CITY OF SIGNAL HILL
STAFF REPORT
2175 Cherry Avenue • Signal
Hill, California 90755-3799
2/22/2022
AGENDA ITEM
TO:
HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM:
SCOTT CHARNEY
DEPUTY CITY MANAGER
THOMAS BEKELE
PUBLIC WORKS CONTRACTS MANAGER
SUBJECT:
RESOLUTION OF INTENT TO GRANT A PIPELINE FRANCHISE TO SIGNAL HILL PETROLEUM, INC.
Summary:
Signal Hill Petroleum, Inc. is requesting to renew a pipeline franchise to operate their pipeline facilities within the City’s right-of-way. Should the Council wish to renew the franchise, the Council would adopt the proposed resolution and set a public hearing.
Recommendations:
1. Adopt a resolution, entitled:
A RESOLUTION OF INTENT OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL,
CALIFORNIA, DECLARING ITS INTENTION TO GRANT A FRANCHISE TO SIGNAL HILL
PETROLEUM, INCORPORATED AND THE INTERESTS, RIGHTS, PRIVILEGES, AND
DUTIES TO LAY AND USE PIPES AND APPURTENANCES FOR TRANSMITTING AND
DISTRIBUTING OIL AND PETROLEUM PRODUCTS FOR ANY AND ALL LAWFUL
PURPOSES UNDER AND ALONG THE PUBLIC STREETS, WAYS, ALLEYS, AND PLACES,
AS THE SAME NOW OR MAY HEREAFTER EXIST, WITHIN THIS CITY
2. Set a public hearing for March 22, 2022.
Fiscal Impact:
In 2020, the City received $206,094.75 in franchise fees for the franchise under Ordinance No. 2007- 04-1373, currently owned by Signal Hill Petroleum, Inc. (SHP). The total pipeline footage for the CITY OF SIGNAL HILL Page 1 of 4 Printed on 2/17/2022
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franchise is 167,596 feet - 98,957 feet classified as “active” pipeline and 68,639 feet as “inactive”.
The proposed franchise includes a new total of 168,931 feet - with 100,292 feet classified as “active” pipeline and 68,639 feet as “inactive”. Based on the updated classifications and the current fee schedule, the shift in pipeline footage will increase the annual franchise fees from $206,094.75 to $209,925.24.
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The franchise fee is updated annually based on inflation, and the Finance Department utilizes current fees when preparing annual invoices. Upon the granting of the proposed franchise, SHP will be responsible for the continued payments of franchise fees. In addition, SHP submitted a deposit of $7,000 to the City for labor and media publication costs associated with processing the pipeline franchise.
Strategic Plan Objectives:
Goal No. 1: Ensure long-term fiscal stability.
Goal No. 6: Promote a transparent and open government.
Background and Analysis:
SHP is the owner of the pipeline franchise under Ordinance No. 2007-04-1373 (Attachment A), which was created when SHP purchased and consolidated five separate pipeline franchises in 2007. Four of the former franchises each correspond to a regional unit or zone of SHP’s pipeline facilities, while one franchise (Lomita Producers) spans multiple units.
· The franchise originally granted to Independent Exploration Co. in 1990 covers the pipelines in SHP’s Long Beach Community Unit.
· The franchise originally granted to Barto/Signal Petroleum in 1990 covers pipelines in the East Unit.
· The franchise originally granted to SHP in 1990 covers pipelines in the Central Unit. · The franchise originally granted to Texaco Exploration and Production, Inc. in 1992 covers pipelines in the West Unit.
· The franchise originally granted to Lomita Producers, Ltd. in 1995 covers the vapor recovery pipelines in SHP’s West, South, Central, and East Units.
The 15-year term for this pipeline franchise is expiring in 2022 and a new franchise is required for SHP to continue operating and maintaining their facilities in the right-of-way.
SHP has conducted business in the City for many years and has made their franchise fee payments in full and on time throughout the term of the current agreement. Staff is recommending that the City Council adopt the resolution stating the City’s intent to grant a franchise to SHP. If adopted, the resolution will set a public hearing date of March 22, 2022. The public hearing will allow the City Council to receive public comments on the proposed granting of the pipeline franchise to SHP.
Reviewed:
_________________________
Sharon del Rosario
Approved:
_________________________
Hannah Shin-Heydorn
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Attachments
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