12-18-12 CC Public Hearing - 4F Ct��1 C��
Public Works Department
763-593-803Q/763-593-3988(fax)
Executive Summary For Action
Golden Valley City Council Meeting
December 18, 2012
Agenda Item
4. F. First Consideration of CenterPoint Energy Franchise Fee Agreement Amendment
Prepared By
Jeannine Clancy, Director of Public Works
Ron Nims, Public Works Project Coordinator
Summary
At Council/Manager meetings held on September 11, October 9 and November 13, 2012, staff
presented a plan for a franchise fee on CenterPoint Energy. If approved, the proceeds from the
fee will assist in addressing the funding shortfall for infrastructure projects. Some of the current
unfunded capital improvement projects are listed below (not necessarily in priority order):
1. Reconstruction of Zane Avenue from Golden Valley Road to TH 55 North Frontage Road
2. Reconstruction of Lindsay Street from Zane Avenue to Lilac Qrive
3. Reconstruction of Golden Hills Drive from Colorado Avenue to Turners Crossroad
4. Winnetka Avenue intersection improvements from Harold Avenue to TH 55
5. Intersection improvements on the south side of TH 55 at Douglas Drive
6. Reconstruction of the intersection at Glenwood Avenue and Ottawa Avenue North
7. Updating the existing trail and walk system to meet current Americans with Disabilities
Requirements
8. Construction of new walk and trail facilities identified on the City's Trail and Walk Priority
Map
9. Implementation of the pavement preservation component of the Pavement Management
Policy (overlays, etc.)
10. Douglas Drive (TH 55 to Medicine Lake Road); as needed to assist with any shortfall in
funding that the project may experience
With the review and advisory assistance of CenterPoint Energy staff, the following fee schedule
has been developed:
Flat Monthly
Rate Class Rate
Residential $2.00
Firm A $3.50
Firm B $22.50
Firm C $22.50
Dual Fuel A $206,00
Dual Fuel B $206.OQ
Large Volume Dual Fuel $206.Q0
The classifications shown as Firm A through C and Dual Fuel A through Large Volume Dual Fuel
are commercial and industrial rates based on their usage and ability to switch to an alternate fuel
use when demand for natural gas is high.
The above rate structure amounts to approximately$447,000 in yearly revenue for the City. As
was done with the Xcel franchise agreement, and seems to be customary, the ordinance also
states the City will not collect permit fees from CenterPoint for their future work within the City's
right-of-ways. The revenue received in past years from permit fees is approximately $11,000 per
year.
The ordinance provides for no required sunset on the fee, but includes provisions for review
every two years.
The following schedule provides an approximate timeline for implementation of the proposed
ordinances:
Adoption of Franchise Agreement with CenterPoint Energy May 2003
Council/Manager Meeting- CenterPoint Franchise Fee Discussion September 11, 2012
Council/Manager Meeting- CenterPoint Franchise Fee Discussion October 9, 2012
Council/Manager Meeting- CenterPoint Franchise Fee Discussion November 13, 2012
Publication of City Newsletter with Public Hearing for New Ordinance Nov/Dec 2012
Publication of News Release December 5, 2012
Council Meeting- Public Hearing for First Consideration of Proposed December 18, 2012
Ordinance
Council Meeting- Public Hearing for Second Consideration of Proposed January 2, 2013
Ordinance
Publication of Adopted Ordinance (effective on January 11, 2013) January 10, 2013
Commencement of C�nterPoint Franchise Fee Collection (90 days after April 2013
CenterPoint Notification)
Attachments
• Proposed Ordinance No. 492, Amending Ordinance No. 279, 2nd Series, Implementing a Gas
Energy Franchise Fee on CenterPoint Energy Minnesota (3 pages)
Recommended Action
Motion to adopt Ordinance No. 492, Amending Ordinance No. 279, 2nd Series, Implementing a
Gas Energy Franchise Fee on CenterPoint Energy Minnesota on first consideration.
ORDINANCE NO. 492, 2ND SERIES
AN ORQINANCE AMENDING THE CITY CODE
Amending Gas Franchise Ordinance No. 279
City of Golden Valley, Hennepin County, Minnesota
IMPLEMENTING A GAS ENERGY FRANCHISE FEE ON CENTERPOINT ENERGY
MINNESOTA GAS ("CENTERPOINT ENERGY") FOR PROVIDING GAS ENERGY
SERVICE WITHIN THE CITY OF GOLDEN VALLEY, MINNESOTA
The City Council for the City of Golden Valley hereby ordains as follows:
Section 1. Definitions. For the purposes of this Ordinance, the following terms shall have
the following meanings:
Franchise Agreement. The franchise agreement be#ween the City and Gompany
pursuant to City Ordinance 279.
Notice. "Notice" means a writing served by any party or parties on any other party or
parties. Notice to Company shall be mailed to CenterPoint Energy, Minnesota
Division Vice President, 800 LaSalle Avenue, Minneapolis, MN 55402. Notice to
City shall be mailed to the City Clerk at 7800 Golden Valley Road, Golden Valley,
MN 55427.
Section 2. Adoption of Franchise Fee.
2.1 Purpose. The City Council has determined that it is in the best interest of the
City to impose a franchise fee on those public utility companies that provide natural
gas services within the City. Ordinance 447, as amended, imposes a franchise fee
on the public utility companies providing electric services with the City. Pursuant to
the Franchise Agreement the City has the right to impose a franchise fee on
Company.
2.2 Franchise Fee Statement and Schedule. A franchise fee is hereby imposed on
Company commencing with the February, 2013 monthly billing, and in accordance
with the following fee schedule:
Customer Classification Amount per Account per Manth
�
Residential: Single family homes, duplex, triplex $ 2.00 per month
and quads, individually metered
apartment units in larger complexes
Firm A: Less than 1,500 therms annual $ 3.50 per manth
usage
Firm B: Greater than 1,500 and less than $ 22.50 per month
5,000 therms annual usage
Firm C: Greater than 5,000 therms annual $ 22.50 per month
usage
Dual Fuel A: Less than 120,000 therrns annual $206.00 per month
usage
Dual Fuel B: Greater than 120,000 therms annuai $206.00 per month
usage
LV Dual Fuel: Greater than 2,000 therms per day $206.00 per month
2.3 Account Fee. This fee is an account based fee and not a meter-based fee. In
the event that an entity covered by this ordinance has more than one meter, but only
one aecount, only one fee shall be assessed to that account. In the event any
entities covered by this ordinance have more than ane account, each account shall
be subject to the appropriate fee. In the event a question arises as to the proper fee
amount for any account, the highest possible fee amount shall apply.
2.4 Payment. Franchise fees are to be collected by the Company and submitted to
the City as follows:
January - March collections due by April 30.
April - June collections due by July 31.
July - September collections due by October 31.
October - December collections due by January 31.
2.5 Record Support for Pavment. The Company shall make each payment when
due and, if requested by the City, shall provide a statement summarizing how the
franchise fee payment was determined, including information showing any
adjustments to the total made to account for any non-collectible accounts, refunds or
error corrections. The Company shall permit the City, and its representatives,
access to the Company's records for the purpose of verifying such statements.
2.6 Payment Adjustments. Payment to the City will be adjusted where the
Company is unable to collect the franchise fee. This includes non-collectible
accounts.
2.7 Surcharqe. The City recognizes that the Minnesota Public Utilities Commission
may allow the Company to add a surcharge to customer rates to reimburse the
Company for the cost of the fee.
2.8 Dispute Resolution. If either party asserts that the other party is in default in the
performance of any obligation hereunder, the complaining party shall notify the other
party of the default and the desired remedy. The notification shall be written.
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 of
the written notice, the parties may jointly select a mediator to facilitate further
discussion. The parties will equally share the fees and expenses of this 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 selected mediator, either party may commence an
action in District Court to interpret and enforce this ordinance or for such other relief
permitted by law.
2.9 Effective Date of Franchise Fee. The effective date of this Ordinance shall be
after its publication and ninety (90) days or more after sending written notice
enclosing a copy of this adopted Ordinance to Company by certified mail. Collection
of the fee shall commence as provided above.
2.10 Relation to Franchise Agreement. This ordinance is enacted in compliance
with the Franchise Agreement and shall be interpreted as such.
2.11 Periodic Review. The City Council shall review this ordinance every two years
in whatever manner the City Manager then determines to be appropriate, including,
but no limited to, review by the City Council in either a work session or a regular
session. Failure to review this ordinance shall not in any way invalidate or limit it.
2.12 Permit Fees. The Company will administer the collection and payment of
franchise fees to the City in lieu of permit fees, or other fees that may otherwise be
imposed on the Company in relation to its operations as a public utility in the City so
long as the following requirements are met:
(1) The Company applies for any and all permits, licenses and similar
documentation as through this provision did not exist.
(2) The Company requests the fee to be waived at the time of application.
Section 3. Effective Date. This ordinance takes effect as provided herein.
Adopted by the City Council this day of , 201�
/s/Shepard M. Harris, Mayor
Shepard M. Harris, Mayor
ATTEST:
/s/Susan M. Virniq
Susan M. Virnig, City Clerk
(This ordinance will be uncodified and referenced in Chapter 25 of the City Code).
Q00090l480568/1552623_1