HomeMy WebLinkAboutItem 6b. Introduce an Ordinance to renew a Franchise Agreement with Phillips 66 Pipeline, LLC for Existing Pipelines within the City's Right-of-Way Item 6b
Department: Public Works
Cost Center: 5001
For Agenda of: 2/15/2022
Placement: Public Hearing
Estimated Time: 60 minutes
FROM: Matt Horn, Public Works Director
Prepared By: Paul Fields, Administrative Analyst
SUBJECT: RENEW A FRANCHISE AGREEMENT FOR EXISTING PIPELINES
WITHIN THE CITY RIGHTS-OF-WAY WITH PHILLIPS 66 PIPELINE LLC
RECOMMENDATION
Introduce an Ordinance entitled “An Ordinance of the City Council of the City of San Luis
Obispo, California, granting to Phillips 66 Pipeline LLC a franchise to construct, operate
and maintain pipelines for the transportation of oil, and other specified materials in the
City of San Luis Obispo” to renew a franchise agreement with Phillips 66 Pipeline LLC for
common carrier pipelines located in the City’s rights-of-way.
DISCUSSION
On June 24, 2021, Phillips 66 Pipeline LLC requested to renew its existing franchise
agreement pertaining to common carrier pipelines located in the City’s rights -of-way
(Attachment A). Common carrier pipelines transport the products of other companies as
well as the products of the franchisee
Background
The City has several franchise agreements with utility companies to allow the use of public
rights of ways for both the transmission and distribution of different products or services.
For example, currently the City has franchise agreements with Pacific Gas and Electric,
the Gas Company, and Charter Communications.
On January 11, 2022, the City Council adopted a resolution of intention to approve a
franchise agreement with Phillips 66 Pipeline LLC for pipelines located within the City’s
rights-of-way (Attachment B). The resolution also set a public hearing for public comment
on the agreement for February 15, 2022. The procedures for adoption of a franchise
agreement are prescribed by Article X of the City Charter (Attachment C). Specifically,
Charter Section 1002 requires the City Clerk to publish the resolution of intention within
fifteen (15) days of its adoption in a local newspaper and requires a public hearing prior
to approval of the franchise within sixty (60) days of the passage of the resolution of
intention.
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Item 6b
Scope of Franchise Agreement
The proposed franchise agreement (Attachment D) would provide Phillips 66 Pipeline
LLC the non-exclusive right to “construct, erect, maintain, operate, repair, renew and
change the size of and remove pipelines … for the transportation of oil, products, thereof,
hydrocarbon gases and other gas necessary for the operation and maintenance of the
pipelines…” The application requests approval of a three-year term as Phillips 66 Pipeline
LLC is planning to divest operations within the San Luis Obispo region. Currently, Phillips
66 Pipeline LLC has no plans to install new pipelines. The franchise agreement would
require Phillips 66 Pipeline LLC to provide the City with plans for decommissioning the
pipelines and would give the City the authority to require their removal. All its existing
pipelines are shown in an exhibit attached to the application requesting franchise approval
(Attachment E).
Franchise Fee
Franchise fees for distribution pipelines are set by the Public Utilities Code Section
6231.5. The fee ranges from $0.088 to $0.66 per lineal foot based on pipeline diameter,
with CPI adjustments added since 1989 when these rates were first established. The
proposed franchise agreement limits pipeline diameter to 12 inches, which corresponds
to a fee of $.264 (plus CPI) per lineal foot. The majority of the pipeline length installed has
an 8-inch internal diameter, resulting in a fee of $.176 (plus CPI) per lineal foot. Based on
the Phillips 66 Pipeline facilities that are installed within City Rights of Way, the resulting
annual revenue is approximately $6,700.
In addition to the annual franchise fee, the City is proposing a granting fee of $10,000 to
cover staff costs associated with preparing the agreement, advertising the request,
holding the required public meetings (three total and described below), and managing the
franchise agreement after adoption.
Previous Council or Advisory Body Action
The City Council renewed the franchise agreement for common carrier pipelines in July
2011 and approved the transfer of the franchise from ConocoPhillips Pipeline Company
to Phillips 66 Pipeline LLC in February 2013. In January 2022 the City Council adopted
Resolution No. 11297 declaring its intention to renew the franchise agreement with
Phillips 66 Pipeline LLC. No other advisory body review is required for this action
Policy Context
The process for adoption of a new franchise agreement is prescribed by the Public Utilities
Code (Section 6232-6234). The following schedule is proposed:
January 11, 2022: Introduce and pass resolution of intent
February 15, 2022: Hold public hearing and introduce ordinance
March 15, 2022: Second reading and final adoption or ordinance
April 14, 2022: Ordinance becomes effective
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Item 6b
Article X of the City Charter empowers the City Council to grant by ordinance a franchise
to furnish the City and its inhabitants with public uti lities. In line with the Public Utilities
Code, and the City Charter, the City Council adopted a resolution declaring its intention
to grant the franchise and the set a public hearing for the February 15, 2022, City Council
meeting. The adopted resolution was published more than fifteen days prior to the
February 15, 2022, City Council meeting.
Public Engagement
Resolution 11297, adopted by the City Council on January 11, 2022, scheduled a public
hearing for February 15, 2022, to allow for public comment on the agreement.
CONCURRENCE
The Finance Department concurs with this recommendation.
ENVIRONMENTAL REVIEW
The renewal of the franchise agreements is categorically exempt from the provisions for
the California Environmental Quality Act in accordance with section 15061(b)(3). The
proposed award of the franchise to Phillips 66 Pipeline LLC will continue the ope ration
and maintenance of an existing pipeline. No new development or intensification of
development would result from the franchise, therefore there is no potential for significant
effects on the environment.
FISCAL IMPACT
Budgeted: Yes/No Budget Year: 2021-22
Funding Identified: Yes
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Fees
Other:
Total $ $ $ $
There is a minor positive fiscal impact to the general fund in the amount of $6,700
associated with granting of the proposed franchise agreement for pipeline services .
Page 209 of 255
Item 6b
ALTERNATIVES
1. The City Council may reject the application by Phillips 66 Pipeline LLC for a new
franchise agreement. This alternative is not recommended because it is in the City’s
best interest to have a qualified company operate and maintain the existing pipeline
infrastructure within the City’s right-of-way. Should the City Council express its
intention to not award the franchise to Phillips 66 Pipeline LLC, the applicant would
have three available options. The first would be to request City approval to physically
remove the pipeline from the City’s right-of-way. The second option would be to leave
the pipeline in its current location but seal it where it enters and leaves the City,
thereby rendering it unusable. The third option would be to initiate a condemnation
action against the City under the Public Utilities Code in order to obtain through
eminent domain a subsurface easement or other rights to utilize the pipeline within the
City.
2. The City Council may reject the agreement in its current form and advise staff
on terms that would need to be included in the agreement prior to approval. This
would reset the process prescribed by the City Charter and California Public Utilities
Code. The revised agreement would need to be approved by Phillips 66 Pipeline LLC.
With no agreement in place Phillips 66 Pipeline LLC would be subject to standard
utility encroachment permit requirements.
ATTACHMENTS
A - Application Requesting Renewal of Franchise
B - Resolution No. 11297 Declaring Intent to Renew Franchise
C - Charter of the City of San Luis Obispo Article X
D - Draft Ordinance approving the Franchise Agreement with Phillips 66 Pipeline LLC
E - Map of Existing Pipelines in the City
Page 210 of 255
Terri James-Barksdale
RES Agent, Western Region
Real Estate Transactions
PHILLIPS 66
3900 Kilroy Airport Way, Ste 210
Long Beach CA 90806
O: 562-290-1529
Terri.L.James-Barksdale@p66.com
November 5, 2021
City of San Luis Obispo
Public Works
919 Palm Street
San Luis Obispo, CA 93401-3218
RE: Phillips 66 Pipeline Ordinance 1587 – Application Request for Extension
Public Works Director:
Phillips66 Pipeline LLC currently operates pipelines within the city limits of San Luis Obispo, CA under the subject
pipeline ordinance. Phillips 66 is planning to divest from operations within this San Luis Obispo region, therefore
we are seeking only to extend the Ordinance for a term of 3 additional years, with an option to renew for an
additional term.
The existing pipelines are located as shown on the attached maps.
We have also provided a copy of our existing pipeline franchise with the neighboring City of Arroyo Grande as
requested for reference.
The California Constitution, under Division 3 within the Public Utilities Code (PUC), Chapter 2, Sections 6201-
6302, allows for local governments to grant gas, oil, electric, and water franchises. Complete legislative
language can be found on the following website:
https://leginfo.legislature.ca.gov/faces/codes_displayexpandedbranch.xhtml?tocCode=PUC&division=3.&title=
&part=&chapter=2.&article=
As in the past, Phillips 66 intends to continue with all safety measures and regulatory practices for the continued
safe operations of all our pipelines within the City of San Luis Obispo.
For more information about Phillips 66 Pipeline LLC, and its pipeline safety practices, please visit
www.phillips66pipeline.com.
We look forward to working with you on this renewal process.
Sincerely,
Terri J. Barksdale
cc: Tracey Brown
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R 11297
RESOLUTION NO. 11297 (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, DECLARING THE CITY’S INTENT TO
APPROVE A FRANCHISE ORDINANCE, SUPERSEDING ORDINANCE
1564 (2011 SERIES), TO OPERATE AND MAINTAIN PIPELINES FOR
THE TRANSPORTATION OF OIL AND OTHER SPECIFIED MATERIALS
IN THE CITY OF SAN LUIS OBISPO BY PHILLIPS 66 PIPELINE LLC
AND SETTING A PUBLIC HEARING FOR FEBRUARY 15, 2022
WHEREAS, the City of San Luis Obispo adopted Ordinance No. 1391 on July 10,
2001 granting a franchise to Union Pipeline Company, a California Corporation for a term
of 10 years for the transportation and distribution of oil and other specified materials in
the City of San Luis Obispo; and
WHEREAS, on April 17, 2007 the City Council adopted Ordinance No. 1504
transferring the franchise agreement from Union Pipeline Company to Conoco-Phillips;
and
WHEREAS, on June 21, 2011, the City of San Luis Obispo adopted Ordinance
No. 1564 for a new franchise agreement to replace the existing franchise agreement
approved by Ordinance No. 1391 and set to expire on July 9, 2011; and
WHEREAS, On February 5, 2013 the City Council adopted Ordinance No. 1587
transferring the franchise from ConocoPhillips to Phillips 66 Pipeline LLC; and
WHEREAS, On June 24, 2021 Phillips 66 Pipeline LLC applied to the City of San
Luis Obispo for a new franchise agreement to replace the existing franchise agreement
approved by Ordinance No. 1564; and
WHEREAS, Phillips 66 Pipeline LLC is currently operating pipelines for the
transportation of oil and other specified materials within the City of San Luis Obispo; and
WHEREAS, the new franchise agreement will include the following key provisions;
Purpose: To maintain and operate pipelines for the transportation of oil and
hydrocarbons within the City of San Luis Obispo.
Type: Non-exclusive
Term: 3-years
Fees: Annual franchise fee to the City in accordance with Public Utilities
Code Section 6231.5 (a fee ranging from $0.088 to $0.660, adjusted
per the Consumer Price Index, per lineal foot based on pipeline
diameter)
DocuSign Envelope ID: D5095864-95EB-44F0-9C02-169873E34FF3
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Resolution No. 11297 (2022 Series) Page 2
R 11297
Bond: One-million dollars faithful performance bond.
Insurance: Ten million dollars liability insurance
Indemnity: Phillips 66 Pipeline LLC to indemnify the City of any and all damages
to personas or property arising out of operations under the franchise.
Includes indemnity for joint acts with the City.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Pursuant to Section 1002 of the City Charter of the City of San Luis
Obispo, the City Council hereby declares its intention to consent to the granting of a
franchise to maintain and operate pipelines for the transportation of oil and other specified
materials within the City of San Luis Obispo to Phillips 66 Pipeline LLC.
DocuSign Envelope ID: D5095864-95EB-44F0-9C02-169873E34FF3
Page 214 of 255
Resolution No. 11297 (2022 Series) Page 3
R 11297
SECTION 2. A public hearing will be held on February 15, 2022 at 6:00 p.m. The
City Clerk shall publish this resolution within fifteen (15) days of its passage in a
newspaper in the City of San Luis Obispo. Any persons having an interest in the franchise
approval or any objection to the approval of the franchise may appear before the Council
to be heard thereon.
Upon motion of Vice Mayor Christianson, seconded by Council Member Marx, and
on the following roll call vote:
AYES: Council Member Marx, Pease, Shoresman, Vice Mayor
Christianson, and Mayor Stewart
NOES: None
ABSENT: None
The foregoing resolution was adopted this 11th day of January 2022.
Mayor Erica A. Stewart
ATTEST:
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
Teresa Purrington
City Clerk
DocuSign Envelope ID: D5095864-95EB-44F0-9C02-169873E34FF3
1/13/2022 | 11:48 AM PST
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ARTICLE X.
LICENSES AND FRANCHISES
Section 1001. Granting of Franchises.
The City Council is empowered to grant by ordinance a franchise to any person, firm or corporation, whether
operating under an existing franchise or not, to furnish the City and its inhabitants with transportation,
communication, terminal facilities, water, light, heat, power, refrigeration, storage, or any other public utility of
public service, and to use the public streets, ways, alleys, and other places, as the same now or may hereafter
exist, for the construction and operation of plants, works, or equipment necessary or convenient for traversing
any portion of the City for the transmitting or conveying of any service elsewhere. The City Council may prescribe
the terms and conditions of any such grant. It may also provide, by procedural ordinance, the method of
procedure and additional terms and conditions for making such grants, subject to provisions of this Charter. The
City Council may, by ordinance or resolution, establish fees or charges for the granting of licenses or franchises.
Section 1002. Resolution of Intention, Notice, and Public Hearing.
Before granting any franchise, the City Council shall pass a resolution declaring its intention to grant the same,
stating the name of the proposed grantee, the character of the franchise and the terms and conditions upon
which it is proposed to be granted. Such resolution shall fix and set forth the day, hour and place when and where
any persons having any interest therein or any objection to the granting thereof may appear before the City
Council and be heard thereon. It shall direct the City Clerk to publish said resolution at least once within fifteen
(15) days of the passage thereof in a newspaper in the City of San Luis Obispo. The time fixed for such hearing
shall not be less than twenty (20) or more than sixty (60) days after the passage of said resolution. At the time set
for the hearing, the City Council shall proceed to hear and pass upon all protests, and its decision thereon shall be
final and conclusive. Thereafter, it may grant or deny the franchise, subject to the right of referendum of the
people.
Section 1003. Term of Franchise.
Every franchise shall state the term for which it is granted, which, unless it is indeterminate as provided for herein,
shall not exceed thirty-five (35) years. No franchise may be renewed until three (3) years before its term expires. A
franchise grant may be indeterminate, that is to say, it may provide that it shall endure in full force and effect until
the same, with the consent of the Public Utilities Commission of the State of California, shall be voluntarily
surrendered or abandoned by its possessor, or until the State of California or some municipal or public
corporation, thereunto duly authorized by law, shall purchase by voluntary agreement or shall condemn and take,
under the power of eminent domain, all property actually used and useful in the exercise of such franchise and
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situated within the territorial limits of the State, municipal or public corporation purchasing or condemning such
property, or until the franchise shall be forfeited for non-compliance with its terms by the possessor thereof.
Section 1004. Grant to be in Lieu of All Other Franchises.
Any franchise granted by the City with respect to any given utility service shall be in lieu of all other franchises,
rights, or privileges owned by the grantee, or by any successor of the grantee to any rights under such franchise,
for the rendering of such utility service within the limits of the City as they now or may hereafter exist, except any
franchise derived under Section 19 of Article XI of the Constitution of California as said section existed prior to the
amendment thereof adopted October 10, 1911. The acceptance of any franchise hereunder shall operate as an
abandonment of all such franchises, rights, and privileges within the limits of the City as such limits shall at any
time exist, in lieu of which such franchise shall be granted. Any franchise granted hereunder shall not become
effective until written acceptance thereof shall have been filed by the grantee thereof with the City Clerk. Such
acceptance shall be filed within ten (10) days after the adoption of the ordinance granting the franchise and when
so filed, such acceptance shall constitute a continuing agreement of such grantee that if and when the City shall
thereafter annex, or consolidate with, additional territory, any and all franchises, rights, and privileges owned by
the grantee therein, except a franchise derived under said constitutional provision, shall likewise be deemed to be
abandoned within the limits of such territory.
Section 1005. Eminent Domain.
No franchise grant shall in any way or to any extent impair or affect the right of the City to acquire the property of
the grantee thereof either by purchase or through the exercise of the right of eminent domain, and nothing herein
contained shall be construed to contract away or to modify or to abridge either for a term or in perpetuity the
City’s right of eminent domain with respect to any public utility. Every franchise grant shall reserve to the City the
right to purchase the property of such utility either at an agreed price or a price to be determined in a manner to
be prescribed in the grant, or in the procedural ordinance hereinabove mentioned. In fixing the price to be paid by
the City for any utility, no allowance shall be made for franchise value (other than the actual amount paid to the
City at the time of the franchise acquisition), goodwill, going concern, earning power, increased cost of
reproduction, severance damage, or increased value of right-of-way.
Section 1006. Duties of Grantee.
By its acceptance of any franchise hereunder, the grantee shall covenant and agree to perform and be bound by
each and all of the terms and conditions imposed in the grant or by procedural ordinance, and shall further agree
to:
(A) Comply with all lawful ordinances, rules, and regulations theretofore or thereafter adopted by the City
Council in the exercise of its police power, governing the construction, maintenance, and operation of its plants,
works, or equipment;
Art. X Licenses and Franchises | Charter of the City of San Luis Obispo Page 2 of 3
The Charter of the City of San Luis Obispo is current through amendments adopted through August 30, 2011.
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The Charter of the City of San Luis Obispo is current through amendments adopted through August 30,
2011.
Disclaimer: The City Clerk's Office has the official version of the Charter of the City of San Luis Obispo. Users
should contact the City Clerk's Office for ordinances passed subsequent to the ordinance cited above.
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(B) Pay to the City on demand the cost of all repairs to public property made necessary by any of the operations
of the grantee under such franchise;
(C) Pay to the owner on demand the cost of all repairs to private property made necessary by any of the
operations of the grantee under such franchise;
(D) Indemnify and hold harmless the City and its officials from any and all liability for damages proximately
resulting from any operations under such franchise;
(E) Remove and relocate without expense to the City any facilities installed, used and maintained under the
franchise if and when made necessary by any lawful change of grade, alignment, or width of any public street, way,
alley, or place, including the construction of any subway or viaduct; and
(F) Pay to the City during the life of the franchise, a percentage, to be specified in the grant, of the gross annual
receipts of the grantee within the limits of the City, or such other compensation as the City Council may prescribe
in the grant.
The City Manager shall be responsible for the enforcement of all provisions of the grant.
Section 1007. Violations.
The exercise by any person, firm or corporation of any privilege for which a franchise is required, without
procuring such franchise, shall be a misdemeanor, and each day that such condition continues to exist shall
constitute a separate violation.
Art. X Licenses and Franchises | Charter of the City of San Luis Obispo Page 3 of 3
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O ______
ORDINANCE NO. _____ (2022 SERIES)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, GRANTING TO PHILLIPS 66 PIPELINE LLC, A
FRANCHISE TO CONSTRUCT, OPERATE, AND MAINTAIN PIPELINES
FOR THE TRANSPORTATION OF OIL, AND OTHER SPECIFIED
MATERIALS IN THE CITY OF SAN LUIS OBISPO
WHEREAS, on January 18, 2022, the City of San Luis Obispo passed Resolution
No. 11297 (2022 Series), a resolution of intention to approve a franchise agreement with
Phillips 66 Pipeline LLC; and
WHEREAS, the Council of the City of San Luis Obispo conducted a public hearing
via teleconference, on February 15, 2022, for the purpose of considering approval of the
franchise agreement; and
WHEREAS , notices of said public hearing were made at the time and in the
manner required by law; and
WHEREAS, Phillips 66 Pipeline LLC is currently operating pipelines for the
transportation of oil and other specified materials within the City of San Luis Obispo; and
WHEREAS, Phillips 66 Pipeline LLC has requested the City of San Luis Obispo
enter into a new franchise agreement.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. The City Council of the City of San Luis Obispo hereby grants to
Phillips 66 Pipeline LLC the non-exclusive right, privilege and franchise to continuation of
its existing use of the public streets for its defined operational purposes on the terms and
conditions and subject to the restrictions and obligations set forth herein.
SECTION 2. Summary and Terms and Conditions of Franchise:
Page 221 of 255
Ordinance No. _____ (2022 Series) Page 2
O ______
TABLE OF CONTENTS
ARTICLE 1 NATURE OF FRANCHISE ................................................................................ 4
A. Grant of Franchise ............................................................................................................ 4
B. Limitations Upon Grant .................................................................................................... 5
C. Rights Reserved to the City of San Luis Obispo ........................................................ 6
ARTICLE 2 APPURTENANCES ........................................................................................... 6
ARTICLE 3 LOCATION OF PIPELINES ............................................................................... 7
ARTICLE 4 CONSTRUCTION OF PIPELINES..................................................................... 7
A. Terms of Construction ....................................................................................................... 7
B. Restoration of Streets ...................................................................................................... 7
ARTICLE 5 COMMENCEMENT OF CONSTRUCTION ........................................................ 8
ARTICLE 6 MAPS AND REPORTS TO BE FURNISHED .................................................... 8
ARTICLE 7 COMPENSATION TO THE CITY ...................................................................... 9
ARTICLE 8 EMERGENCY EQUIPMENT AND CREWS ..................................................... 11
ARTICLE 9 REPAIR OF DEFECTIVE FACILITIES AND REPAIR OF DAMAGE TO CITY
STREETS ........................................................................................................................... 11
ARTICLE 10 REARRANGEMENT OF FACILITIES ........................................................... 11
A. Expense of Grantee ........................................................................................................ 11
B. Expense of Others ......................................................................................................... 13
C. Rearrangement of the Facilities of Others ...................................................................... 13
D. Notice ............................................................................................................................ 13
ARTICLE 11 GRATEES’S REMOVAL OR ABANDONMENT OF FACILITIES ................... 14
ARTICLE 12 COMPLETION OF WORK ............................................................................. 16
ARTICLE 13 RECOVERY OF COSTS OR REPAIRS AND UNPAID FEES ....................... 17
ARTICLE 14 BOND ............................................................................................................ 19
ARTICLE 15 INSURANCE ................................................................................................. 19
ARTICLE 16 INDEMNIFICATION BY GRANTEE ............................................................... 21
ARTICLE 17 CHANGES IN CONTROL OF FRANCHISE .................................................. 21
ARTICLE 18 WAIVER OF BREACH ................................................................................... 24
ARTICLE 19 DEFAULT ..................................................................................................... 24
ARTICLE 20 SCOPE OF RESERVATION .......................................................................... 25
ARTICLE 21 NOTICE ........................................................................................................ 25
ARTICLE 22 SUCCESSORS ............................................................................................. 26
ARTICLE 23 ACCEPTANCE OF FRANCHISE .................................................................. 26
ARTICLE 24 FORCE MAJEURE ........................................................................................ 26
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Ordinance No. _____ (2022 Series) Page 3
O ______
ARTICLE 25 LIQUIDATED DAMAGES .............................................................................. 27
ARTICLE 26 ATTORNEY’S FEES ...................................................................................... 27
ARTICLE 27 CONDEMNATION ......................................................................................... 28
ARTICLE 28 SURVIVALOF OBLIGATIONS ....................................................................... 28
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Ordinance No. _____ (2022 Series) Page 4
O ______
ARTICLE 1
NATURE OF FRANCHISE
A. Grant of Franchise.
1. The City of San Luis Obispo (hereinafter referred to as "City"), hereby grants
to Phillips 66 Pipeline LLC, (hereinafter referred to as "Grantee") pursuant to the provisions
of Article X of the San Luis Obispo City Charter, Article XI, Section 9(b) of the California
Constitution, and Section 39732(b) of the California Government Code, the non-exclusive
right, privilege and franchise, subject, however, to all the limitations and restrictions herein
contained, to construct, erect, maintain, operate, repair, renew, abandon, and change the
size of and remove existing pipelines within the City of San Luis Obispo, not to exceed twelve
(12) inches nominal internal diameter, for the transportation of oil, products thereof,
hydrocarbon gases and other gas necessary for the operation and maintenance of the
pipelines, water and mixtures thereof, movable by pipeline, in, under, along, and across the
public streets, ways, alleys and places within the City of San Luis Obispo (hereinafter
collectively referred to as "streets"), as described in Exhibit No. 1, attached hereto and made
a part hereof. There shall be no expansion of existing infrastructure or operations within the
City without the express prior written consent of the City Council.
2. The term of the franchise granted under this Ordinance shall be for a term of
three (3) years, commencing with the date on which it is Granted by the City.
3. Unless otherwise specifically stated, the following provisions shall govern the
interpretation and construction of the franchise granted herein:
(a) This franchise shall include the right, for the period and subject to the
conditions hereof, to construct, erect, maintain, operate, repair, renew, abandon, and
change the size and remove existing pipelines, if any, of Grantee, as laid and constructed
in said streets as of the date of this Agreement.
(b) The terms and conditions of this franchise shall also apply to any
existing pipe or other facilities of Grantee which are located within the right of way of any
existing public road or street at the time such road or street becomes a City Street
through annexation or otherwise, subject to any other existing rights enjoyed by Grantee.
(c) Grantee shall not be relieved of its obligation to promptly comply with any
provision of this franchise by failure of the City to enforce prompt compliance.
(d) Any right or power conferred, or duty imposed upon any officer,
employee, department, or other City entity, by the terms of this franchise, may be legally
transferred to any other City officer, employee, department, or other City entity.
(e) Grantee shall have no recourse whatsoever against the City for any loss,
cost, expense, or damage suffered by Grantee and arising out or related any provision
or requirement of this franchise or its lawful enforcement by the City.
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Ordinance No. _____ (2022 Series) Page 5
O ______
(f) This franchise does not relieve Grantee of any applicable requirements of
the San Luis Obispo Municipal Code or of any federal, state, or City law, ordinance, rule,
regulation, or specification, including, but not limited to, any requirement relating to street
work, street excavation permits, or the use, removal, or relocation of property in streets,
except as specifically prescribed herein.
(g) This franchise is non-exclusive. Neither the granting of this franchise nor
any of the provisions contained herein shall be construed to prevent the City from granting
any identical or similar franchise to any other person.
(h) The compensation provided for in this franchise is for (i) the rights and
privileges granted by this franchise, and (ii) the right and privilege granted to the Grantee
to construct, erect, maintain, operate, repair, renew, abandon and change the size of and
remove existing pipelines pursuant to this franchise within the City's streets. The City
expressly reserves the right to impose and collect from Grantee, on a non-discriminatory
basis, its normal duly established processing and inspection fees from street cutting and
excavation permits to the extent such fees are imposed generally on all non-governmental
applicants for such permits within the City.
(i) Any activities involving the use of a pipeline system for the transmitting of
oil, products thereof, hydrocarbon gases and other gas necessary for the operation and
maintenance of the pipelines, water and mixtures thereof, which are not specifically
authorized under this franchise are prohibited under this franchise. Except as provided in
Article 2, any telecommunication or other uses not authorized in this franchise Ordinance
must be approved by the City under a separate franchise.
(j) If any provision of this franchise, or the application of this franchise to any
person or circumstance is held invalid by a court of competent jurisdiction or is not in
compliance with any requirement of the Public Utilities Commission, the City, or any other
federal or state body or agency having jurisdiction over Grantee's franchise activities, the
remainder of this franchise Ordinance, or the application of this franchise to persons or
circumstances other than those to which it is held invalid or not in such compliance, shall not
be affected thereby.
B. Limitations Upon Grant.
1. No privilege or exemption is granted or conferred by this franchise except
those specifically prescribed herein.
2. Any privilege claimed under this franchise by Grantee in any street shall be
subordinate to any prior lawful occupancy of the street, including the City’s express right to
demand relocation of any pipelines or appurtenances as may be necessary for the City to
undertake its municipal functions and otherwise utilize its right of way for any valid municipal
purpose.
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3. The rights and privileges of this franchise are granted solely to Grantee except
as provided within this franchise Ordinance. This franchise is not to be sold, transferred,
leased, assigned, or disposed of as a whole or in part, either by forced sale, merger,
consolidation, or otherwise, without the City's prior consent as described in Article 17, infra,
or as otherwise expressly provided herein. The City agrees that such prior consent shall
not be unreasonably withheld or conditioned.
C. Rights Reserved to the City.
1. The rights reserved to the City under this franchise Ordinance are in addition
to all other rights of the City, whether authorized by the San Luis Obispo City Charter, San
Luis Obispo City Municipal Code, or any other federal, state, or City law, rule, or regulation.
No action, proceeding or exercise of a right shall affect any other rights that may be held by
the City. Grantee, by acceptance of this franchise, shall be bound thereby and shall comply
with any action or requirement of the City in its exercise of any such right or power.
2. The City shall have the power and right at all times during the term of this
franchise to require Grantee to conform to the laws, rules and regulations governing the
operation of pipelines now or hereafter adopted by the City Council to the extent permitted
by law.
3. The City may enforce, to the maximum extent permitted by law, the inspection
and testing of pipelines, pursuant to state and federal standards and require appropriate
remuneration and fees to cover such enforcement activities.
ARTICLE 2
APPURTENANCES
The Grantee shall have the right, subject to the prior approval of the City Public Works
Department, to construct and maintain such traps, manholes, conduits, valves, appliances,
attachments, and appurtenances (hereinafter for convenience collectively referred to as
"appurtenances"), as may be necessary or convenient for the proper maintenance and
operation of the pipelines under said franchise. Said appurtenances shall be so located as to
conform to any order of the City Public Works Department in regard thereto and not to
interfere with the use of the streets for travel. The Grantee shall have the right, subject to
such ordinances, rules, or regulation as are now or may hereafter be in force, to make all
necessary excavations in said street for the construction and repair of said pipelines and
appurtenances subject to the prior approval of the City Public Works Department.
"Appurtenances" shall also include any adjunct communications lines and/or conduits as
coaxial cable, optical fiber, wire, or other transmission lines or forms of transmission, and
associated equipment and devices located in, upon, along, across, under or over the streets
of the City, the sole function of which is to monitor or control the operation or safety of the
pipeline system via the distribution of video, audio, voice, or data signals. An adjunct
communications line shall not include any facility which distributes, through any means, to
subscribers or persons other than Grantee, the signal of one or more broadcast television or
radio stations or other sources of video, audio, voice, or data signals.
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ARTICLE 3
LOCATION OF PIPELINES
So far as is practicable and within the requirements of the California State Fire
Marshall, any pipeline hereinafter laid shall be located along the edge or shoulder of the
streets or in the parking areas adjacent thereto so as not unreasonably to disturb the flow of
traffic and where possible shall be laid in the unpaved portion of the street.
ARTICLE 4
CONSTRUCTION OF PIPELINES
A. Terms of Construction. The pipelines and appurtenances laid, constructed or
maintained under the provisions of this franchise shall be installed, maintained, and inspected
by the Grantee in a satisfactory, safe, and workmanlike manner, of good material, and in
conformity with all ordinances, rules, or regulations now or hereafter adopted or prescribed
by the City Council, State, or Federal authorities.
B. Restoration of Streets. The work of laying, constructing, maintaining, operating,
renewing, repairing, changing size, decommissioning, abandoning, removing and moving any
of the pipeline system contemplated by this franchise and all other work in exercise of this
franchise shall be conducted according to the provisions of the City's encroachment
ordinances from time to time prevailing, and otherwise in accordance with federal and state
law and applicable City ordinances, and with the least possible hindrance or interference to
the use of City roads by the public or by the City of San Luis Obispo, and Grantee shall
provide all necessary warning, safety and traffic control devices as are or may be required by
City, State or Federal regulations. All excavations shall be back filled and adequately
compacted. As part of any work completed under provisions of this franchise agreement, the
surface of City streets shall be repaired and replaced to meet current City standards and
specifications. Under no circumstances shall the surface of City streets be placed in a
manner less than as good and serviceable condition as existed at the beginning of said work,
to the satisfaction of the City Public Works Department.
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ARTICLE 5
COMMENCEMENT OF CONSTRUCTON
. The Grantee shall not commence the construction of any new pipelines under the
provision of this franchise or add to such existing pipeline system, if any there be, until it first
shall have applied for and obtained a permit therefore from the City Public Works Department.
The application of the Grantee shall show the following facts: the length, approximate
depth and proposed location of the pipeline proposed to be laid or constructed, the size and
description of the pipeline intended to be used, and such other relevant facts as the City
Public Works Department may require. The Grantee shall pay any and all encroachment
permit fees of the City. Upon the completion of the construction of any pipelines constructed
pursuant to said franchise, the Grantee shall render a statement to the City of San Luis Obispo
showing in detail the permit or permits issued and the total length of pipeline, the construction
of which was authorized under such permit, or permits, and the total length of pipeline
actually laid, and the Grantee shall make payment to the City for the pipelines which have
been constructed under said franchise as provided in Article 7, Section C. Nothing herein
shall be construed to obligate the City to approve or allow any new or expanded pipelines or
appurtenances during the term of the grant herein or otherwise.
ARTICLE 6
MAPS AND REPORTS TO BE FURNISHED
A. Within six (6) months of the effective date of this franchise for existing
pipelines, and within ninety (90) days following the date in which any additional pipelines that
may be permitted under this franchise, the Grantee shall file a map in such form as may be
required by the City Public Works Department showing the accurate location and size of all
its facilities then in place, and shall, upon installation of any additional facilities or upon
removal, change or abandonment of all or any portion thereof, file a revised map or maps
showing the location and size of all such additional and/or abandoned facilities as of this date.
Cathodic protection is to be used for all facilities installed or maintained pursuant to this
franchise. For facilities previously in liquid service and where the liquids have been removed
and the facilities inserted, or for facilities previously in gas service that are not pressurized,
cathodic protection shall be maintained consistent with State Fire Marshall or other agency
requirements. A description of all the protective devices shall be furnished to the City Public
Works Department which shall show the location and types of anodes, including a description
of methods to be used as a protection against corrosion and electrolytic leakage.
B. Grantee shall file with the City Finance Director, within thirty (30) days after
the expiration of the calendar year, or fractional calendar year, following the date of the
granting of this franchise and within thirty (30) days after the expiration of each calendar year
thereafter, two copies of a report verified by the oath of Grantee or by the oath of a duly
authorized representative of Grantee, showing, for the immediately preceding franchise
period, the length of main lines in streets, the nominal internal diameter of such main lines,
the rate per foot per year (when applicable) and the total amount due to the City. In this report,
Grantee shall also show any change in franchise footage since the last franchise report,
segregating such footage as to new main lines and adjunct communications lines laid, old
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main lines and adjunct communications lines removed, old main lines and adjunct
communications lines abandoned in place, and the footage of main lines and adjunct
communications lines in territory annexed by the City since the last franchise report.
C. Grantee shall file with the City Public Works Department within sixty (60)
days after the end of the calendar year a report, in duplicate, showing the permit number of
each permit obtained for the installation of new main lines during the immediately preceding
franchise report period, together with the length and size of said main lines.
ARTICLE 7
COMPENSATION TO THE CITY
A. During the term of this franchise, Grantee shall pay to the City an annual fee
for this franchise, said fee to be those fees prescribed by the California Public Utilities Code
section 6231.5, provided that the rate is subject to increase to the maximum rate established
in subsequent amendments of the California Public Utilities Code. Annual payments to be
made pursuant to this franchise shall be due and payable in arrears April 1 of each year of
this franchise. The initial payment hereunder shall include compensation to the City at the
otherwise applicable maximum rate for any periods of expiration of this agreement, and may
be prorated as appropriate for the remainder of the current calendar year based on a 365-
day year.
At the time of payment of fees by Grantee, Grantee shall file a verified statement with
the City Clerk of the City of San Luis Obispo, with a copy to the City Public Works Department
showing in detail the number of lineal feet and the diameter thereof, expressed in inches, of
pipelines covered by this franchise during the previous calendar year, or portion thereof .
The compensation provided for in this Article shall be subject to an increase after the
first year of the franchise and each subsequent year during the term of this franchise,
including any period of expiration prior to this renewed agreement, based on the provisions
of California Public Utilities Code Section 6231.5, as amended.
The fees set forth will be adjusted annually each year by the annual percentage
change in the U.S. Bureau of Labor Statistics (or successor agency) consumer price index
for all urban consumers (CPI-U) all cities average for the prior calendar year.
Notwithstanding the provisions as otherwise stated in this Article and franchise, the
Grantee shall be liable to pay the City the annual fee for the period to and including the date
of either actual removal of the facilities or the effective date of any agreed upon abandonment
"in place," and until the Grantee shall have fully complied with all of the provisions of law or
ordinances relative to such abandonment.
In the event of partial abandonment of facilities as provided in the Ordinance, or in the
event of partial removal of such facilities by the Grantee, the payments otherwise due the City
for occupancy of the streets by such facilities shall be reduced by the length and diameter of
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pipelines abandoned or the actual pipeline removed beginning with the first day of the next
succeeding franchise year, and for each franchise year thereafter; provided, however, that
the base rate shall be modified to reflect the adjustment (per this Article) applicable to such
abandoned or removed pipeline at the beginning of the next succeeding franchise year
following abandonment or removal.
Grantee shall pay to the City, upon demand, the cost of all repairs made by the City
to public property arising out of the operations of the Grantee under this franchise. Any fees
charged or expenses charged to Grantee by City pursuant to this Article, or any other
provision of this franchise Ordinance, unless disputed in good faith, shall be paid when due
or shall be deemed delinquent. Any undisputed delinquent amounts shall be charged a
10% penalty and, in addition, shall accrue interest commencing thirty (30) days after the due
date, at a rate of one and one-half percent (1.5%) per month (based upon a 30-day calendar
month) or any lesser amount if required by law. Any neglect, omission, or refusal by said
Grantee to pay any undisputed delinquent franchise fee with any late charges, within thirty
(30) days of delinquency, at the times or in the manner herein provided, shall be grounds
for a declaration of a forfeiture of this franchise and of all rights hereunder.
Payments are to be made to the City Finance Department, 990 Palm Street, San Luis
Obispo, California 93401, or at such place as the City shall, from time to time, designate
in writing.
B. Grantee shall pay the City a granting fee of $10,000.00 within thirty (30) days
after the date the City Council adopts this franchise Ordinance.
C. Grantee shall pay the City Public Works Department, within sixty (60) days
after the end of each calendar year, for each year during the life of this franchise, an initial
construction charge calculated at the rate of One Dollar ($1.00) per foot for all new,
replaced, or relocated main lines laid pursuant to this franchise Ordinance during the
preceding year.
D. Right of Inspection. The City shall have the right to inspect Grantee's
pipeline accounting and other records relating to its annual report and to audit and
recompute any and all accounts payable under this franchise. Costs of audit shall be borne
by Grantee when an audit results in an increase of more than five percent of Grantee's
annual payments to the City. Acceptance of any payment shall not be construed as a release,
waiver, acquiescence, or accord and satisfaction of any claim the City may have for further
or additional sums payable under this franchise or for the performance of any other obligation
hereunder.
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ARTICLE 8
EMERGENCY EQUIPMENT AND CREWS
At all times during the term of this franchise, the Grantee shall maintain or arrange for,
on a 24-hour-a-day basis, adequate emergency equipment and a properly trained emergency
crew within a reasonable distance from any pipelines, appurtenances and facilities installed
or maintained pursuant hereto for the purpose of monitoring the leak detection system and
the communications systems if applicable, and of shutting off the pressure and the flow of
contents of such facilities in the event of an emergency resulting from an earthquake, act
of war, civil disturbance, fire, flood, or any other cause or nature whatsoever.
ARTICLE 9
REPAIR OF DEFECTIVE FACILITIES AND REPAIR OF DAMAGE TO CITY STREETS
If any portion of any street shall be damaged by any reason related to the
Grantee's operations pursuant to this franchise including defective facilities laid or
constructed under this franchise, Grantee shall, at its own expense, repair any defect of
its facilities and put such street in as good or better condition as it was before such
damage was incurred, provided that any work done shall, at a minimum, conform to City
standards otherwise applicable to the construction of the work performed, at the time of
commencement of the work performed, to the satisfaction of the City Public Works
Department. If Grantee, within ten (10) days after receipt of written notice from the City
Public Works Department instructing it to repair such damage, fails to commence to
comply with such instruction, or, thereafter, fails diligently to prosecute such work to
completion, then the City Public Works Director immediately may take any actions which
are, in the sole judgment and discretion of the City Public Works Director, necessary to repair
said damage. Any and all costs and expenses so incurred shall be the sole responsibility of
Grantee including the current rate of overhead, including administration and legal support,
being charged by the City for reimbursable work, which cost and expense, by the acceptance
of this franchise, Grantee agrees to pay upon demand. If such damage constitutes an
immediate danger to public health or safety requiring the immediate repair thereof, the City
Public Works Department, without notice, may repair such damage and Grantee agrees to
pay the cost thereof upon demand.
ARTICLE 10
REARRANGEMENT OF FACILITIES
A. Expense of Grantee.
1. If any of the Grantee's facilities, in the opinion of the City Public Works
Director, shall endanger the public or interfere with the use of any street by the public or, for
public purposes, the City shall have the right to require the Grantee, and the Grantee shall
repair, replace, move, alter or relocate the same (hereinafter called "rearrangement") to avoid
such danger, interference or obstruction, in conformity with the written notice of the City Public
Works Department, at the Grantee's sole expense.
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2. The City reserves the right to change the grade, to construct grade
separation facilities, to change the width or to alter or change the location, of any street
which is located within the service area for which this franchise is granted. If any of the
facilities heretofore or hereafter constructed, installed or maintained by Grantee pursuant to
this franchise on, along, under, over, in, upon or across any street are located in a manner
which prevents or interferes with the change of grade, traffic needs, operation, maintenance,
improvement, repair, construction, reconstruction, widening, grade separation, alteration or
relocation of the street, or any work or improvement upon the street, Grantee shall relocate
permanently or temporarily, as directed at the sole discretion of the City Public Works
Director, any such facility at no expense to the City, upon receipt of a written request from the
City Public Works Department to do so, and shall commence such work, by beginning
engineering, surveying, or other pre-construction activities, on or before the date specified in
such written request, which date shall be not less than sixty (60) days from receipt of such
written request . Grantee shall thereafter diligently prosecute such work to completion. Should
Grantee neglect or fail to relocate its facilities in a timely manner after receipt of any such
notice, in addition to the liquidated damages as set forth in Article 25, Grantee shall be
responsible for and shall reimburse the City for any and all additional costs or expenses
incurred by City due to or resulting from such delay in the relocation of the facilities plus,
where applicable, the current rate of overhead being charged by the City for reimbursable
work. If such street be subsequently constituted a state highway, while it remains a state
highway the rights of the State of California shall be as provided in Section 680 of the Streets
and Highways Code of the State of California.
3. The City reserves the right to lay, construct, repair, alter, relocate, and
maintain subsurface, surface, or other improvements of any type of description in a
governmental but not proprietary capacity within, over or under the streets over which this
franchise is granted. If the City finds that the location or relocation of such subsurface,
surface, or other improvements conflicts with the facilities laid, constructed or maintained
under this franchise, whether such facilities were laid before or after the improvements of the
City, Grantee shall relocate permanently or temporarily, as directed at the sole discretion of
the City Public Works Director, any such facility at no expense to the City upon receipt of a
written request from the City Public Works Department to do so and shall commence such
work, by beginning engineering, surveying, or other pre-construction activities, on or before
the date specified in such written request, which date shall not be less than sixty (60) days
from receipt of such written request. The Grantee shall thereafter diligently prosecute such
work to completion. Should Grantee neglect or fail to relocate its facilities in a timely manner
after receipt of any such notice, in addition to the liquidated damages as set forth in Article
25, Grantee shall be responsible for and shall reimburse the City for any and all additional
costs or expenses incurred by City due to or resulting from such delay in the relocation of the
facilities plus, where applicable, the current rate of overhead being charged by the City for
reimbursable work. If such street be subsequently constituted a state highway, while it
remains a state highway the rights of the State of California shall be as provided in Section
680 of the Streets and Highways Code of the State of California.
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4. If Grantee, after the notice provided for herein from the City, fails or refuses
to relocate permanently or temporarily its facilities located in, on, upon, along, under, over,
across, or above any street, or to pave, surface, grade, repave, resurface, or regrade as
required pursuant to any provision of this franchise, the City may cause the work to be done,
and shall keep an itemized account of the entire costs thereof, and Grantee shall hold
harmless the City, its officers and employees from any liability which may arise or be claimed
to arise from the moving, cutting or alteration of any of Grantee's facilities, or any necessary
relocation of the facilities of other utilities.
5. Grantee agrees to, and shall, reimburse the City for such cost within thirty
(30) days after presentation to Grantee of an itemized account arising out of the actions
taken in this Article 10A.
B. Expense of Others.
1. The City shall have the right to require the Grantee to rearrange any part of
the Grantees' facilities for the accommodation of the City when such rearrangement is
done for the accommodation of any water, electric, gas or other utility system now or
hereafter owned or operated by the City.
Except as otherwise provided in Article 10A, such arrangement shall be at the City's
expense.
2. The City shall have the right to require the Grantee to rearrange any part of
the Grantee's facilities for the accommodation of any person, firm or corporation. When such
rearrangement is done for the accommodation of any person, firm, or corporation, other than
one of said utility systems owned or operated by the City, the cost of such rearrangement
shall be borne by the accommodated party. Such accommodated party, in advance of such
rearrangement, shall deposit with the Grantee or the City Clerk cash or a letter of credit or
other cash equivalent in an amount, as in the reasonable discretion of the City Public Works
Department, shall be required to pay the costs of such rearrangement, and such
accommodated party shall execute an instrument agreeing to indemnify and hold harmless
the Grantee from any and all damages or claims caused by such rearrangement.
3. The rearrangement referred to in subsection (1) and (2) of Section B of this
Article 10 shall be accomplished in conformity with the written notice of the City Public Works
Department.
C. Rearrangement of the Facilities of Others. Nothing in this franchise shall be
construed to require the City to move, alter or relocate any of its facilities upon said streets,
at its own expense, for the convenience, accommodation or necessity of any other public
utility, person, firm or corporation now or hereafter owning a public utility system of any type
or nature, to move, alter or relocate any part of its system upon said streets for the
convenience, accommodation or necessity of the Grantee.
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D. Notice. The Grantee shall be given not less than sixty (60) days written notice
of any rearrangement of facilities which the Grantee is required to make hereunder. S uch
notice shall specify in reasonable detail the work to be done by the Grantee and shall specify
a reasonable time that such work is to be accomplished. In the event that the City shall change
the provision s of any such notice given to the Grantee, the Grantee shall be given an
additional period of not less than thirty (30) days to initiate such work.
ARTICLE 11
GRANTEES’S REMOVAL OR ABANDONMENT OF FACILITIES
A. The City reserves the right to require Grantee to remove its facilities from
the City streets and City public property in the event of the non-renewal, revocation or
termination of this franchise or at any time thereafter with respect to those facilities
abandoned in place, or for the facilities affected by the permanent discontinuance of all
or a portion of the facilities. Further, so long as any abandoned facilities installed under
the authority of this franchise remain in a City Street, Grantee shall maintain a
performance bond, security fund, or other form of collateral, acceptable to the City,
sufficient to cover the cost of the removal of all such facilities from the City streets.
B. At the expiration, revocation, or termination of this franchise or of the
permanent discontinuance of the use of all or a portion of its facilities, Grantee shall,
within thirty (30) days thereafter, make written application to the City Public Works
Department for authority either:
1. To abandon all or a portion of such facilities in place; or
2. To remove all or a portion of such facilities. Such application shall describe
the facilities desired to be abandoned, their location with reference to City streets, and shall
describe with reasonable accuracy the physical condition of such facilities. As part of the
application for removal or abandonment of these facilities, Grantee shall submit a soil test,
taken within thirty (30) days of the submittal of the application, for those materials to be
tested annually pursuant to federal, state and local laws. A soil test shall be taken along
that portion of the pipeline to be removed or abandoned at such intervals as directed in
writing by the City Public Works Department and reasonably consistent with established
sampling protocols. The City Public Works Department shall determine whether any
abandonment or removal which is thereby proposed may be affected without detriment to
the public interest and the conditions under which such proposed abandonment or removal
may be affected. The City Public Works Department shall then notify Grantee of the City's
determinations. Grantee shall also obtain permits to abandon or remove the pipeline from
the City Public Works Department for all pipelines prior to the removal, abandonment or
discontinuation of use of all or a portion of Grantee's facilities. The City also reserves the
right to require removal of Grantee's abandoned facilities in place at any time following the
expiration, revocation or termination of this franchise. Grantee shall be required to meet the
obligations of all provisions of this Agreement relating to bonding, insurance, indemnification,
encroachment, defense, indemnification, right of way repair and restoration, and annual
franchise fee requirements of this franchise, for facilities abandoned in place.
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C. Within thirty (30) days after receipt of Notification from the City Public Works
Department pursuant to Article 11.B.2 above, Grantee shall apply for a permit from the City
Public Works Department to abandon or remove the facility.
D. Grantee shall, within sixty (60) days after obtaining such permit, commence
and diligently prosecute to completion the work authorized by the City's permit.
E. In the event Grantee applies to remove its facilities, and the City Public Works
Department determines that any or all of the facilities cannot be removed due to a
moratorium preventing work in the City streets, the payment of annual franchise fees shall be
deferred during any such moratorium period, provided that Grantee promptly removes its
facilities after notice by the City Public Works Department of the cessation of the moratorium
and direction to remove such facilities. In the event Grantee does not promptly remove such
facilities as directed, any deferred annual franchise fees shall be due and payable within thirty
(30) days of notice to pay. Deferred annual franchise fees shall otherwise be waived.
F. Failure to Comply with City's Orders Regarding the Removal or Abandonment
of Facilities.
1. If any orders or prescribed conditions relating to the abandonment of any
facilities are not complied with, the City Public Works Department may impose such
additional orders and conditions as the City deems appropriate, including an order that the
Grantee remove any or all such facilities. Grantee shall comply with such additional orders.
2. In the event that Grantee fails to comply with the terms and conditions of
abandonment or removal as may be required by this franchise Ordinance, and within such
time as may be prescribed by the City Public Works Department, then the City may remove
or cause to be removed such facilities at Grantee's expense. Grantee shall pay to the City
all of the costs of removing and disposing of these facilities, as well as returning the rights-of-
way occupied pursuant to this franchise, including, but not limited to: (a) the cost of all
environmental testing the City must conduct to determine the environmental condition of any
rights-of way occupied pursuant to this franchise and to ascertain what procedures the City
must undertake, if any, to return any such rights-of-way to the environmental condition
required by applicable Federal, State or local environmental laws; (b) all cleanup costs,
disposal costs, and any other costs associated with returning these rights-of-way to such
environmental condition; (c) all costs of removing, storing, and disposing of the Grantee's
facilities; (d) all costs of returning all streets to the structural conditions they were in
immediately at the beginning of Grantee's use of these streets pursuant to this franchise
agreement; (e) plus the current rate of overhead, including administrative and legal support,
being charged by the City for reimbursable work .
3. If, at the nonrenewal, revocation or termination of this franchise, or of the
permanent discontinuance of the use of all or a portion of its facilities, Grantee, within thirty
(30) days thereafter, fails or refuses to make written application for the above-mentioned
authority to remove or abandon its facilities, the City Public Works Department shall make
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the determination as to whether the facilities shall be abandoned in place or removed. The
City Public Works Department shall then notify Grantee of its determinations. Grantee shall
thereafter comply with the applicable provisions of this Article 11.
G. For those facilities Grantee abandons in place, Grantee shall be required to
maintain an acceptable performance bond, letter of credit or security fund, as determined by
the City Public Works Department, to cover the costs for the removal of any such abandoned
facilities from the City streets for any and all periods of time, including those periods
following the expiration, revocation or termination of this franchise, that Grantee's facilities
remain in the City streets. Grantee shall be required to maintain insurance and to indemnify
the City pursuant to this Article during any periods the abandoned facilities remain within the
City streets. Provided, however, that any pipelines which cannot be removed due to a
moratorium preventing work in the City streets, may be deferred from the payment of the
annual franchise fee. The payment of annual franchise fees may be deferred during any
such moratorium period, provided that Grantee promptly removes its facilities after notice by
the City Public Works Department of the cessation of the moratorium and direction to remove
such Facilities. In the event Grantee does not promptly remove such facilities as directed, any
deferred annual franchise fees shall be due and payable within thirty (30) days of notice to
pay.
ARTICLE 12
COMPLETION OF WORK
In the event that the Grantee fails to commence any work or act and diligently proceed
therewith or to complete any such act or work required of the Grantee by the terms of this
franchise within the time limits required hereby (and except as is otherwise provided in
Articles 10 and 11), the City may cause such act or work to be completed by the City or, at
the election of the City, by a private contractor. The Grantee agrees to pay the City, within
thirty (30) days after delivery of an itemized bill, the cost of performing such act or work plus
an amount equal to fifteen percent (15%) thereof for overhead. If the Grantee is dissatisfied
with any decision made by the City Public Works Department hereunder or the determination
of the cost of any work performed by the City pursuant to this Agreement, it may petition the
City Council to review the same within ten (10) days after such decision or determination.
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ARTICLE 13
RECOVERY OF COSTS OR REPAIRS AND UNPAID FEES
If the Grantee has not paid the City for such fees and expenses and/or liquidated
damages incurred by or payable to the City as herein above set forth, the City may institute
the following collection procedures (which procedures are in addition to any other rights, in
law or equity, which the City has to correct amounts due under this franchise and to enforce
the terms of this franchise):
A. The City Public Works Department shall keep an itemized account of the
expenses incurred by the City pursuant hereto, or the fees unpaid by the Grantee. Sixty
(60) days after the presentation of the bill to the Grantee therefore, the City Public Works
Department shall prepare and file with the City Clerk a report specifying the work done by
the City, or the unpaid fees, the itemized and total cost of the work, a description of the
work performed, and the name and address of the Grantee entitled to notice pursuant to this
Article.
B. Upon receipt of said report, the City Clerk shall present it to the City
Council for consideration. The City Council shall fix a time, date and place for hearing
said report, and any protest or objections thereto. The City Clerk shall cause notice of
said hearing to be posted in a newspaper of general circulation in the City, and served by
certified mail, postage prepaid, addressed to the Grantee as set forth herein. Such notice
shall be given at least ten (10) days prior to the date set for hearing and shall specify the
day, hour, and place when the City Council will hear and pass upon the City Public Works
Department's report, together with any objections or protests which may be filed as
hereinafter provided.
C. The Grantee may file written protests or objections with the City Clerk at
any time prior to the time set for the hearing on the report of the City Public Works
Department. Any such protest or objection must contain a description of the work or
unpaid fee or liquidated damages in which the Grantee is contesting and the grounds of
such protest or objection and the date it was received by them. They shall present such
protest or objection to the City Council at the time set for the hearing, and no other protest
or objection shall be considered, except as determined by the City Council for good
cause shown.
D. Upon the day and hour fixed for the hearing, the City Council shall hear
and pass upon the report of the City Public Works Department together with any such
objections or protests, make such revision, correction or modification to the charge as it
may deem just; and when the City Council is satisfied with the correctness of the charge,
the report (as revised, corrected or modified), together with the charge, shall be
confirmed or rejected. The decision of the City Council on the report and the charge, and
on all protests or objections, shall be the final and conclusive decision of the City.
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E. The City Council may thereupon order that such charge shall be made a
personal obligation of the Grantee or assess such charge against the property of the Grantee.
1. If the City Council orders that the charge shall be a personal obligation
of the Grantee, it shall direct the City Attorney to collect the same on behalf of the City by
use of all appropriate legal remedies.
2. If the City Council orders that the charge shall be assessed against
the property of the Grantee, it shall confirm the assessment, cause the same to be
recorded on the assessment roll, and thereafter, said assessment shall constitute a
special assessment against a lien upon any property held in the City of San Luis Obispo
by the Grantee.
F. The validity of any assessment made under the provisions of this franchise
shall not be contested in any action or proceeding unless the same is commenced within
ninety (90) days after the assessment is placed upon the assessment roll as provided herein.
G. The City Council, in its discretion, may determine that assessments in
amounts of $500.00 or more shall be payable in not more than five (5) equal annual
installments. The City Council's determination to allow payment of such assessments in
installments, the number of installments, whether they shall bear interest, and the rate thereof
shall be adopted by a resolution prior to the confirmat ion of the assessment.
H. Immediately upon its being placed on the assessment roll, the assessment
shall be deemed to be complete, the several amounts assessed shall be payable, and the
assessments shall be liens against the property of the grantee in the City of San Luis Obispo.
The lien shall be subordinate to all existing special assessment liens previously imposed
upon the same property and shall be paramount to all other liens except for state, county,
and municipal taxes with which it shall be upon a parity. The lien shall continue until the
assessment and all interest due and payable thereon are paid.
1. All such assessments remaining unpaid after thirty (30) days from the
date of recording on the assessment roll shall become delinquent and shall bear interest
at the highest rate permitted by law from and after said date.
I. After confirmation of the report, certified copies of the assessment shall be
filed with the County Auditor on or before August 10th. The descriptions of the parcels
reported shall be those used for the same parcels on the County Assessors map books for
the current year.
J. The amount of the assessment shall be collected at the same time and in the
same manner as ordinary county taxes are collected and shall be subject to the same
penalties and procedure and sale in case of delinquency as provided for ordinary county
taxes. All laws applicable to the levy collection and enforcement of taxes shall be applicable
to such assessment. If the City Council has determined that the assessment shall be paid in
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installments, each installment and any interest thereon shall be collected in the same
manner as ordinary City taxes is in successive years. If any installment is delinquent, the
amount thereof is subject to the same penalties and procedure for sale as provided for
ordinary county taxes.
K. All money recovered by payment of the charge or assessment or from the
sale of the property at foreclosure sale shall be paid to the City Finance Director.
ARTICLE 14
BOND
A. Grantee shall, concurrently with the filing of and acceptance of award of this
franchise, file with the City Clerk, and yearly thereafter, maintain in full force and effect, a
bond guaranteeing to the City of San Luis Obispo the penal sum of One Million Dollars
($1,000,000.00), with a surety to be approved by the City Public Works Director and City
Risk Manager, conditioned that Grantee shall, well and truly observe, fulfill and perform
each and every term and condition of this franchise, and in a material breach of condition of
said franchise, at the discretion of the City Public Works Director, a percentage of the
amount of the bond shall be paid to the City according to the following schedule, which
cumulative amount for any said breach not cured within the time specified below shall not
exceed the full amount of the bond, in addition to any damages recoverable by the City
and shall be recoverable from the principal and sureties of the bond:
Following receipt of notice by Certified Mail sent by the City, failure to cure said
breach of condition, within: Penal sum paid to City:
10 business days 5% of the amount of the bond
30 calendar days 30% cumulative amount of the bond
60 calendar days 70% cumulative amount of the bond
90 calendar days 100% cumulative amount of the bond
ARTICLE 15
INSURANCE
A. The Grantee shall procure and shall keep in force for the term of the franchise,
at the sole cost and expense of the Grantee, the following insurance. All insurance coverages
are to be placed with insurers which have a Best's rating of not less than A- VIII and are
admitted insurance companies in the State of California. Grantee may satisfy the
requirements of this Article 15 by showing proof of self -insurance reasonably satisfactory to
the City Attorney and Risk Manager.
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Commercial General Liability Insurance (CGL): Grantee shall maintain in full force and effect
Commercial General Liability Insurance with the following coverages:
1. Personal Injury and Bodily Injury, including death resulting therefrom.
2. Property Damage.
3. Automobile coverage which shall include owned, non-owned and hired
vehicles.
The amount of insurance shall not be less than the following: Single limit on the
coverage applying to bodily and personal injury, including death resulting therefrom, property
damage, and automobile coverage in the total amount of Ten Million Dollars ($10,000,000.00).
The following endorsements must be provided in the CGL policy:
1. If the insurance policy covers on an "accident" basis, it must be changed to
"occurrence."
2. The policy must cover personal injury as well as bodily injury.
3. Blanket contractual liability must be afforded, and the policy must contain a
cross- liability or severability of interest endorsement.
4. Broad Form Property Damage Liability must be afforded.
5. Products and Completed Operations coverage must be provided.
6. The City, its officers, employees and agents shall be named as additional
insured under the policy. The policy shall include the appropriate insurance company
endorsement, as required under City regulations. The policy shall provide that the insurance
will operate as primary insurance. No other insurance effected by the City, whether
commercial or self - insurance will be called upon to contribute to a loss hereunder.
Worker’s Compensation Insurance. Grantee shall maintain Workers’ Compensation
Insurance (Statutory Limits) and Employer’s Liability Insurance for Grantee’s employees in
accordance with the laws of the State of California, Section3700 of the labor Code. In
addition, Grantee shall require each subcontractor to similarly maintain Workers’
Compensation Insurance and Employee’s Liability Insurance in accordance with the laws of
the State of California, Section 3700 for all of the subcontractor’s employees.
The following requirements apply to all insurance to be provided by Grantee:
1. A certificate of insurance shall be furnished to the City. Upon request by the
City, Grantee shall provide a certified copy of any insurance policy to the City within forty-
five working days of the City's request.
2. Certificates and policies shall state that the policies will not be canceled or
reduced in coverage or changed in any other material respect without thirty days prior written
notice to the City.
B. Failure on the part of Grantee to procure or maintain required insurance and
bonding shall constitute a material breach of this franchise upon which the City may
immediately terminate or suspend this franchise.
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a) '
ARTICLE 16
INDEMNIFIACTION BY GRANTEE
The Grantee, by the acceptance or use of the franchise hereby granted, shall defend,
indemnify and shall keep and save free and harmless the City, its officers, agents and/or
employees against any and all claims, demands or causes of action which may be asserted,
prosecuted or established against them, or any of them, for damage to persons, or property,
of whatsoever nature, arising out of the use by it of the City streets hereunder or arising out
of any of the operations or activities of the Grantee pursuant to this franchise, whether such
damage shall be caused by its own sole negligence or negligence concurrent with the City,
excepting therefrom, however, any claim or demand based on the sole negligence or willful
misconduct of the City and any claim, demand, or cause of action which may be asserted,
prosecuted or established against the City under the provision of the Worker's
Compensation Act for injury to or the death of any of City's officers, agents or employees
while acting within the scope of their employment, except that Grantee shall indemnify the
City for any Worker’s Compensation liability arising out of injuries to City employees incurred
as the result of necessary oversight or inspection of Grantee activities pursuant to this
Agreement. Grantee shall not be responsible for any criminal, fraudulent or malicious
conduct of the City.
ARTICLE 17
CHANGES IN CONTROL OF FRANCHISE
A. On and after the Grantee's acceptance of this franchise as provided in Article
23 herein, Grantee, its partners, its shareholders, or any other person or persons holding
an interest in Grantee shall not transfer any interest in the franchise where such a transfer
would lead to another person achieving a twenty-five percent. (25%) or greater interest in
this franchise or change control of this franchise unless the City approves such a transfer
or change in control. The City shall approve a request for transfer or change in control only
if doing so serves the public interest. As used in this franchise Ordinance, "control" includes
actual working control in whatever manner exercised.
1. The City shall deny any such request for transfer or change in control
if the transferor or transferee fails to comply with any applicable provision of this Article of
this franchise Ordinance, or if the City determines the transferor is in non-compliance with
the terms and conditions of this franchise Ordinance, or if a transferee is lacking in experience
and/or financial ability to operate the pipelines authorized by this franchise Ordinance, or
if the proposed transfer will be detrimental to the public interest. Both the Grantee and the
proposed transferee shall inform the City Public Works Department of any pending change
in control of this franchise or of any pending transfer of an interest in the franchise requiring
the City's consent pursuant to this Article, and each shall provide applications containing all
documents on which the transfer or change in control is predicated and all documents which
the City Public Works Department determines are necessary to evaluate the transfer or
change of control. These applications shall be signed by duly authorized representatives of
the Grantee and the proposed transferee, with signatures acknowledged by a notary. The
appropriate transfer fee described in Article 17(C), infra shall accompany these applications.
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2. Grantee's application shall include:
a. Identification and ownership of the proposed transferee in the
same detail as if the proposed transferee were an applicant for an initial grant.
b. Current financial statements showing the financial condition of
the Grantee as of the date of the application. In this application, the Grantee shall also agree
to submit financial statements showing the condition of the franchise as of the closing. Said
financial statements shall have been audited and certified by an independent certified public
accountant and shall be submitted within ninety (90) days of the closing.
3. The proposed transferee's application shall contain current financial
statements of the proposed transferee and other such information and data, including but not
limited to sources of capital, as will demonstrate conclusively that the proposed transferee
has al 1 the financial resources necessary to acquire the pipeline(s), carry out all of the terms
and conditions of the franchise, remedy any and all defaults and violations of the provisions
of this franchise in the Grantee's past and present operations, make such other improvements
an additions as may be required or proposed to maintain and conduct the services and
facilities required under this franchise . The proposed transferee will be required to authorize
release of financial information to the City from financial institutions relating to information
supplied by the proposed transferee in support of the application. The proposed transferee's
application shall also include:
a. A construction schedule, describing type and placement of
construction, detail phases of construction, and include map(s) correlated to the phases of
construction. Map(s) shall include detail on the location, length, depth, and internal diameter
of any planned pipelines.
b. Copies of any agreements with utility companies for the use of
any facilities including, but not limited to, poles, lines, and conduit.
c. A description of plans for emergency equipment and personnel
enabling the transferee to meet the emergency equipment personnel requirements in Article
8 herein.
d. Any information indicating as specifically as possible that any
principal, manager, or associate of the proposed transferee or a parent entity of the proposed
transferee has previously been or is currently:
i. A party to a criminal proceeding (involving felonies or
misdemeanors) in which any of the following offenses have been charged: fraud, embezzlement,
tax evasion, bribery, extortion, jury tampering, obstruction of justice (or other misconduct
affecting public or judicial officers in the performance of their duties), false/misleading
advertising, perjury, antitrust violations (state or federal), violation of environmental laws
or regulations, or conspiracy to commit any of the foregoing.
ii. A party to a civil proceeding concerning liability for any of
the following: unfair or anticompetitive business practice, antitrust violations (state or federal)
including instances in which consent decrees were entered, violations of security laws (state
or federal), false/misleading advertising, racketeer influences and corrupt organizations,
violation of environmental laws or regulations, or contraband forfeitures.
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iii. Subject to any penalty, criminal or civil, involving failure
to comply with the requirements of a pipeline franchise.
iv. Involved in instituting legal action against its franchising
authorities.
v. Involved in revocation/non-renewal of any other
franchise.
e. Any other details, statements, information or references
pertinent to the subject matter of such application which shall be required or requested by the
City or by any provision of law.
f. An express and unconditional written acceptance of the terms
and conditions of this Franchise Ordinance, in its most current form, as a condition to the
transfer.
B. A fee shall be submitted with the applications for the City's consent to
transfer or change of control.
1. Where the City's consent to a transfer or a change of control of this
franchise does not result in the modification of this franchise by adoption of an amending
ordinance, this fee for each application shall be as set forth in the City's fee ordinance.
2. Where the City's consent to a transfer or a change of control of this
franchise results in the modification of this franchise by adoption of an amending ordinance
this fee shall be as set forth in the City's fee ordinance.
3. In the event the costs to process the applications exceed the fees
detailed above , the applicants may be required to pay any additional costs incurred by the
City in processing the applicants' requests for the City's consent to the transfer or change of
control of this franchise. Such costs may include the cost incurred for hiring consultants to
assist in evaluating the applications. Such costs shall be paid by the applicants prior to
final consideration of the request by City Public Works Department, or the City Council, as
applicable.
C. Within thirty (30) days of the effective date of the City's approval of the
transfer or change of control, or within thirty (30) days of the date of the close of the transfer
or change of control, the Grantee shall file with the City Public Works Department: ( 1 ) a
certified copy of each duly executed instrument of such a transfer or change in control; and
(2) the submittal of a final accounting and report of all fees due under this franchise. The
proposed transferee shall be responsible for any underpayment and shall be entitled to a
credit for any overpayment. Within ninety (90) days of the closing of the transfer or change
of control, the Grantee shall submit financial statements, audited and certified by an
independent certified public accountant, showing the condition of the franchise as of the
closing. If such duly executed instruments are not filed with the City Public Works
Department by the deadlines imposed in this Article, or if the final documents are different
from the preliminary documents, the City Public Works Department may inform the proposed
transferee that the transfer or change in control is not deemed to be in force and effect.
The City Public Works Department may then administratively determine that this franchise
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is forfeited, and the City Council may, without notice, by ordinance repeal this franchise.
D. As a condition to the granting of consent to such a transfer or change in
control, the City Council may impose such additional terms and conditions upon this
franchise and upon the proposed transferee as are in the public interest. Such additional
terms and conditions shall be imposed by ordinance. Nothing herein contained shall be
construed to grant Grantee the right to transfer or change control of this franchise or any
part thereof, except for the manner aforesaid. This Article 17 applies to any transfer of this
franchise, or of any change in control of this franchise, whether by operation of law, by
voluntary act of Grantee, or otherwise.
ARTICLE 18
WAIVER OF BREACH
No waiver of the breach of any of the covenants, agreements, restrictions, or
conditions of this franchise by the City shall be construed to be a waiver of any succeeding
breach of the same or other covenant, agreements, restrictions, or conditions of this
franchise. No delay or omission of the City in exercising the right, power or remedy herein
provided in the event of default shall be construed as a waiver thereof, or acquiescence
therein, nor shall the acceptance of any payments made in a manner or at a time other
than is herein provided be construed as a waiver of or variation in any of the terms of this
franchise.
ARTICLE 19
DEFAULT
A. In the event that the Grantee shall default in the performance of any of the
terms, covenants and conditions herein, the City may give written notice to the Grantee of
such default by certified mail. In the event that the Grantee does not commence the work
necessary to cur e such default within five (5) business days after such notice is received
or prosecute such work diligently to completion, the City may declare this franchise forfeited
by giving written notice thereof to the Grantee, whereupon this franchise shall be void and
the rights of the Grantee hereunder shall terminate and the Grantee shall execute an
instrument of surrender and deliver the same to the City. If the City Council declares this
franchise forfeited, it may thereupon and thereafter exclude the Grantee from further
occupancy or use of all City roads and streets authorized under this franchise. A forfeiture of
said franchise shall not of itself operate to release any bond filed for said franchise. Upon
declaring a franchise forfeited, the City Council may elect to take and accept any bond as
liquidated damages therefore or pursue any other legal remedy for any damage, loss or injury
suffered by the City as a result of such breach or both. After forfeiture, any bond shall remain
in full force and effect for a period of one (1) year unless exonerated by the City Council. No
bond shall be exonerated unless a release is obtained from the City Public Works Department
and is filed with the City Clerk. The release shall state whether all excavations have been
back filled, all obstructions removed, and whether the substratum or surface of City streets
occupied or used have been placed in good and serviceable condition. A release shall not
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constitute a waiver of any right or remedy which the City of San Luis Obispo may have against
the Grantee or any person, firm or corporation for any damage, loss or injury suffered by the City
as a result of any work or activity performed by the Grantee in the exercise of this franchise.
B. No provision herein made for the purpose of securing the enforcement of the
terms and conditions of this franchise shall be deemed an exclusive remedy, or to afford the
exclusive procedure, for the enforcement of said terms and conditions, but the remedies and
procedure herein provided, in addition to those provided by law shall be deemed to be
cumulative.
ARTICLE 20
SCOPE OF RESERVATION
Nothing herein contained shall ever be construed so as to exempt the Grantee from
compliance with all ordinances of the City now in effect or which may be hereafter adopted
which are not inconsistent with the terms of this franchise. The enumeration herein of specific
rights reserved shall not be construed as exclusive, or as limiting the general reservation herein
made or as limiting such rights as the City may now or hereafter have in law.
ARTICLE 21
NOTICE
Any notice required to be given under the terms of this franchise, the manner of service
of which is not specifically provided for, may be served as follows:
Upon the City, by serving the City Clerk, personally or by addressing a written notice
to the City Clerk of the City of San Luis Obispo, 990 Palm Street, San Luis Obispo, CA 93401,
and depositing such notice in the United States mail, postage prepaid.
Upon the Grantee, by addressing a written notice to Grantee addressed to Phillips 66
Pipeline LLC, Property Tax, Real Estate, Right of Way and Claims, 3900 Kilroy Airport Way,
Suite 210, Long Beach, CA, 90806, or such other address as may from time to time be
furnished in writing by one party to the other and depositing said noti ce in the United States
mail, postage prepaid. When service of any such notice is made by mail, the time of such
notice shall begin with and run from the date of the deposit of same in the United States mail.
ARTICLE 22
SUCCESSORS
The terms herein shall inure to the benefit of and shall bind, as the case may be, the
successors and assigns of the parties hereto, subject, however, to the provisions of Article
17.
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ARTICLE 23
ACCEPTANCE OF FRANCHISE
A. This franchise is granted and shall be held and enjoyed only upon the
terms and conditions herein contained. By accepting this grant of franchise, Grantee shall
agree to be bound by each and all of the requirements of Article X, Sections 1001 through
1007 of the San Luis Obispo City Charter.
B. Grantee shall, within ten (10) days after the passage of this franchise
Ordinance , file with the City Clerk an express and unconditional written letter of
acceptance of, and consent to, the terms and conditions of this franchise Ordinance, in its
current version, and as subsequently amended, pursuant to San Luis Obispo City Charter,
Article X, Section 1004.
C. The parent entity, or entities, if any, of Grantee, shall file a letter with the City,
concurrent with Grantee's letter of acceptance, which guarantees the performance of each
and every term, covenant and condition imposed on Grantee pursuant to the franchise
Ordinance.
D. Grantee's letter of acceptance shall be signed by two (2) duly authorized
representatives of Grantee, whose signatures shall be acknowledged by a notary, and
shall be accompanied by the performance bond and evidence of insurance required by this
franchise Ordinance.
ARTICLE 24
FORCE MAJEURE
The time within which Grantee is obligated hereunder to construct, erect, maintain,
operate, repair, renew, change the size of and remove pipelines or other improvements
shall be extended for a period of time equal in duration to, and performance in the meantime
shall be excused on account of, and for, and during the period of any delay caused by
strikes, threats of strikes, lockouts, war, threats of war, insurrection, invasion, acts of God,
calamities, violent action of the elements, fire, action or regulation of any governmental
agency law or ordinance, impossibility of obtaining materials, or other things beyond the
reasonable control of Grantee.
ARTICLE 25
LIQUIDATED DAMAGES
A. By acceptance of this franchise, Grantee understands and acknowledges
that failure to timely comply with any performance requirements stipulated in this
franchise Ordinance will result in damages to the City, and that it is and will be impractical
to determine the actual amount of such damage in the event of delay or nonperformance.
Each of the amounts set forth below has been set in recognition of the difficulty of affixing
actual damages arising from breach of these time of performance requirements. Each of
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said amounts constitutes a reasonable estimate of these damages. This section does not
limit the rights and remedies available to the City for damages other than the timely
compliance with performance requirements as describe d in this section. The liquidated
damages set forth below shall be chargeable to the bond, letter of credit or security fund
provided for in Article 14, supra, should Grantee not make payment within thirty (30) days
of written notice by certified mail by the City that the following amount s are due for the
following concerns:
1. Failure to provide data, documents, or reports within ten (10)
business days after receipt of written request by the City, by certified mail, or such longer
time as may be specified in said request: Two Hundred Fifty Dollars ($250.00) per day
for each day, or part thereof that each violation continues.
2. Failure to provide to the City within ten (10) business days after
receipt of written request by the City, by certified mail, current evidence of insurance and
bonding: Two Hundred Fifty Dollars ($250 .00) per day for each day, or part thereof, that
each noncompliance continues. Nothing in this Section shall preclude immediate
termination or suspension of this franchise as provided for under Article 15B, supra.
3. Failure by Grantee to timely restore public or private property after
performance of work and following Grantee's receipt of written request by the City to do
so within ten (10) business days thereafter by certified mail: Two Hundred Fifty Dollars
($250.00) per day or part thereof, that each non-compliance continues. Any fines paid
pursuant to this Subsection 3 shall be paid solely to the Street Fund of the City Public
Works Department.
B. If the City Public Works Department determines that Grantee is liable for
liquidated damages, the City Public Works Department shall issue to Grantee by certified
mail written notice of intention to charge liquidated damages. Liquidated damages shall
begin to accrue as of the date of the written notice and as set forth in said notice. The
notice shall set forth the basis for the liquidated damages and give Grantee a reasonable
time in which to remedy the violation.
C. Grantee shall have the right to appeal any notice to the City Public Works
Department by certified mail, within twenty (20) days after issuance of the notice by the
City Public Works Department. The City Public Works Department shall hold an
administrative hearing within sixty (60) days after receipt of an appeal. The City Public
Works Director's decision shall be the final decision of the City.
D. If Grantee does not appeal the notice within said twenty (20) day period,
Grantee shall pay the amount(s) of liquidated damages as stated in the notice. If payment
is not paid as provided for in this Article, the City may withdraw against the bond provided
for in Article 14 herein.
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ARTICLE 26
ATTORNEY’S FEES
In the event the City or Grantee brings legal action against the other, or against
Grantee's bonding companies or insurance carriers to compel performance of, or to recover
for breach of any covenant, agreement or condition contained in this franchise, or for
damages, the prevailing party shall be entitled to, in addition to any other relief obtained,
such reasonable attorneys' fees
ARTICLE 27
CONDEMNATION
Notwithstanding anything to the contrary contained herein and in accordance with
San Luis Obispo City Charter Article X, Section 1005, this Ordinance shall not in any way
affect the right of the City to acquire the property of the Grantee thereof either by purchase
or through the exercise of the right of eminent domain, and nothing herein contained shall
be construed to contract away or to modify or to abridge either for a term or in perpetuity
the City's right of eminent domain with respect to any public utility. The City reserves the
right to purchase the property of such utility at an agreed price. In fixing the price to be
paid by the City for any utility, no allowance shall be made for franchise value (other than
the actual amount paid to the City at the time of the franchise acquisition), goodwill, going
concern, earning power, increased cost of reproduction, severance damage, or increased
value of right-of-way.
ARTICLE 28
SURVIVAL OF OBLIGATIONS
Grantee’s obligations of all provisions of this Agreement relating to bonding, insurance,
defense, indemnification, encroachment, right of way repair and restoration, and annual
franchise fee requirements of this franchise shall survive the termination or expiration of this
Agreement and obligations to save, defend and indemnify the City from harm related to
Grantee’s facilities and operations specifically shall apply to all facilities or appurtenances
remaining in City right of way and any and all claims or allegations against the City relating to
or arising from Grantee’s use or occupation of public property.
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SECTION 3. A summary of this ordinance, together with the names of Council
members voting for and against, shall be published at least five (5) days prior to its final
passage, in The New Times, a newspaper published and circulated in this City. This
ordinance shall go into effect at the expiration of thirty (30) days after its final passage.
INTRODUCED on the ____ day of ____, 2022, AND FINALLY ADOPTED by the
Council of the City of San Luis Obispo on the ____ day of ____, 2022, on the following vote:
AYES:
NOES:
ABSENT:
__________________________
Mayor Erica A. Stewart
ATTEST:
_______________________
Teresa Purrington,
City Clerk
APPROVED AS TO FORM:
_______________________
J. Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington,
City Clerk
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FRANCHISE MILEAGE
8-INCH PIPELINE
18,812 FEET
3.56 MILES
12-INCH PIPELINE
5,848 FEET
1.10 MILES
INDEX TO SAN LUIS OBISPO FRANCHISE MAPS ORDINANCE No. 1587-2013
PHILLIPS 66 PIPELINE LLC
RIGHT-OF-WAY No. 086232Page 251 of 255
CHUPEROSA DR.
LOS VERDES DR.
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SUBURBAN ROAD
5,848' - 12" PRODUCTS
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I
REV DATE
1 04/27 /11
2 03/09/13
CITY OF SAN LUIS OBISPO ---COUNTY OF SAN LUIS OBISPO BUCKLEY ROAD
CITY OF SAN LUIS OBISPO FRANCHISE MAP
ORDINANCE NO. 1587-2013
PHILLIPS 'r;:r;:J. Phillips 66 �. Pipeline LLC
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APP'D. ______ _
SCALE 1 "= 400'
DATE 5/20/98
RW086232
4 SHEETS I SHEET 1 Page 252 of 255
REV DATE
04/27 /11
2 03/09/13
V�-o"'
3245' -8" LINE #400 COAST VALLEY TRUNK
No. 1
SOUTH ST.
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HIGH ST.
BRANCH ST.
BRIDGE ST.
3245' -8" LINE #400 COAST VALLEY TRUNK
No. 2
I
CITY OF SAN LUIS OBISPO FRANCHISE MAP
ORDINANCE NO. 1587-2013
D2A174, D2A340
DRAWN �F=Gl�II _____ _
APP'D. _______ _
SCALE 1 "= 400'
DATE 5/20/98
RW086232
4 SHEETS SHEET 2 Page 253 of 255
REV DATE
04/27 /11
2 03/09/13
_JLJLJL BROAD 1 1 ST. (HWY. 227)
2717'-8" LINE #400 COAST VALLEY TRUNK No. 1
NIPOMO
BEACH
ST. I 2702' -8" LINE #400 COAST VALLEY TRUNK No. 2
ST.
CITY OF SAN LUIS OBISPO FRANCHISE MAP
ORDINANCE NO. 1587-2013
D2A340, D2A270
DRAWN�FG�III�����
APP'D. ______ _
SCALE 1 "= 400'
DATE 5/20/98
RW086232
4 SHEETS SHEET 3 Page 254 of 255
SOUTHERN PACIFIC R AILWA_Y_� ------
REV DATE
04/27 /11
2 03/09/13
•----+.-3450'-8" LINE #400 COAST VALLEY TRUNK No. 2
SANTA ROSA ST.
OSOS ST.
L
3453'-8" LINEEJ400 DCCOAST VALLEY TRUNK 5 No. 1 I �
MORRO ST. 1.-----�
CHORRO ST. �DOC
GARDEN ST. =1D C
BROAD 11 ST. (HWY. 227) �,-------
CITY OF SAN LUIS OBISPO FRANCHISE MAP
ORDINANCE NO. 1587-2013
D2A270, D2A339
DRAWN �FG�lll�----
APP'D. ______ _
SCALE 1 "= 400'
DATE 5/20/98
RW086232
4 SHEETS SHEET 4 Page 255 of 255
2/16/2022
1
Ordinance Introduction
To continue existing Franchise
Agreement with Phillips 66 Pipeline LLC
1
Recommendation
Introduce an Ordinance entitled “An Ordinance of the
City Council of the City of San Luis Obispo, California,
granting to Phillips 66 Pipeline LLC a franchise to
construct, operate and maintain pipelines for the
transportation of oil, and other specified materials in the
City of San Luis Obispo” to award a franchise
agreement to Phillips 66 Pipeline LLC for common
carrier pipelines located in the City’s rights-of-way.
2
1
2
2/16/2022
2
Previous Franchise Agreements
This franchise is for Common Carrier Pipelines – Franchisee transports other
companies' products as well as its own, distinguished from proprietary pipelines in
which the franchisee exclusively transports its own products.
3
June 2021
•Agreement
term ended
February
2013
•Franchise
transferred to
Phillips 66
Pipeline
Company LLC
June 2011
•10-year
franchise
renewed
April 2007
•Franchise
transferred to
ConocoPhillips
Pipeline
Company
July 2001
•Union Oil
Company of
California
(UNOCAL)
granted 10-year
franchise
DC0
California Public Utilities Code (CPUC)
Governed Process
4
Adoption of Resolution
Declaring Intent of Renewal
and Setting Public Hearing
Public Hearing & Ordinance
Introduction
Second Reading and
Ordinance Adoption
3
4
Slide 3
DC0 [@Fields, Paul] you might want to mention compensation for the period of lapse - e.g., I
assume they have been paying consistent with franchise fees and have provided proof of
insurance with city as add'l insured notwithstanding the expiration of the franchise?
Dietrick, Christine, 2022-02-15T16:47:07.675
FP0 0 Franchise payments are received annually, and the period in which the agreement has
lapsed will be included in the upcoming payment, I'll be sure to mention. I'd have to
verify but I assume their insurance certs have not expired.
Fields, Paul, 2022-02-15T18:03:06.277
2/16/2022
3
Highlights of Proposed Franchise Agreement
5
Grants the
right to
maintain
and operate
existing
pipelines in
the City’s
rights-of-way
3-year term
proposed
Public Works
approval
required for
decommission
and removal of
infrastructure
Council
approval
required for
expansion of
infrastructure
FP0
Determining Annual Franchise Fee
6
Pipe Size (Internal
Diameter in Inches)Base Rate per Lineal Foot
0‐4 0.088$
60.132$
8 0.176$
10 0.220$
12 0.264$
14 0.308$
16 0.352$
18 0.396$
20 0.440$
22 0.484$
24 0.528$
26 0.572$
28 0.616$
30 0.660$
Rates are determined by the California Public Utilities Code § 6231.5
“The applicant, if granted the franchise, permit, license, or other privilege will pay to the municipality an annual
fee as follows: The length of pipeline expressed in feet located within the franchised area shall be multiplied
by the applicable base rate”
*Rates are adjusted annually based on the CPI
Pipe Size (Internal
Diameter in Inches)Base Rate per Lineal Foot Existing Pipeline in City
Rights‐of‐Way (Lineal ft.)
80.1760$ ~18,000
12 0.2640$ ~6,000
5
6
Slide 5
FP0 No right to expand or impact physical features of the surrounding area w/ out our
authorization, agree to indemnify, agree to pay for anything that fails, agree to restore
roadways in as good or better condition, required to furnish detailed information on
location of pipelines, agree to bond for removal needs that havent been implemented
just yet, P66 and City agree to cost recovery, and that if immediate response needed by
City they are covering costs
Fields, Paul, 2022-02-14T17:00:09.818
HM0 0 [@Fields, Paul] Please add a slide on franchise fees.. What we can charge and how it is
governed by the PUC. Similar to what is in the staff report. This is addressing a specific
council question.
Horn, Matt, 2022-02-14T18:10:30.433
FP0 1 [@Horn, Matt] Request addressed
Fields, Paul, 2022-02-14T21:34:37.629
2/16/2022
4
Recommendation
Introduce an Ordinance entitled “An Ordinance of the
City Council of the City of San Luis Obispo, California,
granting to Phillips 66 Pipeline LLC a franchise to
construct, operate and maintain pipelines for the
transportation of oil, and other specified materials in the
City of San Luis Obispo” to award a franchise
agreement to Phillips 66 Pipeline LLC for common
carrier pipelines located in the City’s rights-of-way.
7
Questions
8
7
8
1010 Marsh St., San Luis Obispo, CA 93401
(805) 546-8208 . FAX (805) 546-8641
PROOF OF PUBLICATION
(2015.5 C.C.P.)
STATE OF CALIFORNIA,
County of San Luis Obispo,
I am a citizen of the United States and a resident
of the county aforesaid; I am over the age of
eighteen years, and not a party interested in the
above entitled matter. I am the principal clerk
of the printer of the New Times, a newspaper
of general circulation, printed and published
weekly in the City of San Luis Obispo, County
of San Luis Obispo, and which has been
adjudged a newspaper of general circulation by
the Superior Court of the County of San Luis
Obispo, State of California, under the date of
February 5, 1993, Case number CV72789: that
notice of which the annexed is a printed copy
(set in type not smaller than nonpareil), has been
published in each regular and entire issue of said
newspaper and not in any supplement thereof on
the following dates, to -wit:
a
in the year 2022.
I certify (or declare) under the the penalty of
perjury that the foregoing is true and correct.
Dared at San Luis Obis o, alifornia, this day
of #!� 2022.
Patricia Horton, New Times Legals
Proof of Publication of
SAN LUIS OBISPO
CITY COUNCIL
NOTICE OF
PUBLIC HEARING
The San Luis Obispo City Council invites all interested persons
to armed a public hearing on Tuesday, Fabmery 15. 2022 at 6:00
p.m. held vie teleconference. Pursuant to Executive Orders
N-60-211 and N-09-21 executed by the Governor of California,
and subsequently Assembly Bill MI. enacted in response to Me
state of emergency relating te novel coronavours disease 2019
(COVIO-19 and enabling teleconferencing accommodations
by suspending or waiving specified provisions in the Ralph
M. Brown Act (Government Code 0 995O at sue 1. Council
Members and Me public may participate in this meeting by
teleconference. Meetings eon be viewed an Government
Access Channel 20 or steamed live from Me CiNs YouTube
channel at hNp7/youtula&slo.iM. Public comment, prior to the
start of the meeting, may be submitted in writing via U.S. Mail
Ialivered to Me City Clerk's office at 990 Palm Sheet, San Luis
Ohism, CA 9301 or by email to ama'Icounc egslo nv ore
PUBLC HEARING REM:
A Public Hearing to introduce an Ordinance granting
Phillips 66 Pipeline ILL a franchise to construct operate,
and msimain pipelines for the transportation of oil, and
other specified materials in the City of San Luis Obispo. The
proposed three-year franchise agreement would provide
Phillips 86 Pipeline U.0 the nonexclusive again, "compact,
erect maintain, operate, repair, renew and change the size of
and remove pipelines... forthe mod Nrtatiun of oil, products,
M.... I. hydrocarbon gases and order gas necessary for to
operated and maintenance of the pipelines...' On January
11, 201 the City Council adopted a Resolu6en of Intention
(R-11292) he approve a franchise agreement with Phillips
66 Pipeline LLC and set a public hearing to receive public
commem on February 15, 4n
Po, more inlarmabrn, you me beyond in contact
Paul Fields of me Guys Pullin warks Debasement at
ISBN 781-7255 or by email at pfieWsdOsbcilvora
The City Council may also discuss paper hearings or business
hems before ar after the it... listed above. If you challenge Me
proposed projectin court, you may be limited to raising odlythose
issues you or someone else raised site public hearing described
in this notice, or in written correspondence delivered to Me City
Council at or reports, the public hearing.
Council Agenda Reports far this meeting will be available for
review in the CM Clerk's Office and online a1 resew slouny om one
week in advance of to meeting date. Please call the CM Clouts
Office at (605) 701-71M for more intermadod. The City Council
meeting will be televised We an Charter Cable Channel 20 and live
streaming an the Chyle YouTube channel htmeuv�otmghe slo LiN.
February 3, 2O22
nJMn i N—W.NTMG AdmWNl1NG OF¢/tlUSINFSSI Wblk Nneimv/Raofd PoF
1010 Marsh St., San Luis Obispo, CA 93401
(805) 546-8208 . FAX (805) 546-8641
PROOF OF PUBLICATION
(2015.5 C.C.P.)
STATE OF CALIFORNIA,
County of San Luis Obispo,
I am a citizen of the United States and a resident
of the county aforesaid; I am over the age of
eighteen years, and not a party interested in the
above entitled matter. I am the principal clerk
of the printer of the New Times, a newspaper
of general circulation, printed and published
weekly in the City of San Luis Obispo, County
of San Luis Obispo, and which has been
adjudged a newspaper of general circulation by
the Superior Court of the County of San Luis
Obispo, State of California, under the date of
February 5, 1993, Case number CV72789: that
notice of which the annexed is a printed copy
(set in type not smaller than nonpareil), has been
published in each regular and entire issue of said
newspaper and not in any supplement thereof on
the following dates, to -wit.
�hoa�✓S- 2.�
in the year 2022.
I certify (or declare) under the the penalty of
perjury that the foregoing is true and correct.
Dated. at San Luis Obispo, California, this day
17-0
1Y/p of J 2022.
Patricia Horton, New Times Legals
Proof of Publication of
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
The San Luis Obispo City Council invites all interested persons
to attend a public hearing on Tuesday. February 15,202G 96:00
pan. held vie 1Neeondiereoee. Pursuant to Executive Orders
N-60-20 and Will executed by the Governor of California,
and subsequently Assembly Bill 361, enacted in response tothe
state of emergency relating in navel comnavims disease M19
(COVIO-19) and enabling teleconferencing accommodations
by suspending or waiving specified provisions in the Ralph
M. Brawn Act jGovernment Cade § 5495D at sect.), Council
Members and the public may participate in this meeting by
teleconference. Meetings can he viewed on Government
Access Channel 20 or assumed live from the Citys Youlfube
channel at http9tyaumbesla.eiry. Public comment, prior to the
start of the mending, may be submitted in writing via U.S. Mail
delivered to the City Clerk's office at 990 Palm Street, San Luis
Obispo, CA 93401 or by ...it to eMailcouncil®siocity.org.
On January 11, 2022, the San Luis Obispo City Council voted 5:a
to approve Resolution No. 11297, as shown below:
RESOLUTION NO. 11297 (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SAN LUIS OBISPO, CAUFORNIA, DECLARING
THE CITY'S INTENT TO APPROVE A FRANCHISE
ORDINANCE, SUPERSEDING ORDINANCE I560 (MITI
SERIES), TO OPERATE AND MAINTAIN PIPELINES FOR
THE TRANSPORTATION OF OIL AND OTHER SPECIFIED
MATERIALS IN THE CITY OF SAN LUIS OBISPO BY
PHIWPS fib PIPELINE LLC AND SETTING A PUBLIC
HEARING FOR FEBRUARY 15, 2012
WHEREAS, the City of San Luis Obispo adopted Ordinance
No. 1391 on July 10, 2001 granting a franchise be Union Pipeline
Company, a California Corporation for a term of 10 years for
the transportation and distribution of oil and other specified
materials in the City of San Luis Obispo; and
WHEREAS, oo APN 17, 2007 the City Council adopted
Ordinance No. ISM transferring the franchise agreement from
Union Pipeline Company to Conoco -Phillips; and
WHEREAS, on June 21, 2011, the City of San Luis Obispo
adopted Ordinance No. 1564 for a new franchise agreement
to replace the existing franchise agreement approved by
Ordinance No. 1391 and setts expire an July 9, Nil; add
WHEREAS. On February 5, 2013 the City Council
adopted Ordinance No. 1587 transferring the franchise from
ConocoPhillips to Phillips 66 Pipeline LLC; and
WHEREAS, On June 24, 2021 Phillips N Pipeline LLC
applied to the City of San Luis Obispo for a new franchise
agreement to replace the existing franchise agreement
approved by Ordinance No. 1554; and
WHEREAS, Phillips fib Pipeline LLC is currently operating
Apelines far the transportation of oil and other specified
naterials within fine City of San Luis Obispo; and
WHEREAS, the new franchise agreement will include the
allowing key provisions;
Puppers: To maintain and operate pipelines for the
transportation of oil and hydrocarbons within
the City of San Luis Obispo.
T,,, Non -excursive
Term: 3-years
FFful Annual franchise fee to the City in accordance
with Public UMifies Code Section 6231.5 (a tea
ranging from Si to $0.650, adjusted per the
Consumer Price Index, per lineal foot based on
pipeline diameter)
Bond: One -million dollars faithful performance bond.
ms�e:Ten million dollars liability insurance
Ind mn: Phillips 66 Pipeline LLC to indemnify the City of
any and all damages to personas or property
arising out of operations under the franchise.
Includes indemnity forioint acts with the Ciry.
NOW. THEREFORE, BE IT RESOLVED by the Council of the
City of San Luis Obispo as follows:
SECTION 1. Pursuant to Section 1002 of Ihe,CiN Charter of
the City of San Luis Obispo, the City Council hereby declares its
intention to consent be the granting of a franchise to maintain
and operate pipelines for the transportation of oil and other
specified materials within the City of San Luis Obispo to Phillips
56 Pipeline U.C.
SECTION 2 A public hearing will be held on Fehrnary 15.
2012 at 6:00 p.m. The City Clerk shall publish this resolution
within fifteen (15) days of its passage in a newspaper in the
City of San Luis Obispo. Any persons having an interest in the
franchise approval or any objection to the approval of the
franchise may appear before the Council to be heard thereon.
For more information, yeu are inv0ed to concoct Paul fields
a/the City's Public Works Department at(8051781-7255 or by
email at pfields®slocitywg
The City Council may also discuss other hearings or business
it... before or after the items listed above. If you challenge
the proposed project in court, you may be limited to raising
only those issues you or someone else raised at the public
hearing described in this notice, or in written correspondence
delivered to the City Council at, or prior to, the public hearing.
Council Agenda Reports for this manning will be available for
review in the City Clerk's Office and online at www.sincity org
one week in advance of the meaning date. Please call the City
Clerk's Office at (005) 781-7100 for mare information. The City
Council meeting will be televised live on Charter Cable Channel
20 and live streaming on the Cfry's YouTube channel hags://
youtube.sloxity.
January 2a 2022
AdminS tr-4/.KI GAdminN'IMG Omce/HUSINfSS/1461ic No,i.n!RrofMV„F