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2.4. ERMUSR 05-14-2013 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager John Dietz—Chair Al Nadeau—Vice Chair Daryl Thompson—Trustee MEETING DATE: AGENDA ITEM NUMBER: May 14, 2013 2.4 SUBJECT: The City of Elk River Franchise Ordinance BACKGROUND: In April,the City of Elk River adopted a Franchise Fee Ordinance and a Franchise Agreement Ordinance for the purpose of funding street projects. DISCUSSION: Staff and legal counsel have worked with City staff through the development of these documents. ACTION REQUESTED: Staff is requesting the Commission sign the attached agreement. The Franchise Fee Ordinance is attached for reference. ATTACHMENTS: • City of Elk River Ordinance to Elk River Municipal Utilities • City of Elk River Ordinance Implementing an Electric Service Franchise Fee OWEREI BI Page 1 of 1 INATUR Reliable Public Power Provider ORDINANCE NO. 13-07 CITY OF ELK RIVER, MINNESOTA AN ORDINANCE OF THE CITY OF ELK RIVER GRANTING TO ELK RIVER MUNICIPAL UTILITIES, A MINNESOTA MUNICIPAL UTILITY, ITS SUCCESSORS AND ASSIGNS, A NONEXCLUSIVE FRANCHISE TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN IN THE CITY OF ELK RIVER, MINNESOTA, AN ELECTRIC DISTRIBUTION SYSTEM AND TRANSMISSION LINES, INCLUDING NECESSARY POLES, LINES, FIXTURES AND APPURTENANCES, FOR THE FURNISHING OF ELECTRIC ENERGY TO A PORTION OF THE CITY, ITS INHABITANTS, AND OTHERS, AND TO USE THE PUBLIC WAYS AND PUBLIC GROUNDS OF THE CITY FOR SUCH PURPOSES; AND PRESCRIBING CERTAIN TERMS AND CONDITIONS THEREOF. THE CITY COUNCIL OF THE CITY OF ELK RIVER, MINNESOTA,DOES FIND AND ORDAIN, AND THE CITY CODE OF ORDINANCES IS HEREBY REVISED TO INCLUDE,THE FOLLOWING: SECTION 1. DEFINITIONS. For purposes of this Ordinance, the following capitalized terms listed in alphabetical order shall have the following meanings: City. The City of Elk River, County of Sherburne, State of Minnesota and the corporate limits thereof on the Effective Date and as they may be adjusted from to time to time hereafter. City Utility System. Facilities used for providing public utility service owned or operated by the City or agency thereof,including sewer, storm sewer,water service,street lighting and traffic signals. Company. Elk River Municipal Utilities (ERMU),a Minnesota Municipal Utility,its successors and assigns including all successors or assignees that own or operate any part or parts of the Electric Facilities subject to this Franchise. Company Service Area. Those areas within the City to which the Company has been assigned the right to provide electric service, as in effect on the Effective Date or as may be hereafter revised. CounciL The City Council of the City of Elk River as from time to time constituted. Effective Date. The effective date of this Ordinance. Electric Facilities. Electric transmission and distribution substations, towers, poles, lines, guys, anchors, conduits, fixtures, and necessary appurtenances owned or operated by the Company for the purpose of providing electric energy for public or private use. Franchise. The grant of rights made by the City to the Company in this Ordinance, subject to its terms and conditions. 1 Notice. A writing served by any party or parties on any other party or parties at the following addresses: If to the City: City Administrator City of Elk River 13065 Orono Parkway Elk River, MN 55330 If to the Company: General Manager Elk River Municipal Utilities 13069 Orono Parkway Elk River, MN 55330 Any party may change its respective address for the purpose of this Ordinance by written notice to the other parties. Person. A natural person or any partnership, joint venture, corporation, cooperative, limited liability company or any public corporation, political subdivision or agency of the State or any other legal entity that may be created by law. Public Ground. All real property owned by or dedicated to the City with respect to which the City holds the legal right or title to grant or withhold easement, leasehold or occupancy rights or servitudes. Public Way. Any street,alley and other public rights-of-way within the City. Utility. Transmitting, furnishing, transporting, distributing, delivering, selling, receiving, importing, manufacturing, or causing to be produced, transmitted, furnished, transported, delivered, sold,received,imported,or manufactured,electric energy, natural gas,mixed gas, heat, light, power,and services provided through a cable communication system. Utility Service Provider. Any Person who performs any one or more of the activities of a Utility to or for the public or to or for any one or more persons within the corporate limits of the City. SECTION 2. THE FRANCHISE. 2.1. Grant of Franchise. The City hereby grants the Company, for a term of twenty (20) years from the effective date of this Ordinance, the right to transmit and furnish electric energy for any public or private use within and through the Company Service Area. For these purposes, the Company may construct, operate, repair and maintain Electric Facilities in, on, over, under and across the Public Ways and Public Grounds within the Company Service Area, subject to the provisions of this Ordinance. The Company may do all reasonable things necessary or customary to accomplish these purposes, subject however, to all applicable design and safety codes, the provisions of this Ordinance, zoning ordinances, other applicable ordinances, permit procedures and the customary and necessary practices of the City. 2.2 Not Exclusive. This Franchise is not exclusive. 2• 2.3. Effective Date. This Franchise shall be in force and effect from and after the adoption of this Ordinance and publication as required by law and upon the Company's duly authorized acceptance as provided in Section 12 below. SECTION 3. LOCATIONS; CONSTRUCTION;OTHER REGULATIONS. 3.1. General. Electric Facilities shall be located, constructed and maintained by the Company: (i) in as safe and secure a condition or manner as reasonably possible, (ii) so as not to interfere with the safety and convenience of ordinary travel along and over Public Ways, and (iii) so as not to disrupt or interfere with the normal use or operation of any Public Ways, Public Ground or the City Utility System. Electric Facilities may only be located on Public Ground as determined by the City in its sole discretion. The Company's construction, reconstruction, operation, repair, maintenance, location and relocation of Electric Facilities shall be subject to the terms of this Ordinance and such other regulations of the City consistent with authority granted the City to manage its Public Ways and Public Grounds under state law, to the extent not inconsistent with a specific term of this Ordinance. 3.2. Construction; Maintenance; Repairs. Whenever the Company desires to open or disturb any Public Way or Public Ground for the purpose of constructing, maintaining, or repairing Electric Facilities, it shall give the City reasonable advance Notice, but not less than ten (10) business days, by filing a written Notice with the City Clerk. In any case, the Company shall not commence such work before obtaining a permit pursuant to Article 66 of the Elk River City Code, for which the City may impose a reasonable fee. The Company shall not, during the progress of the work, endanger or unnecessarily obstruct the passage of traffic or the normal and customary use of the Public Ways and Public Ground. During the progress of such work, the Company shall keep the affected Public Ways or Public Ground guarded in order to avoid accidents to persons or property. All work performed by the Company shall comply with all applicable federal, state,and local laws,rules, and regulations. 3.3 Emergencies. The requirements for obtaining permits from the City pursuant to Section 5.2 shall not apply if(i) an emergency exists requiring the immediate repair of Electric Facilities and (ii) the Company gives telephone notice to the City before, if reasonably possible, commencement of the emergency repair. Within two (2) business days after commencing the repair, the Company shall apply for any required permits and pay any required fees. 3.4. Restoration. Following the completion of any work, the Company shall promptly and diligently restore the affected Public Ways and/or Public Ground to as good a condition as before the work commenced. If the Company fails to promptly restore such Public Ways and/or Public Ground within ten (10) days of Notice by the City, the City may engage an independent contractor at the expense of the Company to perform the restoration of the Public Ways and/or Public Ground as required under this Section. The Company shall pay to the City upon demand the cost to the City of affecting such restoration including the City's administrative expenses and overhead. 3.5. Avoidance of Damage. The Company must take reasonable measures to prevent the Electric Facilities from causing damage to persons or property. The Company must take reasonable measures to protect the Electric Facilities from damage that could be inflicted on the Electric Facilities by persons, property, or the elements. The Company must take protective measures when the City performs work near the Electric Facilities, if given reasonable Notice by the City of such work prior to its commencement. 3 3.6. Field Locations. The Company shall provide field locations for all its underground Electric Facilities within the city consistent with the requirements of Minnesota Statutes, chapter 216D (commonly known as of the Effective Date as the"Gopher State One Call" system). 3.7. Shared Use of Poles; Street Lights. The Company shall make space available on its poles or towers for City fire, water utility, police or other City facilities whenever such use will not interfere with the use of such poles or towers by the Company or the existing facilities, if any, of another Utility Service Provider. Street name signs, "no parking" signs and other traffic control signs, as requested and provided by the City, may be installed on the electric and street light poles within the Company Service Area. No rental fee or other charge shall be payable by the City for this use; provided,however,that the City will reimburse the Company its actual and reasonable costs incurred by the Company in accommodating such use. The installation and placement of any of the foregoing shall comply with the National Electric Safety Code. 3.8. Tree Trimming. Subject to such procedures, regulation and supervision as the Council may establish, the Company may, at its cost, trim all trees and shrubs in the Public Ways located within the Company Service Area to the extent the Company finds it necessary to avoid interference with the proper construction, operation, repair and maintenance of any of the Company's Electric Facilities installed or maintained hereunder. 3.9. Notice of City Improvements. The City will give the Company reasonable advance Notice of plans for improvements to Public Ways and Public Ground in the Company Service Area where the City has reason to believe that the Company's Electric Facilities may affect or be affected by such improvements. The Notice will contain: (i) the nature and character of the improvements, (ii) the Public Ways and/or Public Ground upon which the improvements are to be made, (iii) the extent of the improvements, (iv) the time when the City will start the work, and (v) if more than one Public Way or parcel of Public Ground is involved,the order in which the work is to proceed. SECTION 4. ELECTRIC FACILITIES RELOCATION. 4.1. Relocation. In the event the City reasonably determines that it is necessary for the Company to move any part of its Electric Facilities because the City has determined to change,move or improve its Public Ways or that the Electric Facilities have become or will become a substantial impairment to the existing or imminent public use of Public Ground, upon reasonable Notice by the City to the Company, then the Company will move its Electric Facilities at its sole cost. The City shall consider reasonable alternatives in designing its public works projects so as not to arbitrarily cause the Company unreasonable additional expense in exercising its authority under this Section 6.1. This Section 6.1 shall not constitute a taking by the City nor be construed as a waiver or modification of any easement or prescriptive rights acquired by the Company independent of and without reliance by the Company on this Franchise. 4.2. No Release of Liability. Nothing contained herein shall relieve any third party from liability arising out of their failure to exercise reasonable care to avoid injuring the Company's Electric Facilities while performing any work connected with grading, regarding or changing the line of any Public Way or with any construction on or adjacent to any Public Way;provided, however, this Section 6.2 shall not limit the City's rights to indemnification under Section 7.1 nor shall the City in any way be liable to the Company for claims arising from the negligence of any third party. 4 • SECTION 5. INDEMNIFICATION. 5.1. Indemnification. If at any time any claim of any kind is made against the City for injury to persons or property arising from the acts or failure to act by the Company,its agents, servants, or employees in connection with the operations of the Company under and pursuant to this Franchise, the Company shall fully indemnify,defend and hold harmless the City,its agents, servants or employees from any and all such claims, including, but not limited to, reimbursement of any reasonable attorneys' fees and costs and expenses the City may incur in handling, denying, or defending such claims. The Company's obligation to indemnify the City shall not extend to any injury to persons or property caused by the negligent act or failure to act by the City or any actions taken by the Company pursuant to directions of the City if performed within the scope of the City's directions without negligence by the Company. The City shall determine who will defend any such claims arising under this Section 6.1 and the Company will thereafter have complete control of such litigation;provided, however, the Company may not settle any such claims without the prior approval of the City, which approval will not be unreasonably withheld. This Section is not, as to third parties, a waiver of any defense or immunity otherwise available to the City; and the Company, in defending any action shall be entitled to assert every defense or immunity that the City could itself assert in its own behalf. The Company's obligations under this Section shall survive the expiration, amendment, or termination of this Ordinance. 5.2. Insurance. Before the Effective Date, the Company shall furnish the City a summary of insurance, if any, carried by the Company, or of its self-insured status, in either case demonstrating adequate protection to the City from any and all obligations, liabilities, or claims of any nature whatsoever,growing out of the operation,construction,and maintenance of its Electric Facilities within the City. The Company shall maintain such insurance coverage at all times during this Franchise. 5.3. Compliance with Laws; Hazardous Substances. In its operation under this Ordinance, the Company shall observe all federal, state and local laws,rules,regulations and orders with respect to the transmission, distribution, transformation or furnishing of electric energy and the handling of materials, substances and wastes deemed toxic or hazardous to health, natural resources or the environment (collectively, "Hazardous Substances"). The Company shall remove or remediate any Hazardous Substances located on, in or surrounding its Electric Facilities or caused to be located on, in or surrounding the Public Ways and Public Grounds or elsewhere in the City in compliance with all applicable laws, regulations and lawful government orders, and pay or cause to be paid all costs associated therewith. The indemnification terms and conditions of Section 6.1 shall apply to all claims made against the City by any Person, including any governmental agency, who or which asserts any right to costs, damages or other relief based upon the terms and conditions imposed upon the Company under this Section 6.3 or which arise from or are related to the Company's acts or failure to act in compliance with any law, rule,regulation or lawful order governing Hazardous Substances. SECTION 6. VACATION OF PUBLIC WAYS. The City will consult with the Company at least four (4) weeks prior to its action on any proposed vacation of a Public Way. Except where ordered pursuant to Section 6.1, the vacation of any Public Way after the installation of Electric Facilities shall not operate to deprive the Company of its rights to operate and maintain such Electric Facilities until the reasonable cost of relocating the same and the loss and expense resulting from such relocation are first paid to the Company. However, in no case shall the City be liable to the Company for failure to specifically preserve a Public Way in the exercise of its authority under Minnesota Statutes, Section 160.29. 5 SECTION 7. ABANDONED FACILITIES. The Company shall comply with City ordinances and Minnesota Statutes, Section 216D.01 et seq., as they may be amended from time to time. The Company shall maintain records describing the exact location of all abandoned and retired Facilities within the City, produce such records at the City's request and comply with the location requirements of Section 216D.04 with respect to all Electric Facilities, including abandoned and retired Electric Facilities. SECTION 8. FRANCHISE FEE. 8.1. Authority. The City reserves all rights under Minnesota Statutes,Sections 216B.36 and 301B.01 or other law to require a franchise fee at any time during the term of and in consideration for, this Franchise. The franchise fee may be expressed (i) as a specified charge per measurable unit of electricity being provided, transported, transmitted, sold, furnished, delivered, or received within the City, or (ii) as a percentage of the gross revenues received by the Company for its operations within the City, or (iii) a flat fee per customer based on service to retail customers within the City or on some other similar basis, or (iv) in such other manner or fashion as the City may determine. The method of imposing the franchise fee may differ by customer class, by type of Utility, by particular circumstances of a Utility Service Provider, or by other relevant factor, and may combine the methods described in (i) through (iv) above. 8.2. Separate Ordinance. A franchise fee shall be imposed by a separate ordinance duly adopted by the Council after 60 days'notice to company of the proposed fee. SECTION 9. DEFAULTS. If the Company shall be in default in the performance of any of the material terms and conditions of this Ordinance, and shall continue in default for more than thirty (30) days (or fails to initiate the cure of the default within said period and diligently pursue said cure, if the cure of the default cannot reasonably be accomplished within said 30 days) after receiving Notice from the City of such default, the City may elect to cure such default and charge the Company for the costs thereof. SECTION 10. AMENDMENT PROCEDURE. The Company's rights hereunder are subject to the police power of the City to adopt and enforce ordinances necessary to the health, safety,and welfare of the public, and this Franchise may be amended or repealed by the City as deemed necessary or appropriate in the exercise of such power. SECTION 11. GENERAL PROVISIONS OF ORDINANCE. 11.1. Governing Law. This Franchise is granted and is intended to be performed in the State of Minnesota and shall be construed and enforced in accordance with the laws of the State of Minnesota. The Company shall be subject to personal jurisdiction in the State of Minnesota. All actions related to this Ordinance or its enforcement shall be venued in Sherburne County District Court. 11.2. Limitation on Applicability. This Ordinance constitutes a franchise between the City and the Company as the only parties and no provision of this Franchise shall in any way inure to the benefit of any third person (including the public at large) so as to constitute any such person as a third 6 party beneficiary of the agreement or of any one or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto. 11.3. Assigmnent. The Company may assign this Franchise without the prior approval of, but upon not less than thirty (30) days' prior Notice to, the City. Such Notice shall include the identity of and contact information for, the assignee and the statement of the assignee's plans and intentions for the operation of the Electric Facilities under this Franchise. SECTION 12. ACCEPTANCE BY THE COMPANY. 12.1. Acceptance by the Company. The Company shall, within thirty (30) days after adoption of this Ordinance or any amendment thereto, file with the City Clerk in writing its acceptance or rejection as provided in Section 12.2. If such acceptance is not filed or if a rejection is filed within said period, the Company,by its continuing operations, shall be deemed to have accepted the terms and conditions of this Franchise or any amendment hereto, except with respect to such particulars as it may successfully challenge under the procedures specified in Section 12.2. 12.2. Rejection Procedures. A rejection of this Franchise or any amendment hereto may be made by the Company only upon the grounds that the terms and conditions hereof or of such amendment exceed the lawful authority of the City under the Constitutions or Laws of the United States or the State of Minnesota or are otherwise unlawful. Any rejection shall be submitted in writing to the City, stating with particularity the points and authorities of law upon which the Company relies. If the City fails to amend this Franchise or otherwise satisfy the Company's objections as stated within thirty (30) days of its receipt of the Company's rejection, the Company shall have the right thereafter to seek appropriate judicial or administrative relief based solely upon those provisions it has alleged are unlawful in its rejection notice. If the Company fails to initiate such legal action within thirty (30) days from the expiration of the aforementioned thirty (30) day period provided for the City's amendment or cure, the Company shall be deemed to have waived its objections and to have accepted the terms of this Franchise or any amendment hereto. 7 Adopted by the City Council of the City of Elk River this 15th day of April 2013. John J. Dietz,Mayor ATTEST: Tina Allard,City Clerk Published on the 20th day of April, 2013, in the Elk River Star News, a paper of general circulation within the City of Elk River,Minnesota. The provisions of the foregoing Ordinance are hereby accepted: DATED , 2013. By: Its By: Its 8 ORDINANCE NO. 13-08 CITY OF ELK RIVER AN ORDINANCE OF THE CITY OF ELK RIVER IMPLEMENTING AN ELECTRIC SERVICE FRANCHISE FEE FOR PROVIDING ELECTRIC SERVICE WITHIN THE CITY OF ELK RIVER, SHERBURNE COUNTY, MINNESOTA The City Council of the City of Elk River hereby ordains as follows: Section 1. Purpose. The Elk River City Council has determined that is in the best interest of the City to impose franchise fees on those utility companies that provide natural gas and electric services within the City. Pursuant to Minnesota Statutes, Section 216B.36 and the Franchise Ordinances, the City has the authority and right to impose franchise fees on the Companies. The purpose of this ordinance is to establish such franchise fees to be paid to the City by the Companies. The franchise fees will be used to partially fund the Cities cost to maintain the city street system. Section 2. Definitions. For the purposes of this Ordinance, the following capitalized terms shall have the following meanings: 2.1 City. The City of Elk River, County of Sherburne, State of Minnesota. 2.2 Companies. Connexus Energy, a Minnesota Cooperative Corporation, its successors and assigns; and Elk River Municipal Utilities, a Minnesota Municipal Utility, its successors and assigns. 2.3 Franchise Ordinances. The franchise ordinances adopted by the City on April 15, 2013 —City Ordinance No. 13-06 and City Ordinance No. 13-07. 2.4 Notice. "Notice" means a writing served by any party or parties on any other party or parties. Notice to Companies shall be mailed to: Chief Executive Officer, Connexus Energy, 14601 Ramsey Boulevard NW, Ramsey, MN 55030 and; General Manager, Elk River Municipal Utilities, 10369 Orono Parkway, Elk River, MN 55330. Notice to City shall be mailed to the City Administrator, City of Elk River, 13065 Orono Parkway, Elk River, MN 55330. Section 3. Electric Franchise Fee. 3.1 Franchise Fee Statement and Schedule. A franchise fee is hereby imposed on the Companies after sixty (60) days' written notice from the City, and in accordance with the following fee schedule: Customer Classification Amount per Account per Month($) Residential $5.00 Small Commercial/Industrial (Non Demand) $25.00 General Commercial/Industrial (Demand) $70.00 Large Commercial/Industrial (> 1 MW Demand) $100.00 3.2 Account Fee. This fee is an account-based fee and not a meter-based fee. In the event that an entity covered by this ordinance has more than one meter, but only one account, only one fee shall be assessed to that account. In the event any entities covered by this ordinance have more than one account, each account shall be subject to the appropriate fee. In the event a question arises as to the proper fee amount for any account, the highest possible fee amount shall apply. 3.3 Payment. After the initial notice period as provided in Section 3.1, franchise fees are to be collected by the Companies and submitted to the City in accordance with the following schedule: January—March collections due by April 30. April—June collections due by July 31. July—September collections due by October 31. October—December collections due by January 31. 3.4 Record Support for Payment. The Companies shall make each payment when due and, if requested by the City, shall provide a statement summarizing how the franchise fee payment was determined, including information showing any adjustments to the total made to account for any non-collectible accounts, refunds or error corrections. The Companies shall permit the City, and its representatives, access to the Company records for the purpose of verifying such statements. 3.5 Payment Adjustments. Payment to the City will be adjusted where the Companies are unable to collect the franchise fee. This includes non-collectible accounts. 3.6 Relation to Franchise Ordinances. This ordinance is enacted in compliance with the Franchise Ordinances and shall be interpreted as such. • 3.7 Periodic Review. The City Council shall review this ordinance every two years in whatever manner the City Administrator then determines to be appropriate. Failure to review this ordinance shall not in any way invalidate or limit it. The franchise fee imposed by this ordinance shall remain in effect unless and until amended or revoked by adoption of an amendment of this ordinance. Section 4. That this Ordinance shall be published and take effect as provided by law. Adopted this 15 day of April , 2013 by the City Council of the City of Elk River. John J. Dietz Mayor Tina Allard City Clerk