§ 1004-2.414. Acceptance and bond.

(a)

Acceptance. Within thirty days after being granted a franchise, a grantee shall file with the road commissioner a written acceptance of the terms and conditions of the franchise, together with a bond (or cash or letter of credit), pursuant to subsection (b) of this section. The date of this filing is the effective date of the franchise.

(b)

Bond.

(1)

A grantee shall file with the road commissioner at the time it files acceptance of a franchise granted under this chapter, and shall maintain and keep on file with the road commissioner, a surety bond in favor of the county, issued by a surety company authorized to transact a surety business in the state of California, approved by the road commissioner, and in the form of surety bond approved by the board of supervisors. The bond must be in the sum of one hundred percent of the amount of the first full annual fee paid to the county by the grantee, rounded up to the nearest thousand dollars for the initial granting of the franchise, and increased each ten years based upon the revised franchise fee amount pursuant to Section 1004-2.602, provided that the minimum amount of any bond twenty-five thousand dollars. The amount of the surety bond posted by a grantee that uses its facilities to transport only potable water shall be twenty-five thousand dollars. Each bond must be on the condition that the grantee well and truly observe, fulfill, and perform each term and condition of the franchise, and that in case of a breach of any condition of the bond, the penal sum therein shall be recoverable. Each bond must be on the condition that if the principal or sureties fail to pay that amount upon demand from the county, they shall be liable, in addition to the penal sum of the bond, for all additional expenses, including reasonable attorneys' fees and any interest accrued on amounts due, incurred by the county in obtaining payment under the bond.

(2)

A grantee shall maintain the bond in full force and effect throughout the term of a franchise at the grantee's sole expense. The bond shall be issued by a surety insurer and comply with the requirements of the Bond and Undertaking Law, codified in Code of Civil Procedure Sections 995.010 et seq. A franchise shall be considered a "license or permit" within the meaning of the Bond and Undertaking Law, solely for purposes of applying the Bond and Undertaking Law to the bonding requirements of this section.

(3)

If a bond is not filed at the time a grantee files acceptance of the franchise, the award of the franchise may be set aside and the resolution granting the franchise repealed at any time prior to the filing of the bond, and any money paid in consideration for the grant of franchise shall be forfeited. If the road commissioner determines that a bond on file has become insufficient, the grantee shall renew the bond, with sureties as approved by the public works department, within ten days after receiving written notice from the road commissioner.

(4)

As an alternative to filing a surety bond, the county may, but is not obligated to, permit a grantee to deposit cash, in the same amount as required on the bond. The county will hold the cash deposit in a non-interest bearing account. If the county draws upon the cash fund for compensation for any loss or damage relating to the franchise, the grantee shall replenish the cash fund to the original amount within thirty days after receiving written notice from the county.

(5)

Grantee may, at its sole election, provide an irrevocable standby letter of credit, in a form acceptable to the county, securing all or a portion of the amount otherwise required to be secured by the performance bond. The letter of credit shall be issued by an issuing bank with offices in California, or shall authorize an advising bank with offices in California to pay the beneficiary thereunder. The county shall have the right to validate the creditworthiness of the bank being used for a letter of credit. The letter of credit shall authorize county to draw upon its proceeds in the event that grantee fails to well and truly observe, fulfill and perform each term and condition of the franchise, and that in case of any breach of the franchise, county may draw against the letter of credit up to the total amount set forth therein. If grantee determines to file a letter of credit, grantee shall file such letter of credit within ten days after the adoption of the resolution granting the franchise.

(6)

Nothing in this chapter waives a grantee from liability that exceeds the amount of the bond or cash deposited. Nothing in this chapter shall be construed as a waiver by the county of any legal remedy against the grantee for any breach of the terms and conditions of the franchise, or for any damage, loss or injury suffered by the county relating to the grantee's exercise of the franchise.

(7)

Upon termination of a franchise, the surety bond will be released or the deposit returned to the grantee, less the amount sufficient to compensate the county for any losses arising out of the grantee's exercise of the franchise.

(Ord. No. 2013-19, § II, 8-13-13)