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Agenda Item 6.

City Council Meeting

Meeting Date:	10/03/2017
FROM:	Bill Gallardo

Subject:

Public Hearing – Transferring and Granting a Pipeline Franchise to Matrix Investments, L.P.

RECOMMENDATION

Introduce Ordinance for First Reading by Title Only, and Waive Further Reading of the Ordinance.

BACKGROUND/DISCUSSION

The California Public Utilities Code ("CPUC") and Brea City Code ("BCC") requires any person, firm or corporation utilizing City property for the conveyance of petroleum or other products to have a valid franchise with the City of Brea. Matrix Investments, L.P. ("Matrix"), as successor in interest to California Resources Production Corporation, has submitted an application requesting that a pipeline franchise be transferred and granted to them in order to operate and maintain the existing petroleum pipelines in the City of Brea.

The CPUC establishes the procedures that the City must follow when considering an application for a pipeline franchise, which is granted by ordinance. In order to act on this franchise application, the City Council is required to:

Adopt a Resolution of Intention to grant a franchise and set a Public Hearing date.
Conduct the Public Hearing then introduce the franchise ordinance for first reading.
Adopt franchise ordinance whereupon it will become effective 30 days later.

On September 5, 2017, the City Council adopted Resolution 2017-060 declaring its intention to consider transferring and granting a pipeline franchise to Matrix. The City Council directed staff to introduce the franchise ordinance and set a public hearing on October 3, 2017. Notice of the public hearing was posted at the three designated City posting places and published in the Brea Star Progress on September 8 and September 15, 2017.

The introduction (first reading) of the Ordinance, attached herewith, and the Public Hearing are being conducted this evening (See attached Ordinance). Staff is recommending waiving the second reading of the Ordinance at the November 7, 2017 City Council meeting. If the Ordinance is adopted at that time, then the Ordinance and franchise would become effective thirty (30) days later and Matrix would be the franchisee of 8,980 linear feet of 6-inch pipelines along Whittier Avenue, Puente Street, Central Avenue, Berry Street and Challenger Way. The term of the franchise would be ten years. Attached is Exhibit 'A' depicting the location of the pipeline facilities owned and operated by Matrix within the City of Brea.

FISCAL IMPACT/SUMMARY

The Public Utilities Commission regulates pipeline activity and establishes the rates charged for franchise agreements. The annual payments are based on a formula associated with the internal diameter and length of the pipelines. The franchise fees for the pipelines depicted in Exhibit 'A' have been paid to the end of 2017 under Ordinance 1057. If adopted, the new Ordinance franchise fee is estimated at $8,100 for 2018. Therefore, there will be a positive impact to the General Fund.

Matrix has submitted an application requesting that a pipeline franchise be transferred and granted to them in order to operate and maintain the existing petroleum pipelines in the City of Brea. The City Council adopted Resolution 2017-060 declaring its intention to consider transferring and granting a pipeline franchise to Matrix on September 5, 2017 and directed staff to introduce the franchise ordinance and set a Public Hearing on October 3, 2017. Therefore, staff is recommending the City Council to introduce the Ordinance and conduct a Public Hearing at this meeting. Furthermore, staff is recommending the second reading be waived for the adoption of the Ordinance at the November 7, 2017 City Council meeting.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: Hsing Chao, Associate Engineer
Concurrence: Steve Kooyman, P.E., City Engineer

Attachments
Ordinance 1195
Exhibit "A" - Pipeline Location Exhibit