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Agenda Item 22.

City Council Meeting

Meeting Date:	11/07/2017
FROM:	Bill Gallardo

Subject:

Ordinance No. 1195 for Transferring and Granting a Pipeline Franchise to Matrix Investment, L.P.

RECOMMENDATION

Adopt 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. On October 3, 2017, the City Council introduced the ordinance and conducted the Public Hearing. No public comments were received during the Public Hearing and no public comments have been received since the October 3, 2017 Public Hearing.

The second reading of the Ordinance was waived by the City Council during the first reading on October 3, 2017. If the Ordinance is adopted, 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 is 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 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. The Public Hearing was open on October 3, 2017 and Ordinance 1195 was introduced with the first reading. The second reading was waived by the City Council. There were no public comments received during the Public Hearing or subsequently to the hearing. Therefore, staff is recommending the City Council adopt Ordinance No. 1195 for transferring and granting a pipeline franchise to Matrix Investment, L.P.

RESPECTFULLY SUBMITTED:

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

Attachments
Exhibit 'A'
Ordinance 1195