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HomeMy WebLinkAbout03/06/2007, C7 - DECLARATION OF INTENTION AND SETTING OF A PUBLIC HEARING FOR APRIL 3, 2007 FOR PROPOSED FRANCHISE O council Mdim D� o 7 j Ac,Enaa Report I"..b. 0 CITY OF SAN LUIS 0BIST0 FROM: Jonathan Lowell, City Attorney Prepared By: J. Christine Dietrick,Assistant City Attorney SUBJECT: DECLARATION OF INTENTION AND SETTING OF A PUBLIC HEARING FOR APRIL 3, 2007 FOR PROPOSED FRANCHISE ORDINANCES REGARDING THE TRANSFER OF PIPELINES TRANSPORTING OIL AND HYDROCARBON GASES BY TOSCO CORPORATION AND UNION PIPELINE COMPANY, A CALIFORNIA CORPORATION, TO CONOCOPHILLIPS COMPANY AND CONOCOPHILLIPS PIPELINE COMPANY, RESPECTIVELY CAO RECOMMENDATION 1. Adopt a resolution declaring the City's intention to authorize the transfer of rights and obligations under Franchise Ordinance 1390 from Tosco Corporation to ConocoPhillips Company, and setting a public hearing date for April 3, 2007; and 2. Adopt a resolution declaring the City's intention to authorize the transfer of rights and obligations under Franchise Ordinance 1391 from Union Pipeline Company ("Unocap"), a California Corporation and wholly owned subsidiary of Cono_coPhillips Company to ConocoPhillips Pipe Line Company. DISCUSSION Before granting or modifying any franchise, Section 1002 of the City Charter requires the City Council to pass a resolution declaring its intention to do so, 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 set forth a date where any person having an interest therein or objection to the granting thereof may appear and be heard and shall direct the City Clerk to publish said resolution within fifteen (15) days of its passage. The time fixed for such hearing shall not be less than twenty (20) nor more than sixty (60) days after the passage of said resolution. At the time set for the hearing, the Council shall proceed to hear and pass upon all protests, and its decision thereon shall be final and conclusive. Thereafter, the Council may grant or deny the franchise subject to the right of referendum of the people. At the hearing, Council will consider two ordinances modifying existing franchises to recognize the successors in interest to the franchise holders. The facts necessitating these changes are as follows. The City of San Luis Obispo adopted Ordinance No. 1390 on July 10, 2001, granting a o • Council Agenda Report—Tosco/Unocap Franchise Transfers Page 2 franchise to Tosco 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. Tosco Corporation was later acquired by Phillips Petroleum Company, which subsequently merged with Conoco Inc., became a subsidiary of the parent company and changed its name to ConocoPhillips Company. Furthermore, on January 1, 2003, Tosco Corporation was merged into ConocoPhillips Company and ceased to exist as a legal entity. So, ConocoPhillips Company has assumed all of Tosco Corporation's properties, rights and obligations, including its pipeline operations in the City of San Luis Obispo and expressly agrees to assume the rights and obligations of Tosco Corporation under Franchise Ordinance 1390. Hence, ConocoPhillips Company has requested that the City modify the existing franchise to reflect ConocoPhillips Company as the holder of the franchise. Similarly, the City of San Luis Obispo adopted Ordinance No. 1391 on July 10, 2001, granting a franchise to Union Pipeline Company ("Unocap"), 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. Effective February 1, 2005, Unocap merged into ConocoPhillips Pipe Line Company ("CPPLC"), a wholly owned subsidiary of ConocoPhillips Company, and is no longer a legal entity. CPPLC is currently operating pipelines for the transportation of oil and other specified materials within the City of San Luis Obispo and expressly agrees to assume the rights and obligations of Unocap under Franchise Ordinance 1391. Hence, CPPLC has requested that the City modify the existing franchise to reflect CPPLC as the holder of that franchise. The attached resolutions satisfy the requirements of Charter Section 1002 and set a public hearing date for April 3, 2007. CONCURRENCES The Public Works Department has reviewed its file and verifies that no further information is required to approve the transfers. The Finance Director has reviewed the financial documents relating to the successor companies and verifies that the companies appear to be financially sound to satisfy the obligations of the franchises. FISCAL IMPACT The annual franchise fee to the City will be paid in accordance with Public Utilities Code Section 6231.5. This fee will generate approximately $7,500.00 per year in discretionary income to the General Fund. This fee is set by State law, which authorizes a per foot fee based on pipeline diameter. Staff costs in reviewing and processing the transfer requests will be paid by ConocoPhillips. ALTERNATIVES 1. Council may decline to approve the transfers. Staff does not recommend this action because the assets transfers have already been completed among the companies and approved by the CPUC. Failure to approve the transfers would leave the City holding Franchise agreements 7—:- Council Agenda Report=ToscoNnocap Franchise Transfers Page 3 with entities that no longer exist and create undesirable ambiguities as to responsibility for maintenance and control of the franchises. 2. . Council could direct staff to further renegotiate the Franchise agreements if specific changes to the agreement are desired. ATTACHMENTS 1. Resolution for the proposed Tosco Corporation franchise transfer to ConocoPhillips Company setting a public hearing date for April 3, 2007. 2. Resolution for the proposed Union Pipeline Company, a California Corporation, franchise transfer to ConocoPhillips Pipeline Company and setting a public hearing date for April 3, 2007. G:\Franchises\Tosco-Unocal\CAR.Franchise Transfer.Tosco-Unocap.07.2.23.doc • o ATTACHMENT �- RESOLUTION NO. (2007 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO DECLARING THE CITY'S INTENT TO APPROVE THE TRANSFER OF FRANCHISE ORDINANCE 1390 TO OPERATE AND MAINTAIN PIPELINES FOR THE TRANSPORTATION OF OIL AND OTHER SPECIFIED MATERIALS IN THE CITY OF SAN LUIS OBISPO FROM TOSCO CORPORATION, A NEVADA CORPORATION, TO CONOCOPHILLIPS COMPANY AND SETTING A PUBLIC HEARING FOR APRIL 3, 2007 WHEREAS, the City of San Luis Obispo adopted Ordinance No. 1390 on July 10, 2001, granting a franchise to Tosco 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, Tosco Corporation was acquired by Phillips Petroleum Company, which subsequently merged with Conoco Inc., became a subsidiary of the parent company and changed its name to ConocoPhillips Company; and WHEREAS, on January 1, 2003, Tosco Corporation was merged into ConocoPhillips Company and ceased to exist as a legal entity;and WHEREAS, ConocoPhillips Company has assumed all of Tosco Corporation's properties, rights and obligations,including its pipeline operations in the City of San Luis Obispo and expressly agrees to assume the rights and obligations of Tosco Corporation under Franchise Ordinance 1390; and WHEREAS, the agreement approved by Ordinance 1390 contains the following key provisions: ose: To maintain and operate pipelines for the transportation of oil and hydrocarbons within the City of San Luis Obispo. Type: Non-exclusive Term: 10 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 per foot based on pipeline diameter) Bond: One million dollars faithful performance bond Insurance: Ten million dollars liability insurance ��y • o Resolution No. (2007 Series) ATTACHMENT Page 2 Indemnity: ConocoPhillips Company to indemnify the City for any and all damages to persons or property arising out of operations under the franchise. Includes indemnity for joint acts with the City. In addition, the Franchise covers all other subjects commonly found in such franchise documents such as: the type of maintenance and operation of the pipelines, permitted transfers of the franchise, requirements for moving pipelines to accommodate public works and utilities, encroachment permits, and pipeline abandonment and removal requirements. 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 Charter of the City of San Luis Obispo and Article 17 of Franchise Ordinance 1390, the City Council hereby declares its intention to consent to the transfer of Franchise Ordinance number 1390 from Tosco Corporation to ConocoPhillips Company. SECTION 2. A public hearing will be held on April 3, 2007, at 7:00 p.m. in the Council Chambers of City Hall, located at 990 Palm Street, San Luis Obispo, California. Any persons having an interest in the franchise transfer or any objection to the approval of the franchise transfer may appear before the Council and be heard thereon. SECTION 3. The City Clerk shall publish this resolution at least once within fifteen (15) days of its passage in a newspaper in the City of San Luis Obispo. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of 2007. Mayor David F. Romero C -7— • o Resolution No. (2007 Series) Page 3 ATTACHMENT ATTEST: Audrey Hooper, City Clerk APPROVED AS TO FORM: Jona well, City Attorney O ATTACHMENT-2 RESOLUTION NO. (2007 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO DECLARING THE CITY'S INTENT TO APPROVE THE TRANSFER OF FRANCHISE ORDINANCE 1391 TO OPERATE AND MAINTAIN PIPELINES FOR THE TRANSPORTATION OF OIL AND OTHER SPECIFIED MATERIALS IN THE CITY OF SAN LUIS OBISPO FROM UNION PIPELINE COMPANY ("UNOCAP"), A CALIFORNIA CORPORATION,TO CONOCOPHILLIPS PIPE LINE COMPANY,A DELAWARE CORPORATION, AND SETTING A PUBLIC HEARING FOR APRIL 3,2007 WHEREAS, the City of San Luis Obispo adopted Ordinance No. 1391 on July 10, 2001, granting a franchise to Union Pipeline Company ("Unocap"), 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, effective February 1, 2005, Unocap merged into ConocoPhillips Pipe Line Company ("CPPLC"), a wholly owned subsidiary of ConocoPhillips Company, and is no longer a legal entity; and WHEREAS, CPPLC is currently operating pipelines for the transportation of oil and other specified materials within the City of San Luis Obispo and expressly agrees to assume the rights and obligations of Unocap under Franchise Ordinance 1391; and WHEREAS, the agreement approved by Ordinance 1391 contains 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: 10 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 per foot based on pipeline diameter) Bond: One million dollars faithful performance bond Insurance: Ten million dollars liability insurance Indemnity: CPPLC to indemnify the City for any and all damages to persons or property arising out of operations under the franchise. Includes indemnity for joint acts with the City. In addition, the Franchise covers all other subjects commonly found in such franchise documents such as: the type of maintenance and operation of the Resolution No. (2007 Series) ATTACHMENT Z Page 2 pipelines, permitted transfers of the franchise, requirements for moving pipelines to accommodate public works and utilities, encroachment permits, and pipeline abandonment and removal requirements.. 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 Charter of the City of San Luis Obispo and Article 17 of Franchise Ordinance 1391, the City Council hereby declares its intention to consent to the transfer of Franchise Ordinance number 1391 from Unocap to Conoco Phillips Pipe Line Company. SECTION 2. A public hearing will be held on April 3, 2007, at 7:00 p.m. in the Council Chambers of City Hall, located at 990 Palm Street, San Luis Obispo, California. Any persons having an interest in the franchise transfer or any objection to the approval of the franchise transfer may appear before the Council and be heard thereon. SECTION 3. The City Clerk shall publish this resolution at least once within fifteen (15) days of its passage in a newspaper in the City of San Luis Obispo. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of 2007. Mayor David F. Romero ATTEST: Audrey Hooper, City Clerk APPROVED AS TO FORM: Jon an Lowell, City Attorney