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Council hears briefing on electric franchise agreements, staff seeks authorization to solicit bids
Summary
City staff explained proposed 20-year nonexclusive electric franchise agreements for utilities operating in Florence’s rights of way, noted the draft reserves the city’s right to impose a franchise fee of up to 5% (not required), and outlined potential costs and tree-canopy protections; council did not vote on an ordinance at the meeting.
City staff presented a detailed briefing to the Florence City Council on municipal electric franchise agreements, the legal framework for utilities operating within the city’s rights of way and the process the city would use to solicit bids from utility providers.
"A franchise agreement is basically a contract between a city and a utility provider, and it allows that utility provider to operate within the city's right away," Mister Hunt said, explaining the purpose of a franchise and showing maps of right-of-way configurations.
Staff said the specific franchise under discussion would be nonexclusive, cover a 20-year term and allow the council to reserve — but not require — the ability to impose a franchise fee of up to 5 percent at some future point during the term. "The franchise agreement reserves a right for the city council to impose a franchise fee of up to 5% at some point within the next 20 years or not at all," Hunt said; he also noted council members had indicated a desire not to impose such a fee now.
Hunt outlined practical implications for street and utility work. He said rights of way are often crowded with utilities and that replacing water mains sometimes requires placing new pipe under the street, increasing project cost. He estimated that adding such work can increase a capital street project by roughly 20 percent because of additional materials and pavement restoration requirements.
Councilors raised passer-through and local-impact questions. Leslie asked whether companies typically pass franchise fees to customers; Hunt said, "these fees do get passed on every time to the user," and noted that legal challenges in other jurisdictions are testing how much cities can require utilities to absorb such charges.
Hunt said the draft agreement also includes provisions intended to address tree maintenance and canopy protection, and that the city will receive formal ordinance language from staff (Lending) prior to any vote. The staff request to council at the meeting was to pass an ordinance that would authorize the city to advertise and accept bids from utilities (Duke Energy and Owen were named as potential respondents). No ordinance vote occurred at the meeting; staff will provide the draft ordinance for council review before any formal action.
