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HomeMy WebLinkAboutB- 7 Public Utility Franchise Fee * _ D The City of Azusa �4ig213 E.Foothill Blvd.,Azusa California 91702 :yi'1 : 5 4 (626)812-5224 Fax(626)334-6358 Geoffrey J.Craig Assistant City Manager AGENDA IT@I TO: HONORABLE MAYOR& MEMBERS OF THE CITY COUNCIL 1 FROM: GEOFF CRAIG,ASST. CITY MANAGER i VIA: RICK COLE, CITY MANAGER 'U2 DATE: MAY 15,2000 SUBJECT: PUBLIC UTILITY FRANCHISE FEES Recommendation State law subjects companies that transport natural gas and/or electricity within municipal rights-of- way to payment of a surcharge, or franchise, to the municipality. Azusa receives such payments from Southern California Edison, Southern California Gas and from its own utilities, which serve as an important source of revenue to the General Fund. In light of this, it is worthwhile to formally recognize the Broughton Act and the Franchise Act as the basis for the City's franchising and to ensure that all applicable utility franchise,business license and users taxes are being properly levied, collected and remitted,as well as to provide for franchising new types of utilities that may be yet to come. Staff is recommending that Council conduct first reading on an ordinance that would enable Azusa to do so. Background According to the Public Utilities Code, companies that transport natural gas and/or electricity over utility and non-utility transmission or distribution systems are subject to a municipal surcharge. This surcharge is designed to replace,but not increase,franchise fees,so that companies like Enron,that will use the transmission or distribution systems of companies, like Southern California Edison Company,that have entered into franchise fee agreements with the City, share commensurately in the burden of compensating the City for the private use of public lands. The Southern California Edison Company has advised that it will be at least two years before Edison will be allowing any other company to use its lines in Azusa for the transportation of power. However,the Southern California Gas Company does have several transportation customers within Azusa's jurisdiction. The Gas Company has advised that,in accordance with State law and The Gas Company's filed tariffs to implement the law,it is collecting and remitting to the city the appropriate surcharge on gas transportation volumes delivered through meters in Azusa. However,staff would like to ensure that all said transportation customers are properly licensed to do business in Azusa and that both the surcharge and any applicable utility users tax are being properly c llected and remitted. Honorable Mayor& Members of the City Council May 15, 2000 Page 2 The City Attorney's Office has provided a model utility franchise ordinance, that has been adapted to Azusa's needs. This draft ordinance,attached,references the laws that pertain to municipal grants of franchises as well as those that pertain to municipal surcharges. Accordingly, this ordinance is an all-inclusive document that will retain its flexibility even if the enabling statues are revised. It may also serve useful in the future, should new types of utilities (other than electric, gas or communications) emerge and seek to place lines or equipment in City right-of-way or on City property, poles or fixtures. Staff in the Light and Water, Community Development and Finance Departments will work together to ensure compliance with the legislation and,when necessary,will work with the energy transporters to collect any delinquencies that may arise. Both staff and the City Attorney's office recommend adoption. The draft ordinance is attached for Council perusal. Fiscal Impact The immediate fiscal impact to the General Fund of adopting this ordinance would be small, probably under$10,000 per year in revenues emanating from business licensing. Further verification of revenues such as the surcharge and the utility user tax may increase this number slightly. But, future income from franchising new types of utilities could be significant, thus passage of the ordinance could be laying the groundwork for an important source of revenue for Azusa in the years to come.