For Economic Development Committee [November 17, 2021]
TO: Honorable Economic Development Committee Members
FROM: Marcus Fuller, City Manager
Title
Request the Economic Development Committee Provide Direction to Staff Regarding a Proposed Ordinance Granting a New Franchise Agreement to CalNev Pipeline Company and SFPP.
Body
BACKGROUND:
On March 18, 1968, the City Council approved Ordinance No. 577 granting to CalNev Pipeline Company a franchise to maintain and operate pipelines within the City (Exhibit A). The franchise agreement expired on April 18, 2018 (50 years). Kinder Morgan owns CalNev and Santa Fe Pacific Partners (SFPP), which operate two fuel pipeline systems within the City that carry fuel products to terminals in the western United States. By letter dated June 13, 2017, Kinder Morgan Energy requested a renewal of the franchise granted by Ordinance No. 577. The parties previously met periodically to discuss the terms of the proposed renewal.
Table 1 shows the recent franchise fee history. Until 2009, Kinder Morgan paid nominal franchise fees based upon the formula specified in the Ordinance as authorized under the Broughton Act: 2% of the gross annual receipts ... arising from the use, operation or possession of the franchise. After negotiations with the City in 2011, Kinder Morgan agreed to pay a franchise fee in accordance with Public Utilities Code Section 6231.5, which sets a standard fee per lineal footage of pipeline with adjustments for inflation.
CalNev updated its facility inventory to include new annexations to the City of Rialto. The facility map is attached hereto as Exhibit B. The CalNev pipeline system generally runs north from the tank farm along Linden Avenue toward the Cajon Pass. The SFPP pipeline system is located in southeastern Rialto and connects to a line paralleling the 10 Freeway.
The pipeline inventory for CalNev and SFPP is attached hereto as Exhibit C. The total lineal footage for the CalNev pipeline s...
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