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TO: Honorable Mayor and Members of the City Council
ATTENTION: Jeffrey L. Stewart, City Manager
FROM: Len Gorecki, Assistant City Manager/Director of Public Works Bernardo Iniguez, Public Works Manager
SUBJECT: Consideration and possible action to adopt Resolution No. 22-64 – A Resolution approving the transfer of an oil pipeline franchise (Agreement File No. 137.1) from Paramount Pipeline, LLC to Air Products and Chemicals, Inc.
DATE: November 14, 2022
EXECUTIVE SUMMARY
This action would approve the transfer of Franchise Agreement File No. 137.1 (AFN 137.1) from Paramount Pipeline, LLC (Paramount Pipeline) to Air Products and Chemicals, Inc. (Air Products).
RECOMMENDATION TO CITY COUNCIL
1) Adopt Resolution No. 22-64; or
2) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
The franchise fee payment under AFN. 137.1 was $13,003 for year 2021, based on the rates for a nonpublic utility oil pipeline. The franchise fee payment for year 2022 will be due by March 1, 2023. There are no fees associated with the transfer of the oil pipeline franchise.
BACKGROUND
AFN 137.1, a nonpublic utility oil pipeline franchise with Paramount Pipeline, is in effect through November 28, 2024. The term of the franchise can be renewed for up to three additional 5-year terms (through November 29, 2034).
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Staff Report – Transfer of Oil Pipeline Franchise
November 14, 2022
BACKGROUND – Continued
On April 6, 2022, Paramount Pipeline and Air Products entered into a Pipeline Purchase and Sale Agreement to purchase the pipeline assets in the City covered under AFN 137.1.
On May 6, 2022, Air Products provided the City with a Notice of Sale of Assets and requested the transfer of the oil pipeline franchise from Paramount Pipeline to Air Products. In accordance with Section 15 of the franchise agreement, the City may consent to the transfer based on a review of the transferee’s financial statements and the transferee’s written acceptance of the franchise agreement’s terms and conditions.
On August 10, 2022, Air Products provided its financial statements, including balance sheets and pro forma statements, in order for Public Works and Finance staff to make a fiscal determination and recommendation to the City Council.
The City has reviewed Air Product’s financial statements and determined that the company has the adequate financial strength to assume the responsibilities established in AFN 137.1. Staff recommends the City Council adopt the attached Resolution approving the transfer of the franchise agreement, with a condition that Air Products provide written confirmation that it will assume and adhere to all terms and conditions of AFN 137.1 and provide a copy of the Purchase and Sale Agreement.
ATTACHMENTS
Resolution No. 22-64....................................................................................................... 3 Notice of Sale of Assets and Request for Transfer ......................................................... 5
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CITY OF BELLFLOWER
RESOLUTION NO. 22-64
A RESOLUTION APPROVING THE TRANSFER OF AN OIL
PIPELINE FRANCHISE (AGREEMENT FILE NO. 137.1) FROM
PARAMOUNT PIPELINE, LLC TO AIR PRODUCTS AND
CHEMICALS, INC.
THE CITY COUNCIL RESOLVES AS FOLLOWS:
SECTION 1. The City Council finds and declares as follows:
A. The City Council adopted Agreement File No. 137.1 (AFN 137.1) on November 29, 2004, granting a nonpublic utility oil pipeline franchise to Paramount Petroleum Corporation;
B. On March 16, 2018, Paramount Petroleum Corporation (Paramount Petroleum) and Paramount Pipeline, LLC (Paramount Pipeline) entered into a Pipeline/Tank Farm Asset Purchase and Sale Agreement to purchase the pipeline assets in the City of Bellflower (City) covered under AFN 137.1;
C. On April 8, 2019, the City of Bellflower (City) adopted Resolution No. 19-22 to approve the transfer of AFN 137.1 from Paramount Petroleum to Paramount Pipeline;
D. On April 6, 2022, Paramount Pipeline and Air Products and Chemicals, Inc. (Air Products) entered into a Pipeline Purchase and Sale Agreement to purchase the pipeline assets in the City covered under AFN 137.1;
E. On May 6, 2022 the City received a Notice of Sale of Assets from Air Products requesting a transfer of AFN 137.1 from Paramount Pipeline to Air Products;
F. In order to assume the oil pipeline franchise, Air Products must possess adequate financial responsibility and provide written acceptance to all terms and conditions under AFN 137.1;
G. The City reviewed Air Product’s financial statements and determined it has the adequate financial strength to assume the responsibilities established in AFN 137.1;
H. A letter of assumption and adherence to all terms and conditions of AFN 137.1 (the “Letter”) will be required from Air Products in order to complete the transfer.
SECTION 2. The City Council approves the transfer of AFN 137 from Paramount Pipeline to Air Products, conditioned on the following items being completed within 10 calendar days from the adoption of this Resolution:
1) the Letter being properly signed on behalf of Air Products; and
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City of Bellflower
Resolution No. 22-64
2) Air Products providing the City a copy of the duly executed instrument of the transfer.
SECTION 3. This Resolution does not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before, this Resolution’s effective date. Any such amended part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Resolution.
SECTION 4. If any part of this Resolution or its application is deemed invalid by a court of competent jurisdiction, the City Council intends that such invalidity will not affect the effectiveness of the remaining provisions or applications and, to this end, the provisions of this Resolution are severable.
SECTION 5. To the extent that any other resolution pertaining to the transfer of AFN 137.1 is incorporated into this Resolution, it is superseded in its entirety.
SECTION 6. The Mayor, or presiding officer, is authorized to sign this Resolution signifying its adoption by the City Council of the City of Bellflower and the City Clerk, or her duly appointed deputy, may attest thereto.
SECTION 7. Electronic Signatures. This Resolution may be executed with electronic signatures in accordance with Government Code §16.5. Such electronic signatures will be treated in all respects as having the same effect as an original signature.
SECTION 8. This Resolution will become effective immediately upon adoption and will remain effective unless repealed or superseded.
PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF BELLFLOWER THIS 14TH DAY OF NOVEMBER 2022.
________________________________
Ray Dunton, Mayor
ATTEST:
________________________________
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
________________________________
Karl H. Berger, City Attorney
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Air Products and Chemicals, Inc.
16945 Northchase Drive, Suite 800
Houston, Texas 77060
Telephone (281) 874-7120
FEDERAL EXPRESS
May 6, 2022
City of Bellflower
Attn: Jeffrey L. Stewart, City Manager
16600 Civic Center Drive
Bellflower, CA 90706
Subject: Notice of Sale of Assets – Agreement File No. 137.1
Paramount Pipeline, LLC (“Paramount Pipeline”) is the Franchisee under the certain Agreement for Oil Pipeline Franchise issued by the City of Bellflower (the “City”) and known as Agreement File No. 137.1 (the “Franchise”). On April 6, 2022, Paramount Pipeline entered into a Pipeline Purchase and Sale Agreement with Air Products and Chemicals, Inc. (Air Products) to purchase, among other things, the pipeline assets in the City covered under the Franchise (the “Pipeline Assets.”)
Please accept this as written notice that effective as of April 6, 2022, Paramount Pipeline and Air Products have finalized the above referenced transaction, which included, the transfer of the Pipeline Assets as evidenced by the enclosed Bill of Sale & Assignment. As required by Section 15 of the Franchise, Paramount Pipeline and Air Products respectfully request that the City consent to the assignment of the Franchise to Air Products.
Air Product’s right of way consultant for this project, Paragon Partners Consultants, Inc. (Paragon), will be contacting you to provide the City with any additional information you or your staff may require to provide consent to the assignment. If you have any questions or require additional information at this time, please contact Michael Boss at Paragon. Mr. Boss can be reached by telephone at (714) 379-3376 ext. 106 or by email at [email protected].
Thank you for your time and consideration.
Sincerely,
Michael Boss
Right of Way Consultant
Enclosure: Bill of Sale and Assignment
cc: Len Goreki (Director of Public Works)
Bernardo Iniguez (Public Works Manager)
Paramount Pipeline
Rick Thibodeaux (Air Products)
Tomi Riley (Air Products)
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