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HomeMy WebLinkAbout1991-01-08 - AGENDA REPORTS - FRANCHISE SC VALENCIA WATER CO (2)• AGENDA REPORT City Manager Approval Items to be presente ' Andrea Daroca PUBLIC HEARING DATE: January 8, 1991 SUBJECT: Ordinance of the City of Santa Clarita Granting a Franchise to Valencia Water Company. Ordinance Number: 91-5 DEPARTMENT: Finance A BACKGROUND: The existing franchise ordinance between the Valencia Water Company and the City of Santa Clarita is up for/renewal. Upon incorporation, the City adopted by reference all existing County franchise ordinances of corporations offering utility services within the City boundaries. Valencia.Water Company has filed an application with the City of Santa Clarita requesting that Council grant them a franchise.to maintain, operate, repair, remove or abandon in place pipes and pipelines for the transportation and distribution of water necessary for the franchisee's business in, under, along or across those portions of the highways now or hereafter dedicated to public use in the City of Santa Clarita. Originally, staff came before Council recommending the granting of a five (5) year franchise ordinance. However, the franchisee has recently raised concerns regarding their ability to obtain financing for capital improvements which have an extended life beyond the five (5) year term. Therefore, the franchisee requests that Council continue the public hearing to February 12, 1991 so that they will have the opportunity to evaluate the ordinance and meet with staff. Additionally, in response to Mayor Boyer's questions regarding the legality of. the City imposing hookup restrictions on a potential municipal water franchise, the City attorney has advised staff that this is not possible. Based upon Civil Code §549 and Lukrawka v. Spring Valley Water Co., the City cannot force the franchisee to not provide the service which it would be required to by its mandate. RECOMMENDATION• The City Council conduct public hearing and continue first reading to February 12, 1991. Attachment: Ordinance 91-5 Letter from Valencia Water Co. Continued To: Agenda ltem.,.........� • 0 ORDINANCE NO. 91-5 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, GRANTING A FRANCHISE TO VALENCIA WATER COMPANY FOR A PERIOD OF FIVE YEARS The City Council of the .City of Santa Clarita does hereby ordain as follows: Section 1. The right, privilege and franchise is granted to Valencia Water Company, its successors and assigns to lay or construct from time to.time and for the period of five (5) years to maintain, operate, repair, renew, change the size of, remove or abandon in place pipes and pipelines for the transportation and distribution of water, waste water, mud, steam and other liquid substances, except any hazardous substances within the meaning of the "Comprehensive Environmental Response Compensation and Liability Act of 19so", the "Federal Pollution Water Control Act", and the "Solid Waste Disposal Act", together with all manholes, valves, appurtenances and service connections necessary or convenient for the operation of said pipes and pipelines, including poles, conduits, wires, cables and other appurtenances and equipment for telegraph or telephone lines or both, necessary or convenient for the Franchisee's business in, under, along or across those portions of -the highways now or hereafter dedicated to public use in the City of Santa Clarita, State of California. Section 2. As consideration for the franchise granted, the Franchisee shall pay -to the City in lawful money of the United States the following: A. Two percent (2%) of the gross annual receipts of the Franchisee arising from the use, operation or possession of the franchise; provided, however, that such payment shall in no event be less than one percent (1%') of the gross annual receipts of the Franchisee derived from the sales within the franchise area(s) of the commodity or service for which the franchise is awarded. Such percentage shall be paid annually during the life of the franchise, including the year of granting the franchise. In the event this amount is increased by Federal or State Law or the City of Santa Clarita is otherwise empowered to increase the -1- rate, the City reserves the right to increase the rate up to the maximum amount permitted by Federal, state or local law. B. In addition to -the foregoing annual payments, the Franchisee shall: I. Pay the City Director of Finance, within sixty (60) days after the end of each calendar year, for each year during the life of the franchise, an initial construction charge calculated at a rate of Two Hundred Dollars ($200.00) per mile or fraction thereof for all new mains laid during the preceding year. 2. Pay the City Director of Finance, within sixty (60) days after the end of each calendar year, for each year during the life of the franchise, an annual fee of Fifty Dollars ($50.00) per pole mile or portion thereof, and Fifty Dollars.($50.00) per mile or portion thereof of underground conduit for telephone or telegraph lines maintained under the franchise. 3. Pay the City Director of Finance, within thirty (30) days of the effective date of this ordinance, a one time granting fee of $5,000. Section 3. The Franchisee shall: A. File with the City Director of Finance, within sixty (60) days after the expiration of the calendar year, or fractional calendar year, following the date of the granting of the franchise and within sixty (60) days after the expiration of each calendar year thereafter, two copies of a report verified by the oath of the Franchisee or by the oath of a duly authorized representative of the Franchisee showing the total gross receipts'of the Franchisee for the immediately preceding franchise payment period, received or accrued in connection with the furnishing of the commodity or service arising from the use or operation of the franchise, together with such data as is necessary in the opinion of the Revenue Collector to calculate or verify the calculation of the annual payment required by Section 2-A, supra (or the. pro rata amount thereof, for the first period if the first period is less than one year). B. On this report the Franchisee shall also show any change in franchise footage since the last franchise report, segregating such footage as to new mains laid, old mains removed, old mains abandoned in place, and the footage of mains.in territory annexed or incorporated since the last franchise report. -2- 0 • C. File with the City Director of Public Works, 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 mains during the immediately preceding franchise report period, together with the length and size of said mains. Section 4. A. The Franchisee during the life of the franchise shall make the annual payments to the City, as provided in Sections 2 and 3, supra, within sixty (60) days after the end of each calendar year. In the event the Franchisee fails to make any payments for the franchise on or before the dates due as hereinabove provided, Franchisee shall pay as additional consideration the following amount: ten percent (10%) of the amount due. Said amount has been set by both parties hereto in recognition of the difficulty in affixing actual damages arising from a breach of said time and performance requirements. B. For each period of late payment of any rate, payment or fee, including the ten percent (10%) late charge, extending beyond thirty (30) days of the due date, an assessment of interest shall accrue at ten percent (10%) per month, up to a maximum of one hundred percent (100%) of the amount due. Section 5. Franchisee shall meet the following indemnification, insurance and bonding requirements: A. Franchisee agrees to indemnify, defend and save harmless City, its agents,'officers and employees from and against any and all liability, expense, including defense costs and legal fees, and claims for damages of any nature whatsoever, including, but not limited to, bodily injury, death, personal injury, or property damage, including property of the Franchisee, arising from or connected with Franchisee's operations, or its services hereunder, including any Workers' Compensation suits, liability or expense, arising from or connected with services performed on behalf of Franchisee by any person pursuant to this franchise. B. Without limiting Franchisee's indemnification of City, Franchisee shall provide and maintain at its own expense during the term of this franchise the programs of insurance covering its operations hereunder set forth hereinbelow. Such insurance shall be provided by insurer(s) satisfactory to City and evidence of -3- such programs satisfactory thereto shall be delivered to City Director of Finance, on or before the effective date of this franchise. Insurance policies and certificates evidencing coverage shall name the City of Santa Clarita, its officers, agents, and employees as additional insureds with respect to Franchisee's operations under the franchise. such evidence shall specifically identify this franchise and shall contain express conditions that City is to be given written notice by registered mail at least sixty (60) days in advance of any modification or termination of any program of in$urance_ The required coverage is as follows: 1. Liability: Such insurance shall be primary to and not contributing with any other insurance maintained by City, shall name the City of Santa Clarita as an additional insured, and shall include, but not be limited to: (a) Comprehensive General Liability insurance endorsed for Premises -Operations, Products/Completed Operations, Pollution Liability, Contractual, Broad Form Property Damage and Personal Injury with a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence. If the above insurance is written on a Claims Made Form, such insurance shall be endorsed to provide an extended reporting period of not less than two (2) years following termination of policy. (b) Comprehensive Auto Liability insurance endorsed for all owned, non -owned, and hired vehicles with a combined single limit of at least One Million Dollars ($1,000,000) per occurrence. 2. workers' Compensation: A program of Workers' Compensation insurance in an amount and form to meet all applicable requirements of the Labor Code of the State of California, including Employers Liability with a $150,000 limit, covering all persons providing.services on behalf of franchisee and all risks to such persons under this franchise. If applicable, such insurance shall also provide for every benefit and payment under obligation of the Federal U.S. Longshoreman and Harbor Worker Compensation Act, paying particular attention to Public Law 92.572. In lieu of the policy. of Workers' Compensation Insurance required in this Section, franchisee may substitute and provide a certificate of consent to self-insurance, issued by the Director of Industrial Relations of the State of California. Z0 9 0 C. Franchisee shall furnish City Director of Finance within thirty (30) days of the.adoption of this Ordinance granting the franchise, either certified copies of such policies or a certificate of insurance for each of the required policies executed by the company issuing the policy, certifying that the policy is in force. D. 1. Within thirty (30) days of the adoption of this ordinance granting the franchise, Franchisee shall provide, to the City Director of Finance, a faithful performance bond in the sum of not less than Fifty Thousand Dollars ($50,000), payable to the City of Santa Clarita and executed by a corporate surety licensed to transact business as a surety in the State of California. Such bond shall be conditioned upon the faithful performance by the Franchisee of'the terms and conditions of the franchise and shall provide that, in case of any breach of condition, the whole amount of the penal sum shall be deemed to be liquidated damages and shall be payable to the City by the principal and sureties of the bond. 2. The faithful performance bond shall continue to exist for one (1) year following the City Council's approval of any sale, transfer, assignment or other change of ownership of the franchise, or of the expiration of termination of franchise. The City Council may release said bond prior to the end of the one (1) year period upon satisfaction by Franchisee of all the obligations underthe franchise. 3. At its sole -option, the City may accept Certificates of Deposit, Cash Deposits, or U.S. Government.Securities in lieu of commercial bonds to meet above bondingrequirements. Such alternative bonds shall be made payable to the City and shall be deposited with the City Director of Finance. E. The types and amounts of said insurance coverages and bond shall be subject to review and reasonable adjustment by the City, at City's sole discretion, at any time during the term of the franchise. In the event of such adjustment, Franchisee agrees to renew required insurance coverages and bonds, in types and amount(s) as determined by the City, within thirty (30) days after written notice to do so from the City. F. Failure on the part of the Franchisee to procure or maintain required insurance and bonding shall -5- constitute a material breach of this franchise upon which the City may immediately terminate or suspend this franchise. G. The obligation of providing evidence of current insurance policies and bonding shall be on the Franchisee_ Section 6. A. The Franchisee shall not sell, transfer, assign, lease, hypothecate, place in trust or change the control of the franchise or any part thereof, except with the prior consent of the City Council, and after payment of a transfer fee as detailed in subsection G, infra. As used in this section, "transfer" includes stock transfer and "control" includes actual working control in whatever manner exercised. B. Franchisee shall inform the City Council of any pending sale, transfer, lease, assignment, hypothecation, placing in trust or change in control of the Franchise, except as excluded in subsection E, and shall provide all documents on which the sale, transfer, assignment, lease, hypothecation, trust or change in control is predicated. C. Franchise shall inform the City Council, within thirty (30) days of the effective date of any such action, a certified copy of the duly executed instrument of such sale, transfer, assignment, lease, hypothecation, trust or change in control. After reviewing the final transfer documents, the City Council may approve the transfer of the franchise rights. If such duly executed instrument isnot filed with the City Council within thirty (30) days after the effective date of such action, or if the final documents are different from the preliminary documents, then upon the expiration of said thirty (30) days, the City Council may inform the transferee (assignee) that the transfer is not deemed to be in force and effect. The City Council may then determine that the franchise is forfeited and may, without notice, by ordinance, repeal the franchise. D. As a condition to the granting of consent to such sale, transfer, assignment, lease, hypothecation, trust or change in control, and the City Council may impose such additional terms and conditions upon the franchise and upon the grantee or assignee which the City Council deems to be in the public interest. Such additional terms and conditions shall be expressed by ordinance. Nothing herein Mc contained shall be construed to grant the Franchisee the right to sell, transfer, assign, lease, hypothecate, place in trust or change control of the franchise or any part thereof, except in the manner aforesaid. This section applies to any assignment, whether by -operation or by law, by voluntary act of the Franchisee, or otherwise. E. Shareholders and/or partners of the Franchisee may transfer, sell, exchange, assign or divest themselves of any interest they may have therein. However, in the event any such sale, transfer, exchange, assignment, divestment or other change is effected in such a way as to give control of or twenty-five percent (25%) or more interest in the franchisee to any persons, corporation, partnership or legal entity other than the controlling interest therein or the effective date of the franchise or the effective date of the last assignment, sale, transfer or other action which required the city Council's consent, consent thereof shall be required. F. Transferee (assignee) shall submit an application to the City Director of Finance which shall contain, but is not limited to: 1. Identification of the applicant. Indicate the corporate or business entity organization and submit copies of the corporate or business formation papers (e.g., articles of incorporation and by-laws; limited partnership agreements); include the names and addresses of anyparent or subsidiary of applicant or any other business entity owning or controlling the applicant in part or in whole. 2. Current financial statement, which has been audited by a certified public accountant demonstrating conclusively that transferee has all the financial resources necessary to carry out all the terms and conditions.of the franchise. Include balance sheet, profit and loss statement for at least the three most recent years, and statement of changes in financial position; if in existence for less than three years, then for such period of existence. 3. Copy of the proposed agreement of sale, letter of understanding, or other documentation which details the pending action which will result in a change in control of the Franchisee. -7- 4. Other information which may be required to assess the capability of the transferee.to operate and maintain the franchise. G. The transfer fee shall be submitted with the applicant's request for the City's consent to any action described in Subsection A, supra, and shall be determined as follows: Conse, of stock,. assignment. or leasentoroanylotheransferaction notnsfer requiring modification of'the franchise by adoption of an amending ordinance: $2,000. 2. of 'stock, assignment or lease, or o oranylotheraaction in requir modification of the franchise by adoption of an amendinginq ordinance: $5,000. the application exc3. In the the costs eed the feesevent detailed above,ttherocess applicant may be required to pay any additional costs incurred by the city in processing the applicant's request for consent to sale, transfer, transfer or stock, assignment, lease, hypothecations or trust of franchise. Such Costs may include the costs incurred for hiring consultants to assist in evaluating the application.. Such costs.shall be paid by the applicant prior to final consideration of the request by the City Council. Section 7. In the event the Franchisee receives notice to -relocate its pipelines and appurtenances pursuant to the Santa Clarita Municipal Code or other applicable ordinance, and the Franchisee neglects or fails to relocate its facilities in a timely manner after receipt of any such notice, Franchisee shall be responsible for and shall reimburse the city, for any and all additional costs or expenses incurred by the City, due to or resulting from such delay in relocation of the facilities. Section 8. In addition to the terms and conditions herein, this franchise is granted under the same terms and conditions contained in the Santa Clarita Municipal Code relating to Basic Franchises, including the prerequisite set forth in Santa Clarita Municipal Code S 4.04.340 that the Franchisee obtain excavation permits pursuant to the Highway Permit Ordinance prior to excavation work on any public right of way. However, if the Franchisee has excavated a portion of highway, that same portion shall not again be excavated within two years of the earlier excavation, except me to conduct emergency work, as defined in the Basic Franchise Ordinance. In the event the terms and conditions hereof conflict with the terms and conditions of the Santa Clarita Municipal Code, the terms and conditions hereof shall control. Section 9. The effective date of this franchise shall be December 17, 1990. 19 ATTEST: PASSED AND APPROVED this day of CITY CLERK -9- MAYOR STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA ) I, , City Clerk of the City of Santa Clarita, do hereby certify that the foregoing Ordinance No. was regularly introduced and placed upon its first reading at a regular meeting of the City Council on the day of , 19_. That thereafter, said Ordinance was duly adopted and passed at a regular meeting of the City Council on the day of 19_, by the following vote, to wit: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: -10- CITY CLERK VALENCIA WATER COMPANY 28769 CASTAIC CANYON ROAD VALENCIA. CALIFORNIA 91355 (805) 257.3566 January 3, 1990 Mr. Ken Pulskamp Assistant City.Manager City of Santa Clarita 23.920 Valencia Blvd., Ste. #300 Santa Clarita, CA 91355 Re: Valencia Water Company Franchise Dear Ken: This letter serves as our written request to defer presentation of the Valencia Water Company franchise ordinance from the January 8th City Council meeting to the February 12th City council meeting. We are making this request in order to provide an opportunity for us to meet with your Finance Department staff and legal counsel to discuss a number of proposed modifications to the franchise which may be mutually agreeable. Sincerely, Dan Masnada Vice President DAM/Vj cc: W.J. Manetta, Santa Clarita Water Company Neu: THE SNErWHALL LAND AND FARMING COMPANY