9 1.13 Overhead facilities6
1.14 Person6
10 1.15 Public rights-of-way6
1.16 SONET7
1 1 1.17 System7
1.18 Telecommunications7
12 1.19 Telecommunications system7
13 1.20 Telephone service8
1.21 Title8
14 1.22 Underground facilities9
15 SECTION 2. FRANCHISE
16 2.1 Grant of Franchise9
2.2 Franchise Term 10
17 2.3 Franchise Non-exclusive 10
2.4 Transfers, Generally 11
18 2.5 Change in Control-Notice and Affiliate Exception 12
19 2.6 Revocation 13
2.7 Continuity of Service and Right to Purchase the System 16
20 2.8 Right to Require Removal of Property/Right
to Remove Property 21
21 2.9 Customers' Right to Obtain Service 23
22 2.10 Responsibility for Costs 23
2.11 Work of Contractors and Subcontractors 23
23 2.12 Survival of Terms 24
24
25
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go@R
I SECTION 3. OPERATION IN STREETS AND RIGHTS-OF-WAY
2 3.1 Use of Public Rights-of-Way 24
3.2 Construction, Operation, or Repair 25
3 3.3 Right to Inspect and Order Corrections 32
3.4 Information Regarding Ongoing Work 33
4
SECTION 4. REGULATORY PROVISIONS
5 4.1 Intent 33
6 4.2 Remedies for Franchise Violations 34
4.3 Procedure for Remedying Franchise Violations 35
7 4.4 Failure to Enforce 37
8 4.5 Force Majeure 37
4.6 Alternative Remedies 38
9 4.7 Compliance with the Laws 38
10 SECTION 5. REPORTING REQUIREMENTS
5.1 Quarterly Reports 39
11 5.2 Annual Report 39
12 5.3 Additional Reports 40
5.4 Preservation of Confidential Information 40
13
SECTION 6. COMPENSATION AND FINANCIAL PROVISIONS
14 6.1 Fees;Taxes 41
15 6.2 Auditing and Financial Records 44
6.3 Performance Bond 46
16 6.4 Indemnification by Franchisee 46
6.5 Franchisee Insurance 47
17 6.6 Security Fund 51
18 SECTION 7. MISCELLANEOUS PROVISIONS
19 7.1 Posting and Publication 51
7.2 Guarantee of Performance 51
20 7.3 Governing Law and Venue 52
7.4 No Recourse 52
21 7.5 Notice 52
22 7.6 Execution 53
23
24
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26
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LEG 004 (11/89)
20 P7
1 BE IT ORDAINED BY THE CITY OF TACOMA:
2 Section 1 - DEFINITIONS. For the purposes of this Franchise, the
3 following terms, phrases, words, and their derivations shall have the meaning
4
given herein- words not defined herein which are defined in Title 16, shall have
5
6 the same meaning or be interpreted as provided in Title 16. Words not defined
7 here or in Title 16 have their ordinary meaning. A reference to Title 16 or to
8 the City's Charter refers to the same as amended from time to time.
9 1.1 "City" means the City of Tacoma, a municipal corporation of the
10
State of Washington.
1 1
12 1.2 "City Manager" means the City Manager or the City Manager's
13 designee.
14 1.3 "Communications facility" means a device which, along or as part
15 of an aggregation of devices, is capable of transmitting signals from place to
16 place.
17
1.4 "Communications system" refers to a telecommunications system.
18
19 1.5 "Construction, operation, or repair" and similar formulations of
20 that term means the named actions interpreted broadly, encompassing, among
21 other things, installation, extension, maintenance, replacement, or components,
22
relocation, undergrounding, grading, site preparation, adjusting, testing, make-
23
ready, and excavation.
24
25
26
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LEG 004 (11/89)
1 1.6 "Customer' means any Person or entity who legally receives
2 within the corporate limits of the City any one or more of the services provided
3 by the Telecommunications System.
4
1.7 "Facilities" or "Installations" are and refer to and include, but are
5
6 not limited to, plant, systems, improvements, and equipment owned, leased, or
7 otherwise used by the Franchisee, such as poles, fiber, wires, fixtures,
8 equipment, underground circuits, and conduit in public rights-of-way and other
9 property necessary or convenient for the transmission and distribution of
10
communications service where such facilities are location.
11
1.8 "Franchise" means the rights granted by this Franchise and
12
13 conditioned as set forth herein, and under the Tacoma Municipal Code and the
14 City Charter.
15 1.9 "Franchise Area" means that area within the present and
16 future corporate limits of Tacoma.
17
1.10 "Franchisee" is Level 3 Communications, LLC, a Delaware
18
19 Limited Liability Company, with its home office at 1025 Eldorado Boulevard,
20 Broomfield, Colorado, 80021, Telephone, (303) 926-3000. It is a subsidiary of
21 Level 3 Communications, Inc. whose home office is located at 1025 Eldorado
22 Boulevard, Broomfield, Colorado, 80021, Telephone, (303) 926-3000.
23 1.11 "GrossReceipts"meansGrossRevenueasdefinedinTitlel6,
24
Chapters 1 and 2.
25
26
ord7483.doc-CDB/km
LM 004 111/89)1
1 1. 1 2 "Operator' when used with reference to a system, refers to a
2 Person (a) who provides service over a Communications System and directly or
3 through one or more Affiliates owns a significant interest in such facility; or
4
(b) who otherwise controls or is responsible for, through any arrangement, the
5
management and operation of such a facility. A Person that operates under
6
7 agreement of a Telecommunications System or a specific portion of a
8 Telecommunications System to provide Telecommunications Services shall be
9 treated as an Operator for purposes of this franchise.
10 1. 1 3 "Overhead Facilities" refers to electric utility and Communications
11
Facilities located above the surface of the ground, including the underground
12
13 supports and foundations for such facilities.
14 1.14 "Person" includes any individual corporation, partnership,
15 association, joint stock company, trust, or any other legal entity, but not the
16 City.
17 1.15 "PublicRights-of-Way"meanthepublicstreetsandeasements
18
which, under the City Charter, the Tacoma Municipal Code, City ordinances,
19
20 and applicable laws, the City has authority to grant Franchises, permits, or
21 Licenses for use thereof or has regulatory authority thereover, excluding
22 railroad rights-of-way, airport, and harbor areas. Public Rights-of-Way for the
23 purpose of this Franchise do not include buildings, parks, poles, conduits, or
24 similar facilities or property owned by or leased to the City, including, by way of
25
26
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LEG 004 (11/89)
I example and not limitation, structures in the Public Rights-of-Way such as
2 utility poles and light poles.
3 1.16 "SONET"istheacronymforSynchronousOpticalNetwork,which
4 involves the transmission of light signals over optical fiber. SONET allows
5
different fiber systems or networks to interconnect efficiently with a high level of
6
7 accuracy and customer control.
8 1.17 "System"meanstheTelecommunicationsSystem.
9 1.18 "TelecommunicationsService"meansthetransmissionforhire
10 of information in electronic or optical form, including, but not limited to, voice,
11
video, or data, whether or not the transmission medium is owned by the
12
13 provider itself. Telecommunications Service includes telephone service but
14 does not include Cable Service or over-the-air broadcasts to the
15 public-at-large from facilities licensed by the Federal Communications
16 Commission or any successor thereto.
17 1.19 "TelecommunicationsSystem"meansatangiblefacilitythatisused
18
to provide one or more Telecommunications Services, any portion of which
19
20 occupies Public Rights-of-Way. The term Telecommunications System by way
21 of example, and not limitation, includes wires, equipment cabinets, guys,
22 conduit, radio transmitting towers, poles, other supporting structures, and
23 associated and appurtenant facilities used to transmit telecommunications
24
signals. The term Telecommunications System includes all devices mounted on
25
light poles in the Public Rights-of-Way through which Telecommunications
26
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I., @ - M., @ @
1 Services are originated or terminated. An Open Video System is not a
2 Telecommunications System to the extent that it provides only video services; a
3
Cable System is not a Telecommunications System to the extent that it provides
4
5 only Cable Service.
6 1.20. "Telephone Service" means the providing by any person of
7 access to a local telephone network, local telephone network switching service,
8 toll service, or coin telephone service, or providing telephonic, video, data, or
9 similar communication or transmission for hire via a local telephone network,
10
toll line, channel, cable, microwave, or similar communication or transmission
11
12 system. Telephone Service includes intrastate or interstate service, including
13 toll service, originating from, or received on, communications equipment or
14 apparatus in this State if the charge for the service is billed to a person in this
15 State. Telephone Service does not include the providing of competitive
16
Telephone Service as defined in Tacoma Municipal Code ? 6.66.020, the
17
providing of cable television service, or the providing of broadcast services by
18
19 radio or television stations.
20 1.21 "Title," when used in the context of referring to this Title of the
21 Tacoma Municipal Code, shall mean this Title 16 of the Tacoma Municipal
22 Code and Chapters 16.01 through 16.06 of this Title.
23
1.22 "Underground Facilities" refers to electric utility and
24
25 Communications Facilities located under the surface of the ground, excluding
26 the underground foundations or supports for Overhead Facilities.
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LEG 004 (11/89)
4071%"%-\,@
I Section 2 - FRANCHISE.
2 2.1 Grant of Franchise. The City hereby grants to Franchisee a
3 non-exclusive Franchise which, once it becomes effective, shall authorize
4
Franchisee, to use the City's Public Rights-of-Way within the Franchise Area to
5
6 construct, repair, and operate an underground fiber optic Telecommunication
7 System to provide Telecommunication Service.
8 Such grant is subject to and must be exercised in strict accordance with
9 and subject to this Franchise Agreement, Title 16 of the Tacoma Municipal
10
Code, and the Tacoma City Charter including but not limited to the provisions
11
set forth in Article Vill of the Charter, and may be revoked if it is not so
12
13 exercised. Provided further, that the exercise of any rights pursuant to the
14 Franchise is subject to the exercise of the City's police powers, and other
15 regulatory powers as it may have or obtain in the future, and all rights granted
16 herein must be exercised in strict accordance with applicable law, including by
17
way of example and not limitation, zoning codes and permitting requirements.
18
19 No rights shall pass to the Franchisee by implication. Said Franchise shall
20 constitute both a right and an obligation to provide the services of the
21 Telecommunications System as required by the provisions of this Franchise.
22 The grant of this Franchise is limited to the purpose of Franchisee
23 providing Telecommunications Service. This Franchise does not include
24
permission to provide cable service, as defined in 47 U.S.C. ? 522,
25
26
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LEG 004 (11/89)
J`
1 multichannel video programming, open video systems, or uses other than
2 Telecommunications Service.
3 Notwithstanding the above grant to use Public Rights-of-Way, no
4
Public Rights-of-Way shall be used by Franchisee if the City, in its sole
5
opinion, determines that such use is inconsistent with the terms, conditions or
6
7 provisions by which such Public Rights-of-Way was created or dedicated, or
8 presently used under applicable laws.
9 In the event of any conflict between a provision in this Franchise
10
and any provision of the City Charter, which Charter is incorporated herein by
11
reference, the applicable provision of the Charter shall control over any
12
inconsistent provision of this Franchise.
13
14 2.2 Franchise Term. The term of the Franchise shall be ten years
15 unless terminated sooner in accordance with this Franchise, Title 16, or the
16 City Charter.
17
2.3 Franchise Non-Exclusive. The Franchise granted herein shall be
18
non-exclusive.
19
20 2.4 Transfers, Generally.
21 A. Every Transfer shall be subject to the prior written approval
22 of the City except as provided herein. A Transfer is any transaction in which:
23 (1) all or a portion of the Telecommunications System is sold or assigned
24
(except a sale or assignment that results in removal of a particular portion of
25
26 the facility from the Public Rights-of-Way); (2) there is any change, acquisition,
ord7483.doc-CDB/km -10- O
LEG 004 (11/89)
1 or direct or indirect transfer of control of the Franchisee; or (3) the rights and/or
2 obligations held by the Franchisee under the Franchise are transferred, sold,
3
assigned, or leased, in whole or in part, directly or indirectly, to another party.
4
The term "control" in (2) refers to actual working control, in whatever manner
5
6 exercised. It will be presumed that a change in working control within the
7 meaning of (2) has occurred in any case where there is a change in voting
8 interest of 1 0 percent or more- or a change in voting interest that results in a
1
9 Person obtaining a 50 percent or greater interest in Franchisee-, or a change in
10
voting interest that results in a Person that held 50 percent or greater interest
11
12 reducing their interest to below 50 percent. A Transfer without the prior written
13 approval of the City is a substantial violation of this Franchise and shall make
14 the Franchise subject to termination by the City as provided herein and in
15 Title 16.
16 B. Applications for approval of any Transfer shall be filed in
17
accordance with procedures set out in Title 16 of the Tacoma Municipal Code.
18
19 C. Franchisee, shall within 60 days of the closing date of any
20 Transfer, file with the City Clerk a copy of the deed, agreement, mortgage,
21 lease, or other written instrument evidencing such sale, lease, mortgage,
22 assignment or Transfer, certified and sworn to as correct by Franchisee. Every
23
such Transfer, whether voluntary or involuntary, may be deemed void and of no
24
25 effect by the City unless Franchisee files the required copy within the 60-day
26 period.
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LEG 004 (11/89)
I D. The requirements of this section shall not be deemed to
2 prohibit the use of Franchisee's property as collateral for security in financing
3 the construction or acquisition of all or part of the Telecommunications System
4
franchised hereunder. However, no such arrangement may be made if it would
5
in any respect under any condition prevent the Operator or any successor from
6
7 complying with the Franchise and applicable law, nor may any such
8 arrangement permit a third party to succeed to the interest of the Operator, or
9 to own or control the Telecommunications System, without the prior consent of
10
the City. Any mortgage, pledge or lease shall be subject to and subordinate to
11
the rights of the City under this Franchise, and other applicable law.
12
2.5 Change in Control-Notice and Affiliate Exception. Franchisee
13
14 shall promptly notify the City of any proposed change in, transfer of, or
15 acquisition by any other Person of an ownership interest in Franchisee that
16 results in a change in control of Franchisee within the meaning of
17
Section 2A.A. However, if the proposed change in control merely results in a
18
19 Transfer of control from Franchisee to another entity that is 1 00 percent owned
20 by a direct parent of Franchisee, and such parent provided an unconditional
21 guaranty of performance of the Transferee Affiliate at the time the Franchise
22 was issued, then such Transfer shall not require the prior approval of the City
23 so long as all the conditions on affiliate Transfers set forth in Title 16 are
24
satisfied (including, without limitation, the notice requirements).
25
26
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LEG 004 (11/89)
1 2.6 Revocation. In addition to any rights set out elsewhere in this
2 Franchise, the City Charter or Title 16, the City reserves the right to declare a
3 forfeiture or otherwise revoke the Franchise, and all rights and privileges
4
pertaining thereto, as provided in Title 16 or in the event that:
5
6 A. Franchisee is in substantial non-compliance with the
7 Franchise; or
8 B. Franchisee is found to have engaged in any actual or
9 attempted fraud or deceit upon the City, Persons or Customers, or
10 C. Franchisee fails to obtain and maintain any permit required
11
by any federal or state regulatory body or by the City, relating to the
1 2
13 construction, repair and operation of the system; or
14 D. At any time during the term of the Franchise, Franchisee
15 fails to provide and maintain all of the securities required under this Franchise
16 including, but not limited to, the performance bond and letter of credit; fails to
17
maintain the insurance required by this Franchise; or fails to satisfy the
18
19 indemnity set out in this Franchise; or if Franchisee's guarantor revokes its
20 guarantee or fails to satisfy or becomes unable to satisfy its obligations
21 thereunder.
22 E. The procedures for revocation and forfeiture shall be
23 governed by Title 16, Section 16.01.8.5. Before the Franchise is revoked,
24
Franchisee shall be given notice and opportunity to cure at least equivalent to
25
26 that required by Title 16 as of the effective date of this Franchise (except in
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LEG 004 (11/89)
I those cases where notice and opportunity to cure are not required), and shall
2 be accorded at least an opportunity to be heard that provides at least the due
3
process protections required by Title 16 as of the effective date of this
4
5 Franchise, which opportunities and protections are set out in Section 2.6.F.
6 F. (1) Where, after notice and providing the Franchisee an
7 opportunity to be heard (if such opportunity is timely requested by a
8 Franchisee), the City finds that there has been an act or omission that would
9
justify revocation of the Franchise, the City may make an appropriate reduction
10
11 in the remaining term of the Franchise or revoke the Franchise. However, the
12 Franchise may only be revoked if the Franchisee (a) was given written notice of
13 the default- and (b) 30 days to cure the default; and (c) the Franchisee failed to
14 cure the default, or to propose a schedule for curing the default acceptable to
15 the City where it is impossible to cure the default in 30 days. The required
16
written notice may be given before the City conducts the proceeding required
17
18 by this paragraph. No opportunity to cure is required for repeated violations,
19 and fraud shall be deemed incurable.
20 (2) Notwithstanding the foregoing, the City may declare
21 a Franchise forfeited without opportunity to cure when the Franchisee: (a)
22
stops providing service it is required to provide in the Franchise (b) Transfers
23
without the prior consent of the City as required in the Franchise- (c) fails to
24
25 pay the Franchise application fees owed hereunder; or (d) defrauds or attempts
26 to defraud the City or Franchisee's customers. However, Franchisee shall
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LEG 004 (11/89)
1 have the right to receive 30 days' prior notice of an intent to declare a
2 Franchise forfeited, and shall have the opportunity to show cause why the
3
Franchise should not be forfeited.
4
(3) Notwithstanding the foregoing, the Franchise will
5
6 automatically terminate by force of law 120 calendar days after an assignment
7 for the benefit of creditors or the appointment of a receiver or trustee to take
8 over the business of the Franchisee, whether in a receivership, reorganization,
9 bankruptcy assignment for the benefit of creditors, or other action or
10
proceeding. However, the Franchise may be reinstated within that 120-day
period, if: (a) such assignment, receivership or trusteeship has been vacated;
12
13 or (b) such assignee, receiver or trustee has fully complied with the terms and
14 conditions of Title 16 and the Franchise and has executed an agreement,
15 approved by any court having jurisdiction, assuming and agreeing to be bound
16
by the terms and conditions of Title 16 and the Franchise. However, in the
17
event of foreclosure or other judicial sale of any of the facilities, equipment or
18
19 property of a Franchisee, the City may revoke the Franchise, following a public
20 hearing before the City Council, by serving notice upon the Franchisee and the
21 successful bidder at the sale, in which event the Franchise and all rights and
22 privileges of the Franchise will be revoked and will terminate 30 calendar days
23
after serving such notice, unless: (a) the City has approved the Transfer of the
24
Franchise to the successful bidder- and (b) the successful bidder has
25
26
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LEG 004 (11/89)
I , _@`
I covenanted and agreed with the City to assume and be bound by the terms and
2 conditions of the Franchise and Title 16.
3
2.7 Continuity of Service and Right to Purchase the System.
4
A. In the event the City has declared a forfeiture for cause or
5
6 otherwise revoked for cause the Franchise as provided herein, or in the event
7 of expiration of the initial term of the Franchise without the Franchise being
8 renewed or extended (referred to below collectively as a "termination"),
9 Franchisee shall, at the direction of the City expressed by ordinance, continue
10
its operations for such reasonable period (the "Continuation Period") as the
I 1
12 City may determine is necessary to permit transition to another provider, which
13 period may be established taking into account any appeal of the termination.
14 During such Continuation Period, Franchisee shall continue to be bound by all
15 its obligations under the Franchise and Title 16. During this Continuation
16
Period, Franchisee shall not Transfer any portion of its Telecommunications
17
System to any other Person, including parts of the System rented, leased, or
18
19 lease-purchased; or significantly alter the Telecommunications System or
20 remove property from the City, or otherwise encumber the Telecommunications
21 System in any manner, without prior written consent of the City. The
22 Franchisee's obligations to remove its facilities under Title 16,
23
Section 16.01.8.6 shall be deferred for the Continuation Period. Within 30
24
25 days of the date the City passes the ordinance requiring continuation of
26 service, or 30 days after the effective date of the termination, whichever is
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LEG 004 (11/89)
I earlier, Franchisee shall provide the City with an inventory of all its property in
2 the City, and in addition, such other property as may be used and useful by it in
3 providing service within the City. Any property on the list that is essential to
4
providing service to other communities must be clearly identified. Property on
5
6 the list that is not within the City must be clearly identified, and its location
7 stated.
8 B. The City shall have an option to purchase the
9 Telecommunications System upon termination of the Franchise, whether
to
termination is, or is not, for cause. This option requires Franchisee to convey
I 1
12 the Telecommunications System or such portion thereof as the City may
13 choose to purchase free and clear of any encumbrances, along with (1) all
14 equipment, Facilities, tools, vehicles and real property interests necessary for
15 the Telecommunications System's operation, free and clear of any
16 encumbrances; (2) Customer lists and billing records- (3) all repair records,
17
maps, and equipment and Facilities records (including records identifying
18
19 equipment that is being used in the field, warranties with respect to such
20 equipment and the like); (4) and such other properties, contract rights or
21 intangibles as may be normally conveyed in order to permit a buyer to take
22 over and continue the operations of a seller with minimal disruption to
23 Customers; provided, that nothing herein shall require the City to accept or pay
24
for any contract that it does not wish to assume. Franchisee is not required to
25
26 convey portions of the Telecommunications System located outside the City
ord7483.doc-CDB/km -17-
LEG 004 (11/89)
I which are essential to Franchisee's operations in other communities, and which
2 were so identified on the inventory provided pursuant to Section 2.7.A. This
3
option also requires Franchisee to sell the Telecommunications System, or
4
5 such portion thereof as the City may choose to purchase at an equitable price,
6 if the Franchise is terminated for cause. If Franchisee's request for a Franchise
7 renewal is denied, the option requires Franchisee to sell the
8 Telecommunications System, or such portion thereof as the City may choose to
9 purchase, at fair market value, determined on the basis of the value of the
10
Telecommunications System as a going concern (taking into account such
I 1
12 property used and useful in providing service within the City that is not to be
13 conveyed) and with no value allocated to the Franchise itself.
14 C. The City may exercise its Section 2.7.13 option rights in the
15 following manner: the City will have up to 180 days after receiving the inventory
16
required by Section 2.7.A to notify Franchisee that it intends to exercise its
17
right to purchase the Telecommunications System or a portion of the
18
19 Telecommunications System. Within 90 days of the date the City notifies
20 Franchisee of its intent to exercise the option, or by such other time as the
21 parties may separately agree, the parties shall meet to establish a price that
22 comports with the requirements of Section 2.7.13. If the parties are unable to
23
agree to a price within 180 days after the City notifies Franchisee that the City
24
25 intends to exercise its purchase option, either party may require the price to be
26 set by appraisal by sending the other party notice that it wishes to have price
ord7483.doc-CDB/km -18-
LEG 004 (11/89)
I set by appraisal. Within 45 days of the date that notice is submitted, each
2 party may appoint one appraiser. If each party appoints an appraiser, the two
3 appraisers shall appoint a third appraiser- if only a single appraiser is
4
appointed (whether by mutual agreement or because of the failure of a party to
5
6 timely nominate an appraiser) that appraiser shall be the sole appraiser. The
7 appraiser or appraisers shall establish a price for the System or portion thereof
8 that the City desires to purchase in accordance with Section 2.7.13. This
9 appraisal determination shall be final and non-appealable. The City shall have
10 120 days after the decision of the appraisers to notify Franchisee that it wishes
11
to conclude the transaction- if it does not so notify the Franchisee, the option
12
13 shall be deemed terminated.
14 If the City gives the notice required by the preceding paragraph,
15 the parties will thereafter promptly sign all necessary documents required to
16 close the transaction; provided, however, that the City may make conclusion of
17
the transaction conditional upon any necessary voter approval of any bond
18
funding for acquisition of all or a part of the System and, if applicable, the
19
20 successful sale of the bonds.
21 The City and Franchisee will share equally the costs associated
22 with any appraiser that is jointly appointed (by them or by the appraisers each
23 selects)- the City will bear costs associated with any appraiser that it separately
24
appoints and Franchisee will bear costs associated with any appraiser that it
25
26 separately appoints.
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LEG 004 (11/89)
D. (1) Nothing in this section or in any other section of this
2 Franchise shall prevent the City's exercise of its rights under the Tacoma City
3
Charter. Included within the rights granted under Tacoma's Charter is the right
4
5 to purchase or condemn Franchisee's property within the Franchised Area at
6 any time, which right is expressly set out in Section 8.1 (c) of the Charter as
7 follows:
8 "to acquire by purchase or condemnation, for the use of the
9 City itself or its inhabitants, all of the property of the grantee
within the public streets, alleys, or places at a fair and just
10 value, which shall not include any valuation of the franchise,
right, or privilege, which shall thereupon be terminated."
11
12 (2) Likewise, nothing in this section or in any other
13 section of this Franchise shall be read to limit the City's right to acquire the
14 Telecommunications System through exercise of any right of eminent domain
15 under state law.
16
(3) Nothing in this section shall be read to limit the
17
18 City's right to acquire the Telecommunications System as a result of
19 abandonment.
20 E. In the event the City purchases, acquires, takes over, or
21 holds all or parts of the System, the City shall have the right without limitation
22 to assign, sell, lease, or otherwise transfer its interest in all or parts of the
23
System to any other Person or entity, including any other Franchisee of a
24
25 Telecommunications System, on whatever terms the City deems appropriate.
26
ord7483.doc-CDB/km -20-
LEG 004 (11/89)
1 2.8 Ri-ght to Require Removal of Property/Right To Remove Property.
2 A. Upon termination of the Franchise, Franchisee may be
3
required to remove its property from any Public Rights-of-Way, and restore
4
such Rights-of-Way to its same or better condition as existed just prior to such
5
6 removal, subject to any rights Franchisee may have to abandon property in
7 place, as set out in Title 16. If Franchisee fails to remove property that the City
8 requires it to remove, the City may perform the work and collect the cost
9 thereof from Franchisee. The actual cost thereof, including direct and indirect
10
administrative costs, shall be a lien upon all plant and property of Franchisee
11
12 effective upon filing of the lien with the Pierce County Auditor.
13 B. To the extent any portion of the System in the Public
14 Rights-of-Way or on any other public property is not removed by the Operator
15 within 12 months of the later of the end of the Franchise term or any
16 Continuation Period, the property will be deemed abandoned and shall become
17
the property of the City if the City wishes to own it.
18
19 C. Any order by the City issued pursuant to Section 2.8.A to
20 remove Installations shall be sent by registered or certified mail to Franchisee
21 not later than 24 months following the date of Franchise termination. Removal
22 shall be completed (except with respect to property that Franchisee is
23
permitted or required to abandon in place) not later than 12 months following
24
the date of notification to remove the Facilities.
25
26
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ord7483.doc
LEG 004 (11/89)
1 2.12 Survival of Terms. Upon the termination or forfeiture of the
2 Franchise, Franchisee shall no longer have the right to occupy the Public
3
Rights-of-Way for the purpose of providing Telecommunications Service.
4
However, Franchisee's obligations to the City (other than the obligation to
5
6 provide service to Customers) survive the expiration of these rights according
7 to their terms. By way of illustration and not limitation, Sections 2.7, 2.8, 2.1 0,
8 and 4 of this Franchise shall continue in effect as to Franchisee
9 notwithstanding any expiration, forfeiture, or revocation of the Franchise,
10
except to the extent that a City-approved Transfer, sale, or assignment of the
11
12 Telecommunications System is completed, and another entity has assumed full
13 and complete responsibility for the Telecommunications System or for the
14 relevant acts or omissions.
15 SECTION 3 - OPERATION IN STREETS AND RIGHTS-OF-WAY.
16
3.1 Rights-of-Way. Franchisee may, subject to the
Use of Public
17
terms of this Franchise and Title 16 and other applicable laws, construct,
18
19 operate and maintain an underground fiber optic Telecommunications System
20 in Public Rights-of-Way within the Franchise Area, to provide
21 Telecommunications Services. Without limiting the foregoing, Franchisee
22 expressly agrees that it will construct, operate and maintain its System in
23
compliance with the requirements of Title 16, including those governing the
24
25 placement of its Telecommunications System, and with other applicable City
26
ord7483.doc-CDB/krn -24-
LEG 004 (11/89)
codes; and will obtain and maintain all bonds and billable work orders required
2 by the same.
3 3.2 Construction, Operation, or Repair. Franchisee shall, in all
4
cases, comply with all lawful City ordinances and regulations now in effect or
5
6 hereinafter enacted regarding the acquisition of permits and such other items
7 as may be required by the City in connection with the construction, operation or
8 repair of the Telecommunications System.
9 Without limiting the foregoing, Franchisee agrees that it shall, in the
10
course of constructing, operating and maintaining its Telecommunications
I 1
12 System comply with the requirements of Title 16 and among other things:
13 A. (1) Franchisee shall, by a time specified by the City,
14 protect, support, temporarily disconnect, relocate, or remove any of its property
15 when required by the City by reason of traffic conditions; public safety- Public
16 Rights-of-Way construction- Public Rights-of-Way repair (including resurfacing
17
or widening); change of Public Rights-of-Way grade- construction, installation
18
19 or repair of sewers, drains, water pipes, power lines, signal lines, tracks, or any
20 other type of government-owned Communications System, public work, public
21 facility, or improvement or any government-owned utility- Public Rights-of-Way
22 vacation- or for any other purpose where the work involved would be aided by
23 the removal or relocation of the Telecommunications System. Collectively,
24
such matters are referred to below as the "public work."
25
26
\4 ord7483.doc-CDB/km -25-
LEG 004 (11/89)
1 (2) In the event of an emergency, or where the
2 Telecommunications System creates or is contributing to an imminent danger
3 to health, safety, or property, the City may protect, support, temporarily
4
disconnect, remove, or relocate any or all parts of the Telecommunications
5
6 System without prior notice, and charge the Franchisee for costs incurred.
7 (3) If any Person that is authorized to place Facilities in
8 the Rights-of-Way requests Franchisee to protect, support, temporarily
9 disconnect, remove, or relocate Franchisee's facilities to accommodate the
10
construction, operation, or repair of the facilities of such other Person, the
Franchisee shall, after 30 days' advance written notice, take action to effect the
12
13 necessary changes requested. Unless the matter is governed by a valid
14 contract or a state or federal law or regulation, or unless the Franchisee's
15 Telecommunications System was not properly installed, the reasonable cost of
16 the same shall be borne by the Person requesting the protection, support,
17
temporary disconnection, removal, or relocation and at no charge to the City,
18
19 even if the City makes the request for such action.
20 (4) Franchisee shall, on the request of any Person
21 holding a valid permit issued by a governmental authority, temporarily raise or
22 lower its wires to permit the moving of buildings or other objects. The expense
23 of such temporary removal or raising or lowering of wires shall be paid by the
24
Person requesting the same.
25
26
ord7483.doc-CDB/km -26-
LEG 004 (11/89)
1 B. The Franchisee's obligation to construct, operate, and
2 repair its Telecommunications System in compliance with all laws, ordinances,
3 departmental rules and regulations and practices affecting such System,
4
includes, by way of example, and not limitation, the obligation to construct,
5
6 operate and repair in accordance with zoning codes, safety codes and City
7 construction standards, including the most current version of the Standard
8 Specifications for Road, Bridge and Municipal Construction, as prepared by the
9 Washington State Department of Transportation (WSDOT) and the
10
Washington State Chapter of American Public Works Association (APWA)- the
11
most current version of the APWA Amendments to Division One, and the most
12
13 current version of the City of Tacoma Amendments thereto. In addition, the
14 construction, operation, and repair shall be performed in a manner consistent
15 with high industry standards. The Franchisee shall exercise reasonable care in
16 the performance of all its activities and shall use commonly accepted methods
17
and devices for preventing failures and accidents that are likely to cause
18
19 damage, injury, or nuisance to the public or to property.
20 C. Franchisee's construction, operation, or repair of its
21 Telecommunications System shall not commence until all required permits
22 have been properly filed for and obtained from the proper City officials and all
23 required permits and associated fees paid. In any permit so issued, the City
24
may impose, as a condition of the granting of the permit, such conditions and
25
26 regulations as may be necessary to the management of the Public
ord7483.doc-CDB/km -27-
LEG 004 (11/89)
Rights-of-Way, including, by way of example and not limitation, for the purpose
2 of protecting any structures in the Public Rights-of-Way, maintaining proper
3
distance from other utilities, for the proper restoration of such Public
4
5 Rights-of-Way and structures, and for the protection of the City and the public
6 and the continuity of pedestrian and vehicular traffic.
7 D. Franchisee must follow City-established requirements for
8 placement of Facilities in Public Rights-of-Way, including the specific location
9
of Facilities in the Public Rights-of-Way, and must in any event install Facilities
10
in a manner that minimizes interference with the use of the Public
I 1
12 Rights-of-Way by others, including others that may be installing
13 Communications Facilities. The City may require that Facilities be installed at a
14 particular time, at a specific place, or in a particular manner as a condition of
15 access to a particular Public Rights-of-Way; may deny access if Franchisee is
16
not willing to comply with the City's requirements; and may remove, or require
1 7
18 removal of, any Facility that is not installed in compliance with the requirements
19 established by the City, or which is installed without prior City approval of the
20 time, place, or manner of installation and charge the Franchisee for all the
21 costs associated with removal- and may require Franchisee to cooperate with
22 others to minimize adverse impacts on the Public Rights-of-Way through joint
23
trenching and other arrangements.
24
25 E. Franchisee agrees that, as a condition of a permit for
26 installation of conduit, the City may require it to install conduit in excess of its
ord7483.doc-CDB/km -28-
LEG 004 (11/89)
A
I reasonably foreseeable requirements for the purpose of accommodating the
2 City and/or other Franchisees and Licensees where the City Manager
3 determines it is appropriate to do so to minimize disruption of public passage or
4
infrastructure, to forestall or relieve exhaustion of Right-of-Way capacity, or to
5
6 protect environmentally sensitive areas.
7 F. To the extent possible, Franchisee shall use conduit
8 existing at the time of permitting in installing its System.
9 G. Whenever all existing utilities are located underground in
to
an area in the City, the Franchisee must also locate its Telecommunication
System underground, including Telecommunication System Facilities, such as
12
13 drops, which cross private property.
14 1 . Whenever the owners of poles locate or relocate
15 underground within an area of the City, the Franchisee shall concurrently
16 relocate its Facilities underground.
17
2. Whenever an electric utility opens a trench for the
18
19 purpose of installing or relocating Facilities, the Franchisee shall concurrently
20 relocate its Facilities underground and, if it uses the same trench, share the
21 cost.
22 3. The City Manager may, for good cause shown,
23 exempt a particular portion of the Telecommunication System from the
24
obligation to locate or relocate Facilities underground, where relocation is
25
impractical, or where the interest in protecting against visual blight can be
26
ord7483.doc-CDB/km -29-
LEG 004 (11/89)
protected in another manner. Nothing in this Section 3.2.G prevents the City
2 from ordering the Franchisee to locate or relocate its Telecommunication
3
System underground under other provisions of the Tacoma Municipal Code, it
4
5 being the intent that the number and extent of Overhead Facilities and the
visual pollution resulting therefrom will, over time, be reduced and eventually,
6
7 to the extent feasible, eliminated.
8 H. The Franchisee shall participate in conversion to
9 underground Local Improvement Districts ("LlDs"). The Franchisee, at no cost
10
to the City or abutting property owners, shall share fairly with other utilities the
I 1
12 cost of undergrounding when done through the LID process.
13 1 . As part of its obligations under the Tacoma
14 Municipal Code, the Franchisee shall provide the preliminary cost estimate,
15 facility conversion designs, and final cost estimates to any LID project
16
coordinator in a timely manner. At the request of an LID project coordinator,
17
the Franchisee shall perform underground construction and movement of
18
19 Customer connections underground (overhead reclaim), in coordination with
20 the undergrounding services provided by other LID utilities, at no cost to the
21 City or abutting property owners.
22 1. Franchisee shall promptly repair any and all Public
23
Rights-of-Way, public property, or private property that is disturbed or
24
25 damaged during the construction, operation or repair of its Telecommunications
26 System. Public property and Public Rights-of-Way must be restored to the
ord7483.doc-CDB/km -30-
LEG 004 (11/89)
I satisfaction of the City or to a condition as good or better than before the
2 disturbance or damage occurred.
3
J. No tree trimming shall be performed without the permission
4
of the City and other affected authorities, and any tree trimming must be
5
6 performed in strict accordance with the City Code. Even if tree trimming is
7 authorized by the City, Franchisee is liable for any damage it causes during the
8 course of tree trimming.
9 K. In any dispute over the adequacy of a restoration relative
10
to this section, the Tacoma Department of Public Works Director shall in
11
12 his/her sole discretion, make the final determination.
13 L. Franchisee shall not remove any underground Facilities
14 except as hereinafter provided.
15 (1) Franchisee shall not remove any underground
16
Facilities which require trenching or other opening of the Rights-of-Way along
17
the extension of the Facilities to be removed without the express permission of
18
19 the City. Franchisee must request permission from the City to remove the
20 Facilities at least 30 days in advance of the date Franchisee proposes to begin
21 removal.
22 (2) Franchisee shall remove such underground
23
Facilities as the City orders it to remove; provided, that the City may not order
24
removal where such removal is primarily to give economic benefit or advantage
25
26 to a competing provider of Telecommunications Service.
ord7483.doc-CDB/km -31-
LEG 004 (11/89)
(3) Where trenching or other opening of the
2 Rights-of-Way along the extension of Facilities to be removed is required,
3
Franchisee must post bonds as the City may require to ensure that the property
4
is promptly removed, with minimum disruption. Franchisee must restore the
5
6 affected property to as good or better condition than existed just before
7 removal; and Franchisee must compensate those whose property it damages
8 for the damage.
9
(4) Subject to the City's rights to purchase the
10
Telecommunications System, Franchisee may voluntarily remove any
I 1
12 underground Facilities from the streets which have been installed in such a
13 manner that they can be removed without trenching or other opening of the
14 Rights-of-Way.
15 3.3 Right To Inspect and Order Corrections. The City may inspect
16
the Telecommunications System at any time reasonable under the
17
18 circumstances to ensure compliance with this Franchise and applicable law,
19 including to ensure that the Telecommunications System of Franchisee is
20 constructed and maintained in a safe condition. If an unsafe condition is found
21 to exist, the City, in addition to taking any other action permitted under
22 applicable law, may order Franchisee, in writing, to make the necessary repairs
23
and alterations specified therein forthwith to correct the unsafe condition on a
24
25 time table established by the City which is reasonable in light of the unsafe
26 condition. The City has the right to correct, inspect, administer, and repair the
ord7483.doc-CDB/km -32-
LEG 004 (11/89)
I shall be responsible for all direct and actual costs related to such action,
2 including, but not limited to, legal and administrative costs,
3
B. Commencing an action at law for monetary damages;
4
5 C. Commencing an action for equitable or other relief;
6 D. Declaring the Franchise to be revoked;
7 E. Seeking specific performance of any provision, which
8 reasonably lends itself to such remedy.
9 In determining which remedy or remedies for Franchisee's violation are
10
appropriate, the City may take into consideration the nature and extent of the
I 1
12 violation, the remedy needed to prevent such violations in the future, whether
13 Franchisee has a history of previous violations of the same or similar kind, and
14 such other considerations as are appropriate under the circumstances.
15 Remedies are cumulative; the exercise of one shall not foreclose the exercise
16
of others.
17
4.3 Procedure for Remedying Franchise Violations. Before imposing
18
19 liquidated damages, or drawing upon the performance bond, letter of credit,
20 security fund, or any other security set out in Section 6, the City shall follow the
21 procedure below.
22 A. Notice of Violation. In the event that the City believes that
23
Franchisee has not complied with the terms of this Franchise, the City shall
24
25 notify Franchisee in writing, by certified mail, of the nature of the alleged
26 noncompliance.
ord7483.doc-CDB/km -34-
LEG 004 (11/89)
1 B. Franchisee's Right to Cure or Respond. Except as
2 provided in Section 4.3.D., Franchisee shall have 30 days from the receipt of
3 notice described above to (a) respond to the City contesting the assertion of
4
noncompliance, or (b) to cure such default or, in the event that by the nature of
5
6 the default such default cannot be cured within the 30-day period, initiate steps
7 to remedy such default as promptly as possible. The duty to cure includes the
8 duty to cure all harms caused by the acts or omissions of Franchisee. At the
9 end of the 30-day period, Franchisee shall notify the City in writing of the steps
10
it has taken to cure the default, if any; if the cure is not complete, the reason it
11
12 is not complete and the projected date for completion; and if the default is
13 disputed, the complete basis for that contention.
14 C. Public Hearing. The City may schedule a public hearing to
15 investigate any alleged default. The City shall give Franchisee 20 calendar
16 days' notice of the time and place of the hearing and provide Franchisee with
17
an opportunity to be heard.
18
19 D. Action After Hearbo. If the City determines after such
20 hearing that the Franchisee did not cure, or initiate steps to cure satisfactory to
21 the City, after the notice required by Section 4.3.A. was provided, then the City
22 may draw upon any performance bond, letter of credit, security fund or other
23 security, including requiring performance under the guarantee; and impose
24
liquidated damages. However, notice and opportunity to cure are not required
25
26 for repeat violations, or for a failure to correct a default where Franchisee knew
ord7483.doc-CDB/km -35-
LEG 004 (11/89)
I or should have known it was in default; in such cases, the performance bond,
2 security fund, letter of credit or other security may be drawn upon, the
3 guarantor required to perform and liquidated damages imposed after the
4
hearing required by Section 4.3.C.
5
6 E. Liquidated Damage Amounts. Because Franchisee's
7 failure to comply with the provisions of this Franchise will result in injury to the
8 City, and because it may be difficult to estimate the extent of each such injury,
9 Franchisee and the City agree to the following liquidated damages, which
10 provisions represent the best estimate of the damages resulting from injuries of
I 1
specific types. The amounts of the liquidated damages set forth in this
12
13 Franchise are in 1999 dollars and shall be increased each year by the increase
14 in the U. S. Department of Labor, Bureau of Labor Statistics, Consumer Price
15 Index for Pacific Cities and U. S. City Average, Seattle, Urban Wage Earners
16 and Clerical Workers Second Half Yearly Report. The amount of liquidated
17
damages for all material violations of the Franchise Agreement for which actual
18
damages may not be ascertainable shall be: $500 per day for each violation for
19
20 each day the violation continues. It is provided, however, that the City shall
21 allow the Franchisee a minimum of 30 days after notice to the Franchisee of
22 such neglect, failure, or refusal to comply within which to meet compliance or
23 correct performance, prior to the assessment of any liquidated damages.
24
4.4 Failure to Enforce. Franchisee shall not be relieved of any of its
25
26 obligations to comply promptly with any provision of this Franchise by reason of
ord7483.doc-CDB/km -36-
LEG 004 (11/89)
J@"R@@
I any failure of the City to enforce prompt compliance, and the City's failure to
2 enforce shall not constitute a waiver of rights or acquiescence in Franchisee's
3 conduct.
4
4.5 Force Ma*eure. The Franchisee shall not be deemed in default
5
6 with provisions of its Franchise where performance was rendered impossible by
7 war or riots, civil disturbances, floods, or other natural catastrophes beyond the
8 Franchisee's control; the unforeseeable unavailability of labor or materials- or
9 power outages exceeding back-up power supplies. The acts or omissions of
10
Affiliates are not beyond the Franchisee's control, and the knowledge of
I 1
12 Affiliates shall be imputed to Franchisee. The Franchise shall not be revoked
13 or the Franchisee penalized for such noncompliance, provided that the
14 Franchisee takes immediate and diligent steps to bring itself back into
15 compliance and to comply as soon as possible under the circumstances with its
16 Franchise without unduly endangering the health, safety, and integrity of the
17
Franchisee's employees or property, or the health, safety, and integrity of the
18
19 public, Public Rights-of-Way, public property, or private property.
20 4.6 Alternative Remedies. No provision of this Franchise shall be
21 deemed to bar the right of the City to seek or obtain judicial relief from a
22 violation of any provision of the Ordinance or any rule, regulation, requirement
23 or directive promulgated thereunder. Neither the existence of other remedies
24
identified in this Franchise nor the exercise thereof shall be deemed to bar or
25
26 otherwise limit the right of the City to recover monetary damages for such
1@_
ord7483.doc-CDB/km -37-
LEG 004 (11/89)
1 violation by Franchisee, or to seek and obtain judicial enforcement of
2 Franchisee's obligations by means of specific performance, injunctive relief or
3
mandate, or any other judicial remedy at law or in equity.
4
4.7 Compliance with the Laws. Franchisee shall comply with all
5
6 federal and state laws and regulations, including regulations of any
7 administrative agency thereof, as well as all City ordinances, resolutions, rules
8 and regulations heretofore or hereafter adopted or established during the entire
9 term of the Franchise. Provided that, nothing herein shall prevent Franchisee
10
from challenging a provision of laws that applies only to it as an impairment of
I 1
12 contract. Nothing in this Franchise shall limit the City's right of eminent domain
1 3 under state law. Nothing in this Franchise shall be deemed to waive the
14 requirements of any lawful code or resolution of the City regarding permits,
15 fees to be paid or manner of construction.
16 SECTION 5 - REPORTING REQUIREMENTS.
17
5.1 Quarterly Reports. Within 30 days after the end of each of
18
19 Franchisee's fiscal quarters, Franchisee shall submit a written report to the
20 City, which shall contain a listing of all categories of Gross Revenues earned
21 and Gross Receipts collected by Franchisee for its business activities as
22 identified in Section 2.1, which are activities specifically taxable as a telephone
23
business under Tacoma Municipal Code Chapter 6.66. Said written report
24
shall be in sufficient detail and with sufficient explanation, to enable the City to
25
26 understand the report and to verify the accuracy of the report. In addition,
ord7483.doc-CDB/km -38-
LEG 004 (11/89)
" @P, -01
Italian
Franchisees shall provide such other quarterly reports as may be required by
2 Title 16.
3
5.2 Annual Report. No later than 120 days following the end of
4
5 Franchisee's fiscal year each year, Franchisee shall present a written report to
6 the City which shall include:
7 A. Audited financial statements for (1) Franchisee and (2) the
8 Affiliate which signed the guarantee for the previous fiscal year, and a financial
9 statement for Franchisee that includes Gross Revenues from all sources, gross
10
Subscriber revenues from each category of service, as well as an income
11
12 statement and a balance sheet. In the event any audited financial report has
13 not been published by the date due under this section, then the audited
14 financial report shall be deemed presented on time if presented within 30 days
15 after publication.
16
All financial reports required under this section shall be presented
17
to the City accompanied by such notes and explanations as are required to
18
19 fully understand the reports. Such notes and explanations shall include, but
20 not be limited to, an explanation of any and all deductions made from Gross
21 Revenues in order to arrive at Gross Receipts for the calculation of Fees or
22 taxes to be paid to the City.
23
B. A summary of the previous year's activities for the
24
25 Franchise Area, including, but not limited to, the total number of Customers,
26
It ft
1%%W
-1@ ord7483.doc-CDB/km -39-
LEG 004 (11/89)
404270-5,111
1 miles of underground Facilities, any services added or dropped, and any
2 technological changes occurring in the system.
3
C. Plans for the future.
4
D. Such other information as is required by Title 16.
5
6 5.3 Additional Reports. Franchisee shall prepare and furnish to the
7 City, upon request, at the times and in the form prescribed by the City, such
8 additional reports with respect to Franchisee's operation, affairs, transactions,
9 or property, as may be reasonably necessary and appropriate to ensure
10
compliance with the material provisions of this Franchise, or to permit the
11
12 performance of any of the rights, functions or duties of the City or such other
13 regulatory entity in connection with the Franchise.
14 5.4 Preservation of Confidential Information. Trade secrets and
15 confidential information designated as such by Franchisee shall be subject to
16
protection as provided in Title 16.
17
SECTION 6 - COMPENSATION AND FINANCIAL PROVISIONS.
18
19 6.1 Fees@Taxes.
20 A. State Prohibition of Franchise Fee. The parties understand
21 that RCW 35.21.860 currently prohibits a municipal franchise fee. Franchisee
22 agrees that if this statutory prohibition is removed, the City may assess a
23
reasonable franchise fee. The parties agree that a reasonable amount would
24
25 be 6 percent of Franchisee's Gross Receipts from its business activities paid
26 monthly in the City of Tacoma, which Gross Receipts include the amount of tax
ord7483.doc-CDB/km -40-
LEG 004 (11/89)
imposed by the City. The parties agree that this Section 6.1 (A) herein does not
2 limit the right of the Franchisee to challenge the franchise fee pursuant to
3
47 USC ? 253.
4
B. Franchisee Sub*ect to the City Telephone Business Tax.
5
6 Franchisee agrees that all of its activities in the City of Tacoma, as identified in
7 Section 2. 1, are activities specifically taxable as a telephone business under
8 Tacoma Municipal Code Chapter 6.66, and are taxable at the rate specified in
9 Tacoma Municipal Code Chapter 6.66 now in effect or as amended, which at
10
the time of the execution of this Franchise agreement is 6 percent of the
11
12 Franchisee's Gross Receipts. It is agreed that the amount of Gross Receipts to
13 be taxed will include the amount of tax imposed on Franchisee by City
14 ordinance. This Franchise does not limit the City's power of taxation.
15 C. Franchisee Obligated to Pay Administrative Costs. In
16
accord with RCW 35.21.860 as presently effective, as later amended,
17
18 Franchisee must pay the City an amount sufficient to recover administration
19 expenses incurred in receiving and approving this Franchise, including, but not
20 limited to, the reasonable costs of outside consultants retained by the City to
21 assist in the City's consideration and processing of this Franchise application.
22 The first $5,000 of said expenses will be covered by the $5,000 application fee
23
deposited with the City. Franchisee will also pay the reasonable costs of
24
25 enforcing, or, as necessary, reviewing, the provisions of this Franchise as well as
26 costs involved with the modification, amendment, renewal, or Transfer of this
ord7483.doc-CDB/km -41-
LEG 004 (11/89)
I Franchise, as ordered by the General Services Director, whether such costs result
2 from accrued in-house staff time, or out-of-pocket expenses or administrative
3 costs, as well as expenses of retaining independent technical, legal, or financial
4
consultants or advisors, or whether relating to costs incurred due to initial System
5
6 development or to future System expansion. The amount of payment to be made
7 by Franchisee to cover these administrative costs is an amount determined to be
8 reasonable by the General Services Director. Such obligation further includes
9 municipal fees related to receiving and approving permits or licenses, inspecting
10 plans and construction, or relating to the preparation of a detailed statement
I 1
pursuant to Chapter 43.21 C RCW. Said fees must be paid within 30 days of
12
13 receipt of the City's billing therefor.
14 D. Manner of Payment: Audit. Franchisee shall make all required
15 fee payments in the form, intervals and manner requested by the City Treasurer,
16 and furnish him/her any information related to his/her revenue collection functions
17
reasonably requested. In case of audit, the City Treasurer may require Franchisee
18
to furnish a verified statement of compliance with Franchisee's obligations or in
19
20 response to any questions. Said certificate may be required from an independent,
21 certified public accountant, at Franchisee's expense. All audits will take place on
22 Franchisee's premises or offices furnished by Franchisee, which shall be a location
23 within the City of Tacoma or other mutually agreeable place; however, the
24
Franchisee must agree to pay the associated costs. Franchisee agrees, upon
25
26 request of the City Treasurer, to provide copies of all documents filed with any
ord7483.doc-CDB/km -42- \A01
LEG 004 (11/89)
I federal, state, or local regulatory agency, to be mailed to the City Treasurer on the
2 same day as filed, postage prepaid, affecting any of Franchisee's Facilities or
3 business operations in the City of Tacoma.
4
E. No Other Deductions. Subject to federal law and regulation,
5
6 no deductions including current or previously paid fees shall be subtracted
7 from the Gross Revenue amount upon which payments are calculated and due
8 for any period. Nor shall copyright fees or other license fees paid by
9 Franchisee be subtracted from Gross Revenues for purposes of calculating
10
payments.
F. Late Payments. Any fees owing which remain unpaid more
12
13 than 10 days after the dates specified herein shall be delinquent and shall
14 thereafter accrue interest at 12 percent per annum or 2 percent above highest
15 prime lending rate published daily in the Wall Street Journal, during the period
16 the payment is due but unpaid, whichever is greater.
17
G. Period of Limitations. The period of limitation for recovery of
18
19 any fee payable hereunder shall be six years from the date on which payment
20 by Franchisee is due, subject to tolling as provided as a matter of law or equity.
21 Unless within six years from and after the due date for a particular payment, the
22 City makes written request to review Franchisee's records with respect to such
23 fee payment (either individually or as part of a broader request) recovery shall
24
be barred with respect to such payment and the Franchising Authority shall be
25
26
ord7483.doc-CDB/km -43-
LEG 004 (11/89@
K' !, " - M., @ @ I
I estopped from asserting any claims whatsoever against Franchisee relating to
2 any alleged deficiencies in that particular payment.
3
6.2 Auditing and Financial Records. Franchisee shall manage all of
4
5 its operations in accordance with a policy of keeping books and records open
6 and accessible to the City. Without limiting its obligations under this
7 Franchise, Franchisee agrees that it will collect and make available books and
8 records for inspection and copying by the City in accordance with Title 16.
9
Franchisee shall be responsible for collecting the information and producing it.
10
Books and records shall be produced to the City at the Tacoma Municipal
11
12 Building, or such other location as the parties may agree. Notwithstanding any
13 provision of Title 16 or this Franchise, if documents are too voluminous or for
14 security reasons cannot be produced at the Tacoma Municipal Building or
15 mutually agreeable location within the City, then the Franchisee may produce
16
the material at another central location, provided it also agrees to pay the
17
18 additional reasonable costs incurred by the City in reviewing the materials.
19 Franchisee shall take all steps required, if any, to ensure that it is able to
20 provide the City all information which must be provided or may be requested
21 under Title 16 or this Franchise, including by providing appropriate Subscriber
22
privacy notices. Nothing in this section shall be read to require a Franchisee to
23
violate 47 U.S.C. ? 551. Franchisee shall be responsible for redacting any
24
25 data that federal law prevents it from providing to the City. Records shall be
26 kept for at least six years. In addition to maintaining all records as required by
ord7483.doc-CDB/km -44-
LEG 004 (11/89)
I Title 16, Franchisee shall maintain records sufficient to show its compliance
2 with the requirements of this Franchise, and shall produce those records within
3
30 days of a City request.
4
Franchisee agrees to meet with a representative of the City upon
5
6 request to review its methodology of record-keeping, financial reporting,
7 computing fee obligations, and other procedures the understanding of which
8 the City deems necessary for understanding the meaning of reports and
9 records.
10
The City agrees to request access to only those books and records, in
11
12 exercising its rights under this section, which it deems reasonably necessary as
13 part of a bona fide exercise of its authority over the Telecommunications
14 System under this Franchise, Title 16 or other applicable law. The City further
15 agrees that it will withhold from public disclosure those books and records
16 made available to it pursuant to this section 6.2, but only to the extent that the
17
City believes that it has the discretion to do so under state law.
18
19 6.3 Performance Bond. At the same time it provides its Franchise
20 acceptance to the City, Franchisee shall provide a performance bond to ensure
21 the faithful performance of its responsibilities under this Franchise and
22 applicable law, including by way of example and not limitation, its obligations to
23
relocate and remove its facilities- and to restore City Rights-of-Way and other
24
property. The initial amount of the performance bond shall be $100,000. The
25
26 amount of the bond may be changed from time to time to reflect changed risks
\I?r ord7483.doc-CDB/km -45-
LEG 004 (11/89) 1
I to the City or to the public. The Franchisee may be required to obtain additional
2 bonds in accordance with the City's ordinary practices. The bond shall be in a
3 form and with a surety acceptable to the City's Risk Manager and in a form
4
acceptable to the City Attorney. Franchisee shall pay all premiums or costs
5
6 associated with maintaining the bond, and shall keep the same in full force and
7 effect at all times.
8 6.4 Indemnification by Franchisee.
9 A. Franchisee, by accepting this Franchise, agrees to release
10
the City from and against any and all liability and responsibility in or arising out
11
12 of the construction, operation or maintenance of the Telecommunications
13 System, and, without limiting the provisions of Section 7.4, agrees not to sue or
14 seek any money or damages from City in connection with the above mentioned
15 matters .
16 B. Franchisee agrees to indemnify and hold harmless the
17
City, its trustees, elected and appointed officers, agents, and employees, from
18
19 and against any and all claims, demands, or causes of action of whatsoever
20 kind or nature, and the resulting losses, costs, expenses, reasonable attorneys'
21 fees, liabilities, damages, orders, judgments, or decrees, sustained by the City
22 or any third party arising out of, or by reason of, or resulting from or of the acts,
23
errors, or omissions of the Franchisee, or its agents, independent contractors
24
25 or employees related to or in any way arising out of the construction, operation
26 or repair of the Telecommunications System. Franchisee waives immunity
ord7483.doc-CDB/km -46-
LEG 004 (11/89)
AIPM
1 under Title 51 RCW and affirms that the City and Franchisee have specifically
2 negotiated this provision, as required by RCW 4.24.115, to the extent it may
3 apply-
4
C. Franchisee agrees that the covenants and representations
5
6 relating to the indemnity provided in A-B above shall survive the term of its
7 Franchise and continue in full force and effect as to the Franchisee's
8 responsibility to indemnify.
9 6.5 Franchisee Insurance.
10
A. Franchisee shall maintain, throughout the term of the
11
12 Franchise, adequate insurance to protect the City, its trustees, elected and
13 appointed officers, agents, and employees against claims and damages that
14 may arise as a result of the construction, operation or repair of the
15 Telecommunications System. This obligation shall require Franchisee to
16 maintain insurance at least in the following amounts:
17
(1) COMPREHENSIVE GENERAL LIABILITY insurance
18
19 to cover liability bodily injury and property damage. Exposures to be covered
20 are: premises, operations, products/completed operations, and certain
21 contracts. Coverage must be written on an occurrence basis, with the following
22 limits of liability:
23 (a) Bodily In4ury
24
1. Each Occurrence $1,000,000
25
26 2. Annual Aggregate $ 3,000,000
ord7483.doc-CDB/km -47-
LEG 004 (11/89)
I (b) Property Damage
2 1. Each Occurrence $1,000,000
3 2. Annual Aggregate $3,000,000
4
(c) Personal Injury
5
6 Annual Aggregate $ 3,000,000
7 (2) COMPLETED OPERATIONS AND PRODUCTS
8 LIABILITY shall be maintained for two years after the termination of the
9 Franchise or License (in the case of the Communications System owner or
10 Operator) or completion of the work for the Communications System owner or
1 1
Operator (in the case of a contractor or subcontractor).
12
13 (3) PROPERTY DAMAGE LIABILITY INSURANCE
14 shall include Coverage for the following hazards: X - explosion, C - Collapse,
15 U - underground.
16 (4) WORKERS' COMPENSATION insurance shall be
17
maintained during the life of this contract to comply with statutory limits for all
18
19 employees, and in the case any work is sublet, Franchisee require its
20 contractors and subcontractors similarly to provide workers' compensation
21 insurance for all the latter's employees unless such employees are covered by
22 the protection afforded by the Franchisee. Franchisee shall also maintain
23 during the life of this policy employers liability insurance. The following
24
minimum limits must be maintained:
25
26
ord7483.doc-CDB/km -48-
LEG 004111/89)
I (a) Workers' Compensation Statutory
2 (b) Employer's Liability $ 500,000
3 per occurrence
4 (5) COMPREHENSIVE AUTO LIABILITY Coverage
5 shall include owned, hired, and non-owned vehicles.
6 (a) Bodily Ineury
7
1. Each Occurrence $ 1,000,000
8
9 2. Annual Aggregate $ 3,000,000
(b) Property Damage
10
I I 1. Each Occurrence $ 1,000,000
12 2. Annual Aggregate $ 3,000,000.
13
B. The required insurance must be obtained and maintained
14
for the entire period the Franchisee has facilities in the Public Rights-of-Way,
15
16 and for six years thereafter. If the Franchisee, its contractors, or
17 subcontractors do not have the required insurance, the City may order such
18 entities to stop operations until the insurance is obtained and approved.
19 C. Certificates of insurance, reflecting evidence of the
20
required insurance and naming the City as an additional insured on the
21
22 GENERAL LIABILITY and AUTOMOTIVE policies described above, shall be
23 filed with the City's Risk Manager. The certificate shall be filed with the
24 acceptance of the Franchise, and annually thereafter, and as provided in E
25 below.
26
ord7483.doc-CDB/km -49-
LEG 004 (11/89)
/A
I D. The certificates shall contain a provision that coverages
2 afforded under these policies will not be canceled until at least 30 days' prior
3 written notice has been given to the City. Policies shall be issued by
4
companies authorized to do business under the laws of the State of
5
Washington. Financial Ratings must be no less than "A" in the latest edition of
6
7 "Bests Key Rating Guide", published by A.M. Best Guide.
8 E. In the event that the insurance certificate provided
9 indicates that the insurance shall terminate or lapse during the period of the
10 Franchise then in that event, the Franchisee shall furnish, at least 30 days prior
11
to the expiration of the date of such insurance, a renewed certificate of
12
13 insurance as proof that equal and like coverage has been or will be obtained
14 prior to any such lapse or termination during the balance of the period of the
15 Franchise.
16 F. The City shall reserve the right to require any other
17
insurance coverage it deems necessary during the term of the Franchise,
18
depending upon the exposures.
19
20 6.6 Security Fund. Franchisee shall establish a cash security fund or
21 provide the City an irrevocable letter of credit in the amount of $50,000, to
22 secure the payment of fees owed, to secure any other performance promised in
23 this Franchise, and to pay any taxes, fees or liens owed to the City. The letter
24 of credit shall be in a form and with an institution acceptable to the City's
25
Director of Finance and in a form acceptable to the City Attorney. Should the
26
ord7483.doc-CDB/km -50-
LEG 004 (11/89)
I City draw upon the cash security fund or letter of credit, it shall promptly notify
2 the Franchisee, and the Franchisee shall promptly restore the fund or the letter
3 of credit to the full required amount. The City may from time to time change the
4
amount of the required security fund/letter of credit to reflect changes in the
5
6 risks to the City and to the public, including delinquencies in taxes or other
7 payments to the City.
8 SECTION 7 - MISCELLANEOUS PROVISIONS.
9 7.1 Posting and Publication. Franchisee shall assume the cost of
10
posting and publication of this Franchise as such posting and publication is
11
required by law and such is payable upon Franchisee's filing of acceptance of
12
13 the Franchise.
14 7.2 Guarantee of Performance. Franchisee acknowledges that it
15 enters into the Franchise voluntarily in order to secure and in consideration of
16 the grant from the City of a ten-year Franchise. Performance pursuant to the
17
terms and conditions of this Franchise agreement is guaranteed by Franchisee.
18
7.3 Governing Law and Venue. The Franchise shall be governed by
19
20 and construed in accordance with the laws of the State of Washington, and
21 Franchisee agrees that any action brought relative to enforcement of this
22 Franchise shall be initiated in the Superior Court of Pierce County, and shall
23 not be removed to a federal court.
24
7.4 No Recourse. Without limiting such immunities as the City or
25
26 other Persons may have under applicable law, Franchisee shall have no
ord7483.doc-CDB/km -51-
LEG 004 (11/89)
1 monetary recourse whatsoever against the City or its officials, boards,
2 commissions, agents or employees for any loss, costs, expense or damage
3
arising out of any provision or requirement of Title 16 or because of the
4
enforcement of Title 16 or the City's exercise of its authority pursuant to
5
6 Title 16, this Franchise or other applicable law.
7 7.5 Notice. Unless expressly otherwise agreed between the parties,
8 every notice, billing, or response required by this Franchise to be served upon
9 the City or Franchisee shall be in writing, and shall be deemed to have been
10
duly given to the required party five business days after having been posted in
I 1
12 a properly sealed and correctly addressed envelope when hand delivered or
13 sent by mail, postage prepaid. The notices or responses to the City shall be
14 addressed as follows:
15 City of Tacoma
16 Tacoma Municipal Building
747 Market St., Suite 208
17 Tacoma, WA 98402-3768
Attn-. General Services Director
18
19 The notices or responses to Franchisee shall be addressed as follows:
20 Level 3 Communications, LLC
1025 Eldorado Boulevard
21 Broomfield, Colorado, 80021
Attn- Director, Network Development
22 General Counsel
Attn.
23
24 The City and Franchisee may designate such other address from time to
25 time by giving written notice to the other, but notice cannot be required to more
26
ord7483.doc-CDB/km -52-
LEG 004 (11/89)
1 than one address, and the address must be within the City, except by mutual
2 agreement.
3 7.6 Execution. Franchisee shall execute and return to the City three
4
original countersigned copies of this Ordinance and a signed acceptance of the
5
6 Franchise granted hereunder within 30 days after the date of passage of the
7 Ordinance by the City Council. The acceptance shall be in a form acceptable
8 to the City Attorney and in accepting the Franchise, Franchisee warrants that it
9 has carefully read the terms and conditions of this Franchise and
10 unconditionally accepts all of the terms and conditions of this Franchise and
I I
agrees to abide by the same and acknowledges that it has relied upon its own
12
13 investigation of all relevant facts, that it has had the assistance of counsel, that
14 it was not induced to accept a Franchise, that this Franchise represents the
15 entire agreement between Franchisee and the City, and that Franchisee
16 accepts all risks related to the interpretation of this Franchise. The
17
countersigned Ordinance and acceptance shall be returned to the City
18
accompanied by- evidence of insurance; a payment for publication costs;
19
20 billable work order deposit, and security deposit (or the letter of credit). The
21 Franchise rights granted herein shall not become effective until all of the
22 foregoing are received in acceptable form. In the event Franchisee fails to
23 submit the countersigned Ordinance and acceptance as provided for herein, or
24
fails to provide the required accompanying documents and payments, within
25
26
N\ P ord7483.doc-CDB/km -53-
LEG 004 (11/89)
I.M.-VIII
1 the time limits set forth in this section, the grant of the Franchise shall be null
2 and void.
3
4 JUL 20 1999
Passed
5
6
7 Mayor
8 smwc@d-
9 Attest., C@ C
10
11 Approved as to form and legality
12
13 Assistant City Attorney
14
15
16
17
18
19
20
21
22
23
24
25
26
ord7483.doc-CDB/km -54-
LEG 004 (11/89)
ACCEPTANCE OF CITY FRANCHISE
2 Ordinance No. @ @ V& -'>-, effective 4x-@@ -.91, 199,7
1, L. se-4*,o@o , am the &ex-roa- of
4 LeAxa- 3 Cam%muosv@@,LLc, and am the authorized representative to accept
the above-referenced City franchise ordinance on behalf of
5 LGVL-L 3 U.(- -
6 1 certify that this franchise and all terms and conditions thereof are
7 accepted by Lgurt-S Csumu,4%cwTio,4, without qualification or
reservation.
8
DATED this day of 999.
9
1 0
11 By_
"'Its SeN%m- biaeLT&L
12 Witnes 6@@
13 V
14
15
16
17
18
19
20
21
22
23
24
25
26
ord7483.doc-CDB/km -55-
LEG 004 (11/89)
lal-, P-WI,
ACCEPTANCE OF CITY FRANCHISE
2 Ordinance No. effective 1199
3
1 am the of
4 and am the authorized representative to accept
5 the above-referenced City franchise ordinance on behalf of
6
1 certify that this franchise and all terms and conditions thereof are
7 accepted by without qualification or
reservation.
8
9 DATED this day of 1999.
10
I I By
12 Its
13 Witness:
14
15
16
17
18
19
20
21
22
23
24
25
26
ord7483.doc-CDB/km -55-
LEG 004 (11/89)
CITY CLERK USE
REQUEST FOR O"INANCE Request
.mod0d
OR RESOLUTION Ordinanoe
Resolution
1. DATE: JUNE 7, 1999
2. REQUESTING DEPARTMENT/DIVISION/PROGRAM 3. CONTACT PERSON(for questions): PHONETXTENSION
General Services/Communications Division Carol Mathewson, Communications Manager 594-7997
4. PREPARATION OF AN ORDINANCE IS REQUESTED FOR THE CITY COUNCIL MEETING OF TUESDAY,
JUNE 29, 1999.
5. SUMMARY TITLE/REcoMMENDATION: (A concise sentence, as it will appear on the Council Agenda)
Granting a non-exclusive telecommunications franchise to Level 3 Communications, L.L.C. to construct,
operate and maintain a telecommunications system within the City of Tacoma.
6. BACKGROUND INFORMATioN/GENERAL DiscussioN: (Why is this request necessary? Are there legal requirements?
What are the viable alternatives? Who has been involved in the process?)
A telecommunications rights-of-way ordinance was approved by the City Council on April 15, 1997. The
proposed franchise agreement with Level 3 Communications, L.L.C. (Level 3) establishes the contractual
and legal charges, terms and conditions for, and upon, the construction, maintenance and repair of their
telecommunications system in conformance with this telecommunications rights-of-way ordinance. Granting
the franchise will enable Level 3 to provide long-haul pass-through carrier services, with the possibility of
providing local service in the future.
7. FINANCIAL IMPACT: (Future impact on the budget.)
The City will be collecting a telecommunications tax of six (6) percent of Level 3's gross revenue on taxable
telecommunications services provided within the City.
8. LIST ALL MATERIAL AVAILABLE AS BACKUP INFORMATION FOR THE REQUEST AND INDICATE WHERE FILED:
Source Documents/Backup Matherial Location of Document
_E? C_
Ordinance No. 26053 City Clerk i C=
c:w-.e
C@
9. FUNDING SOURCE: (Enter amount of funding from each source)
Fund Number & Name: State $ city $ Other $ Total nt@
N/A
If an expenditure, is it budgeted? El Yes n No Where? Org Acct
10. ATTORNEY CONTACT: (Enter Name of Attorney that you've been working with) Chris Bacha
Approved
k?
I 1. f@ Director/Utillity Division Approval Di ger/D r Utilities Approval
ana 0-0
...............
G: @CarohTelecomlLevel 3-ReqOrddoc
eo
Ordinance No. 2 6 4 0`5
'7-
JUN 2 9 1999
First Reading of Ordinance: a. C
Final Reading of Ordinance: JUL 2 M-q
Passed: JUL 2 0 1999
Roll Call Vote:
MEMBERS AYES NAYS ABSTAIN ABSENT
Mr. Baarsma
Mr. Crowley
Mr. De Forrest
Mr. Kirby
Dr. McGavick
Mr. Miller
Mr. Phelps
Dr. Silas
Mayor Ebersole
MEMBERS AYES NAYS ABSTAIN ABSENT
Mr. Baarsma
Mr. Crowley
Mr. De Forrest
Mr. Kirby
Dr. McGavick
Mr. Miller
Mr. Phelps
Dr. Silas
Mayor Ebersole
q:Vorms@gensvckord-roff doc