CONSENT AGENDA - Jon Haukaas, Director of Public Works
Title
SECOND READING
FRANCHISE AGREEMENT - AN ORDINANCE GRANTING TO THE CITY OF CIRCLE PINES, A MUNICIPAL CORPORATION, ITS SUCCESSORS AND ASSIGNS, A NONEXCLUSIVE FRANCHISE TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN FACILITIES AND EQUIPMENT FOR THE TRANSPORTATION, DISTRIBUTION, MANUFACTURE AND SALE OF GAS ENERGY FOR PUBLIC AND PRIVATE USE AND TO USE PUBLIC WAYS AND PUBLIC GROUNDS AND TO USE THE PUBLIC GROUNDS AND PUBLIC WAYS OF THE CITY FOR SUCH PURPOSES
Background
The City of Circle Pines is requesting franchise renewals for their gas utility as their current franchise agreements with Blaine will expire in May of 2018. The Public Works Director has reviewed the franchise agreements along with the City Attorney.
Recommendation
By motion, adopt Ordinance No. 18-2401.
Body
THE CITY OF BLAINE DOES ORDAIN:
This Ordinance replaces Appendix C - Franchises Article III. - Natural Gas Franchise (City of Circle Pines) of the Blaine Code of Ordinances in its entirety.
Section 1. - Definitions.
1.1. City. The City of Blaine, County of Anoka, State of Minnesota.
1.2. City utility system. Facilities used for providing nonenergy related public utility service owned and operated by the city or agency thereof, including sewer and water service, but excluding facilities for providing heating, lighting, or other forms of energy.
1.3. Company. City of Circle Pines, a municipal corporation, by and through its public utilities commission, its successors, and assigns, including successors and assignees of those portions of the company that constitute any part or parts of the gas facilities subject to this franchise.
1.4. Effective date. The date on which the ordinance becomes effective under section 2.2.
1.5. Gas. Natural gas, manufactured gas, mixture of natural gas and manufactured gas or others forms of gas energy.
1.6. Gas facilities. Gas transmission and distribution pipes, mains, lines, ducts, fixtures, and all necessary facilities, equipment and appurtenances owned, operated or otherwise used by the company for the purpose of providing gas energy for public use.
1.7. Non-betterment cost. Costs incurred by the company from relocation, removal or rearrangement of gas facilities that do not result in an improvement to the facilities.
1.8. Notice. A writing served by a party or parties on another party or parties. Notice to the company shall be mailed to City Administrator, City of Circle Pines, 200 Civic Heights Circle, Circle Pines, MN 55014. Notice to city shall be mailed to the City Manager, City of Blaine, 10801 Town Square Drive. NE, Blaine, MN 55449.
1.9. Public ways. Any street, alley, or other public right-of-way within the city.
2.0. Public grounds. Land owned or otherwise controlled by the city for parks, open space or similar public purpose.
Section 2. - Franchise.
2.1. Grant of franchise. The city grants the company, for a period of 20 years from the effective date, the right to import, manufacture, transport, distribute and sell gas for public and private use within and through the limits of the city. This right includes the provision of gas that is manufactured by the company or its affiliates and delivered by the company, gas purchased and delivered by the company, or purchased from another source by retail customer and delivered by the company. For these purposes, the company may construct, operate, repair, and maintain gas facilities, in, on, over, under and across the public way and public ground subject to the provisions of this ordinance. The company may do all things reasonably necessary or customary to accomplish these purposes, subject to other applicable ordinances, permit requirements and further provisions of this ordinance.
2.2. Effective date. This franchise is effective from and after its acceptance by the company. Written acceptance by the company must be filed with the city clerk within 90 days after publication of this notice.
2.3. Nonexclusive franchise. This ordinance does not grant an exclusive franchise.
2.4. Publication expense. The expense of publication of this ordinance must be paid by the company.
2.5. Default; dispute resolution. If the city or the company asserts that the other party is in default in the performance of any obligation hereunder, the complaining party must notify the other party in writing of the default and the desired remedy. Representatives of the parties must promptly meet and attempt in good faith to negotiate a resolution of the dispute. If the dispute is not resolved within 30 days after service of the notice, the parties may jointly select a mediator to facilitate further discussion. The parties will equally share the fees and expenses of the mediator. If a mediator is not used or if the parties are unable to resolve the dispute within 30 days after first meeting with the mediator, either party may commence an action in district court to interpret and enforce this franchise or for such other relief as may be permitted by law or equity.
Section 3. - Conditions of use.
3.1. Location of facilities. Gas facilities must be located, constructed, installed, and maintained so as not to interfere with the city utility system or the safety and convenience of ordinary travel along and over public ways. Gas facilities must be located on public grounds as determined by the city. The company's construction, reconstruction, operation, repair, maintenance and location of gas facilities is subject to other ordinances and regulations of the city.
3.2. Field locations. Upon request by the city, the company must provide field locations for any of its gas facilities within the period of time required by state law.
3.3. Permit required. The company may not open or disturb the surface of any public way or public ground without first having obtained a permit from the city, for which the city may impose a reasonable fee. The permit conditions imposed on the company may not be more burdensome than those imposed on other non-city utilities for similar facilities or work. The company must obtain the permit according to the procedures and requirements stated in Blaine Code, Chapter 70, Article I, Section 70-3. The company may, however, open and disturb the surface of any public way or public ground without a permit if (i) an emergency exists requiring the immediate repair of gas facilities and (ii) the company gives notice to the city before, if possible, commencement of the emergency repair. On the next business day after commencing the repair, the company must apply for any required permits and pay the required fees.
3.4. Restoration. After completing work requiring the opening of a public way of public ground, the company must restore the same, including paving and its foundation, to the condition formerly existing and maintain the same in good condition for two years thereafter. The work must be completed as promptly as weather permits. If the company does not promptly perform and complete the work, remove all dirt, rubbish, equipment and material, and restore the public way or public ground, the city may, after demand to the company to cure and the passage of a reasonable period of time not exceeding five calendar days following the demand, make the restoration at the expense of the company. The company must pay to the city the cost of such work done for or performed by the city, including administrative expense and overhead, plus ten percent of cost and administrative expense. This remedy is in addition to any other remedies available to the city for noncompliance with this section.
3.5. Company protection of gas facilities in public ways. The company must take reasonable measures to prevent the gas facilities from causing damage to persons and property. The company must take reasonable measures to protect the gas facilities from damage that could be inflicted on the facilities by persons, property, or the elements. The company must take protective measures when the city performs work near gas facilities, if given reasonable notice by the city of such work prior to its commencement.
3.6. Notice of improvements. The city must give the company reasonable notice of plans for improvements to public ways or public ground where the city has reason to believe that gas facilities may affect or be affected by the improvement. The notice must contain: (i) the nature and character of the improvements; (ii) the public ways or public grounds upon which the improvements are to be made; (iii) the extent of the improvements; (iv) the time when the city will start the work; and, (v) if more than one public way or public ground is involved, the order in which the work is to proceed. The notice must be given to the company a sufficient length of time in advance of the actual commencement of the work to permit the company to make any necessary additions, alterations or repairs to its gas facilities. If streets are at a final width and grade and the city has installed underground sewer and water mains and service connections to the property line abutting the streets prior to a permanent paving or resurfacing of such streets, and the company's main is located under such street, the city may require the company to install gas service connections prior to such paving or resurfacing, if it is apparent that gas service will be required during the five years following the paving or resurfacing.
Section 4. - Relocation.
4.1. Relocation of gas facilities in public ways. If the city determines to vacate a public way or public ground for a city improvement project, or to grade, re-grade or change the alignment of any public way or public ground or construct or reconstruct any city utility system in any public way or public ground, the city may order the company to relocate its gas facilities located therein. The company must relocate its gas facilities at its own expense. The city must give the company reasonable notice of plans to vacate for a city improvement project, grade, re-grade, or change the line of any public way or to construct or reconstruct any city utility system. City may order company to relocate permanently its mains, services, and other property located in said public way. If any subsequent relocation is required because of the extension of a city utility system to a previously un-served area, the city may require the company to make the subsequent relocation at its expense. If a relocation is ordered within five years of a prior relocation of the same gas facilities, which was made at company expense, the city shall reimburse the company for non-betterment costs on a time and material basis. Nothing in this ordinance requires the company to relocate, remove, replace or reconnect its facilities at the company's expense where such relocation, removal, replacement or reconstruction is solely for the convenience of the city and is not reasonably necessary for the construction or reconstruction of a public way or city utility system or other city improvement.
4.2. Relocation of gas facilities in public ground. The city may require the company, at the company's expense, to relocate gas facilities within or remove gas facilities from public ground upon a finding by city that the gas facilities have become or will become a substantial impairment of the public use or enjoyment to which the public ground is or will be put. The provisions of this section 4.2 apply only to gas facilities constructed in reliance on this franchise and the company does not waive its rights under an easement or prescriptive right in the public ground.
4.3. Vacation of public ways. The city must give the company at least two weeks' notice of a proposed vacation of a public way. Except where required for a city street or other improvement project, or other improvement project or as otherwise provided in section 4.2, the vacation of a public way, after the installation of gas facilities, does not deprive the company of its rights to operate and maintain the gas facilities, until the reasonable cost of relocating the same and the loss and expense resulting from such relocation are first paid to company by the city. The city is not liable to the company for failure to specifically preserve a right-of-way in the manner permitted by law.
4.4. Project with state or federal funding. Relocation, removal or rearrangement of any gas facilities made necessary because of the extension into or through the city of a federally aided highway project shall be governed by the provisions of Minn. Stat. § 161.46.
Section 5. - Defense and indemnification.
5.1. Terms. The company will defend, indemnify, keep, and hold the city free and harmless from any and all liability on account of injury to persons or damage to property caused by the construction, maintenance, operation, repair, inspection, or issuance of permits relating to the gas facilities. The city will not be indemnified by the company for losses or claims in which the city is determined to be negligent, except for losses or claims arising out of or alleging the city's negligence as to the issuance of permits for, or inspection of, the company's plans or work. The city will not be indemnified if the injury or damage results from the performance in a proper manner of acts reasonably deemed hazardous by the company, and such performance is nevertheless ordered or directed by the city after notice to the city of the company's determination. The city will not indemnify the company nor contribute towards costs, fees or damages incurred by the company, arising out of claims by third parties against the company.
5.2. Litigation. If a suit is brought against the city under circumstances where the agreement in section 5 to indemnify applies, the company at its sole cost and expense will defend the city in such suit if notice thereof is promptly given to the company within a reasonable period. If the company is required to indemnify and defend, it will thereafter have control of such litigation, but the company may not settle such litigation without the consent of the city, which consent will not be unreasonably withheld. This section is not as to third parties a waiver of any defense or immunity otherwise available to the city; and the company, in defending any action on behalf of the city is entitled to assert in any action every defense or immunity that the city could assert in its own behalf.
Section 6. - Successors in interest.
This ordinance and the rights and obligations conferred hereby, is binding on and inures to the benefit of the city and its successors and permitted assigns. This ordinance and the franchise it confers may not be assigned by the company without the written consent of the city.
Section 7. - Franchise fee.
7.1. Separate ordinance. During the term of the franchise hereby granted, and in addition to other fees being imposed or that the city has the right by statute to impose on the company, the city may require a franchise fee to be paid by the company. The franchise fee must be imposed by a separate ordinance by the city council, which ordinance may not be adopted until at least 60 days after notice enclosing such proposed ordinance has been served upon the company by certified mail. A fee imposed under this section does not become effective until 60 days after notice enclosing the adopted ordinance has been served upon the company by certified mail.
7.2. Calculation of fee. The city may impose the franchise fee: (i) as a percentage of gross revenues received by the company for its operations within the city; or (ii) as a flat fee per customer based on metered service to retail customers within the city or on some other reasonable basis; or (iii) as a fee based on units of gas delivered to any class of retail customers within the corporate limits of the city. The formula for a franchise fee based on units of gas delivered may incorporate both commodity and demand units. The method of imposing the franchise fee, the percent of revenue rate, the flat rate and the per unit rate may differ for each customer class.
7.3. Collection of the fee. The franchise fee will be payable not less often than quarterly, and based on any of the alternative formulas described in section 7.2 during complete billing months of the period for which payment is to be made. The franchise fee formula may be changed by ordinance from time to time; however, each change must meet the same notice requirements and may not be made more often than annually. The fee may not exceed any amount that the company may legally charge to its customers prior to payment to the city, by imposing a surcharge equivalent to such fee in its rates for gas service. The company may pay the city the fee based upon the surcharge billed subject to subsequent reductions to account for uncollectibles or customer refunds. The company agrees to make available for inspection by the city at reasonable times all records necessary to audit the company's determination of the franchise fee payments.
7.4. Continuation of franchise fee. If this franchise expires and the city and the company are unable to agree upon terms of a new franchise, the franchise fee, if any, being imposed by the city at the time this franchise expires, will remain in effect until a new franchise is agreed upon.
Section 8. - Severability.
If any portion of this franchise is found to be invalid for any reason whatsoever the validity of the remainder will not be affected.
Section 9. - Amendment.
This ordinance may be amended at any time by the city. An amendatory ordinance becomes effective upon the filing of the company's written consent thereto.
Section 10. - Limitation on applicability.
This ordinance constitutes a franchise agreement between the city and the company. No provision of this franchise inures to the benefit of any third person, including the public at large, so as to constitute any such person as a third-party beneficiary of the agreement or of any one or more of the terms hereof, or otherwise give rise to any cause of action for any person not a party hereto.
Section 11. - Previous franchise superseded.
This franchise supersedes and replaces any previous gas franchise granted to the company or its predecessor.
INTRODUCED AND READ this 1st day of March, 2018.
PASSED by the City Council of the City of Blaine this15th day of March, 2018.