HomeMy WebLinkAbout1986-013 Council Ordinances•
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ORDINANCE NO. 13 - 86
CITY OF LINO LAKES
ANOKA COUNTY
STATE OF MINNESOTA
GAS FRANCHISE ORDINANCE
AN ORDINANCE GRANTING TO THE CITY OF CIRCLE PINES, BY AND THROUGH
ITS PUBLIC UTILITIES COMMISSION, A NON-EXCLUSIVE FRANCHISE AND
RIGHT FOR A PERIOD OF 25 YEARS TO USE THE STREETS AND PUBLIC WAYS
FOR THE PURPOSE OF CONSTRUCTING, OPERATING, AND MAINTAINING A
SYSTEM FOR THE MANUFACTURE, DISTRIBUTION AND SALE OF GAS;
PRESCRIBING THE TERMS AND CONDITIONS OF THE FRANCHISE; AND
REPEALING ORDINANCE NOS. 28 AND 29.
WHEREAS, the City of Circle Pines ("the Grantee"), a
Minnesota municipal corporation, by and through the Circle Pines
Public Utilities Commission ("the Utilities Commission"), owns
and operates property used and useful in the manufacture,
distribution and sale of gas in the City of Lino Lakes; and
WHEREAS, the City of Lino Lakes ("City"), a Minnesota
municipal corporation, on October 9, 1961, duly adopted, and, on
March 25, 1962, duly amended, an ordinance granting a franchise
("the 1961 franchise") to the Circle Pines Public Utilities
Commission to construct, maintain and operate a gas distribution
system in the City, and the Utilities Commission duly accepted
the franchise; and
WHEREAS, meetings have been held between representatives of
the Grantee and representatives of the City relative to the
adoption of new franchise ordinance; and
WHEREAS, the City Council of the City has determined that it
is desirable, in the public interest and to the advantage of the
consumers of gas in the City that a new franchise be granted to
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the Grantee upon the terms and conditions contained herein, and
that the 1961 franchise be repealed and all rights and privileges
of the Grantee thereunder be surrendered and cancelled;
WHEREAS, it is the intent of the Grantee and the City to
permit the expansion of the Grantee's gas distribution system in
the City; and
WHEREAS, the Grantee, as and for part consideration and
compensation for the franchise herein granted, has agreed, as
provided in this franchise, to supply gas service in the City,
and to perform the contractual obligations prescribed herein and
pay certain amounts to the City;
NOW, THEREFORE, the City Council of the City of Lino Lakes
does ordain as follows:
Section 1: Definitions.
The following terms shall mean:
1.1. City. The City of Lino Lakes, Minnesota, as its
boundaries now exist and as they may be changed during the term
of this franchise.
1.2. Grantee. The City of Circle Pines, Minnesota, its
successors and assigns.
1.3. Council. The City Council of the City of Lino Lakes.
1.4. Gas. Natural gas, manufactured gas, or a mixture of
natural gas and manufactured gas.
1.5. Street and Public Way. Any street, avenue, highway,
boulevard, sidewalk, road, parkway, alley, square, bridge or
other public way in the City.
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1.6. 1961 Franchise. The franchise granting to the
Grantee, its successors and assigns, permission to use the
streets and public places in the City for the construction,
maintenance and operation of a system of mains, pipelines and
other facilities for the distribution and sale of gas, subject to
certain terms and conditions, pursuant to the City's Ordinance
Nos. 28 and 29, copies of which ordinances are attached to this
Ordinance as Exhibits A and B, respectively.
1.7. Utilities Commission. The Public Utilities Commission
of the City of Circle Pines, as now existing or hereafter
constituted.
Section 2: Grant of Franchise.
There is hereby granted to the Grantee until March 31, 2012,
the right to construct, operate and maintain a gas system or gas
plant, or both, and to import, manufacture, transport, distribute
and sell gas, in the City, and for these purposes to construct,
operate and maintain the necessary facilities and equipment and
to lay and maintain mains, service pipes and any other
appurtenances necessary to the sale, manufacture and distribution
of gas in and along the streets and public ways of the City, and
to do all things which are reasonably necessary or customary in
the accomplishment of these objectives, subject to the provisions
of this franchise.
2.1. Effective Date; Acceptance by Grantee. This franchise
and the rights granted herein shall take effect on and be in
force from thirty days after publication by the City as provided
by law, provided that the Grantee has filed with the Clerk of the
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written acceptance thereof by the Utilities Commission, and a
written acceptance by the City Council of the Grantee of the
provisions of this ordinance relating to the City's option to
purchase the Grantee's gas distribution system in the City. The
written acceptance by the Utilities Commission shall also
surrender all of its rights and privileges under the 1961
franchise.
2.2. Non -Exclusive Grant. The rights hereby granted are
not exclusive and the City may grant like rights to other persons
during the term of this franchise.
2.3. Area. The rights hereby granted extend throughout the
entire geographic area of the City, as said area currently exists
and may be changed. Grantee may, from time to time, make
reasonable additions and extensions to its existing gas
distribution system in the City. The City and the Grantee shall
cooperate to permit the development and expansion of Grantee's
gas distribution system in the City. The Grantee shall comply
with the underground permit requirements of the City.
Section 3: Rates.
Rates charged by the Grantee to its customers for service
hereunder shall not be higher, for comparable classes of
customers, than the rates Grantee charges its customers in the
City of Circle Pines.
Section 4: Franchise Fee.
The Grantee shall annually pay the total of the following to
the City as a franchise fee:
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(a) Seven percent (7%) of the Grantee's gross revenues from
the sale of gas within the City, other than sales of
gas to customers who received interruptible gas
service; and
(b) Three percent (3%) of the Grantee's gross revenues from
the sale of gas with the City to customers who received
interruptible gas service.
The franchise fee to be paid pursuant to this Section shall be
paid based on the gross gas sales to the Grantee's customers in
the City from January 1 through December 31 of the applicable
calendar year, as audited, net of the audit year bad debt expense
and the audit year bad debt recoveries. The franchise fee shall
be paid annually, commencing in 1988 for sales commencing on
January 1, 1987, on or before May 15, such fee to be based on
gross gas sales during the prior calendar year, as audited, net
of the audit year bad debt expense and the audit year bad debt
recoveries. In the event of termination or expiration of the
franchise for any reason, the Grantee shall pay the applicable
franchise fee within four and one-half months after termination
or expiration of this franchise.
Section 5: Purchase by City; Termination of Franchise.
5.1. Option to Purchase. Commencing on January 1, 1992 the
City shall have the option to purchase all, but not less than
all, of the real property, utility plant, meters, regulators and
any other property used exclusively by the Grantee in Grantee's
gas distribution system in the City and physically located in
the City. The City's option shall be exercised by the City
giving the Grantee written notice of its intent to purchase the
Grantee's gas distribution system in the City of at least 18
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• months prior to the proposed date of the purchase. The notice
shall set forth the proposed date of the purchase. This option
shall expire on September 30, 2010, if the Grantee has not
received written notice of the City's intent to purchase on or
before that date. The terms and conditions of any purchase
pursuant to this Section 5.1 shall be as set forth in Section 5.4
hereof.
5.2. Purchase Upon Revocation. Upon the revocation of this
franchise for any reason whatsoever, including default by the
Grantee, the City may purchase, within 180 days after the
effective date of the revocation, all, but not less than all, of
the real property, utility plant, meters, regulators and any
other property used exclusively by the Grantee in Grantee's gas
• distribution system in the City and physically located in the
City. This option shall expire 180 days .after such revocation if
the Granteehas not received written notice of the City's intent
to purchase on or before that time. The Grantee shall continue
to operate the system under the applicable terms and provisions
of this franchise until the City closes on the purchase of the
system pursuant to this Section 5.2. The terms and conditions of
any purchase pursuant to this Section 5.2 shall be as set forth
in Section 5.4 hereof.
5.3. Option to Terminate. Commencing on January 1, 1992,
the Grantee shall have the option to terminate this franchise.
The Grantee's option to terminate the franchise shall be
exercised by the Grantee giving the City, at least 18 months
prior to the proposed date of termination, written notice of
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Grantee's intent to terminate the franchise, which notice shall
set forth the proposed date of termination. After Grantee gives
notice of its intent to terminate the franchise, either the
parties shall negotiate a new franchise on terms and conditions
mutually acceptable to the parties, or the City may purchase, on
the date of termination proposed by Grantee, all, but not less
than all, of the real property, utilities plant, meters,
regulators and any other property used exclusively by the Grantee
in Grantee's gas distribution system in the City and physically
located in the City. If, by the proposed date of termination
contained in the Grantee's notice of termination, the Grantee and
the City have not adopted a mutually acceptable new franchise and
the City has not closed on a purchase of Grantee's gas
distribution system in the City, unless such failure to close is
the result of arbitration or court proceedings arising out of
this agreement, Grantee shall have the right to sell its gas
distribution system in the City to a third party, which third
party shall have the right to operate said gas distribution
system pursuant to the terms of this franchise.
The terms and conditions of any purchase by the City pursuant to
this Section 5.3 shall be as set forth in Section 5.4 hereof.
5.4. Terms and Conditions of Purchase. The Grantee and the
City shall negotiate all terms and conditions of any purchase by
the City of the gas distribution system in the City pursuant to
this Section 5 or otherwise. The price to be paid for the
property to be acquired pursuant to any purchase of the gas
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distribution system in the City shall be the total of the
following:
(a) As to the Grantee's gas distribution system in the City
as it existed on July 1, 1986, the amount paid shall be
the actual cost of construction of said portion of the
system, including without limitation the pro rata share
of any reasonable construction, financing, adminis-
trative, legal or engineering costs incurred in
connection with such construction, less depreciation,
all of the foregoing as determined by generally
accepted accounting principles.
(b) As to any portion of Grantee's gas distribution system
in the City constructed after July 1, 1986, including
any reconstruction of or improvements to the system as
it existed on July 1, 1986, the amount paid shall be
the greater of the following:
(i) 125% of the actual cost of construction of said
portion of the system, including without limita-
tion the pro rata share of any reasonable
construction, financing, administrative, legal or
engineering costs incurred in connection with such
construction, less depreciation, all of the
foregoing as determined by generally accepted
accounting principles; or
(ii) The actual cost of construction of said portion of
the system, including without limitation the pro
rata share of any reasonable construction,
financing, administrative, legal or engineering
costs incurred in connection with such construc-
tion, but not including depreciation, all of the
foregoing as determined by generally accepted
accounting principles.
In no event, however, shall the price for the entire system be
less than the cost of retiring all outstanding bonds or other
obligations issued by the Grantee attributable to the gas
distribution system in the City, plus the amount of any contract
demand costs allocable to the Grantee's gas distribution system
in the City that Grantee is unable to eliminate. The entire
purchase price shall be paid at the time of closing. If the
Grantee and the City cannot agree on the terms and conditions of
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any purchase by the City pursuant to this Section 5, either the
Grantee or the City may proceed to arbitration pursuant to
Section 13 of this ordinance.
5.5. Eminent Domain. The provisions of this Section 5 are
intended to supersede any right or authority possessed by the
City .under statutory, constitutional, common or other law to
acquire any part or all of Grantee's gas distribution system in
the City, and are intended to supersede any method of determining
the terms and conditions of any such acquisition. The City
hereby waives any such right or authority of eminent domain with
respect to the gas distribution system of the Grantee within the
City.
5.6. Right of First Refusal. In the event that, at any
time after any purchase by the City of all or any part of the
Grantee's gas distribution system in the.City, the City desires
to sell or transfer all or any part of the gas distribution
system formerly owned by the Grantee, and the City receives an
offer to purchase all or any part of any gas distribution system
then owned by the City, which offer includes all or any part of
the gas distribution system formerly owned by the Grantee, the
City shall, within ten days after receipt of said offer, offer in
writing to sell the entire gas distribution system for which the
City received an offer to the Grantee on terms identical to those
contained in the offer made to the City. Said offer shall
include a statement of the intention to transfer, the name and
address of the prospective purchaser, the portion of the gas
distribution system formerly owned by the Grantee to be
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' transferred, a description of the entire gas distribution system
to be transferred, and the terms of the transfer. Within 120
days after receipt of the offer, the Grantee may, at its option,
elect to purchase all, but not less than all, of the gas
distribution system offered to the Grantee. The Grantee shall
exercise its election to purchase by giving written notice to the
City of its intention to purchase the gas distribution system
offered on the terms set forth in the offer. The closing for the
purchase and sale to the Grantee pursuant to this Section 5.6
shall take place no later than 30 days after the City received
notice of Grantee's intent to purchase. In the event of any
purchase by the Grantee pursuant to this Section 5.6, the City
shall enact an ordinance granting a franchise to the Grantee on
terms identical to those contained in this ordinance, for a
period of at least ten years. The provisions of this Section 5.6
shall survive any expiration, forfeiture, revocation, or
termination of this franchise for any reason whatsoever, and
shall survive any repeal or amendment of this ordinance.
Section 6: Service and Standards.
6.1. Supply of Gas. The Grantee agrees to provide and to
maintain its entire plant and system in the City in condition ,to
furnish safe, adequate and continuous service, subject, however,
to the further provisions of this section.
6.1.1. Failure to Deliver or Receive Gas. The Grantee is
not liable to any of its customers or to the City for its failure
to deliver gas, and said customers and the City are not liable to
the Grantee for their failure to receive gas when such failure is
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pipelines, machinery or equipment; fires or floods, weather
conditions; strikes; riots; inability of the Grantee's pipeline
supplier to furnish an adequate supply; legal impediments, acts
of God or public enemy; shutdowns for necessary repairs or
maintenance; or without limitation by enumeration, any other
cause beyond the reasonable control of the parties failing to
deliver or receive gas. If gas service by the Grantee is
temporarily suspended for any of said causes, occurring through
no fault or negligence of the Grantee, such suspension shall not
form the basis for any action or proceeding to terminate this
franchise.
6.1.2. Negligence Not Excused. Section 6.1.1 is not
intended to relieve any person of liability for damages or
expenses caused or contributed to by his .own negligence which is
the proximate cause of his failure to deliver or receive gas.
6.1.3. Remedial Action. A party failing to deliver or
receive gas for any of the causes enumerated in Section 6.1.1
shall promptly and diligently take such action as may be
reasonably necessary and practicable under the then existing
circumstances to remove the cause of failure and resume the
delivery or receipt of gas.
6.2. Rules and Regulations. The Grantee shall have the
right to promulgate such rules, regulations, terms and conditions
governing its distribution of gas pursuant to this franchise, not
in conflict with this franchise, as shall be reasonably necessary
to enable the Grantee to exercise its rights and perform its
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obligations under this franchise, and to assure safe, adequate
and continuous service to its customers.
Section 7: Conditions of Street Use.
7.1. Use of Streets. In order to effect the rights granted
pursuant to this franchise, the Grantee is authorized subject to
the City's underground permit requirements to make all necessary
excavations in the street and public ways of the City. All
mains, service and utility facilities shall be located,
constructed, installed and maintained so as not to endanger or
unnecessarily interfere with the usual and customary traffic and
travel upon the streets and public ways of the City. The City
may inspect and examine at reasonable times the Grantee's
facilities used and useful in furnishing gas service in the City.
7.2. Restoration of Streets. The. Grantee shall, upon the
completion of any work requiring an opening or disturbance of the
surface of any street or public way in the City, restore the
street or public way, including the paving or permanent
resurfacing and foundations, to the same order and conditions as
before the opening or disturbance was made insofar as reasonably
possible.
Section 8:- Indemnification.
The Grantee shall indemnify and hold the City free and
harmless from all liability and out-of-pocket expenses, except
attorneys' fees, on account of injury or damage to persons or
property caused by the Grantee's construction, maintenance,
repair or operations in the City during the term of this
franchise, unless such injury or damage is the result of the
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negligence of the City, its elected officials, its employees,
officers, agents or inhabitants.
Section 9: Assignment.
Except as otherwise provided in Section 5.3 of this
Ordinance, this franchise, and the rights and privileges granted
pursuant to it, may not be assigned by Grantee without the prior
written consent of the City. Consent by the City shall not be
unreasonably withheld. The assignee of such rights, including
any assignee pursuant to Section 5.3, by accepting the
assignment, shall be deemed to have accepted the terms of this
franchise, and shall be subject to all the terms and conditions
of this franchise. Section 10: Default.
If the Grantee is in default in the performance of any
material part of this franchise for more than 90 days after
receiving written notice from the City of such default, the
Council may, by ordinance, terminate all rights granted to the
Grantee pursuant to this franchise. A notice of default must
specify the provision of this franchise under which the default
is claimed and state the bases therefor. Such notice shall be
served on the Grantee by personally delivering it to the city
administrator of the Grantee. The reasonableness of any
ordinance declaring a termination of the rights and privileges
granted by this franchise shall be subject to judicial review by
a court of competent jurisdiction. The right of termination on
default is the City's sole remedy.
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Section 11: Utilities Commission Membership.
The City Councils of the City and the Grantee have, by a
joint resolution dated November 24, '198.61- ,set the number of
members to serve on the Utilities Commission and the number of
said members to be recommended by the Council. Any failure by
the Grantee to abide by, the provisions of said, joint resolution,
or any duly adopted sucessor joint resolution, shall be deemed to
be a default under this franchise, and shall entitle the City to
exercise its rights provided for in this franchise in the event
of a default by the Grantee.
Section 12: Accounting Requirements.
The Grantee shall provide to the City on an annual basis by
June 1 the audited statement prepared by the Grantee's certified
public accountant. In addition, the City shall have access at
all reasonable hours to all of the Grantee's plans, contracts
engineering
and service
expense, an
City.
Section 13:
13.1.
dispute
City or
to take
dispute
records, accounts, financial statements, and customer
records. The City may also cause, at its sole
audit of the Grantee's gas distribution system in the
Arbitration.
Disputes Subject to Arbitration.
pursuant to
the Grantee
In the event of a
Section 5.4 of this ordinance, either the
may proceed to arbitration, said arbitration
place as hereinafter provided. In the event of any other
between the City and the Grantee pursuant to this
ordinance, the parties may, but need not, agree to proceed to
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• arbitration, said arbitration to take place in the manner
hereinafter provided.
13.2 Procedure. Arbitration shall commence according to
applicable Minnesota law, except as follows:
(a) The parties shall, within 30 days of a party's decision
to proceed to arbitration, or the parties' agreement to
proceed to arbitration, appoint one arbitrator each who
is experienced and knowledgeable in the purchase and
valuation of business property. The arbitrators so
selected shall each agree upon the selection of a
third arbitrator, similarly qualified, within 30 days
after appointment of the second arbitrator.
(b) Within 30 days after appointment of all arbitrators,
and upon 10 days' written notice to the City and to the
Grantee, the arbitrators shall commence a hearing on
the dispute.
(c) The hearing shall be recorded and may be transcribed at
the request and expense of either party. All hearing
proceedings, debates and deliberations shall be open to
the public and shall take place at such times and
places as contained in the notice or as thereafter
publicly stated in the order to adjourn.
(d) In the event of a dispute pursuant to Section 5.4 of
this ordinance, the arbitration panel shall be required
to determine the purchase price and any other terms and
conditions for the purchase of the system in the City
according to the standards established in this
ordinance.
(e) At the close of the hearings and within 30 days, the
arbitrators shall prepare written findings and make a
written decision agreed upon by a majority of the
arbitrators, which decision shall be served by mail
upon the City and the Grantee.
The decision of a majority of the arbitrators shall be
binding upon both the City and the Grantee.
Either party may seek judicial relief to the extent
authorized under Minnesota Statutes Sections 572.09 and
572.19 as the same may be amended, and, in addition,
under the following circumstances: the party fails to
select an arbitrator; the arbitrators fail to select an
a third arbitrator; one or more arbitrators is
unqualified; designated time limits have been exceeded;
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the arbitrators have not proceeded expeditiously; or,
based upon the record, the arbitrators abused their
discretion.
(h) In the event a court of competent jurisdiction
determines the arbitrators have abused their
discretion, it may order the arbitration procedure
repeated and issue findings, orders and directions,
with costs of suit to be awarded to the prevailing
party.
) The costs of arbitrationshall be borne equally by the
City and the Grantee. Each partyshall pay its own
attorneys' fees.
Section 14: Severability.
If any section, provision or clause of this franchise is
adjudged to be invalid, the same shall not affect the validity of
this franchise as a whole, or any section, provision or clause
other than the part declared to be invalid.
Section 15: Notices.
Any notice required to be sent pursuant to this ordinance
shall be sent registered mail, postage prepaid, return receipt
requested, to the city administrator of the municipality to which
the notice is to be sent.
Section 16: Binding Effect.
The agreement of the City and the Grantee, as set forth in
this ordinance, shall be binding on and inure to the benefit of
the City and the Grantee, and their respective successors and
assigns.
Section 17: Ordinances Repealed.
The 1961 franchise is hereby repealed and all rights
thereunder granted to the Grantee are hereby cancelled and
required to be surrendered. Lino Lakes Gas Franchise Ordinance
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COMMISSION OF THE VILLAGE OF CIRCLE PINES, ETC.", is hereby
repealed. Village of Lino Lakes Ordinance No. 29, entitled "AN
ORDINANCE AMENDING ORDINANCE NO. 28, ETC." is hereby repealed.
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Section 18: Effective Date.
This Ordinance shall be effective after its passage and pub-
lication as required by Lino Lakes City Charter.
Passed by the Lino Lakes City Council this 23rd day of March,
1987.
ATTEST:
cutaLito
Marilyn G. Anderson, Clerk -Treasurer
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G. Benson, Mayor