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Business Meeting
Meeting Date: 12/09/2014 Length (in minutes): 20 Minutes
Agenda Title:    Public Hearing: Amending Tigard Municipal Code Title 15.06 Franchise Utility Ordinance
Prepared For: Loreen Mills Submitted By: Loreen Mills, City Management
Item Type: Motion Requested
Public Hearing - Informational
Meeting Type: Council Business Meeting - Main
Public Hearing
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Public Hearing Publication
Date in Newspaper:

Should Tigard's Franchised Utility Ordinance (Tigard Municipal Code Title 15.06) be amended to clarify the definition of 'gross revenues' and modify the rights-of-way (ROW) fee structure to ensure the City receives fair and reasonable compensation for private use of the public's rights-of-way?
Motion to adopt an ordinance to update and modify Tigard Municipal Code Title 15.06 "Franchise Utility Ordinance" to clarify the definition of 'gross revenues' and modify the rights-of-way fee structure.
The Tigard City Council adopted Tigard Municipal Code (TMC) Chapter 15.06 "Franchised Utility Ordinance" in 2006.  This chapter has served the City well in providing policy direction for managing the use of the public's ROW by utility companies.  Over the last several months in working with telecommunication utility providers, staff has found Chapter 15.06 needs to be updated to:
  1. Further clarify Council's policy regarding the definition of 'gross revenues' to include all amounts earned or derived from the operation and use of the system to serve customers in Tigard.  This will further ensure compensation is based on the benefits derived from the utility use of the public ROW within the City;
  2. Modify the ROW fee structure to reduce the annual minimum fee from $10,000 to $4,000 or 5% of gross revenues (whichever is greater) for utilities owning facilities in the ROW whether they generate revenue or not from city customers; and
  3. Create a new fee definition for those utilities that use non-owned facilities to provide service to limited customers in Tigard at 5% of gross revenues so that all utilities using facilities in the ROW pay for management of the public's asset.

Some utility providers have raised concerns about the minimum annual fee creating a possible barrier to entry into the telecommunications market in Tigard.  The Federal Telecommunications Act of 1996 (the "Act") preempts the city from effectively prohibiting the provision of telecommunication services. While the existing $10,000 minimum fee is defensible under the Act, there is concern that this could deter utilities from providing competitive services and could give rise to litigation under the Act that would be costly even when the City prevails in a suit.  The City Council's policy is to protect and promote access to the Tigard community by utility providers.  Approval of this ordinance further clarifies Council's policy.

Those utility providers that don't own facilities in the ROW and provide services to customers in Tigard typically pay less than $700 per year when calculated on their gross revenues. Under this proposal, those utility providers would continue to pay fees based on 5% of the gross revenues calculation method.
Council provides further direction to staff regarding changes to the proposed language.
TMC Chapter 15.06 "Franchised Utility Ordinance"
TMC Chapter 15.04 "Work In Right-Of-Way"
August 12, 2014 - Council Executive Session
November 18, 2014 - Council Executive Session

Fiscal Impact
Cost: -0-
Budgeted (yes or no): No
Where Budgeted (department/program): General Fund Revenues
Additional Fiscal Notes:
There is no change anticipated in general fund revenues generated from franchise fees with these proposed changes.  Current utilities whom own facilities in the ROW pay more than $4,000 annually through the 5% of gross revenues calculation method. Utilities which do not own facilities in the ROW currently pay under $700 a year and this will continue under the 5% of gross revenues calculation method.

Tigard anticipates $5.8 million will be received in this fiscal year (ending 6/30/15) from franchise/ROW fees.  About $3.4 million of that will come from electric, gas and telecommunication utility providers.
Ordinance No. 14-14

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