Agenda

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Finance Committee

Meeting Date:	09/12/2023
FROM:	Bill Gallardo

Subject:

Waive Full Reading and Introduce Ordinance No. 1244 An Ordinance of the City of Brea Extending the Term of a Pipeline Franchise Granted to Crimson California Pipeline, L.P. and Approve CEQA Exemption Determination

RECOMMENDATION

Waive full reading and introduce Ordinance No. 1244 by title only, and approve a CEQA exemption determination;
Appropriate any revenues received as part of this franchise in the Fiscal Year 2023-2025 Operating Budget; and
Authorize City Clerk to release the current faithful performance bond upon acceptance of the new faithful performance bond once notification is received from the Public Works Department.

BACKGROUND/DISCUSSION

Crimson California Pipeline, L.P. (Crimson) submitted an application requesting that a previously granted pipeline franchise under Ordinance No. 1159 be extended to continue operating and maintaining an existing petroleum pipelines in the City. The California Public Utilities Code (CPUC) and Brea City Code (BCC) require any person, firm, or corporation utilizing City property to convey petroleum or similar products to have a valid franchise with the City of Brea.

With consultation from the City Attorney’s office, staff has determined that Crimson’s application is for the extension of an existing pipeline franchise and not to construct, build, and operate an entirely new pipeline within the City. Therefore, the City Council is not required to adopt a Resolution of Intent to Grant or conduct a Public Hearing and can introduce the draft Ordinance for first reading.

The extension of this pipeline franchise is exempt from the California Environmental Quality Act of 1970 (CEQA) under Section 15301 (“Existing Facilities”) of the CEQA Guidelines, and this Categorical Exemption has been incorporated by reference in the draft Ordinance.

The City is currently holding a $100,000 faithful performance bond from Crimson that will need to be released after the second reading and final adoption of the draft Ordinance by the City Council. At that time, Crimson will submit a new $100,000 faithful performance bond, referencing the new Ordinance No. 1244.

Staff recommends waiving the second reading of the draft Ordinance at the next regularly scheduled City Council meeting. If the draft Ordinance is adopted at that time, then both the Ordinance and franchise would become effective 30 days later. The term of the franchise would be for ten years. Crimson would be the franchisee for 9,317 linear feet of 8-inch diameter and 2,725 linear feet of 6-inch diameter common carrier pipelines along South Palm Street, West Central Avenue, North Berry Street, and Site Drive. Attached is a map (Exhibit “A”) depicting the locations of Crimson pipelines in the City.

SUMMARY/FISCAL IMPACT

The California Public Utilities Commission regulates pipeline activity and establishes the rates charged for pipeline franchises. The annual payments are based on a formula associated with the internal diameter and length of the pipelines subject to annual Consumer Price Index adjustments. The franchise fees for the pipelines depicted in Exhibit “A” have been paid through 2023 under Ordinance No. 1159. If the draft ordinance is adopted, the annual franchise fee is estimated at $2,100 for Fiscal Year 2023-2024. Therefore, there will be a positive fiscal impact to the General Fund.

Crimson California Pipeline, L.P. has submitted an application requesting that a previous pipeline franchise be extended in order to operate and maintain the existing petroleum pipelines in the City of Brea. Staff, with consultation from the City Attorney’s Office, has determined that Crimson’s application is an extension of an existing pipeline franchise and does not constitute the granting of a new franchise. Therefore, the City Council is not required to adopt a Resolution of Intent to Grant or conduct a Public Hearing, and can introduce the draft Ordinance for first reading. The pipeline franchise has been determined to be exempt from CEQA requirements pursuant to Section 15301 of CEQA guidelines. Upon final adoption of the draft Ordinance by the City Council, the current $100,000 faithful performance bond will need to be released and a new bond will be submitted by Crimson. Furthermore, staff is recommending the second reading be waived for the adoption of the draft Ordinance at the next regularly scheduled City Council meeting.

RESPECTFULLY SUBMITTED

William Gallardo, City Manager
Prepared by: Matthew Cuevas, Senior Management Analyst
Concurrence: Michael Ho, Director of Public Works

Attachments
Draft Ordinance
Exhibit "A" Pipeline Location Map