Request By:
Honorable Paul H. Twehues, Jr.
Campbell County Attorney
Suite 301, Campbell Towers
Newport, Kentucky 41071
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Your request for an opinion of this office involves the awarding of a cable television franchise for Campbell County. The pertinent facts were stated as follows:
". . . Our proposed franchise ordinance provides for the granting of a franchise 'for a term of 15 years' and then 'if the Board finds the company's performance satisfactory, a new franchise may be granted pursuant to the ordinance as amended for a period of 10 years.' The ordinance does not provide for re-bidding of the franchise for the second 10 year period. 'The ordinance does provide that: "To determine satisfactory performance, the Board shall consider technical developments and performance of the system, etc."'"
Question No. 1:
"Do these sections of the proposed franchise ordinance, providing for a franchise of 15 years and an additional franchise of 10 years, violate section 164 of the Kentucky Constitution regarding term of franchises? "
Sections 163 and 164 of the Kentucky Constitution, relating to franchises, must be read together, and a franchise can only be issued in the manner described in § 164. That latter section requires that: (1) the franchise be let for a definite term, not to exceed twenty (20) years; and (2) each franchise must be let after due advertisement for bids and an award of same to the "highest and best bidder. " When the constitutional mandates are observed, it means that the best of the competition may be selected and that the grantor of the franchise has the best opportunity to derive a sufficient consideration for granting the valuable privilege. See Hatcher v. Kentucky & West Virginia Power Co., 280 Ky. 583, 133 S.W.2d 910, 915. Judge Dietzman wrote in Kentucky Utilities Co. v. Board of Com'rs., 254 Ky. 527, 71 S.W.2d 1024 (1933) 1027, that "A reading of the debates of the Constitutional Convention bearing upon this section 163 of the Constitution will disclose that the main and actuating purpose of the framers of that instrument was to prevent the Legislature from authorizing the indiscriminate use of the streets of the city by public utilities without the city being able to control the decision as to what streets and what public ways were to be occupied by such utilities." The fiscal court's control over county roads presents the same principle.
Elsewhere in Kentucky Utilities above, Judge Dietzman added this at page 1027:
". . . There is no language, however, in either section 163 or section 164 of the Constitution that takes away from the Legislature the right and power to require a municipality once it has granted a franchise to a public utility to give that utility, after it has established its plant and occupied the public ways and streets of the municipality, the opportunity on the expiration of its franchise of procuring a new one, on the terms fair to the city, the utility, and to the public, by bid which is highest and best in open competition. . . ."
The answer to question No. 1 is that such a franchise for fifteen (15) years with an additional ten (10) years under certain conditions would violate § 164 of the Constitution, since the 10-year term would be granted without letting it out on bids in open competition. The Constitution cannot be circumvented in this manner. Further, since the extended franchise would total twenty-five (25) years, that would exceed the twenty (20) year limit anyway.
Question No. 2:
"The other issue that concerns us is whether or not, in accepting bids (called 'Request for proposals' in the ordinance) , it must be based on the model procurement code as adopted in the Fiscal Court's Administrative Regulations, or based on the 'highest and best bid' as provided in section 164 of the Kentucky Constitution."
Actually § 164 of the Constitution is self-executing and requires no implementing statutes as to bidding requirements. Thus, the model procurement code, even where the fiscal court has adopted it [see KRS 45A.343], has no application to the issuance of a franchise. The old bidding statute, KRS 424.260, also has no bearing on franchises. See Irvine Toll Bridge Co. v. Estill County, 210 Ky. 170, 275 S.W. 634 (1925) 636; Ray v. City of Owensboro, Ky., 415 S.W.2d 77 (1967) 79; and Willis v. Davis, Ky., 534 S.W.2d 255 (1976) 256, 257. The bidding provisions of § 164, i.e., the "highest and best bidder" language, controls.