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G-12-12-06-E2 - 12/6/2012ORDINANCE NO. AN ORDINANCE GRANTING TO ATMOS ENERGY CORPORATION, A TEXAS AND VIRGINIA CORPORATION, ITS SUCCESSORS AND ASSIGNS, A FRANCHISE TO FURNISH, TRANSPORT AND SUPPLY GAS TO THE GENERAL PUBLIC IN THE CITY OF ROUND ROCK, WILLIAMSON COUNTY, TEXAS, FOR THE TRANSPORTING, DELIVERY, SALE, AND DISTRIBUTION OF GAS IN, OUT OF, AND THROUGH SAID MUNICIPALITY FOR ALL PURPOSES; PROVIDING FOR THE PAYMENT OF A FEE OR CHARGE FOR THE USE OF THE STREETS, ALLEYS, AND PUBLIC WAYS; PROVIDING THAT IT SHALL BE IN LIEU OF OTHER FEES AND CHARGES, EXCEPTING AD VALOREM TAXES; PRESCRIBING THE TERMS, CONDITIONS, OBLIGATIONS AND LIMITATIONS UNDER WHICH SUCH FRANCHISE SHALL BE EXERCISED; PROVIDING A SAVINGS CLAUSE AND A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ROUND ROCK, TEXAS: Sec. 1. Grant of Authority a. The City of Round Rock, Texas, hereinafter called "City," hereby grants to Atmos Energy Corporation, hereinafter called "Atmos Energy," its successors and assigns, privilege and license to use and occupy the present and future Public Rights - of -Way of City for the purpose of laying, maintaining, constructing, protecting, operating, and replacing the System needed and necessary to deliver, transport and distribute gas in, out of, and through City and to sell gas to persons, firms, and corporations, including all the general public, within the City's corporate limits. b. Said privilege and license being granted by this Ordinance is for a term ending December 31, 2023. Unless written notice of its intent to renegotiate is provided by either the City or Atmos Energy at least 180 days prior to the expiration of any term, the franchise shall be extended for one (1) additional term of five (5) years on the same terms and conditions as set forth herein. c. The provisions set forth in this Ordinance represent the terms and conditions under which Atmos Energy shall construct, operate, and maintain the System within City, hereinafter sometimes referred to as the "Franchise." In granting this Franchise, City does not in any manner surrender or waive its regulatory or other rights and powers under and by virtue of the Constitution and statutes of the State of Texas as the same may be amended, nor any of its rights and powers under or by virtue of present or future ordinances of City, including but not limited to generally applicable ordinances regulating the use of Public Rights -of -Way. Company, by its acceptance of this Franchise, agrees that all such lawful regulatory powers and rights as the same may be from time to time vested in City shall be in full force and effect and subject to the exercise thereof by City at any time. O:4dox\SCCI nts\0112\ 1204\MUNIC IPAL\00262092. DOC Sec. 2. Definitions For the purposes of this Ordinance, the following terms, phrases, words, and their derivations shall have the meanings given herein. When not inconsistent with the context, words in the present tense include the future, words in the plural number include the singular number, and words in the singular number include the plural number. The word "shall" is always mandatory and not merely directory a. "City" shall mean the City of Round Rock, Texas. b. "Company" shall mean Atmos Energy Corporation, Mid -Tex division, its successors and assigns, but does not include an Affiliate, which shall have no right or privilege granted hereunder except through succession or assignment in accordance with Section 5. c. "City Manager" shall mean the City's chief executive officer, or his or her designee. d. "Gross Revenues" shall mean: (1) all revenues received by Company from the sale of gas to all classes of customers (excluding gas sold to another gas utility in the City for resale to its customers within City) within the City; (2) all revenues received by Company from the transportation of gas through the System of Company within the City to customers located within the City (excluding any gas transported to another gas utility in City for resale to its customers within City); (3) the value of gas transported by Company for Transport Customers through the System of Company within the City ("Third Party Sales") (excluding the value of any gas transported to another gas utility in City for resale to its customers within City), with the value of such gas to be established by utilizing Company's monthly Weighted Average Cost of Gas charged to industrial customers in the Mid -Tex division, as reasonably near the time as the transportation service is performed; and (4) "Gross Revenues" shall also include fees paid pursuant to this agreement, revenues billed but not ultimately collected or received by Company, State gross receipts fees and the following "miscellaneous charges": charges to connect, disconnect, or reconnect gas, contributions in aid of construction, and charges to handle returned checks from consumers within the City. (5) "Gross Revenues" shall not include: (a) the revenue of any Affiliate or subsidiary of Company; (b) sales tax paid to the City; (c) interest or investment income earned by Company; and 2 (d) monies received from the lease or sale of real or personal property, provided, however, that this exclusion does not apply to the lease of facilities within the City's right of way. e. "Person" shall mean any natural person, or any association, firm, partnership, joint venture, corporation, or other legally recognized entity, whether for-profit or not-for-profit, but shall not, unless the context clearly intends otherwise, include City or any employee, agent, servant, representative or official of City. f. "Public Right -of -Way" shall mean public streets, alleys, highways, bridges, public easements, public places, public thoroughfares, grounds, and sidewalks of City, as they now exist or may be hereafter constructed, opened, laid out or extended within the present limits of City, or in such territory as may hereafter be added to, consolidated or annexed to City. g. "System" or "System Facilities" shall mean all of Company's pipes, pipelines, gas mains, laterals, feeders, regulators, meters, fixtures, connections, and all other appurtenant equipment used in or incident to providing delivery, transportation, distribution, supply and sales of natural gas for heating, lighting, and power, located in the Public Right -of -Way within the corporate limits of the City. h. "Affiliate" shall mean in relation to Company, a Person that controls, is controlled by, or is under common control with Company. As used in this definition, the term "control" means, with respect to a Person that is a corporation, the ownership, directly or indirectly, of more than 50% of the voting securities of such Person or, with respect to a Person that is not a corporation, the power to direct the management or policies of such Person, whether by operation of law, by contract, or otherwise. i. "Transport Customer" shall mean any Person for which Company transports gas through the System of Company within the City's Public Right -of -Way for delivery within the City (excluding other gas utilities in City who resell gas to their customers within City). Sec. 3. Acceptance of Terms of Franchise a. Prior to the adoption of this Ordinance by the City, the Company shall provide to the City its agreement with the form of the Ordinance as presented to the City Council. After the final passage and approval of this Ordinance by the City, the Company shall file its written acceptance thereof with the City Clerk within sixty (60) days after the final passage and approval of this Ordinance. If Company does not file such written acceptance the Ordinance shall be rendered null and void. b. At 11:59 p.m. on December 31, 2023, ALL rights, franchises and privileges herein granted, unless they have already at that time ceased or been forfeited, extended pursuant to Sec. 1. b. or extended by mutual agreement while a new franchise is being negotiated, shall at once cease and terminate. 3 Sec. 4. No Third Party Beneficiaries. This Franchise is made for the exclusive benefit of City and Company, and nothing herein is intended to, or shall confer any right, claim, or benefit in favor of any third party. Sec. 5. Successors and Assigns. The rights granted by this Franchise inure to the benefit of Company. a. Company may, without consent by the City, transfer or assign the rights granted by this Franchise to an Affiliate of Company provided that such Affiliate assumes all obligations of Company hereunder and is bound to the same extent as Company hereunder, and has net capital and liquid assets reasonably equivalent to Company's as of the month immediately preceding the transfer or there are provided other guarantees or assurances of the transferee's or assignee's financial ability to perform this Franchise reasonably acceptable to the City. Company shall give City written notice thirty (30) days prior to such assignment. b. City will have the right to approve the transfer or assignment of this Franchise except as provided in Section 5. a., provided that City may not unreasonably withhold or delay approval to a transfer or assignment of this Franchise. City shall not be obligated to approve any assignment if the assignee or transferee is materially weaker than Company. For the purpose of this Section 5. b., "materially weaker" means that the long term unsecured debt rating of the assignee or transferee is less than investment grade as rated by both Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. or its successor ("S&P") and Moody's Investors Service, Inc. or its successor ("Moody's"). If the long term unsecured debt rating of the assignee or transferee is not rated by S&P and Moody's or, if rated, such rating is materially weaker than that of Company, the City agrees to request and review such additional documents and information reasonably related to the transaction and the legal, financial and technical qualifications of the assignee or transferee, and that said approval shall not be withheld solely on the basis of such ratings, or the lack of such ratings. Any such assignment or transfer shall require that said assignee or transferee assume all obligations of Company to be bound to the same extent as Company hereunder. If within the first ninety (90) days after assignment or transfer to assignee or transferee, City identifies a failure to comply with a material provision of this Franchise, City shall have the right, after notice and opportunity for hearing before Council, to terminate this Franchise. Sec. 6. Compliance with Laws, Charter and Ordinances. This Franchise is granted subject to the laws of the United States of America and its regulatory agencies and commissions and the laws of the State of Texas, the Round Rock City Charter, as amended, and all other applicable ordinances of City, not inconsistent herewith, including, but not limited to, ordinances generally applicable to regulating the use of Public Rights -of -Way. .19 Sec. 7. Notices. a. Any notices required or desired to be given from one party to the other party to this Ordinance shall be in writing and shall be given and shall be deemed to have been served and received if: (i) delivered in person to the address set forth below; (ii) deposited in an official depository under the regular care and custody of the United States Postal Service located within the confines of the United States of America and sent by certified mail, return receipt requested, and addressed to such party at the address hereinafter specified; or (iii) delivered to such party by courier receipted delivery. Either party may designate another address within the confines of the continental United States of America for notice, but until written notice of such change is actually received by the other party, the last address of such party designated for notice shall remain such party's address for notice. CITY City Manager City of Round Rock 221 E. Main Street Round Rock, Texas 78664 COMPANY Manager of Public Affairs Atmos Energy, Mid -Tex Division 3110 135 North Round Rock, Texas 78681 b. The Company shall provide to the City a local or toll-free telephone number that is manned twenty-four (24) hours a day, seven (7) days a week to provide available information relating to emergency situations. The City understands that this telephone number is not equipped to handle calls from the public, and the City will not provide this number to customers, but will direct them to the Company's Call Center. If the Company cannot timely respond to an emergency with Company employees, the Company will attempt to respond to the emergency with qualified local contractors. The Company's contact information shall be kept current at all times. The Company and the City shall periodically, and upon request by either party, meet to discuss and address emergency response issues, in order to rectify any problems identified by either party. Sec. 8. Paragraph Headings, Construction The paragraph headings contained in this Ordinance are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several paragraphs hereof. Both parties have participated in the preparation of this Ordinance and this Ordinance shall not be construed either more or less strongly against or for either party. Sec. 9. Conditions of Occupancy. All construction and the work done by Company, and the operation of its business, under and by virtue of this Ordinance, shall be in conformance with the generally applicable ordinances, rules and regulations now in force, including but not limited to the "Right -of -Way Management" Chapter of the City Code of Ordinances, and that may hereafter be adopted by City, relating to the use of City's Public Rights -of -Way. This Franchise shall in no way affect or impair the rights, obligations or remedies of the parties under the Texas Utilities Code, or other state or federal law. Nothing herein shall be deemed a waiver, release or relinquishment of either party's right to contest or 5 appeal any action or decision of the other party, including ordinances adopted by the City, that it believes is contrary to any federal, state or local law or regulation. Sec. 10. Relocation of Company Equipment. a. Company shall lay, maintain, construct, operate, and replace its pipes, mains, laterals, and other equipment to minimize interference with traffic, place or cause to be placed appropriate barriers to mark excavations or obstructions, and restore to approximate original condition all Public Rights -of -Way that it may disturb. In determining the location of the facilities of the City and other users of Public Right -of - Way within City, City shall minimize interference with then existing facilities of Company and agrees to work with Company and other users of Public Rights -of -Way in order to minimize, to the extent reasonably possible, interference with existing facilities of Company by other users of Public Rights -of -Way. In the event of a conflict between the location of the proposed facilities of Company and the location of the existing facilities of City or other users of Public Rights -of -Way within Public Rights -of -Way and the parties involved have been unable to resolve such conflict through their good faith efforts, City or an authorized agent of City shall resolve the conflict and determine the location of the respective facilities within the Public Rights -of -Way, subject however to the terms and conditions of this Franchise and giving effect to generally accepted industry operational and safety practices. Company or contractors working on behalf of Company shall not be required to pay for street cutting, street excavation or other special permits related to excavations in Public Rights -of -Way in connection with Company's operations in Public Rights -of -Way. City shall provide Company with its annual capital improvements plan as well as any updates or changes as soon as the plan, update, or change becomes available. City shall notify Company as soon as reasonably possible of any projects that will affect Company's facilities located in the Public Rights -of -Way. When required by City to remove or relocate its mains, laterals, and/or other facilities lying within Public Rights -of - Way, Company shall do so as soon as practically possible with respect to the scope of the project. In no event shall Company be required to remove or relocate its facilities in less than ninety (90) days from the time notice is given to Company by City. b. If City, in constructing its sewers, drainage, water lines, streets, or utilities, should request that Company remove or relocate its mains, laterals, and other facilities lying within Public Rights -of -Way, Company shall do so at its own expense for facilities that are in conflict, unless such work is for the primary purpose of beautification or to accommodate a private developer. Facilities are deemed to be in conflict to the extent that the proposed City facilities are determined by Company to be inconsistent with gas distribution industry standard safe operating practices for existing facilities. Company shall not be required to relocate facilities to a depth of greater than four (4) feet unless prior agreement is obtained from Company. When Company is required by City to remove or relocate its mains, laterals, and other facilities lying within Public Rights -of -Way to accommodate a request by City, and costs of utility removals or relocations are eligible under federal, state, county, local or other programs for reimbursement of costs and expenses incurred by Company as a result of such removal or relocation, and such reimbursement is required to be handled 2 through City, Company costs and expenses shall be included in any application by City for reimbursement if Company submits its cost and expense documentation to City prior to the filing of the application. City shall provide Company with reasonable written notice of the deadline by which the Company must submit documentation of the costs and expenses of Company's relocation to City in order for City to be able to submit its application for reimbursement to such program in a timely manner. In the event that the City does not provide sufficient written notice to Company as set forth in this paragraph, and, as a result, the opportunity for Company to receive reimbursement through City from such program of costs and expenses incurred by Company as a result of such removal or relocation is lost or forfeited, then the City shall be responsible for fifty percent (50%) of the cost of the removal or relocation of Company's facilities. If Company is required by City to remove or relocate its mains, laterals, or other facilities lying within Public Rights -of -Way for any reason other than the construction or reconstruction of sewers, drainage, water lines, streets or utilities by City, Company shall be entitled to reimbursement from City or others of the cost and expense of such removal or relocation. c. When Company is required to remove or relocate its mains, laterals or other facilities to accommodate construction by City without reimbursement from City, Company shall have the right to seek recovery of relocation costs as provided for in applicable state and/or federal law. Nothing herein shall be construed to prohibit, alter, or modify in any way the right of Company to seek or recover a surcharge from customers for the cost of relocation pursuant to applicable state and/or federal law. City shall not oppose recovery of relocation costs when Company is required by City to perform relocation. City shall not require that Company document its request to the City for reimbursement as a pre -condition to recovery from customers of such relocation costs pursuant to applicable state and/or federal law. Notwithstanding the foregoing, the City shall have the right to request other project documentation to the full extent provided by state law. If City abandons, pursuant to Council action, any Public Right -of -Way in which Company has facilities, such abandonment shall be conditioned on Company's right to maintain its use of the former Public Right -of -Way and on the obligation of the party to whom the Public Right -of -Way is abandoned to reimburse Company for all removal or relocation expenses if Company agrees to the removal or relocation of its facilities following abandonment of the Public Right -of -Way by action of City Council. If the party to whom the Public Right -of -Way is abandoned requests the Company to remove or relocate its facilities and Company agrees to such removal or relocation, such removal or relocation shall be done within a reasonable time at the expense of the party requesting the removal or relocation. If relocation cannot practically be made to another Public Right -of -Way, the expense of any right-of-way acquisition shall be considered a relocation expense to be reimbursed by the party requesting the relocation. d. Upon request by City, Company shall provide maps showing the location of its facilities and cooperate in locating its facilities when necessary to avoid conflict and protect the health and safety of the public. 7 Sec. 11. Laying of Lines in Advance of Paving. a. Whenever City shall conclude to pave any Public Right -of -Way in which System Facilities already exist or in which Company may propose to install its System, Company will be provided the opportunity, at no expense to City, in advance of such paving to renew such System Facilities, if defective or inadequate in size, and to lay System Facilities, or renew same, if inadequate in size or defective, to the property lines where buildings are already located. b. At least ninety (90) calendar days prior to the planned paving or repaving of Public Rights -of -Way, City shall give Company written notice of the intention of City to pave any such Public Right -of -Way. Upon receipt of such notice, Company shall initiate its review process to determine the need to renew its System Facilities, and the need to lay or renew service lines underneath the portions of the Public Rights -of -Way to be paved. If Company determines such a need, Company shall promptly initiate such work and shall thereafter proceed in a good faith and workmanlike manner to completion of the necessary work within ninety (90) calendar days after receipt of the notice from the City. Company's failure to complete the necessary work within the ninety (90) day period may be excused at the City's discretion, if Company has promptly notified the City of the circumstances that have caused the delay, and has requested an extension of the construction period. City shall grant the extension unless withheld for good cause. c. If Company should fail to take advantage of the pre paving opportunity to undertake new construction or repairs to existing System Facilities in the Rights -of -Way to be paved, and such street or alley is thereafter paved, except in an emergency or in response to a request for initiation of new service, Company shall for two (2) years thereafter not be allowed to cut such pavement or excavate in such paved street or alley for any purpose, except by written permission of the City Manager under such terms and conditions as the City Manager may reasonably prescribe, provided that such permission may not be unreasonably or arbitrarily withheld. Sec. 12. Installation of Meter. If a meter is to be installed in or near the Public Right -of -Way, Company agrees to discuss with the Public Works Director or his or her delegate, the aesthetics of the meter placement and to accommodate the request of City to the maximum extent possible. If City requests a meter upgrade, Company will comply so long as City reimburses Company for the reasonable costs incurred by Company in changing meters. In no event, however, shall underground meters be required. Sec. 13. Extensions for Customers. Company shall, at its expense, extend distribution mains in any street up to fifty (50) feet for any one residential or commercial customer so long as the customer at a minimum uses gas for unsupplemented space heating and water heating. Company shall not be required to extend transmission mains in any Public Rights -of -Way within City or to make a tap on any transmission main within City unless Company agrees to such extension by a written agreement between Company and a customer. Sec. 14. Duty to Serve. Company hereby agrees that it will not arbitrarily refuse to provide service to any Person having a service location within the City and meeting Company's reasonable credit requirements that it is economically feasible for Company to serve. In the event that a Person is refused service, said Person may request a hearing before the City Council of City or its designee, said hearing to be held within forty-five (45) days from the date of the request for hearing. The Council may order Company to provide service or take any other action necessary to bring Company into compliance with the intent of the Council in granting this Franchise, including termination or forfeiture of the Franchise in accordance with Section 22. The Council may render its opinion at this meeting but in no event shall it be required to act in less than fourteen (14) days. Sec. 15. Customer Service Standards; Local Office. Company shall maintain a local, toll-free or collect call telephone access line which will be available to its customers 24 hours a day, seven days a week. Company shall make a good faith effort to maintain within City one or more locations where customers can pay their bills. In no circumstance shall the absence of such a location be considered violation of a material provision of this Franchise as outlined in Section 22. Sec. 16. Rates. Company's rates and charges shall be established and shall be subject to revision and change in accordance with all applicable statutes and ordinances. Company shall maintain on file with City copies of its current tariffs, schedules or rates and charges, customer service provisions, and line extension policies. Sec. 17. Payments to the City. a. In consideration of the privilege and license granted by City to Company to use and occupy the Public Rights -of -Way in the City for the conduct of its business, Company, its successors and assigns, agrees to pay and City agrees to accept such franchise fees in the amount and manner described herein. Except as provided for in Section 17. b., such payments shall be made annually on February 1 of each year during the term of this Franchise, including any extensions pursuant to Section 1. b. or Section 3. b,. The franchise fee shall be a sum of money that shall be equivalent to five percent (5%) of the Gross Revenues, as defined in Section 2. d., for the preceding calendar year. The initial payment provided under this Franchise shall be due on or before February 1, 2013, based on the preceding calendar year (January 1, 2012 to December 31, 2012). The initial payment for the rights and privileges herein provided shall be for the privilege period January 1 through December 31, 2013, and each succeeding payment shall be for the privilege period of the calendar year in which the payment is made. Unless this Franchise is extended pursuant to Section 1. b. or Section 3. b, the final payment under this Franchise will be due on or before February 1, 2023, and will be based on the preceding calendar year(January 1, 2022 to December 31, 2022), and 7 shall be for the right and privilege during the calendar year (January 1, 2023 to December 31, 2023). b. The franchise fee amounts based on "Contributions in Aid of Construction" ("CIAC") shall be calculated on an annual calendar year basis, i.e., from January 1 through December 31 of each calendar year. The franchise fee amounts that are due based on CIAC shall be paid at least once annually on or before April 30 each year based on the total CIAC recorded during the preceding calendar year. The initial CIAC franchise fee payment will be due on or before April 30, 2014 and will be based on CIAC received from January 1, 2013, through December 31, 2013. Unless this Franchise is extended pursuant to Section 1. b. or Section 3. b, the final payment of franchise fee amounts based on CIAC will be April 30, 2024, for the calendar year ending December 31, 2023. c. It is also expressly agreed that the franchise fees shall be in lieu of any and all other and additional occupation taxes, easement, franchise taxes or charges (whether levied as an ad valorem, special or other character of tax or charge), municipal license, permit, and inspection fees, bonds, street taxes, and street or alley rentals or charges, and all other and additional municipal taxes, charges, levies, fees, and rentals of whatsoever kind and character that City may now impose or hereafter levy and collect from Company or Company's agents, excepting only the usual general or special ad valorem taxes that City is authorized to levy and impose upon real and personal property. Except however, Company's separate obligations to reimburse the City for City's reasonable rate case expenses and for street repairs in accordance with City's ordinances, are not affected by Company's payment of franchise fees hereunder. Should City not have the legal power to agree that the payment of the foregoing sums of money shall be in lieu of occupation taxes, licenses, fees, street or alley rentals or charges, easements or franchise taxes or charges aforesaid, then City agrees that it will apply so much of said sums of money paid as may be necessary to satisfy Company's obligations, if any, to pay any such occupation taxes, licenses, charges, fees or rentals. d. If Company fails to pay when due any payment provided for in this Section, Company shall pay such amount plus interest consistent with the rate for customer deposits under Texas Utilities Code Section 183.003 from such due date until payment is received by City. e. City agrees that: (i) as regulatory authority, it will adopt and approve the ordinance, rates or tariff which provide for 100% recovery of such franchise fees as part of Atmos' rates; (ii) if the City intervenes in any regulatory proceeding before a federal or state agency in which the recovery of Atmos' franchise fees is an issue, the City will take an affirmative position supporting 100% recovery of such franchise fees by Atmos; (iii) in the event of an appeal of any such regulatory proceeding in which the City has intervened, the City will take an affirmative position in any such appeals in support of the 100% recovery of such franchise fees by Atmos; and (iv) it will take no action, nor cause any other person or entity to take any action, to prohibit recovery of such franchise fees by Atmos. f. Company shall have the right to lease, license or otherwise grant to a party other than Company the use of its Facilities within the City's Public Right -of -Way 10 provided: (i) Company first notifies City of the name of the lessee, licensee or user, the type of service(s) intended to be provided through the facilities, and the name and telephone number of a contact person associated with such lessee, licensee or user; and (ii) Company makes the franchise fee payment due on the revenues from such lease pursuant to Section 17 of this Ordinance. This authority to lease Facilities within City's Public Right -of -Way shall not affect any such lessee, licensee or user's obligation, if any, to pay franchise fees, access line fees, or similar Public Right -of -Way user fees. g. City shall, within thirty (30) days of final approval, give Company notice of annexation and disannexations of territory by City, which notice shall include a map and addresses, if known. Upon receipt of said notice, Company shall promptly initiate a process to reclassify affected customers into the City limits no later than sixty (60) days after receipt of notice from City. The annexed areas added to the City limits will be included in future franchise payments in accordance with the effective date of the annexation if notice was timely received from City. Upon request from City, Company will provide documentation to verify that affected customers were appropriately reclassified and included for purposes of calculating franchise payments. Sec. 18. Books and Records. Company agrees that at the time of each quarterly payment, Company shall also submit to the City a statement showing its Gross Revenues for the preceding calendar quarter as defined in Section 2. d. City may, if it sees fit, upon reasonable notice to the Company, have the books and records of Company examined by a representative of said City to ascertain the correctness of the reports agreed to be filed herein. Company shall make available, during normal working hours and upon reasonable notice, such personnel and records as City may in its reasonable discretion request in order to complete such audit, and shall make no charge to the City therefore. Company shall assist City in its review by providing all requested information no later than fifteen business (15) days after receipt of a request. The cost of the audit shall be borne by City unless the audit discloses that the Company has underpaid the franchise fee by 10% or more, in which case the reasonable costs of the audit shall be immediately reimbursed to the City by the Company. If such an examination reveals that Company has underpaid City, then upon receipt of written notification from City regarding the existence of such underpayment, Company shall undertake a review of City's claim and if said underpayment is confirmed, remit the amount of underpayment to City, including any interest calculated in accordance with Section 17. d. Should Company determine through examination of its books and records that City has been overpaid, upon receipt of written notification from Company regarding the existence of such overpayment, City shall review Company's claim and if said overpayment is confirmed, remit the amount of overpayment to Company including any interest calculated in accordance with Section 17. d. The period of review for purposes of determining overpayments or underpayments shall be limited to payments made in the two (2) year period before commencement of the audit. 11 Sec. 19. Reservation of Rights: General a. City reserves to itself the right and power at all times to exercise, in the interest of the public and in accordance with state law, regulation and control of Company's use of the Public Rights -of -Way to ensure the rendering of efficient public service, and the maintenance of Company's System in good repair throughout the term of this Franchise. b. The rights, privileges, and franchises granted by this Ordinance are not to be considered exclusive, and City hereby expressly reserves the right to grant, at any time, like privileges, rights, and franchises as it may see fit to any other person or corporation for the purpose of furnishing gas for light, heat, and power and for City and the inhabitants thereof. c. City expressly reserves the right to own and/or operate its own system for the purpose of transporting, delivering, distributing, or selling gas to and for the City. d. Nothing herein shall impair the right of the City to fix, within constitutional and statutory limits, a reasonable price to be charged for natural gas, or to provide and fix a scale of prices for natural gas, and other charges, to be charged by Company to residential consumers, commercial consumers, industrial consumers, or to any combination of such consumers, within the territorial limits of the City as same now exists or as such limits may be extended from time to time hereafter. Sec. 20. Right to Indemnification and to be Held Harmless. a. In consideration of the granting of this Franchise, Company agrees to indemnify, defend and hold harmless City, its officers, agents, and employees (City and such other persons and entities being collectively referred to herein as "Indemnitiees"), from and against all suits, actions or claims of injury to any person or persons, or damages to any property brought or made for or on account of any death, injuries to, or damages received or sustained by any person or persons or for damage to or loss of property arising out of, or occasioned by Company's intentional and/or negligent acts or omissions in connection with Company's operations; except that the indemnity provided for in this paragraph shall not apply to the extent any liability is determined by a court of competent jurisdiction to have resulted from the negligence or intentional acts or omissions of City, its officers, agents, and employees. In the event of joint and concurrent negligence or fault of both Company and City, responsibility and indemnity, if any, shall be apportioned comparatively in accordance with the laws of the State of Texas without, however, waiving any of the defenses of the parties under Texas law. Further, in the event of joint and concurrent negligence or fault of both Company and City, responsibility for all costs of defense shall be apportioned between City and Company based upon the comparative fault of each. b. In fulfilling its obligation to defend and indemnify City, Company shall have the right to select defense counsel, subject to City's approval, which shall not be unreasonably withheld. Company shall retain defense counsel within seven (7) business days of City's written notice that City is invoking its right to indemnification under this Franchise. If Company fails to retain counsel within such time period, City shall have the right to retain defense counsel on its own behalf, and Company shall be liable for all defense costs incurred by City, except as set out in Section 20. a. 12 Sec. 21. Insurance. Company will maintain an appropriate level of insurance and/or self-insurance in consideration of Company's obligations and risks undertaken pursuant to this Franchise. To the extent Company's insurance of its obligations and risks undertaken pursuant to this Franchise is in the form of self-insurance then such self-insurance must be permitted by applicable law and be administered by Company under a plan of self- insurance maintained in accordance with sound accounting and risk -management practices. Upon request of City, Company will furnish City with a letter evidencing such self-insurance signed by an authorized representative of Company. The Company will require its self-insurance to respond to the same extent as if an insurance policy had been purchased naming the City as an additional insured, and any excess coverage purchased for the sole purpose of insuring Company's obligations pursuant to this agreement will name the City as an additional insured up to the amounts required by City's ordinance. Sec. 22. Termination. a. Right to Terminate. In addition to any rights set out elsewhere in this Ordinance, City reserves the right to terminate the Franchise and all rights and privileges pertaining thereto, in the event that Company violates any material provision of the Franchise. b. Procedures for Termination. 1. City may, at any time, terminate this Franchise for a continuing material violation by Company of any of the substantial terms hereof. In such event, City shall give to Company written notice, specifying all grounds on which termination or forfeiture is claimed, by registered mail, addressed and delivered to Company at the address set forth in Section 7 hereof. Company shall have sixty (60) days after the receipt of such notice within which to cease such violation and comply with the terms and provisions hereof. In the event Company fails to cease such violation or otherwise comply with the terms hereof, then Company's Franchise is subject to termination under the following provisions. Provided, however, that if Company commences work or other efforts to cure such violations within thirty (30) days after receipt of written notice and shall thereafter prosecute such curative work with reasonable diligence until such curative work is completed, then such violations shall cease to exist, and the Franchise will not be terminated. 2. Termination shall be declared only by written decision of the City Council after an appropriate public proceeding whereby Company is afforded the full opportunity to be heard and to respond to any such notice of violation or failure to comply. Company shall be provided at least fifteen business (15) days prior written notice of any public hearing concerning the termination of the Franchise. In addition, ten (10) days notice by publication shall be given of the date, time and place of any public hearing to interested members of the public. 3. City, after full public hearing, and upon finding material violation or failure to comply, may terminate the Franchise or excuse the violation or failure to comply, upon a 13 showing by Company of mitigating circumstances or upon a showing of good cause of said violation or failure to comply as may be determined by the City Council. 4. Nothing herein stated shall preclude Company from appealing the final decision of the City Council to a court or regulatory authority having jurisdiction. 5. Nothing herein stated shall prevent City from seeking to compel compliance by suit in any court of competent jurisdiction if Company fails to comply with the terms of this Franchise after due notice and the providing of adequate time for Company to comply with said terms. Sec. 23. Renegotiation. If either City or Company requests renegotiation of any term of this Ordinance, Company and City agree to renegotiate in good faith revisions to any and all terms of this Ordinance. If the parties cannot come to agreement upon any provisions being renegotiated, then the existing provisions of this Ordinance will continue in effect for the remaining term of the Franchise. Sec. 24. Effective Date. This Franchise shall be effective on January 1, 2013 if City has received Company's acceptance as provided by Section 3 herein. The Company's obligation to submit payments to the City in compliance with Section 17 will begin January 1, 2013. Sec. 25. No Waiver. Either City or Company shall have the right to waive any requirement contained in this Ordinance, which is intended for the waiving party's benefit, but, except as otherwise provided herein, such waiver shall be effective only if in writing executed by the party for whose benefit such requirement is intended. No waiver of any breach or violation of any term of this Ordinance shall be deemed or construed to constitute a waiver of any other breach or violation, whether concurrent or subsequent, and whether of the same or a different type of breach or violation. Sec. 26. Severability. This Ordinance and every provision hereof, shall be considered severable, and the invalidity or unconstitutionality of any section, clause, provision, or portion of this Ordinance shall not affect the validity or constitutionality of any other portion of this Ordinance. If any term or provision of this Ordinance is held to be illegal, invalid or unenforceable, the legality, validity or unenforceability of the remaining terms or provisions of this Ordinance shall not be affected thereby. (Ord. xxx). The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Ordinance was adopted was posted and that such meeting was open to the public as required by law at all times during which this Ordinance and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. 14 �T1A READ and APPROVED on first reading this the day of I READ, APPROVED and ADOPTED on second reading this the 0 day of ���/1�(i'� , 2012. ATTEST: 1236�- Q�4 SARA L. WHITE, City Clerk ALAr7rMCGRAW, Mayor City of Round Rock, Texas 15 TK TEXAS N. PROSPERITY. nda Item No. Agenda City Council Agenda Summary Sheet E2. - CONSENT Consider an ordinance adopting a franchise agreement with Atmos Energy Corporation to use and occupy the present and future public rights-of-way for the purpose of distributing gas within the Meeting Date: December 6, 2012 Department: Finance limits. (Second Readi Staff Person making presentation: Cheryl Delaney Finance Director Item Summary: The franchise agreement with Atmos Energy Corporation (Atmos) will expire in December 2012. This franchise agreement assigns license for Atmos to use and occupy the present and future public rights-of-way for delivery and sale of gas within the City's corporate limits. For use of this right-of-way, the City will receive annual compensation (5% of gross revenues). City has negotiated and included the most favorable contract terms that Atmos has developed with other cities to be incorporated into this agreement. This is a ten year agreement. Cost: Recommended Action: N/A Approval of Second Reading