§ 12. Compensation to the city.

(a)

As compensation for the use, occupancy, oversight, supervision and regulation of the city's rights-of-way, and in lieu of and in full compensation for any lawful tax or license or charge or right-of-way permit fee or inspection fee, whether charged to the telephone company or its contractor(s), or any right-of-way easement or street or alley rental or franchise tax or other character of charge for use and occupancy of the rights-of-way within the city, except the usual general ad valorem taxes, special assessments in accordance with state law or sales taxes now or hereafter levied by the city in accordance with state law, the city hereby imposes a charge upon the gross receipts (as hereinafter defined) of the telephone company. The amount of the charge for the first year this ordinance is in effect shall be $48,000.00. In no event shall such charge be less than the above amount for each year this ordinance is in effect, except as provided in the case of disannexation as set forth in subsection 12(e), or as provided in section 16 herein.

The telephone company will, according to tariff, bill such charge to the customers billed the customer service charges included within the term "gross receipts," as defined herein. Gross receipts, for purposes of this charge, shall include only customer service charges which meet all four of the following conditions:

(1)

Such charges are for telephone company services provided within the city.

(2)

Such charges are billed through the telephone company's customer records information system (CRIS).

(3)

Such charges are the recurring charges for the local exchange access rate element specified in the telephone company's tariffs filed with the PUC.

(4)

Such charges are subject to an interstate end user common line (EUCL) charge as imposed by the Federal Communications Commission (FCC).

For the second and subsequent years while this ordinance remains in effect, the above charge is subject to adjustment by application of the growth factor set out in subsection 12(c). This adjustment for the growth factor will be made effective as of each anniversary date of this ordinance.

The telephone company shall adjust its billings to customers to account for any under-collection or over-collection of the charge due the city.

(b)

The charge for each year shall be paid in four equal installments on May 31, August 31, November 30 and February 28. In the event of any over- or under-collection from customers at the expiration of this ordinance, the telephone company may make a pro rata one-time credit or charge to the customer billing for affected customers who are billed for a service included within gross receipts, as defined in subsection 12 (a). This will be accomplished within 150 days following the date of expiration of this ordinance. If however, it is impractical to credit any over-collection to customers, then such over-collection shall be paid to the city.

(c)

The growth factor shall be calculated by dividing the telephone company's revenues within the corporate limits of the city subject to the state telecommunications sales tax (sales tax revenues) applicable to services rendered within the corporate limits of the city for the twelve-month period ending three months prior to the next anniversary date of this ordinance by the sales tax revenues for the twelve-month period ending three months prior to either the initial effective date or the preceding anniversary date of this ordinance as applicable. The growth factor calculated by the method set forth in the preceding sentence, if greater than one, shall be multiplied by the current year's charge to determine the dollar amount of the charge for the next year. If the growth factor calculated above is one or less, the charge for the next year shall be equal to the current year's charge. The telephone company will adjust its customer billing to account for the growth factor calculated above.

Stated another way, for example, the Charge and Growth Factor for the first three years of an ordinance shall be calculated as follows:

Example: Charge and Growth Factor for an Ordinance Effective October 1, 1991.

Payment year 1	Oct. 1, 1991— Sept. 30, 1992	Charge for the first payment year	= First year charge
Payment year 2	Oct. 1, 1992— Sept. 30, 1993	First year charge × growth factor, if any (sales tax revenues for twelve-month period ending three months prior to Oct. 1, 1992 (STR) ° by sales tax revenues for 12-month period ending three months prior to Oct. 1, 1991 (STR))	= Second year charge
Payment year 3	Oct. 1, 1993— Sept. 30, 1994	Second year charge × growth factor, if any (sales tax revenues for 12-month period ending three months prior to Oct. 1, 1993 (STR) ° by sales tax revenues for 12-month period ending three months prior to Oct. 1, 1992 (STR)	= Third year charge

 

Once the growth factor calculation is completed, the telephone company will provide the city with the sales tax revenues upon which the growth factor calculation was based.

The city agrees to rely upon audits by the Texas Comptroller of Public Accounts of state telecommunications sales taxes as reported by the telephone company which are performed in compliance with V.T.C.A., Tax Code §§ 151.023 and 151.027 (1982). The growth factor shall be recomputed to reflect any final, nonappealable adjustments made to the telephone company's applicable reports of state telecommunications sales taxes pursuant to audit by the Texas Comptroller of Public Accounts. The charge shall be recalculated using the growth factor recomputed as specified in the preceding sentence, and the recalculated charge shall be used for all future calculations required by this ordinance. Any overpayment or underpayment resulting from such recalculation shall be subtracted from or added to the first installment due the following year. If any overpayment or underpayment shall be due during the final year of this ordinance, then payment shall be made as follows. In the case of overpayment by the telephone company, the city shall pay such overpayment to the telephone company within 150 days following the expiration of this ordinance and, in the, case of underpayment by the telephone company, the telephone company shall pay such underpayment to the city within 150 days following the expiration of this ordinance.

(d)

Such payments shall not relieve the telephone company from paying all applicable municipally-owned utility service charges. Should the city not have the legal power to agree that the payment of the foregoing charge shall be in lieu of the taxes, licenses, charges, rights-of-way permit or inspection fees, rentals, rights-of-way easements or franchise taxes aforesaid, then the city agrees that it will apply so much of such payments as may be necessary to the satisfaction of the telephone company's obligation, if any, to pay any such taxes, licenses, charges, rights-of-way permit or inspection fees, rentals, rights-of-way easements or franchise taxes.

(e)

In the event that either (1) territory within the boundaries of the city shall be disannexed and a new incorporated municipality created which includes such territory, or (2) an entire, existing incorporated municipality shall be consolidated or annexed into the city, then notwithstanding any other provision of this ordinance, the charge shall be adjusted. To accomplish this adjustment, within thirty days following the action effecting a disannexation/annexation as described above, the city shall provide the telephone company with maps of the affected area(s) showing the new boundaries of the city.

In the event of an annexation as described above, the charge for the city will be adjusted to include the amount of the payment by the telephone company to the existing incorporated municipality being annexed. In the event that the annexed municipality had no ordinance imposing a charge or in the event of a disannexation, then the adjustment to the charge will be calculated using the effective date of the imposition of local sales taxes as determined by the Texas Comptroller of Public Accounts. The adjustment shall be the percent increase/decrease in the telephone company's gross receipts as defined herein for the city for the first calendar month following the local sales tax effective date compared to the last month prior to such effective date. This adjustment to the charge will be made on the first day of the second month following the local sales tax effective date and the adjusted charge shall be prorated from that date through the remainder of the payment year. The charge as adjusted shall be used for all future calculations required by this ordinance.