Introduction of an Ordinance to
Renew a Franchise Agreement for
Nitrogen Distribution
Chip Taylor
Public Works Director
2City of Sunnyvale – Franchise Agreement for Nitrogen Distribution – November 18, 2025 • Nitrogen is an inert gas used in packaging and manufacturing • Current Franchise agreement in place with the city since 1978 • Franchise Ordinance was amended and extended over time • Current 15-year agreement expires Dec. 31, 2025
• Air Products requested to extend the agreement for 15 years • Current Revenue is approximately $40K annually
Background
3City of Sunnyvale – Franchise Agreement for Nitrogen Distribution – November 18, 2025 • Staff conducted a survey of rates in the area
• Rates methodologies vary between Cities
• Staff balance remaining competitive rate while maximizing revenue • Recommended Rate consistent with Fremont and Milpitas • Estimate annual review $100k annually
Discussion
4City of Sunnyvale – Franchise Agreement for Nitrogen Distribution – November 18, 2025 Alternatives
Recommendation
1. Introduce an Ordinance awarding a fifteen-year extension to an existing franchise for the distribution of nitrogen gas
2. Do not introduce an Ordinance to renew the franchise agreement
3. Do not introduce an Ordinance and direct staff to negotiate different terms with Air Products.
•
Staff Recommendation
• Alternative 1 – Introduce an Ordinance awarding a fifteen-year extension to an existing franchise for the distribution of nitrogen gas