HomeMy WebLinkAbout05 APPROVE RESOLUTION OF INTENT TO GRANT FRANCHISE TO WICKLAND PIPELINES LLCAgen
AGENDA REPORT Reviedweidm 5
City Manager
Finance Director
MEETING DATE: JULY 7, 2015
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: DOUGLAS S. STACK, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER
SUBJECT: APPROVE RESOLUTION OF INTENT TO GRANT A FRANCHISE TO
WICKLAND PIPELINES LLC FOR THE RIGHT TO CONSTRUCT,
MAINTAIN, AND OPERATE ONE 12 -INCH PIPELINE TO TRANSMIT
JET FUEL WITHIN CERTAIN PUBLIC ROADS OF THE CITY OF
TUSTIN
SUMMARY
Wickland Pipelines LLC (Wickland) is requesting approval to construct, maintain, and
operate an approximately 5 -mile long 12 -inch California Public Utilities Commission (CPUC)
regulated common carrier jet fuel pipeline connecting John Wayne Airport to an existing 16 -
inch products pipeline operated by Kinder Morgan Energy Partners (Kinder Morgan). The
route through the City of Tustin would connect to the Kinder Morgan pipeline adjacent to
Tustin Ranch Road just north of Edinger Avenue, continue eastward in Edinger Avenue,
then proceed. south in Red Hill Avenue, through the City of Irvine, to the Airport. The
County of Orange has conducted an Initial Study and approved Mitigated Negative
Declaration CPP #2013-00087.
RECOMMENDATION
It is recommended that the City Council adopt Resolution No. 15-35 declaring the City's
intent to grant a franchise to Wickland Pipelines LLC to construct, maintain, and operate
one 12 -inch pipeline within certain public roads, streets, and ways of the City of Tustin,
California and set a hearing date of July 21, 2015 at which the franchise would be
considered.'
FISCAL IMPACT
Benefits associated with the proposed action include:
A yearly franchise fee paid annually to the City pursuant to Public Utilities
Code Section 6231.5 adjusted by the Consumer Price Index — All Urban
Consumers for the Los Angeles -Riverside -Orange County area; and
2. A voluntary one-time payment of $100,000 due and payable at the time of the
first year annual franchise fee payment.
CORRELATION TO THE STRATEGIC PLAN
This Agreement contributes to the fulfillment of three goals in the City's Strategic Plan.
First, is contribution to the fulfillment of the City's Strategic Plan Goal A: Economic and
Neighborhood Development. Secondly, is implementation of Goal D, Strategy #2 by
Wickland Pipelines Resolution of Intent
July 7, 2015
Page 2 of 2
working collaboratively with agencies to address issues of mutual interest and concern.
Lastly, the Agreement addresses Goal B, Strategy #3 to ensure public safety and protection
of assets through continuous maintenance and improvement of public facilities.
DISCUSSION AND BACKGROUND
Wickland is proposing to construct an approximately.5-mile long 12 -inch CPUC regulated
common carrier jet fuel pipeline connecting John Wayne Airport to an existing 16 -inch
products pipeline operated by Kinder Morgan. This project will provide airline companies
operating at John Wayne Airport with an enhanced jet fuel storage and transportation
system.
The proposed pipeline would connect to the existing Kinder Morgan products pipeline at a
location near the intersection of Edinger Avenue and Tustin Ranch Road. The 5 -mile
pipeline route predominately traverses adjacent developed office and industrially -zoned
land in the Cities of Tustin and Irvine and will be located in Cities of Tustin and Irvine public
streets, and County of Orange John Wayne Airport property.
The proposed pipeline will provide the airlines operating at John Wayne Airport access to
jet fuel from all Long Beach area refineries and terminals without the need for highway truck
transportation resulting in the elimination of approximately 44 tank truck trips per day to and
from the Airport. This will reduce truck traffic by over 500,000 truck -miles per year, and
truck generated carbon dioxide and other air pollutants by approximately 2,200,000 pounds
annually. Elimination of truck traffic will also significantly increase operational safety and
security at the Airport. The proposed project also includes new onsite jet fuel storage which
will be located on the northwest side of Airport property in close proximity to the existing jet
fuel storage tanks.
If the attached Resolution of Intent is approved, then a hearing date of July 21, 2015 will be
set at which the franchise would be considered. At the hearing the City Council would
determine whether to grant the franchise, which would be pursuant to Public Utilities Code
Section 6234, and is by ordinance. The hearing would be the first reading and introduction,
and at the next meeting (August 4, 2015) the ordinance would be adopted and effective 30
days thereafter or upon acceptance by Wickland, whichever is later.
Stack, P.E.
Public Works/City Engineer
Attachment 1: Wickland Pipelines Franchise Letter Application dated May 14, 2015
Attachment 2: Resolution No. 15-35 with Intention to Grant A Franchise to Wickland Pipelines LLC
S'.\City Council Items\2015 Council Items\07-07-2015\Approval of ResolWon of Intent to Adopt Franchise Agmt for Wickland Plpelines\Approval of Resolution of Intent
to Adopt Franchise Agmt for Wickland Pipelines SC.dccx
ATTACHMENT 1
Wickland Pipelines Letter Application
WICKLAND
PIPELINES LLC
May 14, 2015
Tustin City Council
City of Tustin
300 Centennial Way
Tustin, CA 92780
Subject: Franchise Application — Wickland Pipelines LLC
Dear Members of the Tustin City Council:
This letter constitutes a franchise application made in accordance with the requirements of §6231.5 of the
Franchise Act of 1937 (California Public Utilities Code §6201 et seq.). Specifically, Wickland Pipelines LLC is
applying for a jet fuel pipeline franchise to be located across and under certain public right-of-way located
within the City of Tustin.
Wickland Pipelines LLC ("Wickland") is a California limited liability company. The California Public Utilities
Commission ("CPUC') designated Wickland as a public utility common carrier pipeline company within the
meaning of California Public Utility Code §§ 216 and 228 in CPUC Decision 99-12-038 issued on December
16, 1999. As a public utility common carrier pipeline company, Wickland is subject to the ongoing jurisdiction
of the CPUC.
Wickland is currently in the process of developing a common carrier jet fuel pipeline that will connect to an
existing Kinder Morgan owned common carrier petroleum products pipeline (the "Kinder Morgan Line") and
deliver jet fuel to the John Wayne Airport ("Airport"). The project will eliminate approximately 44 tank truck
trips per day to and from the Airport, which will reduce truck traffic by over 500,000 truck -miles per year, and
truck generated carbon dioxide and other air pollutants by approximately 2,200,000 pounds annually.
Elimination of truck traffic will also significantly increase operational safety and security at the Ail -port.
The pipeline to the Airport will have a diameter of twelve inches (12") and will be approximately five (5) miles
in length. It will connect with the Kinder Morgan Line at a location adjacent to the Tustin Ranch Road/Edinger
Avenue interchange and will travel in City of Tustin public streets for a distance of approximately 13,500 lineal
feet. The pipeline will be located in Tustin city streets in substantial conformity with the alignment sheets
attached to this letter as Exhibit A. These alignment sheets have been reviewed and approved by the City of
Tustin Department of Public Works.
Wickland is seeking a franchise term of thirty (30) years, and other franchise terms and conditions in
conformity with the form of franchise attached to this letter as Exhibit B. Among other things, this form of
franchise provides that Wickland will pay to the City of Tustin an annual franchise fee computed in accordance
with §§ 6231.5(a)(3) and 6231.5(b) of the California Public Utilities Code. In addition, Wickland has included
PO Box 13648 Sacramento California 95853 —Tel 916-978-2400— Fax 916-978-2410-8950 Cal Center Drive Suite 125 Sacramento CA 95826
City Council of Tustin
300 Centennial Way
Tustin, CA 92780
May 14, 2015
Page 2
a voluntary, onetime payment of S 100,000 in the annual compensation due for the first year of the term of the
franchise. The specific language governing annual compensation is set forth in Exhibit B to the franchise form.
A California Environmental Quality Act ("CEQA") review of Wickland's pipeline project has been conducted.
Orange County, the lead agency for the CEQA review, has adopted a mitigated negative declaration for the
project. (File No. CPP #201:x-00087, hereafter the "MND") Section 8 of the attached franchise form specifies
that Wickland shall comply with the mitigation measures contained in the IvtND. Wickland has previously
provided copies of the MND to City of Tustin staff.
Your consideration of this application will be greatly appreciated. I hereby certify on behalf of Wickland that
the information contained in this letter is truc and correct.
Respectfully submitted,
Wickland Pipelines LLC
Daniel E. Hall
Attachments
Exhibit A
Those portions of' the rights-of-way for Tustin Ranch Road, lsdinger Avenue and Red Hill
Avenue as generally depicted on the pipeline alignment sheets attached to this Exhibit A and
hereby incorporated herein by this reference.
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Exhibit B
Conmcnsation to City
As consideration for the Franchise, Franchisee shall annually pay to City, pursuant to Public
Utilities Code § 6231.5(a)(3), a fee which shall be equivalent to the length of Franchisee's pipe
within the Franchise, expressed in feel, multiplied by the applicable base rate, as adjusted
pursuant to subdivision (b) of Public Utilities Code § 6231.5.
file table of the internal pipe diameter base rates set forth in §6231.5(a)(3) of the Public Utilities
Gale lullows:
Internal Diameter Base Rate Per Lineal Foot
0-4 Inches
$0.088
6Inches
0.132
8 Inches
0.176
10 Inches
0.220
12 Inches
0.264
14 Inches
0.308
16 Inches
0.352
18 Inches
0.396
20 Inches
0.440
22 Inches
0.484
24 Inches
0.528
26 Inches
0.572
28Inches
0.616
30 Inches
0.660
For pipes with an internal diameter not listed above, the base rate shall be in the same proportion
to the base rate of it 12 -inch -diameter pipe as the diameter of the unlisted pipe is to 12 inches.
Within sixty ('60) days after the end of each year of the term of the Franchise, Franchisee shall
File a verified statement with the City's Finance Department. 'file verified statement shall show
in detail for the previous year or portion thereof the number of uncal feet of' Franchisee's pipe
located in the Franchise and the diameter of said pipe expressed in inches. The amount of each
annual payment shall be revised at the time of payment in accordance with the following
formula:
The applicable base rate shall be multiplied by the COnSUtller Price Index — All Urban
Consumers for the Los Angeles -Riverside -Orange County area (hereafter the "CI'I"), as
published by the United States Department of Labor, Office of Information for the month of
September immediately preceding the month in which payment is due and payable, and divided
by the CPI for .lune 30, 1989, which is declared to be 100.0. Under no circumstances shall the
multiplying factor be less than one. The resulting per lineal foot rate (tile "Adjus(ed Rate") will
then be multiplied by the lineal feet of the Pipeline located in the Franchise.
If the United States Department of Labor, Office of Information discontinues the preparation or
publication of the CPI, and if no translation table prepared by the Department of Labor is
available so as to make those statistics which are then available applicable to the index of JUne
30, 1959, City shall prescribe a rate of payment which shall, in its reasonable judgment, vary
fiom the rates specified in this section in approximate proportion as commodity consumer prices
then cun*ent vary from commodity consumer prices current in December 1988.
The foregoing notwithstanding, in exchange for City granting the Franchise, Franchisee shall pay
to City the additional onetime sum of $100,000. This onetime amount shall be added to, and
constitute a portion of the annual compensation due for the first year of the term of the
Franchise. Franchisee acknowledges and agrees that payment of the onetime fee of $100,000 is
voluntary, and shall not be considered to be subject to the limitations of California Public
Utilities Code § 6231.5.
With submission of the verified statement, Franchisee shall pay to the Treasurer of City the
compensation outlined in this Exhibit 13. City shall have the power and authority to reasonably
dispute any verified statement and to require additional proof Nvith respect to any matters set
forth in the verified statement.
ATTACHMENT 2
Resolution No. 15-35
RESOLUTION NO. 15-35
A RESOLUTION OF INTENTION OF THE CITY
COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA TO
GRANT A FRANCHISE TO WICKLAND PIPELINES,
LLC, TO CONSTRUCT, MAINTAIN AND OPERATE
PIPELINES WITHIN CERTAIN PUBLIC ROADS,
STREETS AND WAYS OF THE CITY OF TUSTIN,
CALIFORNIA
The City Council of the City of Tustin finds:
WHEREAS, WICKLAND PIPELINES, LLC ("Wickland"), a California public utility
under Public Utilities Code Section 216(a), has applied to the City of Tustin ("City") for
the right to construct, maintain and operate one 12 -inch pipeline along a route within the
City to transmit jet fuel to John Wayne Airport; and
WHEREAS, the City Council of the City of Tustin ("City Council") intends to adopt
a resolution, pursuant to California Public Utilities Code Section 6232, declaring its
intention to grant the franchise application and set a public hearing at which all persons
having any objection to the granting thereof may appear before the City Council and be
heard thereon.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN DOES
HEREBY RESOLVE, ORDER AND DETERMINE AS FOLLOWS:
SECTION 1: The City Council declares its intention to grant the franchise to
Wickland for a term of thirty (30) years ("Franchise") that is of the character and for the
purposes referenced in the form of notice set forth below.
SECTION 2: A hearing on objections to the granting of the Franchise will be held
at the time and place specified in the form of notice set forth below, which the City Clerk
of the City is hereby directed to publish at least once in a newspaper of general
circulation in the City within fifteen (15) days after passage of this Resolution, and that
the notice shall be substantially as follows:
NOTICE OF INTENTION TO GRANT FRANCHISE
NOTICE IS HEREBY GIVEN that Wickland Pipelines, LLC, a California public
utility ("Wickland"), has filed its application with the City Council of the City of Tustin
requesting that the City Council grant to it a franchise pursuant to Division 3, Chapter 2
of the Public Utilities Code of the State of California, for a term of 30 years commencing
on the effective date of the passage of the Ordinance and Wickland's acceptance
thereof, granting Wickland the right, privilege and franchise to construct, maintain,
inspect, operate, protect, repair and replace facilities consisting of a pipeline with an
internal diameter of twelve (12) inches, including control facilities, connection
improvements and equipment, and other appurtenances, and any facilities necessary
1075670.1
for the cathodic protection thereof, for the transportation of jet fuel in, under, along, over
and across the public streets, roads, highways, alleys and other public ways.
If the franchise is granted, Wickland and its successors and assigns will, during
the life of the Franchise, pay to the City annually, a fee equivalent to the length of
pipeline expressed in feet located within the franchised area multiplied by the applicable
base rate established in Public Utilities Code Section 6231.5. The fee shall be paid
annually from the date of the granting of the Franchise, and in the event such payment
is not made, the Franchise will be forfeited.
Any and all persons having any objections to the granting of the Franchise may
appear before the City Council in the City Council chamber at 300 Centennial Way,
Tustin, CA 92780 at the hour of seven o'clock p.m. on the 21St day of July, 2015, and be
heard thereon; and at any time not later than the hour set for hearing objections, any
person interested may make written protest stating objections against the granting of
the Franchise, which protest must be signed by the protestant and be delivered to the
City Clerk of the City. The City Council at the time set for hearing the objections shall
proceed to hear and pass upon all protests so made.
SECTION 3: This Resolution shall be effective upon its adoption.
PASSED AND ADOPTED at a regular meeting of the Tustin City Council held on
the 7th day of July, 2015.
CHARLES E. PUCKETT,
Mayor
Attest:
JEFFREY C. PARKER,
City Clerk
1orazsnal
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Jeffrey C. Parker, City Clerk and ex -officio Clerk of the City Council of the City of
Tustin, California, do hereby certify that the whole number of the members of the City
Council of the City of Tustin is five; that the above and foregoing Resolution No. 15-35
was duly passed and adopted at a regular meeting of the Tustin City Council, held on
the 7th day of July, 2015 by the following vote:
COUNCILMEMBERS AYES:
COUNCILMEMBERS NOES:
COUNCILMEMBERS ABSTAINED:
COUNCILMEMBERS ABSENT:
JEFFREY C. PARKER,
City Clerk
1075670.1