100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB5432

 

Introduced , by Rep. Natalie A. Manley

 

SYNOPSIS AS INTRODUCED:
 
55 ILCS 5/5-1095.1
65 ILCS 5/11-42-11.05

    Amends the Counties Code and Illinois Municipal Code. Provides that a county's or municipality's initial report of its audit findings to CATV operators shall include the complete list of all addresses within the corporate limits of the county or municipality. Limits the scope of provisions concerning franchise fees and service provider fee reviews. Provides that contingent fees paid to auditors, including subcontractors, may not exceed 25% of the net amount recovered, inclusive of interest and penalties. Provides that counties and municipalities shall provide to each CATV operator an updated complete list of addresses within the corporate limits of the county or municipality annually. In addition, the county or municipality shall provide a CATV operator the updated address list within 90 days after the date of a written request by the CATV operator and before a CATV operator's franchise fees or service provider fees are derived. Holds harmless the CATV operator for any franchise fee underpayment if the county or municipality does not provide the updated address list. Makes other changes.


LRB100 20602 AWJ 36015 b

FISCAL NOTE ACT MAY APPLY
HOME RULE NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

HB5432LRB100 20602 AWJ 36015 b

1    AN ACT concerning local government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Counties Code is amended by changing Section
55-1095.1 as follows:
 
6    (55 ILCS 5/5-1095.1)
7    Sec. 5-1095.1. County franchise fee or service provider fee
8review; requests for information.
9    (a) If pursuant to its franchise agreement with a community
10antenna television system (CATV) operator, a county imposes a
11franchise fee authorized by 47 U.S.C. 542 or if a community
12antenna television system (CATV) operator providing cable or
13video service in that county is required to pay the service
14provider fees imposed by the Cable and Video Competition Law of
152007, then the county may conduct an audit of that CATV
16operator's franchise fees or service provider fees derived from
17the provision of cable and video services to subscribers within
18the franchise area to determine whether the amount of franchise
19fees or service provider fees paid by that CATV operator to the
20county was accurate. Any audit conducted under this subsection
21(a) shall determine, for a period of not more than 4 years
22after the date the franchise fees or service provider fees were
23due, any overpayment or underpayment to the county by the CATV

 

 

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1operator, and the amount due to the county or CATV operator is
2limited to the net difference.
3    (b) Not more than once every 2 years, a county or its agent
4that is authorized to perform an audit as set forth in
5subsection (a) may, subject to the limitations and protections
6stated in the Local Government Taxpayers' Bill of Rights Act,
7request information from the CATV operator in the format
8maintained by the CATV operator in the ordinary course of its
9business that the county reasonably requires in order to
10perform an audit under subsection (a). The information that may
11be requested by the county includes without limitation the
12following:
13        (1) in an electronic format used by the CATV operator
14    in the ordinary course of its business, the database used
15    by the CATV operator to determine the amount of the
16    franchise fee or service provider fee due to the county;
17    and
18        (2) in a format used by the CATV operator in the
19    ordinary course of its business, summary data, as needed by
20    the county, to determine the CATV operator's franchise fees
21    or service provider fees derived from the provision of
22    cable and video services to subscribers within the CATV
23    operator's franchise area.
24    (c) The CATV operator must provide the information
25requested under subsection (b) within:
26        (1) 60 days after the receipt of the request if the

 

 

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1    population of the requesting county is 500,000 or less; or
2        (2) 90 days after the receipt of the request if the
3    population of the requesting county exceeds 500,000.
4    The time in which a CATV operator must provide the
5information requested under subsection (b) may be extended by
6written agreement between the county or its agent and the CATV
7operator.
8    (c-5) The county or its agent must provide an initial
9report of its audit findings to the CATV operator no later than
1090 days after the information set forth in subsection (b) of
11this Section has been provided by the CATV operator. This
1290-day timeline may be extended one time by written agreement
13between the county or its agent and the CATV operator. However,
14in no event shall an extension of time exceed 90 days. This
15initial report of audit findings shall detail the basis of its
16findings and provide, but not be limited to, the following
17information: (i) any overpayments of franchise fees or service
18provider fees, (ii) any underpayments of franchise fees or
19service provider fees, (iii) the complete list of all addresses
20within the corporate limits of the county for which the audit
21is being conducted, (iv) all county addresses that should be
22included in the CATV operator's database and attributable to
23that county for determination of franchise fees or service
24provider fees, and (v) (iv) addresses that should not be
25included in the CATV operator's database and addresses that are
26not attributable to that county for determination of franchise

 

 

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1fees or service provider fees. Generally accepted auditing
2standards shall be utilized by the county and its agents in its
3review of information provided by the CATV operator.
4    (c-10) In the event that the county or its agent does not
5provide the initial report of the audit findings to the CATV
6operator with the timeframes set forth in subsection (c-5) of
7this Section, then the audit shall be deemed completed and to
8have conclusively found that there was no overpayment or
9underpayment by the CATV operator for the audit period during
10the 24 months prior to the county or its agents requesting the
11information set forth in subsection (b) of this Section.
12    (d) If an audit by the county or its agents finds an error
13by the CATV operator in the amount of the franchise fees or
14service provider fees paid by the CATV operator to the county,
15then the county shall notify the CATV operator of the error.
16Any such notice must be given to the CATV operator by the
17county or its agent within 90 days after the county or its
18agent discovers the error, and no later than 4 years after the
19date the franchise fee or service provider fee was due. Upon
20such a notice, the CATV operator must submit a written response
21within 60 days after receipt of the notice stating that the
22CATV operator has corrected the error on a prospective basis or
23stating the reason that the error is inapplicable or
24inaccurate. The county or its agent then has 60 days after the
25receipt of the CATV operator's response to review and contest
26the conclusion of the CATV operator. No legal proceeding to

 

 

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1collect a deficiency or overpayment based upon an alleged error
2shall be commenced unless within 180 days after the county's
3notification of the error to the CATV operator the parties are
4unable to agree on the disposition of the audit findings.
5    Any legal proceeding to collect a deficiency as set forth
6in this subsection (d) shall be filed in the appropriate
7circuit court.
8    (e) No CATV operator is liable for any error in past
9franchise fee or service provider fee payments that was unknown
10by the CATV operator prior to the audit process unless (i) the
11error was due to negligence on the part of the CATV operator in
12the collection or processing of required data and (ii) the
13county had not failed to respond in writing in a timely manner
14to any written request of the CATV operator to review and
15correct information used by the CATV operator to calculate the
16appropriate franchise fees or service provider fees if a
17diligent review of such information by the county reasonably
18could have been expected to discover such error.
19    (f) All account specific information provided by a CATV
20operator under this Section may be used only for the purpose of
21an audit conducted under this Section and the enforcement of
22any franchise fee or service provider fee delinquent claim. All
23such information must be held in strict confidence by the
24county and its agents and may not be disclosed to the public
25under the Freedom of Information Act or under any other similar
26statutes allowing for or requiring public disclosure.

 

 

HB5432- 6 -LRB100 20602 AWJ 36015 b

1    (f-5) All contracts by and between a county and a third
2party for the purposes of conducting an audit as contemplated
3in this Code shall be disclosed to the public under the Freedom
4of Information Act or under similar statutes allowing for or
5requiring public disclosure.
6    (g) For the purposes of this Section, "CATV operator" means
7a person or entity that provides cable and video services under
8a franchise agreement with a county pursuant to Section 5-1095
9of the Counties Code and a holder authorized under Section
1021-401 of the Cable and Video Competition Law of 2007 as
11consistent with Section 21-901 of that Law.
12    (h) (Blank). This Section does not apply to any action that
13was commenced, to any complaint that was filed, or to any audit
14that was commenced before the effective date of this amendatory
15Act of the 96th General Assembly. This Section also does not
16apply to any franchise agreement that was entered into before
17the effective date of this amendatory Act of the 96th General
18Assembly unless the franchise agreement contains audit
19provisions but no specifics regarding audit procedures.
20    (h-5) This Section applies to: (i) any franchise agreement
21entered into, amended or renewed on or after the effective date
22of this Amendatory Act of the 100th General Assembly; and (ii)
23any franchise fee or service provider fee audit of a CATV
24operator conducted pursuant to this Section on or after the
25effective date of this Amendatory Act of the 100th General
26Assembly.

 

 

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1    (i) The provisions of this Section shall not be construed
2as diminishing or replacing any civil remedy available to a
3county, taxpayer, or tax collector.
4    (j) If a contingent fee is paid to an auditor, then the
5payment must be based upon the net difference of the complete
6audit, and the fee paid to auditors, including subcontractors,
7may not exceed 25% of the net amount recovered, inclusive of
8interest and penalties.
9    (k) A Within 90 days after the effective date of this
10amendatory Act of the 96th General Assembly, a county shall
11provide to each any CATV operator an updated a complete list of
12addresses within the corporate limits of the county and shall
13annually update the list. In addition, the county shall provide
14a CATV operator the updated address list within 90 days after
15the date of a written request by the CATV operator.
16    As a prerequisite to performing an audit of a CATV
17operator's franchise fees or service provider fees derived from
18the provision of cable and video services to subscribers within
19the franchise area, a county shall provide to a CATV operator
20the complete list of addresses within the corporate limits of
21the county for each calendar year subject to the audit. If an
22address is not included in the list or if no list is provided,
23the CATV operator shall be held harmless for any franchise fee
24underpayments, including penalty and interest, from situsing
25errors if it used a reasonable methodology to assign the
26address or addresses to a county.

 

 

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1    (l) This Section is a denial and limitation of home rule
2powers and functions under subsection (h) of Section 6 of
3Article VII of the Illinois Constitution.
4(Source: P.A. 99-6, eff. 6-29-15.)
 
5    Section 10. The Illinois Municipal Code is amended by
6changing Section 11-42-11.05 as follows:
 
7    (65 ILCS 5/11-42-11.05)
8    Sec. 11-42-11.05. Municipal franchise fee or service
9provider fee review; requests for information.
10    (a) If pursuant to its franchise agreement with a community
11antenna television system (CATV) operator, a municipality
12imposes a franchise fee authorized by 47 U.S.C. 542 or if a
13community antenna television system (CATV) operator providing
14cable or video service in that municipality is required to pay
15the service provider fees imposed by the Cable and Video
16Competition Law of 2007, then the municipality may conduct an
17audit of that CATV operator's franchise fees or service
18provider fees derived from the provision of cable and video
19services to subscribers within the franchise area to determine
20whether the amount of franchise fees or service provider fees
21paid by that CATV operator to the municipality was accurate.
22Any audit conducted under this subsection (a) shall determine,
23for a period of not more than 4 years after the date the
24franchise fees or service provider fees were due, any

 

 

HB5432- 9 -LRB100 20602 AWJ 36015 b

1overpayment or underpayment to the municipality by the CATV
2operator, and the amount due to the municipality or CATV
3operator is limited to the net difference.
4    (b) Not more than once every 2 years, a municipality or its
5agent that is authorized to perform an audit as set forth in
6subsection (a) of this Section may, subject to the limitations
7and protections stated in the Local Government Taxpayers' Bill
8of Rights Act, request information from the CATV operator in
9the format maintained by the CATV operator in the ordinary
10course of its business that the municipality reasonably
11requires in order to perform an audit under subsection (a). The
12information that may be requested by the municipality includes
13without limitation the following:
14        (1) in an electronic format used by the CATV operator
15    in the ordinary course of its business, the database used
16    by the CATV operator to determine the amount of the
17    franchise fee or service provider fee due to the
18    municipality; and
19        (2) in a format used by the CATV operator in the
20    ordinary course of its business, summary data, as needed by
21    the municipality, to determine the CATV operator's
22    franchise fees or service provider fees derived from the
23    provision of cable and video services to subscribers within
24    the CATV operator's franchise area.
25    (c) The CATV operator must provide the information
26requested under subsection (b) within:

 

 

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1        (1) 60 days after the receipt of the request if the
2    population of the requesting municipality is 500,000 or
3    less; or
4        (2) 90 days after the receipt of the request if the
5    population of the requesting municipality exceeds 500,000.
6    The time in which a CATV operator must provide the
7information requested under subsection (b) may be extended by
8written agreement between the municipality or its agent and the
9CATV operator.
10    (c-5) The municipality or its agent must provide an initial
11report of its audit findings to the CATV operator no later than
1290 days after the information set forth in subsection (b) of
13this Section has been provided by the CATV operator. This
1490-day timeline may be extended one time by written agreement
15between the municipality or its agents and the CATV operator.
16However, in no event shall an extension of time exceed 90 days.
17This initial report of audit findings shall detail the basis of
18its findings and provide, but not be limited to, the following
19information: (i) any overpayments of franchise fees or service
20provider fees, (ii) any underpayments of franchise fees or
21service provider fees, (iii) the complete list of all addresses
22within the corporate limits of the municipality for which the
23audit is being conducted, (iv) all municipal addresses that
24should be included in the CATV operator's database and
25attributable to that municipality for determination of
26franchise fees or service provider fees, and (v) (iv) addresses

 

 

HB5432- 11 -LRB100 20602 AWJ 36015 b

1that should not be included in the CATV operator's database and
2addresses that are not attributable to that municipality for
3determination of franchise fees or service provider fees.
4Generally accepted auditing standards shall be utilized by the
5municipality and its agents in its review of information
6provided by the CATV operator.
7    (c-10) In the event that the municipality or its agent does
8not provide the initial report of the audit findings to the
9CATV operator with the timeframes set forth in subsection (c-5)
10of this Section, then the audit shall be deemed completed and
11to have conclusively found that there was no overpayment or
12underpayment by the CATV operator for the audit period during
13the 24 months prior to the municipality or its agents
14requesting the information set forth in subsection (b) of this
15Section.
16    (d) If an audit by the municipality or its agents finds an
17error by the CATV operator in the amount of the franchise fees
18or service provider fees paid by the CATV operator to the
19municipality, then the municipality shall notify the CATV
20operator of the error. Any such notice must be given to the
21CATV operator by the municipality or its agent within 90 days
22after the municipality or its agent discovers the error, and no
23later than 4 years after the date the franchise fee or service
24provider fee was due. Upon such a notice, the CATV operator
25must submit a written response within 60 days after receipt of
26the notice stating that the CATV operator has corrected the

 

 

HB5432- 12 -LRB100 20602 AWJ 36015 b

1error on a prospective basis or stating the reason that the
2error is inapplicable or inaccurate. The municipality or its
3agent then has 60 days after the receipt of the CATV operator's
4response to review and contest the conclusion of the CATV
5operator. No legal proceeding to collect a deficiency or
6overpayment based upon an alleged error shall be commenced
7unless within 180 days after the municipality's notification of
8the error to the CATV operator the parties are unable to agree
9on the disposition of the audit findings.
10    Any legal proceeding to collect a deficiency as set forth
11in this subsection (d) shall be filed in the appropriate
12circuit court.
13    (e) No CATV operator is liable for any error in past
14franchise fee or service provider fee payments that was unknown
15by the CATV operator prior to the audit process unless (i) the
16error was due to negligence on the part of the CATV operator in
17the collection or processing of required data and (ii) the
18municipality had not failed to respond in writing in a timely
19manner to any written request of the CATV operator to review
20and correct information used by the CATV operator to calculate
21the appropriate franchise fees or service provider fees if a
22diligent review of such information by the municipality
23reasonably could have been expected to discover such error.
24    (f) All account specific information provided by a CATV
25operator under this Section may be used only for the purpose of
26an audit conducted under this Section and the enforcement of

 

 

HB5432- 13 -LRB100 20602 AWJ 36015 b

1any franchise fee or service provider fee delinquent claim. All
2such information must be held in strict confidence by the
3municipality and its agents and may not be disclosed to the
4public under the Freedom of Information Act or under any other
5similar statutes allowing for or requiring public disclosure.
6    (f-5) All contracts by and between a municipality and a
7third party for the purposes of conducting an audit as
8contemplated in this Article shall be disclosed to the public
9under the Freedom of Information Act or under similar statutes
10allowing for or requiring public disclosure.
11    (g) For the purposes of this Section, "CATV operator" means
12a person or entity that provides cable and video services under
13a franchise agreement with a municipality pursuant to Section
1411-42-11 of the Municipal Code and a holder authorized under
15Section 21-401 of the Cable and Video Competition Law of 2007
16as consistent with Section 21-901 of that Law.
17    (h) (Blank). This Section does not apply to any action that
18was commenced, to any complaint that was filed, or to any audit
19that was commenced before the effective date of this amendatory
20Act of the 96th General Assembly. This Section also does not
21apply to any franchise agreement that was entered into before
22the effective date of this amendatory Act of the 96th General
23Assembly unless the franchise agreement contains audit
24provisions but no specifics regarding audit procedures.
25    (h-5) This Section applies to: (i) any franchise agreement
26entered into, amended or renewed on or after the effective date

 

 

HB5432- 14 -LRB100 20602 AWJ 36015 b

1of this Amendatory Act of the 100th General Assembly; and (ii)
2any franchise fee or service provider fee audit of a CATV
3operator conducted pursuant to this Section on or after the
4effective date of this Amendatory Act of the 100th General
5Assembly.
6    (i) The provisions of this Section shall not be construed
7as diminishing or replacing any civil remedy available to a
8municipality, taxpayer, or tax collector.
9    (j) If a contingent fee is paid to an auditor, then the
10payment must be based upon the net difference of the complete
11audit, and the fee paid to auditors, including subcontractors,
12may not exceed 25% of the net amount recovered, inclusive of
13interest and penalties.
14    (k) A Within 90 days after the effective date of this
15amendatory Act of the 96th General Assembly, a municipality
16shall provide to each any CATV operator an updated a complete
17list of addresses within the corporate limits of the
18municipality and shall annually update the list. In addition,
19the municipality shall provide a CATV operator the updated
20address list within 90 days after the date of a written request
21by the CATV operator.
22    As a prerequisite to performing an audit of a CATV
23operator's franchise fees or service provider fees derived from
24the provision of cable and video services to subscribers within
25the franchise area, a county shall provide to a CATV operator
26the complete list of addresses within the corporate limits of

 

 

HB5432- 15 -LRB100 20602 AWJ 36015 b

1the county for each calendar year subject to the audit. If an
2address is not included in the list or if no list is provided,
3the CATV operator shall be held harmless for any franchise fee
4underpayments, including penalty and interest, from situsing
5errors if it used a reasonable methodology to assign the
6address or addresses to a municipality.
7    (l) This Section is a denial and limitation of home rule
8powers and functions under subsection (h) of Section 6 of
9Article VII of the Illinois Constitution.
10    (m) This Section does not apply to any municipality having
11a population of more than 1,000,000.
12(Source: P.A. 99-6, eff. 6-29-15.)