AGENDA BILL. Beaverton City Council Beaverton, Oregon BUDGET IMPACT

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1 AGENDA BILL Beaverton City Council Beaverton, Oregon SUBJECT: A Resolution Granting A Non-Exclusive Franchise to Verizon Northwest Incorporated and Establishing an Effective Date. FOR AGENDA OF: BILL NO: Mayor's APprova,~f ((»?() DEPARTMENT OF ORIGIN: City AttorneyttJr DATE SUBMITTED: ~ / Clearances: Assl. 1.0 I.he Mayo V PROCEEDING: Consent EXHIBITS: Resolution BUDGET IMPACT EXPENDITURE AMOUNT APPROPRIATION REQUIRED$O BUDGETED$O REQUIRED $0 RECOMMENDED ACTION: Approve Resolution granting franchise for use of public right of way to Verizon Northwest, Inc. HISTORICAL PERSPECTIVE: Verizon Northwest, Inc. is one of two "incumbent local exchange carriers" (ILEC) with a certificate from the Oregon PUC to provide dial tone telephone service to city residents. An ILEC must serve all properties that it passes by with basic telephone service. For comparison, a CLEC ("competitive" I.e.c.) may offer selected services to selected customers). Oregon law allows cities to impose a privilege tax on an ILEG's "local exchange access" revenue OR to contract with the ILEC setting terms and conditions for the ILEC's use of city public rights of way. Verizon like Quest, Inc. (the City's other ILEC) chose not to negotiate for or renew the last franchise it had with the City (it expired in 2000) while litigation was pending in the gth Circuit US Court of Appeals as to what federal law did and did not permit in such franchises. In the interim, Verizon has continued to pay a portion of its local exchange access revenue as compensation for use of rights of way. The City for its part chose not to enact a "privilege tax." For the last two years City staff have negotiated the terms of a new franchise and have also settled the terms of a number of other business transactions with Verizon regarding audits of amounts due under former franchises, a dedication of right of way at 12S th and Brockman, an easement under SW Millikan, and the terms of City's plan review for the FIOS project by which Verizon replaced its copper wire telephone service with fiber optic cable that also transmits cable television. INFORMATION FOR CONSIDERATION: This franchise sets the terms and conditions of Verizon Northwest's use of City rights of way and public property for its telephone service only. Verizon's "FIOS" cable television service uses public rights of way under a separate franchise negotiated by MACC. The franchise allows the City to impose a higher fee for the use of right of way by go day notice to Verizon; that will allow the Council, if it desires, to offset the continuing decline in this revenue source caused by declining use of wireline telephone service. This franchise will expire when the cable television franchise also expires. Agenda Bill No: lalla

2 RESOLUTION NO A RESOLUTION GRANTING A NONEXCLUSIVE FRANCHISE TO VERIZON NORTHWEST INC. AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the Council after public hearing as required by Beaverton Code acknowledges that Verizon Northwest Inc. has fulfilled the application requirements of Beaverton Code for a franchise to occupy public rights of way and other public places within the City for purposes of providing telecommunications service, now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF BEAVERTON, OREGON: 1. Grant of Franchise. A. Generally. The City of Beaverton, Oregon ("City"), grants to Verizon Northwest Inc., a Washington corporation ("Company"), its successors and assignees, this nonexclusive Franchise, right and privilege to occupy public rights-of-way, public property owned or controlled by City, and private property dedicated to the provision of public facilities as shown on public records (collectively, the "Property") for the purpose of placing, constructing, maintaining and operating facilities used in connection with Company's "telecommunications service" as defined in ORS The Franchise is subject to the terms, conditions, and limitations contained in this ordinance and in federal, state and local law. No subsequently enacted or promulgated City ordinance or resolution shall alter the rights or obligations of the Company under this Franchise without the parties' mutual consent. This franchise does not grant Company authority to use its facilities on Property to provide cable services. B. Other City Enactments. City will enter into discussions with Company to attempt to achieve acceptable solutions to issues identified by Company regarding proposed changes to city ordinances, resolutions, rules or orders whenever such discussions are practical. In case of any conflict between the express terms of this Franchise and any other local law that City may enact from and after the effective date of this Franchise, the express terms of this Franchise shall control. City may enforce its rights under this Franchise by action of its Mayor. Company may appeal any action taken or proposed by City relating to Company's rights or obligations under this Franchise to City's Mayor, whose decision shall be City's final decision in the matter. C. Grant Not Exclusive. This Franchise is not exclusive and shall not limit City's own use of the Property for any purpose nor City's authority to grant franchises, rights, and privileges to other persons or corporations for use of the Property provided that any use by City or others shall not unreasonably interfere with Verizon's use or shall be subject to the provisions of this Agreement relating to relocation of Verizon's facilities. City's grant of use by others that may interfere with Company's use of the Property shall be subject to the provisions of this Franchise relating to relocation of Company's facilities. Resolution No

3 This Franchise grants Company no interest in the Property other than a limited and nonexclusive license to use the Property subject to those rights reserved to City and further subject to the rights of other franchised, invited and licensed users. 2. Term and Termination. This Franchise shall expire on May 25, 2022 unless terminated sooner for Company's default or as provided for in this Section 2. City may declare a breach of this Franchise for Company's default in any material term or condition if Company has not cured the default or taken substantial steps towards a cure as soon as possible and, except for an event of default that constitutes an unreasonable risk of personal injury or property damage, no later than 30 days after City's written notice of the default. In the event of Company's breach of contract for a default that Company does not cure within the time allowed, City shall have every remedy available to it in law and equity for such default. Upon any change in relevant federal or state law enacted after the effective date of this Franchise that supersedes any provision of this Franchise Agreement as to the scope, calculation method, or amount of the compensation provided for herein, the parties agree to meet and confer as to any amendment(s) to this agreement as may be necessary to implement the new law(s). Upon City or Company's failure or refusal to agree to such amendment(s) on the other party's demand, this Franchise shall expire on the 90th day after the date of demand. 3. Permits and Maps. A. Company's Construction Plans. Company shall meet and confer with City on City's request at least once annually to inform City of Company's known plans for work on Property so as to coordinate that work with any work planned by any other public or private entity during the ensuing year. Company understands and agrees that City may impose conditions as stated in City's current Engineering Design Manual or equivalent on any non-emergency excavations in any newly paved or resurfaced areas on Property for a reasonable period following such paving or resurfacing. Company further understands and agrees that City may place reasonable limitations on the location of any of Company's facilities to be placed on Property so as not to interfere with City's use of same or others' existing or known use of same. B. Excavations and Work within Public Rights of Way. Company may make necessary excavations on Property for the purpose of erecting, constructing, repairing, maintaining, removing, relocating and operating its facilities subject to the terms and conditions of this Franchise. Except in an emergency, Company shall obtain all permits required by state, federal and local law before commencing any work that: i), may damage or destroy paved surfaces or utilities on or under Property; or, ii), that will require motor vehicle traffic control other than for "service drops", routine maintenance or repair of facilities, and the installation of new replacement cables or wires on existing aerial facilities so long as such work does not disrupt motor vehicle traffic for more than 4 hours. Resolution No

4 C. Surface Restoration. Company's failure to timely restore Property in accordance with City's asphalt and compaction standards for pavement restoration or to permit standards for newly paved streets in which a construction moratorium existed prior to construction, or Company's failure to timely restore Property such as to present an unreasonable risk of injury or damage to persons or property shall constitute a breach of this Franchise. In such case and notwithstanding any provision of this Franchise that states or implies the contrary, City may proceed immediately to restore Property so as to abate or remove that risk, and Company shall indemnify City against any and all of City's reasonable costs incurred to make that restoration. For any and all work on Property for which Company must, under this Franchise, apply for a city permit, Company shall guarantee the restoration of paved surfaces on Property against defects in the work for a period of one year following completion of the work. D. Plans of Record. Company shall furnish City with documents showing Company's facilities "plans of record" within the public right of way and on and under public property and public places in a mutually acceptable format and within a reasonable time after such work is complete. E. Worksite Safety. Company shall perform all work done under the auspices of this Franchise according to all requirements of federal and state and industry practice for workplace and public safety. Company shall allow the City access to and the right to inspect any of the Company's work within public right of way or on public property or other public place and shall insure against the risk of personal and bodily injury that may be incurred by any City agent or employee in the course of that person's access to and inspection of such work. 4. Access to Records of Company Facilities. A. Access. Company shall maintain on file at an office within the Portland, Oregon metropolitan area all records of the location of any and all of its facilities in, over and under Property in industry standard format. The records shall be available to City for inspection and copying without charge for any purpose relating to this Franchise, during regular business hours upon reasonable prior notice from City. B. Non-Disclosure. Company may deem any of its records to which it grants City access under this Agreement to be confidential and propriety and shall make that designation in writing. Upon such designation by Company, City will only disclose Company information requested from City that is disclosable under Oregon Public Records law (Chapter 192, ORS) and will notify Company of any third-party request to City for disclosure of such records prior to any such disclosure. City shall tender the defense of any non-disclosure of Company confidential and proprietary records to Company and Company shall defend City from and hold City harmless against any claim for or award of costs and attorney fees by or to the person making the request for disclosure. Resolution No

5 5. Location of Company Facilities. A. Generally. Company shall obtain City's prior written approval of the location of all of the Company's facilities on Property other than for customer service drops (subject to the undergrounding requirements of this Agreement), routine maintenance or repair of facilities, and the installation, maintenance and repair of cables or wires on existing aerial facilities that will not damage or disturb paved surfaces or other utilities on the Property and that will not require motor vehicle traffic control. The Company shall place its facilities so that they do not unreasonably interfere with City's and its invitees' and permittees' use of the Property that Company knows of or should know of with the exercise of reasonable diligence. In locations where aerial or above ground public utility facilities (including aerial cable supports) exist as of the effective date of this Franchise, Company shall be allowed to overbuild, upgrade, maintain, replace, or add to its existing aerial facilities and supporting structures unless City requires or has required in the course of permitting public improvements or public or private property development or redevelopment, that all such facilities including a service drop to a customer's premises be located or relocated underground. Company may construct its improvements on Property without any showing that excess capacity exists in facilities on Property owned by others, provided that Company's proposed addition of capacity to existing aerial plant shall be subject to the requirements for undergrounding as provided in this Agreement. Company acknowledges that City, in accordance with DRS as amended, by general ordinance or resolution may require, in the course of permitting public improvements or public or private property development or redevelopment, that all such facilities be relocated underground. Relocation of facilities that is necessary as part of a City-issued land use or site development permit to a private property owner shall be at the private property owner's expense. Company may require a deposit against its anticipated cost to relocate its facilities or convert them to underground, including its costs to buy any adjacent overhead facilities, from the person who carries on the development or redevelopment of property that in turn requires the relocation or conversion. B. Relocation of Company Facilities. City shall have the right to require, in the public interest, the removal or relocation of facilities in a like manner (aerial to aerial, underground to underground) placed by Company on Property at Company's sole expense. "Removal or relocation in the public interest" shall mean removal or relocation to accommodate the construction or reconstruction of public right of way or governmentowned utility improvements that are undertaken and funded by a unit of state or local government, including sewage, storm drainage and water districts; it shall not include relocation to accommodate private construction of public infrastructure that is required as a condition of approval of private property development or redevelopment. Prior to any such relocation City shall notify Company of the project that will require relocation as soon as is practicable. During the planning and design phase of the project City shall coordinate with Company, if the project will require relocation of Company's facilities, to discuss the project's scope and schedule as required by DRS (3). Resolution No

6 Company shall perform such work promptly following notice to do so from the City and its failure or refusal to do so shall constitute an event of default under this Franchise. City shall provide a suitable location on Property for Company to relocate the facilities sufficient to maintain service. Where relocation is to be temporary, City and Company agree to cooperate to minimize its economic impact on each party. The cost of such removal or relocation in the public interest shall be payable solely by Company unless chargeable by law or tariff to another party. City shall notify Company as to any project funds provided by county, state or federal government that are specifically identified for relocation of Company's facilities and City and Company shall agree on the allocation of any such funds to the costs of relocation. The cost of relocation of Company facilities due to private development or redevelopment shall be as provided by state law, Company's tariffs or agreement between Company and the private property owner. C. Temporary Relocation for Private Purposes. A person who proposes to temporarily occupy Property for house-moving or any other use that requires temporary relocation of Company's facilities shall notify Company sufficiently in advance of such activity as to allow Company a reasonable time to arrange for the relocation and shall agree to pay Company its reasonable costs incurred in such relocation. No such work shall proceed except under the additional terms and conditions of any other permit that City may require of the person for such use of Property. D. Vacation or Transfer of Right of Way by City. City shall not transfer, assign or vacate any portion of the Property without allowing Company notice and the right to be heard as to any property interests that Company desires to preserve in, on or under the area to be transferred, assigned or vacated. 6. Conversion of Overhead Facilities to Underground A. City May Require Conversion. City in its sole discretion may require that Company's overhead communication facilities be converted to underground in the course of construction of publicly or privately funded improvements to Property or the course of private property development or redevelopment as provided in ORS as amended from time to time. B. On Private Property. When conversion of Company's facilities to underground is necessitated due to private property development or redevelopment the costs of conversion shall be the responsibility of the property owner for whom the City has issued a land use or site development permit. For such (re-)development Company may require a deposit from the property owner against its anticipated cost to relocate its facilities or convert them to underground, including its costs to buy any adjacent overhead facilities. C. Scope of Conversion. When City directs Company to convert Company's facilities from overhead to underground City also shall (1) require removal and conversion to Resolution No

7 underground of all existing overhead telecommunication and electric distribution facilities (of less than 12 Kv capacity) in the affected area; and, (2) require each customer served from existing overhead facilities in the area to make all changes on the customer's premises as reasonably required by Company so as to connect the premises to the underground facilities, at the customer's expense, as soon as the underground facilities are available; and, (3) authorize the Company to discontinue its overhead service on completion of the underground facilities. 7. Franchise Fee. A. Amount and Payment Interval. In consideration of the City's grant of this Franchise Company agrees to pay quarterly to City compensation for Company's use of Property, calculated as a minimum of four (4) and a maximum of seven (7) percent of Company's local access revenues. Local access revenues means those revenues derived from exchange access services within the city, as defined in ORS , less related net uncollectibles. Revenue from local exchange access services shall include any and all local exchange access included in a bundled or package or similar service. If such revenue can not be separately determined from the Company's records, the local exchange access charge that corresponds to Company's currently approved tariff shall be deemed to be the revenue subject to the calculation above for payment of compensation to City. City in its sole discretion shall determine from time to time the percentage of revenue payable to City as allowed by state and federal law and shall give Company 90 days' written notice of any change in the percentage of such revenue to be calculated and remitted to City. Company shall remit such payments on a quarterly basis on or before April 30, July 31, October 31 and January 31 for the calendar quarters immediately preceding. B. Company to Furnish Supporting Data. Company shall furnish to the City with each payment of compensation required by this section a written statement showing the gross revenue received by the Company for the period covered by the payment. City at any time within 5 years following the date City receives a payment may request an audit of Company's revenues to verify the correct calculation of that payment. On City's request for an audit Company agrees to make any and all of its business records relevant to such calculation, no matter where located, and including but not limited to Company's records of service addresses in Beaverton for the period used in calculating the payment, available to City at reasonable times and on reasonable prior notice from City at a Company office located within the Pacific Northwest of the United States. Each party shall be responsible for its own costs and professional fees incurred in any such audit. Any underpayment by Company shall be due and payable to City on City's demand for same and shall bear interest at the Oregon statutory rate for interest on judgements until paid. C. Other Taxes and Fees. Nothing in this Franchise grants Company any credit against any lawful business or excise tax, ad valorem property tax, local improvement Resolution No

8 assessment or fees charged for land use, site development or building permits or systems development charges payable for development or redevelopment of Company's real property as any unit of government may levy on Company's property or as Company may apply for in the course of Company's business. Company shall not be required to pay any additional fee, compensation or consideration, including the free use or construction of telecommunication facilities or equipment, for its use of the Property, except for any charges and penalties that City may impose for noncompliance with City resolutions, ordinances or permit conditions as described in ORS (3). At City's request Company shall furnish City with services offered by Company at rates authorized by the Oregon Public Utility Commission or, if not regulated by the Commission, at rates in accordance with Company's business practices for similar customers for similar services. D. No Waiver. Acceptance by the City of any payment due under this section shall not be deemed to be a waiver of any breach of the terms of this Franchise occurring prior to the acceptance. In addition to and not in lieu of any other remedies available to City for Company's underpayment of the franchise fee. City shall be entitled to interest at the statutory rate on the amount of the underpayment from the date originally due until the date paid. 8. Where Notice Sent. All notices from one party to the other required by this Franchise shall be in writing and shall be deemed given when sent by ordinary mail as of the postmark date and addressed to: For City: Finance Director, City of Beaverton, PO Box 4755, Beaverton OR For Company: Helen Hall, Director, Government Relations Verizon Northwest, Inc Mail Code WA0105RA st Street 5th Floor Everett WA Renee Willer, External Affairs Manager Verizon Mail Code OR NW Von Neumann Drive Beaverton OR For Company, for Notices of Annexation: City shall send any and all notices of annexation of territory to City, to Company at the following address: Richard Masching, Director - Property Tax Verizon Mail Code SV1 E5002 Resolution No

9 750 Canyon Dr 5th Floor Coppell, TX Mark Scovic, Manager Regulatory Fees and Surcharges Verizon Mail Code HQW03E Hidden Ridge Irving TX Conditions on Sale, Transfer or Assignment. The franchise granted in this ordinance shall be binding upon and inure to the benefit of the successors, legal representatives and assigns of the Company. Company may sell, transfer or otherwise assign this Franchise without City's consent provided that no such transfer, sale or assignment of this franchise shall be binding on City unless and until City has notice of same in writing, until the transferee in writing has accepted the terms and conditions of this Franchise and until the transferee has submitted proof satisfactory to city of the liability insurance coverage required by this Franchise and has submitted bonds or other guarantees that any work begun by Company and then in progress under the terms of a City permit shall be performed by the transferee to City's standards. Company's sale, lease or other assignment of Company's facilities on the Property shall be subject to City's right to compensation from the transferee for the transferee's use of the Property as provided by City ordinance and state and federal law. 10. Insurance and Indemnification. A. Surety Bonds. When City determines that the nature and extent of Company's work on Property requires separate assurance that the work will be complete or that the work shall be maintained against defects in material or workmanship, after notice and an opportunity to Company to cure any defect, City may require Company to furnish City a performance or maintenance bond for the estimated value of all work on the Property for the stated interval. B. Insurance. Company shall furnish to City at least annually a Certificate of Insurance that provides proof of insurance against the risks of personal injury, bodily injury and property damage in the minimum amounts and coverage provided for by City resolution or ordinance for franchises to telecommunications service providers, naming City as additional insured against those risks for any act or omission that is not an intentional wrongful act of City. C. Liability and Indemnity. Company shall indemnify, defend and save harmless the City and its officers, agents and employees from any and all loss, cost and expense, including without limitation attorneys fees, arising from damage to property, injury or death of persons, or any other damage resulting in whole or in part from any wrongful or negligent act or omission of the Company, its agents or employees in exercising the rights, privileges and obligations granted by this Franchise. If both the Company and Resolution No

10 the City are found to be partially liable for damages, neither party's liability under this section shall exceed its proportion of negligence or fault. City shall give Company prompt notice of any claim (or advance notice of claim) received by City as to which City seeks indemnity from Company and shall tender the defense of any such claim to Company. Neither party may bind the other to a settlement of any such claim or to payment of any of the costs of such claim without the written consent of the party to be bound. 11. Non-Waiver. Either party's failure to enforce any of the terms or conditions of this Franchise that run to that party's benefit shall not be construed as a waiver of any other or future or additional breach of any term or condition. 12. Jurisdiction and Venue. Any legal action brought to enforce a party's rights or responsibilities under this franchise shall be brought only in the Circuit Court for the State of Oregon in Washington County, Oregon or in the United States Court for the District of Oregon in Portland, Oregon. 13. Effective Date. This Franchise shall be effective only if and when City receives Company's written acceptance of same within 30 days from the date the City Council enacts this Resolution. ADOPTED by the Council this day of, APPROVED by the Mayor this day of, AYES: _ NAYS: _ ATIEST: SUE NELSON, CITY RECORDER APPROVED: DENNY DOYLE, MAYOR Resolution No