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May 4, 2012 – Magic Valley Electric Coop Franchise Agreement

ORDINANCE NO. ______

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MISSION, TEXAS APPROVING A FRANCHISE AGREEMENT WITH MAGIC VALLEY ELECTRIC COOPERATIVE, INC.

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF MISSION, TEXAS, that the Franchise Agreement attached hereto and made a part hereof for all purposes is hereby adopted and the Mayor is hereby authorized and directed to execute same. Such Franchise Agreement to take effect on July 1st, 2012

READ, CONSIDERED AND APPROVED ON THE 29TH DAY OF MAY, 2012.

_______________________

Norberto Salinas, Mayor

ATTEST:

________________________

Anna Carrillo, City Secretary

FRANCHISE AGREEMENT

Between

The City of Mission, Texas and

Magic Valley Electric Cooperative, Inc.

ARTICLE 1.

For the purpose of this franchise, the following words and phrases shall have the meaning given in this article, when not inconsistent with the context, words used in the present tense include the future tense, words in the plural number include the singular number, and words in the singular number include the plural number. The word “shall” is mandatory and “may” is permissive. Words not defined in this article shall be given their common and ordinary meaning.

1.1 “City” refers to and is the municipal corporation designated as the City of Mission, Texas, Hidalgo County, Texas and includes the territory as currently is or may in the future be included within the boundaries of the City of Mission, Texas.

1.2 “Company” refers to and is Magic Valley Electric Cooperative, Inc., and its successors and assigns, but does not include its affiliates, subsidiaries or any other entity in which it has an ownership interest.

1.3 “Council” or “City Council” refers to and is the legislative body of the city.

1.4 “Distribution Facilities” refers to and is only that portion of the Company’s electric system, which delivers electric energy from the substation breakers to the point-of delivery of the customer, including all devices connected to that system.

1.5 “Facilities” refer to and are all facilities reasonably necessary to provide electrical energy within and through the City and include plants, works, systems, substation, transmission and distribution structures, lines, equipment, pipes, mains, conduit, transformers, underground lines, meters, wires, cables and poles.

1.6 “Overhead Conversion” refers to and is the process of converting overhead electric distribution facilities to underground facilities.

1.7 “Public Easements” refer to and are public and dedicated easements created and available for use by utilities for their facilities.

1.8 “Relocation” refers to and is the movement of facilities from one location to another in public easements or streets and other public places.

1.9 “Residents” refers to and includes all persons, business, industry, governmental agencies, and any other entity whatsoever, presently located or to be hereinafter located, in whole or in part, within the territorial boundaries of the City.

1.10 “Revenues” refer to and are those amounts of money which the Company receives from its customers within the City from the sale of electrical energy to customers within the City and under rates authorized by the Company’s tariff and represent amounts billed under such rates as adjusted for refunds, the net write-off of uncollectible, accounts, corrections or other regulatory adjustments.

1.11 “Streets and Other Public Places” refer to and are streets, alleys, viaducts, bridges, roads, lanes and other public places in said City.

ARTICLE 2.

GRANT OF FRANCHISE

2.1 Grant of Franchise. The City hereby grants to Company, for the period specified in and subject to the conditions, terms and provisions contained in this franchise, a non-exclusive right to furnish, sell and distribute electrical energy to the City and to all residents of the City. Subject to the conditions, terms and provisions contained in this franchise, the City also hereby grants to the Company a non-exclusive right to acquire, construct, install, locate, maintain, operate and extend into, within and through the City all facilities reasonably necessary to furnish, sell and distribute electrical energy within and through the City and a non-exclusive right to make reasonable use of the streets and other public places as may be necessary to carry out the terms of this franchise. These rights shall extend to all areas of the City as it is now constituted and to additional areas as the City may increase in size by annexation or otherwise.

2.2 Street Lighting Service. Wherever reference is made to the sale of electrical energy or the provision of electric service in this franchise, these references shall be deemed to include the provision of street lighting service. Wherever reference is made to Company facilities, equipment, system or plant in this franchise, this reference shall be deemed to include Company-owned street lighting facilities, equipment, system and plant.

2.3 Term of Franchise. This franchise shall take effect on July 1st, 2012. The term of this franchise shall be for ten (10) years, beginning with said effective date of this franchise and expiring on June 30th, 2022.

2.4 Extent of Franchise. This grant of franchise does not apply to service outside of the Company’s certified service areas.

ARTICLE 3.

FRANCHISE FEE

3.1 Franchise Fee. In consideration for the grant of this franchise, the Company shall pay the City a sum equal to four percent (4%) of all revenues received from the sale of electrical energy within the City, excluding revenues paid by the City to the Company.

3.2 Payment Schedule. For the franchise fee owed on revenues received after the effective date of July 1st, 2012, this franchise, payment shall be made in installments not more than thirty (30) days following the close of the month for which payment is to be made. Initial and final payments shall be prorated for the portions of the months at the beginning and end of the term of this ordinance. All payments shall be made to the City Finance Director. The City Finance Director, or other authorized representatives, shall have access to the books of the Company for the purpose of auditing or checking to ascertain that the franchise fee has been correctly computed and paid.

3.3 Franchise Fee Payment In Lieu of Other Fees. The franchise fee is the only monetary payment to the City for the rights granted in this franchise. The Company, by this agreement, is not exempt from any property tax, from any sales or use tax, from any other tax not related to the franchise, from other fees or taxes assessed generally upon business, or from fees and charges that are uniform and generally applicable to contractors performing similar work.

ARTICLE 4.

SUPPLY, CONSTRUCTION AND DESIGN

4.1 Supply of Electrical Energy. The Company shall take all reasonable and necessary steps to provide an adequate supply of electrical energy to its customers at the lowest reasonable cost consistent with long-term reliable supplies. If the supply of electrical energy to its customers should be interrupted, the Company shall take all necessary and reasonable actions to restore such supply within the shortest practicable time.

4.2 Restoration of Service. In the event the Company’s electric system, or any part thereof, is partially or wholly destroyed or incapacitated, the Company shall use due diligence to restore its system to satisfactory service within the shortest practicable time.

4.3 Obligations Regarding Company Facilities. The Company shall install, maintain, repair, renovate and replace its facilities with due diligence in a good and workmanlike manner and the Company’s facilities will be of sufficient quality and durability to provide adequate and efficient electric service to the City and its residents. Company facilities shall not interfere with the City’s water mains, sewer mains or other municipal use of streets and other public places. The Company shall erect and maintain its facilities in such a way so as to minimize interference with trees and other natural features. Company facilities shall be installed in public easements so far as reasonable so as to cause a minimal amount of interference with such property.

4.4 Excavation and Construction. All excavation and construction work done by the Company shall be done in a timely and expeditious manner which minimizes the inconvenience to the public and individuals. All public and private property and dedicated easements whose use conforms to restrictions in public easements disturbed by Company excavation or construction activities shall be restored as soon as practicable by the Company at its expense to substantially its former condition, subject to inspection by the City Director of Public Works and compliance by the Company with reasonable remedial action required by said Director pursuant to said inspection.

4.5 Relocation of Company Facilities. Any relocation of the Company’s facilities in any street or other public place required, caused or occasioned by any City project shall be at the cost of the Company. Relocation shall be completed within a reasonable time from the date when the City makes its request, such time to be established by the Company as soon as possible after the City’s request. The Company shall be granted an extension time of completion equivalent to any delay caused by conditions not under its control provided that the Company proceeds with due diligence at all times. Relocated underground facilities shall be underground. Relocated aboveground facilities shall be aboveground unless the City agrees to pay the additional cost of moving underground.

4.6 Service to New Areas. If the boundaries of the City are expanded during the term of this franchise, the Company shall extend service to residents in the expanded area at the earliest practicable time and in accordance with the Company’s extension policy. Service to the expanded area shall be in accordance with the terms of this franchise agreement, including payment of franchise fees.

ARTICLE 5.

COMPLIANCE

5.1 City Regulation. The City expressly reserves, and the Company expressly recognizes, the City’s right and duty to adopt, from time to time, in addition to the provisions herein contained, such charter provisions, ordinances, and rules and regulations as may be necessary in the exercise of its police power for the protection of the health, safety and welfare of its citizens and their properties.

5.2 Compliance With City Requirements. The Company will comply with all City requirements regarding curb and pavement cuts, excavating, digging and related construction activities. If requested by the City, the Company shall submit copies of reports of annual and long-term planning for capital improvement projects with descriptions of required street cuts, excavation, digging and related construction activities within thirty (30) days after issuance. Except for emergencies, the City may require that all installations be coordinated with the City’s street improvement programs. The City Director of Public Works shall be the City’s agent for inspection and for compliance with City ordinances and regulations on any such projects.

5.3 City Review of Construction. Prior to construction of any significant transmission lines or generating plant, building, substation or similar structure within the City, if requested by the City, the Company shall furnish to the City the plans for such facilities, and assess and report on the impact of such proposed construction on the City environment. Such plans and reports may be reviewed by the City to ascertain, inter alia, (1) that all applicable laws including building and zoning codes and air and water pollution regulations are complied with, (2) that aesthetic and good planning principles have been given due consideration, and (3) that adverse impact on the environment has been minimized.

5.4 Compliance with Industry Standards. The electrical energy which the Company distributes shall conform with the standards generally recognized in the electric industry and with the tariff provisions of the Company as the same may be amended from time to time.

5.5 Compliance with Air and Water Pollution Laws. The Company shall use its best efforts to take measures which will result in its facilities meeting the standards required by applicable Federal and State air and water pollution laws.

5.6 Inspection. The City shall have the right to inspect at all reasonable times any portion of the Company’s system used to serve the City and its residents. The City shall also have access to Company records for the purpose of determining Company compliance with this franchise. The Company agrees to cooperate with the City in conducting the inspection and to correct any discrepancies affecting the City’s interest in a prompt and efficient manner.

ARTICLE 6.

PUBLIC UTILITY COMMISSION

6.1 Public Utility Commission Regulation. The City and the Company recognize that the lawful provisions of the Company’s tariffs are controlling over any inconsistent provision in this franchise dealing with the same subject matter. In the opinion of the Company, no provision of this franchise is inconsistent with any of the currently effective provisions of the Company’s tariffs.

ARTICLE 7.

CITY USE OF COMPANY FACILITIES

7.1 City Use. The Company will allow others holding a franchise from the City to so utilize such poles and suitable overhead structures upon reasonable terms and conditions to be agreed upon by the Company and such holder of a franchise from the City, provided, however, that the Company shall assume no liability nor shall it be put to any additional expense in connection therewith and the use of said poles and structures by the City or others holding a franchise from the City shall be in such a manner as not to constitute a safety hazard or to interfere unnecessarily with the Company’s use of same.

7.2 Underground Conduit. If the Company installs new electric underground conduit, opens a trench, or replaces such conduit, the Company shall provide adequate advance notice to permit additional installation of similar conduit and pull-wire for the City. If the City wants additional similar conduit and pull-wire, the City will provide the same at its expense to the Company which will install it without further expense to the City provided that such action by the City will not unnecessarily interfere with the Company’s facilities or delay the accomplishment of the project.

ARTICLE 8.

INDEMNIFICATION OF THE CITY

8.1 City Held Harmless. The Company shall construct maintain and operate its facilities in a manner which provides reasonable protection against injury or damage to persons or property, provided, however, said obligation of the Company hereunder shall not increase or decrease its liability on third-party claims, and provided further that the Company’s obligation to the City hereunder shall not be diminished by said exception. The Company shall save and hold the City harmless and indemnify the City from and against all liability or damage and all claims or demands whatsoever in nature, and reimburse the City for all its reasonable expenses arising out of the negligent operations of the Company within the City and the securing of and the exercise by the Company of the franchise rights granted in this ordinance, including any third-party claims, administrative hearings and litigation. None of the City expenses reimbursed by the Company under this section shall be surcharged by the Company. The Company shall not be obligated to hold harmless or indemnify the City for claims or demands to the extent arising out of or in connection with any negligent act or failure to act of the City or any of its officers or employees.

ARTICLE 9.

TRANSFER OF FRANCHISE

9.1 Consent of City Required The Company shall not transfer or assign any rights under this franchise to a third party, excepting only corporate reorganizations of the Company not including a third party, unless the majority of the legal voters voting on the question shall have approved such transfer or assignment.

ARTICLE 10.

PURCHASE OR CONDEMNATION

10.1 City’s Right to Purchase or Condemn. The right of the City to construct, purchase or condemn any public utility works or ways, and the rights of the Company in connection therewith, are hereby expressly reserved.

10.2 Continued Cooperation by Company. In the event the City exercises its power to purchase or condemn, the Company agrees that, at the City’s request, it will continue to supply any service it supplies under this franchise, for the duration of the terms of this franchise pursuant to terms and conditions negotiated for such continued operation.

ARTICLE 11.

REMOVAL OF COMPANY FACILITIES AT END OF FRANCHISE

11.1 Limitations on Company Removal. In the event this franchise is not renewed at the expiration of its term or the Company terminates any service provided herein for any reason whatsoever, and the City has not purchased or condemned the system and has not provided for alternative electrical service, the Company shall have no right to remove said system pending resolution of the disposition of the system. The Company further agrees it will not withhold any temporary services necessary to protect the public and shall be entitled only to monetary compensation in no greater amount than it would have been entitled to were such services provided during the term of this Franchise. Only upon receipt of written notice from the City stating that the City has adequate alternative electrical energy sources to provide for the people of the City shall the Company be entitled to remove any or all of said systems in use under the terms of this franchise.

ARTICLE 12.

FORFEITURE

12.1 Forfeiture. Both the Company and the City recognize there may be circumstances whereby compliance with the provisions of this franchise is impossible or is delayed because of circumstances beyond the Company’s control. The Company shall have a reasonable time, not exceeding six (6) months, in which to remedy the violations. If the Company fails to perform any of the terms and conditions of this franchise and such failure is within the Company’s control, the City, acting by and through its Council, may determine, after hearing, that such failure is of a substantial nature. Upon receiving notice of such determination, the Company shall have a reasonable time in which to remedy the violations. If during said reasonable time corrective actions have not been successfully taken, the City, acting by and through its Council, shall determine whether any or all rights and privileges granted the Company under this agreement shall be forfeited.

12.2 Judicial Review. Any such declaration of forfeiture shall be subject to judicial review as provided by law.

12.3 Other Legal Remedies. Nothing herein contained shall limit or restrict any legal rights that the City or the Company may possess arising from any alleged violation of this franchise.

12.4 Continued Obligations. Upon forfeiture, the Company shall continue to provide service to the City and its residents in accordance with the terms hereof until the City makes alternative arrangements for such service. If the Company fails to provide continued service, it shall be liable for damages to the City.

ARTICLE 13.

AMENDMENTS

13.1 Amendments to Franchise. At any time during the term of this franchise, the City, through its City Council, or the Company may propose amendments to this franchise by giving thirty (30) days written notice to the other of the proposed amendment(s) desired and both parties thereafter will negotiate within a reasonable time in good faith in an effort to agree on mutually satisfactory amendment(s).

ARTICLE 14.

MISCELLANEOUS

14.1 Successors and Assigns. The rights, privileges, franchises and obligations granted and contained in this agreement shall inure to the benefit of and be binding upon the Company, its successors and assigns.

14.2 Third Parties. Nothing contained in this franchise shall be construed to provide rights to third parties.

14.3 Representatives. Both parties shall designate from time to time in writing representatives for the Company and the City who will be the persons to whom notices shall be sent regarding any action to be taken under this ordinance. Notice shall be in writing and forwarded by certified mail or hand delivery to the persons and addresses as hereinafter stated, unless the persons and addresses are changed at the written request of either party, delivered in person or by certified mail. Until any such change shall hereafter be made, notices shall be sent to the City Manager and to the Company addresses as follows:

For the City: Julio Cerda, P.E. City Manager

1201 East 8th Street

Mission, Texas 78572

For the Company: Magic Valley Electric Cooperative, Inc.

P.O. Box 267

Mercedes, Texas 78570

14.4 Severability. Should any one or more provisions of this franchise be determined to be illegal or unenforceable, all other provisions nevertheless shall remain effective; provided, however, the parties shall forthwith enter into good faith negotiations and proceed with due diligence to draft a term that will achieve the original intent of the parties hereunder.

14.5 Entire Agreement. This franchise constitutes the entire agreement of the parties. There have been no representations made other than those contained in this Franchise.

ARTICLE 15.

APPROVAL

15.1 Council Approval. This grant of franchise shall not become effective unless approved by a majority vote of the City Council.

15.2 Company Approval. The Company shall file with the City Clerk its written acceptance of this franchise within thirty (30) days after the adoption of this franchise by the City Council. The acceptance shall be in form and content approved by the City Attorney. If the Company shall fail to timely file its written acceptance as herein provided, this franchise shall be and become null and void.

____________

Mayor

ATTEST:

____________

City Clerk

 

APPROVED AS TO FORM:

___________

City Attorney

 

Atanacio Hinojosa

Magic Valley Electric Co-op, Inc.

 

ATTEST:

_______________________________

Publication Dates:  May 4, 2012

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