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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