Qwest Communications - Telecommunications EXHIBIT A
FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT("Agreement")is made and entered into by and between the
City of Tigard, an Oregon municipal corporation , ("City") and Qwest Communications
Corporation, a Delaware corporation("Franchisee") qualified to do business in Oregon:
RECITALS
1. Pursuant to Federal law, State statutes, and City Charter and local ordinances,the City is
authorized to grant non-exclusive franchises to occupy the rights-of-way as defined in
Chapter 15.06 of the Tigard Municipal Code("TMC"),in order to place and operate a utility
system within the municipal boundaries of the City of Tigard("Franchise Area");
2. Franchisee has requested a franchise to place and operate a telecommunications system, as
defined in TMC 15.06.020,within the Franchise Area;
3. The City has found that Franchisee meets all lawful requirements to obtain a franchise,and
therefore approves the application; and
3. Both the City and Franchisee expressly reserve all rights they may have under law to the
maximum extent possible;neither the City nor Franchisee shall be deemed to have waived
any federal or state constitutional or statutory rights they may now have or may acquire in the
future by entering into this agreement.
NOW,THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:
AGREEMENT
1. GRANT OF AUTHORITY
The City grants Franchisee the non-exclusive right to occupy City rights-of-way to place
and operate a telecommunications system for a term of ten(10)years from and after the Effective
Date of this Agreement(the"Term"), except as set forth below.
2. AUTHORITY NOT EXCLUSIVE
This Agreement shall be nonexclusive, and is subject to all prior rights,interests,
agreements,permits, easements or licenses granted by the City to any person to use the rights-of-
way for any purpose whatsoever,including the right of the City to use same for any purpose they
deem fit,including the same or similar purposes allowed Franchisee hereunder. The City may, at
any time, grant to other persons authorization to use the rights-of-way for any purpose. This
Agreement does not confer on Franchisee any right,title or interest in any right-of-way.
Ordinance No.08-J4
Page 1—Qwest Communications Corp.Franchise Agreement
3. PERFORMANCE
a. During the term of this Agreement,Franchisee agrees to comply with all lawful terms and
conditions of TMC Chapter 15.06, including the permit and permit fee requirements set forth in
TMC 15.06.200 and TMC Chapter 15.04,the provisions of which are incorporated herein as
though fully set forth. Franchisee reserves the right to challenge any of the terms and conditions
of TMC Chapters 15.06 and 15.04 under applicable federal and state law in the future.
b. Notwithstanding the preceding paragraph,Franchisee agrees to pay an annual right-of-
way usage fee that is the greater of the right-of-way usage fee set forth in TMC 15.06.100 or
$2.72 per linear foot of Franchisee's telecommunications system in the right-of-way. The right-
of-way usage fee shall be paid semiannually,by March 15 for the six month period ended
December 31, and September 15 for the six month period ended June 30. The per linear foot
right-of-way usage fee shall be calculated by multiplying the total number of linear feet of
Franchisee's telecommunications system in the right-of-way at the end of the previous six month
period by$2.72, and dividing the product by 2. Along with the payment,Franchisee shall send
the City a report that includes a description of the method used to calculate the right-of-way
usage fee,including Franchisee's gross revenues earned within the City for the preceding six
month period and current as-built drawings that shall be utilized to calculate the total number of
linear feet of Franchisee's telecommunications system in the right-of-way. Franchisee shall pay
interest at the rate of nine percent(9%)per year for any payment made after the due date.
4. CHANGE OF LAW;AMENDMENT OF FRANCHISE AGREEMENT
a. It is the intent of the parties that this Agreement may be amended from time to time to
conform to any changes in the controlling federal or state law or other changes material to
this agreement. Each party agrees to bargain in good faith with the other party concerning
such proposed amendments. This Agreement may be amended or terminated by the
mutual consent of the parties and their successors-in-interest.
b. To the extent any lawful City rule, ordinance or regulation, including any amendment to
the provisions of TMC Chapter 15.06, including any change to TMC 15.06.100,is
adopted on a jurisdiction-wide basis and is generally imposed on similarly situated
persons or entities,the rule, ordinance or regulation shall apply without need for
amendment of this Agreement. City shall provide Franchisee notice of any such change
in law. Such change in law will not affect Franchisee's reserved right of challenge set
forth in Section 3.
5. TAXES
Nothing contained in this Agreement shall be construed to exempt Franchisee from any
license, occupation, franchise or excise tax or assessment which is or may be hereafter lawfully
imposed on Franchisee.
Ordinance No.08-d—
Page 2—Qwest Communications Corp'.Franchise Agreement
6. INSURANCE
By the Effective Date of this Agreement,Franchisee shall provide a certificate of
insurance that names the City as an additional insured and is otherwise consistent with the
requirements of TMC 15.06.180.
7. SEVERABILITY
If any section, subsection, sentence,paragraph, term, or provision hereof is determined to
be invalid, or unconstitutional by any court of competent jurisdiction, such determination shall
have no effect on the validity of any other section, subsection, sentence,paragraph,term or
provision hereof, all of which will remain in full force and effect for the term of the Agreement.
If any material portion of the Agreement becomes invalid or unconstitutional so that the intent of
the Agreement is frustrated,the parties agree to negotiate replacement provisions to fulfill the
intent of the Agreement consistent with applicable law.
8. REMEDIES
a. Subject to the reservation of rights in Section 3,this Agreement shall be subject to
termination as set forth in TMC 15.06.310,provided that the City complies with the
requirements set forth in TMC 15.06.320 and 15.06.330.
b. All remedies under this Agreement,including revocation of the Agreement, are
cumulative and not exclusive, and the recovery or enforcement by one available remedy is
not a bar to recovery or enforcement by any other such remedy. The City reserves the
right to enforce the penalty provisions of any ordinance or resolution and to avail itself of
any and all remedies available at law or in equity. Failure to enforce shall not be
construed as a waiver of a breach of any term, condition or obligation imposed upon
Franchisee by or pursuant to this Agreement. A specific waiver of a particular breach of
any term, condition or obligation imposed upon Franchisee by or pursuant to this
Agreement shall not be a waiver of any other, subsequent or future breach of the same or
of any other term, condition or obligation, or a waiver of the term, condition or obligation
itself.
C. The right is hereby preserved to the City to adopt, in addition to the reservations
contained herein and existing applicable ordinances, such additional regulations as it shall
find necessary for the regulation of the right-of-way,provided that such regulations,by
ordinance or otherwise, shall be reasonable and not in conflict with the rights herein
granted. Franchisee shall, at all times during the life of this Agreement,be subject to all
lawful exercise of the police power by the City, and to such reasonable regulations as the
City may hereafter by resolution or ordinance provide. The City hereby reserves the right
to exercise,with regard to this Agreement, all authority now or hereafter granted to the
City by state statute or City charter, except where such authority may be modified or
superseded by the Constitution of the State of Oregon or the Constitution of the United
States.
Ordinance No.08-A
Page 3—Qwest Communications Corp.Franchise Agreement
9. ASSIGNMENT
All rights and privileges granted and duties imposed by this Agreement upon Franchisee
shall extend to and be binding upon Franchisee's successors,legal representatives and assigns.
This Agreement may not be transferred or assigned to another person unless such person is
authorized under all applicable laws to own or operate the telecommunications system and the
transfer or assignment is approved by all agencies or organizations required or authorized under
federal or state laws to approve such transfer or assignment. Franchisee shall provide the City
with written notice of any transfer or assignment of this Agreement within twenty(20) days of
requesting approval from any state or federal agency.
10. NOTICE
Unless specifically provided otherwise herein, all notices shall be mailed,postage
prepaid,to the following addresses or to such other addresses as Franchisee or the City may
designate in writing:
If to Franchisee: Qwest Communications Corporation
700 West Mineral Avenue
Littleton, CO 80120
Attn: J. L. Shives
With a copy to: Qwest Communications Corporation
1810 California Street, 10th Floor
Denver, CO 80202
Attn: Meshach Rhoades
If to City: City of Tigard
Attention: City Manager
13125 SW Hall Blvd.
Tigard, Oregon 97223
12. GOVERNING LAW
The law of the State of Oregon governs the validity of this Agreement, and its
interpretation,performance and enforcement. Any action or suit to enforce or construe any
provision of this Agreement by any party shall be brought in the Circuit Court of the State of
Oregon for Washington County,or the United States District Court for the District of Oregon.
13. EFFECTIVE DATE
The effective date of this Agreement("Effective Date") shall be the date it is fully
executed by the City and Franchisee.
Ordinance No.08-/4
Page 4—Qwest Communications Corp.Franchise Agreement
CITY OF TIGARD FRANCHISEE
9 By: By:
Mayr Title:
Date: q , a3� 0-9
Date:
Ordinance No.08--d
Page 5—Qwest Communications Corp.Franchise Agreement
April 6,2009
Ms. Meshach Rhoades
Qwest
1801 California Street
Suite 1000
Denver,Colorado 80202
Re: City of Tigard/Qwest Communications Franchise Agreement
Dear Ms. Rhoades:
I received your letter dated March 20, 2009, regarding the expired franchise agreement between the
City of Tigard (the "City's and Qwest Communications ("Qwest"). It is not clear what, if anything,
you are requesting or proposing in this letter. In addition, there are a number of factual
misstatements in your letter. I would appreciate it if you would review your letter with regard to the
specific circumstances in the City and send a letter clarifying Qwest's intent with respect to the
expired franchise.
While I will not attempt to address every misstatement in your letter, I will mention a couple of
critical issues. First, there are two different Qwest entities operating in the City. Your letter does
not clearly state the entity to which you are referring. Because the City recently granted a franchise
to Qwest Communications Corporation, the competitive local exchange carrier, and the franchise
with the Qwest entity operating as the incumbent local exchange carrier has expired, I assume you
are referring to the latter.
Second, the letter implies that the City and Qwest have been negotiating a new franchise agreement.
This assertion is not correct. There have been no ongoing negotiations between the City and Qwest
and little if any contact from Qwest of any kind regarding the expired franchise. Further, the City
has not received any draft agreements from Qwest, nor did the letter include the draft referenced in
the second paragraph.
Third, Qwest's franchise with the City expired on February 11, 2007. There is no "current
agreement" as stated in your letter. The City has not agreed and will not agree that Qwest may
continue to operate under the terms of the expired franchise. Pursuant to Tigard Municipal Code
(IMC) Section 15.06.050,any person with a utility system in the rights-of-way without a franchise is
subject to the terms of the TMC. The expired franchise,which was agreed to prior to the enactment
of Chapter 15.06, may not be consistent with the TMC and thus Qwest and the City must comply
with the terms of the Code. You can review this chapter of the TMC at hhtW://www.tigard-
or.gov/business/municipal code/docs/15-06.pd£
Finally, your letter states that Qwest currently pays the City 7% of its exchange access revenue in
exchange for use of the City's rights-of-way. The expired franchise required payment of 5% of
exchange access revenue and Chapter 15.06 requires payment of a right-of-way usage fee of 5% of
gross revenue, subject to applicable law. Our records show that Qwest has been paying a fee of 5%,
although we are not certain what revenue base Qwest has used to calculate the fee. I would
appreciate clarification on both the rate and fee base Qwest has been using to calculate its payments
to the City.
I look forward to your prompt response addressing the issues I've raised and clarifying the intent of
your previous letter.
Sincerely,
Craig Prosser
City Manager
LM\I:\Risk\Franchise\Letter to Qwest re:Expired Franchise 04-06-09