§ 9-3-253. Security fund.

(a)

Prior to a franchise becoming effective, the franchisee shall post with the city a cash security deposit to be used as a security fund to ensure the franchisee's faithful performance of and compliance with all provisions of this chapter, the franchise agreement and other applicable law, and all orders, permits and directions of the city, including the franchisee's payment of any claims, liens, fees, taxes or other payments due the city under this chapter, the franchise agreement or other law.

(b)

In lieu of a cash security fund, a franchisee may file and maintain with the city an irrevocable letter of credit with an acceptable surety in the amount specified in the preceding paragraph to serve the same purposes as set forth therein. Said letter of credit shall remain in effect for the full term of the franchise plus an additional six months thereafter. The franchisee and its surety shall be jointly and severally liable under the terms of the letter of credit for the franchisee's failure to ensure its faithful performance of and compliance with all provisions of this chapter, the franchise agreement and other applicable law, and all orders, permits and directions of the city, including the franchisee's payment of any claims, liens, fees, taxes or other payments due the city under this chapter, the franchise agreement or other law. The letter of credit shall provide for 30 days' written notice to the city prior to its cancellation, non-renewal or any material alteration of its terms. Neither the filing of a letter of credit with the city, nor the city's receipt of any payment thereunder, shall be construed to excuse the franchisee's faithful performance of and compliance with all provisions of this chapter, the franchise agreement and other applicable law, and all orders, permits and directions of the city, or to limit the liability of the franchisee for damages.

(c)

The rights of the city with respect to the security fund are in addition to all other rights of the city provided by this chapter, other law, a franchise and a franchise agreement, and no action, proceeding or exercise of a right with respect to such security fund or letter of credit shall affect any such other rights of the city.

(d)

The following procedures shall apply to drawing on the security fund and letter of credit:

(i)

If the franchisee fails to make timely payment to the city of any amount due under its franchise, a franchise agreement or applicable law, fails to make timely payment to the city of any taxes due, or fails to compensate the city within 10 days of written notification that such compensation is due for damages, costs or expenses that the city has incurred by reason of any act or omission of the franchisee in connection with its franchise or franchise agreement, or by reason of the city's enforcement of this chapter, the franchise or the franchise agreement, the city may withdraw the amount which it is due, with any interest and penalties that are payable, from the security fund or from monies available under the letter of credit.

(ii)

Within three days of a withdrawal from the security fund or under the letter of credit, the city shall, by certified mail, return receipt requested, provide written notification of the amount, date and purpose of such withdrawal to the franchisee.

(iii)

If, at the time of a withdrawal from the security fund and under the letter of credit by the city, the amounts available are insufficient to provide the total payment towards which the withdrawal is directed, the balance of such payment shall continue as the obligation of the franchisee to the city until it is paid.

(iv)

No later than 30 days after providing the notice under subsection (ii), the franchisee shall deliver to the city, for deposit in the security fund, an amount equal to the amount so withdrawn and shall restore the letter of credit to its original amount. Failure to make timely delivery of such amount to the city or to restore the letter of credit shall constitute a material violation of the franchise.

(v)

Upon termination of the franchise under conditions other than those providing for forfeiture of the security fund, the balance then remaining in the fund shall be withdrawn by the city and paid to the franchisee within 90 days of such termination, provided that there is then no outstanding default on the part of the franchisee. (Ord. No. 4738, 10/15/11, Sec. 1)