Item No. 8.
TO:HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM:OFFICE OF THE CITY MANAGER
BY:MATTHEW BAUMGARDNER, DIRECTOR OF PUBLIC WORKS/CITY ENGINEER DATE:APRIL 28, 2026
SUBJECT:ADOPTION OF A RESOLUTION DECLARING INTENTION TO RENEW FRANCHISE
AGREEMENT WITH TESORO SOCAL PIPELINE COMPANY LLC
EXECUTIVE SUMMARY
The City Council will consider adopting Resolution No. 26-8345 declaring its intention to grant a pipeline franchise agreement to Tesoro SoCal Pipeline Company LLC (Tesoro) and setting a public hearing for May 12, 2026, affording the public an opportunity to provide testimony and comment on the proposed franchise agreement. The existing oil pipeline franchise agreement with Tesoro expired on February 10, 2026. The proposed term would be extended through February 2036.
RECOMMENDATION
That the City Council:
1. Adopt Resolution No. 26-8345, declaring its intention to renew the oil pipeline franchise agreement with Tesoro SoCal Pipeline Company LLC; and,
2. Set a public hearing date of May 12, 2026 to hear testimony and comments on the proposed franchise agreement.
BACKGROUND
On January 10, 2006, the City Council adopted Ordinance No. 06-1184, granting a 10-year franchise agreement to BP West Coast Products, LLC to construct, operate, maintain, inspect, repair, remove, replace, and abandon an 8- inch oil pipeline within certain streets of the City. The City Council subsequently adopted Resolution No. 13-7430 on July 23, 2013 granting a transfer of the franchise from BP West Coast Products LLC to Tesoro Refining and Marketing Company LLC, currently known as Tesoro. On October 12, 2015, Tesoro submitted a request to the City to extend the franchise agreement for another 10 years as it was set to expire on February 10, 2016. On January 26, 2016, the City Council adopted Ordinance No. 16-1351, granting the extension of the oil pipeline franchise agreement to Tesoro. The pipeline is part of an underground system through several cities that transports oil. It will continue to be operated and maintained by Tesoro.
The existing franchise agreement between the City and Tesoro expired on February 10, 2026. The attached map shows the location of Tesoro Pipeline within the City (Attachment B).
ANALYSIS
The proposed franchise agreement would be for a 10-year term and contains the rules under which Tesoro would operate the pipeline. Ultimately, the City Council may at its sole discretion approve, deny, or condition the approval of any such request. Per letter dated October 29, 2025, the Office of the State Fire Marshal (OSFM) confirms that the subject pipeline, which passes through the City of Downey, is in compliance with applicable federal and state laws and regulations governing pipeline maintenance and operation.
With the adoption of the attached required resolution, the City Council will be declaring its intention to grant a pipeline franchise agreement to Tesoro and setting a public hearing for May 12, 2026 affording the public an opportunity to provide testimony and comment on the proposed franchise. Upon holding a Public Hearing, the City Council may then introduce an ordinance granting said franchise followed by a second reading and adoption of the ordinance at a subsequent meeting.
Within thirty (30) days following the adoption of the ordinance, Tesoro will pay to the City a base granting fee in the amount of $10,300. Additionally, a base annual fee shall be paid every year within sixty (60) days after the end of each calendar year, including the year of granting. The initial base annual fee for the 19,748 feet of eight (8) inch pipeline within the City of Downey right of way will be $32,387.
The annual payment for each lineal foot of pipeline will be adjusted at the time payment is due by the percentage change in the Consumer Price Index, all Urban Consumers for the Los Angeles-Long Beach-Anaheim area. In no event shall any base fee be charged which is less than the base fee amount of $1.64 per lineal foot.
CITY COUNCIL PRIORITIES
Fiscal Responsibility
FISCAL IMPACT
Approval of the recommended actions will result in an increase in revenues of $42,687 in Fund 10 (General Fund) in Fiscal Year 2025–26 recorded in Revenue Account No. 10-3-1860. In subsequent fiscal years, the City will receive ongoing annual franchise revenues of approximately $32,387, subject to annual Consumer Price Index adjustments.
Attachments
Attachment A: Resolution No. 26-8345 - Intent to Renew Tesoro Franchise Agreement.pdf Attachment B: Location Map Tesoro Pipeline