Chapter 7.12 Franchises and Utility Privilege Tax Law

City Code Chapter

(Chapter replaced by Ordinance 186827, effective October 31, 2013)

7.12.010 Definitions.

  1. As used in this Chapter 7.12, the following terms are defined as provided in this Section:
  2. A.  “Bureau” means the Bureau of Revenue and Financial Services of the City of Portland, Oregon, along with its employees and agents, or such other bureau as the City Council may designate.
  3. B.  “Director” means the Bureau Director, as defined in Subsection 3.15.060 A., or the Director’s designee.

7.12.020 Record of Franchises.

  1. A.  Except as otherwise required by the City Charter, the Bureau shall keep a separate record of each franchise granted by the Council, including:
    1. 1.  Compliance of franchisees with applicable franchise provisions;
    2. 2.  Franchise fee payments made to the City by franchisees; and
    3. 3.  Any franchise records and statements required by the City Charter.
  2. B.  Records and data required under the City Charter, including such information that the Bureau may require the franchisee to furnish to the City.  Franchisees shall provide such records and information upon the Bureau’s request, at the franchisees’ own cost and expense.

7.12.030 Authority to Inspect Franchisee Records and Require Reports.

  1. A.  The Bureau shall have the right to inspect franchisee records during normal business hours upon reasonable notice, to determine compliance with obligations under applicable franchise provisions, including relevant financial franchise obligations.
  2. B.  The Bureau shall have the right to require, in writing and upon reasonable notice, reports and information as appropriate to determine whether franchisees are in compliance with their franchises. Franchisees shall cooperate with the Bureau and shall provide such information and documents as necessary for the City to evaluate compliance. The Bureau may specify the form and details of all franchise reports required under applicable franchise provisions.
  3. C.  In case any franchisee fails to provide access to records, or refuses to furnish information required under this Section when required so to do, on behalf of the City and if so directed by the City Council, the City Attorney may petition the Circuit Court of the State of Oregon for Multnomah County to compel such franchisee to furnish the information and to pay the City’s costs of the court proceedings.
  4. D.  For purposes of this Section 7.12.030, “record” means written or graphic materials, however produced or reproduced, or any other tangible permanent record, including, without limitation, all letters, correspondence, memoranda, minutes, notes, summaries or accounts of telephone conversations, summaries or accounts of personal conversations or interviews, reports, notebooks, sketches, summaries or accounts of meetings or conferences, opinions or reports of consultants or experts, invoices, billings, statements of accounts, studies, appraisals, analyses, contracts, agreements, charts, graphs, photographs and any other writings or recordings of every kind and description, including magnetic media, and all sound recordings, to the extent related to the enforcement or administration of a franchise.

7.12.040 Contents of Franchise.

  1. Each franchise granted by the City shall provide that the legal name and title of the franchisee, including where applicable the names of any members of a co partnership or association to which any franchise may be granted, shall be kept on file in the Bureau and shall be open to public inspection.  Each franchise shall also contain provisions setting forth and requiring that:
  2. A.  Each franchise granted by the City is subject to the Charter of the City of Portland and general ordinance provisions passed pursuant thereto, affecting matters of general City concern and not materially in conflict with the franchisee’s existing contractual rights, then in effect or thereafter made effective.
  3. B.  Each franchise granted by the City shall incorporate by reference Sections 10-201 through 10-218, inclusive, of the Charter of the City of Portland (1942 compilation, as revised in part by subsequent amendments), and made a part of such franchise.
  4. C.  Nothing in any franchise granted by the City shall be deemed to waive the requirements of the various codes and ordinances of the City regarding permits, fees to be paid or the manner of construction.
  5. D.  Franchisees shall comply with all applicable City ordinances, resolutions, rules and regulations adopted or established pursuant to the City's lawful authority.
  6. E.  Unless specifically otherwise declared by the City Council, nothing in any franchise granted by the City shall be deemed a waiver by the City of the rights of the City under applicable law.

7.12.050 Short Title and Administration.

  1. A.  Purpose.  Section 7.12.050 through Section 7.12.120 shall be known as the Utility Privilege Tax Law.  The authority to impose utility privilege taxes is granted to the City by Oregon statutes and is exercised to the fullest extent of the state laws.  The revenues generated by the Utility Privilege Tax Law are for general revenue purposes and are not regulatory.
  2. B.  Administration.
    1. 1.  The Utility Privilege Tax Law shall be administered by the Director.  The Director may adopt procedures, forms, and written policies for administering the Utility Privilege Tax Law.
    2. 2.  Authority granted to the Director may be delegated, in writing, to employees or agents of the Bureau.
    3. 3.  The Director may, upon request, issue written interpretations of how the Utility Privilege Tax Law applies in general or to specific circumstances.
    4. 4.  Nothing in the Utility Privilege Tax Law precludes the informal disposition of controversy by the Director in writing, whether by stipulation or agreed settlement.
    5. 5.  The Director may implement procedures, forms, and written policies for administering the provisions of the Utility Privilege Tax Law.
    6. 6.  The Director may adopt rules relating to matters within the scope of this Chapter to administer compliance with Utility Privilege Tax Law.
      1. a.  Before adopting a new rule, the Director must hold a public hearing.  Prior to the hearing, the Director will notify utilities and telecommunications utilities.  Such notice, which may be provided by mail or electronic means, must be distributed to utilities and telecommunications utilities not less than 10 nor more than 30 days before the hearing.  The notice must include the place, time and purpose of the public hearing, a brief description of the subjects covered by the proposed rule, and the location where copies of the full text of the proposed rule may be obtained.
      2. b.  At the public hearing, the Director will receive oral and written testimony concerning the proposed rule.  The Director will either adopt the proposed rule, modify it or reject it, taking into consideration the testimony received during the public hearing.  If a substantial modification is made, additional public review will be conducted, but no additional public notice is required if an announcement is made at the hearing of a future hearing for a date, time and place certain at which the modification will be discussed.  Unless otherwise stated, all rules are effective upon adoption by the Director.  All rules adopted by the Director will be filed in the Bureau’s office.  Copies of all current rules will be posted on the Bureau’s website and made available to the public upon request.
      3. c.  Notwithstanding Subsections a. and b., the Director may adopt an interim rule without prior public notice upon a finding that failure to act promptly will result in serious prejudice to the public interest or the interest of the affected parties, stating the specific reasons for such prejudice.  An interim rule adopted pursuant to this Subsection is effective for a period of not longer than 180 days.

7.12.060 Payment of Privilege Tax Required.

  1. A. Definitions.  As used in the Utility Privilege Tax, the following terms are defined as provided in this Section:
    1. 1.  “Gross Revenue” means any revenue earned within the City, after adjustment for the net write-off of uncollectible accounts, from the sale of electrical energy, gas, district heating or cooling, or water, or sewage disposal and treatment service, or for the furnishing or sale of communications or associated services, and for use, rental, or lease of operating facilities of the utility engaged in such business.  “Gross Revenues” shall not include earnings from interstate business, or earnings from the business of the United States government.
    2. 2.  “Telecommunications Utility” has the meaning provided in ORS 759.005(9) (2011).
    3. 3.  “Utility” means any electric cooperative, people’s utility district, privately-owned public utility or heating company.
  2. B.  Any telecommunications utility using or occupying a street, alley or highway for other than travel within the City without a franchise for a period of 30 days or longer shall pay a privilege tax.  The privilege tax imposed upon telecommunications utilities under this Subsection shall be in an amount of 7 percent of the telecommunications utility’s gross revenues earned within the corporate limits of the City for each consecutive 3 month period.  For the purposes of this paragraph, “gross revenues” shall mean all revenues derived from exchange access services, as defined in ORS 401.710, less uncollectibles from such revenues.  The privilege tax shall be computed as of the commencement of business or upon the expiration of any franchise under which the telecommunications utility formerly operated.  The privilege tax shall be due and payable so long as the telecommunications utility operates within the City and uses or occupies the streets, alleys or highways.
  3. C.  Any utility using or occupying a street, alley, or highway within the City without a franchise for a period of 30 days or longer shall pay a privilege tax for the use and occupancy of any street, alley or highway.  The privilege tax imposed under this Subsection shall be in an amount of 5 percent of the utility’s Gross Revenues of the City for each consecutive 3 month period.  The privilege tax shall be computed as of 30 days after the commencement of business or 30 days after the expiration of any franchise or other authority under which the utility formerly operated.  The privilege tax shall be due and payable so long as the utility operates with the City and uses or occupies the streets, alleys or highways.
  4. D.  In the event a franchise is granted to any utility subject to the privilege tax under the Utility Privilege Tax Law and the franchise becomes effective, then the privilege tax shall cease to apply from the effective date of the franchise.  The franchise holder shall pay the proportionate earned amount of the privilege tax for the current quarterly period.  The privilege tax shall in all such cases become immediately due and payable, and if not paid, collectible as provided in Section 7.12.080.

7.12.070 Privilege Tax Applicable to Other Cases.

  1. A.  The terms of the Utility Privilege Tax shall not apply to any holder of a current, valid franchise granted or issued by the Council.
  2. B.  The terms of Section 7.12.060 through Section 7.12.120 shall apply to any utility or telecommunications utility using or occupying a street, alley or highway within the corporate limits of the City 30 days after the expiration of the utility or telecommunications utility’s franchise.

7.12.080 Report of Earnings.

  1. Each utility and telecommunications utility subject to the privilege tax as provided in Section 7.12.060 shall file with the Bureau a report of the revenues earned within the corporate limits of the City for each consecutive 3 month period in the form and manner specified by the Bureau (“quarterly report”).
  2. A.  The first quarterly report shall be filed on or before the first payment date of privilege tax.  Subsequent quarterly reports shall be filed on or before February 15, May 15, August 15, and November 15 of each year.
  3. B.  If a franchise is granted to a utility or telecommunications utility which is otherwise subject to the provisions of the Utility Privilege Tax Law, the utility or telecommunications utility shall file a report with Bureau within 10 days after the franchise becomes effective showing the Gross Revenues earned for the proportionate period of the quarter prior to the franchise being granted.

7.12.090 Time Payment of the Privilege Tax.

  1. A.  Utilities and telecommunications utilities shall submit quarterly payment of Utility Privilege Taxes under Section 7.12.060 on or before February 15, May 15, August 15, and November 15 of each year and shall be accompanied by the quarterly report of the revenues for that payment period, as provided under Section 7.12.080.
  2. B.  If a utility or telecommunication utility fails to pay the privilege tax under the Utility Privilege Tax Law, the City Attorney may institute an action in the Circuit Court of the State of Oregon for Multnomah County to recover the amount of the privilege tax due the City, together with any applicable penalties and accrued interest.

7.12.100 No Waiver or Estoppel.

  1. Nothing in the Utility Privilege Tax Law, or in any ordinance granting a franchise or right to any utility or telecommunications utility, nor anything done or performed or monies expended under ordinance, shall estop or prevent the City from requiring the utility or telecommunications utility to cease using or occupying the streets, alleys or highways within the corporate limits of the City upon the expiration or other termination of such franchise or right to use or occupy the streets, alleys or highways.

7.12.110 Credits Allowable.

  1. Any amount which any utility or telecommunications utility may have paid to the City under the terms of any provision of franchise, permit or ordinance in lieu of franchise granted by the City Council shall be credited against the amount or amounts which have accrued or shall have accrued under the Utility Privilege Tax Law.

7.12.120 Interest and Penalty Applicable.

  1. A.  Interest will be assessed on any unpaid privilege tax at the rate of 0.833 percent simple interest per month or fraction thereof (10 percent per annum), computed from the original due date of the tax to the 15th day of the month following the date of the payment. 
    1. 1.  For purposes of calculating interest under Subsection 7.12.120 A., the amount of the privilege tax due shall be reduced by the amount of any privilege tax payments received by the Bureau on or before the due dates established in the Utility Privilege Tax Law.
    2. 2.  Interest amounts properly assessed in accordance with this Section may not be waived or reduced by the Director.
  2. B.  Any person subject to this Chapter or any officer or agent of any association or corporation subject to the provisions of this Chapter who, for a period of 30 days after the statement is required to be filed with the Bureau, fails, neglects, or refuses to file with the Bureau the quarterly statement of Gross Revenues of such person, association or corporation shall be subject to the penalties, including the criminal penalties, provided for violations of Section 7.02.700 Penalties.  

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