City Auditor - City Recorder - City Code - 180378 Paramount of Oregon Inc pipeline franchise ordinance

Ordinance No. 180378

Grant a pipeline franchise to Paramount of Oregon, Inc. for a period of 10 years. (Ordinance)

The City of Portland ordains:

Section 1. NATURE AND TERM OF GRANT.

1.1 Grant of Franchise.

(A) The City of Portland, Oregon does hereby grant to Paramount of Oregon, Inc., an Oregon corporation qualified to do business in Oregon, and to its successors and assigns, as approved by the City under Section 14 of this Franchise, a Franchise to construct, operate and maintain a Pipeline System with all necessary pipe line facilities, together with pump stations and other facilities, for the transportation of petroleum products, in and under the Streets, as shown on the map attached hereto as Exhibit A, which is incorporated by reference.

At any point during the term of this Franchise, Grantee may seek to amend, alter or add to its Pipeline System by filing a map showing such proposed changes with the City's Office of Cable Communications and Franchise Management and with the City Engineer. The City shall respond with its approval, modifications, or denial within 45 days from receiving Grantee's proposal. However, the total length of Grantee's pipe line facilities in Streets shall not exceed ten thousand (10,000) feet unless separately authorized by the City Council by ordinance.

(B) Throughout this Franchise, the City of Portland, Oregon, shall be referred to as the "City" and Paramount of Oregon, Inc. shall be referred to as the "Grantee".

1.2 Duration of Franchise. The term of this Franchise, and all the rights and obligations pertaining thereto, shall be ten (10) years from the effective date of this Franchise, unless terminated sooner as provided herein.

1.3 Effective Date. The effective date of this Franchise shall be 60 days after passage of the Franchise by the City Council unless Grantee fails to file an unconditional written acceptance of this Franchise in accordance with Section 19 herein, in which event this Franchise shall be null and void. The passage date of this Franchise is set forth on the last page of the original hereof, as stamped by the Council Clerk.

1.4 Franchise Not Exclusive. This Franchise is not exclusive. The City expressly reserves the right to grant rights, permits or franchises to other Persons or corporations, as well as the right in its own name as a municipality, to use the Streets for similar or different purposes allowed Grantee hereunder, by franchise, permit or otherwise.

1.5 Charter and General Ordinances To Apply. To the extent authorized by law, this Franchise is subject to the Charter of the City of Portland and general ordinance provisions passed pursuant thereto, affecting matters of general City concern and not merely existing contractual rights of Grantee, now in effect or hereafter made effective. Section 10-201 through 10-218, inclusive, of the Charter of the City of Portland, (1942 compilation, as revised in part by subsequent amendments), as the same now exist or hereafter are amended by the people of the City of Portland, are hereby incorporated by reference and made a part of this Franchise, to the extent authorized by law. Nothing in this Franchise shall be deemed to waive the requirements of the various codes and ordinances of the City regarding permits, fees to be paid or the manner of construction.

Section 2. DEFINITIONS.

2.1 (A) Captions. Throughout this Franchise, captions to sections are intended solely to facilitate reading and to reference the sections and provisions of this Franchise. The captions shall not affect the meaning and interpretation of this Franchise.

(B) Definitions. For the purpose of this Franchise, the following terms, phrases, and their derivations shall have the meanings given below unless the context indicates otherwise. 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 include the plural number. The word "shall" is always mandatory and not merely directory.

2.2 "City" means the City of Portland, Oregon, a municipal corporation, and all of the territory within its corporate boundaries, as such may change from time to time.

2.3 "City Council" means the Council of the City of Portland.

2.4 "Facility" means any tangible component of Grantee's Pipeline System.

2.5 "Franchise" means this Franchise agreement, as approved by the City Council and accepted by the Grantee pursuant to Section 19 herein.

2.6 “Indefeasible Right of User Interest” (IRU) means a form of acquired capital in a Pipeline system, in which the holder of the interest possesses a right to use the pipeline system, but not the right to control, maintain, construct or revise the pipeline system.

2.7 “Minimum Annual Franchise Fee” shall mean $10,000 in the first year of this Franchise, and shall increase by $1,000 annually.

2.8 "Penalties" means any and all monetary penalties provided for in this Franchise.

2.9 "Person" means any individual, sole proprietorship, partnership, association, corporation or other form of organization authorized to do business in the State of Oregon, and includes any natural person.

2.10 "Pipeline System" means all of Grantee's pipe line facilities, together with its pump stations, gathering lines and distribution facilities for the transportation of petroleum products, located in or below the Streets.

2.11 "Street" means the surface of, and the space above and below, any public street, road, alley or highway, within the City, used or intended to be used by the general public, to the extent the City has the right to allow the Grantee to use them.

2.12 "Year", "Annual", or "Annually" means the period consisting of a full calendar year, beginning January 1 and ending December 31, unless otherwise provided in this Franchise.

Section 3. COMPENSATION.

3.1 Amount of Compensation.

(A) As compensation for the benefits and privileges under this Franchise, and in consideration of permission to use the Streets of the City, the Grantee shall pay as a franchise fee to the City, through the duration of this Franchise, an amount equal to the greater of the Minimum Annual Franchise Fee or $3.22 (for calendar year 2005) per linear trench foot of Grantee’s Pipeline System in the Streets. The total number of linear trench feet of Grantee’s Pipeline System located in the Streets shall be determined by the as-built maps submitted by the Grantee, and approved by the City Engineer, as provided in Section 6.1(B).

Compensation to the City for the use of the Streets is a franchise fee calculated by the following formula:

F = C x R, where

"F" shall mean the franchise fee.

"C" shall mean the total length of the trenches through the Streets occupied by Grantee's pipes, structures, and other facilities, measured in linear feet along the major axis. The total number of linear feet of Grantee's Pipeline System located in the Streets shall be determined by the as-built maps submitted by the Grantee, and approved by the City Engineer, as provided in Section 6.1(B).

"R" shall mean the rate per linear foot. The initial rate shall be $3.22 per linear foot of Grantee's Pipeline System in the Streets for calendar year 2005.

(B)(1) The amount of the franchise fee specified herein shall increase annually by a percentage equal to the change in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers for the Portland, Oregon metropolitan region for the prior year, unadjusted for seasonal variations, as determined by the Bureau of Labor Statistics of the Department of Labor and as published in such Bureau of Labor Statistics Detailed Report during the time period immediately prior to the due date of the franchise fee payment.

(2) As an example of the calculation of the CPI adjustment, for 2005 the calculation would be as follows:

The 2004 linear foot fee was $3.15. The percentage change in the CPI for calendar year 2004 was 2.3%. $3.15 multiplied by 2.3% = $0.07245, which rounds to $0.07. The annual CPI adjustment for 2005 is therefore $0.07. Adding the 2005 CPI adjustment to the 2004 linear foot fee provides a 2005 Linear foot fee of $3.22 ($3.15 + $0.07). Multiplying the 2005 linear foot fee by the total linear feet provides the 2005 linear foot franchise fee. The calculation of the CPI adjustment for calendar year 2006 would be similar, but would apply the 2005 CPI to $3.22 to determine the 2006 linear foot franchise fee.

3.2 As additional compensation to the amounts set forth in Section 3.1(A):

(A) In the event Grantee sells any portion of its Pipeline System in the Streets, Grantee shall pay a one-time franchise fee to the City of one percent (1%) of the sales price; and,

(B) In the event Grantee enters into any lease or grants any IRU for any portion of its Pipeline System in the Streets, Grantee shall pay annually to the City a franchise fee of five percent (5%) of the revenues from any such leases and IRUs.

(C) The calculation of the one percent (1%) franchise fee on sale revenue shall be based on the sale price of the Portland, Oregon portion of the Pipeline System or a minimum annual fee of $10,000, whichever is greater.

The calculations of the one percent (1%) franchise fee on sale revenue shall be calculated under the following formula:

Franchise fee = (0.01) x Ts x (Fp/Ft), where:

Ts = Total sales price or periodic lease payments for the facility, expressed in Dollars/pipeline-miles;

Fp = the length of the facilities sold or leased, located within the City, expressed in pipeline-miles; and,

Ft = the total length of the facilities sold, expressed in pipeline-miles.

The calculations of the five percent (5%) franchise fee on leases and IRU revenues shall be calculated under the above formula using 5%.

3.3 Franchise Fee Payments.

(A) Grantee's first Minimum Annual Franchise Fee payment to the City shall be made on or before the forty fifth (45^th) day following the Effective Date of this Franchise. For all subsequent years, the Minimum Annual Franchise Fee shall be paid on or before the forty fifth (45^th) day following December 31^st. However, if the linear foot fee, after adjustment for the CPI for any given year in the Franchise, exceeds the Minimum Annual Franchise Fee, then the Grantee shall pay the amount in excess to the City within forty five (45) days of receiving Notice from the City of the CPI adjustment for that year.

(B) Payment not received by the City within forty-five (45) days from the due date shall be assessed interest based on the average prime interest rate set by the City’s bank, Wells Fargo Bank, N.A. on December 31st of the previous year, plus 300 basis points (3%). At no time shall the annual interest rate be reduced to less than 12%. Interest shall be due on the entire late payment from the date on which the payment was due until the date on which the City receives the payment.

3.4 Reports. Accompanying each franchise fee payment to the City, Grantee shall file with the City a report setting forth the total length of the trenches through the Streets occupied by Grantee's lines, pipes, and facilities, measured in linear feet along the major axis, the amount per linear foot, together with its calculation of the franchise fee payment, any adjustments for inflation, and the total amount due.

3.5 Cost of Pre-franchising and Publication. Grantee has paid the City Five thousand Dollars ($5,000) for its pre-franchising costs, including publication of this Franchise, as such publication is required by the City Charter.

3.6 Acceptance of Payment and Recomputation. No acceptance of any franchise fee payment shall be construed as an accord that the amount paid is, in fact, the correct amount, nor shall any acceptance of payments be construed as a release of any claim the City may have for further or additional sums payable. All amounts paid under this Section 3 shall be subject to confirmation and recomputation by the City, provided that such audit and computation is completed within five (5) years of the date any audited and recomputed payment is due. If no such audit is conducted within the five (5) year period, then any claim that the City might have had for additional compensation shall be forever waived and relinquished. The Grantee agrees to reimburse the City for:

(A) The reasonable costs of such confirmation if the City’s recomputation discloses that the Grantee has paid 95% or less of the franchise fees owing for the period at issue upon receipt of an invoice from the City showing such costs were actually incurred and directly related to the audit; or

(B) One-half of the reasonable costs of such confirmation if the City’s recomputation discloses that the Grantee had paid more than 95% but less than 98% of the franchise fees owing for the period at issue.

(C) The City’s confirmation costs which may be reimbursed under this Section 3 shall not exceed Five Thousand Dollars ($5,000.00) per audit.

3.7 If the Grantee disputes the City’s determination of underpayment, the Grantee shall place the disputed amount in an escrow account until final resolution.

3.8 The City and its agents and representatives shall have authority to arrange for and conduct reviews, within the Portland metropolitan region, upon no less than 48 hours prior written notice, during normal business hours, of the relevant financial obligations payable hereunder. The City may determine the scope of review in each instance. All amounts paid by Grantee shall be subject to review by the City, provided that such review be completed within five (5) years from the date payment was due. If the City requests in writing that the Grantee provide, or cause to be provided, copies of any information reasonably within the scope of the review, and the Grantee fails within 30 days of receipt of the request to provide, or cause to be provided, such information, then the five (5) year period shall be extended by one day for each day or part thereof beyond 30 days that Grantee fails to provide, or fails to cause to be provided, such requested information.

3.9 Payment of franchise fees shall not exempt Grantee from the payment of any license fee, tax or charge on the business, occupation, property or income of Grantee that may be lawfully imposed by the City or other taxing authority, except as may otherwise be provided in the ordinance or ordinances imposing such other license fee, tax or charge.

Section 4. GENERAL FINANCIAL AND INSURANCE PROVISIONS.

4.1 (A) Grantee shall maintain public liability and property damage insurance that protects the Grantee and the City, as well as the City’s officers, agents, and employees from the claims referred to in Section 5. The insurance shall provide coverage at all times of not less than $200,000 for personal injury to each person, $500,000 for each occurrence, and $50,000 for each occurrence involving property damages, plus costs of defense; or a single limit policy of not less than $500,000 covering all claims per occurrence, plus costs of defense. The limits of the insurance shall be subject to any changes as to maximum statutory limits of liability imposed on municipalities of the State of Oregon during the term of the Franchise. The insurance shall be without prejudice to coverage otherwise existing and shall name as additional insureds the City and its officers, agents, and employees. Notwithstanding the naming of additional insureds, the insurance shall protect each insured in the same manner as though a separate policy had been issued to each, but nothing herein shall operate to increase the insurer's liability as set forth elsewhere in the policy beyond the amount or amounts for which the insurer would have been liable if only one person or interest had been named as insured. The coverage must apply as to claims between insureds on the policy. The insurance shall provide that the insurance shall not be canceled or materially altered without thirty (30) days prior written notice first being given to the City Auditor. If the insurance is canceled or materially altered within the term of this Franchise, Grantee shall provide a replacement policy with the same terms. Grantee agrees to maintain continuous uninterrupted coverage, in the terms and amounts required, for the duration of the Franchise.

(B) The Grantee shall maintain on file with the City Auditor a certificate of insurance certifying the coverage required above. The adequacy of the insurance shall be subject to the reasonable approval of the City Attorney.

(C) In the alternative to providing a certificate of insurance to the City certifying liability insurance coverage as required in this Section 4.1(A), Grantee may provide the City with a statement regarding its self-insurance. Grantee’s self-insurance shall provide at least the same amount and scope of coverage for the Grantee and the City, its officers, agents and employees, as otherwise required under this Section. The adequacy of such self-insurance shall be subject to the City Attorney’s review and approval. Upon Grantee’s election to provide self-insurance coverage under this Section, any failure by the Grantee to maintain adequate self-insurance shall be cause for immediate termination of this Franchise under Section 15.

4.2 Faithful Performance Bond.

(A) Upon the effective date of this Franchise, the Grantee shall furnish proof of the posting of a faithful performance bond running to the City, with good and sufficient surety approved by the City, in the penal sum of not less than $100,000, conditioned that the Grantee shall well and truly observe, fulfill, and perform each term and condition of the Franchise. Grantee shall pay all premiums charged for the bond, and shall keep the bond in full force and effect at all times throughout the term of the Franchise, including, if necessary, the time required for removal of all of Grantee’s Pipeline System installed in the City’s Streets. The bond shall contain a provision that it shall not be terminated or otherwise allowed to expire without 30 days prior written notice first being given to the City Auditor. The bond shall be reviewed and approved as to form by the City Attorney.

(B) During the term of the Franchise, Grantee shall file with the City Auditor a duplicate copy of the bond along with written evidence of payment of the required premiums. However, in no event shall the City exercise its rights against the performance bond under this Section if a bona fide, good faith dispute exists between the City and the Grantee.

4.3 Construction bond. During all times when Grantee is performing any construction work in or under the Streets requiring a Street opening permit, Grantee shall post a faithful performance bond running to the City, as is required for Street opening permits, with good and sufficient surety approved by the City, in the sum of $100,000. The bond shall be conditioned that the Grantee shall well and truly observe, fulfill and perform each term and condition under Section 6. Grantee shall pay all premiums or other costs associated with maintaining the bond, and shall keep the same in full force and effect at all times during the construction work. The bond shall provide that it may be terminated upon final approval of Grantee’s construction work in or under the Streets by the City Engineer which shall not be unreasonably withheld or delayed. Upon such approval, the City agrees to sign all documents necessary to release the bond in accordance with the terms of this Section. During the duration of the construction work, Grantee shall file with the City Auditor a copy of the bond, along with written evidence of the required premiums. The bond shall be subject to the reasonable approval of the City Attorney as to its adequacy under the requirements of this Section.

Section 5. COVENANT TO INDEMNIFY AND HOLD CITY HARMLESS.

(A) Grantee hereby agrees and covenants to indemnify, defend and hold the City, its officers, agents and employees, harmless from any direct claim for injury, damage, loss, liability, cost or expense, including court and appeal costs and reasonable attorney fees or expenses, arising from any casualty or accident to person or property by reason of any construction, excavation or any other act done under this Franchise, by or for Grantee, its agents or employees, or by reason of any neglect or omission of Grantee to keep its pipes, structures, or other facilities in a safe condition, but not if arising out of or by reason of any negligence or willful misconduct by the City, its officers, agents or employees. The City shall provide Grantee with prompt notice of any such claim which Grantee shall defend with counsel of its own choosing and no settlement or compromise of any such claim will be done without the prior written approval of Grantee. Grantee and its agents, contractors and others shall consult and cooperate with the City while conducting its defense of the City.

(B) Grantee also hereby agrees to indemnify the City for any damages, claims, additional costs or expenses assessed against or payable by the City arising out of or resulting, directly or indirectly, from Grantee's failure to remove, adjust or relocate any of its pipes, structures or other facilities in the Streets in a timely manner in accordance with a relocation schedule furnished Grantee by the City Engineer in writing, unless Grantee’s failure arises directly from the City’s negligence or willful misconduct.

Section 6. CONSTRUCTION AND RELOCATION.

6.1 (A) Subject to applicable regulations of the City, Grantee may perform all necessary construction to construct, operate and maintain its Pipeline System. All construction and maintenance of any and all Pipeline System Facilities within Streets shall, regardless of who performs installation and/or construction, be and remain the responsibility of Grantee. Grantee shall apply for and obtain all permits necessary for installation and/or construction of any such Facilities, and for excavation and laying of any Pipeline System Facilities within City Streets. Grantee shall pay all applicable fees due for City construction permits.

(B)(1) Prior to beginning construction, Grantee shall provide the City's Office of Cable Communications and Franchise Management with an initial construction schedule for work in the Streets and the estimated total cost of such work. When Grantee's construction in the Streets is completed, Grantee shall provide the City with the total amount of Streets, measured linearly, occupied by Grantee's Pipeline System, with a map showing the location of its installed Pipeline System in the Streets, as built. Such "as-built" maps shall be in a form acceptable to the City Engineer.

(2) Maps. One year after the effective date of this Franchise, and annually thereafter in the event of any alterations, Grantee shall provide a map to the City’s Office of Cable Communications and Franchise Management, or its successor, showing the location of Grantee’s Pipeline System in the Streets on a scale of three thousand five hundred feet (3,500’) per inch or whatever standard scale the City adopts for general use. Grantee shall also provide such maps in an electronic format acceptable to the City and the Grantee.

(C) Grantee may make excavations in City Streets for any Facility needed for the maintenance of the Grantee’s Pipeline System, subject to obtaining permits from the City. Prior to doing such work, Grantee must apply for, and obtain, appropriate permits from the City, and give appropriate notices to any further franchisees, licensees or permittees of the City, or bureaus of the City or other units of government owning or maintaining facilities which may be affected by the proposed excavation, as provided in Section 6.2.

(D) In the event that emergency repairs are necessary for its Facilities in the Streets, Grantee shall immediately notify the City of the need for such repairs. Grantee may immediately initiate such emergency repairs, and shall apply for appropriate permits the next business day following discovery of the emergency. Grantee must comply with all Charter and ordinance provisions relating to such excavations or construction, including the payment of permits or license fees.

6.2 Locates. Grantee shall comply with the requirements of the Oregon Utility Notification Law (ORS 757.542 through 757.562 and 757.993 (2005), and the rules and regulations promulgated thereunder, as currently set forth in OAR Chapter 952.

6.3 Relocation. The City shall have the right to require Grantee to change the location of its Pipeline System within the Streets when the public convenience requires such change, and the expense thereof shall be paid solely by Grantee. The City shall provide the Grantee with the standard notice given under the circumstances to other franchisees, licensees, or permitees. Should Grantee fail to remove or relocate any such Facilities by the date established by the City, the City may cause and/or effect such removal or relocation, and the expense thereof shall be paid by Grantee, including all direct, indirect and/or consequential costs and expenses incurred by the City due to Grantee’s delay. If the City requires Grantee to relocate its Facilities located within the City’s Streets, the City will make a reasonable effort to provide Grantee with an alternate location for its Facilities within the City’s Streets.

6.4 Grantee’s Pipeline System shall be constructed and maintained in such manner as not to interfere with sewers, water pipes, or any other property of the City, or with other facilities that may have been laid in the Streets by or under the City’s authority. The Pipeline System constructed or erected by Grantee shall be of good quality and workmanship and shall be maintained in good repair and efficiency.

6.5 Upon Grantee’s acquisition of any facilities in the Streets, or upon any addition or annexation to the City of any area in which Grantee retains any such Facilities in the Streets, the Grantee shall submit to the City a written statement describing all Facilities involved, whether authorized by franchise or any other form of prior right, and specifying the location of all such Facilities. At the City’s sole option, as expressed by ordinance adopted by the City Council, such acquired Facilities shall be subject to the terms of this Franchise, within a reasonable period of time to bring such acquired Facilities into compliance with this Franchise and Grantee shall pay additional franchise fees as determined by the City.

Section 7. RESTORATION OF STREETS.

7.1 Whenever Grantee disturbs the surface of any Street for any purpose, Grantee shall promptly restore the Street to at least its prior condition, to the satisfaction of the City Engineer. When any opening is made by Grantee in a hard surface pavement in any Street, Grantee shall promptly refill the opening and restore the surface to a condition satisfactory to the City Engineer.

7.2 If Grantee excavates the surface of any Street, Grantee shall be responsible for restoration of the Street and its surface within the area affected by the excavation. The City may, after providing notice to Grantee, refill and/or repave any opening made by Grantee in the Street, and the expense thereof shall be paid by Grantee. The City reserves the right, after providing notice to Grantee, to remove and/or repair any work done by Grantee which, in the determination of the City Engineer, is inadequate. The cost thereof, including the cost of inspection and supervision, shall be paid by the Grantee. All excavations made by Grantee in the Streets shall be properly safeguarded for the prevention of accidents. All of Grantee’s work under this Section shall be done in strict compliance with all applicable rules, regulations and ordinances of the City.

Section 8. RESERVATION OF CITY STREET RIGHTS. Nothing in this Franchise shall be construed to prevent the City from constructing sewers, grading, paving, repairing and/or altering any Street or laying down, repairing or removing water mains or constructing or establishing any other public work or improvement. All such work shall be done, insofar as practicable, so as not to injure or prevent the unrestricted use and operation of the Pipeline System of the Grantee under this Franchise. However, if any of the Grantee’s Pipeline System interferes with the construction or repair of any Street or public improvement, including construction, repair or removal of a sewer or water main, the Grantee’s system shall be removed or replaced in the manner the City shall direct: provided, however, the City will cooperate with the Grantee to identify possible alternate locations within the Streets. Any and all such removal or replacement shall be at the expense of the Grantee. Should Grantee fail to remove, adjust or relocate its Facilities by the date established by the City Engineer’s written notice to Grantee, the City may cause and/or effect such removal, adjustment or relocation, and the expense thereof shall be paid by Grantee, including all costs and expenses incurred by the City due to Grantee’s delay.

Section 9. STREET VACATION. If any Street or portion thereof used by Grantee is vacated by the City during the term of this Franchise, unless the City Council specifically reserves to Grantee the right to continue its installation in the vacated Street area, Grantee shall, without expense to the City, forthwith remove its Facilities from such Street, and restore, repair or reconstruct the Street area where such removal has occurred, and place the Street area in such condition as may be required by the Council which shall be no better than the condition of such Street immediately prior to removal. In the event of failure, neglect or refusal of Grantee, after thirty days’ notice by City Council, to repair, improve or maintain such Street portions, the City may do such work or cause it to be done, and the direct cost thereof, as found and declared by City Council, shall be entered in the Docket of City Liens against any property of Grantee which City may choose, and such lien shall be enforced in like manner and with like effect as other liens entered in such docket. The City will cooperate with Grantee to identify alternative locations within the Streets.

Section 10. MAINTENANCE OF FACILITIES. Grantee shall provide and put in use all Facilities, equipment and appliances necessary for the operation of its Pipeline System in the Streets so as to prevent personal injury or injury to the City's property or to any property within the City belonging to any person, firm or corporation. Grantee, solely at its own expense, shall repair, renew, change and improve said Facilities, equipment and appliances from time to time as may be necessary to accomplish this purpose. Grantee shall not connect its pipes, structures or other Facilities in a manner that requires its customers to install any pipe, structure or other facility, within, under or over a Street.

Section 11. COMMON USERS.

11.1. For the purposes of this Section 11:

(A) “Licensee” means any Person franchised, licensed or otherwise permitted by the City to use the Streets. For the purpose of this Section 11, the Grantee shall not be construed to be a “Licensee” as defined herein.

(B) “Surplus pipeline” are pipes other than those occupied by the Grantee or any prior Licensee, unused pipes held by Grantee as an emergency spares, and other unused or occupied pipes that the Grantee reasonably expects to use within the next 18 months.

11.2. Grantee acknowledges that the Streets are a finite resource, with a limited capacity for containing conduits. Therefore, Grantee agrees that whenever the City Engineer determines it is impracticable to permit construction of an underground pipeline system by any other person which may at the time have authority to construct or maintain a pipeline system in the Streets, the City Engineer may require Grantee to afford to such person the right to use Grantee’s surplus pipes as the City Engineer finds practicable in common with the Grantee, pursuant to the terms and conditions of an agreement for use of surplus pipes being entered into by the Grantee and the Licensee. If the Licensee and Grantee fail to reach agreement on such terms and conditions within a reasonable time, both parties shall agree to resolve the dispute through such binding alternative dispute resolution procedures as are acceptable to both parties.

11.3. A Licensee occupying or using part of a pipe shall be deemed to occupy or use the entire pipe.

11.4. The Grantee shall give a Licensee 120 written days notice of its need to use or occupy pipe and shall propose that the Licensee take the first feasible action listed:

(A) Pay revised pipe rent designed to recover the cost of retrofitting the pipe, if necessary, to meet the Grantee's space needs;

(B) Pay revised pipe rent based on the cost of new pipe constructed to meet the Grantee’s space needs;

(D) Construct and maintain sufficient new pipe to meet the Grantee’s space needs.

Grantee shall provide a written copy of such notice to the City at the same time such notice is provided to the Licensee.

11.5. All work shall meet local, state, and federal safety requirements, and meet the provisions of contracts executed between the Grantee and the Licensee. The Grantee may, at its option, correct any deficiencies and charge the Licensee for its costs. Each Licensee shall pay the Grantee for any fines, fees, damages, or other reasonable costs the Licensee’s pipes cause the Grantee to incur.

Section 12. DISCONTINUED USE OF FACILITIES. Whenever Grantee intends to discontinue using any pipes, structures or other Facilities within all or part of a particular portion of the Streets and does not intend to use said Facilities again in the future, Grantee shall submit to the City Engineer for the City Engineer's approval a completed application describing the pipes, structures or other Facilities and the date on which the Grantee intends to discontinue using such pipes, structures or other Facilities. Grantee may elect to remove the pipes, structures or other Facilities or request that the City permit them to remain in place. If Grantee is permitted to abandon its Facilities in place, upon consent of the City, the ownership of Facilities in the City’s Streets shall transfer to the City and Grantee shall have no further obligation therefor.

Notwithstanding the Grantee's request that any such pipes, structures or other Facilities remain in place, the City Engineer may require the Grantee to remove the pipes, structures or other Facilities from the Street area or modify the pipes, structures or other Facilities in order to protect the public health and safety or otherwise serve the public interest. The City Engineer may require the Grantee to perform a combination of modification and removal of the pipes, structures or other Facilities. Grantee shall complete such removal or modification in accordance with a schedule set by the City Engineer. Until such time as Grantee removes or modifies the affected pipes, structures or other Facilities as directed by the City Engineer, or until the rights to and responsibility for the affected pipes, structures or other Facilities are accepted by another person or entity having authority to construct and maintain such pipes, structures or other Facilities, Grantee shall be responsible for all necessary repairs and relocations of the pipes, structures or other Facilities, as well as maintenance and restoration of the Street area in the same manner and degree as if the pipes, structures or other Facilities were in active use, and Grantee shall retain all liability for such pipes, structures or other Facilities.

Section 13. HAZARDOUS SUBSTANCES.

13.1. Grantee shall comply with all applicable state and federal laws, statutes, regulations and orders concerning Hazardous Substances relating to its pipes, structures or other Facilities in the Streets. For purposes of this Section, "Hazardous Substances" shall have the meaning given by ORS 465.200(16) (2005).

13.2. Inspection and Removal

(A) Grantee shall maintain and inspect its pipes, structures or other Facilities located in the Streets. If Grantee discovers any leaks, spills, releases or other contamination associated with, arising from or due to its pipes, structures or other Facilities in the Streets, Grantee shall report the discovery to the City within 48 hours. Grantee shall immediately proceed to repair, contain, extract, detoxify and remediate any Hazardous Substances in the Streets associated with, resulting from or due to any leaks, spills, releases or other contamination from its pipes, structures or other Facilities.

(B) Upon reasonable notice to Grantee and in the presence of an authorized representative of Grantee, the City may inspect Grantee's Facilities in the Streets to determine if any release of Hazardous Substances has occurred, or may occur, from or related to Grantee's Pipeline system Facilities.

(C) In doing any construction, modification or removal of any of its pipes, structures or other Facilities in the Streets, Grantee shall inspect and test for any Hazardous Substances contamination or residue. Grantee shall remove all contamination or residue of Hazardous Substances in compliance with applicable environmental cleanup standards. If Grantee fails to remove all such contamination or residue, in compliance with standards set by federal, state and local laws, statutes, regulations and orders, the City may arrange for the cleanup, extraction, detoxification, removal or remediation of the Hazardous Substances and the costs of such clean up, extraction, detoxification or neutralization shall be charged to the Grantee and the Grantee shall promptly pay such charges.

13.3. Grantee agrees to forever indemnify the City against any claims, costs, and expenses, of any kind, whether direct or indirect, incurred by the City arising out of the release or threat of release of Hazardous Substances caused by Grantee's ownership or operation of its pipes, structures or other Facilities in the Streets.

Section 14. CITY'S CONSENT REQUIRED FOR ASSIGNMENT, TRANSFER, MERGER, LEASE OR MORTGAGE.

14.1 (A) Except as otherwise permitted in Section 14.2 hereof, neither this Franchise nor any of Grantee’s Pipeline System located in the Streets by authority of this Franchise shall be sold, leased, mortgaged, assigned, merged or otherwise transferred without the prior written consent of the City as expressed by ordinance, which consent shall not be unreasonably withheld, except to entities that control, are controlled by, or are under common control with the Grantee. Grantee shall give written notice to the City of any transfers to entities under such common control within ten (10) days of such transfers. The City’s granting of consent in one instance shall not render unnecessary any subsequent consent in any other instance. Nothing contained in this Section 14 shall be deemed to prohibit the mortgage, pledge, or assignment of tangible assets of Grantee's Pipeline System for the purpose of financing the acquisition of equipment for or the construction and operation of Grantee’s Pipeline System, within or outside the City, without the City’s consent, but any such mortgage, pledge or assignment shall be subject to the City’s other rights contained in this Franchise.

(B)(1) In determining whether the City will consent to any sale, lease, mortgage, assignment, merger or transfer, the City may inquire into the technical, legal, and financial qualifications of the prospective party. Grantee shall assist the City in any such inquiry. The City may condition any sale, lease, mortgage, assignment, merger or transfer upon such conditions related to the technical, legal, and financial qualifications of the prospective party to perform according to the terms of this Franchise, as it deems appropriate. The City shall not unreasonably delay or withhold its consent to any such sale, lease, mortgage, assignment, transfer or merger.

(2) No sale, lease, mortgage, assignment, transfer or merger for which the City’s consent by ordinance is required may occur until the successor, assignee or lessee has complied with the requirements of Section 4, including, but not limited to, providing certificates of insurance, unless the City Council waives such compliance by ordinance. Within ten (10) days after execution and delivery of any instrument so consented to by the City, Grantee shall file with the Auditor an executed counterpart or certified copy thereof.

14.2 (A) Grantee shall not lease any of its Facilities without the City’s prior consent as expressed by ordinance. However, Grantee may lease any portion of its Facilities in the ordinary course of its business without otherwise obtaining the City’s consent by ordinance, so long as Grantee remains solely responsible for locating, servicing, repairing, relocating or removing such Facilities. A lessee of Grantee’s Facilities shall not obtain any rights under this Franchise. For the purposes of this Section, a capital lease shall be treated as a lease under this Section until the conclusion of the lease, when transfer of ownership occurs. At that point in time, the capital lease shall be treated as a sale under Section 14.2(B)(2).

(B)(1) Notwithstanding Section 14.1(A), Grantee may grant Indefeasible Right of User Interests in any portion of its Facilities in the ordinary course of its business without otherwise obtaining the City’s consent by ordinance, so long as Grantee remains solely responsible for locating, servicing, repairing, relocating or removing such Facilities. The holder of any IRU in Grantee’s Facilities shall not obtain any rights under this Franchise. For the purposes of this Section, if a transfer of ownership of the Facilities occurs at the conclusion of the IRU, it shall be treated as a sale under Section 14.2(B)(2) at that point in time.

(2) Notwithstanding Section 14.1(A), Grantee may sell portions of its Pipeline System in the ordinary course of its business, without otherwise obtaining the City’s consent by ordinance, so long as Grantee complies with the following conditions:

(a) The sale is to the holder of a current existing, valid pipeline franchise with the City;

(b) Within fourteen days of the sale being executed and becoming final, Grantee shall provide written notice to the City, describing the portions of the Pipeline System sold by the Grantee, identifying the purchaser of the Facilities, the location of the Facilities (in accordance with the requirements of Section 6.1(B)(2), and providing an executed counterpart or certified copy of the sales documents;

(c) Grantee remains solely responsible for locating, servicing, repairing, relocating or removing its remaining Pipeline System; and,

(d) Within fourteen days of the sale being executed and becoming final, the purchaser of such Facilities shall file written notice to the City that it has assumed sole responsibility for locating, servicing, repairing, relocating or removing the purchased Facilities under the purchaser’s current, existing valid franchise. The purchaser shall not obtain any of the Grantee’s rights under this Franchise.

Section 15. REVOCATION

15.1 Revocation. In addition to any other rights set out elsewhere in this Franchise, the City reserves the right to declare a revocation of the Franchise, and all of Grantee’s rights arising thereunder, in the event that:

(A) The Grantee violates any material provision of the Franchise;

(1) For purposes of this Section, the following are material provisions of this Franchise, allowing the City, without limitation, to exercise its rights under this Section or as set forth elsewhere in this Franchise:

(a) The invalidation, failure to pay or any suspension of Grantee’s payments of franchise fees to the City for use of the Streets under this Franchise;

(b) Any failure by the Grantee to submit timely reports regarding the calculation of its franchise fees to the City;

(d) Any failure by Grantee to maintain the performance bond required under this Franchise;

(e) Any failure by Grantee to provide copies of requested information as provided under Section 3.8 above; or,

(f) Any failure by Grantee to otherwise fully comply with the requirements of Section 3 through Section 19 of this Franchise.

(B) The Grantee is found by a court of competent jurisdiction to have practiced any fraud or deceit upon the City;

(C) There is a final determination that Grantee has failed, refused, neglected or is otherwise unable to obtain and/or maintain any permit required by any federal or state regulatory body regarding Grantee’s operation of its Pipeline System within the City;

(D) The Grantee’s construction schedule is delayed for over 18 months; or,

(E) The Grantee becomes unable or unwilling to pay its debts, or is adjudged a bankrupt.

15.2 Additional Remedies. In addition to any rights set out elsewhere in this Franchise, as well as its rights under the City Code, the City reserves the right at its sole option to apply any of the following, alone or in combination:

(A) Impose a financial penalty of up to $1,000.00 per Franchise violation; or,

(B) Suspend the Grantee’s Franchise rights, until the Grantee corrects or otherwise remedies the violation.

(C) Revocation. The City Council may revoke this Franchise in the event that any provision becomes invalid or unenforceable and the City Council expressly finds that such provision constituted a consideration material to the grant of the Franchise. The City shall exercise its revocation rights pursuant to Section 15.

15.3 In determining which remedy or remedies are appropriate, the City shall consider the nature of the violation, Grantee's efforts to cure the violation after notice thereof, the person or persons burdened by the violation, the nature of the remedy required in order to prevent further such violations, and any other matters the City deems appropriate.

15.4 Notice and Opportunity to Cure. The City shall give Grantee thirty (30) days prior written notice of its intent to exercise its rights under this Section, stating the reasons for such action. If Grantee cures the stated reason within the thirty (30) day notice period, or if the Grantee initiates efforts satisfactory to the City to remedy the stated reason and the efforts continue in good faith, the City shall not exercise its remedy rights. If Grantee fails to cure the stated reason within the thirty (30) day notice period, or if the Grantee does not undertake and/or maintain efforts satisfactory to the City to remedy the stated reason, then the City Council may impose any or all of the remedies available under this Section. However, in no event shall the City exercise its rights under this Section if a bona fide, good faith dispute exists between the City and the Grantee.

Section 16. RENEGOTIATION.

In the event that any provision of this Franchise becomes invalid or unenforceable and the City Council or the Grantee expressly finds that such provision constituted a consideration material to entering into this Franchise, the City and the Grantee may mutually agree to renegotiate the terms of this Franchise. The party seeking renegotiation shall serve on the other party written notice of an offer to renegotiate. In the event the other party accepts the offer to renegotiate, the parties shall have 90 days to conduct and complete the renegotiation. If both parties agree to renegotiations under this Section, the parties shall proceed in good faith and in a manner that is reasonable under the circumstances.

Section 17. EXPIRATION.

(A) Upon the expiration of this Franchise, on application made by the Grantee for franchise renewal or additional authority to exercise the privileges, or any of them, hereby granted, the Grantee shall have the first and preferential right to take and receive such authority upon terms and conditions approved by the City. If the Grantee does not promptly apply for such renewal or additional authority, or if the Grantee rejects the terms and conditions of such authority offered by the City, the City may exercise its rights under ORS 221.470 (2005), after one year from the expiration of this Franchise, to grant a permit or franchise to any other corporation, association, firm, individual or individuals, or to require removal of the facilities. In the event of such a grant, such other corporation, association, firm, individual or individuals taking such new or additional authority, shall in addition to any compensation to be paid to the City for such new or additional authority, pay to the Grantee, at or before the time such new or additional authority takes effect, and before the Grantee shall be deprived of the right to possess, maintain and operate its Pipeline System located within the Streets, the fair and equitable valuation of Grantee’s Pipeline System located within the Streets. If the third party and Grantee cannot agree on the fair and equitable value of said Pipeline System, the dispute shall be submitted for a declaratory determination by the courts of the State of Oregon. Until such time as the City exercises its rights as set forth in this Section, the Grantee’s rights and responsibilities within the City shall continue to be controlled by the terms and conditions of this Franchise.

(B) Subject to the terms of Section 17(A), upon the expiration of this Franchise, the City shall have the right, at its election, to:

(1) Renew or extend the Franchise to Grantee, in accordance with the Portland

City Charter and applicable law;

(2) Invite additional proposals and award the Franchise to another grantee;

(3) Terminate the Franchise without further action; or,

(4) Take such further action as the City deems appropriate.

Until such time as the City exercises its rights under this Section the Grantee’s rights and responsibilities within the City shall be controlled by the terms of the Franchise.

Section 18. MISCELLANEOUS PROVISIONS.

18.1 Compliance With Laws.

(A) Both Grantee and the City shall comply with all applicable federal and state laws.

(B) Grantee shall comply with all applicable City ordinances, resolutions, rules and regulations adopted or established pursuant to the City's lawful authority.

18.2 Severability. If any section, provision or clause of this Franchise is held by a court of competent jurisdiction to be invalid or unenforceable, or is preempted by federal or state laws or regulations, the remainder of this Franchise shall not be affected, unless the City Council determines such section, provision, or clause was material to the City's agreement to issue a Franchise to the Grantee.

18.3 Regulation and Nonenforcement by the City. The City Council shall be vested with the power and authority to reasonably regulate the exercise of the privileges permitted by this Franchise in the public interest. Grantee shall not be relieved of its obligations to comply with any of the provisions of this Franchise by reason of any failure of the City to enforce prompt compliance, nor does the City waive or limit any of its rights under this Franchise by reason of such failure or neglect.

18.4 Force Majeure.

(A) For the purposes of this Section 18.4, the term "Force Majeure" shall mean acts of God, landslides, earthquakes, lightning, fires, hurricanes, volcanic activity, storms, floods, washouts, droughts, civil disturbances, acts of terrorism or of the public enemy, partial or entire failure of utilities, strikes, explosions, lockouts or other industrial disturbances, insurrections, public riots or other similar events which are not reasonably within the control of the parties hereto.

(B) If the Grantee is wholly or partially unable to carry out its obligations under this Franchise as a result of Force Majeure, the Grantee shall give the City prompt notice of such Force Majeure, describing the same in reasonable detail, and Grantee's obligations under this Franchise, other than for the payment of monies due, shall not be deemed in violation or default for the duration of the Force Majeure. Grantee agrees to use its best efforts to remedy as soon as possible, under the circumstances, Grantee's inability, by reason of Force Majeure, to carry out its responsibility and duties under this Franchise.

18.5 Choice of Forum. Any litigation between the City and the Grantee arising under or regarding this Franchise shall occur, if in the state courts, in the Multnomah County Court having jurisdiction thereof, and if in the federal courts, in the United States District Court for the District of Oregon, Portland.

18.6 Notice. Any notice provided for under this Franchise shall be sufficient if in writing and (1) delivered personally to the following addressee or deposited in the United States mail, postage prepaid, certified mail, return receipt requested, (2) sent by overnight or commercial air courier (such as Federal Express), or (3) sent by facsimile transmission addressed as follows, or to such other address as the receiving party hereafter shall specify in writing:

(A) If to the City: Office of Cable Communications and Franchise Management

City of Portland, Oregon

1120 SW 5th Avenue, Room 1305

Portland, Oregon 97204

FAX (503) 823-5370

With a copy to: City Attorney’s Office

City of Portland

1221 SW 4th Avenue, Room 430

Portland, Oregon 97204

FAX (503) 823-3089

(B) If to the Grantee: Steven D. Farkas

General Counsel/Vice President

14700 Downey Avenue

Paramount, CA 90723

Fax (562) 633-8211

With a copy to: John Junkin

Bullivant Houser Bailey PC

888 SW 5th Ave, 300 Pioneer Tower

Portland, Oregon 97204

Fax (503) 295-0915

(C) Any such notice, communication or delivery shall be deemed effective and delivered upon the earliest to occur of actual delivery, three (3) business days after depositing in the United States mail as aforesaid, one (1) business day after shipment by commercial air courier as aforesaid or the same day as facsimile transmission (or the first business day thereafter if faxed on a Saturday, Sunday or legal holiday).

18.7 Confidentiality. Grantee may identify information submitted to the City as confidential. Prior to submitting such information to the City, Grantee shall prominently mark any such information with the mark “Confidential” in letters at least one-half (½) inch in height. The City shall treat any information so marked as confidential and not subject to public disclosure, until the City receives any public records request for disclosure of such information. Within five (5) working days of receiving any such request, the City shall provide the Grantee with written notice of the request, including a copy of the request. Grantee shall have five (5) working days within which to provide a written response to the City, before the City may release any of the requested confidential information. Whether the Grantee submits any written response to the City, the City shall retain final discretion to determine whether to release the requested confidential information, provided that the City shall give the Grantee at least five days written notice after receipt of any response from Grantee, prior to releasing such information.

18.8 Public Records.

(A) Some information submitted by the Grantee to the City may be relevant to the Grantee’s obligation to pay franchise fees. Requiring such information to be submitted to the City in order to determine fees payable or paid to the City may qualify such information as being exempt from public disclosure under ORS 192.501(5) (2005) of the Oregon Public Records Law.

(B) Some information submitted by the Grantee to the City may otherwise be used to conduct its business and known to certain individuals within the organization, with actual or potential commercial value, and giving Grantee a business advantage over its competitors. Such information may constitute trade secrets and be exempt from public disclosure under ORS 192.501(2) (2005) of the Oregon Public Record Law.

(C) Identification of these exemptions under the Oregon Public Records Law, which may apply to information submitted by the Grantee to the City, is not an exhaustive list of those possibly applicable to such information.

18.9 Franchise Amendment. The City has negotiated this Franchise in good faith, in reliance upon the information provided by the Grantee regarding the scope of its authority to operate a Pipeline System described in Section 2.10 above. In the event that Grantee actually receives authority to offer services outside the scope of this Franchise, Grantee shall immediately notify the City. Within 90 days of receiving such notice, the City may either enter into negotiations with the Grantee to revise or amend this Franchise to reflect such changed circumstances, or may proceed with early termination of this Franchise. The parties will negotiate in good faith to revise the Franchise to authorize the expanded scope of services.

Section 19. WRITTEN ACCEPTANCE. On or before the thirtieth day after this ordinance becomes effective, Grantee shall file in the Office of the Auditor of the City of Portland a written acceptance of this ordinance, executed by the Grantee, meeting the approval of the City Attorney. A failure on the part of Grantee to file such written acceptance within such time shall be deemed an abandonment and rejection of the rights and privileges conferred hereby and this ordinance shall thereupon be null and void. Such acceptance shall be unqualified and shall be construed to be an acceptance of all the terms, conditions and restrictions contained in this ordinance.

Section 20. OTHER AUTHORITY SUPERSEDED. Upon effectiveness of this Franchise, any and all authority to operate previously granted to Grantee by the City shall be superseded by this Franchise.

Passed by the Council: August 16, 2006

Gary Blackmer

Commissioner Dan Saltzman Auditor of the City of Portland

Soloos/Walters By /S/ Susan Parsons

June 15, 2006 Deputy

BACKING SHEET INFORMATION

AGENDA NO. ~~929~~ ~~1060~~ 1100-2006

ACTION TAKEN:

JULY 05, 2006 PASSED TO SECOND READING AUGUST 09, 2006 9:30 AM

AUGUST 09, 2006 CONTINUED TO AUGUST 16, 2006 9:30 AM

ORDINANCE/RESOLUTION/COUNCIL DOCUMENT NO. 180378

COMMISSIONERS VOTED AS FOLLOWS:

	YEAS	NAYS
ADAMS	X
LEONARD	X
SALTZMAN	X
STEN	X
POTTER	===	===