Item 6BCITY OF
SOUTHLAKI
MEMORANDUM
October 13, 2014
To: Shana Yelverton, City Manager
From: Sharen Jackson, Chief Financial Officer
Item 613
Subject: Ordinance No. 1103, Granting to Atmos Energy Corporation, a
franchise to construct, maintain, and operate pipelines and
equipment in the City of Southlake for the transportation,
delivery, sale and distribution of gas.
Action
Requested: City Council approval of Ordinance No. 1103.
Background
Information: The purpose of this item is to approve a new twenty year
franchise agreement with Atmos Energy Corporation
(Atmos), granting them the right and privilege to operate in
Southlake public rights of way for the purpose of maintaining
gas pipelines and all necessary accessories for the purpose
of delivering gas to the City and its residents and
businesses.
The provisions set forth in the proposed agreement
specifically speak to the manner in which Atmos will
construct, operate, and maintain its equipment within the
City's rights of way. It also addresses the process for
relocating and abandoning equipment as well as rights of
way, and finally the agreement explains the franchise fee
and the payment schedule to the City.
Financial
Considerations: Approval of the ordinance will increase the franchise rate
from 4% to 5% of Atmos' gross revenues
Strategic Link: 132-Collaborate with select partners to implement service
solutions
Citizen Input/
Board Review: City Council will consider item as a Public Hearing with 2na
Reading on November 4, 2014.
Legal Review: City Attorney assisted with the negotiation
Alternatives: Approve, deny or modify proposed Ordinance
Supporting
Documents: Ordinance No. 1103
Staff
Recommendation: Approval of Ordinance No. 1103
ORDINANCE NO. 1103
AN ORDINANCE 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
SOUTHLAKE, TARRANT COUNTY TEXAS, FOR THE
TRANSPORTATION, DELIVERY, SALE, AND DISTRIBUTION OF GAS
IN, OUT OF, AND THROUGH SAID CITY; PROVIDING FOR THE
PAYMENT OF A FEE OR CHARGE FOR THE USE OF THE PUBLIC
RIGHTS -OF -WAY; AND PROVIDING THAT SUCH FEE SHALL BE IN
LIEU OF CERTAIN OTHER FEES AND CHARGES.
WHEREAS, Atmos Energy Corporation ("Grantee") is engaged in the business of
providing gas utility service within the City of Southlake and is using the Public Rights -of -Way
for that purpose under the terms of an ordinance granting a franchise agreement and ordinance
heretofore duly passed by the governing body of the City; and
WHEREAS, the franchise expired at midnight, December 5, 2012 and the City and
Grantee desire to enter into a new franchise agreement;
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF SOUTHLAKE, TEXAS:
SECTION 1. GRANT OF AUTHORITY.
(A) That the City hereby grants to Grantee consent to use and occupy, subject to the
terms hereof, the Public Right -of -Way, for the purpose of laying, maintaining, constructing,
protecting, operating, and replacing therein and thereon pipelines and all other appurtenant
equipment 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.
(B) The provisions set forth in this Ordinance represent the terms and conditions
under which Grantee shall construct, operate, and maintain its System facilities within the City.
Grantee, by its acceptance of this Franchise, agrees that all such lawful regulatory powers and
rights as the same may be from time to time vested in the City shall be in full force and effect
and subject to the exercise thereof by the City at any time.
(C) This Franchise does not grant to the Grantee the right, privilege or authority to
engage in any other activities within the City other than those set forth in Section 1(A).
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SECTION 2. DEFINITIONS.
For the purpose of this Franchise, the following words and phrases shall have meaning
given in this section. When not inconsistent with the context, words used in the present tense
include future tense, words in the plural number include the singular number, and words in the
singular number include the plural number. The word "shall" is mandatory and "may" is
permissive. Words not defined in this section shall be given their common and ordinary meaning.
"Affiliate" means any entity controlling, controlled by or under common control with the
entity in question. As used in this definition, the term "control" means, with respect to an entity
that is a corporation, the ownership, directly or indirectly, of more than 50% of the voting
securities of such entity or, with respect to an entity that is not a corporation, the power to direct
the management or policies of such entity, whether by operation of law, by contract or otherwise.
"City" means the municipal corporation designated as the City of Southlake and includes
the territory as currently is or may in the future be included within the boundaries of the City,
with its principal office at 1400 Main Street, Suite 460, Southlake, Texas 76092.
"Franchise" or "Agreement" means the rights and obligations of the City and the Grantee
set forth in this Franchise ordinance, as the same may be amended from time to time, and
includes those rights and duties provided under the laws of Texas and of the United States.
"Gas" means such gaseous fuels as natural, artificial, synthetic, liquefied natural gas,
liquefied petroleum, manufactured, or any mixture thereof.
"Grantee" means Atmos Energy Corporation, but does not include its affiliates,
subsidiaries or any other entity in which it has an ownership interest, with its principal office at
5430 LBJ Freeway, Dallas, Texas 75240.
"Gross Revenues" means all revenue derived or received, directly or indirectly, by the
Grantee from or in connection with the operation of the System within the corporate limits of the
City and including, without limitation:
(A) all revenues received by the Grantee from the sale of gas to all classes of
customers (excluding gas sold to another gas utility in the City for resale of gas to its customers
within City) within the City;
(B) all revenues received by the Grantee from the transportation of gas through the
pipeline system of Grantee within the City to customers located within the City (excluding any
gas transported to another gas utility in City for the sale of gas to its customers within City);
(C) the value of gas transported by Grantee for transport customers through the
System of Grantee within the City ("Third Party Sales"), (excluding the value of any gas
transported to another gas utility in City which has executed a franchise agreement with the City
for the sale of gas to its customers within City), with the value of such gas to be established by
utilizing Grantee's monthly weighted average cost of gas charged to industrial customers in the
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Mid -Tex division, as reasonably as is possible near the time as the transportation service is
performed; and
(D) "Gross Revenues" shall also include amounts collected from customers for fees
paid to the City pursuant to this agreement and the following "miscellaneous charges": charges
to connect, disconnect, or reconnect gas and charges to handle returned checks from consumers
within the City and State gross receipts fees.
(E) "Gross Revenues" shall not include:
(1) revenues billed but not ultimately collected or received by Atmos Energy;
(2) contributions in aid of construction;
(3) the revenue of any affiliate or subsidiary of Atmos Energy;
(4) sales tax paid to the City;
(5) interest or investment income earned by Atmos Energy; and
(6) 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.
"Public Rights -of -Way" means the public streets, medians, boulevards, roads, lanes,
alleys, highways, public utility easements, viaducts, and bridges across water ways and other
public places that are deeded or dedicated to the City and are available for Grantee's use.
"Railroad Commission" means the Railroad Commission of the State of Texas or other
authority succeeding to the regulatory powers of the Railroad Commission.
"Residents" means all persons, businesses, industry, governmental agencies, and any
other entity whatsoever, located, in whole or part, within the City that are or may be served by
the Grantee hereunder.
"System" and/ or "System facilities" means all of the Grantee's pipes, pipelines, gas
mains, laterals, feeders, regulators, meters, fixtures, connections or other appurtenant equipment
used in or incident to providing delivery, transportation, distribution, and sales of natural gas for
heating, lighting and power.
SECTION 3. USE OF RIGHT-OF-WAY.
(A) The grant to Grantee in Section 1 is subject to the terms and conditions contained
herein, the Texas Constitution, the City's ordinances, all as amended, and subject to applicable
and controlling local, state and federal laws, including the rules and regulations of any and all
agencies thereof, whether presently in force or whether enacted or adopted at any time in the
future. This franchise agreement shall in no way affect or impair the rights, obligations or
remedies of the parties under the Texas Public Utility Regulatory Act, other state or federal law
or the Texas Constitution. Nothing herein shall be deemed a waiver, release or relinquishment of
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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 Grantee believes is in violation of any
federal, state, or local law or regulation.
(B) Grantee shall provide reasonable notice to the City of planned work within the
Public Right -of -Way and shall, except in cases of emergency conditions, obtain a permit if
required by the City's ordinances before commencing work. If so required, Grantee shall comply
with permitting requirements that do not conflict with this Ordinance; provided however Grantee
or contractors working on behalf of Grantee shall not be required to pay fees related to its use of
the public right-of-way other than in accordance with Section 7 hereof.
(C) The location of all pipes, mains, laterals, and other equipment shall be subject to
approval by the City Manager or designee prior to construction; provided however, said approval
shall not be unreasonably withheld. In the event of a conflict between the location of the
facilities of Grantee and the location of the facilities of City or other utility franchisees within the
Public Rights -of -Way that cannot be resolved, the City Manager or designee shall resolve the
conflict and determine the location of the respective facilities. Grantee shall not interfere with
power, telephone, cable or water facilities, sanitary or storm sewer facilities or other municipal
or public use of the Public Right -of -Way. Grantee has the right to request City Council review
of any actions concerning Grantee's use of the Public Right -of -Way. City shall provide Grantee
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 Grantee as soon as reasonably possible of
any projects that will affect Grantee's facilities located in the Public Rights -of -Way.
(D) The Grantee shall construct, maintain and operate its System facilities in a manner
which provides reasonable protection against injury or damage to persons or property.
(E) When the Grantee is required by City to remove or relocate its mains, laterals, and
other facilities to accommodate construction of streets and alleys by City, and Grantee is eligible
under Federal, State, County, City or other local agencies or programs for reimbursement of
costs and expenses incurred by Grantee as a result of such removal or relocation, and such
reimbursement is required to be handled through City, the City shall include Grantee costs and
expenses in an application by City for reimbursement only when the City applies for a grant or
program where the eligible relocation costs are delineated separately such that the City has
constructive notice that Grantee relocation costs are eligible for reimbursement and only if
Grantee submits a request together with its cost and expense documentation to City a reasonable
time prior to the filing of the application. City shall provide reasonable notice to Grantee of the
deadline for Grantee to submit documentation of the costs and expenses of such relocation to
City. In the event that the City makes application for and receives reimbursement for a project
where the Grantee's relocation costs and expenses are delineated separately as set forth above
and does not provide sufficient notice to Grantee as set forth in this paragraph, the City shall be
responsible for fifty percent (50%) of the cost of the removal or relocation of Grantee's facilities.
In the event that the City receives only a portion of any reimbursement costs sought and the
reimbursement received is not delineated separately such that Grantee's eligible relocation costs
are clearly noted, the City will reimburse Grantee only after the City's costs have been paid in
full. When Grantee is required to remove or relocate any System facility without reimbursement,
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Grantee 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 Grantee 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 Grantee is required by City to perform relocation. City shall not require that Grantee
document request for reimbursement as a pre -condition to recovery of such relocation costs.
Upon receipt of reimbursement from an agency or program as outlined above, the City shall
remit to the Grantee, within thirty (30) days of receipt, its portion related to the relocation or
removal of its facilities only if the reimbursement received delineates separately Grantee's
eligible relocation costs or the City's costs have been paid in full. Notwithstanding the
foregoing, City shall not be responsible for reimbursement of any relocation costs if Grantee
secures or is eligible to secure reimbursement of eligible costs from any other source other than
through a statutory rate mechanism or other rate mechanism adopted by the City. This paragraph
applies exclusively to the Company's recovery of its relocation costs and, except as provided in
Section 7(D), nothing herein shall prohibit the City from denying or opposing a request by
Company to increase or modify its other rates, charges, fees or tariffs
(F) City may request Grantee to relocate any part of its System facilities installed or
maintained in the Public Right -of -Way to accommodate construction or improvement of a
highway, road, street, public way or other public work procured by City which is not undertaken
primarily for beautification or solely to accommodate a private developer. Grantee and City
agree that a project is not undertaken primarily for beautification unless more than fifty percent
of the project costs are allocated to costs unassociated with those required to meet City standards
for highway, road, street, public way or other public work including costs associated with water,
sewer, drainage, paving and subgrade, curb and gutter, and sidewalk construction. Grantee shall
be responsible for bearing the costs of such relocation to the extent that proposed City facilities
are determined to be in conflict with Grantee's existing facilities and as permitted by local, state
or federal law. Such relocation shall be made by the Grantee within a reasonable period of time
not to exceed sixty (60) days after notice of request from City unless otherwise specifically
agreed to by the City or unless Grantee certifies to the City in writing that no conflict exists
between its facilities and the proposed City facilities. Should Grantee submit evidence that it is
unable to complete the relocation within said time due to no fault of Grantee, the City Manager
or designee may agree with Grantee to extend such time. Should Grantee have concerns
regarding whether the requested placement of facilities is unsafe or inconsistent with the gas
distribution industry standard safe operating practices, Grantee shall provide the City with
information detailing and substantiating such concerns and work with City on a solution
acceptable to both parties. Should Grantee certify that no conflict exists and it is later determined
that Grantee's facilities conflict with proposed City facilities resulting in a delay in the
construction of City facilities, Grantee shall reimburse City for all expenses incurred as a result
of the delay. Should Grantee agree to relocate any part of its System facilities and fail to perform
the relocation causing a delay in the construction of City facilities, Grantee shall reimburse City
for all expenses incurred as a result of the delay.
(G) Following relocation, Grantee shall repair, according to City specifications, clean
up, and restore to the condition it was in before being disturbed, all Public Rights -of -Way
disturbed during the construction and repair of its System at its expense.
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(H) The installation and replacement of any System facilities in Public Right -of -Way
by the Grantee shall be subject to inspection and approval by the City. The repair and
maintenance of any System Facilities in Public Right-of-way by the Grantee shall be subject to
inspection by the City. The Grantee agrees to cooperate fully with the City in conducting the
inspection. Such inspections shall be conducted within a reasonable time after completion of the
project. The Grantee shall promptly perform reasonable remedial action required by the City
pursuant to such an inspection. Notwithstanding anything in this section to the contrary, the
authority to regulate and inspect the Grantee's system for compliance with the provisions of Part
192 of Title 49 of the Code of Federal Regulations is hereby reserved to those federal and state
authorities having jurisdiction thereunder and nothing herein is intended to confer any such
authority to City unless expressly provided under applicable law.
(I) The City reserves the right to lay and permit to be laid, power, sewer, Gas, water,
and other pipe lines or cables and conduits, and to do and permit to be done, any underground
and overhead work that may be deemed necessary or proper by the City in, across, along, over
and under any Public Right -of -Way occupied by Grantee, and to change any curb or sidewalk or
the grade of any street.
Q) If City abandons any Public Rights -of -Way in which Grantee has facilities, such
abandonment shall be conditioned on Grantee'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 Grantee 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, 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.
SECTION 4. INDEMNIFICATION AND INSURANCE.
(A) IN CONSIDERATION OF THE GRANTING OF THIS FRANCHISE,
GRANTEE AGREES TO INDEMNIFY AND KEEP HARMLESS THE CITY, ITS
OFFICERS, AGENTS AND EMPLOYEES (THE "INDEMNITEES") FROM AND
AGAINST ALL SUITS, ACTIONS, LIABILITY, OR CLAIMS OF INJURY TO ANY
PERSON OR PERSONS, OR DAMAGES TO ANY PROPERTY BROUGHT OR MADE
FOR OR ON ACCOUNT OF ANY DEATH, INJURIES TO, OR DAMAGES RECEIVED
OR SUSTAINED BY ANY PERSON OR PERSONS OR FOR DAMAGE TO OR LOSS
OF PROPERTY ARISING OUT OF, OR OCCASIONED BY GRANTEE'S
INTENTIONAL AND/OR NEGLIGENT ACTS OR OMISSIONS IN CONNECTION
WITH GRANTEE'S OPERATIONS; THIS INDEMNIFICATION SHALL APPLY
WHETHER OR NOT THE CITY, ITS AGENTS, OFFICERS OR EMPLOYEES WERE
NEGLIGENT.
(B) IT IS THE INTENT OF THE PARTIES BY AGREEMENT TO THIS
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SECTION 4 THAT IF A CLAIM IS MADE IN ANY FORUM AGAINST INDEMNITEES
FOR ANY OF THE REASONS REFERRED TO IN SECTION 4(A), AND UPON
RESOLUTION OF THE CLAIM:
(1) THERE IS NO FINDING BY A COURT OF COMPETENT
JURISDICTION THAT INDEMNITEES WERE NEGLIGENT IN CONNECTION WITH
ANY OF THE REASONS REFERRED TO IN SECTION 4(A), GRANTEE SHALL
HOLD INDEMNITEES HARMLESS AND INDEMNIFY THEM FOR ANY DAMAGE,
LOSS, EXPENSE, OR LIABILITY RESULTING FROM THE CLAIM, INCLUDING
ALL REASONABLE ATTORNEY'S FEES, COSTS, AND PENALTIES INCURRED; OR
(2) THERE IS A FINDING BY A COURT OF COMPETENT
JURISDICTION THAT GRANTEE AND INDEMNITEE WERE BOTH NEGLIGENT IN
CONNECTION WITH ANY OF THE REASONS REFERRED TO IN SECTION 4,
INDEMNITY, IF ANY, SHALL BE APPORTIONED COMPARATIVELY IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
(C) This section does not waive any governmental immunity available to the City
under Texas law. This section is not intended to create a cause of action or liability for the
benefit of third parties but is solely for the benefit of the Grantee and the City. This section is
not intended to limit the ability of City or Grantee to settle claims through alternative dispute
resolution.
(D) If any action, suit or proceeding is brought against the City, its agents and
employees, upon any claim arising out of Grantee's operations, City shall give notice in writing
to Grantee by registered or certified mail. The City agrees to reasonably cooperate with Grantee
in connection with such defense.
(E) Promptly after receipt by an Indemnitee of any claim or notice of the
commencement of any action, administrative or legal proceeding, or investigation as to which
the indemnity provided for in Section 4(A) hereof may apply, the Indemnitee shall notify the
Grantee in writing of such fact. Grantee shall assume the defense thereof with counsel
designated by Grantee and reasonably satisfactory to the Indemnitee.
(F) Should an Indemnitee be entitled to indemnification under this Section (4) hereof
as a result of a claim by a third party, and Grantee fails to assume the defense of such claim, the
Indemnitee will, at the expense of Grantee, contest (or, with the prior written consent of Grantee,
settle) such third party claim.
(G) Grantee shall insure its obligations and risks undertaken pursuant to this franchise
in the form of a formal plan of self-insurance maintained in accordance with sound accounting
and risk -management practices, or, at its option, maintain the following insurance coverages
throughout the term of this Franchise:
(1) Commercial general or excess liability with minimum limits of five
million dollars ($5,000,000.00). To the extent that coverage is maintained on a claims made
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form, the minimum limits are ten million dollars ($10,000,000) per occurrence and twenty
million dollars ($20,000,000) aggregate. This coverage shall include the following:
(a) Completed operations to be maintained for one (1) year.
(b) Personal and advertising injury.
(c) Contractual liability
(d) Explosion, collapse, or underground (XCU) hazards.
(2) Automobile liability coverage with a minimum policy limit of one million
dollars ($1,000,000.00) combined single limit. This coverage shall include all owned, hired and
non -owned automobiles. Pollution liability insurance, with a minimum coverage of $10,000,000
per occurrence shall be provided for bodily injury and property damage resulting from pollutants
which are discharged suddenly and accidentally. Such insurance shall provide coverage for
clean-up costs.
(H) Prior to commencement of operations pursuant to this Agreement, the Grantee
shall furnish the City with proof of insurance.
(I) The Grantee will require its self-insurance to respond to the same extent as if the
City as an additional insured and waive subrogation rights against the City.
SECTION 5. GAS SERVICE.
(A) Grantee shall be required to extend distribution mains in any Public Rights -of -
Way up to one hundred feet (100') for any one residential customer only if such customer, at a
minimum, uses gas for unsupplemented space heating and water heating. Grantee shall not be
required to extend transmission mains in any Public Right -of -Way within City or to make a tap
on any transmission main within City unless Grantee agrees to such extension by a written
agreement between Grantee and a customer.
(B) Grantee shall keep and maintain its books, records, contracts, accounts,
documents and papers in any way related to this franchise ordinance and shall make them
available for inspection by City officials and employees upon reasonable notice.
(C) The Grantee shall install, repair, maintain and replace its Facilities in a good and
workmanlike manner.
(D) Grantee shall take such measures which will result in its Facilities meeting the
standards required by applicable federal, state and environmental laws.
SECTION 6. 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,
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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.
SECTION 7. CONSIDERATION AND METHOD OF PAYMENT.
(A) Grantee shall pay City on or before the I't day of June, 2015, and on or before the
same day of each succeeding year during the term of this franchise, five percent (5%) of the
Gross Revenues received by Grantee during the preceding calendar year.
(B) Grantee shall make the initial payment of the Franchise Fee pursuant to this
Ordinance for the privilege period from January 1, 2015 through December 31, 2015, based on
the Gross Revenues during the preceding calendar year (January 1, 2014 to December 31, 2014).
Each subsequent payment shall be made on June 1 based on the calendar year preceding the year
in which the payment is made, with the final payment under the initial term being due on June 1,
2034.
(C) Grantee agrees that at the time of each payment, Grantee shall also submit to the
City a statement showing its Gross Revenues for the calendar year in which payment is made
from the sale of gas to its customers, including but not limited to residential, commercial, and
industrial customers, within said corporate limits, including the amount of revenues received by
Grantee for the transportation of gas.
(D) Grantee may file with the City a tariff or tariff amendment(s) to provide for the
recovery of the franchise fees under this agreement. 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 Grantee's rates; (ii) if the City intervenes in any regulatory proceeding
before a federal or state agency in which the recovery of Grantee's franchise fees is an issue, the
City will take an affirmative position supporting 100% recovery of such franchise fees by
Grantee 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 appeals in support of the
100% recovery of such franchise fees by Atmos Energy. 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 Grantee. This
paragraph applies exclusively to the City's franchise fees and nothing herein shall prohibit the
City from denying or opposing a request by Company to increase of modify its other rates,
charges, fees or tariffs
SECTION 8. OTHER TAXES.
(A) It is expressly agreed that the aforesaid payments shall be in lieu of any and all
other and additional occupation taxes, easement, franchise taxes or charges, municipal license,
permit and inspection fees, bonds, street taxes, and street or alley rentals or charges except as
provided in this section. Payment of the fees and other consideration due hereunder by the
Grantee is not accepted by the City in lieu of any reimbursement of regulatory costs, payment of
taxes that are uniform and generally applicable to other persons conducting business within the
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City, such as property, sales and use taxes or the costs to repair damages to the Public Right-of-
way or to indemnify the City as required herein. 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 as aforesaid, then City
agrees that it will apply so much of said sums of money paid as may be necessary to satisfy
Grantee's obligations, if any, to pay any such taxes, licenses, charges, fees, rentals, easement or
franchise taxes or charges as aforesaid.
(B) Payment of the fees and other consideration due hereunder shall not in any way
limit or inhibit any of the privileges of the City whether under this Franchise ordinance or
otherwise.
SECTION 9. TERM.
The initial term of this franchise shall expire at midnight on December 31, 2034. With
the approval of both City and Grantee, the franchise may be extended for two (2) additional
terms of five (5) years on the same terms and conditions as set forth herein or as negotiated by
the parties hereto.
SECTION 10. OTHER FRANCHISES.
If Grantee 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 the Mid -Tex Division, as it exists on the effective date of this Agreement, which
municipal franchise ordinance determines the franchise fee owed to that municipality for the use
of its Public Right-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 Grantee 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 Grantee may grant, in its sole reasonable discretion, such waiver.
SECTION 11. CITY RULES AND REGULATION, DOCUMENTS AND REPORTS
(A) The City expressly reserves, and the Grantee expressly recognizes, the City's right
and duty to adopt, from time to time, in addition to the provisions herein contained, such cost of
service, cost of Gas, charter provisions, ordinances, rules and regulations as the City deems
necessary.
(B) Grantee shall file with the City, those documents required by law to be filed with
the City, and otherwise, upon City's request, all tariffs, rules, regulations and policies under
consideration with the Railroad Commission relating to the facilities and operations, any matters
relating to the System facilities and operations, any matters affecting the use of Public Right -of -
Way or this Franchise. Upon request, the Grantee shall provide the City with a copy of filings it
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makes with the Railroad Commission affecting the same. In addition, upon request, the Grantee
will provide the City copies of the Grantee's most recent annual report, all petitions,
communication reports, advice letters, audits, complaints and applications together with
supporting pre -filed testimony and exhibits filed by the Grantee or third parties with the Railroad
Commission.
SECTION 12. DEFAULT, REMEDIES, TERNHNATION.
(A) In addition to all other rights and powers retained by the City under this Franchise
or otherwise, the City reserves the right to forfeit and terminate the Franchise and all rights and
privileges of the Grantee hereunder in the event of a breach of its terms and conditions. A breach
by Grantee shall include, but shall not be limited to, the following:
(1) Violation of any provision of the Franchise or any rule, order, regulation
or determination of the City made pursuant to the Franchise;
(2) Attempt to evade any provision of the Franchise or to practice any fraud or
deceit upon the City or its Residents;
(3) Failure to begin or complete Gas facility construction and/or extension as
agreed to with the City;
(4) Failure to provide the services set forth in the Franchise; or
(5) Material misrepresentation of fact in the application for or negotiation of
the Franchise.
(B) The foregoing shall not constitute a breach if the violation occurs without fault of
the Grantee or occurs as a result of circumstances beyond its control which could not have been
avoided as a result of the exercise of reasonable care. Grantee shall not be excused by mere
economic hardship or by misfeasance or malfeasance of its directors, officers or employees.
(C) The City may make a written demand that the Grantee comply with any such
provision, rule, order, or determination under or pursuant to this Franchise. If the violation by the
Grantee continues for a period of thirty (30) days following such written demand without written
proof that the corrective action has been taken or is being actively and expeditiously pursued, the
City may take under consideration the issue of termination of the Franchise.
(D) If Grantee does not cure the default within such time frame, City shall notify
Grantee in writing of its right to have a hearing before the City Council to present any objections
or defenses Grantee may have that are relevant to the proposed termination. The notice shall
specify a hearing date which shall be at least thirty (30) days from the date of the notice. After
such hearing, the City may determine whether to continue or to terminate the franchise. The
final decision of the City Council may be appealed to any court or regulatory authority having
jurisdiction. Upon timely appeal by Grantee of the City Council's decision terminating the
franchise, the effective date of such termination shall be either when such appeal is withdrawn or
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a court order upholding the termination becomes final and unappealable, and until the
termination becomes effective, the provisions of this franchise shall remain in effect for all
purposes.
(E) Notwithstanding the foregoing, the rights and remedies of City set forth in this
section shall be in addition to, and not in limitation of, any other rights and remedies provided by
law or in equity. City and Grantee understand and intend that such remedies shall be cumulative
to the maximum extent permitted by law and the exercise by City of any one or more of such
remedies shall not preclude the exercise by City, at the same or different times, of any other such
remedies for the same breach of this agreement.
(F) The prevailing party in the adjudication of any proceeding relating to this
Agreement shall be authorized to recover its reasonable and necessary attorney's fees pursuant to
Section 271.159 of the Texas Local Government Code.
SECTION 13. MISCELLANEOUS PROVISIONS.
(A) This Franchise is made for the exclusive benefit of the City and the Grantee, and
nothing herein is intended to, or shall confer any right, claim, or benefit in favor of any third
party-
(B) No assignment or transfer of this franchise shall be made, in whole or in part,
without approval of the City Council of the City; provided however that Grantee may assign this
Agreement to an Affiliate without the City's consent, upon thirty (30) days' notice to the City.
The City will grant such approval unless withheld for good cause. Upon approval, the rights,
privileges, and franchise herein granted to the Grantee shall extend to and include its successors
and assigns. The assignment shall not become effective until assignee agrees in writing to be
bound by the terms, conditions, provisions, requirements and agreements contained in this
franchise.
(C) Any notices required or desired to be given from one party to the other party to
this Ordinance shall be in writing and shall be given and shall be deemed to have been served
and received (whether actually received or not) if (i) delivered in person to the address set forth
below; (ii) deposited in an official depository under the regular care and custody of the United
States Postal Service located within the confines of the United States of America and sent by
certified mail, return receipt requested, and addressed to such party at the address hereinafter
specified; or (iii) delivered to such party by courier receipted delivery. Either party may
designate another address within the confines of the continental United States of America for
notice, but until written notice of such change is actually received by the other party, the last
address of such party designated for notice shall remain such party's address for notice.
CITY
City Manager
City of Southlake
1400 Main Street
Southlake, Texas 76092
COMPANY
Manager of Public Affairs
Atmos Energy
1550 Tech Centre Pkwy
Arlington, Texas 76014
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With a copy to:
Ms. Cara Leahy White
Taylor Olson Adkins Sralla & Elam LLP
6000 Western Place Suite 200
Fort Worth, Texas 76107
(D) Nothing herein contained shall limit or restrict any legal rights that the City may
possess arising from any alleged violation of this Franchise.
(E) Neither the City nor the Grantee shall be excused from complying with any of the
terms and conditions of this Franchise by any failure of the other, or any of its officers,
employers, or agents, upon any one or more occasions to insist upon or seek compliance with
any such terms and conditions.
(F) 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 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 14. ACCEPTANCE AND EFFECTIVE DATE.
To accept this Franchise, Grantee 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 Grantee, the franchise
ordinance shall be rendered null and void. If Grantee accepts this Ordinance, this Ordinance shall
become effective as of the date of approval or thirty (30) days following second approval by the
City. When this Ordinance becomes effective and Grantee makes it first payments due
hereunder, all previous ordinances of City granting franchises for gas delivery purposes that were
held by Atmos Energy shall be cancelled.
PASSED AND APPROVED this day of )2014.
ATTEST:
Lori Payne, City Secretary
First Reading: , 2014
John Terrell, Mayor
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STATE OF TEXAS
COUNTY OF TARRANT
CITY OF SOUTHLAKE
I, Lori Payne, City Secretary of the City of Southlake, Tarrant and Johnson Counties,
Texas, do hereby certify that the above and foregoing is a true and correct copy of an ordinance
passed by the City Council of the City of Southlake, Texas, at a regular session, held on the
day of , 2014, as it appears of record in the Minutes in Book
, page
WITNESS MY HAND AND SEAL OF SAID CITY, this the day of
, 2014.
Lori Payne, City Secretary
City of Southlake, Texas
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