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9. Ordinance franchise agreement with Minnegasco. first reading C ITYOF ... 1 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 • (612) 937 -1900 • FAX (612) 937 -5739 MEMORANDUM TO: Mayor and City Council FROM: Don Ashworth, City Manager —1)A I �► DATE: September 14, 1992 1 SUBJ: Ordinance Establishing a Franchise Agreement with Minnegasco, First Reading 1 Attached please find a draft of the franchise ordinance with Minnegasco. This draft represents joint work efforts between Roger Knutson, City Attorney and Kim Roden from Minnegasco. Approval of first reading is recommended. 1 1 1 1 1 1 rs 1 1 1 to, PRINTED ON RECYCLED PAPER CAMPBELL, KNUTSON, SCOTT & FUCHS, P.A Sep 10,92 14:38 No.008 P.02 1 CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA ' ORDINANCE NO. AN ORDINANCE GRANTING 1[INNEGASCO, INC., X11 DIVISION OF ARRLA, A DELAWARE CORPORATION, A NONEXCLUSIVE ' FRANCHISE TO CONSTRUCT, OPERATE, REPAIR, AND MAINTAIN FACILITIES AND EQUIPMENT FOR TEE TRANSPORTATION, DISTRIBUTION, MANUFACTURE, AND SALE OF GAS ENERGY FOR PUBLIC AND PRIVATE UBE AND TO UBE THE PUBLIC GROUNDS OF TEE CITY OF CHANHASSEN, MINNESOTA, FOR OUCH PURPOSES, AND PRESCRIBING CERTAIN TERMS AND CONDITIONS THEREOF 1 THE CITY COUNCIL OF THE CITY OF CHANHASSEN ORDAINS: ' Section 1. Definitions. The foregoing terms shall mean: 1.1 Company. Minnegasco, a division of Arkla, a Delaware corporation, its successors and assigns. 1.2 Gas. Natural gas, manufactured gas, mixture of natural gas and manufactured gas or other forms of gas energy. ' 1.3 City /City Council. In this ordinance, "City" means the City of Chanhassen, Counties of Carver and Hennepin, Minnesota, and "City Council" means the City Council of ' Chanhassen. 1.4 Public Ground. All streets, alleys, and utility easements of the City as to which it has the right to grant the use to the Company. ' Section 2. Agreement Qeneraily. 2.1 Grant of A reement. There is hereby granted to the Company, for a per od of ten (10) years, the right to import, manufacture, transport, distribute, and sell gas for public and private use in the City, and for these purposes to construct, operate, repair and maintain in, on, over, under, and across the ' Public Ground of the City, all facilities and equipment used in connection therewith, and to do all things which are necessary or customary in the accomplishment of these objectives, subject to zoning ordinances, other applicable ordinances, permit proce- dures, customary practices, and the provisions of this agreement. 2.2 Effective Date. This agreement shall be in force and effect from and after its passage and publication as required by law, and its acceptance by the Company in writing filed with the City Manager within sixty (60) days after publication. r09/10/92 CAMPBELL, KNUTSON, SCOTT & FUCHS, P.A Sep 10,92 14:38 No.008 P.03 r 2.3 Non - exclusive Franchise. This is not an exclusive franchise. The C ty may award add tional franchises to other gas utilities. 2.4 Expense. The following expenses shall be paid by the Company: the expense incurred in calling special meetings, attorney's fees incurred in the preparation of this ordinance, the expense of publication of the ordinance, City inspection costs to regulate the manner in which the Company uses public Ground, City costs, including attorney's fees incurred in enforcing this ordinance. 2.5 Default. If the Company is in default in the perfor- mance of any material part of this agreement for more than ninety (90) days after receiving written notice from the City of such default, the City Council may terminate all rights granted here- under to the Company. The notice of default shall be in writing and shall specify the provisions of this agreement under which the default is claimed and state the basis therefor. Such notice shall be served on the Company by personally delivering the notice to an officer thereof at its principal place of business in Minnesota. If the Company is in default as to any part of this agree- went, the City may, after reasonable notice to the Company and the failure of the Company to cure the default within a reason- able time, take such action as may be reasonably necessary to abate the condition caused by the default, and the Company agrees to reimburse the City for ail its reasonable costs. Nothing in this section shall bar the Company from challen- ging the City's claim that a default has occurred. In the event of disagreement over the existence of a default, the burden of proving the default shall be on the City. 2.6 Com lianae. The Company shall at all times comply with all app l cable law s, ordinances, rules re and codes, federal, state, and local, whether now or hereafter promulgated or enacted. At no time shall the installation, operation, or maintenance of the system endanger or interfere with the safety of persons or property in the City. 2.7 City Authority. Notwithstanding any provision contained in this franchise, the City retains the authority to enact ordinances after the effective date of this franchise. The Company shall adhere to those ordinances. ' Section 3. Conditions of Use. 3.1 Notice. At least two (2) business days before the 1 Company intends to do work in Public Ground it shall notify the City in writing of the type of work, its location, and the date upon which the work will be done. -2- CAMPBELL, KNUTSON, SCOTT & FUCHS, P.R Sep 10,92 14:39 No.008 P.04 1 3.2 Use of Public Ground. All utility facilities ies and equipment of the Company shall be located, constructed, ' installed, and maintained so as not to endanger or unnecessarily interfere with the usual and Customary traffic, travel, and use of Public Ground, and shall be subject to those permit conditions the City has adopted for all utilities. 3.3 Permit Required. The Company shall not open or disturb the surface of any Public Ground for any purpose without ' first having obtained a permit from the City, for which the City may impose a reasonable fee to be paid by the Company. The permit conditions imposed on the Company shall not be more bur- densome than those imposed on other utilities for similar facili- ties or work. The mains, services and other property placed pursuant to such permit shall be located as shall be designated ' by the City. The Company may, however open and disturb the surface of any Public Ground without a permit where an emergency exists requiring the immediate repair of its facilities. The Company in such event shall request a permit no later than the 1 second working day thereafter. 3.4 Restoration. Upon completion of any work requiring the opening of any Public Ground, the Company shall restore the same, including paving and its foundations, to as good condition as formerly, and shall maintain the same in good condition for ' two (2) years thereafter. The restoration shall be completed as promptly as weather permits, but if the Company shall not promptly perform and complete the work, the City shall have the right to do so at the expense of the Company; and the Company shall, upon demand, pay to the City the reasonable cost of the work performed by the City, including its administrative expense and overhead. This remedy is in addition to any other remedy available to the City. 3.5 Rel on oca ti of Uli tity F aciliti es. The Company shall promptly, with due regard for season working conditions, perma- nently relocate its facilities or equipment whenever the City orders such relocation. If the relocation is a result of the proper exercise of the police power in grading, regrading, changing the location or shape of or otherwise improving any Public Ground or constructing or reconstructing any sewer, water, or utility system therein, or vacating an easement, the reloca- tion shall be at the expense of the Company. If the relocation is not a result of the proper exercise of•the police power, the relocation shall be at the expense of the City. If such reloca- tion is done without an agreement first being made as to who shall pay the relocation cost, such relocation of the facilities shall be made by the Company, but shall not be construed as a waiver of its right to be reimbursed for the relocation cost. If the Company claims that it should be reimbursed for such reloca- tion costs, it shall notify the City within thirty (30) days after receipt of such order. The City shall give the Company reasonable notice of plans requiring such relocation. 1 -3- CAMPBELL, KNUTSON, SCOTT & FUCHS, P.R Sep 10,92 14:40 No.008 P.05 1 Nothing contained in this subsection shall require the Company to remove and replace its mains or to cut and reconnect its service pipe running from the main to a customer's premises at its own expense where the removal and replacement or cutting and reconnecting is made for the purpose of a more expeditious operation for the construction or reconstruction of underground facilities; nor, shall anything contained herein relieve any person from liability arising out of the failure to exercise reasonable care to avoid damaging the Company's facilities while performing any work in any Public Ground. 3.6 Street Im rovements Pavin or Resurfacin . The City will endeavor to give the Company r easonabl e wr tten n otice of plans for street improvements where paving or resurfacing of a permanent nature is involved that affect a gas pipe line. The notice shall contain the nature and character of the improve- , ments, the streets upon which the improvements are to be made, the extent of the improvements and the time when the City will start the work, and, if more than one street is involved, the order in which this work is to proceed. The notice shall be given to the Company a sufficient length of time, considering season- able working conditions, in advance of the actual commencement of the work to permit the Company to make any additions, altera- tions, or repairs to its facilities the Company deems necessary. Section 4. Indemnification. ' The Company shall indemnify, keep and hold the City, its elected officials, officers, employees, and agents free and harmless from any and all claims and actions on account of injury or death of persons or damage to property occasioned by the construction, maintenance, repair, removal, or operation of the Company's property located in, on, over, under, or across the Public Ground of the City, unless such injury or damage is the result of the negligence of the City, its elected officials, officers, or agents. The City shall not be entitled to reimbursement for attorneys' fees incurred prior to notification to the Company of claims or actions and a reasonable opportunity for the Company to accept and undertake the defense. ' If a claim or action shall be brought against the City under circumstances where indemnification applies, the Company, at its sole cost and expenses, shall defend the City if written notice of the claim or action is promptly given to the Company within a period wherein the Company is not prejudiced by lack of such notice. The Company shall have complete control of such claim or action, but it may not settle without the consent of the City, which shall not be unreasonably withheld. This section is not, as to third parties, a waiver of any defense or immunity otherwise available to the City, and the Company in defending any action on behalf of the City shall be entitled to assert every defense or immunity that the City could assert in its own behalf. -4- ' CA 1NbELL , KNUTSUN , SUM I K I- ULHS , F . H Sep 1u , 3 14:41 �vo . uu� r . u� II 1 Section 5. Franchise Fee. I 5.1 Franchise Fee. During the term of the franchise hereby granted, the city may impose on the Company a franchise fee not greater than five (5 %) percent of the Company's gross receipts as hereinafter defined. The franchise fee shall be I imposed by a separate ordinance duly adopted by the City Council, which separate ordinance shall not be adopted until at least sixty (60) days after written notice enclosing such proposed 1 ordinance has been served upon the Company by certified mail. Any change in the franchise fee shall be imposed by a I separate ordinance duly adopted by the City Council, which ordinance shall not be adopted until at least thirty (30) days after written notice enclosing such proposed ordinance has been served upon the Company by certified mail. The franchise fee I rate may not be changed more often than once in any twelve (12) month period. I The separate ordinance imposing or changing the fee shall not be effective against the Company unless the City lawfully imposes a fee or tax of the same percentage on the gross receipts I from sales of energy within the City by any other similar natural gas or electrical utility supplier. 5.2 Gross Receipts Definition. The term "'gross revenues"' I means all sums rece ved by the Company for its sale or transpor- tation of natural gas to customers within the City. For natural gas transported but not sold by the Company, "gross revenues" I shall include only the revenues for the Company's transportation of natural gas and not the revenues for a third party's sale of natural gas to customers within the City. 1 5.3 Collection of the Fee. The franchise fee shall be payable quarterly and shall be based on the gross receipts of the Company as defined in Section 5.2 for complete billing months I during the period for which payment is to be made. Such fee shall not exceed any amount which the Company may legally charge to its customers prior to payment to the City by imposing a I surcharge equivalent to such fee in its rates for gas service. If the time and manner of collecting the franchise fee is subject to the approval of the public Utilities Commission, the Company I agrees to use best efforts to obtain such approval. 5.4 Financial Records. The City, its agents and repre- sentatives, shall have the authority to arrange for and conduct I an audit of the books and records of the Company. The extent of the audit shall be limited to that information which is necessary to verify the accuracy of the gross receipts as defined in I Section 5.2 and reported to the City. The City and the Company shall establish reasonable procedures to protect the confiden- tiality of this information. The Company shall first be given thirty (30) days' notice of the audit request, the description of II the audit and description, to the bast of the City's ability, of 1 -5- CAMPBELL, KNUTSON, SCOTT & FUCHS, P.A Sep 10,92 14:42 No.008 P.07 1 1 the books, records and documents it wants to review which the company shall provide at its expense. 5.5 Document Provisions. The Company shall file and maintain with the City a financial statement certified by the General Manager of the Company showing, in reasonable detail, the Company's gross generated within the City during the preceding fiscal year. Section 6. Change in Comm. 1 Any change in the form of the Company shall not affect the validity of this ordinance. Any organization succeeding the Company shall, without consent of the City, succeed to all of the rights and obligations of the Company provided in this ordinance. Section 7. Change in Porm,of Government. Any change in the form of government of the City shall not affect the validity of this agreement. Any governmental unit succeeding the City shall, without the consent of the Company, automatically succeed to all of the rights and obligations of the 1 City provided in this agreement. Section 8, Severability. If any portion of this agreement is found to be invalid for 1 any reason whatsoever, the validity of the rest of this agreement shall not be affected. • section 9. Notices. Any notice required by this agreement shall be sufficient if, in the case of notice to the Company, it is delivered to Minnegasco, Inc., Attention: Vice President, Minnesota Operations Division, 201 South Seventh Street, Minneapolis, Minnesota 55402; and, in the case of the City, it is delivered to Don Ashworth, City Manager, City of Chanhassen, P. O. Sox 147, Chanhassen, MN 55317 -0147. 1 Section 10. Previous Agreements Superseded. This agreement supersedes all previous agreements granted to the Company or its predecessors. 1 PASSED AND ADOPTED by the City Council of Chanhassen this day of , 1992. 1 -6- CAMPBELL, KNUTSON, SCOTT & FUCHS, P.A Sep 10,92 14:42 No.008 P.08 1 1 CITY COUNCIL OF CHANHASSEN 1 BY: DONALD J. CHMIEL, Mayor 1 ATTEST: 1 Don Ashworth, CITTMana g er 1 1 1 1 1 1 1 1 1 1 . 1 1 1