Request By:
Honorable George M. Hogg
Attorney at Law
P.O. Box 535 - Railroad Street
Olive Hill, Kentucky 41164
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
As City Attorney of the city of Olive Hill, you seek an opinion concerning the following:
"The City of Olive Hill bid a franchise for the installation of a cablevision system in the City of Olive Hill. This bid was duly advertised and as a result thereof the franchise was granted to Cave Run Cablevision Company. Subsequent to the letting of the bids and the installation of the system, the City Council was approached by the cablevision system and was asked to amend the original franchise ordinance so that the maximum rate of $5.50 per month per customer could be raised. As a result of this request, the City Council of Olive Hill voted to pass an ordinance whereby the franchise so stating a maximum charge of $5.50 per month was changed to read that a reasonable rate could be charged by the cablevision company to the customer. As previously stated, this ordinance amending the rate structure was never purblished.
"My question is 1) does the City of Olive Hill have the right to amend a franchise ordinance that awarded pursuant to advertised bids in view of Section 164 of the Kentucky Constitution or any other law of the Commonwealth and 2) even if the City would have a right to so amend, would that amendment be void or unenforceable if it were never published pursuant to KRS 86.090 and KRS Chapter 424?"
In response to your initial question concerning the right to amend the rate charges of the franchise ordinance by mutual agreement, we believe that such would be perfectly legal. A franchise constitutes of course a contract, the terms of which are not subject to alteration without the consent of both parties, unless the right of alteration has been reserved in the franchise itself. See 36 Am.Jr. 2d, Franchises, § 51.
Section 164 of the Constitution, governing the term of franchises and their advertisement for bids, prohibits an enlargement of a franchise, but contains no restriction on amending rate charges and regulatory provisions contained in utility franchises in order for the utility to receive a fair return and continue the service.
Johnson Co. Soc. Co. v. Stafford, 198 Ky. 208, 248 S.W. 515 (1923); and
Scott v. Cinn. N & C Ry., 268 Ky. 383, 105 S.W. 2d 169 (1937).
On the other hand, assuming that the franchise ordinance is amended as you have indicated, such amendment should, in our opinion, be published in the same manner as the original franchise ordinance under the terms of KRS 86.090(4) which provides, in effect, that unless and until the ordinance is published, it is unenforceable.