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Agenda Item 7.

City Council Meeting

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

Subject:

Public Hearing – Transferring and Granting a Pipeline Franchise to Torrance Pipeline Company, LLC

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") require 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. Torrance Pipeline Company, LLC ("Torrance"), as successor in interest to Exxon Mobile 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 2017-061 declaring its intention to consider transferring and granting a pipeline franchise to Torrance. 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 Draft Ordinance provided in the September 5, 2017 City Council agenda has been updated to reflect a minor revision to Section 3. The revised Section 3 verbiage stipulates the Franchisee to submit the list of pipeline testing and a certification of the test within 60-days after end of each calender year. This revision has been reviewed by the City Attorney's office and included in the Ordinance, attached hereon.

The introduction (first reading) of the Ordinance and the Public Hearing are being conducted this evening. 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 Torrance would be the franchisee for 5,980 linear feet of 8-inch and 9,790 linear feet of 6-inch pipelines on Central Avenue from the westerly City limit to Lambert Road, then on Lambert Road from State College Boulevard to about 800 feet east of Associated Road. Additionally, the franchise also includes 1,100 linear feet of 6-inch pipelines on Blake Road. The term of the franchise would be ten years. Attached is Exhibit 'A' depicting the location of Torrance pipeline facilities 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 973. If adopted, the new Ordinance franchise fee is estimated at $12,000 for 2018. Therefore, there will be a positive fiscal impact to the General Fund.

Torrance 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 2017-061 declaring its intention to consider transferring and granting a pipeline franchise to Torrance 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 during 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 1196
Exhibit "A" - Pipeline Location Exhibit