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AGENDA ITEM REVIEW FORM
5.E.
Regular City Council Meeting
Meeting Date:
07/10/2024
Department Head:
Kay Macuil
Submitted By:
Janet Taylor, Legal Secretary, Attorney's Office
Action Requested:
Motion
Resolution

ITEM:

Discussion and possible action on any and all matters regarding Resolution No. 2326.  A resolution of the Mayor and City Council of the City of San Luis, Arizona, that deems the grant of a gas franchise to Southwest Gas Corporation beneficial to the City of San Luis, Arizona, and submits it to the voters for the November 5, 2024, election; repealing conflicting provisions; and providing for severability.  (Kay Marion Macuil, City Attorney)           
(The franchise will not be in effect until after it is approved in an election by the voters residing within San Luis, Arizona)

SUMMARY:

The Arizona Constitution Article 13 § 4 and A.R.S. § 9-502 allow franchises to be granted for twenty-five (25) years. Southwest Gas Corporation currently operates within the City of San Luis ("City") under a franchise agreement approved by the San Luis voters on March 14, 2000. Franchises in the City must be approved by the voters of San Luis. To avoid a special election, the city will need to submit it to the voters this election year.

This Agenda Item is for:
  • the City Council to consider the franchise of Southwest Gas and its benefits,
  • if approved, make the statutory finding that the franchise is beneficial to San Luis,
  • publish the agreement in the newspaper as required by law,and 
  • submit the franchise agreement to the voters. 
The City Council took prior action to process the proposed franchise:
  • February 14, 2024, Resolution 2303, City Council ordered the November 5, 2024, Election to be held and to include this franchise and
  • May 22, 2024, Resolution 2310, City Council set the deadline for pro and con statements for August 7, 2024 (and with a Nunc Pro Tunc Resolution 2311 correcting a typographical error on June 12, 2024).
If the voters residing in San Luis approve it, the new franchise agreement (Exhibit A to the Resolution) will have the following terms in summary :
  • It will be effective on January 1, 2025, and expire on January 1, 2050.
  • It will allow Southwest Gas Corporation the right, privilege, and franchise to construct, maintain, and operate its gas system and gas system facilities upon, over, along, across, and under the present and future public rights-of-way, thereby supplying natural gas and/or artificial gas to the City and its inhabitants.
Attorneys and representatives of the City of San Luis, the Arizona Municipal Risk Retention Pool for the city, and Southwest Gas have met several times, and the final terms are agreeable to all. In consideration of the grant of this franchise, Southwest Gas Corporation will pay the City:
  • a franchise fee equal to two percent (2%) of the gross revenues of Southwest Gas Corporation,
  • transaction privilege and use tax authorized by City ordinance,
  • other charges, taxes, or fees levied upon businesses generally throughout the City, and
  • applicable City right-of-way management and inspection fees, and pavement damage fees established by ordinance necessary for the services provided by Southwest Gas Corporation under this franchise.
The final agreement is attached as Exhibit A to the resolution. The Southwest Gas Franchise Agreement with the city, signed on May 26, 1999, is attached as a reference.

RECOMMENDATION / SUGGESTED MOTION:

I MOVE TO APPROVE RESOLUTION NO. 2326, AS PRESENTED.

Fiscal Impact

IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
Please see the fiscal impact statement.
CITY/STATE/FEDERAL FUNDS:
N/A
TOTAL:
N/A
BUDGETED AMOUNT:
N/A
AVAILABLE AMOUNT TO TRANSFER:
N/A
ACCT NAME & GL#/REMAINING BALANCE BEFORE PURCHASE:
N/A

FISCAL IMPACT STATEMENT (IF THIS IS A BUDGET TRANSFER, YOU MUST ATTACH THE BUDGET ADJUSTMENT FORM):

There will be shared costs with the city and South West Gas for the publishing and election process. The franchise, if passed by the voters, will be a source of revenue for the city to provide public services.

Attachments