La Habra Heights Municipal Code Ch. 10.5 Compensation to the City

The purpose of this Chapter is to regulate the pipeline franchise fees that must be paid to the City of La Habra Heights.

As consideration for the award of any franchise to a public utility for a pipeline system transmitting oil or products of oil, including the extension, renewal, or continuation of a previously granted franchise, the franchisee must pay to the City the following fees:

A. Base Annual Fee. During the term of the franchise, a base annual fee must be paid within
thirty (30) days after the end of each calendar year, including the year in which the
franchise is granted. The base annual fee is determined by multiplying the pipe length
expressed in feet by the applicable base rate, as follows:

Pipe Size (Internal) Diameter Base Rate Per Lineal Foot

0-4-inches $0.088

6-inches $0.132

8-inches $0.176

10-inches $0.220

12-inches $0.264

14-inches $0.308

16-inches $0.352

18-inches $0.396

20-inches $0.440

22-inches $0.484

24-inches $0.528

26-inches $0.572

28-inches $0.616

30-inches $0.660

For pipelines with an internal diameter not listed above, the fees will be in the same
proportion to the fees for a twelve (12) inch-diameter pipe as the diameter of the unlisted
pipe is to twelve (12) inches. The formula used in computing the annual fee also applies to
any replacement, modification or extension of the pipeline.

B. Adjustments. The base annual fee provided for in Subsection A of this section will be
adjusted at the time payment is due by multiplying the base annual fee by the Consumer
Price Index, All Urban Consumers, for the Los Angeles-Anaheim-Riverside Area as
published by the United States Department of Labor, Office of Information, for the month of September immediately preceding the month in which payment is due, and divided by
the Consumer Price Index for June 30, 1989 (June 30, 1989 = 100.0). The multiplying
factor may not be less than one (1). In no event will a base annual fee be charged
that is less than the amount of the base annual fee established by Subsection A of this
Chapter. The indices specified herein are calculated and published by the United States
Department of Labor, Bureau of Labor Statistics. If the Bureau discontinues the calculation
or publication of the Consumer Price Index, All Urban Consumers, for the Los Angeles-
Anaheim-Riverside Area, and no transposition table is available to convert to another
index, then the amount of each annual adjustment in base fees will be computed by using a
comparable governmental index.

C. Conversion of Nonpublic Utility to Public Utility. Upon the expiration of a franchise
issued to the operator of a nonpublic utility pipeline transmitting oil or products of oil, if
that operator has converted or seeks to convert to public utility status, all of the following
must be established to the satisfaction of the City Council in accordance with Public
Utilities Code Section 6231.5(f):

1. Its property is dedicated to the service of the public.

2. Its rates for transportation are established in accordance with tariffs filed with the
California Public Utilities Commission ("Commission").

3. Its accounts and records are established in accordance with rules and regulations
adopted by the Commission.

4. It has filed an appropriate annual report with the Commission.

5. Its rates for transportation are just, reasonable, and nondiscriminatory, as evidenced
either by an order of the Commission approving those rates, or an application for
approval of its rates that is pending with the Commission.

Products of Oil.

As consideration for the award of any franchise to a public utility for a pipeline system
transmitting substances other than oil or products of oil, including the extension, renewal, or
continuation of a previously granted franchise, the franchisee must pay to the City the following
fees:

A. Base Annual Fee. As provided in Section 6231(c) of the California Public Utilities Code,
the franchisee must pay to the City during the term of the franchise two (2%) percent of the
gross annual receipts of the franchisee arising from the use, operation or possession of the
franchise; but this annual payment may not be less than one (1%) percent of the gross
annual receipts of the franchise derived from the sale within the boundaries of the City of
the utility service for which the franchise is awarded.

B. Adjustments. The City reserves the right to change the fees imposed by this section at
three (3) year intervals from the effective date of the agreement granting the franchise, if,
following a public hearing, that action is not in conflict with the law of the State of
California.

The franchisee of any franchise awarded to any entity other than a public utility, as consideration for that franchise, including the extension, renewal, or continuation of a previously granted franchise, must pay to the City the following fees:

A. Base Granting Fee. Upon the initial grant of a franchise, or a franchise that extends,
renews, or continues a previously granted franchise, a base granting fee must be paid in
accordance with the following provisions, whichever is applicable:

1. For pipelines with a total length of one-quarter (1/4) mile or more, the base granting
fee will be seven thousand five hundred ($7,500.00) dollars.

2. For pipelines with a total length of less than one-quarter (1/4) mile, the base granting
fee will be the sum of one thousand six hundred ($1,600.00) dollars. If, at any time
during the first five (5) years following the grant of a franchise, additional pipeline is
added that results in a total length of pipeline of one-quarter (1/4) mile or more,
payment of the base granting fee as determined above will be required at the same
time that footage is added.
The base granting fee must be paid within thirty (30) days the City Council adopts the
agreement granting the franchise and before the franchisee files its written acceptance of
the agreement.

B. Base Franchise Fee. The franchisee must pay to the City a base franchise fee for the area
occupied by the pipeline at an annual rate of one dollar and sixty-eight ($1.68) cents per
cubic foot. The base franchise fee is payable annually during the term of the franchise, at
the end of each "franchise payment period" as defined in this Code, including the year of
granting the franchise. The base franchise fee accrues at the end of each franchise payment
period for the area occupied by the greatest number of feet of pipeline during that period.
For purposes of this paragraph, the area occupied by a pipeline or conduit, including
protective covering, pipe connections, cathodic protection facilities, pipe casings, and other
minor appurtenances, is equivalent to the volume occupied by a cylinder of equal length
having a diameter that is one (1) inch (for metal pipe) or two (2) inches (for plastic pipe)
greater than the nominal internal diameter of the pipe or conduit, but in no case with an
equivalent cylinder diameter less than four (4) inches. The applicable payment rate must be
computed to the nearest tenth of a cent per lineal foot of pipe. The area occupied by any
appurtenances, such as manholes or vaults, must be computed from the outside dimensions
of the structure. The annual base franchise fee must be paid no later than January 15 after
the end of each calendar year. A penalty will be imposed at the rate of ten (10%) percent
per month, or fraction thereof, for any delinquent payment that is made thirty (30) days or
more after the payment due date. The City reserves the right to adjust the base franchise fee
specified above at any time after the effective date of the agreement granting a franchise,
but the base franchise fee applicable to anyone (1) franchise may be changed only three (3)
times during the life of that particular franchise.

C. Base Construction Charges. Upon commencement of the installation, relocation, or
replacement of any pipeline or other facility covered by the franchise, the franchisee must
pay a base construction charge of three thousand three hundred eighty-four ($3,384.00)
dollars for each one-half (1/2) mile of trench or fractional part thereof that is installed on
major streets, and two thousand two hundred thirty-two ($2,232.00) dollars for each one-
half (1/2) mile of trench or fractional part thereof that is installed on minor streets. In either case, the actual costs of inspection may be charged if they exceed the base construction
charge. The City reserves the right to change these base construction charges at any time
after the effective date of the agreement granting a franchise, but the base construction
charges applicable to anyone (1) franchise may be changed only three (3) times during the
life of that particular franchise.

D. Adjustments. Base fees specified in the Section will be adjusted as follows.

1. At the time payment is due, the amount of each base fee will be adjusted by the
percentage change in the Consumer Price Index, All Urban Consumers, for the Los
Angeles-Anaheim-Riverside Area (1982-84 = 100), for the period July 1, 1998, to the
date that is sixty (60) days prior to the due date of the fee.

2. No base fee will be charged that is less than the amount of the base fee specified in
paragraphs B and C of this section.

3. The indices specified above are calculated and published by the United States
Department of Labor, Bureau of Labor Statistics. If the Bureau discontinues the
calculation or publication of the Consumer Price Index, All Urban Consumers, for the
Los Angeles-Anaheim-Riverside Area (1982-84 = 100), and no transposition table is
available to convert to another index, then the amount of each annual adjustment in
base fees will be computed by using a comparable governmental index.

If facilities are abandoned by the franchisee with the approval of the City as elsewhere provided in this Article, or if facilities are removed by the franchisee, or if a franchise is granted that has an initial franchise payment period of less than six (6) months, the annual base franchise fee will be prorated for that calendar year, as of the end of the calendar month in which that abandonment, removal or grant occurs.

Franchisee must preserve for a period of five (5) years all records necessary to determine the amount of any fee that is payable to the City under the provisions of this Chapter. At all reasonable times, the franchisee must permit the City to inspect all property of the franchisee that is erected, constructed, laid, operated or maintained under the franchise, and to examine and make copies of all books, accounts, papers, maps, and other records maintained by the franchisee, or under its control, that concern the operations, transactions, property, or financial condition of the franchisee. These records must be made available to the City at a location in either Los Angeles County or Orange County.