HomeMy Public PortalAboutOrdinance No. 1472-23 05-22-2023 ORDINANCE NO: 1472-23
AN ORDINANCE OF THE CITY OF RICHLAND HILLS, TEXAS
GRANTING TO ATMOS ENERGY CORPORATION, A TEXAS AND
VIRGINIA CORPORATION, ITS SUCCESSORS AND ASSIGNS, A
FRANCHISE TO CONSTRUCT, MAINTAIN, AND OPERATE PIPELINES
AND EQUIPMENT IN THE CITY OF RICHLAND HILLS, TARRANT
COUNTY, TEXAS, FOR THE TRANSPORTATION, DELIVERY, SALE,
AND DISTRIBUTION OF GAS IN, OUT OF, AND THROUGH SAID CITY
FOR ALL PURPOSES; PROVIDING FOR THE PAYMENT OF A FEE OR
CHARGE FOR THE USE OF THE PUBLIC RIGHTS-OF-WAYS; AND
PROVIDING THAT SUCH FEE SHALL BE IN LIEU OF OTHER FEES
AND CHARGES, EXCEPTING AD VALOREM TAXES; AND
REPEALING ALL PREVIOUS GAS FRANCHISE ORDINANCES.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF RICHLAND HILLS, TEXAS, THAT:
SECTION 1.
GRANT OF AUTHORITY
The City of Richland Hills, Texas, hereinafter called "City," hereby grants to
Atmos Energy Corporation, Mid-Tex Division, hereinafter called "Atmos Energy," its
successors and assigns, consent to use and occupy the present and future streets,
alleys, highways, public utility easements, public ways and other public places ("Public
Rights-of-Way"), for the purpose of laying, maintaining, constructing, protecting,
operating, and replacing therein and thereon pipelines and all other appurtenant
equipment (the "System") to deliver, transport, and distribute gas in, out of, and through
City for persons, firms, and corporations, including all the general public, and to sell gas
to persons, firms, and corporations, including all the general public, within the City
corporate limits, as such limits may be amended from time to time during the term of
this franchise, said consent being granted for a term ending December 31, 2038.
Unless written notice of its intent to renegotiate is provided by either the City or Atmos
Energy at least 60 calendar days prior to the expiration of any term, the franchise shall
be automatically extended for up to two (2) additional terms of five (5) years each from
the expiration date on the same terms and conditions as set forth herein.
SECTION 2.
CONSTRUCTION, MAINTENANCE, OPERATION & RELOCATION OF ATMOS
ENERGY FACILITIES
A. All construction and work done by Atmos Energy, and the operation of its
business, under and by virtue of this Ordinance, shall be in conformance with the
City's ordinances, rules and regulations, policies and procedures now in force
and that may hereafter be adopted or amended by City related to the use of its
Public Rights-of-Way, provided such ordinances, rules and regulations are not in
express conflict with this franchise. If the franchise does not provide an express
provision governing the use of the Public Right-of-Way, the ordinances, rules,
regulations, policies and procedures of City control. This franchise shall in no
way affect or impair the rights, obligations or remedies of the parties under the
Texas Gas Utility Regulatory Act or other state or federal law. Nothing herein
shall be deemed a waiver, release or relinquishment of either party's right to
contest, appeal or file suit with respect to any action or decision of the other
party, including ordinances adopted by the City that Atmos Energy believes are
contrary to any federal, state or local law or regulations. Atmos Energy shall lay,
maintain, construct, operate, and replace its pipes, mains, laterals, and other
equipment to minimize interference with traffic, place or cause to be placed
appropriate barriers to mark excavations or obstructions, and restore to
approximate original condition all Public Rights-of-Way that it may disturb. In
determining the location of the facilities of the City and other users of Public
Right-of-Way within City, City shall minimize interference with then existing
facilities of Atmos Energy and shall require other users of Public Rights-of-Way
to minimize interference with existing facilities of Atmos Energy. In the event of a
conflict between the location of the proposed facilities of Atmos Energy and the
location of the existing facilities of City or other users of Public Rights-of-Way
within Public Rights-of-Way that cannot otherwise be resolved, City or an
authorized agent of City shall resolve the conflict and determine the location of
the respective facilities within the Public Rights-of-Way.
Atmos Energy or contractors working on behalf of Atmos Energy shall not be
required to pay for street cutting, street excavation or other special permits
related to excavations in Public Rights-of-Way in connection with Atmos Energy's
operations in Public Rights-of-Way. City shall provide Atmos Energy with its
annual capital improvements plan as well as any updates or changes as soon as
the plan, update, or change becomes available. City shall notify Atmos Energy
as soon as reasonably possible of any projects that will affect Atmos Energy's
facilities located in the Public Rights-of-Way. When required by City to remove
or relocate its mains, laterals, and/or other facilities lying within Public Rights-of-
Way, Atmos Energy shall do so as soon as practically possible with respect to
the scope of the project. In no event shall Atmos Energy be required to remove
or relocate its facilities in less than thirty (30) days from the time notice is given to
Atmos Energy by City.
B. If City, in constructing its sewers, drainage, water lines, streets, or utilities, should
request that Atmos Energy remove or relocate its mains, laterals, and other
facilities lying within Public Rights-of-Way, Atmos Energy shall do so at its own
expense for facilities that are in conflict, unless such work is for the primary
purpose of beautification or to accommodate a private developer. Facilities are
deemed to be in conflict to the extent that the proposed City facilities are
determined by Atmos Energy to be inconsistent with gas distribution industry
standard safe operating practices for existing facilities. Atmos Energy shall not
Ordinance No. 1472-23, Page 2 of 8
be required to relocate facilities to a depth of greater than four (4) feet unless
prior agreement is obtained from Atmos Energy.
When Atmos Energy is required by City to remove or relocate its mains, laterals,
and other facilities lying within Public Rights-of-Way to accommodate a request
by City, and costs of utility removals or relocations are eligible under federal,
state, county, local or other programs for reimbursement of costs and expenses
incurred by Atmos Energy as a result of such removal or relocation, and such
reimbursement is required to be handled through City, Atmos Energy costs and
expenses shall be included in any application by City for reimbursement if Atmos
Energy submits its cost and expense documentation to City prior to the filing of
the application. City shall make all reasonable efforts to provide reasonable
written notice to Atmos Energy of the deadline for Atmos Energy to submit
documentation of the costs and expenses of such relocation to City. Upon
receipt of an amount of reimbursement intended for utility relocation including,
but not limited to, gas utilities, City shall remit to Atmos Energy, within 60
calendar days of receipt, the portion of reimbursement related to the relocation or
removal of Atmos Energy's facilities.
If Atmos Energy is required by City to remove or relocate its mains, laterals, or
other facilities lying within Public Rights-of-Way for any reason other than the
construction or reconstruction of sewers, drainage, water lines, streets or utilities
by City, Atmos Energy shall be entitled to reimbursement from City or others of
the cost and expense of such removal or relocation.
C. When Atmos Energy is required to remove or relocate its mains, laterals or other
facilities to accommodate construction by City without reimbursement from City,
Atmos Energy shall have the right to seek recovery of relocation costs as
provided for in applicable state and/or federal law. Nothing herein shall be
construed to prohibit, alter, or modify in any way the right of Atmos Energy to
seek or recover a surcharge from customers for the cost of relocation pursuant to
applicable state and/or federal law. City shall not oppose recovery of relocation
costs when Company is required by City to perform relocation. City shall not
require that Company document request for reimbursement as a pre-condition to
recovery of such relocation costs pursuant to applicable state and/or federal law.
Notwithstanding the foregoing, the City shall have the right to request other
project documentation to the full extent provided by state law.
D. If City abandons any Public Rights-of-Way in which Atmos Energy has facilities,
such abandonment shall be conditioned on Atmos Energy's right to maintain its
use of the former Public Right-of-Way and on the obligation of the party to whom
the Public Right-of-Way is abandoned to reimburse Atmos Energy for all removal
or relocation expenses if Atmos Energy agrees to the removal or relocation of its
facilities following abandonment of the Public Right-of-Way. If the party to whom
the Public Right-of-Way is abandoned requests Atmos Energy to remove or
relocate its facilities and Atmos Energy agrees to such removal or relocation,
Ordinance No. 1472-23, Page 3 of 8
such removal or relocation shall be done within a reasonable time at the expense
of the party requesting the removal or relocation. If relocation cannot practically
be made to another Public Right-of-Way, the expense of any right-of-way
acquisition shall be considered a relocation expense to be reimbursed by the
party requesting the relocation.
E. Upon request by City for a public health or safety purpose, Atmos Energy shall
provide maps in a digital format showing the location of its System and cooperate
in locating its System when necessary to avoid conflict and protect the health and
safety of the public. All maps provided by Atmos Energy to the City shall be
deemed confidential and proprietary, and will be provided solely for the City's
use. The City agrees to maintain the confidentiality of any non-public information
obtained from Atmos Energy to the extent allowed by law. If the City receives a
request under the Texas Public Information Act that includes Atmos Energy's
previously designated proprietary or confidential information, the City shall
provide notice to Atmos Energy of any request for release of information
previously designated by Atmos Energy as proprietary or confidential non-public
information. City will comply with the law, as amended.
SECTION 3.
INDEMNITY & INSURANCE
In the event of injury to any person or damage to any property by reason of
Atmos Energy's construction, operation, maintenance, or replacement of Atmos
Energy's pipeline system within Public Rights-of-Way, Atmos Energy shall indemnify
and keep harmless City from any and all liability in connection therewith, except to the
extent such injury or damage is attributable to the fault of the City, including, without
limitation, the City's negligent or intentional acts or omissions. By entering into this
franchise, City does not consent to suit, waive any governmental immunity available to
the City under Texas Law or waive any defenses of the parties under Texas law. Atmos
Energy's insurance of its obligations and risks undertaken pursuant to this franchise
may be in the form of self-insurance to the extent permitted by applicable law, under an
Atmos Energy plan of self-insurance maintained in accordance with sound accounting
and risk-management practices.
SECTION 4.
NON-EXCLUSIVE FRANCHISE
The rights, privileges, and franchises granted by this ordinance are not to be
considered exclusive, and City hereby expressly reserves the right to grant, at any time,
like privileges, rights, and franchises as it may see fit to any other person or corporation
for the purpose of transporting, delivering, distributing, or selling gas to and for City and
the inhabitants thereof.
Ordinance No. 1472-23, Page 4 of 8
SECTION 5.
PAYMENTS TO CITY
A. Atmos Energy, its successors and assigns, agrees to pay and City agrees to
accept, on or before the 1st day of April, 2024, and on or before the same day of
each succeeding year during the term of this franchise the last payment of the
initial term being made on the 1st day of April, 2038 a sum of money which shall
be equivalent to five percent (5%) of the Gross Revenues, as defined in 5.B
below, received by Atmos Energy during the preceding calendar year.
B. "Gross Revenues" shall mean:
1) all revenues received by Atmos Energy from the sale of gas to all classes of
customers (excluding gas sold to another gas utility in the City for resale to its
customers within City) within the City;
2) all revenues received by Atmos Energy from the transportation of gas through
the System of Atmos Energy within the City to customers located within the
City (excluding any gas transported to another gas utility in City for resale to
its customers within City);
3) the value of gas transported by Atmos Energy for Transport Customers
through the System of Atmos Energy within the City ("Third Party
Sales")(excluding the value of any gas transported to another gas utility in
City for resale to its customers within City), with the value of such gas to be
established by utilizing Atmos Energy's monthly Weighted Average Cost of
Gas charged to industrial customers in the Mid-Tex division, as reasonably
near the time as the transportation service is performed; and
4) "Gross Revenues" shall also include the following "miscellaneous charges":
charges to connect, disconnect, or reconnect gas and charges to handle
returned checks from consumers within the City.
5) "Gross Revenues" shall not include:
a) revenues billed but not ultimately collected or received by Atmos Energy;
b) contributions in aid of construction;
c) the revenue of any affiliate or subsidiary of Atmos Energy;
d) sales tax and franchise fees paid to the City;
e) interest or investment income earned by Atmos Energy; and
f) monies received from the lease or sale of real or personal property,
provided, however, that this exclusion does not apply to the lease of
facilities within the City's right of way.
C. The initial payment for the rights and privileges herein provided shall be for the
privilege period January 1 through December 31, 2024, and each succeeding
payment shall be for the privilege period of the calendar year in which the
payment is made. If Atmos Energy fails to pay when due any payment provided
for in this Section, Atmos Energy shall pay such amount plus interest consistent
with the rate for customer deposits under Texas Utilities Code Section 183.003
from such due date until payment is received by City.
Ordinance No. 1472-23, Page 5 of 8
It is also expressly agreed that the aforesaid payments shall be in lieu of any and
all other and additional occupation taxes, easement, franchise taxes or charges
(whether levied as an ad valorem, special, or other character of tax or charge),
municipal license, permit, and inspection fees, bonds, street taxes, and street or
alley rentals or charges, and all other and additional municipal taxes, charges,
levies, fees, and rentals of whatsoever kind and character that City may now
impose or hereafter levy and collect from Atmos Energy or Atmos Energy's
agents, excepting only the usual general or special ad valorem taxes that City is
authorized to levy and impose upon real and personal property. If the City does
not have the legal power to agree that the payment of the foregoing sums of
money shall be in lieu of taxes, licenses, fees, street or alley rentals or charges,
easement or franchise taxes or charges aforesaid, then City agrees that it will
apply so much of said sums of money paid as may be necessary to satisfy Atmos
Energy's obligations, if any, to pay any such taxes, licenses, charges, fees,
rentals, easement or franchise taxes or charges aforesaid.
D. Effect of Other Municipal Franchise Ordinance Fees Accepted and Paid by
Atmos Energy
If Atmos Energy should at any time after the effective date of this Ordinance
agree to a new municipal franchise ordinance, or renew an existing municipal
franchise ordinance, with another municipality in Atmos Energy's Mid-Tex
Division, which municipal franchise ordinance determines the franchise fee owed
to that municipality for the use of its public rights-of-way in a manner that, if
applied to the City, would result in a franchise fee greater than the amount
otherwise due City under this Ordinance, then the franchise fee to be paid by
Atmos Energy to City pursuant to this Ordinance may, at the election of the City,
be increased so that the amount due and to be paid is equal to the amount that
would be due and payable to City were the franchise fee provisions of that other
franchise ordinance applied to City. The City acknowledges that the exercise of
this right is conditioned upon the City's acceptance of all terms and conditions of
the other municipal franchise in toto. The City may request waiver of certain
terms and Company may grant, in its sole reasonable discretion, such waiver.
E. Atmos Energy Franchise Fee Recovery Tariff
1) Atmos Energy may file with the City a tariff or tariff amendment(s) to provide
for the recovery of the franchise fees under this agreement.
2) City agrees that (i) as regulatory authority, it will adopt and approve the
ordinance, rates or tariff which provide for 100% recovery of such franchise
fees as part of Atmos Energy's rates; (ii) if the City intervenes in any
regulatory proceeding before a federal or state agency in which the recovery
of Atmos Energy's franchise fees is an issue, the City will take an affirmative
position supporting 100% recovery of such franchise fees by Atmos Energy
and; (iii) in the event of an appeal of any such regulatory proceeding in which
the City has intervened, the City will take an affirmative position in any such
Ordinance No. 1472-23, Page 6 of 8
appeals in support of the 100% recovery of such franchise fees by Atmos
Energy.
3) City agrees that it will take no action, nor cause any other person or entity to
take any action, to prohibit the recovery of such franchise fees by Atmos
Energy.
F. Lease of Facilities Within City's Rights-of-Way. Atmos Energy shall have the
right to lease, license or otherwise grant to a party other than Atmos Energy the
use of its facilities within the City's public rights-of-way provided: (i) Atmos
Energy first notifies the City of the name of the lessee, licensee or user; the type
of service(s) intended to be provided through the facilities; and the name and
telephone number of a contact person associated with such lessee, licensee or
user and (ii) Atmos Energy makes the franchise fee payment due on the
revenues from such lease pursuant to Section 5 of this Ordinance. This authority
to Lease Facilities within City's Rights-of-Way shall not affect any such lessee,
licensee or user's obligation, if any, to pay franchise fees.
G. City shall within thirty (30) days of final approval, give Company notice of
annexations and disannexations of territory by the City, which notice shall include
a map and addresses, if known. Upon receipt of said notice, Company shall
promptly initiate a process to reclassify affected customers into the city limits no
later than sixty (60) days after receipt of notice from the City. The annexed areas
added to the city limits will be included in future franchise fee payments in
accordance with the sales tax effective date of the annexation if notice was timely
received from City. Upon request from City, Company will provide
documentation to verify that affected customers were appropriately reclassified
and included for purposes of calculating franchise fee payments. In no event
shall the Company be required to add premises for the purposes of calculating
franchise payment prior to the earliest date that the same premises are added for
purposes of collecting sales tax.
SECTION 6.
ACCEPTANCE OF FRANCHISE: In order to accept this franchise, Atmos Energy
must file with the City Secretary its written acceptance of this franchise ordinance within
sixty (60) days after its final passage and approval by City. If such written acceptance
of this franchise ordinance is not filed by Atmos Energy, the franchise ordinance shall
be rendered null and void.
When this franchise ordinance becomes effective, all previous ordinances of City
granting franchises for gas delivery purposes that were held by Atmos Energy shall be
automatically canceled and annulled, and shall be of no further force and effect.
Ordinance No. 1472-23, Page 7 of 8
SECTION 7.
PARAGRAPH HEADINGS. CONSTRUCTION
The paragraph headings contained in this ordinance are for convenience only
and shall in no way enlarge or limit the scope or meaning of the various and several
paragraphs hereof. Both parties have participated in the preparation of this ordinance
and this ordinance shall not be construed either more or less strongly against or for
either party.
SECTION 8.
EFFECTIVE DATE
If Atmos Energy accepts this ordinance, it becomes effective as of upon final
passage and approval.
APPROVED AND ADOPTED at a regular meeting of the Richland Hills City
Council on May 22, 2023, by a vote of tp ayes, 0 nays, and abstentions.
APPROVED:
. /' 'Z -6' .> \°-"</HE HONORABLE MAYOR EDWARD LOPEZ .,```‘�,0IAND y/1'%,
ATTEST: ct, '_
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LIND AY RAWLI SON, CITY SECRETARY %, •••• ..
Ordinance No. 1472-23, Page 8 of 8