G58-99 (2) Ordinance No. G58-99
AN ORDINANCE
AMENDING ELGIN MUNICIPAL CODE, 1976, AS AMENDED
BY ADDING CHAPTER 4 . 60 ENTITLED
"TELECOMMUNICATIONS INFRASTRUCTURE MAINTENANCE FEE"
WHEREAS, the City of Elgin is a home rule municipality in
accordance with the Constitution of the State of Illinois of
1970 ; and
WHEREAS, the City of Elgin has the authority to adopt
ordinances and to promulgate rules and regulations that
pertain to its government and affairs and that protect the
public health, safety and welfare of its citizens; and
WHEREAS, in addition to the City of Elgin' s power as a
home rule municipality, this Ordinance is adopted pursuant to
the provisions of the Illinois Telecommunications Municipal
Infrastructure Maintenance Fee Act, Public Act 90-154 (the
"Act" ) ; and
WHEREAS, the fees imposed under this Ordinance will
replace the City of Elgin' s existing municipal franchise fees
with respect to telecommunications retailers, which are
currently paid by the telecommunications consumer, with a
different fee under the Act ; and
WHEREAS, this Ordinance is intended to create a uniform
system for the collection of fees associated with the
privilege of using City of Elgin rights-of-way and other
public rights-of-way for telecommunications activity within
the municipal boundaries of the City of Elgin including the
recovery of reasonable costs for regulating the use of all
public rights-of-way within its municipal boundaries for
telecommunications activity.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the
City of Elgin, as follows :
Section 1 . Recitals . The facts and statements contained
in the preamble to this Ordinance are found to be true and
correct and are hereby adopted as part of this Ordinance.
Section 2 . That the Elgin Municipal Code, 1976 , as
amended, be and is hereby amended by adding Chapter 4 . 60
thereto entitled "Telecommunications Infrastructure
Maintenance Fee" to read as follows :
"Chapter 4 . 60 Telecommunications Infrastructure
Maintenance Fee
Section 4 . 60 . 010 Definitions.
As used in this chapter, the following terms
shall have the following meanings :
A. "Gross Charges" means the amount paid to a
telecommunications retailer for the act or privilege
of originating or receiving telecommunications
within the city, and for all services rendered in
connection therewith, valued in money whether paid
in money or otherwise, including cash, credits,
services, and property of every kind or nature, and
shall be determined without any deduction on account
of the cost of such telecommunications, the cost of
the materials used, labor or service costs, or any
other expense whatsoever. In case credit is
extended, the amount thereof shall be included only
as and when paid. "Gross charges" for private line
service shall include charges at each channel point
within the city, charges for the channel mileage
between each channel point within the city, and
charges for that portion of the interstate
inter-office channel provided within the city.
However, "gross charges" shall not include :
1 . Any amounts added to a purchasers bill
because of a charge made under:
a. The fee imposed by this section;
b. Additional charges added to a
purchasers bill under Section 9-221 or
9-222 of the Public Utilities Act;
c . Amounts collected under Section 8-11-17
of the Illinois Municipal Code;
d. The tax imposed by the
Telecommunications Excise Tax Act ;
e . 911 surcharges, or;
f . The tax imposed by Section 4251 of the
Internal Revenue Code .
2 . Charges for a sent collect
telecommunication received outside the city;
3 . Charges for leased time on equipment or
charges for the storage of data or information or
subsequent retrieval or the processing of data or
information intended to change its form or content .
Such equipment includes, but is not limited to, the
use of calculators, computers, data processing
equipment , tabulating equipment, or accounting
equipment and also includes the usage of computers
under a time-sharing agreement ;
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4 . Charges for customer equipment, including
such equipment that is leased or rented by the
customer from any source, wherein such charges are
removed from the aggregate charges and separately
identified from other charges;
5 . Charges to business enterprises certified
under Section 9-222 . 1 of the Public Utilities Act to
the extent of such exemption and during the period
of time specified by the city;
6 . Charges for telecommunications and all
services and equipment provided in connection
therewith between a parent corporation and its
wholly owned subsidiaries or between wholly owned
subsidiaries, and only to the extent that the
charges between the parent corporation and wholly
owned subsidiaries or between wholly owned
subsidiaries represent expense allocation between
the corporations and not the generation of profit
other than a regulatory required profit for the
corporation rendering such services;
7 . Bad debts . "Bad debt" shall mean any
portion of a debt that is related to a sale at
retail for which gross charges are not otherwise
deductible or capable of being excluded that has
become worthless or uncollectible, as determined
under applicable federal income tax standards; if
the portion of the debt deemed to be bad is
subsequently paid, the retailer shall report and pay
the tax on that portion during the reporting period
in which the payment is made;
8 . Charges paid by inserting coins in
coin-operated telecommunications devices; or
9 . Charges for telecommunications and all
services and equipment provided to the city.
B. "Public Right-of-Way" means any municipal
street, alley, water or public right-of-way
dedicated or commonly used for utility purposes,
including utility easements wherein the city has
acquired the right and authority to locate or permit
the location of utilities consistent with
telecommunications facilities . "Public Right-of-Way"
shall not include any real or personal city property
that is not specifically described in the previous
sentence and shall not include city buildings and
other structures or improvements, regardless of
whether they are situated in the public right-of-way.
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C. "Retailer maintaining a place of business
in this State" , or any like term, means and includes
any retailer having or maintaining within the State
of Illinois, directly or by a subsidiary, an office,
distribution facilities, transmission facilities,
sales office, warehouse, or other place of business,
or any agent or other representative operating
within this State under the authority of the
retailer or its subsidiary, irrespective of whether
such place of business or agent or other
representative is located here permanently or
temporarily, or whether such retailer or subsidiary
is licensed to do business in this State .
D. "Sale of telecommunications at retail "
means the transmitting, supplying, or furnishing of
telecommunications and all services rendered in
connection therewith for a consideration, other than
between a parent corporation and its wholly owned
subsidiaries or between wholly owned subsidiaries,
when the gross charge made by one such corporation
to another such corporation is not greater than the
gross charge paid to the retailer for their use or
consumption and not for sale .
E . "Service address" means the location of
telecommunications equipment from which
telecommunications services are originated or at
which telecommunications services are received. If
this is not a defined location, as in the case of
wireless telecommunications, paging systems,
maritime systems, air-to-ground systems, and the
like, "service address" shall mean the location of
the customers primary use of the telecommunications
equipment as defined by the location in Illinois
where bills are sent .
F. "Telecommunications" includes, but is not
limited to, messages or information transmitted
through use of local, toll , and wide area telephone
service, channel services, telegraph services,
teletypewriter service, computer exchange services,
private line services, specialized mobile radio
services, or any other transmission of messages or
information by electronic or similar means, between
or among points by wire, cable, fiber optics, laser,
microwave, radio, satellite, or similar facilities .
Unless the context clearly requires otherwise,
"telecommunications" shall also include wireless
telecommunications as hereinafter defined.
"Telecommunications" shall not include value added
services in which computer processing applications
are used to act on the form, content , code, and
protocol of the information for purposes other than
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transmission. "Telecommunications" shall not
include purchase of telecommunications by a
telecommunications service provider for use as a
component part of the service provided by him or her
to the ultimate retail consumer who originates or
terminates the end-to-end communications . Retailer
access charges, right of access charges, charges for
use of intercompany facilities, and all
telecommunications resold in the subsequent
provision and used as a component of, or integrated
into, end-to-end telecommunications service shall
not be included in gross charges as sales for
resale . "Telecommunications" shall not include the
provision of cable services through a cable system
as defined in the Cable Communications Act of 1984
(47 U. S .C . Sections 521 and following) as now or
hereafter amended or cable or other programming
services subject to an open video system fee payable
to the city through an open video system as defined
in the Rules of the Federal Communications
Commission (47 C.D. F. 76 . 1550 and following) as now
or hereafter amended.
G. "Telecommunications provider" means :
1 . Any telecommunications retailer, and;
2 . Any person that is not a telecommunica-
tions retailer that installs, owns, operates or
controls equipment in the public right-of-way that
is used or designed to be used to transmit
telecommunications in any form.
H. "Telecommunications retailer" or "retailer"
or "carrier" means and includes every person engaged
in the business of making sales of
telecommunications at retail as defined in this
section. The city may, in its discretion, upon
application, authorize the collection of the fee
hereby imposed by any retailer not maintaining a
place of business within this State, who, to the
satisfaction of the city, furnishes adequate
security to ensure collection and payment of the
fee . When so authorized, it shall be the duty of
such retailer to pay the fee upon all of the gross
charges for telecommunications in the same manner
and subject to the same requirements as a retailer
maintaining a place of business within the city.
I . "Wireless telecommunications" includes
cellular mobile telephone services, personal
wireless services as defined in Section 704 (C) of
the Telecommunications Act of 1996 (Public Law No .
104-104) , 42 U. S .C. §332 (c) (7) , as now or hereafter
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amended) , including all commercial mobile radio
services, and paging services .
Section 4 . 60 . 020 Registration of Telecommunications
Providers .
A. Every telecommunications provider as
defined by this chapter shall register with the city
within 30 days after the effective date of this
chapter or becoming a telecommunications provider,
whichever is later, on a form to be provided by the
city, provided, however, that any telecommunications
retailer that has filed a return pursuant to Section
4 . 60 . 040 (C) of this chapter shall be deemed to have
registered in accordance with this section.
B. Every telecommunications provider who has
registered with the city pursuant to Section
4 . 60 . 020 (A) has an affirmative duty to submit an
amended registration form or current return as
required by Section 4 . 60 . 040 (C) as the case may be,
to the city within 30 days from the date of the
occurrence of any changes in the information
provided by the telecommunications provider in the
registration form or most recent return on file with
the city.
Section 4 . 60 . 030 Municipal Telecommunications
Infrastructure Maintenance Fee .
A. A city telecommunications infrastructure
maintenance fee is hereby imposed upon all
telecommunications retailers in the amount of one
percent (1 . 0%) of all gross charges charged by the
telecommunications retailer to service addresses
within the city for telecommunications originating
or received in the city.
B. Upon the effective date of the infrastruc-
ture maintenance fee authorized in this chapter, the
city infrastructure maintenance fee authorized
hereunder shall be the only fee or compensation for
the use of all public rights-of-way within the city
by telecommunications retailers . Imposition of the
infrastructure maintenance fee provided under this
chapter does not, however, serve as a limitation
on the levying of any taxes or imposition of any
fees otherwise authorized by law.
C. The city telecommunications infrastructure
maintenance fee authorized by this section shall be
collected, enforced, and administered as set forth
in Section 4 . 60 . 040 of this chapter.
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Section 4 . 60 . 040 Collection, Enforcement, and
Administration of
Telecommunications Infrastructure
Maintenance Fees .
A. A telecommunications retailer shall charge
to and collect from each customer an additional
charge in an amount equal to the city infrastructure
maintenance fee attributable to that customers
service address .
B. Unless otherwise approved by the city
manager, the infrastructure maintenance fee shall be
remitted by the telecommunications retailer to the
city not later than the last day of the month
subsequent to the month in which a bill is issued to
the customer; provided, however, that the
telecommunications retailer may retain an amount not
to exceed two percent (2%) of the city
infrastructure maintenance fee collected by it to
reimburse itself for expenses incurred in accounting
for and remitting the fee .
C. Remittance of the municipal infrastructure
fee to the city shall be accompanied by a return, in
a form to be prescribed by the city manager, which
shall contain such information as the city manager
may reasonably require .
D. Any infrastructure maintenance fee required
to be collected pursuant to this chapter and any
such infrastructure maintenance fee collected by
such telecommunications retailer shall constitute a
debt owed by the telecommunications retailer to the
city. The charge imposed under Section 4 . 60 . 040 (A)
by the telecommunications retailer pursuant to this
chapter shall constitute a debt of the purchaser to
the telecommunications retailer who provides such
services until paid and, if unpaid, is recoverable
at law in the same manner as the original charge for
such services .
E. If it shall appear that an amount of
infrastructure maintenance fee has been paid that
was not due under the provisions of this chapter,
whether as a result of a mistake of fact or an error
of law, then such amount shall be credited against
any infrastructure maintenance fee due, or to become
due, under this chapter, from the telecommunications
retailer who made the erroneous payment; provided,
however, the city manager may request, and the
telecommunications retailer shall provide, written
substantiation for such credit . However, no claim
for such credit may be made more than three years
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after the date of the erroneous payment unless the
credit is used only to offset a claim of
underpayment made by the city within the applicable
statutory period of limitations, and; the credit
derives from an overpayment made by the same
telecommunications retailer during the applicable
statutory period of limitations .
F. Amounts paid under this chapter by
telecommunications retailers shall not be included
in the tax base under any of the following acts as
described immediately below:
1 . "Gross charges" for purposes of the
Telecommunications Excise Tax Act;
2 . "Gross receipts" for purposes of the
municipal utility tax as prescribed in Section
8-11-2 of the Illinois Municipal Code;
3 . "Gross charges" for purposes of the
municipal telecommunications tax as prescribed in
Section 8-11-17 of the Illinois Municipal Code;
4 . "Gross revenue" for purposes of the tax
on annual gross revenue of public utilities
prescribed in Section 2-202 of the Public Utilities
Act .
G. The city shall have the right, in its
discretion, to audit the books and records of all
telecommunications retailers subject to this chapter
to determine whether the telecommunications retailer
has properly accounted to the city for the city
infrastructure maintenance fee . Any underpayment of
the amount of the city infrastructure maintenance
fee due to the city by the telecommunications
retailer shall be paid to the city plus five percent
(5%) of the total amount of the underpayment
determined in an audit, plus any costs incurred by
the city in conducting the audit, in an amount not
to exceed five percent (5%) of the total amount of
the underpayment determined in an audit . Said sum
shall be paid to the city within twenty-one (21)
days after the date of issuance of an invoice for
same .
H. The city manager, or his or her designee,
may promulgate such further or additional
regulations concerning the administration and
enforcement of this chapter, consistent with its
provisions, as may be required from time to time and
shall notify all telecommunications retailers that
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are registered pursuant to Section 4 . 60 . 020 of this
chapter of such regulations .
Section 4 . 60 . 050 Compliance With Other Laws .
Nothing in this chapter shall excuse any person
or entity from obligations imposed under any law,
including but not limited to :
A. Generally applicable taxes; and
B . Standards for construction on, over, under,
or within, use of or repair of the public
rights-of-way, including standards relating to free
standing towers and other structures upon the public
rights-of-way, as provided; and
C. Any liability imposed for the failure to
comply with such generally applicable taxes or
standards governing construction on, over, under, or
within, use of or repair of the public
rights-of-way; and
D. Compliance with any ordinance or provision
of this Code concerning uses or structures not
located on, over, or within the right-of-way.
Section 4 . 60 . 060 Existing Franchises and Licenses .
Any franchise, license, or similar agreements
between telecommunications retailers and the city
entered into before the effective date of this
chapter regarding the use of public rights-of-way
shall remain valid according to and for their stated
terms except for any fees, charges or other
compensation to the extent waived.
Section 4 . 60 . 070 Penalties .
Any person, firm or corporation violating any
of the provisions of this chapter, in addition to
other legal and equitable remedies available to the
city, shall be fined as provided in Chapter 1 . 20 of
this code . Each day during which a violation of
this chapter continues or is permitted to exist
shall be considered a separate and distinct offense .
Section 4 . 60 . 080 Enforcement .
Nothing in this chapter shall be construed as
limiting any additional or further remedies that the
city may have for enforcement of this chapter. The
levy and/or payment of any penalty or fine provided
in this chapter or in this code shall not be deemed
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a waiver of the power of the City of Elgin to
suspend, revoke or refuse to renew any permit for
cause or to seek injunctive relief to enjoin
violations of this chapter or provisions of this
code .
Section 4 . 60 . 090 Severability.
If any provision, clause, sentence, paragraph,
section or part of this chapter or application
thereof to any person or circumstance, shall for any
reason be adjudged by a court of competent
jurisdiction to be unconstitutional or invalid, said
judgment shall not affect, impair or otherwise
invalidate the remainder of this chapter and the
application of such provision to other persons or
circumstances, but shall be confined in its
operation to the provision, clause, sentence,
paragraph, section or part thereof directly involved
with the controversy in which such judgment shall
have been rendered and to the person or
circumstances involved. It is hereby declared to be
the legislative intent of the City Council that this
Chapter would have been adopted had such
unconstitutional or invalid provisions, clause,
sentence, paragraph, section or part thereof had not
been included.
Section 4 . 60 . 100 Waiver and Fee Implementation.
A. The city hereby waives all fees, charges,
and other compensation that may accrue, after the
effective date of the waiver, to the city by a
telecommunications retailer pursuant to any existing
city franchise, license, or similar agreement with a
telecommunications retailer during the time the city
imposes the Telecommunications Infrastructure
Maintenance Fee . This waiver shall only be
effective during the time the Infrastructure
Maintenance Fee provided for in this Ordinance is
subject to being lawfully imposed on the
telecommunications retailer and collected by the
telecommunications retailer from the customer.
B. The city clerk shall send a notice of the
waiver by certified mail , return receipt requested,
to each telecommunications retailer with whom the
city has a franchise . "
Section 3 . That this ordinance shall be in full force
and effect from and after its passage and publication in the
manner provided by law, provided however, the city
infrastructure maintenance fee provided for in this Ordinance
shall become effective and imposed on the first day of the
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month not less than ninety (90) days after the city provides
written notice by certified mail to each telecommunications
retailer with whom the city has an existing franchise,
license, or similar agreement that the city waives all
compensation under such existing franchise, license, or
similar agreement during such time as the fee is subject to
being lawfully imposed and collected by the retailer and
remitted to the city. The infrastructure maintenance fee
shall apply to gross charges billed on or after the effective
date as established in the preceding sentence.
Section 4 . That all ordinances or parts of ordinances in
conflict with the provisions of this ordinance be and are
hereby repealed.
s/ Ed Schock
Ed Schock, Mayor
Presented: October 13 , 1999
Passed: October 13 , 1999
Omnibus Vote : Yeas 7 Nays 0
Recorded: October 14 , 1999
Published: October 15, 1999
Attest :
s/ Dolonna Mecum
Dolonna Mecum, City Clerk
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Imo)• .cy OF ft c,
\ti� City of Elgin Agenda Item No.
September 15, 1999
TO: Mayor and Members of the City Council
FROM: Joyce A. Parker, City Manager
SUBJECT: Proposed Ordinance Providing for Telecommunications
Infrastructure Maintenance Fee
PURPOSE
The purpose of this memorandum is to present a proposed ordi-
nance providing for municipal telecommunications infrastruc-
ture maintenance fee at a rate of up to one percent (1%) of
the gross revenue from each telecommunication retailer servic-
ing customers within the city.
BACKGROUND
The City of Elgin and most other municipalities have typical-
ly regulated access to public rights of way for utilities
through franchise agreements. These franchise agreements
usually include franchise fees as compensation for access to
city-owned public rights of way and to compensate the city
for the cost of right of way management .
When the Illinois General Assembly enacted the Telecommunica-
tions Municipal Infrastructure Maintenance Act during the
1997-98 Regular Session, the traditional methods used by
municipalities to control the use of public streets and other
rights-of-way by telecommunications retailers were signifi-
cantly altered. As of January 1, 1998, a municipality can no
longer enter into a franchise or license agreement with a
telecommunications retailer for the use of public streets or
right-of-ways without comporting with the provisions of the
Telecommunications Municipal Infrastructure Maintenance Act
(the "Act" ) . While the city' s existing franchise and licens-
ing agreements with telecommunications retailers using public
streets or right-of-ways are not immediately affected by the
Act, upon their expiration, the city will be precluded from
entering into new franchise or licensing agreements with a
telecommunications retailer without first passing an ordi-
nance comporting with the provisions of the Act .
Already, Metricom, Inc . , a wireless Internet access company,
has applied to the city for use of the public right-of-way to
deploy its high-speed Ricochet wireless network within the
city. In the event the city wishes to allow a telecommunica-
tions provider to use the public rights of way and to receive
compensation for such use the Telecommunications Municipal
Telecommunication Infrastructure Maintenance Fee
September 15, 1999
Page 2
Infrastructure Maintenance Act prohibits the city from enter-
ing into a franchise or license agreement with Metricom, Inc .
unless an ordinance similar to the instant ordinance being
presented for the city council ' s consideration is passed.
The Telecommunications Municipal Infrastructure Maintenance
Act has three stated purposes : First, to "abolish municipal
franchise fees with respect to telecommunications compa-
nies . " Secondly, "to create a uniform system for collecting
and distributing fees associated with the privilege of the
use of the public right-of-way for telecommunications activi-
ty. Third, to "provide municipalities [with] a comprehensive
method of compensation for telecommunications activity includ-
ing the recovery of reasonable costs of regulating the use of
public rights-of-way for telecommunications activity. "
If the city desires to recover its costs of regulating the
telecommunications companies ' use of public streets and
rights-of-way, it must impose what is referred to in the Act
as a "municipal telecommunications infrastructure maintenance
fee" (MTIMF) at a rate of up to one percent (1%) of gross
revenues of the telecommunications companies . The MTIMF
imposed by the proposed ordinance would replace the existing
franchise fees and permit fees paid by telecommunications
retailers. (Franchise agreements with entities other than
telecommunication retailers, such as Commonwealth Edison,
Northern Illinois Gas Company and the cable television compa-
nies, would remain without change. ) The MTIMF is intended to
compensate the city for (a) the value of the local public
rights-of-way used by these telecommunications companies, and
(b) the costs of regulating that use.
Attached is a proposed ordinance which would add a new Chap-
ter 4 . 60 to the Elgin Municipal Code to provide for a telecom-
munication infrastructure maintenance fee. The proposed
ordinance is based upon a model ordinance prepared by the
Telecommunications Subcommittee of the Illinois Municipal
League Home Rule Attorneys ' Committee . The proposed ordi-
nance may be summarized as follows :
1 . Section 4 . 60 . 010 of the proposed ordinance provides for
definitions . The definition of "telecommunications" is
taken from Section 10 (b) of Act and specifies (1) which
companies must pay the MTIMF, and (2) which companies by
paying the MTIMF are entitled to use the city rights-of-
way to locate facilities. The definition specifically
includes "wireless telecommunications" and excludes
cable TV services. The definition, generally, does not
make exclusions based on the types of information being
transmitted, the type of facilities used to transmit
information, or the types of electronic or similar
technologies used to make transmissions. However, the
definition does specifically exclude (1) services that
process information (and do not merely transmit it) ;
Telecommunication Infrastructure Maintenance Fee
September 15, 1999
Page 3
(2) component services that are part of the telecommuni-
cations services ultimately provided to the retail
consumer; (3) other types of special access charges,
fees for use of intercompany facilities, and services
resold or integrated into telecommunications services,
and; (4) cable or other programming services provided
through a cable or open video system authorized under
federal law.
2 . The proposed ordinance defines "telecommunications
provider" more broadly than telecommunications retailer,
the intent being to require all entities owning telecom-
munications equipment located in the right-of-way but
not selling telecommunications at retail to register
with the city. This will enable the city to determine
which companies operating within the right-of-way consti-
tute telecommunications retailers or telecommunications
providers . The proposed ordinance requires a one-time
registration with the city that must be updated as the
registration information changes .
3 . The definition of "telecommunications retailer" is
derived from Section 10 (d) of the Act and specifies
which providers of telecommunications services must pay
the MTIMF. Businesses that do not provide "telecommunica-
r tions services at retail" are not required to pay the
MTIMF. Telecommunications retailers who provide "wire-
less telecommunications" must also pay the MTIMF despite
the fact that the provider does not have facilities
located in the municipality' s rights-of-way. The defini-
tion of wireless communications includes cellular mobile
telephone services and personal wireless services as
defined in the Telecommunications Act of 1996 (42 U.S .C.
§332 (c) (7) ) and includes all commercial mobile radio
services and paging services. The "service address" is
the customer' s billing address.
4 . Section 4 . 60 . 030 of the proposed ordinance provides for
the city' s telecommunications infrastructure maintenance
fee upon all telecommunication retailers in the amount
of one percent of all gross charges charged by the
telecommunications retailer to serve addresses within
the city for telecommunications originating or received
in the city.
5 . Under the proposed ordinance, the MTIMF is intended to
be the sole municipal compensation for right-of-way use
by telecommunications retailers . However, Section
4 . 60 . 030 of the proposed ordinance expressly reserves
the city' s authority to impose generally applicable
taxes, right-of-way construction standards, and antenna
low and tower location standards . Section 4 . 60 . 050 (D) of the
proposed ordinance also expressly reserves municipal
authority and control over property which is not the
Telecommunication Infrastructure Maintenance Fee
September 15, 1999
Page 4
subject of the Act, i .e . property not located within the
right-of-way.
6 . The proposed ordinance requires the MTIMF to be added
as a customer charge to each bill sent to each service
address in the city and provides the timing and mechan-
ics of payment . The ordinance also requires the telecom-
munications retailer to remit the MTIMF to the city and
also entitles the retailer, in accordance with the Act,
to retain up to 2% of the MTIMF collected to offset its
administrative costs . Although the Act does not indi-
cate a collection interval, the proposed ordinance
includes language requiring remittance not later than
the last day of the month following receipt of payment
from the customer. This period is consistent with the
billing practices of most retailers and is the typical
cycle for collection of the municipal telecommunications
tax or utility tax by municipalities .
7 . Payments made by a telecommunications retailer' s custom-
ers under the proposed ordinances MTIMF are specifically
excluded from the tax base of certain taxes which may
also be paid by the telecommunications retailer' s custom-
ers . This avoids the imposition of a tax on the MTIMF.
Section 4 . 60 . 040 (F) of the proposed ordinance is taken
directly from the Act, listing the taxes for which the
MTIMF must be excluded from "gross charges" : the telecom-
munications excise tax, the municipal utility tax, and
the municipal telecommunications tax. Also, because the
Act excludes the MTIMF from the definition of "gross
revenue" upon which a telecommunications retailer calcu-
lates the amount of tax on gross revenue due 'to the
state under the Public Utilities Act, such an exclusion
has been included in the proposed ordinance .
8 . Section 4 . 60 . 040 (G) of the proposed ordinance reserves
to the city the right to audit payments and accounts of
telecommunications retailers to verify the accuracy of
their returns . That section also imposes a 5% penalty
on the amount of the underpayment and reimbursement of
costs not to exceed 5% of the amount of the underpayment
on a telecommunications retailer found to have failed to
properly pay the MTIMF.
9 . Section 4 . 60 . 040 (H) of the proposed ordinance authorizes
the appropriate city administrators to issue administra-
tive regulations addressing technical or procedural
matters concerning the collection of the MTIMF (without
the need to amend the municipal code) . The promulgation
of returns and other forms to be used by telecommunica-
tions retailers in remitting the MTIMF and regulations
providing for payment by electronic transfer are both
examples of matters that are more appropriately handled
by administrative regulations .
Telecommunication Infrastructure Maintenance Fee
September 15, 1999
Page 5
(..- 10 . Section 4 . 60 . 060 of the proposed ordinance grandfathers
existing franchise, license and similar agreements until
the expiration of their current terms . Should the city
choose to impose the MTIMF, rather than stand on the
fees provided for in the existing agreements, terms
other than the franchise fee terms will continue in
effect provided those terms do not conflict with the
Act . In essence, right-of-way use and construction
standards contained in the franchise agreements will
continue in effect, unless those terms are clearly
contrary to any provisions in the Act . Existing provi-
sions in the Elgin Municipal Code relating to the pri-
vate use of the city' s right-of-ways including permit-
ting, fees, surety and the like are retained under
Section 4 . 60 . 100 of the proposed ordinance .
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
The proposed ordinance adding a new Chapter 4 . 60 providing
for a municipal telecommunications infrastructure maintenance
fee is derived from a model ordinance prepared by the Telecom-
munications Subcommittee of the Illinois Municipal Leagues
Home Rule Attorneys Committee . Representatives from the
Northwest Municipal Conference and the DuPage Mayors and
Managers Conference were included on this subcommittee . That
subcommittee, in turn, also received input from AT&T, Ameri-
tech and MCI . The telecommunications retailers representa-
tives participated in the last two working sessions of the
drafting process . Approximately 300 Illinois municipalities
have adopted similar ordinances with each municipality impos-
ing the maximum telecommunications infrastructure maintenance
fee rate of one percent (1%) of the gross revenue from each
telecommunication company servicing customers within the city.
0 APLvFINANCIAL IMPACT
The city receives franchise revenues from Ameritech for the
use of city right-of-way at a monthly rate of $ . 38 per access
line which will generate approximately $252 , 700 in 1999 .
Currently Elgin customers generate approximately 2 . 3M-2 . 5M in
revenues for Ameritech monthly. Revenues proposed under the
new ordinance at 1% of gross revenues would result in approxi-
mately $288, 000 annually from Ameritech alone when the cur-
rent franchise agreement expires 1/1/01 . Additionally, new
revenues will be realized as the city enters into agreements
with other telecommunications service providers .
'44LEGAL IMPACT
The Telecommunications Municipal Infrastructure Maintenance
Act requires each municipality imposing an infrastructure
eft. maintenance fee to file a certified copy of its ordinance
with the Illinois Department of Revenue not more than 30 days
after the effective date of the ordinance. Establishing the
Telecommunication Infrastructure Maintenance Fee
September 15, 1999
Page 6
r, effective date of the ordinance will be dependent upon the
city properly identifying and notifying all existing telecom-
munications franchisees of the city' s intent to impose an
MTIMF. The Telecommunications Municipal Infrastructure
Maintenance Act states that the MTIMF shall not become effec-
tive less than 90 days after the city mails written notice of
its intent to waive the fees in existing franchise agree-
ments . After the requisite waiting period, the MTIMF becomes
effective on the first day of the month following the 90-day
waiting period. Section 3B of the proposed ordinance directs
the city clerk to send notice of waiver by certified mail to
each current telecommunications retailer with a franchise,
license or similar agreement .
ALTERNATIVES
The city may choose to continue collecting franchise fees and
permit fees paid by telecommunications retailers under its
existing franchise agreements . But upon the expiration of
those agreements, and in those instances when a new telecommu-
nications retailer is seeking to use the public streets or
right-of-ways, the city would be precluded from entering into
a franchise or license agreement with the telecommunications
retailer without first passing an ordinance comporting with
the provisions of the Telecommunications Municipal Infrastruc-
ow ture Maintenance Act .
RECOMMENDATION
It is recommended that the City Council adopt the proposed
ordinance adding a new Chapter 4 . 60 providing for a municipal
telecommunications infrastructure maintenance fee at a rate
of up to one percent of the gross revenue from each telecommu-
nications company servicing customers within the city.
Respectfully submitted,
ar.'"
J. ce A. Parker
City Manager
WAC/RGK:nr
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