Lone Star Gas-AG 890328GUBMISSION DEADLINE: 5:00 p
Rev.: Effective 1/20/88
I. REF/FILE NUMBER
II.
· Monday - 8 Days Preceding Ci
,il Meeting
AGENDA REqUEST FORM
FOR CITY COUNCILMEETING: 28,
Resolution
ITEM CAPTION : Discussion and consideration
and authorizing the Mayor to sign a Resolution urging
legislature to raise the cap on Street Use Charges
and Gas utilities.
)'ving'
Electrical
III. ACTION RECOMMENDED : stars recommenas approva±.! A
/
-//
Alan D. Ratliff, City Manager
IV. REP. IN ATTENDANCE A: STAFF-
B: OTHER -
V. NOTIFICATION TO :
TU Electric
Tom Parsons
Lone Star Gas
VI.
METHOD OF CONTACT :
DATE
FINANCIAL REVIEW :
in person
3-21-89
1. BUDGETED ITEM
2. BUDGET AMOUNT
3. ESTIMATED AMOUNT FOR THIS ITEM
4. AMOUNT OVER OR UNDER BUDGET
5. LOW BIDDER RECOMMENDED
SOURCE OF FUNDING
CO'S OR BONDS FUNDS
(Series or year authorized)
OPERATING BUDGET' (Accost N~mber)
OT~ER
AGENDA REQUEST FORM
DMEMOI
APPROVED BY CITY MANACER :
ITEM NUMBER__~_~
agenda mailed
3-24-89
: YES NO
: YES NO
CITY MANAGER'S COMMENTS/RECOMMENDATION FOR AGENDA ITEM
ITEM # 8 CITY COUNCIL AGENDA DATED 3-28-89
COMMENTS/RECOMMENDATIONS
The attached letters from the City Attorneys representing
the City of Tyler and the City of Arlington suggest that the
City of Coppell adopt a resolution supporting House Bill
2155 and Senate Bill 1040. These bills have been introduced
simultaneously into the Senate and the House. David Cane
introduced the House Bill and Bill Hailey introduced the
Senate Bill. The question of parody of franchise fees
appears to be the issue and we have generally endorsed the
concept of parody amongst cities within a service
jurisdiction having similar or the same franchise fees. You
will recall we recently obtained an adjustment in the cable
franchise fee to obtain parody with the other cities within
Paragon Cable's service area. It is our understanding that
TU Electric is opposed to this legislation. In discussing
the matter with Mr. Doegey, the City Attorney for the city
of Arlington, we have found that this legislation is
endorsed by the Texas Municipal League and that the City of
Arlington has underwritten the originating cost of the
legislation. They would like to have the support of all
cities in the state supporting these bills. If you chose to
adopt this resolution and approve this change in the
franchise fee cap for electric and gas utilities, we will be
asked to send copies to our state elected officials as well
as to the governor, lt. governor, and speaker of the house
urging their support. Mr. Doegey has stated that it is
their plan to try to get a meeting established with the
Mayors from all the cities who have endorsed this
legislation to meet with Mr. Jerry Ferrington, Chairman of
the Texas Utilities Board to discuss this matter.
We informed Tom Parsons of TU Electric at the 3-21 City
Council meeting that this item will be on the agenda so h
can attend your meeting. We will also inform Lone Star Ga
of the item so they may also attend the meeting.
recommend your endorsement of this resolution and position
TEXAS
March 9, 1989
TO: ALL TU ELECTRIC CITIES
Re:
P.O. BOX 2039
TYLER, TEXAS 75710
CITY HALL
212 NORTH BONNER
Proposed Legislation to Increase
Franchise Fees
I Wanted to make you aware of some proposed legislation being
considered by the City of Arlington and its effect on your city. Most
of you probably have a written franchise ordinance or agreement that
sets out your relationship with and regulation of your local electric
company. Traditionally, most franchises in Texas provided for a
franchise fee of two percent (2%) of the gross receipts of the local
electric company. The City of Tyler's prior franchise with TU Electric
provided for a two percent (2%) franchise fee. However, it is my
understanding that in the early 1970's, TU Electric voluntarily
increased their franchise fee payments to three percent (3%). Many
cities that have been negotiating franchises in the last few years have
attempted, through negotiation, to raise this franchise fee amount to
four or five percent. TU Electric is currently paying three percent
throughout most of their system, but in a very few old Dallas Power &
Light Company cities, has been and is continuing to pay four percent.
However, all recent franchise negotiations with TU Electric have not
resulted in any increase over the standard three percent (3%).
For several months, the City of Arlington has been involved in
attempting to get a bill filed in the Texas Legislature to increase the
state law minimum for franchise fees from two to either four or five
percent. While cities are able to negotiate a higher franchise fee with
companies, and while TU Electric has voluntarily been paying three
percent, there is a state law which says that in the absence of an
agreement, the maximum for such an electric utility franchise fee is two
percent. Franchise fees represent the rental value paid to a city for
the use of that city's right-of-way by the utility to lay or string
their lines. Oust as the value of most easements and other rental
property has increased in the last twenty years, it is reasonable to
believe that the fair rental value of city right-of-way has similarly
increased in the past twenty years. Accordingly, many cities have been
attempting through negotiation to increase that percentage to four or
five percent.
Many cities in Texas are receiving four percent already from their
electric company (other than TU Electric), as well as some gas company
franchises. The most recent and standard percentage for cable
television franchises is five percent. The bill that the City of
Arlington is currently considering attempting to file in the Texas
"An Equal Opportunity and Affirmative Action Organization"
C ty of Arl ngtonTexas
Box 231
Zip Coc~e 76004-0231
ArEngton Phone
(817) 275-3271
Oal~as Phone
Metro (817) 265-3311
TO ALL INTERESTED CITIES:
March 6, 1989
Office of the City Attorney
200 West Abram
Re: Texas Municipal League Legislative Program - Street Use Charge Legislation
The Board of Directors of the Texas Municipal League recently approved TML's
legislative program for the 1989 Texas Legislative Session. Among the items
included was one seeking to introduce and pass legislation which would increase
the amount a city may charge an electric or gas utility for street rental from
the current 2% to 5% of gross receipts from sales within the city.
Attached are some answers to questions you may have concerning this proposed
legislation. Because of the importance of this item and the substantial impact
it could have upon the budget decisions of each city, the City of Arlington has
engaged two lobbyists - one on each side of the aisle - to spearhead efforts in
gaining introduction and passage of this legislation. One of the lobbyists is
Ray Hutchison of ,'utchison, Boyle, Brooks and Dransfield. As I am ~;ure you
know, that firm represents public entities and is well known for its
legislative practice. Mr. Hutchison was a Republican member of the Texas House
of Representatives from 1972 to 1977. The second lobbyist is Bill Messer, a
Democrat, who finished his last term in the Texas House in 1985. Mr. Messer
was part of the TM~ lobbying team for tort reform. Representative clients for
Mr. Messer are the Hospital Association, the Chemical Council, several large
banks and IBM.
It is anticipated the total cost will be approximately $70,000.00 to $75,000.00
for the 1989 Legislative Session and any immediately following special sessions
in which the matter may be included. We would request that ali. interested
cities consider supporting this effort both financially by reimbursing the City
of Arlington a proportionate share suggested at 1¢ per citizen, and politically
by contacting your local legislative representatives to support this legisla-
tion. Any overcollected money will be refunded to the cities involved on a
proportional basis. Please consider the attached material and complete the
questionnaire. Regardless of whether your city chooses to contribute finan-
cially to this effort, your political support is vital. Therefore, we ask that
your City Council adopt a resolution urging the Texas Legislature to support
the passage of this bill.
Sincerely,
i y At~orn'Ey/City of Arlington
Attachments
A RESOLUTION OF THE CITY OF COPPELL, TEXAS
RESOLUTION NO.
A RESOLUTION OF THE CITY OF COPPELL, TEXAS URGING THE TEXAS
LEGISLATURE TO RAISE THE CAP ON STREET USE CHARGES FOR
ELECTRIC AND GAS UTILITIES.
WHEREAS, Texas cities and towns grant gas and
electric utility companies the privilege of using City
property and rights-of-way as the most effective way to
provide services to end user customers; and
WHEREAS, without such privilege, gas and electric
companies could not provide such services and realize
profits; and
WHEREAS, Texas cities and towns may charge a fee
for the use of their property under the laws of the State of
Texas, and may not constitutionally make a gift or lend its
credit to a private person or entity; and
WHEREAS, in 1941, the Texas Legislature restricted
the amount of street use charge a city or town could charge
to an electric or gas utility within the city, limiting the
total charges to two percent (2%) of gross receipts of' the
public utility from the sale of gas or electricity within
the city, absent an agreement with the gas or electric
company; and
WHEREAS, since 1941, the cost of providing such
right-of-way by cities and towns has increased such that
through the passage of time the two percent (2%) cap compels
Texas cities and towns to provide valuable property rights
to gas and electric companies contrary to the Texas
constitution, thereby compelling local taxpayers to
subsidize the business operations of the utility companies;
and
WHEREAS, the federal Cable Franchise Policy and
Communications Act of 1984 authorizes a franchise fee of up to
five percent (5%) of gross receipts for the operation of a
cable television system within a city; and
WHEREAS, several utility companies have
voluntarily agreed to pay a street use charge in excess of
the 1941 cap for electric and gas utilities; and
WHEREAS, bills have been filed in the House and
Senate (HB 2155 and SB 1040, respectively) which, if passed,
would allow cities to be more fairly compensated for the use
of their properties and rights-of-way;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF COPPELL, TEXAS:
Section 1
That the City Council hereby strongly urges the
Texas Legislature to amend Section 182.025(b) of the Texas
Tax Code to allow Texas cities and towns to charge a fee for
the use of city streets, alleys, or public ways by a public
utility up to five percent (5%) of the gross receipts of the
public utility for the sale of gas, electric or water within
the city.
Section 2
That the City Council urges the Texas Legislature
to pass either HB 2155 or SB 1040 relating to this issue.
Section 3
That this resolution shall be forwarded to the
Governor, Lieutenant Governor, Speaker of the Texas House of
Representatives, and all members of the local State
Legislative delegation representing the city.
DULY PASSED by the City Council of the City of
Coppell, Texas, on the day of , 1989.
THE CITY OF COPPELL, TEXAS
ATTEST:
By:
city Secretary
APPROVED AS TO FORM:
By:
City Attorney
CAP.RES #9
By:
Mayor