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HomeMy WebLinkAbout051605 Work Session16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 INTEROFFICE MEMORANDUM TO: FROM: DATE: City Council Frank Boyles, City Manager Ralph Teschner, Finance Director Franchise Fees Workshop May 16, 2005 One of the goals of the 2020 Vision and Strategic Plan is to identify and develop alternate revenue sources for the City. New sources can assist the City in curbing its dependence upon property taxes, which have escalated over time from 50% to 60% of our general fimd revenues. The purpose of the workshop is to discuss the advantages and disadvantages of entering into franchise agreements with public utilities which would call for franchise fees. The staff briefly discussed franchise fees with the City Council at the 2005 budget workshops. Minnesota Statutes Section 216B.36 (attached) states that, "any public utility furnishing utility services...or occupying streets, highways or other public right of way within a municipality may be required to obtain a license, permit, right or franchise in accordance with the regulatory acts of the municipality... Under the license, permit, right or franchise the utility may be obligated by any municipality to pay the municipality fees to raise revenue or defray increased municipal costs accruing as the result of utility operations or both." In the case of Prior Lake, the following utility companies utilize City rights of way: Mediacom, Excel Energy, Minnesota Valley Electric, Shakopee Public Utilities, Centerpoint Energy/Minnegasco, and Integra Telecom. In the case of Mediacom Cable Television, the City has already entered into a franchise agreement which provides for a franchise fee of 5% on gross operating revenues (excluding Intemet services). In the case of the other public utilities, the franchise documents have expired. As a matter of fact, Centerpoint Energy periodically encourages the City to renegotiate a franchise agreement with them. The staff has been reluctant to proceed without Council direction to enter into franchise negotiations with all public utilities serving the City. The rationale for the franchise fee is that the City incurs expense in acquiring and, in some cases, improving (by installation of curbing, sod and landscaping) the public right of ways. For example, the Council may recall that the City purchased significant right of way for the Village Lake Drive reconstruction project. The public utilities utilize that right of way for their distribution plant at little or no cost. Moreover, some rights of way are encumbered with utility poles or lights. Energy costs, light replacement or under- grounding of overhead utilities could be expenditures which franchise fees help to defray. Franchise feels may be based upon a percentage of public utility revenues, a flat fee based upon usage or a fixed fee per account or meter. Attached as Exhibit A, is a more detailed description of each and also financial illustrations. www. cityofpriorlake, com I:\COUNCIL\Work Sessions\051605 Franchise f~hone 952.447.4230 / Fax 952.447.4245 Within the last decade, cities in the metropolitan area have initiated franchise fees. We will bring information to the workshop identifying the cities that have taken this action. James M. Strommen's article, Gas and Electric Franchise Fees; or how we learn to stop worrying and love the "fee", illustrates many of the issues associated with the implementation of franchise fees. The final attachment is a model franchise ordinance prepared by the League of Minnesota Cities. If the Council supports franchise fees, we estimate that the negotiation of the franchise agreements and fees, coupled with the actions the Council must take to adopt each as an ordinance, would be completed for implementation sometime in 2006. I:\COUNCIL\Work Sessions\051605 Franchise fees.doc MUNICIPAL POWERS 216B.36 MUNICIPAL REGULATORY AND TAXING POWERS. Any public utility furnishing the utility services enumerated in section 216B.02 or occupying streets, highways,, or other public property within a municipality may be required 'to obtain a license, permit,, right Or franchise in accordance' with the terms, conditions, and limitations of regulatory 'acts of the municipality, includin~ the pla. cing ..of distribution lines and_fa_c~.tigs _undergr9und. Under the licenS~..permit, ngn't, or ix a~tcm~¢',' [he utility may 'be ooligated by any municipality to pay 'to the municipality fees to raise revenue or defray increased municipal costs accruing as a result of utility operations, or both. The fee-may include but is not limited to a sum of money based upon gross operating revenues or gross earnings from its operations in the municipality sO long as the public utility shall continue to operate in the municipality, unless upon reqUest, of the public utility it is expressly released from the obligation at any time by such muniCipality. Notwithstanding the definition of'"public utility'" in section 216B.02, subdivision 4, a municipality may require, payment of a fee under this section by a cooperative electric association organized under chapter 308A that furnishes utility services within the municipality. All. existing licenses, permits, franchises and other rights acquired by any public utility or municipality prior to April 11, 1974, including the payment of existing franchise fees, shall not be impaired or. affected in any respect by the passage of this' chapter, except with respect to matters, of rate and serv/ce regulation, service area assignments, securities and indebtedness;, that are vested in the jurisdiction of the commission by this chapter. However, in the event that a court of competent jurisdiction determines, or the parties by mutual agreement determine, that an existing license, permit, franchise or other fight has been abrogated or impaired by this chapter,, or its execution, the muniCipality affected' shaH' impose and the public ~tility shall collect an excise tax on the utility charges, whiCh from year. to year yields-an amount which is reasonably equivalent to that amount of revenue which then would be due as a fee, charges or other thing or service of value to the municipality under the franchise, liCense or permit. The authorization shall be over and above taxing limita- tions including, but not limited to those of section 477A.016. Franchises granted pursuant to this section shall be exempt from the provisions of.. chapter 80C. For purposes of this section, a public utility shall include a cooperative electric association. History: 1974 c 429 s 36; 1978 c 795 s 5; 1Sp1981 c i art 6 s & 1,982 c 378 s 1; 1991~ c 291 art 9 s 4 GAS AND ELECTRIC FRANCHISE FEES; ~or how we learn to stop worrying and love the "fee." James M. Strommen A. INTRODUCTION Exercising a city's fight to require franchise fees from gas and etectric utilities has become a topic of increased interest in light of recent city. budget cuts. Gas and electric franchise fees present a means t6 raise considerable revenue. They have been sparingly employed until recently in part because of resident and business resistance to such fees as a new "tax." Franchise fees are fully authorized by law.2 MrNN. STAT. §§ 216B.36; 300.03. This update discusses the risks and benefits of implementing franchise fees .on electric or gas utilities. It also touches on a new alternative means of public right-of-way improvement where certain costs are no longer automatically paid for with taxpayers dollars. Improvements can be funded with city ratepayer dollars. B. LEGAL AUTHORITY TO REQUIRE FRANCHISE FEES Minnesota law 'allows cities to "require" franchise ageements from the gas and electric service providers in the city. MrNN. STAT. §§ 216B.36: 300.03.'Even.a municipal utility' may be required to have the consent of the city, to serve customers and use the public right of way ("ROW"). Mn~. STat. §§ 216B.36 and 412.321; 412.361; Village of Blaine v. Independent School Dist. No. 12, 121 N.W.2d 183 (Minn. 1963). The franchise ordinance is the required or customary vehicle for the franchise fee or payment in lieu of taxes that a city may require from the gas or electric utility, be it investor-owned (e.g., Xcel Energy), a cooperative (e.g., Dakota Electric) or a municipal utility (e.g., North St. Paul). le Is It a Fee Or a Tax? A franchise fee is described as "compensation" to the city for its consent to issue a franchise to the utility and its use of city ROW to serve utility customers. M.n~. STAT. § 300.03. The "compensation" need not be tied to a city, cost (police power limitation). It is an expressly delegated right to "raise revenues" over and above any associated cW cost. MrNN. STAT. § 216B.36. Many courts have regarded a utility,' fee as a tax, but its common law contract roots support the conclusion that it is a negotiated fee. The issue is open in Minnesota,.. though the more recent Section 216B.36 uses langx~age more associated with tax than the traditional contract fee. ~ For those who are curious about the unusual title, there is a loose parallel between the well-established city council hesitancy to impose franchise fees and the subject of the 1962 dark comedy, "Dr. Strangetove or How I Learned to Stop Worrying and Love the Bomb." In the end, the government leaders embraced that which they had opposed or feared. Fanchise fees frequently meet with public resistance and result in opposition from those with the power to use them, city councils. Such fees are a viable option to financially-strapped cities, however, and have been increasing)y "embraced" recently. : This discussion does not include cable franchise fees. Cable franchise fees are similar to gas and electric fees, yet raise different public policy issues and are governed by MIN~. ST,~,T. ~ 238.08. III-1 Kennedy & Graven 200 South Sixth Street. Suite 470 Minneapolis. MN 55402 If a Tax, Is It Deductible From Income? No. In a Un/ted States Tax Court decision in 1980. the internal Revenue Se,w4ce put to rest the question of whether a utiliry- franch/se fee. labeled as a "utility user's tax," was deductible from the personal income tax of the taxpayer. In Fife v. Commissioner of Internal Revenue, 73 T.C. 621 (U.S. Tax Ct. 1980), the court held that the five percent of gross revenues franchise 'fee charaed bv the California city telephone utilities was no_~t deductible by individuals. The court reasoned that such a tax (the court did not anal,vze the tax v. fee issue) did not fit w/thin the IRS-defined tax deductible pa.wnents of an individual taxpayer. The tax was neither a real property tax nor a general sales tax. C. ESTABLISHING A FEE WITH THE UTILITY As noted, the city, should have a franchise in place Minn. Stat. §§ 216B.3 and 3DD.D3. The franchise is regarded as a contract between the city and the utility. The franchise should , reserve the city's right to require a franchise fee at any time durine the term of the franchise. and to' .modify that fee. The franchise fee may also be negotiate~d and implemented at the same tame as the franchise. Without such a reservation of fight (and there are many franchises that do not have it), the utility may argue that the city has waived its contract rig__&t to require a franchise fee during the franchise term. To begin the process, the city informs the utiliw that it seeks to establish a franchise fee. The city's revenue needs can be provided to ~e utilitv. The utility will then prepare a Schedule of rates reflecting the desired revenue. (See,'e.g., App. A). The schedule will demonstrate the cost per month per customer class to raise the desired amount of revenue. Cities with, e.g., 23,000 in population can assume that fees per customer of "modest" amount on gas and electric utilities can raise a combined total of $400,000 a year, or more from gas and electric service. ' - The city and the utility will then negotiate the fee design. 1. Pass-through and Fee Design Options. Pdthou~h Minnesota utilities object to fee collection, they have made the fees relatively painless to themselves by ratepayer pass-through. This means that this compensation "from" the utility is not a tree cost of doing business, but rather a simple collect/on service for cities. That is, unlike rent paid to a landlord and built in to the utility's general rates, it is added penny for penny to the customer's bill. It is neither a cost nor a risk to the utility. Other expenses such as the cost of leased property, labor, equipmem and materials are all costs to the utili¢' that affect its bottom line. franchise fees do not.. III-2 Kennedy & Graven 200 South Sixth Street. Suite 4'70 Mmneapoiis..'MN' 55402 Unless the franchise establishes ontv one. the city should reserve its r~ght to charge any one of these three, or a combination of them)' a) b) Percentage of gross revenue ("PGR"). This is the traditional design bm not favored by utilities and not ideal for cities either. PGR franchise fee desi_zn emsts in many gas and electric franchises adopted in the late 1970s and 1980s. It allows the city to require 'that the utility, collect a Percentage of its goss revenues derived from operations in the city. The'fee increases with increased revenues and is simple to apply. When rates spike upward,, however (such as the winter of 2000 gas prices), consumers are subject hi~er energy prices and hi~er franchise fees. The city may then be perceived as receiving a "windfall." Gross revenues may also drop dramatically in a deregulated environment where large customers purchase energy from a source other than the franchised utility, causing a drop in the franchise utilky's revenues. This is more likely to happen in the gas service industry,, which is dere~m,tlated for large users (non-residential). The deregnlation risk of dropping revenues can be avoided with the fee modification rights retained in the franchise. PGR is also disfavored by large users because total fees can be si~m~ificant. Meter or customer account fee. This fee attaches a fixe(:l monthly amount to meter(s) installed at customer premises. Utilities now' favor the meter or customer account fee over PGR or the usage-based fees. Residential customers typically have one meter. Businesses may have mukiple meters. The advantage to this fee is the predictable, fLxed amount to the customer and predictable revenue to the city. It also captures growth in the community, because new customers reqttire new meters. The disadvantage of a meter fee is its lack of a conservation component and its regressive nature. The meter fee of a lower income minimal-use residential customer is the same as that of a hi~-consuming residential ener~ user. The business meter fees are also more arbitrary, because they are fixed and unrelated to usage (though this is also regarded'as fair by some residents and businesses). The meter fee, however, is easy to understand and not subject to decrease if the franchised utili~' stops supplying the gas. c) Usage fee. This uses a pre-determined rate for a fee based on the usage of the customer. It is similar to a percentage of goss revenue, but the btu (gas) or kwh (electric) amount is fixed rather than variable with the changing rates found in gas and electric charges. (See, e.g., App. B). It varies with the amount of usage only because the rate per btu or kwh is fixed (unlike our gas and electric rates). The less ener~ the customer uses, the lower the fee. Use is not dependent on the franchised utility providing the ener~ to ,the customer (a disadvantage of the PGR). This is the least commonly used ~ The limits of franchise desi~s have never been tested in Minnesota. Another option could be an up-front fee as consideration for the ri~t. This is not used in Minnesota and would be challenged. III-3 Kennedy & Graven 200 South Sixth Street, Suite 470 Minneapolis, MN 55402 method. It is not currently "available': through CenterPoin/ Minnegasco · without the request for r..m2burs,.m,.n, for admimstrative costs. Xcel nov,' also disfavors it because of' the administration cost. Di POINTS OF POTE1NqlAL CITY-L~ITY DISAGREEMENT IN FRANCI-HSE FEE NEGOTIATIONS Utilities simply do not like franchise fees. They ar~e that it is essentially a tax that the customer associates with the utility itself and increases the real price of the service. As a result, at least historically, investor-owned utilities subtly or not-so-subtly generate resistance to the fee among customers. This opposition drives a number of issues in negotiations. The following are common negotiation subjects:4 le Equal Fees-All Utilities. if a fee is applied only to e.g., electric and not to gas in a ciD', the electric utility would allege anti-competitive action by the city. The law' does not require that a city charge a franchise fee to both gas and electric utilities, but each w/il argue that the other should be assessed. With some technical assistance, an "apples to apples" equal fee structure equalized between gas and electric can be established. More complex equalizing of fees is most necessary with a usage-based fee: 2. Rates for Commercial v. Residential. Utilities tend to favor a lower fee percentage for larger customers (i.e., those free to consider alternative ener~' sources) and a higher rate for residential customers (i.e., captive and seen as being subsidized in tariffed rates). A city council may have the opposite view thou~ recently there has been a greater willingness on the part of city councils to accommodate large businesses (employers) in town by modifying the fee proportionately lower.. . Placing "Blame" for the Fee. Minnesota Public Utility Commission requires that the utility bill clearly state that it is a city'-imposed fee and not required by the utilirv. A city may ask, however, that the utility back off from an aggressive anti-fee stance during the public hearings. Franchise Fees in Lieu of Permit Fees. This is a significant provision for the utility. It means that when a city imposes a franchise fee, the fee will be in lieu of all permit fees the utili~ has been previouslY paying. This is a windfall for the utility if many cities impose a franchise fee (which they do not- probably under 2 percent of Minnesota cities impose gas or electric franchise fees). The benefit to the utility of the franchise "fee in lieu" agreement is that permit fees go from being a cost of business to a pass-throu~m5 to customers. Ckies that derive considerable fees from ~ The "negotiation" issue raises the subject of tax (unilateral) versus fee (negotiated). 'Ultimately, the law should support the ri~t of the ciD' to impose reasonable terms and not be stonewalled by a utility indefinitely. See, MINN. STAT. § § 216B.36 and 300.03. III-4 Kennedy' & Graven 200 South Sixth Street. Suite 470 Minneapolis. MN 55402 me · r2ermits lose a ".~enerai_ rate" revenue that is not ~',&ar_edz back to its customers. Cities that make insi_m2ificant cos'~ recover' fi.on,., permit fees lose ;only a small amount in exchange for the ageement to collect fi.anch2se fees. o Sunset Provision. Utilities have been recently asking for a sunset provision. They do not want to see the franchise become "embedded." Many civy 'councils are including provisions in the ordinance requiring review of the fee periodically. Experience suggeStS that the most controversial t/me for a franchise fee is at the be_running. Ut/l/ties realize this also. Fee Caps. Some utilities are a negotiating harder to limit in the franchise the amount of revenue a cid~ is allowed to raise during the term of the franch/se. There is no legal limit to the fee amount, other than a "reasonable" fee. Some utilities are see'king a cap of three (3) percent, when, in the past, many cities have had the contract (franchise) right to impose up to five (5) percent. PUBLIC INFO~4~ON PROCESS Like the franchise itself,, the franchise fee takes the form of an ordinance. This introduces the public process necessary under charter and statutory, cities. The followi_ng procedures have been used recently by cities intending to adopt or just consider (test the waters) a fee. Formal public hearing(s). Nothing in the franchise or franchise fee law requires public discussion beyond that required by law for the passage of an ordinance. If hearing requirements are minimal for ordinances, additional v~a-itten information will be necessary to avoid the perception of"slipping throu_mt2" a controversial ordinance. Informal public informational forums. The other approach would be to schedule multiple public forums to discuss the franchise fee. This can have the negative effect of inviting opposition to the fee. The benefit is to ensure full public disclosure. Community memos or newsletters. This is effective in providing information that is controlled by the city, and eliminating claims of failure to disclose. . City. website. A city. website has the similar benefit,, but may not be as accessible to residents. 5. Newspaper 'articles. This method places the information provided in the hands of the newspaper writer. Throu~ these means, the city will explain its intentions and the effect of a fee on residential and business customers. The city will of'ten describe the uses for the funds, though these are general revenue funds that mav be used for any purpose. III-5 Kenned'v & Graven 200 South SLxth Street. Suite 470 Minneapolis, MN >_40. L League of Minnesota Cities Cities excellence Model Gas and Electric Franchise Ordinance Cooperative between Suburban Rate Authority and the League of Minnesota Cities Revised 10/1/00 BACKGROUND The following model franchise ordinances are the result of a cooperative effort between James Strommen of the Kennedy & Graven Law Firm, attorney for the Suburban Rate Authority ("SRA"), and Thomas Grundhoefer, General Counsel of the League of Minnesota Cities. The ordinances modify previous models published in March 1996. The SRA is a joint powers organization consisting of 36 Twin City suburban municipalities. The SRA has actively intervened in electric, gas and telecommunications matters before the Minnesota Public Utilities Commission (MPUC). Prior to the Commission's creation in 1974, the SRA acted as a regulatory body governing gas and electric utilities on behalf of member municipalities. The purpose of the two franchise ordinances is to provide uniform provisions that incorporate the broad municipal statutory franchise rights that exist under Minnesota Statutes Chapters 216B and 300. The franchises also incorporate many of the MPUC's right-of-way management rules adopted in April 1999. (To take full advantage of the rules and to fully implement the right-of- way management authority granted to cities by Minnesota Statute Sections 237.161 -. 163, a city should consider adopting a comprehensive right-of-way management ordinance by exercising its option under Section 237.163 subd. 2(b).) In Minnesota, franchises are negotiated and take the form of a contract set forth in an ordinance. Yet cities have the right to require franchises and to include certain terms, e, g., franchise fees. There is no case law guidance on what specific franchise terms may be required by the city. Accordingly, a franchise can incorporate all reasonable terms within the limits of a city's statutory franchise and police power authority. These rights are extensive and can be found in Minnesota Statutes, Sections 216B.36, 300.03, 222.37, 237.162 and 236.163 and in case law. NOTES The city's legal right to include a particular franchise provision and the practical realities facing a city when the utility refuses to agree, are two quite different matters however. For example, though a city may have the right to insist on a franchise fee, potentially as high as 8% of the utility's gross revenues, it is unlikely that the utility would readily agree to such a percentage even though the utility passes the fee through to its customers within the city. Utilities are very concerned in today's increasingly deregulated environment that franchise fees will harm their competitive position relative to perceived competitors. This fee pass-through also becomes an issue to the residential and business customers who truly pay it. Thus, cities must be careful to gauge the level of local acceptance or resistance to the exercise of their full franchise rights under the law. As a result of the realities of the franchise negotiation and community acceptance process, a "take it or leave it" franchise ordinance that includes the imposition of franchise fees and strict right-of-way management provisions may be difficult to enact without compromise. These models are based on actual ordinances that have been reviewed by gas and electric companies. Because these models are more city-oriented than many currently existing franchises, and because of increasing competition between and among energy providers, utilities have objected to many of the provisions contained in these models. As a result, there is likely to be vigorous negotiation on at least the following provisions: 1) franchise fees; in form, amount and class of service/large customer distinctions; 2) fee obligation on competitors; 3) fights regarding city-requested location and relocation of facilities; and 4) the scope of the utility's indemnity of the city. It should be noted that many of the revisions to the March, 1996 Model were made in order to incorporate MPUC's fight-of-way rules on such matters as street restoration, relocation for utilities, construction performance bonds, mapping information, street vacation, removal of abandoned facilities, and indemnification. The MPUC right-of-way rules were largely a product of negotiations between local government units and members of the utility including a number of gas and electric providers. Each city must evaluate the importance of the provisions contained in these models as such provisions may affect the city's particular needs. One franchise cannot fit all because of the many variations of city-utility relationships, including factors such as: urban, suburban or rural settings; developing v. redeveloping cities; single v. multiple utilities serving the city; residential-commercial customer mix; larger employer v. diversified economic base; the presence of a municipal utility or contemplated utility; and revenue needs of the city. The authors should be contact if there are any questions about a clause or section. You can call Tom Grundhoefer at (651) 281-1266 or James Strommen at (612) 337-9233. Model Ordinance LMC/SRA Gas Franchise Ordinance ORDINANCE NO. CITY OF COUNTY, MINNESOTA AN ORDINANCE GRANTING , A CORPORATION, ITS SUCCESSORS AND ASSIGNS, A NONEXCLUSIVE FRANCHISE TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN FACILITIES AND EQUIPMENT FOR THE TRANSPORTATION, DISTRIBUTION, MANUFACTURE AND SALE OF GAS ENERGY FOR PUBLIC AND PRIVATE USE AND TO USE THE PUBLIC GROUND OF THE CITY OF ., MINNESOTA, FOR SUCH PURPOSE; AND, PRESCRIBING CERTAIN TERMS AND CONDITIONS THEREOF. THE CITY COUNCIL OF THE CITY OF MINNESOTA, ORDAINS: , COUNTY, SECTION 1. DEFINITIONS. For purposes of this Ordinance, the following capitalized terms listed in alphabetical order shall have the following meanings: City. The City of , County of ., State of Minnesota. City Utility System. Facilities used for providing public utility service owned or operated by City or agency thereof, including sewer, storm sewer, water service, street lighting and traffic signals, but excluding facilities for providing heating, lighting, or other forms of energy. Commission. The Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government, which preempts all or part of the authority to regulate gas retail rates now vested in the Minnesota Public Utilities Commission. Company. , a corporation, its successors and assigns including all successors or assigns that own or operate any part or parts of the Gas Facilities subject to this franchise. Gas Facilities. Gas transmission and distribution pipes, lines, ducts, fixtures, and all necessary equipment and appurtenances owned or operated by the Company for the purpose of providing gas energy for public or private use. Notice. A writing served by any party or parties on any other party or parties. Notice to Company shall be mailed to . Notice to the City shall be mailed to Any party may change its respective address for the purpose of this Ordinance by written notice to the other parties. Public Way. Any street, alley or other public right-of-way within the City. Public Ground. Land owned or otherwise controlled by the City for park, open space or similar public purpose, which is held for use in common by the public. SECTION 2. ADOPTION OF FRANCHISE. 2.1 Grant of Franchise. City hereby grants Company, for a period of~ years from the date this Ordinance is passed and approved by the City, the right to import, manufacture, distribute and sell gas for public and private use within and through the limits of the City as its boundaries now exist or as they may be extended in the future. For these purposes, Company may construct, operate, repair and maintain Gas Facilities in, on, over, under and across the Public Ways and Public Grounds, subject to the provisions of this Ordinance. Company may do all reasonable things necessary or customary to accomplish these purposes, subject however, to such reasonable regulations as may be imposed by the City pursuant to ordinance or permit requirements and to the further provisions of this franchise agreement. 2.2 Effective Date; Written Acceptance. This franchise shall be in force and effect from and alter its passage of this Ordinance and publication as required by law and its acceptance by Company. If Company does not file a written acceptance with the City within 60 days alter the date the City Council adopts this Ordinance, or otherwise informs the City, at any time, that the Company does not accept this franchise, the City Council by resolution may revoke this franchise or seek its enforcement in a court of competent jurisdiction. 2.3. Service and Gas Rates. The service to be provided and the rates to be charged by Company for gas service in City are subject to the jurisdiction of the Commission. 2.4. Ordinance. Publication Expense. Company shall pay the expense of publication of this 2.5. Dispute Resolution. If either party asserts that the other party is in default in the performance of any obligation hereunder, the complaining party shall notify the other party of the default and the desired remedy. The notification shall be written. Representatives of the parties must promptly meet and attempt in good faith to negotiate a resolution of the dispute. If the dispute is not resolved within 30 days of the written notice, the parties may jointly select a mediator to facilitate further discussion. The parties will equally share the fees and expenses of this mediator. If a mediator is not used or if the parties are unable to resolve the dispute within 30 days alter first meeting with the selected mediator, either party may commence an action in District Court to interpret and enforce this franchise or for such other relief as may be permitted by law or equity. 2.6. Continuation of Franchise. If the City and the Company are unable to agree on the terms of a new franchise by the time this franchise expires, this franchise will remain in effect until a new franchise is agreed upon, or until 90 days after the City or the Company serves written Notice to the other party of its intention to allow the franchise to expire. However, in no event shall this franchise continue for more than one year after expiration of the -year term set forth in Section 2.1. SECTION 3. LOCATION, OTHER REGULATIONS. 3.1. Location of Facilities. Gas Facilities shall be located, constructed, and maintained so as not to interfere with the safety and convenience of ordinary travel along and over Public Ways and so as not to disrupt normal operation of any City Utility System. Gas Facilities may be located on Public Grounds as determined by the City. Company's construction, reconstruction, operation, repair, maintenance, location and relocation of Gas Facilities shall be subject to other reasonable regulations of the City consistent with authority granted the City to manage its Public Ways and Public Grounds under state law, to the extent not inconsistent with a specific term of this franchise. 3.2. Street Openings. Company shall not open or disturb the surface of any Public Way or Public Ground for any purpose without first having obtained a permit from the City, if required by a separate ordinance, for which the City may impose a reasonable fee. Permit conditions imposed on Company shall not be more burdensome than those imposed on other utilities for similar facilities or work. Company may, however, open and disturb the surface of any Public Way or Public Ground without a permit if (i) an emergency exists requiring the immediate repair of Gas Facilities and (ii) Company gives telephone, email or similar notice to the City before commencement of the emergency repair, if reasonably possible. Within two business days after commencing the repair, Company shall apply for any required permits and pay any required fees. 3.3. Restoration. After undertaking any work requiring the opening of any Public Way, the Company shall restore the Public Way in accordance with Minnesota Rules, part 7819.1100 and applicable City ordinances consistent with law. Company shall restore the Public Ground to as good a condition as formerly existed, and shall maintain the surface in good condition for six months thereafter. All work shall be completed as promptly as weather permits, and if Company shall not promptly perform and complete the work, remove all dirt, rubbish, equipment and material, and put the Public Ground in the said condition, the City shall have, after demand to Company to cure and the passage of a reasonable period of time following the demand, but not to exceed five days, the right to make the restoration of the Public Ground at the expense of Company. Company shall pay to the City the cost of such work done for or performed by the City. This remedy shall be in addition to any other remedy available to the City for noncompliance with this Section 3.3. The Company shall also post a construction performance bond consistent with the provisions of Minnesota Rules parts 7819.3000 and 7819.0100, subpart 6. 3.4. Avoid Damage to Gas Facilities. The Company must take reasonable measures to prevent the Gas Facilities from causing damage to persons or property. The Company must take reasonable measures to protect the Gas Facilities from damage that could be inflicted on the Facilities by persons, property, or the elements. The Company must take protective measures when the City performs work near the Gas Facilities, if given reasonable notice by the City of such work prior to its commencement. 3.5. Notice of Improvements to Streets. The City will give Company reasonable written Notice of plans for improvements to Public Ways where the City has reason to believe that Gas Facilities may affect or be affected by the improvement. The notice will contain: (i) the nature and character of the improvements, (ii) the Public Ways upon which the improvements are to be made, (iii) the extent of the improvements, (iv) the time when the City will start the work, and (v) if more than one-Public Way is involved, the order in which the work is to proceed. The notice will be given to Company a sufficient length of time, considering seasonal working conditions, in advance of the actual commencement of the work to permit Company to make any additions, alterations or repairs to its Gas Facilities the Company deems necessary. 3.6 Mapping Information. The Company must promptly provide complete and accurate mapping information for any of its Gas Facilities in accordance with the requirements of Minnesota Rules Parts 7819.4000 and 7819.4100. SECTION 4. RELOCATIONS. 4.1. Relocation in Public Ways. The Company shall comply with Minnesota Rules, part 7819.3100 and applicable City ordinances consistent with law. 4.2. Relocation in Public Grounds. City may require Company at Company's expense to relocate or remove its Gas Facilities from Public Ground upon a finding by City that the Gas Facilities have become or will become a substantial impairment to the existing or proposed public use of the Public Ground. Relocation shall comply with applicable city ordinances consistent with law. 4.3. Projects with Federal Funding. Relocation, removal, or rearrangement of any Company Gas Facilities made necessary because of the extension into or through City of a federally-aided highway project shall be governed by the provisions of Minnesota Statutes Section 161.46. SECTION 5. INDEMNIFICATION. 5.1. Indemnity of City. Company shall indemnify and hold the City harmless from any and all liability, on account of injury to persons or damage to property occasioned by the construction, maintenance, repair, inspection, the issuance of permits, or the operation of the Gas Facilities located in the Public Ways and Public Grounds. The City shall not be indemnified for losses or claims occasioned through its own negligence except for losses or claims arising out of or alleging the City's negligence as to the issuance of permits for, or inspection of, Company's plans or work. 5.2. Defense of City. In the event a suit is brought against the City under circumstances where this agreement to indemnify applies, Company at its sole cost and expense shall defend the City in such suit if written notice thereof is promptly given to Company within a period wherein Company is not prejudiced by lack of such notice. If Company is required to indemnify and defend, it will thereafter have control of such litigation, but Company may not settle such litigation without the consent of the City, which consent shall not be unreasonably withheld. This section is not, as to third parties, a waiver of any defense or immunity otherwise available to the City. The Company, in defending any action on behalf of the City, shall be entitled to assert in any action every defense or immunity that the City could assert in its own behalf. This franchise agreement shall not be interpreted to constitute a waiver by the City of any of its defenses of immunity or limitations on liability under Minnesota Statutes, Chapter 466. SECTION 6. VACATION OF PUBLIC WAYS. The City shall give Company at least two weeks prior written notice of a proposed vacation of a Public Way. The City and the Company shall comply with Minnesota Rules, 7819.3200 and applicable ordinances consistent with law. SECTION 7. CHANGE IN FORM OF GOVERNMENT. Any change in the form of government of the City shall not affect the validity of this Ordinance. Any govemmental unit succeeding the City shall, without the consent of Company, succeed to all of the rights and obligations of the City provided in this Ordinance. SECTION 8. FRANCHISE FEE. 8.1. Form. During the term of the franchise hereby granted, and in addition to permit fees being imposed or that the City has a right to impose, the City may charge the Company a franchise fee. The fee may be (i) a percentage of gross revenues received by the Company for its operations within the City, or (ii) a flat fee per customer based on metered service to retail customers within the City or on some other similar basis, or (iii) a fee based on units of energy delivered to any class of retail customers within the corporate limits of the City. The method of imposing the franchise fee, the percentage of revenue rate, or the flat rate based on metered service may differ for each customer class or combine the methods described in (i) - (iii) above in assessing the fee. The City shall seek to use a formula that provides a stable and predictable amount of fees, without placing the Company at a competitive disadvantage. If the Company claims that the City required fee formula is discriminatory or otherwise places the Company at a competitive disadvantage, the Company shall provide a formula that will produce a substantially similar fee amount to the City and reimburse the City's reasonable fees and costs in reviewing and implementing the formula. The City will attempt to accommodate the Company but is under no franchise obligation to adopt the Company-proposed franchise fee formula and each review will not delay the implementation of the City-imposed fee. 8.2. Separate Ordinance. The franchise fee shall be imposed by separate ordinance duly 'adopted by the City Council, which ordinance shall not be adopted until at least thirty (30) days after written notice enclosing such proposed ordinance has been served upon the Company. The fee shall become effective ten (10) days after written notice enclosing such adopted ordinance has been served upon the Company by certified mail. 8.3. Condition of Fee. The separate ordinance imposing the fee shall not be effective against the Company unless it lawfully imposes a fee of the same or substantially similar amount on the sale of gas energy within the City by any other gas energy supplier, provided that, as to such supplier, the City has the authority or contractual right to require a franchise fee or similar fee through a previously agreed upon franchise. 8.4. Collection of Fee. The franchise fee shall be payable not less than quarterly during complete billing months of the period for which payment is to be made. The franchise fee formula may be changed from time to time, however, the change shall meet the same notice requirements and the fee may not be changed more often than annually. Such fee shall not exceed any amount that the Company may legally charge to its customers prior to payment to the City. Such fee is subject to subsequent reductions to account for uncollectibles and customer refunds incurred by the Company. The Company agrees to make available for inspection by the City at reasonable times all records necessary to audit the Company's determination of the franchise fee payments. 8.5. Continuation of Franchise Fee. If this franchise expires and the City and the Company are unable to agree upon terms of a new franchise, the franchise fee, if any being imposed by the City at the time this franchise expires, will remain in effect until a new franchise is agreed upon. SECTION 9. ABANDONED FACILITIES. The Company shall comply with City ordinances, Minnesota Statutes, Section 216D.01 et seq. and Minnesota Rules Part 7819.3300, as they may be amended from time to time. The Company shall maintain records describing the exact location of all abandoned and retired Facilities within the City, produce such records at the City's request and comply with the location requirements of Section 216D.04 with respect to all Facilities, including abandoned and retired Facilities. SECTION 10. PROVISIONS OF ORDINANCE. 10.1. Severability. Every section, provision, or part of this Ordinance is declared separate from every other section, provision, or part; and if any section, provision, or part shall be held invalid, it shall not affect any other section, provision, or part. Where a provision of any other City ordinance conflicts with the provisions of this Ordinance, the provisions of this Ordinance shall prevail. 10.2. Limitation on Applicability. This Ordinance constitutes a franchise agreement between the City and Company as the only parties and no provision of this franchise shall in any way inure to the benefit of any third person (including the public at large) so as to constitute any such person as a third party beneficiary of the agreement or of any one or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto. SECTION 11. AMENDMENT-PROCEDURE. Either party to this franchise agreement may at any time propose that the agreement be amended. This Ordinance may be amended at any time by the City passing a subsequent ordinance declaring the provisions of the amendment, which amendatory ordinance shall become effective upon the filing of Company's written consent thereto with the City Clerk within 60 days after the effective date of the amendatory ordinance. Passed and approved: Mayor of the City of Minnesota Attest: City Clerk, , Minnesota Model Ordinance LMC/SRA Electric Franchise Ordinance City of , County, Minnesota ELECTRIC ORDINANCE ORDINANCE NO. CITY OF COUNTY, MINNESOTA AN ORDINANCE GRANTING TO A CORPORATION, ITS SUCCESSORS AND ASSIGNS, A NONEXCLUSIVE FRANCHISE TO CONSTRUCT, OPERATE, REPAIR AND MAINTAIN IN THE CITY OF , MINNESOTA, AN ELECTRIC DISTRIBUTION SYSTEM AND TRANSMISSION LINES, INCLUDING NECESSARY POLES, LINES, FIXTURES AND APPURTENANCES, FOR THE FURNISHING OF ELECTRIC ENERGY TO THE CITY, ITS INHABITANTS, AND OTHERS, AND TO USE THE PUBLIC WAYS AND PUBLIC GROUNDS OF THE CITY FOR SUCH PURPOSES. THE CITY COUNCIL OF THE CITY OF MINNESOTA, ORDAINS: , COUNTY, SECTION 1. DEFINITIONS. For purposes of this Ordinance, the following capitalized terms listed in alphabetical order shall have the following meanings: City. The City of ., County of , State of Minnesota. City Utility System. Facilities used for providing public utility service owned or operated by City or agency thereof, including sewer, storm sewer, water service, street lighting and traffic signals, but excluding facilities for providing heating, lighting, or other forms of energy. Commission. The Minnesota Public Utilities Commission, or any successor agency or agencies, including an agency of the federal government, which preempts all or part of the authority to regulate electric retail rates now vested in the Minnesota Public Utilities Commission. Company. ,, a Minnesota corporation, its successors and assigns including all successors or assignees that own or operate any part or parts of the Electric Facilities subject to this franchise. Electric Facilities. Electric transmission and distribution towers, poles, lines, guys, anchors, conduits, fixtures, and necessary appurtenances owned or operated by Company for the purpose of providing electric energy for public or private use. Notice. A writing served by any party or parties on any other party or parties. Notice to Company shall be mailed to . Notice to the City shall be mailed to Any party may change its respective address for the purpose of this Ordinance by written notice to the other parties. Public Way. Any street, alley or other public right-of-way within the City. Public Ground. Land owned or otherwise controlled by the City for park, open space or similar public purpose, which is held for use in common by the public. SECTION 2. ADOPTION OF FRANCHISE. 2.1. Grant of Franchise. City hereby grants Company, for a period of years from the date this Ordinance is passed and approved by the City, the right to transmit and furnish electric energy for light, heat and power for public and private use within and through the limits of the City as its boundaries now exist or as they may be extended in the future. For these purposes, Company may construct, operate, repair and maintain Electric Facilities in, on, over, under and across the Public Ways and Public Grounds, subject to the provisions of this Ordinance. Company may do all reasonable things necessary or customary to accomplish these purposes, subject however, to such reasonable regulations as may be imposed by the City pursuant to ordinance or permit requirements and to the further provisions of this franchise agreement. 2.2. Effective Date; Written Acceptance. This franchise shall be in force and effect from and atter the passage of this Ordinance and publication as required by law and its acceptance by Company. If Company does not file a written acceptance with the City within 60 days after the date the City Council adopts this Ordinance, the City Council by resolution may revoke this franchise or seek its enforcement in a competent jurisdiction. 2.3. Service, Rates and Area. The service to be provided and the rates to be charged by Company for electric service in City are subject to the jurisdiction of the Commission. The area within the City in which Company may provide electric service is subject to the provisions of Minnesota Statutes, Section 216B. 37- .40. 2.4. Ordinance. Publication Expense. Company shall pay the expense of publication of this 2.5. Dispute Resolution. If either party asserts that the other party is in default in the performance of any obligation hereunder, the complaining party shall notify the other party of the default and the desired remedy. The notification shall be written. Representatives of the parties must promptly meet and attempt in good faith to negotiate a resolution of the dispute. If the dispute is not resolved within thirty (30) days of the date of written Notice, the parties may jointly select a mediator to facilitate further discussion. The parties will equally share the fees and expenses of this mediator. If a mediator is not used or if the parties are unable to resolve the dispute within 30 days after first meeting with the selected mediator, either party may commence an action in District Court to interpret and enforce this franchise or for such other relief as may be permitted by law or equity. 2.6. Continuation of Franchise. If the City and the Company are unable to agree on the terms of a new franchise by the time this franchise expires, this franchise will remain in effect until a new franchise is agreed upon, or until 90 days after the City or the Company serves written Notice to the other party of its intention to allow the franchise to expire. However, in no event shall this franchise continue for more than one year after expiration of the ~ year term set forth in Section 2.1. SECTION 3. LOCATION, OTHER REGULATIONS. 3.1. Location of Facilities. Electric Facilities shall be located, constructed, and maintained so as not to interfere with the safety and convenience of ordinary travel along and over Public Ways and so as not to disrupt or interfere with the normal operation of any City Utility System. Electric Facilities may be located on Public Grounds as determined by the City. Company's construction, reconstruction, operation, repair, maintenance, location and relocation of Electric Facilities shall be subject to other reasonable regulations of the City consistent with authority granted the City to manage its Public Ways and Public Grounds under state law, to the extent not inconsistent with a specific term of this franchise agreement. 3.2. Street Openings. Company shall not open or disturb the surface of any Public Way or Public Ground for any purpose without first having obtained a permit from the City, if required by a separate ordinance for which the City may impose a reasonable fee. Permit conditions imposed on Company shall not be more burdensome than those imposed on other utilities for similar facilities or work. Company may, however, open and disturb the surface of any Public Way or Public Ground without a permit if (i) an emergency exists requiring the immediate repair of Electric Facilities and (ii) Company gives telephone notice to the City before, if reasonably possible, commencement of the emergency repair. Within two business days after commencing the repair, Company shall apply for any required permits and pay any required fees. 3.3. Restoration. After undertaking any work requiring the opening of any Public Way, the Company shall restore the Public Way in accordance with Minnesota Rules, part 7819.1100 and applicable City ordinances consistent with law. Company shall restore Public Ground to as good a condition as formerly existed, and shall maintain the surface in good condition for six (6) months thereafter. All work shall be completed as promptly as weather permits, and if Company shall not promptly perform and complete the work, remove all dirt, rubbish, equipment and material, and put the Public Ground in the said condition, the City shall have, after demand to Company to cure and the passage of a reasonable period of time following the demand, but not to exceed five days, the right to make the restoration of the Public Ground at the expense of Company. Company shall pay to the City the cost of such work done for or performed by the City. This remedy shall be in addition to any other remedy available to the City for noncompliance with this Section 3.3. Company shall also post a construction performance bond consistent with provisions of the Minnesota Rules parts 7819.3000 and 7819.0100, subpart 6. 3.4. Shared Use of Poles. Company shall make space available on its poles or towers for City fire, water utility, police or other City facilities whenever such use will not interfere with the use of such poles or towers by Company, by another electric utility, by a telephone utility, or by any cable television company or other form of communication company. In addition, the City shall pay for any added cost incurred by Company because of such use by City. 3.5. Avoid Damage to Electric Facilities. The Company must take reasonable measures to prevent the Gas Facilities from causing damage to persons or property. The Company must take reasonable measures to protect the Gas Facilities from damage that could be inflicted on the Facilities by persons, property, or the elements. The Company must take protective measures when the City performs work near the Gas Facilities, if given reasonable notice by the City of such work prior to its commencement. 3.6. Notice of Improvements to Streets. The City must give Company reasonable written Notice of plans for improvements to Public Ways where the City has reason to believe that Electric Facilities may affect or be affected by the improvement. The notice must contain: (i) the nature and character of the improvements, (ii) the Public Ways upon which the improvements are to be made, (iii) the extent of the improvements, (iv) the time when the City will start the work, and (v) if more than one Public Way is involved, the order in which the work is to proceed. The notice must be given to Company a sufficient length of time, considering seasonal working conditions, in advance of the actual commencement of the work to permit Company to make any additions, alterations or repairs to its Electric Facilities the Company deems necessary. 3.7. Mapping Information. The Company must promptly provide mapping information for any of it underground Electric Facilities in accordance with Minnesota Rules parts 7819.4000 and 7819.4100. SECTION 4. FACILITIES RELOCATION. 4.1. Relocation in Public Ways. The Company shall comply with Minnesota Rules, part 7819.3100 and applicable City ordinances consistent with law. 4.2. Relocation in Public Grounds. City may require Company at Company's expense to relocate or remove its Electric Facilities from Public Ground upon a finding by City that the Electric Facilities have become or will become a substantial impairment to the existing or proposed public use of the Public Ground. Such relocation shall comply with applicable ordinances consistent with law. 4.3. Projects with Federal Funding. Relocation, removal, or rearrangement of any Electric Facilities made necessary because of the extension into or through City of a federally-aided highway project shall be governed by the provisions of Minnesota Statutes Section 161.46. SECTION 5. TREE TRIMMING. Unless otherwise provided in any permit or other reasonable regulation required by the City under separate ordinance, Company may trim all trees and shrubs in the Public Ways and Public Grounds of City to the extent Company finds necessary to avoid interference with the proper construction, operation, repair and maintenance of any Electric Facilities installed hereunder, provided that Company shall hold the City harmless from any liability arising therefrom. SECTION 6. INDEMNIFICATION. 6.1. Indemnity of City. Company shall indemnify and hold the City harmless from any and all liability, on account of injury to persons or damage to property occasioned by the construction, maintenance, repair, inspection, the issuance of permits, or the operation of the Electric Facilities located in the Public Ways and Public Grounds. The City shall not be indemnified for losses or claims occasioned through its own negligence except for losses or claims arising out of or alleging the City's negligence as to the issuance of permits for, or inspection of, Company's plans or work. 6.2. Defense of City. In the event a suit is brought against the City under circumstances where this agreement to indemnify applies, Company at its sole cost and expense shall defend the City in such suit if written notice thereof is promptly given to Company within a period wherein Company is not prejudiced by lack of such notice. If Company is required to indemnify and defend, it will thereafter have control of such litigation, but Company may not settle such litigation without the consent of the City, which consent shall not be unreasonably withheld. This section is not, as to third parties, a waiver of any defense or immunity otherwise available to the City; and Company, in defending any action on behalf of the City shall be entitled to assert in any action every defense or immunity that the City could assert in its own behalf. This franchise agreement shall not be interpreted to constitute a waiver by the City of any of its defenses of immunity or limitations on liability under Minnesota Statutes, Chapter 466. SECTION 7. VACATION OF PUBLIC WAYS. The City shall give Company at least two weeks prior written notice of a proposed vacation of a Public Way. The City and the Company shall comply with Minnesota Rules, 7819.3200 and applicable ordinances consistent with law. SECTION 8. ABANDONED FACILITIES. The Company shall comply with City ordinances, Minnesota Statutes, Section 216D.01 et seq. and Minnesota Rules Part 7819.3300, as they may be amended from time to time. The Company shall maintain records describing the exact location of all abandoned and retired Facilities within the City, produce such records at the City's request and comply with the location requirements of Section 216D.04 with respect to all Facilities, including abandoned and retired Facilities. SECTION 9. CHANGE IN FORM OF GOVERNMENT. Any change in the form of government of the City shall not affect the validity of this Ordinance. Any governmental unit succeeding the City shall, without the consent of Company, succeed to all of the rights and obligations of the City provided in this Ordinance. SECTION 10. FRANCHISE FEE. 10.1. Form. During the term of the franchise hereby granted, and in addition to permit fees being imposed or that the City has a right to impose, the City may charge the Company a franchise fee. The fee may be (i) a percentage of gross revenues received by the Company for its operations within the City, or (ii) a flat fee per customer based on metered service to retail customers within the City or on some other similar basis, or (iii) a fee based on units of energy delivered to any class of retail customers within the corporate limits of the City. The formula for a franchise fee based on units of energy delivered may incorporate both commodity and demand units. The method of imposing the franchise fee, the percentage of revenue rate, or the flat rate based on metered service may differ for each customer class or combine the methods described in (i) - (iii) above in assessing the fee. The City shall seek to use a formula that provides a stable and predictable amount of fees, without placing the Company at a competitive disadvantage. If the Company claims that the City-required fee formula is discriminatory or otherwise places the Company at a competitive disadvantage, the Company shall provide a formula that will produce a substantially similar fee amount to the City and reimburse the City's reasonable fees and costs in reviewing the formula. The City will attempt to accommodate the Company but is under no franchise obligation to adopt the Company-proposed franchise fee formula and such review will not delay the implementation of the City-imposed fee. 10.2. Separate Ordinance. The franchise fee shall be imposed by separate ordinance duly adopted by the City Council, which ordinance shall not be adopted until at least thirty (30) days after written notice enclosing such proposed ordinance has been served upon the Company. The fee shall become effective ten (10) days after written notice enclosing such adopted ordinance has been served upon the Company by certified mail. 10.3. Condition of Fee. The separate ordinance imposing the fee shall not be effective against the Company unless it lawfully imposes a fee of the same or substantially similar amount on the sale of electric energy within the City by any other electric energy supplier, provided that, as to such supplier, the City has the authority to require a franchise fee. 10.4. Collection of Fee. The franchise fee shall be payable not less than quarterly during complete billing months of the period for which payment is to be made. The franchise fee formula may be changed from time to time; however, the change shall meet the same notice requirements and the fee may not be changed more often than annually. Such fee shall not exceed any amount that the Company may legally charge to its customers prior to payment to the City. Such fee is subject to subsequent reductions to account for uncollectibles and customer refunds incurred by the Company. The Company agrees to make available for inspection by the City at reasonable times all records necessary to audit the Company's determination of the franchise fee payments. 10.5. Continuation of Franchise Fee. If this franchise expires and the City and the Company are unable to agree upon terms of a new franchise, the franchise fee, if any being imposed by the City at the time this franchise expires, will remain in effect until a new franchise is agreed upon. SECTION 11. PROVISIONS OF ORDINANCE. 11.1. Severability. Every section, provision, or part of this Ordinance is declared separate from every other section, provision, or part; and if any section, provision, or part shall be held invalid, it shall not affect any other section, provision, or part; provided, however, that if the City is unable to enforce its franchise fee provisions for any reason the City will be allowed to amend the franchise agreement to impose a franchise fee pursuant to statute. Where a provision of any other City ordinance conflicts with the provisions of this Ordinance, the provisions of this Ordinance shall prevail. 11.2. Limitation on Applicability. This Ordinance constitutes a franchise agreement between the City and Company as the only parties and no provision of this franchise shall in any way inure to the benefit of any third person (including the public at large) so as to constitute any such person as a third party beneficiary of the agreement or of any one or more of the terms hereof, or otherwise give rise to any cause of action in any person not a party hereto. SECTION 12. AMENDMENT PROCEDURE. Either party to this franchise agreement may at any time propose that the agreement be amended. This Ordinance may be amended at any time by the City passing a subsequent ordinance declaring the provisions of the amendment, which amendatory ordinance shall become effective upon the filing of Company's written consent thereto with the City Clerk after City council adoption of the amendatory ordinance. Passed and approved: , Mayor of the City of , Minnesota Attest: City Clerk, , Minnesota