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Ord. No. 17-03-1801ORDINANCE NO. 17-03-1801 AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, RELATING TO ENTERING INTO A NON-EXCLUSIVE GAS FRANCHISE AGREEMENT WITH NUl UTILITIES, INC. ALLOWING FOR THE USE OF PUBLIC RIGHTS OF WAY OF THE CITY OF SOUTH MIAMI, FLORIDA, AND PRESCRIBING THE TERMS AND CONDITIONS UNDER WHICH THE FRANCHISE MAY BE EXERCISED; MAKING FINDINGS; AND PROVIDING FOR SEVERABILITY, ORDINANCES IN CONFLICT, AND AN EFFECTIVE DATE. WHEREAS, the Mayor and City Commission of the City of South Miami pursuant to applicable law and subject to the rights, limitations and conditions in the attached non-exclusive franchise agreement are authorized to grant public utility franchises; and, WHEREAS by Ordinance 468, adopted in 1962, the City Commission of the City of South Miami granted to NUl Utilities, Inc., its successors and assigns, a non-exclusive right, privilege or franchise for the purpose of distributing and selling gas in the City of South Miami, which franchise was extended until 2002, by Ordinance No. 526-B; and, WHEREAS, upon expiration of the above referenced ordinances, NUl Utilities, inc. continued to distribute and sell gas in the City of South Miami, and to pay the city franchise fees without a written franchise agreement; and, WHEREAS, NUl Utilities, Inc. desires to enter into a new non-exclusive franchise agreement for a period of 15 years commencing from the date provided in the attached non-exclusive franchise agreement; and, WHEREAS, the Mayor and City Commission desire to enter into a new non- exclusive franchise agreement with NUl Utilities, Inc., as it is in the public interest of its citizens. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA: Section 1. Attached is the non-exclusive franchise agreement between the city and NUl Utilities, Inc. to be incorporated by reference into this ordinance. Additions shown by underlining and deletions shown by e'/efStfikillg. Section 2. If any section, clause, sentence, or phrase of this ordinance is for any reason held invalid or unconstitutional by a court of competent jurisdiction, the holding shall not affect the validity of the remaining portions of this ordinance. Section 3. All ordinances or parts of ordinances in conflict with the provisions of this ordinance are repealed. Section 4. This ordinance shall be codified and included m the Code of Ordinances. Section 5. This ordinance shall take effect immediately upon enactment. PASSED AND ADOPTED this 17th day of June, 2003. CITY CLERK 1 st Reading -6/3/03 2nd Reading -6117/03 READ AND APPROVED AS TO FORM , ~/6 6;Ie-e CITY ATTORNEY > APPROVED: COMMISSION VOTE: 4-0 Mayor Feliu: Yea Vice Mayor Russell: Yea Commissioner Wiscombe: Yea Commissioner Bethel: Out of room Commissioner McCrea: Yea Additions shown by underlining and deletions shown by eV6FStril<ing. NON-EXCLUSIVE FRANCHISE AGREEMENT THIS NON-EXCLUSlVEYRANCHISE AGREEMENT (this "agreement") dated as of the ~ day of -1 U.J'lL .... , 2003 is made and entered into by and between the CITY OF SOUTH MIAMI, FLORIDA, a Florida municipal corporation, and NUl UTILITIES, INC. (the "franchisee"), a New Jersey corporation d/b/a City Gas Company of Florida. WITNESSETH: WHEREAS, pursuant to ordinance no. 468, the city granted in 1962 to Florida Gas Utilities Company, and its successors and assigns, a non-exclusive franchise (the "prior franchise") to construct, maintain and operate its gas system facilities within the city's municipal boundaries; and, WHEREAS, pursuant to ordinance no. 478, the city corrected an inadvertent error by changing the franchisee to Florida Gas Company, d/b/a Florida Gas Utilities Company; and, WHEREAS, pursuant to ordinance no. 526, the city approved the assignment and assumption of the prior franchise by franchisee's predecessor-in- interest, Florida Gas Company, to franchisee's predecessor-in-interest, City Gas Company; and, WHEREAS, pursuant to ordinance no. 526-A, the city approved an amendment to the prior franchise changing the franchisee from franchisee's predecessor-in-interest, City Gas Company, to franchisee (which was then known as NUl Corporation); and, WHEREAS, pursuant to ordinance no. 526-B, the city approved an amendment to the prior franchise changing the franchisee from franchisee to franchisee's wholly-owned subsidiary, Elizabethtown Gas Co.; and, WHEREAS, the term of the prior franchise has expired and the city and the franchisee desire to enter into a new franchise agreement. NOW THEREFORE, in consideration of $10.00 and other good and valuable consideration, the receipt and legal sufficiency of which the parties acknowledge, and in further consideration of mutual covenants contained in this agreement, the parties agree as follows: [48103·]";1;]481OJl.J. ~ Page 1 of 18 '/:'f' • -:> . . , Section 1. Whereas clauses. The above Whereas clauses (i.e., recitals) are incorporated and made a part of this agreement. Section 2. Definitions. For the purposes of this agreement, the following terms will have the meanings defined below: "city" shall mean the City of South Miami, Miami-Dade County, Florida, and its successors and assigns; "consumer" shall mean any person, firm, or public or private entity served by the franchisee within the municipal boundaries of the city; "FPSC" shall mean the Florida Public Service Commission. "franchise" shall mean the rights granted to franchisee under this agreement; "franchisee" shall mean the franchisee named above in this agreement and its successors and assigns; "gas" shall mean natural gas, commingled gas and, or manufactured gas; and "gas system facilities" or "facilities" shall mean all equipment, machinery, apparatus, fixtures, facilities, hardware, appliances, attachments, structures, systems and appurtenances used or useful in the distribution and, or other means of supplying and delivering gas, and shall include, but not be limited to, gas mains, pipes, pipelines, conduits, ducts, laterals, tubes, traps, vents, vaults, manholes, meters, gauges, regulators and valves, constructed both prior to and during the term of this agreement. Section 3. Grant. Franchisee, its successors and assigns are granted for a period of fifteen (15) years from the date of this agreement, a non-exclusive right, privilege and franchise, to construct, erect, install, extend, repair, replace, maintain and operate gas system facilities in, on and under the present and future streets, alleys, avenues, easements and other public ways and places in the city, as it is now constituted and as it may hereafter be added to or extended, for the purpose of transporting, distributing, and selling gas to the city, its inhabitants and the public generally and to persons and entities located outside of the city which the franchisee is or may be lawfully entitled to serve, for domestic, commercial and industrial uses and for any and all other purposes for which gas, during the period of this grant, may legally be used, together with the right to enter upon the streets, alleys, avenues, easements, and other public ways, places and grounds of the city for the foregoing uses and purposes. This agreement shall be extended for an Page 2 of 18 [48103-H]48103J..1 additional five year term, unless the franchisee or the city gives written notice to the other party of its desire to not so extend the franchise I between twelve (12) and six (6) months prior to the expiration of the initial term. In the event that either the franchisee or the city gives timely notice of its election not to extend the franchise, then the franchise shall expire upon the conclusion of the initial term. This grant of authority to franchisee is strictly limited to the provision of gas delivery, transportation and service only. It is explicitly recognized that this franchise does not limit the franchisee's ability to operate a liquefied petroleum (commonly referred to as LP gas, bottled gas, or propane) business or a gas appliance rental business within the incorporated limits of the city. Nor does it limit the city's ability to assess utility tax upon the liquefied petroleum business within the limits permitted under Florida law. In the event franchisee desires to use its existing facilities or to construct new facilities for the purpose of providing other utility or non-utility services to existing or potential consumers, including, but not limited to, providing public communications, leased fiber optic capacity, video services, telecommunication services or any other services other than the provision of gas, or providing any other use to existing or potential consumers, franchisee shall notify the city and seek additional and separate permission from the city for the activities to the extent that permission is otherwise required by law. Section 4. Assignment. No sale, assignment, or transfer of the rights granted in this agreement shall be effective unless the franchisee shall have filed written notice with the city clerk, prior to the scheduled date of the sale, assignment or transfer, and unless, subsequent to the filing of the notice, the city shall have by ordinance approved and consented to the sale, assignment or transfer, which approval shall not be unreasonably withheld or delayed; provided, however, that any sale, assignment or transfer decreed by a court of competent jurisdiction in any receivership or bankruptcy proceedings shall not be governed by the provision of this section. Notwithstanding the foregoing, and except as governed by article VI, section 5 of the city charter, the franchisee may transfer or assign its interest in this agreement or any of its rights hereunder to the following entities and under the following circumstances, without the city's approval: (i) to any entity directly or indirectly controlling, controlled by or under common control with franchisee; (ii) to any successor of franchisee resulting from a merger or consolidation of franchisee or its successors or assigns; (iii) pursuant to a sale or other transfer by franchisee of all or substantially all of its assets or stock; and, or (iv) pursuant to a corporate reorganization of franchisee. Any sale, assignment, lease or other alienation and transfer of this franchise shall be subject to the conditions that (1) the successor-in interest to the facilities and, or the rights under this franchise shall Page 3 of 18 [ 48H)'3·1··~1481OJl.3 have agreed in writing to be bound by the terms and conditions of this agreement, and (2) the transferee or assignee executes and delivers to the city clerk an instrmnent in which the assignee or transferee assumes and agrees to perform franchisee's obligations under this agreement, and (3) at least sixty (60) days prior to the effective date of any transfer, all franchise fees then owing to the city under this agreement shall have been paid and any outstanding notice of default shall have been resolved. Any disputes relating to or arising out of the provisions of this paragraph shall be subject to the mediation provision set forth below in section 29 of this agreement. Franchisee may, without obtaining the city's consent, pledge this franchise and, or the facilities as security, provided, however, in the event of a foreclosure of the pledge, the city shall have the right to revoke the franchise under section 21 below. Section 5. Use of streets. The facilities shall be erected, placed or laid in a marmer as will, consistent with necessity, least interfere with other public uses of the streets, alleys, avenues, easements, and public grounds, and the streets shall not be unnecessarily obstructed, and before the franchisee makes any excavation or disturbs the surface of any of the streets, alleys, or other public places, it shall make application for a permit to the appropriate city authority and shall, with due diligence and dispatch, place the streets or public place in as good condition and repair as before the excavation or disturbance was made. If franchise defaults in complying with this provision the city may make necessary repairs, charge the costs associated with those repairs to the franchisee, and collect the costs from it. The city retains the right of reasonable regulation of the erection or construction of any facilities, and to reasonably designate where the facilities shall be placed. The franchisee agrees to abide by all the rules and regulations and ordinances which the city has passed or might pass in the future, and further agrees to abide by any established reasonable policy which the city commission or its duly authorized representative has passed; or established; or will establish; provided, however, it is not intended that the city shall have the right of altering or breaching the terms of this agreement. Notwithstanding anything to the contrary, the provisions of this section shall only apply to the regulations, rules and laws of the city, whether enacted or adopted by ordinance or otherwise, as shall be not in conflict with or preempted by the rules and regulations of the FPSC or any other applicable rules, regulations and laws of other State of Florida or federal governmental authorities or agencies. Page 4 of 18 [ 48103-J. .. ZJ~81031.l '. 'wo.' " '.~ • Section 6. Maintenance. All facilities of franchisee shall be constructed and maintained in the condition as will enable it to furnish adequate and continuous service and. shall be constructed, installed and maintained in accordance with accepted good practice and in accordance with the orders, rules and regulations of the FPSC or other regulatory body having jurisdiction over the franchisee. Section 7. Laying of pipe. All main pipe lines shall be laid at least two feet and all lateral pipe lines not less than eighteen inches below the established grade of the streets, avenues, alleys, easements, and other public ways and places as the grades now exist or may hereafter be established, unless otherwise specifically authorized by proper authority of the city. Section 8. Construction work. The city reserves the right to lay and permit to be laid electric conduits, water, gas and other pipe lines or cables, sewers, and to do and permit to be done any underground work that may be necessary or proper by the city commission or other governing body of the city in, across, along or under any street, alley, public way, easement, place or other public ground, provided that all the activities shall be performed in compliance with all applicable . federal, state and local laws and regulations and provided that the city shall not co- locate pipes, lines, cables or other items in a common trench with any facilities of the franchisee. Further, franchisee agrees that the materials to be used in the construction, operation and maintenance of the gas system facilities and the service to be rendered shall be in compliance with all applicable federal, state and local laws and regulations. Section 9. Performance and construction bonds. A. Within ten (10) business days after its acceptance of the terms and conditions of this agreement, the franchisee shall file with the city clerk, a bond in the amount of $50,000 having as a surety a company qualified to do business in the State of Florida and reasonably acceptable to the city (the "performance bond"). The performance bond shall secure the full and faithful performance by the franchisee of all requirements, duties and obligations imposed upon the franchisee by the provisions of this agreement. The performance bond shall provide that the surety shall give sixty (60) days prior written notice of any cancellation thereof to the city. The franchisee shall cause the performance bond to be renewed or replaced and in effect at all times throughout the term of this agreement. B. Upon the request of the city in connection with any construction or installation of facilities under this agreement in which the cost exceeds $50,000, Page 5 of 18 [48lG-3-h-ZJ481D3Ll ~ '. f ' \ ~" ' and prior to the issuance of any permits therefor, the franchisee shall file with the city clerk prior to the construction or installation, a bond in an amount equal to the projected cost of the construction having as a surety a company qualified to do business in the State of Florida and reasonably acceptable to the city (the "construction bond"). The construction bond shall be conditioned on the completion of the applicable construction of facilities by the franchisee in compliance with all applicable permits, laws, rules and regulations. The construction bond shall provide that the surety shall give sixty (60) days prior written notice of any cancellation thereof to the city. Upon franchisee's written request, the city shall release each such construction bond twelve months after the completion of the applicable construction and restoration in compliance with all applicable permits, laws, rules and regulations. C. Recovery by the city under a performance bond, construction bond or under insurance shall not limit the franchisee's indemnification obligations set forth in section 12 of this agreement with respect to its construction, maintenance and operations, provided that the city shall not be entitled to double recovery. Recovery by the city under either a bond or insurance is in addition to all other rights of the city, whether specified in this agreement or authorized by law, provided that the city shall not be entitled to double recovery. If a performance bond or construction bond required by this agreement and previously approved by the city is suspended, voided, or cancelled and not replaced, then the occurrence shall be a violation of this agreement, subject to the notice and cure periods and remedies provided in section 20 of this agreement. Section 10. Facilities maps. The franchisee shall, at all times, keep an accurate map showing the location of all gas system facilities laid and maintained by franchisee under this franchise, which shall be accessible for public inspection upon reasonable advance notice during reasonable hours. Promptly after a written request therefor is made by the city to the franchisee, the franchisee shall provide the city with two copies of its facilities location map on an annual updated basis, with one copy to be a printed copy in a minimum size of 11" x 17" and the second copy to be in CD-AutoCAD format or the other format as the city and the franchisee shall reasonably agree upon to reflect changes in map technology and, or practices. The maps required to be kept and provided under this Section 10 shall be in the standard form provided by franchisee to other municipalities in Miami-Dade County. Section 11. Accidents or damages and relocation. In permitting the work identified in section 7 to be done, and in conducting the work, the city shall not be Page 6 of 18 [ 48103·1-.'2]481031.J. ; '\of :. " ~ , liable to the franchisee for any accident, personal injury, property damage or any claim or damage that may occur in the course of construction, operation or maintenance by franchisee, its employees, agents, contractors, sublessees or licensees of any of its facilities, except to the extent caused by the willful misconduct or gross negligence of the city or its employees, contractors or agents. Notwithstanding anything to the contrary, the city's right to require relocation of existing facilities and the rights and obligations of the city and franchisee with respect to the relocations shall be governed by sections 337.403 and 337.404, Florida Statutes. The franchisee further agrees that it shall not interfere with, change or injure any water pipes, drains, or sewers, within the municipal boundaries of the city unless it has received specific permission from the city commission or a duly authorized representative of the city. Nothing in this agreement shall be con~trued to affect in any way the city's rights, privileges, and immunities under the doctrine of "sovereign immunity" as set forth in section 768.28, Florida Statutes. Franchisee further agrees that during the term of this agreement, it will not install, erect, construct, or maintain any maintenance yards or above-ground bulk storage facilities within the city, unless specifically permitted by the city. Section 12. Indemnification. Franchisee agrees to indenmify, defend, and hold harmless the city, its officers, agents and employees from and against any and all claims, suits, actions, and causes of action, as well as the costs of removal, remediation and monitoring of a condition of environmental contamination, arising during the term of this franchise and resulting in personal injury, loss of life, or damage to property sustained by any person or entity, caused by or arising out of franchisee's (or its contractors', subcontractors' employees' or agents') negligent construction, operation or maintenance of franchisee's gas system facilities within the city, including all costs, attorneys' fees, expenses, including any appeal, and including the investigations and defense of any action or proceeding and any order, judgment or decree which may be entered in any action or proceeding, except to the extent caused by or arising out of the negligence, strict liability, intentional torts or criminal acts of the city, its officers, agents, employees or contractors. In the event that a judgment covered by the foregoing indenmity shall be rendered in any suit or action against the city, the franchisee shall either fully satisfy or bond the judgment within sixty (60) days after the franchisee shall have received written notice from the city of the judgment following the final determination of the suit or action, if determined adversely to the city. If the franchisee shall fail to satisfy or bond the judgment within the· designated time period set forth in this agreement, then the failure shall be a violation of this agreement subject to the notice and cure Page 7 of18 [48Hl-3-H)4811lJLJ. ''>,' : :!' periods and remedies provided in section 20 of this agreement. Nothing in this agreement shall be construed to affect in any way the city's rights, privileges, and immunities under the doctrine of "sovereign immunity" as set forth in section 768.28, Florida Statutes. The provisions of this section shall survive the termination of this agreement. Section 13. Insurance. The franchisee shall keep in full force and effect at all times during the exercise of its franchise, public liability insurance with a minimum aggregate combined single limit of liability of $5,000,000, the terms and conditions of which shall provide for the protection and indenmification of the city with respect to claims of any persons suffering injury, loss or damage to person or property by reason of the construction, operation or maintenance of the facilities. The city shall be named as an additional insured. The franchisee shall hold the city harmless for any premiums due, and to the extent covered by the franchisee's indenmity in section 12 above, the amounts of deductibles or claims under the policies. A certificate of insurance shall be filed with the city clerk or with the city risk manager if the franchisee is notified in writing of the name and address of the risk manager. Every insurance policy shall contain a provision whereby every company executing the policy shall obligate itself to notify the city clerk, in writing, at least 30 days prior to the effective date of any cancellation of the policy, except non-payment of premium, then 10-days notice shall be given Each insurance policy shall be subject to the reasonable acceptance and approval of the city attorney. Any primary insurance policy must be issued by an insurance company having a policyholder's surplus at least five times the amount of the coverage of the policy, and the insurance company must have a rating ofBB or better in AM. Best Company's Insurance Guide of BB or from another rating agency reasonably acceptable to the city attorney. Any excess policy used must be issued by underwriters reasonably acceptable to the city attorney. All insurance required hereunder may be maintained by the franchisee and, or by an affiliate of the franchisee by self-insurance or pursuant to a master or so-called blanket policy of insurance. Section 14. Franchisee's rules. Franchisee shall have the right to make and enforce reasonable rules and regulations as it may deem necessary for the extension of its facilities, and the sales of its gas and the prudent conduct of its business, provided that the rules and regulations shall not be in conflict with the laws, rules, and other regulatory authorities of the city, or Miami-Dade County, or the State of Florida. Page 8 of 18 [48103·J..'2]481D3LJ. Section 15. Florida Public Service Commission's authority. In the event that the FPSC, or other State regulatory authority, should be deprived of the authority to make rules and regulations governing the franchisee, and no other State of Florida or federal governmental authority has the authority, then the city commission, or other governing body, shall have the right to fix reasonable and compensatory rates to be paid for gas by consumers, and to provide for the extension, repair, and maintenance of mains and service lines, and the connection with the pipes of consumers and the installing and testing of meters, and to regulate the quality and pressure of gas, and to provide other and further regulations as shall be reasonably necessary and proper to provide adequate service to consumers and to protect their interests. Section 16. Accounts and records. The accounts and records of the franchisee appertaining to gas service rendered hereunder shall be maintained as required by the FPSC and other applicable state and federal laws, rules and regulations in compliance with generally accepted accounting methods, and be open at all reasonable times for inspection by the duly authorized representatives of the city upon reasonable advance notice. The franchisee shall establish and maintain appropriate accounts and records in such detail that revenues within the limits of the city are consistently declared separately from all other revenues. All records shall be maintained for a minimum of three years, or longer if required by applicable regulatory bodies other than the city. The franchisee further agrees that the city, by its duly authorized representative, shall have the right during business hours, and upon reasonable advance notice, to inspect and, or audit the books and records of the franchisee that evidence the franchise fees and computations of franchise fee payments made by the franchisee to the city. If the city decides to inspect franchisee's books and records, specifically franchise fee payments made to the city and franchise fee computations, the franchisee shall permit a city representative to review the pertinent portion of franchisee's books and records including billing records at the franchisee's office where these records are housed, during normal business hours, upon reasonable advance notice .. Further, should the city subsequently determine it necessary to make a detailed independent audit of the accounts and records of the franchisee and if the city's audit determines that the franchisee has underpaid, and the franchisee has in fact underpaid, the franchise fees audited in an amount equal to or exceeding two percent (2%) of the franchise fees, then in that event the franchisee shall bear the reasonable, incremental costs of the audit (i.e., the reasonable costs of the audit incurred by the city that would not have been incurred but for the audit). Otherwise, the city shall bear the cost of the audit. In the event that an audit of Page 9 of18 [48103·h'2]481DJLJ. , "~,' . : ;",' franchisee's books determines that the franchisee made an underpayment ofthe franchise fees payable under this agreement in any quarter, and the franchisee has in fact so underpaid the franchise fees, the franchisee shall pay interest at the rate of 12% per annum on the amount underpaid or not paid, calculated from the date the amount was due, to the date it was finally paid. Both the underpayment and interest shall be paid within thirty (30) days after receipt of demand from the city. The city acknowledges that the franchisee shall be entitled to pursue and recover the underpayment from the applicable consumers in accordance with FPSC rules and other applicable law. In the event that the franchisee overpays to the city the amount of any franchise fees payable under this agreement or any utility or public service tax, the city shall refund the amount of the overpayment to the franchisee within thirty (30) days after delivery to the city of written notice of the overpayment, together with reasonable documentation thereof, and if the city fails to do so, the city shall pay interest at the rate of 12% per annum on the amount of the overpayment, calculated from the date the notice was delivered to the city to the date the overpayment is finallyrepaidto the franchisee. The franchisee shall file with the city, on a quarterly basis within thirty (30) days after each payment of the franchise fee under this agreement, a listing of the consumers billed by the franchisee during the applicable quarter setting forth for each such consumer, the gross receipts (as defined in section 17 below) received from. the consumer for tlle quarter. Franchisee also shall submit to the city, promptly after the franchisee's receipt of a written request therefor made by the city, a copy of its audited financials, if any, published in annual reports of the franchisee or the franchisee's affiliate or successor and a copy of the applicable portions of any audit conducted by or on behalf of the franchisee which pertain to the franchisee fees payable hereunder. Section 17. Franchise fee. In further consideration for the rights and privileges granted under this agreement and the costs and obligations undertaken by the city as a result of this agreement, the franchisee agrees to pay to the city a fee (the "franchise fee") in an amount equal to seven and one-half percent (7-112%) of the franchisee's gross receipts, as defined below, realized from the sale or transportation of gas to consumers within the municipal boundaries of the city during the term of this agreement. Notwithstanding the earlier execution of this agreement, the franchise fee shall be effective beginning on the first day of the first calendar month immediately following tlle execution of this agreement (the "franchise fee commencement date"). Accordingly, if this agreement is executed in June 2003, then the franchise fee commencement date shall be July 1, 2003. The franchise fee shall be paid to the city in four quarterly payments based upon Page 10 ofl8 [4810-3·1,'2]481031.3 '0,· : :,' the actual gross receipts for each calendar quarter (or portion thereof) during which this agreement is in effect, with payment to be made no later than sixty (60) days following the end of each the calendar quarter. . The first such payment shall be based upon the gross receipts for the calendar quarter (or portion thereof, as the case may be) beginning on the franchise fee commencement date and ending September 30, 2003, and shall be made on or before November 29, 2003. Prior to the franchise fee commencement date, the franchisee shall continue to pay a franchise fee to the city in accordance with the terms of that certain Franchise Extension Agreement previously entered into by and between the city and the franchisee. . As used in this agreement, the term "gross receipts" means all revenues recognized by the franchisee in accordance with generally accepted accounting procedures derived from the service charges (alk/a customer charges), energy charges (including ECCR factor charges, CRA factor charges and margins and, or surcharges and any other energy based charges approved for billing consumers by the FPSC), and, for consumers who purchase gas from the franchisee, gas charges, and any applicable minimum charges or discounts, as the charges and discounts are defined in the franchisee's tariffs on file with the FPSC for both transportation consumers of the franchisee and consumers purchasing gas from the franchisee. Gross receipts shall not include the franchise fee itself nor any taxes, or other governmental fees and charges on gas or services furnished by the franchisee which are paid to the applicable franchisor or tax authority nor shall gross receipts include bad debt, accounts written off as uncollectible by the franchisee, interest, returned check charges, late fees or late charges, reconnection charges, unauthorized use charges not any revenue derived from appliance leasing repair, maintenance, installation, removal or other appliance services. In addition, any franchise fees which are paid to the city by the franchisee but are not paid by consumers to the franchisee when due may be applied and credited against any subsequent franchise fee payment due by the franchisee to the city; provided, however, that such amount shall be repaid to the city if the franchisee ultimately collects the amount. The franchise fee shall be exclusive of and in addition to: (1) the usual and general or special ad valorem taxes which the city is authorized to levy and impose upon real and personal property; (2) sales taxes of the franchisee's services to the extent permitted by Florida law; and (3) assessments for public improvements. The franchise fee levied under this agreement also shall be in addition to any tax, now or in the future, levied by any other goverumental body or agency. Page 11 of 18 (48103·1-.'2]481001.3. For the purposes of confirming the franchise fee paid under this section, the franchisee shall provide to the city the documentation specified in section 16 above supporting its gross receipts for each calendar quarter. The city shall have the right to conduct an independent review of the books and records of the franchisee relating to the calculation of the franchisee fee, and shall have the right to require an audit ofthe franchisee's books and records, as provided in section 16 above. Section 18. Elimination of residential permit fee. In consideration for the franchisee fee revenue to be paid to the city under this agreement, including the additional franchise fee revenue that will be realized by the city from residential consumers who switch to gas service, the city agrees that, effective as of the effective date of the city resolution approving this agreement, all permit fees imposed by the city for the installation of gas appliances by residential consumers shall be eliminated and that during the term of this agreement, no such permit fee or similar fee shall be charged by the city. The city further agrees that all city ordinances or parts of ordinances which are inconsistent with or in conflict with the provisions of this section 18 are and shall be repealed by the city resolution approving this agreement. Section 19. Annexation by city. Promptly after the city's annexation of any property, the city shall provide the franchisee with written notice of the annexation. The notice shall contain a description of the annexed property sufficient to enable the franchisee to determine which, if any, of its consumers are located in the annexed territory. Beginning on the first day of the next calendar quarter that occurs at least thirty (30) days after the franchisee receives a written annexation notice from the city, the portion of the franchisee's gas system that may be located within the annexed territory (including the streets, alleys or public grounds located in the annexed territory) shall be subject to the terms of this franchise; provided that, notwithstanding anything to the contrary, in the event that lands are annexed by the city and the Miami-Dade County Code or other applicable law provides for a retention of the franchise fee generated from the lands annexed by the city or otherwise provides for the payment of the franchise fee, then the franchise fee generated from consumers located on the lands shall instead be paid as provided by the law. Section 20. Default and termination. Any material violation by the franchisee of any of the covenants, terms and conditions of this agreement, or material default by the franchisee in observing or carrying into effect any of the covenants, terms and conditions of this agreement, shall authorize and empower the city to terminate this agreement and all rights hereunder, provided, however, that before action by the city shall become operative and effective, the franchisee Page 12 of 18 [48IG3·"'Zl~81OJJ.J. · .~.,' : '.'~ . shall have been served by the city with a written notice setting forth all matters pertinent to the violation or default, and describing the action of the city with respect thereto, and franchisee shall have had a period of 60 days after service of the notice within which to cure the violation or default; provided that if the violation or default is not susceptible of cure within 60 days, the franchisee shall have additional time as is reasonably necessary to cure the violation or default so long as franchi~ee has commenced to cUre the violation or default within the 60 day period and thereafter is diligently prosecuting the cure to completion and provided, further, that any violation or default resulting from a strike, a lockout, natural or man-made disaster or any other cause beyond the control of the franchisee shall not constitute grounds for termination of this agreement. The city may extend that period upon appropriate representations and assurances by the franchisee that corrections are being made. However, any extension will not be considered or deemed a waiver by the city of franchisee's lack cif compliance. The city may allow continuation of this agreement for as long as the city deems appropriate, despite a breach or forfeiture as described in this section, in order to ensure continuation of service to consmners. Continuation of the arrangement will not be deemed a waiver of the city's claim of a breach or forfeiture. In the event that the franchisee upon receipt of the written notice from the city does not desist from the violation within the time prescribed above, then the franchisee shall be deemed to have forfeited, and annulled all of franchisee's franchise, grants, privileges, rights licenses and immunities granted under this agreement. The franchisee is required to make every reasonable effort to maintain operation and service at all times even in the event of any work stoppage by its employees. Nothing in this agreement shall limit or restrict any legal rights that the city may possess arising from any alleged violation of this agreement; provided that in the event of a conflict between any other rights and the provisions of this section 20, the provisions of this section' 20 (including, without limitation, the franchisee's cure rights set forth in this section 20) shall control.' Section 21. Insolvency or bankruptcy of franchisee. In the event of a fmal adjudication of barikruptcy of the franchisee, the city shall have full power and authority to terminate, revoke and cancel any and all rights granted under the provisions of this agreement. Section 22. Changes in provlSlons of this a!!feement. No amendment, modification, waiver or discharge of this agreement, or any subpart (including, without limitation, this sentence) shall be valid or effective unless in writing and signed by the party against whom enforcement of the amendment, modification, waiver or discharge is sought and then only to the extent set forth in writing. Page 13 of 18 [48103·1,'1[481031.3 · '... : ~' ... ' Minor changes in the terms and conditions of this agreement may be made by written agreement between the city and the franchisee without the approval of the city commission, provided, however, that this section shall not be construed as conferring authority to make any changes in or modifications of the provisions of this agreement which would be repugnant to or inconsistent with basic factors or principles underlying the terms and conditions of this agreement, unless agreed to in writing by the franchisee and approved by the city commission. Section 23. Limitation of liability for breach of contract. Nothing contained in this agreement is in any way intended to be a waiver of the limitation placed upon the city's liability as set forth in section 768.28, Florida Statutes. Section 24. No third-party rights. It is the express intent of the city and the franchisee that neither this agreement nor any of its provisions shall create any rights in third-parties. Section 25. Franchisee as independent contractor. When performing under this agreement, the franchisee's status shall be that of an independent contractor and not an agent, servant, employee or representative of the city in the performance of work pursuant to this agreement. No term or provision of this agreement, or act of the franchisee (or its employees, contractors, or subcontractors) shall be construed as changing this status. Section 26. Repealing section. All ordinances or parts of ordinances in conflict with the provisions of this agreement are repealed. Section 27. Saving provision. If any term, condition, provision, section, part of section, paragraph, sentence or clause of this agreement, to any extent, be held by a court of competent jurisdiction to be invalid, illegal or unenforceable ("impaired provision") the remaining terms, conditions and provisions shall remain valid in all other respects and continue to be effective. With respect to the impaired provision, the city and the franchisee shall enter into good faith negotiations and proceed with due diligence to draft a term, condition or provision that will achieve the original intent of the parties to this agreement. In the event of a subsequent change in applicable law so that the impaired provision is no longer impaired, and the impaired provision has not been renegotiated by mutual agreement of the city and the franchisee, upon reasonable notice by the city, that provision shall return to full force and effect without further action by the city and shall thereafter be binding on the franchisee and the city. Page 14 of 18 [4810-3-U,]481031.3. Section 28. Purchase right upon expiration. The city reserves the right at and after the expiration of the term of this agreement to purchase the property of the franchisee used under this agreement, as provided by the laws of Florida, in effect at the time of the franchisee's acceptance of this agreement, and the franchisee does grant to the city the right to purchase the property; provided that in order to exercise the right of purchase, the city must give the franchisee written notice of the city's exercise of this right between 60 and 30 days prior to the expiration of the term of this agreement. Section 29. Mediation. Any claim or dispute arising out of or related to this agreement shall be subject to informal mediation as a condition precedent to the institution oflegal or equitable proceedings by either party to this agreement. Both parties waive any right to arbitration. The parties shall share the mediator's fee and any filing fees equally. The mediation shall be held in Miami-Dade County, Florida, unless another location is mutually agreed upon. Contracts reached in mediation shall be enforceable as settlement contracts in the circuit court for the 11 th Judicial Circuit for the State of Florida .. Section 30. Jurisdiction and venue. For the purposes of this agreement, Florida law shall govern the terms of this agreement. Venue shall be in Miami- Dade County, Florida. Section 31. Right of the city to intervene. The city reserves to itself the right to intervene in any suit, action or proceeding involving any provision of this agreement. Franchisee agrees to advise the city of any suits. Section 32. Attorneys' fees. Except as otherwise provided, the city and the franchisee agree that if litigation becomes necessary to enforce any of the obligations, terms, and conditions of this franchise, the prevailing party shall be entitled to recover a reasonable amount of attorneys' fees and court costs, including paralegal costs, and fees and costs on appeal, from the non-prevailing party. However, in no event shall either party be held liable for prejudgment interest. Section 33. Warranty of authority. The signatories to this agreement warrant that they are duly authorized by action of their respective city commission, board of directors or other authority to execute this agreement and to bind the party on whose behalf the signatory signed this agreement to the promises, terms, conditions and warranties contained in this agreement. . Section 34. Miscellaneous. Page 15 of 18 [48!IJ.3·V2]481D31.J A. Entire agreement. This agreement contains the entire agreement between the parties with respect to the subject matter of this agreement and supersedes . any and all prior and contemporaneous negotiations, representations, understandings and agreements, whether written or oral, all of which are merged into this agreement. B. Headings. The headings of sections and subsections of this agreement are for convenience of reference only and are not intended to restrict, affect, or be of any weight in the interpretation or construction of the provisions of sections or subsections. c. No waiver. Neither the city nor the franchisee shall be excused from complying with any of the terms and conditions of this agreement by any failure of the other (including its affiliates, employers, or agents) to insist upon or seek compliance with any term or condition. Waiver of a condition in this agreement may solely occur upon the express written approval of the party against whom enforcement of the waiver is sought, as provided for in section 22. D. Construction of this agreement. This agreement has been prepared by the parties and was thoroughly reviewed and extensively modified during negotiations between the city and the franchisee and their respective legal counsel. The parties agree that this document is a product of all of their efforts, that it expresses their mutual understandings, and that it should not be interpreted in favor of either party or against either of them merely because of the parties' initial efforts in preparing it. Each party shall bear its own costs to draft and negotiate this agreement. E. Notices. All notices, demands, requests, consents, approvals or other communications (collectively, "notices") required or permitted to be given hereunder or which are given with respect to this agreement shall be effective only if in writing and delivered by personal service, or delivered to an overnight courier service with guaranteed next day delivery or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the franchisee: with a copy to: [481()'3·1·.·Zl~81llJL3 NUl Utilities, Inc. 955 East 25th Street Hialeah, Florida 33013 Attention: Director of Utility Operations NUl Utilities, Inc. One Elizabethtown Plaza Page 16 of 18 Union, New Jersey 07083 Attention: Legal Department with a second copy to: Morgan, Lewis & Bockius, LLP. 5300 Wachovia Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2339 Attention: Robert W. Murray, Esq. To the city : Sanford Youkilis, Interim City Manager City of South Miami 6130 Sunset Drive South Miami, Florida 33143 with a copy to: Earl G. Gallop, City Attorney Nagin Gallop Figueredo, PA 3225 Aviation Avenue Third Floor Miami, Florida 33133 or to the other address as the party shall have specified most recently by like notice. The attorneys for the parties to this agreement are respectively authorized to give any notice permitted under this agreement. Any notice given as provided under this section shall be deemed received as follows: if delivered by personal service, on the date so delivered; if delivered to an overnight courier service, on the business day immediately following delivery to service; and if mailed, on the third business day after mailing. IN WITNESS WHEREOF, the parties have executed this agreement as of the date first written above. ATTEST: CITY OF SOUTH MIAMI, a Florida nicipal corporation. ilis . Its: Interim City Manager Approved as to form: Page 17 of18 [48103·1,'4]481031.3. ....... ';ia..~ • City Attorney WITNESS: NUl UTILITIES, INC., a New Jersey corporation d/b/a City ~7tJAAAMr itIleSSto sign above Print Name: Lin .ttL I-. /vlol"rOW Gas Com~any of Florid By: V J:ou; 1l1IAA.1VV Name: Vi etrnr A. FOvtiQ-e..W'CL Its: Vi u. fre'5i dl.nf Page 18 of 18 [48103·Hl~81llJl.3. CITY OF SOUTH MIAMI INTER-OFFICE MEMOR1lNDUM To: Mayor and city comm'n. Sandy Y oukilis, city manager Ronetta Taylor, city clerk From: Eve A. Boutsis, office of Date: May 29, 2003 Earl G. Gallop, city attorney Re: NUl gas utility franchise ordinance This memorandum presents an outline of subjects to be addressed in a proposed ordinance revising the city's gas utility franchise agreement. The city's code requires the franchise agreement to be written as an ordinance. The city's prior utility franchise agreement was for a 30-year term and provided the city with a 6% franchise fee. Subsequent to the franchise's adoption the federal government required NUl and other gas pipelines to transport gas for other entities, for a charge. However, as other entities were now distributing gas through NUl's pipelines the city began to lose franchise fees, as the city's ordinance did not allow the city to seek fees for gas that NUl transported for third parties. The current ordinance rectifies this situation. The city earns its franchise fee based upon NUl's "gross sales." GrQss sales now includes the term "transport." The NUl gas franchise ordinance has been modified in several material respects: term; amount of the utility franchise fee the city earns; defining the scope of the city's franchise fee, to include transportation services; waiver of residential permit fees for installing gas hot water heater units; performance bond; and increased insurance requirements. NUl has requested a 30-year agreement. The city's negotiating team has recommended a I5-year term, with a 5-year renewal option. The city will earn a 7.5% utility franchise fee, which shall now include revenues from NUl's transport of gas for third parties. NUl has projected that by including transportation customers in the calculation, the city will earn additional annual franchise free of revenues of $7,500. In exchange for the foregoing increases in franchise fee revenues, NUl has requested that permit fees be waived for all residential gas water heater installations. Per Ms. Sonia Lama the city annually receives very few gas water heater permit applications. NUl has requested that this savings be provided to residents as an incentive to them to install gas water heaters. This would in exchange increase NUl's customer base and provide the city with increased franchise fees. Finally, NUl will provide the city with a $50,000 performance bond, and $5,000,000 liability insurance policy.