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HomeMy WebLinkAbout2015-026 Franchise to Cascade Natural Gas Corporation for Natural Gas Transmission/Distribution System and FacilitiesAN ORDINANCE ORDINANCE NO. 2015-026 granting a non-exclusive franchise to Cascade Natural Gas Corporation ("CNG") to construct, operate and maintain a natural gas transmission/distribution system/facility(ies), with all necessary facilities, within the City of Yakima, Washington (the "City"), setting forth provisions, terms and conditions accompanying the grant of this franchise; providing for City regulation of construction, operation, maintenance and use of the natural gas transmission/distribution system/facility(ies), prescribing penalties for the violations of its provisions; and setting an effective date. BE IT ORDAINED BY THE CITY OF YAKIMA that a franchise is hereby granted to Cascade Natural Gas Corporation, to operate and maintain a natural gas transmission/distribution system/facility(ies) in the City of Yakima, Washington, upon the following express terms and conditions: SECTION 1 - DEFINITIONS 1.1 (A) Captions. Throughout this franchise Ordinance, captions to sections are intended solely to facilitate reading and to reference the sections and provisions of this franchise Ordinance. The captions shall not affect the meaning and interpretation of this franchise Ordinance. 1.1 (B) Definitions For the purposes of this franchise Ordinance the following terms, phrases, words and their derivations shall have the meaning given herein. When not inconsistent with the context, words used in the present tense include the future, words in the plural number include the singular number, words in the singular number include the plural number and the use of any gender shall be applicable to all genders whenever the sense requires The words "shall" and "will" are mandatory and the word "may" is permissive. Where a term in this franchise Ordinance is not defined in this Section and there exists a definition for the term in the applicable state and/or federal law, the applicable state and/or federal law definition shall apply Other terms in this franchise Ordinance that are not defined in this Section shall be given their common or ordinary meaning 1.2 "City" shall mean City of Yakima, Washington, and all the incorporated territory within as of the effective date of this franchise Ordinance and any other areas later added thereto by annexation or other means. 1.3 "City Council" shall mean the City Council of the City of Yakima, Washington. 1.4 "Customer" means any person(s) who legally receives any one or more of the services provided by CNG utilizing the natural gas transmission/distribution system/facility(ies). 1.5 "Days" shall mean calendar days 1.6 "Franchise" shall mean the right granted by this franchise Ordinance and conditioned as set forth herein by which the City authorizes CNG to erect, construct, reconstruct, operate, dismantle, test, use and maintain a natural gas transmission/distribution in the City The franchise granted herein shall be a non-exclusive franchise. 1 1.7 "Franchise service area" shall mean that area within the incorporated City limits in which CNG shall extend its services 1.8 "Grantee" shall refer to, as incorporated or used herein, Cascade Natural Gas Corporation 1.9 "Gross revenue" shall have a meaning consistent with any existing or future City Code. Gross Revenue shall include, without limitation, any and all compensation in whatever form, from any source, directly earned by CNG or any affiliate of CNG or any other person who would constitute an operator of CNG's natural gas transmission/distribution system/facility(ies) under applicable local, state and/or federal law, derived from the transmission, distribution, delivery, and sale of natural gas originating or terminating in the City (including all sums earned or charged whether received or not) 1.10 "Natural gas transmission/distribution system/facility(ies)" means collectively, any and all natural gas systems, including, but not limited to, conduits, equipment, gas pipes, pipelines, mains, laterals, conduits, feeders, regulators, valves, meters, meter - reading devices, fixtures, communications systems, appliances, attachments, appurtenances, and supporting structures, and/or any other tangible component of CNG's natural gas transmission/distribution system/facility(ies), located in the City's rights-of-way, utilized by CNG in the operation of activities authorized by this franchise Ordinance The abandonment by CNG of any Facilities as defined herein shall not act to remove the same from this definition 1.11 "Permittee" means any person who has been granted a permit by the assigned permitting authority. 1.12 "Permitting authority" means the head of the City division or department authorized to process and grant permits required to perform work in the City's rights-of-way, or the head of any agency authorized to perform this function on the City's behalf. Unless otherwise indicated, all references to the Permitting Authority shall include the designee of the department, division or agency head. 1.13 "Person" means any individual, sole proprietorship, corporation, partnership, association, joint venture or other form of organization of any kind and the lawful trustee, successor, assignee, transferee or personal representative thereof. 1.14 Ordinance. "Penalties" means any and all monetary penalties provided for in this franchise 1.15 "Right-of-way" or "rights-of-way" shall mean the surface of and the space above and below any public street, road, highway, freeway, easement, lane, path, alley, court, sidewalk, parkway or driveway now or hereafter existing as such within all incorporated areas of the City 1.16 "Street" or "streets" shall mean the surface of and the space above and below the right-of-way of any public street, road, highway, freeway, easement, lane, path, alley, court, sidewalk, parkway or driveway now or hereafter existing as such within all incorporated areas of the City. 1.17 "WUTC" shall mean the Washington Utilities and Transportation Commission 2 1.18 "Year", "annual" or "annually" means the period consisting of a full calendar year, beginning January 1 and ending December 31, unless otherwise provided for in this franchise Ordinance SECTION 2 - FRANCHISE 2.1 Grant of Franchise. Pursuant to the laws of the State of Washington, including, but not limited to, RCW 35A.47 040 and RCW 80 28, the City hereby grants to Cascade Natural Gas Corporation, a non-exclusive franchise which authorizes CNG, subject to the terms of this franchise Ordinance, to construct a natural gas transmission/distribution system/facility(ies) in, along, among, upon, across, above, over, under or in any matter connected with the rights-of-way located in the City and for that purpose to erect, install, construct, repair, replace, reconstruct, maintain or retain in, on, over, under, upon, across or along any rights-of-way or extensions thereof and additions thereto, such conduits, equipment, gas pipes, pipelines, mains, laterals, conduits, feeders, regulators, valves, meters, meter - reading devices, fixtures, communications systems, appliances, attachments, and supporting structures, and/or any other tangible component of CNG's natural gas transmission/distribution system/facility(ies) as may be necessary or appurtenant to the natural gas transmission/distribution system/facility(ies) Said franchise shall constitute both a right and an obligation to provide the services of a natural gas transmission/distribution system/facility(ies) as required by the provisions of this franchise Ordinance, subject to CNG's line extension policy as approved by the WUTC. 2.2 Franchise Term. The term of this franchise shall be ten (10) years, commencing on November 17, 2015, and expiring on November 17, 2025 at midnight, unless extended as described herein and in accordance with the provisions in Section 2.7 of this franchise Ordinance, or terminated sooner in accordance with this franchise Ordinance. The City reserves the right to extend this franchise for up to two (2) additional five (5) year periods, upon ninety (90) days written notice to CNG prior to its expiration or upon a shorter written notice to CNG if agreed to by CNG. Any written extension to this franchise Ordinance shall be presented for consideration and approval to the City Council at a City Council business meeting, and if accepted and approved by CNG, executed by CNG This provision does not affect the City's right to revoke this franchise for cause, because of a breach of any promise, condition or stipulation stated herein 2.3 Franchise Non -Exclusive. The franchise granted herein shall be non- exclusive. The City specifically reserves the right to grant, at any time, such additional franchises for a natural gas transmission/distribution system/facility(ies) as it deems appropriate provided, however, such additional grants shall not operate to materially modify, revoke or terminate any rights previously granted to CNG. The grant of any additional franchise shall not of itself be deemed to constitute a modification, revocation or termination of rights previously granted to CNG. Any franchise granted pursuant to this franchise Ordinance shall confer and impose substantially similar rights and obligations. In establishing the rights and obligations pursuant to a franchise, consideration shall be given to the services to be provided, the area to be served, the commitments made by the applicant to the City, the regulatory authority of the City and the investment proposed by such applicant. In no event will the City impose discriminatory rights or obligations on any franchise applicant. 3 2.4 Authority Granted. A. Subject to local, state and federal law, this franchise Ordinance grants the authority, right and privilege to CNG to operate and maintain a natural gas transmission/distribution system/facility(ies) including all equipment and all other appurtenances necessary for the transmission, distribution, delivery, and sale of natural gas in, upon, along, above, over and under the streets and rights-of-way in the City. B. CNG's right to construct, erect, install, modify, operate and maintain its natural gas transmission/distribution system/facility(ies) is subject to the terms, conditions and requirements of this franchise Ordinance, the City Charter and is specifically subject to the requirement that CNG obtain permits as set forth in this franchise Ordinance. C CNG expressly acknowledges and agrees, by acceptance of this franchise, that its rights under this franchise Ordinance are subject to the police power of the City to adopt and enforce general ordinances necessary to the safety, health and welfare of the public and CNG agrees to comply with all such applicable general laws and ordinances enacted by the City pursuant to such police power. The City, by the granting of this franchise, does not render or to any extent lose, waive, impair or lessen the lawful powers and rights now or hereafter vested in the City to regulate the use of its rights-of-way and tax, regulate or license the use thereof, and CNG, by its acceptance of this franchise, acknowledges and agrees that all lawful powers and rights, whether regulatory or otherwise, as are or may be from time to time vested in or reserved to the City, shall be in full force and effect and CNG shall be subject to the exercise thereof by the City at any time. D CNG expressly acknowledges and agrees, by acceptance of this franchise, that conduits, equipment, gas pipes, pipelines, mains, laterals, conduits, feeders, regulators, valves, meters, meter -reading devices, fixtures, communications systems, appliances, attachments, and supporting structures, and/or any other tangible component of CNG's natural gas transmission/distribution system/facility(ies) as may be necessary or appurtenant to the natural gas transmission/distribution system/facility(ies) in the City rights-of-way which are subsequently acquired by CNG and which, if acquired prior to this original franchise grant, would have been subject to this franchise Ordinance and the permitting authority related thereto, shall be subject to the provisions of this franchise Ordinance and all permits related thereto. E. In return for promises made and subject to the stipulations and conditions stated herein, the City grants to CNG permission to use the City's rights-of- way to transmit, distribute, deliver, and sell natural gas to persons within the franchise Service Area. To the extent of the City's interests, permission is similarly granted to CNG to use areas outside the City's rights-of-way which are reserved by regulation, practice or dedication for public utilities, but in such areas, CNG's use is also subject to conditions now or hereafter recognized by the City as generally applicable to natural gas or underground conduit utilities 2.5 Limits on Permission. A. Permission does not extend to areas outside those listed in Section 2 4, E of this franchise Ordinance, or otherwise to any area outside the authority of the City 4 to extend franchised -use permission, such as buildings or private areas not reserved for utilities. CNG is solely responsible to make its own arrangements for any access to such places B. This franchise Ordinance does not extend permission to municipal buildings or other municipally owned or controlled structures. For such locations, CNG shall make specific arrangements directly with the municipal department or division controlling such building or other structure C. Permission granted by this franchise Ordinance is non-exclusive CNG stipulates the City may grant similar permission to others D. CNG shall not permit installations by others in the franchise service area without written approval of the City Such approval shall not be in lieu of a franchise or other requirements of the City Whether or not permitted, CNG remains responsible for all third party users of the natural gas transmission/distribution system/facility(ies) for compliance with this franchise Ordinance. E No privilege or exemption is granted or conferred by this franchise Ordinance except as may be specifically prescribed F. Any privilege claimed under this franchise Ordinance in any street or right-of-way shall be subordinate to any prior lawful occupancy or any subsequent exercise of City police power The grant of this franchise shall not impart to CNG any fee title property rights in or on any public or private property to which CNG does not otherwise have title. 2.6 Franchise Service Area. The franchise service area shall be that area within the present or future city limits of the City of Yakima, Washington. 2.7 Franchise Renewal or New Franchise. A. The City may establish appropriate requirements for new franchises or franchise renewals consistent with federal, state and local law. B Nothing in this franchise Ordinance shall be construed to require renewal of this franchise. 2.8 Renegotiation. In the event that any provision of this franchise Ordinance becomes invalid or unenforceable and the City or CNG expressly finds that such provision constituted a consideration material to entering into this franchise, or in the event of significant change in the law regulating this franchise or change in municipal authority to act under the terms of this franchise Ordinance, or in the event of significant change or advancement in technology governing CNG's functions, the City and CNG may mutually agree to renegotiate any or all of the terms of this franchise The party seeking renegotiation shall serve on the other party written notice of an offer to renegotiate In the event the other party accepts the offer to renegotiate, the parties shall have one hundred twenty (120) days to conduct and complete the renegotiation. Nothing in this franchise Ordinance shall be construed to require acceptance by either the City or CNG of an offer to renegotiate. 5 2.9 Revocation. A. In addition to any rights set out elsewhere in this franchise Ordinance, the City reserves the right to declare a forfeiture or otherwise revoke this franchise and all rights and privileges pertaining thereto in the event that: (1) The City determines CNG is in violation of any material provision of this franchise Ordinance and fails to correct the violation after written notice of the violation and proposed forfeiture and a reasonable opportunity thereafter to correct the violation as noted in Section 8.2 of this franchise Ordinance, or (2) CNG is found by a court of competent jurisdiction to have engaged in any actual or attempted fraud or deceit upon the City, persons or customers; or (3) CNG becomes insolvent, unable or unwilling to pay its debts as they become due, or is adjudged a bankrupt; or (4) CNG fails, refuses, neglects or is otherwise unable to obtain and/or maintain any permit required by any local, federal or state regulatory body regarding CNG's construction, maintenance and operation of its natural gas transmission/distribution system/facility(ies), providing that the issuance of any such required permit has not been unreasonably withheld by any local, federal or state regulatory body B. For purposes of this Section, the following are material provisions of this franchise Ordinance, allowing the City, without limitation, to exercise its rights under this Section or as set forth elsewhere in this franchise Ordinance: (1) The invalidation, failure to pay or any suspension of CNG's payment of any fees or taxes due the City under this franchise Ordinance; (2) Any failure by CNG to submit timely reports regarding the calculation of any fees or taxes due the City under this franchise Ordinance; (3) Any failure by CNG to maintain the liability insurance required under this franchise Ordinance; (4) Any failure by CNG to maintain and provide the City a copy of a Performance Bond as required under this franchise Ordinance, (5) Any failure by CNG to otherwise fully comply with the requirements of this franchise Ordinance. C Upon occurrence of one or more of the events set out above, following sixty (60) days written notice to CNG of the occurrence and the proposed forfeiture and an opportunity for CNG to be heard, the City may, by ordinance or other appropriate document, declare a forfeiture In a hearing, CNG shall be afforded due process rights as if the hearing were a contested case hearing subject to Washington law, including the right to cross-examine witnesses and to require that all testimony be on the record Findings from the hearing shall be written and shall stipulate the reasons for the City's 6 decision. If a forfeiture is lawfully declared, all rights of CNG under this franchise Ordinance shall immediately be divested without a further act upon the part of the City. 2.10 Receivership. The City shall have the right to declare a forfeiture or otherwise revoke this franchise Ordinance one hundred eighty (180) days after the appointment of a receiver, or trustee, to take over and conduct the business of CNG, whether in receivership, reorganization, bankruptcy or other action or proceeding, unless such receivership or trusteeship shall have vacated prior to the expiration of said one hundred eighty (180) days, or unless: A. Within one hundred eighty (180) days after his/her election or appointment, such receiver or trustee shall have been approved by the City and shall fully have complied with all the provisions of this franchise Ordinance and remedied all defaults thereunder; and B Such receiver or trustee, within said one hundred eighty (180) days, shall have executed an agreement, duly approved by the City as well as the court having jurisdiction in the premises, whereby such receiver or trustee assumes and agrees to be bound by each and every provision of this franchise Ordinance. 2.11 Expiration. Upon expiration of this franchise Ordinance, the City shall have the right, at its own election, to: (1) Extend this franchise, as provided for herein, though nothing in this provision shall be construed to require such extension; (2) Renew this franchise, in accordance with applicable valid law; (3) Invite additional franchise applications or proposals; (4) Terminate this franchise without further action; and (5) Take such other action as the City deems appropriate. 2.12 Transfer of Ownership. A. This franchise shall not be sold, leased, mortgaged, assigned or otherwise transferred, nor shall any of the rights or privileges herein granted or authorized be sold, leased, mortgaged, assigned or otherwise transferred, either in whole or in part, nor shall title hereto, either legal or equitable, or any right, interest or property herein, pass to or vest in any person, except CNG, either by act of CNG or operation of law, without the prior consent of the City, expressed in writing. The granting of such prior consent in one instance shall not render unnecessary any subsequent prior consent in another instance. Any transfer of ownership shall make this franchise subject to revocation unless and until the City shall have given written prior consent. B Upon any transfer as heretofore described, CNG shall, within sixty (60) days thereafter, file with the City a copy of the deed, agreement, mortgage, lease or other written instrument evidencing such sale, lease, mortgage, assignment or transfer, certified and sworn as correct by CNG. 7 C. Every such transfer as heretofore described, whether voluntary or involuntary, shall be deemed void and of no effect unless CNG shall, within sixty (60) days after such transfer has been made, file such certified copy as is required. D The requirements of this Section shall not be deemed to prohibit the use of CNG's property as collateral for security in financing the construction or acquisition of all or part of the natural gas transmission/distribution system/facility(ies) franchised hereunder However, such financing shall be subject to the provisions of this franchise Ordinance E. The City reserves the right to invoke any or all provisions of this franchise Ordinance upon CNG's successors or assigns, judgment creditors or distributees of facilities or property used in enjoyment of privileges conferred herein, whether or not stated elsewhere, all without waiver of the right to withhold consent not expressly given of any such transfer and/or require a new franchise. 2.13 Change in Control. CNG shall promptly notify the City through the City Council of any proposed change in, transfer of or acquisition by any other party of control of CNG. If beneficial ownership of thirty percent (30%) or more of the stock of CNG, or any parent company of CNG immediate or otherwise, or of any entity now owning or later acquiring such a beneficial interest is acquired by a single entity or by several entities under common control, and if such entity or agent of common control is other than an organization a) whose primary business is natural gas transmission/distribution system/facility(ies) operation, and b) is more than fifty percent (50%) owned by CNG or a parent of CNG, then a change in control will be deemed to have taken place unless the City, upon request of CNG, finds otherwise. Such a change in control shall make this franchise Ordinance subject to revocation unless and until the City shall have given written consent thereto. For the purpose of determining whether it will consent to such change, transfer or acquisition of control, the City may inquire into the qualifications of the prospective controlling party to perform the obligations of CNG under this franchise Ordinance CNG shall assist the City in any such inquiry. The City may condition its consent upon such terms and conditions as it deems appropriate. Consent to the transfer shall not be unreasonably withheld. 2.14 No Stock to be Issued. CNG promises never to issue any capital stock solely on account of this franchise or any permission granted under the terms of this franchise Ordinance, or the value thereof. CNG further agrees it will not have any right to receive, upon a condemnation proceeding or other negotiation by the City to acquire the properties of CNG, any payment or award on account of this franchise Ordinance or permission or its value. CNG waives all such claims against the City and also any claims for any municipal revision, action, inaction, curtailment, suspension, revocation or change in municipal policy or regulation relating to CNG's franchised activities. The City shall have no obligation to make any payment to CNG or award in condemnation for any other asset or interest of CNG, except as required under the State of Washington Constitution and United States Constitution or as state or federal laws may preemptively require, which value shall be determined at the time of such condemnation. 2.15 Other Codes and Ordinances. Nothing in this franchise Ordinance shall be deemed to waive the requirements of the other lawful codes and ordinances of the City regarding permits, fees to be paid or manner of construction. 8 2.16 Survival of Terms. Sections 4 7, 5 3, 6 and 9 of this franchise Ordinance shall continue in effect for a five year period after the expiration, forfeiture or revocation of this franchise. SECTION 3 - ENFORCEMENT AND ADMINISTRATION BY THE CITY 3.1 City Jurisdiction and Supervision. The City, through its Engineering Division (or its successor(s)), shall have continuing regulatory jurisdiction and supervision over the operation and enforcement of this franchise Ordinance and may from time to time adopt such reasonable rules and regulations as it may deem necessary for the conduct of the business contemplated herein. All questions of application, interpretation, conflict or ambiguity arising out of or in connection with this franchise Ordinance are to be determined by the manager of the Engineering Division (or his/her successor(s)), except only where otherwise specifically stated, or in the event that a different person or body may be designated by the City through written notice to CNG. 3.2 Grantee to Have No Recourse. Subject to state and federal law, CNG shall have no recourse other than non -monetary declaratory or injunctive relief against the City and shall be awarded no monetary recovery whatsoever for any incidental or consequential damages, including but not limited to lost profits, arising out of any provision or requirement of this franchise Ordinance, nor from the City's regulation under this franchise Ordinance, nor from the City's exercise of its authority to grant additional franchises. 3.3 Acceptance of Power and Authority of City. CNG expressly acknowledges by acceptance of this franchise Ordinance that: A. It has relied upon its own investigation and understanding of the power and authority of the City to grant and enforce this franchise Ordinance and that it has no objection to the exercise of the City's power and authority therein; B It has not been induced to enter into this franchise arrangement by any understanding or promise or other statement, whether verbal or written, by or on behalf of the City concerning any term or condition of this franchise Ordinance that is not specifically included herein, C. It has carefully read the terms and conditions contained herein and CNG is willing to and does accept all the obligations of such terms and conditions to the extent not inconsistent with state or federal law and further agrees that it will not set up as against the City any claim that any provision of this franchise Ordinance is unreasonable, arbitrary, invalid or void subject to its rights herein; and D The matters contained in CNG's application and all subsequent applications or proposals for renewals of this franchise, and as stated in any and all other presentations to the City, except as inconsistent with law, regulations or local ordinance, are incorporated into this franchise Ordinance as though set out verbatim. 3.4 Acts Discretionary, Reservation of Authority. All City acts undertaken pursuant to this franchise Ordinance shall be deemed discretionary, guided by the provisions of this franchise Ordinance and considerations of the public health, safety, aesthetics and convenience. CNG stipulates and agrees that this franchise is subject to the City Charter of the City of Yakima. CNG understands the Charter's provisions are incorporated herein, where 9 applicable. CNG agrees that the City reserves all municipal powers now or hereafter granted by law, including without limitation, the power to tax and license, regulate activities of land use, protect the public health and safety and regulate and control use of the public right-of-way. 3.5 Delegation of Authority to Regulate. The City reserves the right to delegate its regulatory authority wholly or in part to the federal government, state government and/or to agents of the City, including but not limited to an agency which may be formed to regulate several City franchises. SECTION 4 - OPERATION IN STREETS AND RIGHTS-OF-WAY 4.1 Use of Streets. CNG may, subject to terms of this franchise Ordinance, erect, install, construct, repair, replace, reconstruct and retain in, on, over, under, upon, across and along the City streets and rights-of-way such conduits, equipment, gas pipes, pipelines, mains, laterals, conduits, feeders, regulators, valves, meters, meter -reading devices, fixtures, communications systems, appliances, attachments, appurtenances, and supporting structures, and/or any other tangible component and other property and equipment as are necessary and appurtenant to the operation of a natural gas transmission/distribution system/facility(ies) within the City All installation, construction, alteration and/or maintenance of any and all of CNG's natural gas transmission/distribution system/facility(ies) within City streets and rights-of-way incident to CNG's transmission, distribution, delivery, and sale of natural gas shall, regardless of who performs installation, construction, alteration and/or maintenance, be and remain the responsibility of CNG. 4.2 Construction or Alteration. 4.2.1 Permits. CNG shall in all cases comply with all lawful City ordinances and regulations regarding the acquisition of permits and other such items as may be reasonably required in order to install, construct, alter and maintain the natural gas transmission/distribution system/facility(ies). CNG shall apply for and obtain all permits necessary for installation, construction, alteration and/or maintenance of any such facilities, and for excavation and laying of any natural gas transmission/distribution facilities within City streets and rights-of-way. CNG shall pay all applicable fees due for any such permits. 4.2.2 Schedule and Maps. A. Prior to beginning installation, construction, alteration or maintenance of the natural gas transmission/distribution system/facility(ies), CNG shall provide the City with an initial work schedule for work to be conducted in City streets and rights-of-way. CNG shall, upon request, provide information to the City regarding its progress in completing or altering the natural gas transmission/distribution system/facility(ies). B. Upon completion of construction or alteration of the natural gas transmission/distribution system/facility(ies), CNG shall provide the City with a map showing the location of its installed natural gas transmission/distribution system/facility(ies), as built. Such "as -built" maps shall be in a form acceptable to the City and submitted to the City within ninety days of the completion or the alteration. C. CNG shall provide a map to the City's Engineering Division, or its successor, showing the location of CNG's facilities in City streets and rights-of-way on 10 a scale of 3500 feet per inch or in whatever standard scale the City adopts for general use: (1) One year after the effective date of this franchise Ordinance, and (2) Annually thereafter 4.2.3 Good Engineering. A. CNG promises that all of its property and facilities shall be constructed, operated and maintained in good order and condition in accordance with good engineering practice In connection with the civil works of CNG's natural gas transmission/distribution system/facility(ies), such as, but not limited to, trenching, paving, compaction and locations, CNG promises to comply with the edition of the American Public Works Association Standard Specifications which is in current or future use by the City, together with the City's Supplemental Specifications thereto, all as now or hereafter amended. B. CNG promises that the natural gas transmission/distribution system/facility(ies) shall comply with all applicable federal, state and local laws, regulations and codes, including, but not limited to the National Fuel Gas Code, the National Electric Safety Code and the Washington Electrical Construction Code 4.3 Facilities Placement. 4.3.1 General Standards. The natural gas transmission/distribution system/facility(ies) shall be constructed and maintained in such manner as not to obstruct, hinder, damage or otherwise interfere with sewers, water pipes, other utility fixtures or any other property of the City, or any other pipes, wires, conduits or other facilities that may have been installed in City streets or rights-of-way by or under the City's authority. CNG shall maintain a minimum underground horizontal separation of five (5) feet from City water facilities and ten (10) feet from above -ground City water facilities; PROVIDED, that for development in new areas, the City, together with CNG and other utility purveyors or authorized users of City streets or rights-of-way, will develop and follow the City's determination of a consensus for guidelines and procedures for determining specific utility locations, subject additionally to this franchise Ordinance. 4.3.2 Limited Access. CNG must follow the City's requirements for the placement of facilities in City streets and rights-of-way, including City requirements for location of facilities in specific City streets and rights-of-way, and must in any event install facilities in a manner that minimizes interference with the use of City streets and rights-of-way by others, including others that may have or may install other utility facilities in City streets and rights-of-way. The City may require that CNG install facilities at a particular time, at a specific place and/or in a particular manner as a condition of access to a particular City street or right-of-way and the City may exclude CNG's access to a particular street or right-of-way in accordance with City requirements for placement of facilities. 4.3.3 Consistency with Designated Use. Notwithstanding the grant to use City streets and rights-of-way contained in this franchise Ordinance, no street or right - 11 of -way shall be used by CNG if the City, in its sole opinion, determines that such use is inconsistent with the terms, conditions or provisions by which such street or rights- of-way were created or dedicated or presently used under state and local laws. 4.3.4 Non -Interference. CNG shall exert its best efforts to construct and maintain the natural gas transmission/distribution system/facility(ies) so as not to interfere with other uses of City streets or rights-of-way CNG shall individually notify all residents affected by any proposed installation, construction, alteration or maintenance of the natural gas transmission/distribution of such work where and when such notification is reasonably possible, such as when the activity may result in service interruptions or restricted access. 4.3.5 Underground Utility Coordination. CNG hereby states it is familiar with RCW Ch. 19.122, Washington State's "Underground Utilities" statute, and understands local procedures, custom and practice relating to the one -number locator service program. CNG hereby agrees to coordinate its underground installation and planning activities with the City's underground plan and policies. 4.4 Coordination with Other Users. CNG shall coordinate its activities with other utilities and users of City streets and rights-of-way to avoid unnecessary cutting, damage or disturbance of such streets and rights-of-way and shall conduct its planning, design, installation, construction, alteration and maintenance of the natural gas transmission/distribution at all times so as to maximize the life and usefulness of the paving and municipal infrastructure In addition, the City may determine with respect to franchised uses, in the exercise of reasonable discretion, when and where reasonable accommodation shall be made by CNG to the City for public needs or, where requested, other third party needs, how such accommodation should be made and a reasonable apportionment of any expenses of same; PROVIDED, that this franchise creates no third party beneficial interests or accommodation. Notwithstanding the foregoing, it remains the responsibility of CNG to anticipate and avoid conflicts with other City streets or rights-of-way occupants or users, other utilities, franchisees or permittees. The City assumes no responsibility for such conflicts. Further, CNG shall give appropriate notice(s) to any other City streets or rights-of-way occupants or users, other utilities, franchisees, permittees, divisions of the City or other units of government owning or maintaining facilities which may be affected by CNG's planning, design, installation, construction, alteration or maintenance of the natural gas transmission/distribution system/facility(ies). 4.5 Relocation. A. The City shall have the right during the term of this franchise, as it may be extended, renewed or otherwise altered in accordance with this franchise Ordinance, to require CNG to change the location of its natural gas transmission/distribution system/facility(ies) within City streets and rights-of-way when the public convenience and necessity requires such change If the City elects or requires a third party to alter, repair, realign, abandon, improve, vacate, reroute or change the grade of any street, public way or other public property; or to construct, maintain or repair any public improvement; or to replace, repair, install, maintain or otherwise alter any cable, wire, wire conduit, pipe, line, pole, wireholding structure, structure or other facility, including a facility used for the provision of utility or other services or transportation of drainage, sewage or other liquids, CNG shall, upon request, except as otherwise hereinafter provided, at no expense to the City, remove 12 or relocate, as necessary, any of its conduits, equipment, gas pipes, pipelines, mains, laterals, conduits, feeders, regulators, valves, meters, meter -reading devices, fixtures, communications systems, appliances, attachments, utility access covers, and supporting structures, and/or any other tangible component of CNG's natural gas transmission/distribution system/facility(ies) which it has installed and when the public convenience and necessity requires such change. B If the City requires CNG to remove or relocate its facilities located within City streets or rights-of-way, the City will make a reasonable effort to provide CNG with an alternate location for its facilities within City streets or rights-of-way C. The City, or a third party contracted by the City to perform work as defined in Section 4 5 of the franchise Ordinance, shall provide CNG with no less than forty-five (45) days advance written notice advising CNG of the date or dates removal or relocation shall be completed. The City, or its contracted third party, and CNG may agree to, and document in writing, a completion duration greater than forty-five (45) days if the complexity of the work or other circumstances necessitate additional time. D If during the term of this franchise, as it may be extended, renewed or otherwise altered in accordance with this franchise Ordinance, another entity which holds a franchise or any utility requests CNG to remove or relocate its natural gas transmission/distribution system/facility(ies) to accommodate the construction, maintenance or repair of the requesting party's facilities, or the more efficient use of such facilities, or to "make ready" the requesting party's facilities for use by others, or because CNG is using a facility which the requesting party has a right or duty to remove, CNG shall do so to the extent necessary to accommodate the reasonable use(s) planned by the requesting entity. The parties involved may decide among themselves who is to bear the cost of removal or relocation, PROVIDED, that the City shall not be liable for any such cost(s). E. Any person requesting CNG to remove or relocate its facilities shall give CNG no less than forty-five (45) days advance written notice advising CNG of the date or dates removal or relocation is to be undertaken, PROVIDED, that no advance written notice shall be required in emergencies or in cases where public health and/or safety or property is endangered. F. If CNG fails, neglects or refuses to remove or relocate its facilities as directed pursuant to Section 4.5C of this franchise Ordinance, or in emergencies or where public health and/or safety or property is endangered, the City may do such work or cause it to be done and the cost, including all direct, indirect and/or consequential costs and expenses incurred by the City due to CNG's failure, neglect or refusal thereof shall be paid solely by CNG. G. If CNG fails, neglects or refuses to remove or relocate its facilities as directed pursuant to Section 4.5C of this franchise Ordinance, and the City incurs costs due to the delay, directly or through its contract with a third party, all such costs including all direct, indirect, delay and/or consequential costs and expenses shall be paid solely by CNG 13 H. If CNG causes any damage to private property or public property in the process of removing or relocating its facilities, CNG shall pay the owner of the property for such damage. I. CNG does hereby promise to protect and save harmless the City, its officers, agents and employees from any customer or third party claims for service interruption or other losses in connection with any removal or relocation of CNG's natural gas transmission/distribution system/facility(ies). 4.6 Restoration. A. Whenever CNG damages or disturbs any area in or near City streets, rights-of-way, paved area or public improvement, CNG shall, at its sole cost, expense and liability, restore such area in or near City streets, rights-of-way, paved area or public improvement to at least its prior condition, or the City standard, whichever is greater, to the satisfaction of the City B Whenever any opening is made by CNG in a hard surface pavement in any City street or right-of-way, CNG shall refill, restore, patch and repave entirely all surfaces opened as determined necessary by the City in order to maintain and preserve the useful life thereof C For pavement restorations, any patch or restoration shall be thereafter properly maintained in good condition and repair by CNG until such time as the area is resurfaced or reconstructed. D The City hereby reserves the right, after providing reasonable notice to CNG, to remove and/or repair any work done by CNG which, in the determination of the City, is inadequate. The cost thereof, including the cost of inspection and supervision, shall be paid solely by CNG. E Should CNG fail, neglect, refuse or delay in performing any obligation here or elsewhere stated, or where the City deems necessary to protect the public right- of-way or to avoid liability, risk or injury to the public or the City, the City may proceed to perform or cause to have performed such obligation, including any remedial or preventative action deemed necessary, at CNG's sole expense and liability, but no action or inaction by the City shall relieve CNG of its obligation to hold the City harmless as set forth in Section 6.6 of this franchise Ordinance. Prior to undertaking corrective effort, the City shall make a reasonable effort to notify CNG, except no notice is needed if the City declares an emergency or determines a need for expedient action. This remedy is supplemental and not alternative to any other municipal right. F Whenever CNG damages or disturbs any area in or near City streets, rights-of-way, paved area or public improvement, CNG stipulates that the City may, without limitation: (1) Require CNG to repave an entire lane or greater affected area within any cut or disturbed location; and/or (2) Require CNG to common trench with any other underground installation in City streets or rights-of-way, with cost sharing to be negotiated 14 between the parties involved, or in the absence of agreement, as directed by the City in a non-discriminatory manner. G All requirements of this Section pertaining to public property shall also apply to the restoration of private easements and other private property. H If CNG causes any damage to private property in the process of restoring facilities, CNG shall pay the owner of the property for such damage. All of CNG's work under this Section shall be done in strict compliance with all applicable rules, regulations and ordinances of the City. J Any survey monuments which are disturbed or displaced by CNG in its performance of any work under this franchise Ordinance shall be referenced and restored by CNG, as per WAC 332-120, as from time to time amended, and all pertinent federal, state and local standards and specifications K. CNG shall perform all restoration work promptly. 4.7 City Right to Require Removal of Property. A. Upon the expiration of this franchise and the cessation of ,use of the natural gas transmission/distribution system/facility(ies) by CNG and subject to applicable law and regulations, CNG shall remove, at its sole cost and expense, any underground facilities by trenching or opening City streets and rights-of-way along the extension thereof or otherwise which is ordered to be removed by the City Council based upon a determination by the Council and concurrence by the Washington Utilities and Transportation Commission that removal is required in order to eliminate or prevent a hazardous condition which can reasonably expected to affect public health and safety. Upon the removal of any underground facilities, CNG shall restore such affected area in or near City streets, rights-of-way, paved area or public improvement to at least its prior condition, or the City standard, whichever is greater, to the satisfaction of the City B Any natural gas distribution/transmission system/facilities to be left in place after cessation of use by CNG shall be made inert by purging all natural gas from such facilities (including displacement of natural gas with an appropriate inert gas) and disconnecting and sealing such facilities (including displacement of natural gas with an appropriate inert gas) and disconnecting and sealing such facilities, all in compliance with applicable regulations and industry standards. 4.8 Emergency Repairs. In the event that emergency repairs to the natural gas transmission/distribution system/facility(ies) are necessary, CNG shall notify the City of the need for such repairs. CNG may immediately initiate such emergency repairs and shall apply for appropriate permits the next business day following discovery of the emergency. 4.9 Emergency Notifications In the event that an emergency occurs where there is a threat or occurrence of a major interruption of service, or where there is a threat or occurrence involving the health, safety or welfare of the public, CNG shall promptly notify the Public Safety Communications Center (911), the Mayor's Office and the City Manager's Office 15 4.10 City Right of Inspection. The City shall have the right to inspect and approve all installation, construction, alteration or maintenance work performed by CNG within the franchise Service Area and to make such tests as it deems necessary to ensure compliance with the terms and conditions of this franchise Ordinance and other pertinent provisions of law, the cost thereof to be paid solely by CNG, but no action or inaction by the City shall create any duty or obligation by the City to inspect, test or approve any installation, construction, alteration or maintenance work performed by CNG. In addition, at the time any permit is issued by the City for any installation, construction, alteration or maintenance work performed by CNG, the City may require CNG to furnish certification from a qualified independent engineer that CNG's facilities are constructed in accordance with good engineering practice and are reasonably protected from damage and injury 4.11 After -Acquired Facilities. CNG expressly acknowledges and agrees, by acceptance of this franchise Ordinance, that any natural gas transmission/distribution facilities located within City streets or rights-of-way which are subsequently acquired by CNG or upon addition or annexation to the City of any area in which CNG retains or acquires any such facilities (if acquired prior to this original franchise grant) and which would have been subject to this franchise Ordinance and the permitting authority related thereto shall immediately be subject to the provisions of this franchise Ordinance and all permits related thereto. 4.12 Information. CNG hereby promises to maintain and supply to the City, at CNG's sole expense, any information requested by the City to coordinate municipal functions with CNG's activities within City streets and rights-of-way CNG shall provide such information, upon request, either in hard copy and/or electronic format compatible with the City's data base system, as now or hereafter existing, including the City's geographic information service (GIS) data base SECTION 5 - CUSTOMER SERVICE POLICIES 5.1 City Reservation of Rights. The City reserves the right to enforce any and all customer service and consumer protection standards at any time that such standards are established by state or federal law or regulation as applicable to natural gas transmission/distribution system/facility(ies) operations should such right be granted to the City by such state or federal law or regulation. 5.2 Response to Customers. CNG shall promptly respond to all requests from customers of the natural gas transmission/distribution system/facility(ies) for service, repair, installation, information or any other such reasonable and appropriate requests and shall render effective service, make repairs promptly and interrupt service only for good cause and for the shortest time possible as required by state and/or federal law or regulation CNG shall promptly respond to complaints from customers of the natural gas transmission/distribution system/facility(ies) and shall attempt to promptly resolve such complaints as required by state and/or federal law or regulation. 5.3 City Franchise Contact Identified. CNG shall provide all appropriate and pertinent contact information for the person identified by the City as responsible for handling questions and complaints for the City regarding CNG's operation in City streets and rights-of- way to any and all customers of the natural gas transmission/distribution system/facility(ies) and any interested persons. Said information shall be provided to such customers in a format acceptable to the City. 16 5.4 Complaints. CNG hereby acknowledges the City's interest in the prompt resolution of all complaints made to the City regarding CNG's operation in City streets and rights-of-way and CNG shall work in close cooperation with the City to resolve such complaints SECTION 6 - COMPENSATION AND FINANCIAL PROVISIONS 6.1 Taxes and Fees. 6.1.1 City Occupation Tax on Utilities. A. CNG hereby stipulates that all of its business activities in the City as identified in this franchise Ordinance are taxable activities subject to the rate imposed under the City's occupation taxes on utilities, adopted in Yakima Municipal Code Section 5.50.050. Therefore, throughout the term of this franchise Ordinance, all CNG business activities within the City are taxable activities, subject to the rate imposed under the City's occupation taxes on utilities as adopted in Yakima Municipal Code Section 5.50 050. B. CNG and the City understand that RCW 35.21.860, as of the effective date of this franchise Ordinance, prohibits imposition of a municipal franchise fee applicable to revenues from natural gas transmission/distribution business activities CNG agrees that if this statutory prohibition is removed, and the City obtains authority from the State to impose a municipal franchise fee applicable to revenue from natural gas transmission/distribution business activities, and if the City imposes such a fee on all other entities engaged in natural gas transmission/distribution activities within the City, then CNG's business activities will be subject to a franchise fee. C. CNG and the City further understand and agree that RCW 35 21.870, as of the effective date of this franchise Ordinance, limits the rate of City tax upon natural gas transmission/distribution business activities to six percent (6%), unless a higher rate is approved by a vote of the people. However, CNG and the City agree that nothing in this franchise Ordinance shall limit the City's power of taxation, as may now or hereafter exist. 6.1.2 Other Fees. A. CNG shall pay the City all reasonable costs of granting, enforcing or reviewing the provisions of this franchise Ordinance as ordered by the City manager or designee, whether as a result of accrued in-house staff time or out-of-pocket expenses or administrative costs, provided that the payment of said costs by CNG shall be required only in the event that CNG is found to be in violation of the terms and provisions of this franchise Ordinance Notwithstanding the foregoing, CNG shall pay the City all costs and municipal fees related to receiving and approving permits, licenses or other required approvals, inspecting plans and construction, or relating to the preparation of a detailed statement pursuant to RCW 43.21 C B Upon request of CNG, the City will submit proof of any charges or expenses incurred as defined in Section 6.1.2, A of this franchise Ordinance. Said charges or expenses shall be paid by CNG no later than thirty (30) days after CNG's receipt of the City's billing thereof 17 C CNG shall pay all other taxes and fees applicable to its operations and activities within the City, all such obligations also being a condition of this franchise. Such payments shall not be deemed franchise fees or payments in lieu thereof. 6.2 Payments. A. CNG shall make all required payments in the form, intervals and manner requested by the City director of budget and finance and shall furnish the City any and all information related to the City's revenue collection functions reasonably requested. B. As provided for in Section 5 50 090 of the Yakima Municipal Code, City occupation tax on utilities payments shall be transmitted by CNG monthly to the City of Yakima. Said payments shall be received by the City no later than the 25th of each month for the preceding calendar month. Not later than the date of each payment, CNG shall file with the City a written statement signed by the chief financial officer, or his/her designee, of CNG which identifies in detail the sources and amounts of gross revenue earned by CNG during the month for which payment is made, in accordance with Section 7.1 of this franchise Ordinance, and any additional information as required by Chapter 5 50 of the Yakima Municipal Code No acceptance of any payment by the City shall be construed as an accord that the amount paid is, in fact, the correct amount, nor shall such acceptance of payment be construed as a release of any claim which the City may have for further or additional sums payable under the provisions of this franchise Ordinance. C Neither current nor previously paid utility taxes may be subtracted from the gross revenue amount upon which utility tax payments are calculated and due for any period. Nor shall any license fee(s) paid by CNG be subtracted for purposes of calculating utility tax payments. D. Any utility taxes owing pursuant to this franchise Ordinance which remain unpaid for more than ten (10) days after the dates specified herein shall be delinquent and shall thereafter accrue interest at twelve percent (12%) per annum or two percent (2%) above prime lending rate as quoted by major Seattle banks, whichever is greater. 6.3 Financial Records. A. CNG shall manage all of its operations in accordance with a policy of keeping books and records open and accessible to the City. The City shall have the right, as necessary or desirable for effectively administering and enforcing this franchise Ordinance, to inspect at any time during normal business hours upon thirty (30) days prior written notice, all books, records, maps, plans, financial statements, service complaint logs, performance test results, records required to be kept by CNG and/or any parent company of CNG pursuant to the rules and regulations of the WUTC and other regulatory agencies, and other like materials CNG and/or any parent company of CNG which directly relate to the operation of this franchise Ordinance. B Access to the aforementioned records referenced in Section 6 3.A shall not be denied by CNG to representatives of the City on the basis that said records contain "proprietary" information. However, to the extent allowed by Washington law, 18 the City shall protect the trade secrets and other confidential information of CNG and/or any parent company of CNG. C CNG hereby agrees to meet with a representative of the City upon request to review its methodology of record keeping, financial reporting, computing utility tax payments and other procedures, the understanding of which the City deems necessary for understanding the meaning of such reports and records. D The City agrees to request access to only those books and records, in exercising its rights under this franchise Ordinance, which it deems reasonably necessary for the enforcement and administration of this franchise Ordinance. 6.4 Auditing. A. The City or its authorized agent may at any time conduct an independent audit of the revenues of CNG in order to verify the accuracy of utility tax payments made to the City. CNG and each parent company of CNG shall cooperate fully in the conduct of such audit. In case of audit, the City director of budget and finance may require CNG to furnish a verified statement of compliance with CNG's obligations or in response to any questions. Said certificate may be required from an independent certified public accountant at CNG's sole expense All audits will take place on CNG's premises or at offices furnished by CNG, which shall be a location within the City of Yakima. CNG agrees, upon request of the City director of budget and finance, to provide copies of all documents filed with any federal, state or local regulatory agency, to mail to the City on the same day as filed, postage prepaid, affecting any of CNG's facilities or business operations in City. B. In the event it is determined, as a result of an audit conducted by the City or its authorized agent, that CNG has underpaid City utility taxes by five percent (5%) or more than was due the City for any given period, then CNG shall reimburse the City for the entire cost of such audit and any back utility taxes with interest accrued at twelve percent (12%) per annum or two percent (2%) above prime lending rate as quoted by major Seattle banks, whichever is greater, within thirty (30) days of the completion and acceptance of the audit by the City. 6.5 Insurance. 6.5.1 Coverages. CNG shall maintain, throughout the term of this franchise Ordinance, liability insurance insuring CNG, its officers, employees and agents, with regard to all claims and damages specified in Section 6 5 herein, in the minimum amounts as follows: A. Commercial Liability Insurance. On or before the date this franchise Ordinance is fully executed by the parties, CNG shall provide the City with a certificate of insurance as proof of commercial liability insurance with a minimum liability limit of One Million Dollars ($1,000,000) combined single limit bodily injury and property damage. This coverage will have a per job aggregate endorsement and Washington stop gap coverage Said certificate of insurance shall clearly state who the provider is, the amount of coverage, the policy number, and when the policy and provisions provided are in effect. Said policy shall be in effect for the duration of this franchise Ordinance. The policy shall name the City, its elected and appointed officials, officers, 19 agents and employees as additional insureds, and shall contain a clause that the insurer will not cancel or change the insurance without first giving the City thirty (30) calendar days prior written notice (any language in the clause to the effect of "but failure to mail such notice shall impose no obligation or liability of any kind upon the company" shall be crossed out and initialed by the insurance agent). The insurance shall be with an insurance company or companies rated A -VII or higher in Best's Guide and admitted in the State of Washington. If CNG uses any contractors and/or subcontractors to perform any of the work referenced in this franchise Ordinance, such contractors and/or subcontractors shall maintain the same minimum limits of liability and comply with all other provisions discussed above in this subsection entitled "Commercial Liability Insurance " B. Commercial Automobile Liability Insurance. On or before the date this franchise Ordinance is fully executed by the parties, CNG shall provide the City with a certificate of insurance as proof of commercial automobile liability insurance with a minimum liability limit of One Million Dollars ($1,000,000) combined single limit bodily injury and property damage Said certificate of insurance shall clearly state who the provider is, the amount of coverage, the policy number, and when the policy and provisions provided are in effect. Said policy shall be in effect for the duration of this franchise Ordinance. The policy shall name the City, its elected and appointed officials, officers, agents and employees as additional insureds, and shall contain a clause that the insurer will not cancel or change the insurance without first giving the City thirty (30) calendar days prior written notice (any language in the clause to the effect of "but failure to mail such notice shall impose no obligation or liability of any kind upon the company" shall be crossed out and initialed by the insurance agent). The insurance shall be with an insurance company or companies rated A -VII or higher in Best's Guide and admitted in the State of Washington If CNG uses any contractors and/or subcontractors to perform any of the work referenced in this franchise Ordinance, such contractors and/or subcontractors shall maintain the same minimum limits of liability and comply with all other provisions discussed above in this subsection entitled "Commercial Automobile Liability Insurance." C. Umbrella Liability Insurance. CNG, and its contractors and/or subcontractors (as described below), shall maintain umbrella liability insurance coverage, in an occurrence form, over underlying commercial liability and automobile liability. On or before the date this franchise Ordinance is fully executed by the parties, CNG shall provide the City with a certificate of insurance as proof of umbrella coverage with a minimum liability limit of Fifteen Million Dollars ($15,000,000). CNG's contractors and/or subcontractors operating directly on the natural gas transmission/distribution system shall maintain a minimum umbrella liability limit of insurance of Five Million Dollars ($5,000,000) The insurance shall be with an insurance company or companies rated A -VII or higher in Best's Guide and admitted in the State of Washington Providing coverage in the amounts as set forth above shall not be construed to relieve CNG from liability in excess of those limits. 6.5.2 Proof of Insurance. CNG shall file with the City copies of all certificates of insurance showing up-to-date coverages and additional insured coverages as set forth above. 20 6.5.3 Alteration of Insurance. Insurance coverages, as required by this franchise Ordinance, shall not be changed, cancelled or otherwise altered without approval of the City. CNG shall provide the City no less than thirty (30) days prior written notice of any such proposed change, cancellation or other alteration. The City may, at its option, review all insurance coverages. If it is determined by the City that circumstances require and that it is reasonable and necessary to increase insurance coverage and liability limits above such coverage and limits as are set forth in this franchise Ordinance, in order to adequately cover the risks of the City, CNG and CNG's officers, agents and employees, the City may require additional insurance to be acquired by CNG Should the City exercise its right to require additional insurance, the City will provide CNG with thirty (30) days prior written notice. If CNG does not believe that the requested amount of the additional insurance is reasonably necessary, then CNG has the right to terminate the franchise if the City continues to require such additional insurance coverage. 6.5.4 Failure to Procure. CNG acknowledges and agrees, by acceptance of this franchise Ordinance, that failure to procure and maintain the insurance coverages as detailed in Section 6.5.1 of this franchise Ordinance shall constitute a material breach of this franchise Ordinance, as provided for in Section 2 9, B, 3 of this franchise Ordinance. In the event of such failure to procure and maintain the referenced insurance coverages, the City may immediately suspend CNG's operations under this franchise Ordinance, terminate or otherwise revoke this franchise Ordinance and/or, at its discretion, procure or renew such insurance in order to protect the City's interests and be reimbursed by CNG for all premiums in connection therewith 6.6 Indemnity, No Estoppel, No Duty. A. CNG shall, at its sole expense, protect, defend, indemnify and hold harmless the City, its elected officials, and in their capacity as such, the officials, agents, officers and employees of the City from any and all claims, lawsuits, demands, actions, accidents, damages, losses, liens, liabilities, penalties, fines, judgments, awards, costs and expenses arising directly or indirectly from or out of, relating to or in any way connected with the performance or non-performance, by reason of any intentional or negligent act, occurrence or omission of CNG, whether singularly or jointly with others, its representatives, permittees, employees, contractors or subcontractors, whether or not such acts or omissions were authorized or contemplated by this franchise Ordinance or applicable law, including by not limited to the construction, installation, maintenance, alteration or modification of the natural gas transmission/distribution system/facility(ies); arising from actual or alleged injury to persons or property, including the loss of use of property due to an occurrence, whether or not such property is physically damaged or destroyed; arising out of or alleged to arise out of CNG's failure to comply with any and all provisions of any statute, regulation or resolution of the United States, State of Washington or any local agency applicable to CNG and its business. Nothing herein shall be deemed to prevent the parties indemnified and held harmless herein from participating in the defense of any litigation by their own counsel at such parties' expense. Such participation shall not under any circumstances relieve CNG from its duty of defense against liability or of paying any judgment entered against such party. Notwithstanding any provision of this Section to the contrary, CNG shall not be obligated to indemnify, defend or hold the City harmless to the extent any claim, demand, lien, damage or liability arises out of or in connection with negligent acts or omissions of the City. 21 B Whenever any judgment is recovered against the City or any other indemnitee for any such liability, costs, or expenses, such judgment shall be conclusive against CNG, not only as to the amount of such damage, but as to its liability, provided CNG has reasonable notice from the City of the pendency of such suit and of the City's intention to claim indemnity hereunder Under such circumstances, CNG may also request the opportunity to defend or participate in the suit with legal counsel of its choice, at its expense, said request not to be unreasonably denied. C. No action, error or omission, or failure to act by the City, its agents, officers, officials or employees, in connection with administering its rights, duties or regulatory functions related to this franchise Ordinance shall be asserted by CNG, directly, indirectly or by way of seeking indemnification or as an assertion that the City has waived or is estopped to assert any municipal right hereunder, against the City, its boards, departments, divisions, officers, officials or employees. D. It is not the intent of this franchise Ordinance to acknowledge, create, imply or expand any duty or liability of the City with respect to its role as a franchising authority, in the exercise of its police powers or for any other purpose Any City duty nonetheless deemed created shall be a duty to the general public and not to any specific party, group or entity. SECTION 7 — REPORTING REQUIREMENTS All reports required under Section 7 of this franchise Ordinance may be requested by the City to be provided by CNG in hard copy and/or electronic format compatible with City databases, including, but not limited to, the GIS system. 7.1 Monthly Reports. As provided for in Section 5.50.090 of the Yakima Municipal Code, within twenty-five (25) calendar days after the end of the previous month, CNG shall submit to the City a completed form reporting any and all revenues for the previous month. Said reports shall be verified by the chief financial officer, or his/her designee, of CNG. Said reports shall contain an accurate statement in summarized form, as well as in detail, of CNG's revenues and the computation basis and method utilized for the -purpose of calculating any and all taxes imposed by the City. These reports shall be in a form reasonably required by the City. The City may, from time to time, make such reasonable amendments to the forms as are required to ensure that all revenues are reported clearly and accurately 7.2 Annual Reports. Not later than ninety (90) days following the end of CNG's fiscal year, and/or as required by the Securities and Exchange Commission (SEC) and/or by state regulations, CNG shall present, at its sole expense, a written report to the City which shall include: A. A full and complete set of CNG's audited financial statements for the previous year B. The names and business postal addresses, telephone numbers and, where applicable, the electronic mail addresses of the local manager and engineer of the natural gas transmission/distribution system/facility(ies). 22 7.3 Monitoring and Compliance Reports. Only upon request of the City, but no more than once per year, CNG shall provide a written report of any and all technical performance tests for the natural gas transmission/distribution system/facility(ies) required by the WUTC or any other governmental agency having jurisdiction over the natural gas transmission/distribution system/facility(ies) 7.4 Additional Reports. CNG shall prepare and furnish to the City or any other entity exercising lawful regulatory authority in connection with this franchise Ordinance, at the times and in the form prescribed by the City or such other regulatory entity, such additional reports with respect to CNG's operations, affairs, transactions or property, as may be reasonably necessary and appropriate to the performance of the rights, functions or duties of the City or such other regulatory entity in connection with this franchise Ordinance. 7.5 Communication with Regulatory Agencies. CNG shall simultaneously file with the City a copy of each petition, application and tariff related to the natural gas transmission/distribution system/facility(ies) transmitted by CNG to, or received by CNG from, any federal, state or other regulatory commissions or agencies having competent jurisdiction to regulate the construction or operation of the natural gas transmission/distribution system/facility(ies), including, specifically, the WUTC In addition, CNG and its affiliates shall within ten (10) days of any communication transmitted by CNG to, or received by CNG from, any judicial or regulatory agency regarding any alleged or actual violation of a law, regulation or other requirement related to the natural gas transmission/distribution system/facility(ies), provide the City a copy of the communication, whether specifically requested by the City to do so or not. 7.6 Preservation of Confidential Information. The City shall protect information provided to the City by CNG designated as confidential or proprietary by CNG, given such information had been so designated at the time it was provided to the City, to the maximum extent permissible under Chapter 42.17 RCW, or as provided by other state law as it may now or hereafter exist. SECTION 8 — REMEDIES AND PROCEDURE FOR REMEDYING FRANCHISE VIOLATIONS 8.1 Remedies for Franchise Violations. A. In addition to the remedies set forth elsewhere in this franchise Ordinance, the City shall have the right to assert any or all of the following remedies in the event CNG violates or defaults on, as determined by the City, any provision of this franchise Ordinance (1) Drawing upon or foreclosing all or any part of any security provided under this franchise Ordinance; PROVIDED, however, such drawing or foreclosure shall be only in such a manner and in such amount as the City reasonably determines is necessary to remedy the violation or default. Should the City take such action as described herein, CNG shall be responsible for all direct and actual costs related to such action, including, but not limited to, legal and administrative costs incurred by the City; (2) Commence an action at law for monetary damages or seek other equitable relief; 23 (3) In the case of substantial violation or default, as determined by the City, of a material provision of this franchise Ordinance, declare this franchise to be revoked, (4) Seek specific performance of any provision of this franchise Ordinance, which reasonably lends itself to such remedy, as an alternative to seeking damages. B In determining which remedy or remedies, as set forth herein, are appropriate, the City shall take into consideration the nature and extent of the violation or default, the remedy needed to prevent such violations or defaults from occurring in the future, whether CNG has a history of previous violations of the same or similar kind and such other considerations as are appropriate under the circumstances. 8.2 Procedure for Remedying Franchise Violations. 8.2.1 Notice of Violation. In the event the City determines CNG has not complied with any term or condition of this franchise Ordinance, the City shall notify CNG of the exact nature of the alleged noncompliance. 8.2.2 CNG's Right to Cure or Respond. CNG shall have thirty (30) days from receipt of notice by the City of any alleged noncompliance with any term or condition of this franchise Ordinance to: (1) Respond to the City contesting the assertion of noncompliance; or (2) Cure such violation or default or, in the event that by the nature of the violation or default such violation or default cannot be cured within a thirty (30) day period, initiate reasonable steps to remedy such violation or default and notify the City of the steps being taken and the projected date such remedy will be completed. 8.2.3 Public Hearing. In the event CNG fails to respond to a notice, as described herein, or in the event CNG fails to cure such violation or default pursuant to the procedures set forth herein, the City shall schedule a public hearing to investigate any alleged violation or default. The City shall provide CNG twenty (20) calendar days notice of the time and place of such hearing and provide CNG an opportunity to be heard at such hearing. 8.3 Enforcement. In the event the City, after such hearing as described in subsection 8 2.3 of this franchise Ordinance has been conducted, upholds its determination that CNG has violated or defaulted on any provision of this franchise Ordinance, the City may impose any of the remedies set out in Section 8.1, A of this franchise Ordinance. 8.4 Failure to Enforce. CNG shall not be relieved of any of its obligations to comply promptly with any provision of this franchise Ordinance by reason of any failure of the City to enforce prompt compliance, and the City's failure to enforce shall not constitute a waiver of rights or acquiescence in CNG's conduct. 24 8.5 Acts of Nature. CNG shall not be held in violation, default or noncompliance with the provisions of this franchise Ordinance, nor suffer any enforcement or penalty related thereto, where such violation, default or noncompliance is caused by acts of nature, power outages or other events reasonably beyond its ability to control. However, CNG shall take all reasonable steps necessary to provide service despite such occurrences 8.6 Alternative Remedies. Nothing in this franchise Ordinance shall be deemed to bar the right of the City or CNG to seek or obtain judicial relief from any violation of this franchise Ordinance or any rule, regulation, requirement or directive promulgated thereunder. Neither the existence of other remedies identified in this franchise Ordinance nor the exercise thereof shall be deemed to bar or otherwise limit the right of the City to recover monetary damages for such violation by CNG, or to seek and obtain judicial enforcement of CNG's obligations under this franchise Ordinance by means of specific performance, injunctive relief or mandate, or any other judicial remedy at law or in equity. SECTION 9 — MISCELLANEOUS PROVISIONS 9.1 Posting and Publication. CNG shall assume the cost of posting and publication of this franchise Ordinance as such posting and publication is required by law, and such is payable upon CNG's filing of acceptance of this franchise Ordinance. 9.2 Service of Notice. Except as otherwise specifically provided herein, any notice required or permitted to be given under this franchise Ordinance shall be deemed sufficient if provided in writing and when (1) delivered personally to the following addressee(s) or deposited with the United States Postal Service, postage paid, certified or registered mail; (2) sent by overnight or commercial air courier; or (3) sent by facsimile transmission addressed as follows, or to such other address as the receiving party hereafter shall specify in writing Notices to the City shall be addressed to each of the following City Manager City of Yakima 129 N. Second Street Yakima, WA 98901 (509) 576-6335 (fax) Director of Utilities & Engineering City of Yakima 129 N Second Street Yakima, WA 98901 (509) 576-6380 (fax) Notices to CNG shall be addressed to each of the following. Cascade Natural Gas Corporation Central Region Director 200 N Union Street Kennewick, WA 99336-2212 Cascade Natural Gas Corporation Central Region Director 701 South First Avenue Yakima, WA 98902 (509) 457-8112 (fax) 9.3 Compliance with Laws. CNG shall comply with all federal and state laws and regulations, including regulations of any administrative agency thereof, as well as the general ordinances, resolutions, rules and regulations of the City, pursuant to the City's lawful authority, heretofore or hereafter adopted or established during the entire term of this franchise Ordinance. In the event any valid and superior law, rule or regulation of any governing authority or agency having jurisdiction contravenes the provisions of this franchise Ordinance subsequent to its adoption, then the provisions of this franchise Ordinance shall be superseded 25 only to the limited extent that the provisions hereof are in conflict and contrary to any such law, rule or regulation Nothing in this franchise Ordinance shall limit the City's right of eminent domain under state law Nothing in this franchise Ordinance shall be deemed to waive the requirements of any lawful code or resolution of the City regarding permits, fees to be paid or manner of construction. 9.4 Governing Law and Venue. This franchise Ordinance shall be governed by and construed in accordance with the laws of the State of Washington, and venue for any litigation arising out of or in connection with privileges extended herein is stipulated to be in Yakima County 9.5 Severability. If any section, subsection, sentence, clause, phrase or portion of this franchise Ordinance is for any reason declared by a court of competent jurisdiction to be void, invalid or unenforceable, such portion shall be deemed a separate, distinct and independent provision and such declaration shall not affect the validity of the remaining portions thereof In such event, the City and CNG shall negotiate in good faith to modify this franchise Ordinance as may be necessary to meet the requirements of the law and/or to effectuate the intention of this franchise Ordinance. In the event that such modifications are barred by any legal requirements governing any party, the City and CNG shall use their best efforts to otherwise avoid prejudice to the respective parties' interests and to implement changes to effectuate the intent in entering into this franchise Ordinance. 9.6 Guarantee of Performance. CNG hereby agrees that it enters into this franchise Ordinance voluntarily and in order to secure and in consideration of the grant from the City of a ten (10) year franchise. Performance pursuant to the terms and conditions of this franchise is guaranteed by CNG 9.7 Force Majeure. A. For the purposes of this Section, the term "Force Majeure" shall mean acts of God, landslides, earthquakes, lightning, fires, hurricanes, volcanic activity, storms, floods, washouts, droughts, civil disturbances, acts of terrorism or of the public enemy, partial or entire failure of utilities, strikes, explosions, lockouts or other industrial disturbances, insurrections, public riots or other similar events which are not reasonably within in the control of the parties hereto. B. If CNG is wholly or partially unable to carry out its obligations under this franchise Ordinance as a result of a Force Majeure, CNG shall provide the City prompt notice of such Force Majeure, describing the same in reasonable detail, and CNG's obligations under this franchise Ordinance, other than for payment of moneys due, shall not be deemed in violation or default for the duration of the Force Majeure. CNG agrees to use its best efforts to remedy as soon as possible, under the circumstances, CNG's inability, by reason of Force Majeure, to carry out its responsibilities and duties under this franchise Ordinance. 9.8 Consent. Wherever the consent or approval of either CNG or the City is specifically required in this franchise Ordinance, such consent or approval shall not be unreasonably withheld. 9.9 No Third Party Beneficiaries. There shall be no third party beneficiaries of this franchise Ordinance. 26 9.10 Franchise Ordinance Acceptance. CNG shall execute and return to the City, within fifteen (15) days after passage of the franchise Ordinance by the City Council, three (3) original franchise Ordinances, by which CNG acknowledges that it has carefully read the terms and conditions of the franchise Ordinance and accepts all of the terms and conditions of the franchise Ordinance and this franchise and agrees to abide by the same In accepting this franchise Ordinance, CNG shall indicate that it has relied upon its own investigation of all relevant facts, that it has had the assistance of counsel, that it was not induced to accept this franchise Ordinance, that the franchise Ordinance represents the entire agreement between CNG and the City and that CNG accepts all reasonable risks related to the interpretation of the franchise Ordinance and this franchise The executed franchise Ordinances shall be returned to the City accompanied by evidence of insurance as required in Sections 6 5 1 and 6 5 2 of this franchise Ordinance. In the event CNG fails to submit a franchise Ordinance as provided for herein, or fails to provide the required accompanying documents, this franchise Ordinance shall be null and void. 9.11 Previous Rights Abandoned. This franchise Ordinance supersedes any and all other rights, privileges, powers, immunities and authorities owned, possessed, controlled or exercisable by CNG pursuant to any previous franchise in the City 9.12 Effective Date. This franchise Ordinance shall become effective on November 17, 2015, provided that this franchise and franchise Ordinance shall be null and void and shall have no effect whatsoever unless CNG shall, within fifteen (15) days of the date the City Council passes the franchise Ordinance, file with the City Clerk a written acceptance thereof pursuant to Section 9.10 of this franchise Ordinance. 2015. Attest: PASSED BY THE CITY COUNCIL, signed and approved this 15th day of September, Sonya Claa ..tee, City Clerk Publication Date. September 18, 2 Effective Date. November 17, 2015 27 Micah Cawley,((Vlayor ACCEPTED AND APPROVED by CASCADE NATURAL GAS CORPORATION this day of 164460-- , 2015. State of V' (w\c County )ss CASCADE NATURAL GAS CORPORATION By. nt Name: LtC. ��S fid Its: VP- Pisl 1 hereby certify that I know or have satisfactory evidence thatlrAc 1"1 nri-uScA I t is the person who appeared before me, and said person acknowledged that he/she signed this instrument, and on oath stated that he/she was authorized to execute the instrument ,on behalf of Cascade Natural Gas Corporation, and acknowledged it as the etf-kei of Cascade Natural Gas Corporation, to be the free and voluntary act of such party for the uses and purposes mentioned in this instrument. Dated this 1. k day of """ifi' l-ernbVV , 2015. WENDY MCDONOUGH Notary Public State of Washington My Commission Expires December 06, 201 7 Print Name*' 3enAAA Moc'ou L`� NOTARY PUBLIC in and for the Stat&of , residing at 8113 \t . 6randrOr &uc1 ko n npw6i< , 28 ITEM TITLE: SUBMITTED BY: SUMMARY EXPLANATION: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 12. For Meeting of: September 15, 2015 Ordinance granting a non-exclusive franchise to Cascade Natural Gas Corporation ("CNG") to construct, operate and maintain a natural gas transmission/distribution system and facilities within the City of Yakima Debbie Cook, Director of Utilities & Engineering Randy Beehler, Communications & Public Affairs Director Helen A. Harvey, Senior Assistant City Attorney Cascade Natural Gas Corporation has operated in the City of Yakima for many decades. The current franchise Ordinance No. 2005-51 with Cascade Natural Gas Corporation is a ten year franchise and the term ends during November 2015. This ordinance is being presented to the City Council following negotiation with Cascade Natural Gas Corporation ("CNG") regarding the franchise. The ordinance is the franchise itself. RCW 35.21.860 does not allow a city to impose a franchise fee on a natural gas business. Pursuant to YMC 5.50.050, CNG pays a utility tax to the City of six percent of gross revenue derived from its business in the City. The franchise is for a period of ten years, with an option to extend the franchise for up to two additional five year periods if the extensions are approved by the City Council at a business meeting and executed by CNG. Resolution: Ordinance: X Other (Specify): Franchise Ordinance Contract: Contract Term: 10 years with option to extend Start Date: 11/17/2015 End Date: 11/17/2025 Item Budgeted: NA Amount: Funding Source/Fiscal Impact: Strategic Priority: Public Trust and Accountability Insurance Required? Yes Mail to: Mike Clapp, Cascade Natural Gas Company, 200 N. Union Street, Kennewick, WA 99336-2212 Phone: (509) 736-5543 APPROVED FOR SUBMITTAL: RECOMMENDATION: City Manager Staff recommends the City Council to pass ordinance ATTACHMENTS: Description Ordinance - Cascade Natural Gas Corporation Franchise d Upload Date Type 9/8/2015 Ordinance