Item No. 1.
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:MAY 12, 2026
SUBJECT:REQUEST FOR FRANCHISE AGREEMENT RENEWAL WITH TESORO SOCAL PIPELINE
COMPANY LLC
EXECUTIVE SUMMARY
The City Council will consider adopting an ordinance declaring its intention to grant an oil pipeline franchise agreement to Tesoro SoCal Pipeline Company LLC (Tesoro) which expired on February 10, 2026. The proposed term of this renewal is for 10 years through February 2036. If the franchise agreement is renewed, the estimated first-year franchise fee revenue would be $32,387 which would be adjusted annually in subsequent years by the Consumer Price Index (CPI).
RECOMMENDATION
That the City Council:
1. Conduct a public hearing to consider granting an oil pipeline franchise to Tesoro Pipeline Company LLC; and,
2. Introduce an Ordinance of the City Council of the City of Downey Granting a Renewal of an Oil Pipeline Franchise Agreement to Tesoro Socal Pipeline Company LLC.
BACKGROUND
On January 10, 2006, the City Council adopted Ordinance No. 06-1184, granting a 10-year franchise to BP West Coast Products, LLC to construct, operate, maintain, inspect, repair, remove, replace and abandon an 8” oil pipeline within certain streets of the City. On July 23, 2013, the City Council subsequently adopted Resolution No. 13-7430 granting a transfer of the franchise from BP West Coast Products LLC to Tesoro.
On October 12, 2015, Tesoro submitted a letter to the City requesting the renewal of their franchise agreement for another 10 years. On December 8, 2015, the City Council adopted a resolution declaring its intention of renewing an oil pipeline franchise with Tesoro and setting the date of public hearing for January 12, 2016. Subsequently, on January 12, 2016 the City Council introduced an ordinance upon conclusion of a public hearing on the matter.
On January 26, 2016, the City Council adopted Ordinance No. 16-1351 (Attachment A), granting a 10-year franchise 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.
In late 2025, Tesoro submitted a letter to the City requesting the renewal of their franchise agreement for an additional 10 years. The existing agreement expired on February 10, 2026. The attached map shows the location of Tesoro Pipeline within the City (Attachment B).
ANALYSIS
The proposed franchise 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 and absolute discretion, approve, deny, or condition the approval of any such request. The term of the new franchise, if granted, will be effective February 10, 2026. Per letter dated October 29, 2025 (Attachment C), 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. The notice of public hearing for this item was published in the Downey Patriot on April 30, 2026 (Attachment D).
In accordance with the terms of the franchise agreement, an annual franchise fee shall be paid by Tesoro every year within sixty (60) days after the end of each calendar year, including the year of granting. Within thirty (30) days following the adoption of the ordinance, Tesoro will pay 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. A penalty at the rate of ten percent (10%) per month or fraction thereof beyond the sixty (60) day payment date will be charged.
The annual payment for each lineal foot of pipeline will be adjusted at the time payment is due by the percentage change in the CPI, 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. This rate is consistent with the base fee per lineal foot that is charged by other public agencies in the region.
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 budget for and receive ongoing annual franchise revenues of approximately $32,387, subject to annual Consumer Price Index adjustments.
Attachments
Attachment A- Ordinance no. 26-XXXX.pdf
Attachment B - Project Location Map.pdf
Attachment C - Letter from Fire Marshall.pdf
Attachment D- Notice of Public Hearing.pdf
ATTACHMENT B
ATTACHMENT C
CITY OF DOWNEYNOTICE OF PUBLIC HEARING AND SUMMARY OF PROPOSED ORDINANCE OF THECITY COUNCIL OF THE CITY OF DOWNEY
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DOWNEY GRANTING AN OIL PIPELINE FRANCHISE TO TESORO SOCAL PIPELINE COMPANY LLC Notice is hereby given that a Public Hearing will be held before the Downey City Council, on May 12, 2026, at 6:30
p.m. in the Council Chambers of the
Downey City Hall, 11111 Brookshire Avenue, Downey, California, 90241, to consider the adoption of an Ordinance granting an oil pipeline franchise to Tesoro SoCal Pipeline Company LLC.
The following is a summary of the
proposed Ordinance:
Under Section 1400 of the Downey City Charter, the City Council by Ordinance may grant a franchise to
any person, partnership, corporation,
or other legal entity capable of exercising the privilege conferred, whether operating under an existing franchise or not, and may prescribe the terms, conditions, and limitations
of such grant, including the
compensation to be paid to the City. The City has previously granted a ten-year franchise to Tesoro SoCal Pipeline Company LLC for the operation of a pipeline system for the
transportation of gas, petroleum oil
and other hydrocarbon substances and general operations incidental to the oil industry within certain streets of the City of Downey. This franchise is scheduled to expire on
February 16, 2026. The proposed
Ordinance would grant another ten-year franchise to this same entity for the same purposes on terms and conditions similar to the existing franchise.
Note: The above is a summary of the Ordinance. To obtain a full understanding of the Ordinance, it should be read in its entirety. A copy of the full text of the Ordinance is
posted in the City Clerk’s Office at 11111
Brookshire Ave., Downey, CA 90241, or on the City’s website at https://www.downeyca.org/ .
All interested persons may present
oral comments and information at the
Public Hearing or may e-mail public comments to [email protected] or, submit their written comments to the City Clerk’s Office in person at 11111 Brookshire Ave.
Downey, CA 90241, no later than 2:00
p.m. on the day of the Public Hearing.
M. Alicia Duarte, CMCCity Clerk
The Downey Patriot4/30/26
PROOF OF PUBLICATION
(2015.5 C.C.P.)
STATE OF CALIFORNIA )
County of Los Angeles )
I am a citizen of the United States and a
resident of the county aforesaid; I am over
the age of eighteen years, and not a party
to or interested in the above-entitled matter.
I am the principal clerk of the printer of THE
DOWNEY PATRIOT, a newspaper of general
circulation, published weekly in the City
of Downey, County of Los Angeles and
which newspaper has been adjudged a
newspaper of general circulation by the
Superior Court of the County of Los Angeles,
State of California, under the date of 3/11/10.
Case Number BS124251; that the notice of
which the annexed is a printed copy (set in
type not smaller than nonpareil), has been
published in each regular and entire issue of
said newspaper and not in any supplement
thereof on the following dates, to-wit:
4/30/26
I certify (or declare) under the penalty of
perjury that the foregoing is true and
correct.
Dated at Downey, California
this 30th day of April, 2026.
__________________________________________
Signature
PUBLICATION PROCESSED BY:
THE DOWNEY PATRIOT
10927 DOWNEY AVENUE
SUITE C
DOWNEY, CA 90241
(562) 904-3668
Proof of Publication
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