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JUl 2 5 1989
CA:RMM:kp91jhpadv
City council Meeting 7-25-89
Santa Monica, California
STAFF REPORT
TO:
Mayor and City Council
FROM:
city Attorney
Resolution Declaring the Intention of the City
council to Enter Into a Franchise Agreement with
Shell California Pipeline Company for an
Existing Pipeline
SUBJECT:
The accompanying Resolution of Intention schedules a public
hearing for September 12, 1989, regarding the granting of a
franchise to Shell California Pipeline Company (hereinafter
"Shell") for the purposes and under the terms and conditions
described in the attached franchise agreement for an existing
pipeline.
The principal points of the franchise agreement are as
follows:
a. 20 year franchise.
b. The annual franchise fee is $12,000.00 adjusted
annually by increases in the Producer Price Index for All
Commodities.
c. Shell has an option to extend the franchise for an
additional 20-year term, subject to negotiations on a "reasonable
fee."
d. Shell shall maintain $50,000,000.00 in liability
insurance. This is a substantial increase from the $5,000,000.00
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required by the Interim Agreement under which Shell has been
operating. The franchise which expired in 1981 required no
liability insurance.
e. Shell agrees to comply with all safety requirements
of federal and state law.
f.
Shell may only use the pipeline
for the
transportation of petroleum as defined in Shellts public
utilities Commission Tarriff No. 1 effective September 16, 1988.
This definition does not include refined gasoline. The expired
franchise allowed the tranportation of Upetroleum, oil, and
liquid hydrocarbon products thereof, and gas, U which could have
included refined gasoline.
These terms are advantagous to the ci ty considering the
pending condemnation action instituted by Shell.
Were such
action successfully completed, Shell would be granted a fee
interest in the easement, and the city would be without authority
to negotiate any of the above conditions. If Shell held a fee
interest rather than a franchise, Shell could change the product
transported from crude oil to refined gasoline, without the
City's approval.
RECOMMENDATION
It is respectfully recommended that the city Council adopt
the accompanying resolution.
PREPARED BY: Robert M. Myers, city Attorney
Mary H. Strobel, Deputy city Attorney
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BEFORE DISTRIBUTION ~K CONTENT OF ALL
DISTRIBUTION OF RESOLUTION # 71 ~~V
Council Meeting Date' ~~ /1 ,
C-p
FOR CIT~ERK'S ACTION
ORDINANCE :#
Introduced:
VOTE: Affirmative:
Negat~ve:
Abstain:
Absent:
PROOF VOTES WITH ANOTHER PERSON BEFORE ANYTHING
DISTRIBUTION: ORIGINAL to he signed, sealed and filed in Vault.
(yo-
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Adopted:
ALWAYS PUBLISH ADOPTED ORDINANCES
Cross out Attorney's approval
Agenda Item #
--Was it: amended?
NEWSPAPER PUBLICATION (Date: )
D~partment originating staff report ( Laurie Lieberman)
Ordinances only for Attorney ( Claud~a Thompson) 2
Management Services Lynne Barrette ORDINANCES ONLY 1
Agency mentioned in document or staff report
(cert:tfied?)
Subject file (agenda packet} 1
Counter file 1
Others: (Review for departments who need to know) .
Airport Parking Auth.
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Auditorium Personnel
Building Dept.
ClEO
Finance
General Servo
Library
Manager I
Fire
Planning
Police
Purchasing
Recr/Parks
Transportation
Treasurer
SEND FOUR COPIES OF
CODED SYSTEMS
120 Main Street
Avon, New Jersey
ALL ORDINA~~
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07717
SEND FOUR COPIES OF ALL ORDINANCES TO: 4
Debra Myrick
Santa Monica Municipal Court
1725 Main Street, Room 118
Santa Monica, CA 90401 Total Copies
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CA:RMM:kp91jhpadv
City Council Meeting 7-25-89 Santa Monica, California
RESOLUTION NUMBER 7855 (CCS)
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SANTA MONICA DECLARING ITS INTENTION TO
GRANT A FRANCHISE TO SHELL CALIFORNIA PIPELINE COMPANY
FOR AN EXISTING PIPELINE
THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE
AS FOLLOWS:
SECTION 1. Pursuant to City Charter Section 1601, the City
Council does hereby give notice of its intention to grant a
franchise to Shell California Pipeline Company for purposes of
transporting petroleum by pipeline under certain City streets.
The terms and conditions of the franchise are set forth in the
proposed franchise agreement contained in Exhibit A, which is
incorporated herein by reference.
SECTION 2. At the regularly scheduled City Council meeting
on August 22, 1989, at 7:30 p.m., in the City Council Chambers,
located at 1685 Main Street, any persons having any interest
therein or any person having an Objection to the granting thereof
may appear before the Ci ty Council and be heard thereon. In
addition, the City Council will confirm certification of the
Final Environmental Impact Report entitled "Proposed Easement
Franchise Renewal Shell Oil Company Ventura-Wilmington Pipeline."
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SECTION 3. The city Clerk is directed to publish this
Resolution in the official newspaper at least once within fifteen
(15) days of the passage hereof in the manner required by City
Charter Section 1601.
SECTION 4. The City Clerk shall certify to the adoption of
this Resolution, and thenceforth and thereafter the same shall be
in full force and effect.
APPROVED AS TO FORM:
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ROBERT M. MYERS
City Attorney
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Adopted and approved this 25th day of July, 1989.
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l}J yyor
I hereby certify that the foregoing Resolution No. 7855(CCS)
was duly adopted by the City council of the city of Santa Monica
at a meeting thereof held on July 25, 1989 by the following
council vote:
Ayes: Councilmembers: Abdo, Finkel, Genser, Jennings,
Katz, Reed, Mayor Zane
Noes: Councilmembers: None
Abstain: Councilmembers: None
Absent: Councilmembers: None
ATTEST:
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City Clerk j/
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EXHIBIT A
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ORDINANCE NUMBER
AN ORDINANCE OF THE CITY OF SANTA MONICA GRANTING
A FRANCHISE TO SHELL CALIFORNIA PIPELINE COMPANY
TO OPERATE, MAINTAIN, INSPECT, REPAIR, REMOVE, REPLACE
AND ABANDON A PIPELINE AND APPURTENANT FACILITIES
IN CERTAIN PUBLIC STREETS OF THE CITY OF SANTA MONICA
THE CITY COUNCIL OF THE CITY OF SANTA MONICA ORDAINS AS FOLLOWS:
SECTION 1. Interpretation of Franchise.
(a) The word "Grantee" shall mean the Shell California Pipeline
Company, a Callfornia corporatlon and a pipeline corporatlon within the
meaning of Callfornia Public Utilities Code S 228, to which the franchise
is granted by this Ordinance as well as its lawful successors or assigns.
(b) The word "City" shall mean the City of Santa Monica, a
municipal corporatlon duly organized and val1dly existing under the
general laws of the State of California with corporate power to carryon
its business as it is now conducted under the statutes of the State of
California and the Charter of the City.
(c) The word "use" shall mean to operate, maintain, inspect, repair,
remove, replace and abandon a pipeline system together with all manholes,
valves, appurtenances and service connections therewith and necessary and
convenient for operation of the pipeline in, under, along and across
certaln public streets (hereinafter collectively referred to as "street"
or IIstreetsU) located in City, described as follows:
On Twenty-sixth Street from the Northwesterly boundary
of the City of Santa Monlca to Colorado Avenue; thence
on Colorado Avenue to Cloverfield Boulevard; thence on
Cloverfield Boulevard to Ocean Park Boulevard; thence
in Ocean Park Boulevard to Twenty-third Street; thence
on Twenty-third Street to Dewey Street; thence on Dewey
Street to the southeast boundary of City.
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(d) The word IIfranchiseu or IIfranchlse property" shall mean this
franchise to use a plpeline system in those streets set forth in
subsectlon (c) of this Section.
(e) The word IIpipeline>> shall mean the existing pipeline system
including all manholes, valves and appurtenances.
SECTION 2. Grant of Franchise.
The rlght, privl1ege and franchlse, subject to each and all terms
and conditions contained in this Ordinance to continue to use the pipe-
line for the use of transportlng petroleum, as defined in Granteels
Callfornia P.U.C. Tariff No.1 effective September 16, 1988, in those
streets contained in Section l(c) is hereby granted to Grantee pursuant
to Section 1600, Article XVI of the Santa Monica Municipal City Charter.
SECTION 3. Term of Franchlse.
ThlS franchise shall be for a term of 20 years from the effective
date of this franchise; however, said franchise may be sooner terminated
by voluntary surrender or abandonment by Grantee, or by forfeiture for
noncompliance with the terms and provisions hereof. Grantee shall further
have an option to,extend this franchlse for an additional 20.year term
for a reasonable fee, to be negotiated by the parties hereto prior to the
end of the initial 20 year term of this franchise. The parties shall
commence negotiations on such fee upon notification from Grantee to
City, which notice shall be given no sooner than eighteen (18) months
nor later than twelve (12) months prior to expiration of the initial
tenn.
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SECTION 4. Compensatlon to the City.
(a) Grantee shall pay to the City a fee of $12,000 per year. The
first fee shall be paid upon acceptance of the franchise and annually
thereafter on the anniversary of this franchise.
(b) The compensation provided for in Section 4(a) shall be subject
to an increase after the first year of the franchise on the anniversary
date of the franchise, and each subsequent year thereafter during the
term of this franch,se. The amount of increase shall be computed
pursuant to the Producer Price Index for All Commodities in the following
manner:
The base for computing the adJustment is the Producer Price Index
for All Commodities, published by the United States Department of
Labor, Bureau of Labor Statlstics ("Index"), which is published for
the month nearest the date of the commencement of the tenm of this
franchise ("Beglnnlng Index"). If the Index published nearest the
anniversary date ("Extension Index") has increased over the
Beginning Index, the franchise fee for the following year (until the
next adJustment) shall be set by multiplying the franch1se fee set
forth in Section 4{a) by a fraction, the numerator of which is the
Extens10n Index and the denominator of which is the Beginning Index.
In no case shall this increased compensation be less than the
franchise fee set forth in Section 4(a). If the Index is
discontinued or revised during the term, such other mutually
agreeable governmental index or computation with which it is
replaced shall be used 1n order to obtain substantially the same
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result as would be obtained if the Index had not been discontinued
or revised.
(c) The franchise fee set out 1n this section shall in no way limit
Grantee's obligat1on to compensate City or any private citizen for any
damage, claim, expense, or loss whatsoever as set forth in this
franchise.
(d) Grantee shall pay to the C1ty, on demand, the cost of all
repairs to publ1C property made necessary by any operation of the Grantee
under this franchise.
(e) Any payment due from Grantee to City under any prov1sion of
this franchise WhlCh is not paid when due shall bear interest at the
highest amount allowable by law, but the payment of such interest shall
not excuse or cure any default by Grantee under th1S franchise. Such
interest is separate and cumulative and is in addition to and shall not
dim1nish or represent a substitute for any or all of City's r1ghts or
remedies under any other prov1s1on of this franchise.
SECTION 5. Abandonment.
Should Grantee elect to abandon all or any part of the pipeline,
Grantee shall water wash the pipeline, fill the pipeline with an inert
environmentally acceptable gas or other material and cap the pipeline.
Grantee shall not owe the City any compensation for the privilege of said
abandonment.
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SECTION 6. Insurance.
Grantee-at all times during the term of this franchise shall
maintain liability insurance 1n an amount not less than $50,000,000 to
cover any claim, expense, or loss ariSing out of the operation, use,
maintenance or other privilege exerc1sed under this franchise, including
Grantee's contractual liability to indemnify City. The City, its city
council, boards and commissions. off1cers, agents, servants and employees
shall be r,amed as additional insureds in said policy of insurance for all
operatlons of Grantee relating to the operation of the pipeline within
the C1ty. Sald policy of insurance shall contain the following provi-
sions or endorsements:
(a) The naming of an additional insured shall not affect any
recovery to which such additional insured would be entitled under this
policy 1f not named as such additional 1nsured.
(b) An additional insured named herein shall not be held llable for
any premium or expense of any nature on this policy or any extension
thereof.
(c) The provisions of the policy will not be changed, suspended,
cancelled or otherwise terminated as to the interest of an additional
1nsured named herein without first delivering to City twenty (20) days
notice of such intention.
(d) Grantee shall furnish to City a -Certificate of Insurance showing
insurance as herein required.
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SECTION 7. Maintenance and Repair.
(a) Grantee shall malntaln the pipeline in a good, workerlike manner
and in conformity with all applicable and lawful federal, state and local
rules and regulations and shall perform any necessary repairs. City
agrees to process all permit and excavation applications in a timely
manner and for a reasonable fee not to exceed the time periods and fees
charged to other public utilitles servlng the citizens of the City.
(b) Grantee shall conduct maintenance and repair of the pipeline
wlth the least pesslble hindrance to the use of the streets fer purposes
of travel, and as soon as such work is completed, all portions of the
streets which have been excavated or otherwise damaged thereby shall be
placed in as good condltion as the same were before the commencement of
such work, to the satisfactlon of the City, and any damage or injury
suffered by any person by reason of any excavation or obstruction being
improperly guarded during said work shall be borne by Grantee.
(c) Grantee, upon completing any street opening, shall restore all
streets, highways, private and publlC property to at least as good
conditlon as the same existed in, immedlate1y prior to said openlng, and
does by this franchise, guarantee that the work of restoration shall be
good against all faulty workmanship and materials and shall, for a period
of one (1) year thereafter, maintain all such street surfaces in as good
conditlon as other portions of sald street, not disturbed by said
opening.
(d) Grantee shall make such deposits of money or shall file such
bonds with the City as may be required to insure satisfactlon and
completion of all construction activity within public rights of way.
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SECTION 8. Safety Requirements.
Grantee shall comply with all of the requirements of 49 C.F.R. Part
195 and all other applicable federal and state regulations.
SECTION 9. Pipeline Accidents.
If any portion of any street shall be damaged by reason of breaks or
leaks 1n any pipe or conduit constructed under this franch1se, Grantee
shall, at its own expense, repair any such damage and put such street 1n
as good condition as it was in before such break or leak, to the reason-
able satisfaction of the C1ty.
SECTION 10. Indemnification of City.
(a) Grantee shall indemnify and hold City, its city council, boards
and commissions, officers, agents, servants and employees harmless from
and against any and all loss, damages, llability, claims, SUlts, costs
and expenses, whatsoever, 1ncluding reasonable attorneys' fees,
regardless of the merlt or outcome of any such c1aim or suit, arising
from or in any manner connected to the activities or work conducted
pursuant to the franchise.
(b) Grantee ~hall indemnlfy, defend and save harmless the City, its
Clty counc1l, boards and commissions, officers, agents, servants and
employees, from and against any and all claims and losses whatsoever,
1ncluding reasonable attorneys' fees, accruing or resulting to any and
all persons, firms or corporations furnishing or supplying work,
services. materials, equipment or supplies in connectlon with activities
or work conducted or performed pursuant to this franchise and arislng out
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of such activities or work, and from any and all claims or losses what-
soever, including reasonable attorneys' fees, accruing or resulting to
any person, flrm or corporation for damage, inJury or death arising out
of Grantee's operatlons.
SECTION 11. Relocatlon of Pipellne Upon City's Request.
Grantee shall relocate without expense to the City any facillties
installed, used, or malntained under thlS franchlse if necessary to
accommodate the construction of any public street, hlghway, alley or
other publiC lmprovement.
SECTION 12. City's Reserved Rights.
(a) The granting of thlS franchise or any of the terms or conditions
contained herein shall not be construed to prevent the City from granting
over the route hereln speclfied or elsewhere any identical, similar, or
other type of franchise to any person, firm or corporation other than
Grantee.
(b) The City reserves the right to improve any highway, street,
alley, or other public place or portion thereof over and within which
this franchise is. granted, including the wldening, change of grade,
construction or reconstruction of such highway, street, alley or other
public place or portlon thereof, and there is further reserved to the
City and any political subdivision or district within the City, the right
to construct, reconstruct, install, repair and maintain in any such
highway, street, alley or other public place or portion thereof, any
publ1C improvement.
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(c) The Clty reserves the right to 91ve the Grantee any directions
for the malntenance, construction, and repair of the pipeline as may be
reasonably necessary to avoid sewers, water pipes, and conduits in other
structures lawfully placed in or under the streets; and before the work
of maintenance, construction or repairs of the pipeline is commenced, the
Grantee shall file with the City Engineer plans showing the location
thereof, WhlCh shall be subject to the approval of the City Engineer.
(d) Nothlng hereln shall be deemed to make the City or any offlcer
or employee of the Clty responslble or liable to said Grantee by reason
of the approval of plans for the maintenance, construction and repair of
the pipeline. The City, by granting this franchise, does not warrant the
accuracy of such approval or information as supplied or given to the
Grantee.
SECTION 13. prohibltion Agalnst Transfer~
Grantee shall not assign, hypothecate or transfer this franchlse or
any interest therein directly or indirectly, by operation of law or
otherwise without the prior written consent of the City, said consent to
not be unreasonably wlthheld. Grantee may however assign this franchise
to any subsidiary. parent or affiliate company without obtaining the
consent of City.
SECTION 14. Condemnation.
Notwlthstanding anything to the contrary contained herein, this
Ordinance shall not in any way affect the right, under law, of either
party to commence eminent domain proceedings at any time.
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SECTION 15. Forfeiture.
If the Grantee of thlS franchise shall fail. neglect or refuse to
comply with any of the provisions of this franchise or conditions thereof
unless due to a cause beyond Grantee's control and shall not within
thirty (3D) days after wrltten demand for compliance, begin the work of
compliance. or after having such beginning~ shall not prosecute the same
with due diligence to completion, then the City may declare this
franchise and all rights and prlvileges forfeited and upon written notice
to Grantee, this franchise shall be void and the rights of the Grantee
shall cease.
SECTION 16. Termination of Franchlse.
At the time of the expiration, forfeiture or other termination of
this franchise~ or the permanent discontinuance of the use of the
pipellne. or any portlon thereof~ Grantee shall abandon the pipeline~ or
portion thereof, pursuant to Section 5 of this franchise.
SECTION 17. Cumulative Remedies.
No provision herein made for the purpose of securing the performance
of the terms and conditions of this franchise shall be deemed an exclu-
sive remedy, or to afford the exclusive procedure for the enforcement of
said terms and conditions, but the remedles and procedures herein
provided, in addition to those provided by law. shall be deemed to be
cumulative.
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SECTION 18. Notlce.
All notices. demands. requests or approvals to be given under thlS
franchise shall be glven in writing and conclusively shall be deemed
served when delivered personally or when received in the United States
Mail, postage prepald, registered or certified. addressed as hereinafter
provlded.
All notices, demands, requests or approvals from Grantee to City
shall be addressed to C1ty at:
Santa Monica City Hall
1685 Main Street
Santa Monica, Callfornia 90401
Attn: City Attorney
All notices, demands, requests or approvals from City to Grantee
shall be addressed to Grantee at:
Shell California Pipeline Company
c/o Shell Pipe Line Corporation
P. O. Box 4848
Anaheim. California 92803
Attn: Division Manager
SECTION 19. Costs of Litigation.
If any legal action is necessary to enforce any provision hereof or
for damages by reason of an alleged breach of any provisions of this
franchise, the pr~vailing party shall be entitled to receive from the
losing party all costs and expenses and such amount as the court may
adjudge to be reasonable attorney's fees for the costs incurred by the
prevailing party in such action or proceeding.
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SECTION 20. Counterparts.
This franchise may be executed in several counterparts, each Df
which is an original, and all of WhlCh together constitute but one and
the same document.
SECTION 21. Captions for Convenience.
The captions herein are for convenience and reference only and are
not a part of this franchise and do not in any way limit, define or
amplify the terms and provisions hereof.
SECTION 22. Governin9 Law.
This franchise has been made and shall be constructed and
interpreted 1n accordance with the laws of the State of California.
SECTION 23. Acceptance of Franchlse.
The acceptance of this franchise by the Grantee must be filed within
10 days after adoption of this franchise. Upon the filing of the
acceptance, and provided this franchlse has become effective, all
franchises and privileges heretofore granted to the Grantee or its
predecessors in interest in respect to the pipeline shall terminate.
SECTION 24. Execution.
The Mayor of City shall sign and the City Clerk shall attest to the
passage of this Ordinance. The City Clerk shall cause the same to be
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published once in the official newspaper wlthin 15 days after its
adoptlon. This Ordlnance shall become effective 30 days from its
adoption.
IN WITNESS WHEREOF the partles hereto have executed this Ordinance
on this ____ day of
, 1989.
Approved as to form:
City of Santa Monica
ROBERT M. MYERS
City Attorney
Shell California Pipeline
Company
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