12-2001.   Granting of franchises; certain provisionsdeclared void;purposes; conditions; assessment of fees.(a) The governing body of any city may permit any person, firm orcorporation to:

      (1)   Manufacture, sell and furnish artificial or natural gaslight and heat; electric light, water, power or heat; or steam heat tothe inhabitants;

      (2)   build street railways, to be operated over andalong or under the streets and public grounds of such city;

      (3)   lay pipes, conduits, cables and all appliancesnecessaryfor the construction, operation of gas and electric-light or steam-heat plants;

      (4)   lay pipes, conduits, cables and all appliancesnecessary for theconstructionand operation of electric railways or buscompanies;

      (5)   lay pipes for the operation of a water plant for thedistributionor furnishing of water over, under and along the streets and alleys ofsuch city; or

      (6)   use the streets in the carrying on of any businesswhich isnot prohibited by law.

      (b)   If the governing body of a city permits any activity specified insubsection (a), the granting of permission to engage in the activity shallbe subject to the following:

      (1)   All contracts granting or giving any such originalfranchise, right or privilege, or extending or renewing or amending anyexisting grant, right, privilege or franchise, to engage in such an activityshall be made byordinance, and not otherwise.

      (2)   No contract, grant, right, privilege or franchise to engage in suchan activity, now existing or hereafter granted, shall be extended forany longer period of time than 20 years from the date of such grant orextension.

      (3)   No person, firm or corporation shall be granted anyexclusive franchise, right or privilege whatever.

      (4)   The governing body of any city, at all times during theexistence of any contract, grant, privilege or franchise to engage in suchan activity, shallhave the right by ordinance to fix a reasonable schedule of maximumrates to be charged such city and the inhabitants thereof for gas, lightand heat, electric light, power or heat, steam heat or water;the rates of fare on any street railway or bus company; or the rates chargedany such city, or theinhabitants thereof, by any person, firm or corporation operating underany other franchise under this act. The governing body at notime shall fix a rate which prohibits such person, firm or corporationfrom earning a reasonable rate upon the fair value of the property usedand useful in such public service. In fixing and establishing such fairvalue, the value of such franchise, contract and privilege given andgranted by the city to such person, firm or corporation shall not betaken into consideration in ascertaining the reasonableness of the ratesto be charged to the inhabitants of such city.

      (5)   No such grant, right, privilege or franchise shallbe made to any person, firm, corporation or association unless itprovides for adequate compensation or consideration therefor to be paidto such city, and regardless of whether or not other or additionalcompensation is provided for such grantee shall pay such fixedcharge as may be prescribed in the franchise ordinance. Such fixedcharge may consist of a percentage of the gross receipts derived fromthe service permitted by the grant, right, privilege or franchise fromconsumers or recipients of such service located within the corporateboundaries of such city, and, in case of public utilities or commoncarriers situated and operated wholly or principally within such city,or principally operated for the benefit of such city or its people, fromconsumers or recipients located in territory immediately adjoining suchcity and not within the boundaries of any other incorporated city; andin such case such city shall make and report to the governing body allsuch gross receipts once each month, or at such other intervals as stipulatedin thefranchise ordinance and pay into the treasury the amount due such cityat the time the report is made. The governing body shall also haveaccess to and the right to examine, at all reasonable times, all books,receipts, files, records and documents of any such grantee necessary toverify the correctness of such statement and to correct the same, iffound to be erroneous. If such statement of gross receipts isincorrect, then such payment shall be made upon such correctedstatement.

      On and after the effective date of the act, any provision forcompensation or consideration, included in afranchise granted pursuant to this section which is established on the basis ofcompensation or consideration paid by the utility under another franchise,is hereby declared to be contrary to the public policy of this state andshall be void and unenforceable. Any suchprovision, included in a franchise granted pursuant to this section and inforce on the effective date of this act which requires payments to the cityby a utility to increaseby virtue of the compensation or consideration required to be paid under afranchise granted by another city to the utility'spredecessor in interest, is hereby declared to be contrary to the publicpolicy of this state and shall be void and unenforceable.

      (6)   No such right, privilege or franchise shall beeffective until the ordinance granting the same has beenadopted asprovided by law.

      All expense of publishing any ordinance adopted pursuant to this sectionshall be paid by the proposed grantee.

      (7)   All contracts, grants, rights, privileges orfranchises for the use of the streets and alleys of such city, notherein mentioned, shall be governed by all the provisions of this act,and all amendments, extensions or enlargements of any contract, right,privilege or franchise previously granted to any person, firm orcorporation for the use of the streets and alleys of such city shall besubject to all the conditions provided for in this act for themaking of original grants and franchises. The provisions of thissection shall not apply to railway companies for the purpose of reachingand affording railway connections and switch privileges to the owners orusers of any industrial plants, or for the purpose of reaching andaffording railway connections and switch privileges to any agency orinstitution of the state of Kansas.

      (c)   As used in this act:

      (1)   "Access line" shall mean and be limited to retail billed and collectedresidential lines; business lines; ISDN lines; PBX trunks and simulatedexchange access lines provided by a central office based switching arrangementwhere all stations served by such simulated exchange access lines are used byasingle customer of the provider of such arrangement. Access line may not beconstrued to include interoffice transport or other transmission media that donot terminate at an end user customer's premises, or to permit duplicate ormultiple assessment of access line rates on the provision of a single serviceor on the multiple communications paths derived from a billed and collectedaccess line. Access line shall not include the following: Wirelesstelecommunications services, the sale or lease of unbundled loop facilities,special access services, lines providing only data services without voiceservices processed by a telecommunications local exchange service provider orprivate line service arrangements.

      (2)   "Access line count" means the number of access lines serving consumerswithin the corporate boundaries of the city on the last day of each month.

      (3)   "Access line fee" means a fee determined by a city, up to a maximum asset out in this act and amendments thereto, to be used by a telecommunicationslocal exchange service provider in calculating the amount of access lineremittance.

      (4)   "Access line remittance" means the amount to be paid by atelecommunications local exchange service provider to a city, the total ofwhich is calculated by multiplying the access line fee, as determined in thecity, by the number of access lines served by that telecommunications localexchange service provider within that city for each month in that calendarquarter.

      (5)   "Commission" means the state corporation commission.

      (6)   "Gross receipts" means only those receipts collected from within thecorporate boundaries of the city enacting the franchise and which are derivedfrom the following: (A) Recurring local exchange service for business andresidence which includes basic exchange service, touch tone, optional callingfeatures and measured local calls; (B) recurring local exchange access lineservices for pay phone lines provided by a telecommunications localexchange service provider to all pay phone service providers; (C) localdirectory assistance revenue; (D) line statusverification/busy interrupt revenue; (E) local operator assistance revenue; and(F) nonrecurring local exchange service revenue which shall include customerservice for installation of lines, reconnection of service and charge forduplicate bills. All other revenues, including, but not limited to, revenuesfrom extended area service, the sale or lease of unbundled network elements,nonregulated services, carrier and end user access, long distance, wirelesstelecommunications services, lines providing only data service without voiceservices processed by a telecommunications local exchange service provider,private line service arrangements, internet, broadband and all other servicesnot wholly local in nature are excluded from gross receipts. Gross receiptsshall be reduced by bad debt expenses. Uncollectible and late charges shallnot be included within gross receipts. If a telecommunications local exchangeservice provider offers additional services of a wholly local nature which ifin existence on or before July 1, 2002, would have been included with thedefinition of gross receipts, such services shall be included from the date ofthe offering of such services in the city.

      (7)   "Local exchange service" means local switched telecommunications servicewithin any local exchange service area approved by the state corporationcommission, regardless of the medium by which the local telecommunicationsservice is provided. The term local exchange service shall not includewireless communication services.

      (8)   "Telecommunications local exchange service provider" means a localexchange carrier as defined in subsection (h) of K.S.A. 66-1,187, andamendments thereto, and a telecommunications carrier as defined in subsection(m) of K.S.A. 66-1,187, and amendments thereto, which does, or in good faithintends to, provide local exchange service. The term telecommunications localexchange service provider does not include an interexchange carrier that doesnot provide local exchange service, competitive access provider that does notprovide local exchange service or any wireless telecommunications localexchange service provider.

      (9)   "Telecommunications services" means providing the means of transmission,between or among points specified by the user, of information of the user'schoosing, without change in the form or content of the information as sent andreceived.

      (d)   A city may require a telecommunications local exchange service providerwhich intends to provide local exchange service in that city, to enter into avalid contract franchise ordinance enacted pursuant to this act. Compensationfor the contract franchise ordinance shall be established pursuant tosubsection (j). A contract franchise complying with the provisionsof this act shall be deemed reasonable and shall be adopted by the governingbody of a city absent a compelling public interest necessitated by publichealth, safety and welfare. A contract franchise must be competitively neutraland may not be unreasonable or discriminatory. No telecommunications contractfranchise ordinance shall be denied or revoked without reasonable notice and anopportunity for a public hearing before the city governing body. A citygoverning body's denial or revocation of a contract franchise ordinance may beappealed to a district court.

      (e)   If the governing body of a city requires a contract franchise asspecified in subsection (d), the contract franchise shall be subject to thefollowing:

      (1)   All contracts granting or giving any such original contract franchise,right or privilege or extending, renewing or amending any existing grant,right, privilege or franchise, to engage in such an activity shall be made byordinanceand not otherwise;

      (2)   no contract, grant, right, privilege or contract franchise to engage insuch an activity, now existing or hereafter granted, shall be extended for anylonger period of time than 20 years from the date of such grant or extension;

      (3)   no telecommunications local exchange service provider shall be grantedany exclusive contract franchise, right or privilege whatever;

      (4)   no such right, privilege or contract franchise shall be effective untilthe ordinance granting the same has been adopted as provided by law. Allexpense of publishing any ordinance adopted pursuant to this section shall bepaid by the proposed grantee; and

      (5)   no city shall have the authority or jurisdiction to regulatetelecommunications local exchange service providers based upon the content,nature or type of telecommunications service or signal to be provided or thequality of service provided to customers.

      (f)   A franchisee shall make and report to the governing body once eachquarter, or at such other intervals as stipulated in the contract franchiseordinance, the compensation collected and pay into the treasury the amount duesuch city at the time the report is made.

      (g)   A city may assess a one-timeapplication fee to recover its costs associated with the review and approval ofa contract franchise provided that such application fee reimburses the city forits reasonable, actual and verifiable costs of reviewing and approving thecontract franchise. An application fee must be competitively neutral and maynot be unreasonable or discriminatory.

      (h)   Within 90 days of the receipt of a completed application for atelecommunications contract franchise, a city shall process and submit theapplication and contract franchise to the city's governing body, and thegoverning body shall take a final vote concerning such contract franchiseunless the telecommunications local exchange service provider and city agreeotherwise.

      (i)   In considering the adoption and passage of a telecommunications contractfranchise ordinance, no city shall have the authority or jurisdiction toregulate telecommunications local exchange service providers based upon thecontent, nature or type of telecommunications service or signal to be provided,or the quality of service provided to customers.

      (j)   The governing body of a city may require telecommunications localexchange service providers to collect and remit to each such city an accessline fee of up to a maximum of$2.00 per month per access line or a fee on gross receipts as described insubsection (j)(2). The access line fee shall be a maximum of $2.25 per monthper access line in 2006; a maximum of$2.50 in 2009; a maximum of $2.75 in 2012 and thereafter.

      (1)   To determine an access line remittance fee, the telecommunications localexchange service provider shall calculate and remit an amount equal to theaccess line fee established by a city multiplied by the access line count. Suchamount shall be due not later than 45 days after the end of the remittalperiod. The city shall have the right to examine, upon written notice to thetelecommunications local exchange service provider, no more than once percalendar year, those access line count records necessary to verify thecorrectness of the access line count. If the access line count is determined tobe erroneous, then the telecommunications local exchange service provider shallrevise the access line fees accordingly and payment shall be made upon suchcorrected access line count. If the city and the telecommunications localexchange service provider cannot agree on the access line count, or are indispute concerning the amounts due under this section for the payment of accessline fees, either party may seek appropriate relief in a court of competentjurisdiction, and that court may impose all appropriate remedies, includingmonetary and injunctive relief and reasonable costs and attorney fees. Allclaims authorized in this section must be brought within three yearsof the date on which the disputed payment was due. The access line fee imposedunder this section must be assessed in a competitively neutral manner, may notunduly impair competition, must be nondiscriminatory and must comply with stateand federal law.

      (2)   As an alternative to the access line fee specified in subsection (j)(1),the governing body of a city may require telecommunications local exchangeservice providers to collect and remit to each such city a fee of up to amaximum of 5% of gross receipts as defined in this act. The telecommunicationslocal exchange service provider shall calculate the gross receipts and multiplysuch receipts by the fee, up to a maximum of 5%, established by the city. Thetelecommunications local exchange service provider shall remit such fee to thecity no more frequently than each quarter unless the telecommunications localexchange service provider agrees otherwise, and not later than 45 days afterthe end of the remittal period. The city shall have the right to examine, uponwritten notice to the telecommunications local exchange service provider, nomore than once per calendar year, those records necessary to verify thecorrectness of the gross receipts fee. If the gross receipts fee is determinedto be erroneous, then the telecommunications local exchange service providershall revise the gross receipts fee accordingly and payment shall be made uponsuch corrected gross receipts fee. If the city and the telecommunications localexchange service provider cannot agree on the gross receipts fee, or are indispute concerning the amounts due under this section for the payment ofgross receipts fees, either party may seek appropriate relief in a court ofcompetent jurisdiction, and that court may impose all appropriate remedies,including monetary and injunctive relief, reasonable costs and attorneyfees. All claims authorized in this section must be brought within three yearsof the date on which the disputed payment was due. The gross receipts feeimposed under this section must be assessed in a competitively neutral manner,may not unduly impair competition, must be nondiscriminatory and must complywith state and federal law.

      (k)   Notwithstanding any other provision of this act, payment by atelecommunications local exchange service provider that complies with theterms of an unexpired franchise ordinance that applies to the providersatisfies the payment attributable to the provider required by this act.

      (l)   Beginning January 1, 2004, and every 36 months thereafter, a city,subjectto the public notification procedures set forth in subsection (m), may elect toadopt an increased access line fee or gross receipts fee subject to theprovisions and maximum fee limitations contained in this act or may choose todecline all or any portion of any increase in the access line fee.

      (m)   Adoption of an increased access line fee or gross receipts fee by a cityshall not become effective until the following public notification proceduresoccur: (1) Notice of the new fee has been provided at a regular meeting of thegoverning body; (2) immediately thereafter, notification of the new fee shallbe published in the official city paper once a week for two consecutive weeks;and (3) sixty days have passed from the date of the regular meeting of thegoverning body at which the new fee was proposed. If, during the period ofpublic notification of the new fee or prior to the expiration of 60 days fromthe date of the regular meeting of the governing body at which the new fee wasproposed, 20% of the qualified voters of such city voting for mayor, or in caseno mayor is elected then the commissioner or council member receiving thehighest number of votes at the last preceding city election,present a petition to the governing body asking that the new fee be submittedto popular vote, the mayor of the city shall issue a proclamation callingfor an election for that purpose. Such election shall be held in conjunctionwith the next available general election. The proclamation calling suchelection shall specifically state that such election is called for the adoptionof the new fee, and the new fee shall be set out in full in the proclamation.The proclamation shall be published once each week for two consecutive weeks inthe official city newspaper, and the last publication shall not be less than 30days before the day upon which the election is held. If, at the election themajority of votes cast shall be for the new fee, the new fee shall thereuponbecome effective. If a majority of the votes cast at the election are againstthe new fee, the new fee shall not become effective and shall be void.

      (n)   A city may require a telecommunications local exchange service providertocollect or remit an access line fee or a gross receipts fee to such city onthose access lines that have been resold to another telecommunications localexchange service provider, but in such case the city shall not collect anaccess line fee or gross receipts fee from thereseller telecommunications local exchange service provider and shall notrequire the reseller to enter into a contract franchise ordinance pursuant tosubsection (d).

      (o)   A city may not impose the following regulations on telecommunicationslocal exchange service providers:

      (1)   Requirement that particular business offices or othertelecommunications facilities be located in the city;

      (2)   requirement for filing reports and documents that are not reasonablyrelated to the collection of compensation pursuant to this act;

      (3)   requirement for inspection of the business records of atelecommunications local exchange service provider except to the extentnecessary to conduct the review of the records related to the access line countor gross receipts fee as provided for in this act;

      (4)   requirement for city approval of transfers of ownership or control ofthe business or assets of a telecommunications local exchange service providerexcept that a city may require that such provider maintain current point ofcontact information and provide notice of a transfer within a reasonable time;and

      (5)   requirement concerning the provisioning or quality of services,facilities, equipment or goods in-kind for use bythe city, political subdivision or any other telecommunications local exchangeservice provider or public utility.

      (p)   Information provided to municipalities and political subdivisions underthis act shall be governed by confidentiality procedures in compliance withK.S.A. 45-215 and 66-1220a et seq. and amendments thereto.

      (q)   Except as otherwise provided, this act does not affect the validity of afranchise agreement or contract ordinance with a telecommunications localexchange service provider so long as the franchise agreement or contractordinance does not include a linear foot charge and/or a minimum fee, wasenacted prior to the effective date of this act, and was agreed to by thetelecommunications local exchange service provider. Under such circumstances, acity may continue to enforce a previously enacted franchise agreement orcontract ordinance and to collect franchise fees and other charges under thatfranchise agreement or contract ordinance until the date on which the agreementor ordinance expires by its own terms or is terminated in accordance with theterms of this act. Notwithstanding any other provision hereof, where such afranchise agreement or contract ordinance exists between a city and atelecommunications local exchange service provider prior to the effective dateof this act, during the term of such existing franchise agreement or contractordinance the city must offer to new applicants franchise agreements orcontract franchises whose terms and conditions are as a whole competitivelyneutral and nondiscriminatory, as compared to such existing agreement.

      (r)   Without prejudice to a telecommunications local exchange serviceprovider's other rights and authorities, a telecommunications local exchangeservice provider which is assessed, collects and remits an application fee,access line fee or gross receipts fee assessed by a city shall add to itsend-user customer's bill, statement or invoice a surcharge equal to the prorata share of any such fees.

      (s)   Subsections (c) through (r) apply only to telecommunications localexchange service providers.

      History:   L. 1945, ch. 98, § 1; L. 1949, ch. 119, § 1; L.1953, ch. 70, § 1; L. 1976, ch. 83, § 1; L. 1981, ch. 173, § 28;L. 1985, ch. 71, § 2;L. 2002, ch. 32, § 1; July 1.