Broken Arrow City Council
Meeting of: 06-20-2016
To: Mayor and City Council
From: Office of the City Attorney
Title:
title
Consideration, discussion and possible adoption of Ordinance No. 3435, an Ordinance of the City Council of the City of Broken Arrow increasing the Franchise Fee paid by Oklahoma Natural Gas Company (ONG) from 4% to 4.25% of the gross receipts received from the distribution of natural gas pursuant to Ordinance No. 2383, approved by voters at an election held on October 9, 2001, and granting a 25-year non-exclusive franchise to ONG; repealing all ordinances to the contrary; and declaring an emergency
End
Background:
State Statutes authorize Oklahoma cities to apply a franchise fee to certain utility operators. The fee recognizes that utility operators use city rights-of-way to engage in their business practices. The fee compensates cities for that use, among other things. Over the last several years, the City has experienced a dramatic increase in right-of-way acquisition costs. In years past, property owners often donated land for utility easements. Recently, however, the City is being forced to acquire right-of-way and easements at fair market value, thereby increasing the cost not only of acquisition, but also public improvement projects.
The City of Broken Arrow has a franchise agreement with Oklahoma Natural Gas (ONG) that was approved by voters on October 9, 2001. This franchise agreement provides that the City of Broken Arrow is entitled to adjust its franchise fee if ONG accepts a franchise agreement from another city having a population above 15,000 residents. A city serviced by ONG recently executed a new agreement that contained a 4.25% franchise fee. Adjusting Broken Arrow’s franchise rate to keep pace with representative Oklahoma communities will have a positive impact on the fiscal year 2016 budget by approximately $63,000.00.
Staff needs to advise ONG if the City desires to adjust the franchise rate and recommends that the fiscal year 2017 budget include the 4.25% ONG franchise fee. Amendment of the franchise is handled through an ordinance. Staff recommends the Council adopt Ordinance No. 3435 and approve the emergency clause.
Cost: Publication fees
Prepared By: Beth Anne Wilkening, City Attorney
Reviewed By: Acting Assistant City Manager - Administration
Finance Department
Approved By: Michael L. Spurgeon, City Manager
Attachments: Ordinance No. 3435
Letter agreement from ONG addressed to Mr. Spurgeon
Recommendation:
Adopt Ordinance No. 3435 and approve the emergency clause.