ITEM #: 9.
DATE: 11/04/2024
AI #:2274 |
 |
CITY COUNCIL ACTION REPORT
| SUBJECT: |
APPROVAL OF A FRANCHISE AGREEMENT WITH EPCOR WATER ARIZONA INC. FOR A SPECIAL ELECTION TO BE HELD MAY 20, 2025
|
| STAFF PRESENTER(S): |
Roric Massey, City Attorney |
|
|
|
| SUMMARY |
| This franchise agreement grants EPCOR Water Arizona Inc. (EPCOR) the right to construct, maintain, and operate water distribution facilities within rights-of-way located within the City of Goodyear in order to provide water services for areas designated by the Arizona Corporation Commission. EPCOR does not currently provide wastewater collection services within the city of Goodyear but the franchise agreement allows EPCOR to install wastewater collection facilities within city rights-of-way at a future date if the Arizona Corporation Commission expands EPCOR’s service territory. The franchise agreement would be approved or rejected by the qualified electors of the City of Goodyear at the May 20, 2025, Special Election. |
| STRATEGIC PLAN ALIGNMENT |
|
|
| RECOMMENDATION |
| ADOPT RESOLUTION NO. 2024-2431
APPROVING A FRANCHISE AGREEMENT BETWEEN THE CITY OF GOODYEAR AND EPCOR WATER ARIZONA INC., ITS SUCCESSORS AND ASSIGNS, AND PLACING THE APPROVAL OF THE FRANCHISE AGREEMENT ON THE BALLOT OF A SPECIAL ELECTION TO BE HELD ON MAY 20, 2025, THAT GRANTS EPCOR WATER ARIZONA INC., ITS SUCCESSORS AND ASSIGNS THE RIGHT, PRIVILEGE AND FRANCHISE TO CONSTRUCT, MAINTAIN AND OPERATE UPON, OVER, AND/OR ALONG THE PUBLIC RIGHTS-OF-WAY IN THE CITY OF GOODYEAR, ARIZONA, AND FUTURE ADDITIONS THERETO, WATER DELIVERY AND WASTEWATER COLLECTION SYSTEMS WITH ALL NECESSARY APPURTENANCES, FOR THE PURPOSE OF SUPPLYING WATER AND COLLECTING WASTEWATER TO THE CITY, ITS SUCCESSORS, THE INHABITANTS THEREOF, AND PERSONS AND CORPORATIONS EITHER WITHIN OR BEYOND THE LIMITS THEREOF, FOR ALL PURPOSES, PRESCRIBING CERTAIN RIGHTS, DUTIES, TERMS AND CONDITIONS IN RESPECT THERETO.
(Roric Massey, City Attorney) |
| FISCAL IMPACT |
| This franchise agreement requires EPCOR to pay the City of Goodyear three percent (3%) of the gross profits of the sale of water services or wastewater collection services within the boundaries of the city as a franchise fee. EPCOR currently has a license agreement with the city and pays a license fee of two percent (2%) of the gross profits of the sale of water services within the boundaries of the city. The city collects between $22,000 and $26,000 per year under the current license agreement with EPCOR. Costs associated with the special election have been included as a part of the FY2025 budget. |
| BACKGROUND AND PREVIOUS ACTIONS |
| EPCOR is a regulated utility company that supplies water and wastewater collection services to customers across Arizona. The City and EPCOR previously negotiated a license agreement to allow EPCOR to use the city right-of-way to install water distribution facilities. EPCOR has been operating within the city right-of-way under this license with the intent to enter into a franchise agreement with the city. The license allowed EPCOR to install and maintain infrastructure within the city-maintained right-of-way to provide water service within its service area. The license required EPCOR to pay a license fee of two percent (2%) of the gross receipts from the sale of potable drinking water within the license area. |
| STAFF ANALYSIS |
Franchise agreements are authorized by the Arizona Constitution and the Goodyear City Charter. Franchise agreements are important because they provide stability and help the City of Goodyear effectively plan for the future in coordination with public utility companies. The city currently has franchise agreements with Arizona Public Service (APS) for the provision of electrical service and Southwest Gas for the provision of natural gas services.
This franchise agreement is a contract between the City of Goodyear and EPCOR. The franchise agreement gives EPCOR a non-exclusive right to use the city's streets, alleys, and other public rights-of-way to construct, maintain, and operate their water distribution facilities safely and efficiently to serve their customers in the City of Goodyear. The city will collect a three percent (3%) franchise fee for all EPCOR utilities provided to customers in the service area which currently includes water distribution facilities and may include wastewater collection if EPCOR provides these services to city residents at a future date. EPCOR is responsible for the installation and maintenance of its infrastructure at its own cost and shall be required to relocate its infrastructure when the city constructs improvements to or within the right-of-way. The franchise agreement also ensures EPCOR is using rights-of-way safely and efficiently and they comply with city regulations. Within the franchise agreement, EPCOR commits to designing, constructing, and completing any projects in a timely fashion and in partnership with the City. EPCOR will consult and coordinate with the City on a regular basis to ensure emergencies, damage mitigation, traffic control, or defaults are addressed to the best of their ability.
The Arizona Constitution requires that voters in the city approve a municipal franchise agreement. EPCOR will be responsible for costs incurred by the City for holding a general election to approve this franchise agreement and the City will equitably apportion only those costs attributable to the election of this franchise agreement to EPCOR if other items are on the ballot. If approved by a majority of the voters at the May 2025 Special Election, this franchise agreement will be effective for a term of 25-years, which is the maximum allowed by the Arizona Constitution, and will go into effect June 1, 2025. Unless terminated earlier by a written agreement this franchise agreement will be effective through May 30, 2050. |
|
|
|
