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2012-3754 Ordinance ORDINANCE NO. 2012-3754 AN ORDINANCE GRANTING TO FLORIDA POWER & LIGHT COMPANY, ITS SUCCESSORS AND ASSIGNS, AN ELECTRIC FRANCHISE, IMPOSING PROVISIONS AND CONDITIONS RELATING THERETO, PROVIDING FOR MONTHLY PAYMENTS TO THE CITY OF MIAMI BEACH, AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, there is currently in effect a franchise agreement between the City of Miami Beach ("City") and Florida Power & Light Company ("FPL"), the terms of which are set forth in City of Miami Beach Ordinance No. 82-2294, passed and adopted January 20, 1982, and FPL's written acceptance thereof dated January 22, 1982, granting to FPL, its successors and assigns, a thirty (30) year electric franchise ("Current Franchise Agreement"); and WHEREAS, FPL and the City desire to enter into a new agreement ("New Franchise Agreement") providing for the payment of fees to the City in exchange for the non-exclusive right and privilege of supplying electricity and other electricity-related services within the City of Miami Beach free of competition from the City of Miami Beach, pursuant to certain terms and conditions; and WHEREAS, the City Commission deems it to be in the best interest of the City of Miami Beach and its citizens to enter into the New Franchise Agreement prior to expiration of the Current Franchise Agreement. 1 NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA: Section 1. There is hereby granted to Florida Power & Light Company, its successors and assigns (hereinafter called the "Grantee"), for the period of thirty (30) years from the effective date hereof, the non-exclusive right, privilege, and franchise (hereinafter called "Franchise") to construct, operate, and maintain in, under, upon, along, over, and across the present and future roads, streets, alleys, bridges, easements, and rights-of-way (hereinafter called "Public Rights-of-Way") throughout all of the incorporated areas, as such incorporated areas may be constituted from time to time, of the City of Miami Beach, Florida, and its successors (hereinafter called the "Grantor"), in accordance with the Grantee's customary practice with respect to construction and maintenance, electric light and power facilities, including, without limitation, conduits, poles, wires, transmission and distribution lines, and all other facilities installed in conjunction with or ancillary to all of the Grantee's operations (hereinafter called "facilities"), for the purpose of supplying retail electricity service and other electricity-related services incidental thereto (which other electricity-related services are defined as FPL's facility-to-facility data capabilities over the lines to identify faults, load information, and other data necessary or helpful to the provision of electric service, and which do not include any services that are sold to others) to the Grantor and its successors, the inhabitants thereof, and persons beyond the limits thereof. Section 2(a). The facilities of the Grantee shall be so located, re-located, installed, constructed, and erected as to not unreasonably interfere with the convenient, safe, continuous use, or with the maintenance, improvement, extension or expansion of any 2 public "road," as defined under the Florida Transportation Code, nor unreasonably interfere with reasonable egress from and ingress to abutting property. (b) To minimize such conflicts with the standards set forth in subsection (a) above, the location, relocation, installation, construction, or erection of all facilities shall be made as representatives of the Grantor may prescribe in accordance with all applicable federal, state, and local statutes, laws, ordinances, rules, and regulations, and pursuant to Grantor's valid rules and regulations with respect to utilities' use of Public Rights-of-Way relative to the placing and maintaining in, under, upon, along, over, and across said Public Rights-of-Way, provided that such rules and regulations shall be (i) for a valid municipal purpose; (ii) shall not prohibit the exercise of Grantee's rights to use said Public Rights-of-Way for reasons other than conflict with the standards set forth above; (iii) shall not unreasonably interfere with Grantee's ability to furnish reasonably sufficient, adequate, and efficient electric service to all its customers while not conflicting with the standards set forth above; or (iv) shall not require relocation of any of the Grantee's facilities installed before or after the effective date hereof in any Public Rights-of-Way unless or until the facilities unreasonably interfere with the convenient, safe, or continuous use, or the maintenance, improvement, extension, or expansion, of such Public Rights-of-Way. 3 (c) Such rules and regulations shall recognize that above-grade facilities of the Grantee installed after the effective date hereof should, unless otherwise permitted, be installed near the outer boundaries of the Public Rights-of-Way to the extent possible, and such installation shall be consistent with the Florida Department of Transportation's Manual of Uniform Minimum Standards for Design, Construction and Maintenance for Streets and Highways, as same may be amended from time to time. (d) When any portion of a Public Right-of-Way is excavated, damaged, or impaired by Grantee, or any of its agents, contractors or subcontractors, because of the installation, inspection, or repair of any of its facilities, the portion of the Public Right-of- Way so excavated, damaged, or impaired shall, within a reasonable time and as early as practicable after such excavation, damage, or impairment, be restored to its original condition before such excavation, damage, or impairment by the Grantee at its expense. (e) The Grantor shall not be liable to the Grantee for any cost or expense in connection with any relocation of the Grantee's facilities required under this Section, except, however, the Grantee may be entitled to reimbursement of its costs from others and as may be provided by law. (f) In the event the Grantor requires removal or relocation of Grantee's facilities because the facilities unreasonably interfere with the standards set forth in subsection (a) hereof, and Grantee fails to remove or relocate such facilities at Grantee's expense within thirty (30) days after written notice from Grantor, then Grantor may proceed to cause the facilities to be removed or relocated and the expense therefore shall be charged against the Grantee. 4 Section 3. The Grantor shall in no way be liable or responsible for any accident, injury, or damage, whether to persons or property, that may occur in the construction, installation, location, relocation, reconstruction, maintenance, repair, or operation by Grantee of its facilities hereunder. Accordingly, acceptance of this New Franchise Agreement by Grantee shall be deemed an agreement on the part of the Grantee to indemnify and hold harmless Grantor, and its officers, employees, agents, servants, contractors, or subcontractors, from and against any and all liability, loss, costs, damages, attorneys' fees, or expenses (including, without limitation, those for or related to any accident, injury, personal injury, wrongful death, or other damage to persons or property), including Grantor's reasonable attorneys' fees and costs incurred in defending itself against any claims for such liabilities, losses, costs, damages, or expenses asserted against Grantor by others which may accrue to or be incurred by or charged or sought against Grantor, or any of its officers, employees, agents, servants, contractors, or subcontractors, by reason of construction, installation, location, relocation, reconstruction, maintenance, repair, or operation of Grantee's facilities, or by any acts or omissions of negligence, gross negligence, strict liability, products liability, or intentional torts, default, or misconduct of the Grantee, or any of its officers, directors, agents, servants, employees, contractors, or subcontractors. The indemnity hereunder shall include not only the reasonable costs, expenses, and attorneys' fees incurred by the Grantor in defense of any third party's claim (prior to and during all phases of litigation, including trial and post-trial and appellate proceedings), but shall also include the reasonable costs, expenses, and attorneys' fees incurred by the Grantor in the event it must enforce the terms of this indemnity prior to and during all litigation, including trial, post-trial, and appellate 5 proceedings. This indemnity shall survive expiration or other termination of this New Franchise Agreement. Section 4. All rates and rules and regulations established by the Grantee from time to time shall be subject to such regulation as may be provided by law. Section 5. As a consideration for this Franchise, the Grantee shall pay to the Grantor, commencing ninety (90) days after the effective date hereof, and each month thereafter for the remainder of the term of this Franchise, an amount which when added to the amount of all licenses, excises, fees, charges and other impositions of any kind whatsoever (except ad valorem property taxes and non-ad valorem tax assessments on property) levied or imposed by the Grantor against the Grantee's property, business or operations, and against the property, business, or operations of the Grantee's subsidiaries that are directly involved in supplying electricity and other electricity-related services as defined in Section 1 of this New Franchise Agreement, during the Grantee's monthly billing period ending sixty (60) days prior to each such payment, will equal 5.29 percent (5.29%) of the Grantee's billed revenues, less actual write-offs, from the sale of electrical energy to residential, commercial, and industrial customers (as such customers are defined by Grantee's tariff) within the incorporated areas of the Grantor for the monthly billing period ending sixty (60) days prior to each such payment, and in no event shall payment for the rights and privileges granted herein exceed 5.29 percent of such revenues for any monthly billing period of the Grantee. The Grantor understands and agrees that such revenues as described in the preceding paragraph are limited, as in the Current Franchise Agreement, to the precise revenues described therein, and that such revenues do not include, by way of example 6 and not limitation: (a) revenues from the sale of electrical energy for Public Street and Highway Lighting (service for lighting public ways and areas); (b) revenues from Other Sales to Public Authorities (service with eligibility restricted to governmental entities); (c) revenues from Sales to Railroads and Railways (service supplied for propulsion of electric transit vehicles); (d) revenues from Sales for Resale (service to other utilities for resale purposes); (e) franchise fees; (f) Late Payment Charges as described in Grantee's tariff; (g) Field Collection Charges as described in Grantee's tariff; (h) other service charges permissible under Grantee's tariff. Section 6. Grantee recognizes and agrees that the City Commission may, once each calendar year, upon one hundred twenty (120) days advance written notice to Grantee, prospectively reduce the percentage rate of the franchise fee which is identified in Section 5 above, to a rate which is not less than one (1.0%) percent, and that the City Commission may also, upon providing the same period of notice to Grantee, once each calendar year prospectively increase the percentage rate of the franchise fee up to, but not in excess of, a rate of six (6.0%) percent. In the event this adjustment option is exercised by the City, the formula to be used in calculating the franchise fee to be remitted shall be and remain the formula specified in detail in Section 5 of this franchise agreement, with the exception of the adjusted franchise fee percentage. Further, in the event the City elects to exercise this adjustment option, such option shall be exercised by the adoption of an ordinance, a certified copy of which must be delivered to the Grantee no later than ninety (90) days before any such increase or reduction is to become effective, which ordinance identifies the adjusted franchise fee rate. Such ordinance shall provide that the Grantee shall pay to the Grantor, no later than ninety (90) days after the end of the Grantee's first 7 billing period and no later than ninety (90) days after the end of each succeeding monthly billing of the Grantee during the term of the franchise, franchise fees at the adjusted franchise fee percentage rate, using the same formula (with the exception of the adjusted franchise fee percentage) delineated in Section 5 above. In no event may the Grantor increase the amount by more than two (2.0%) percent from the percentage then being collected in any given year. The Grantor shall also have the option to reduce the amount to be paid by the Grantee to any percentage between six (6.0%) percent and one (1.0%) percent without any restriction or limitation on the size of that reduction, but in no event shall the Grantor have the option to increase the percentage used to calculate the amount to be paid by the Grantee as consideration for this franchise to any percentage which is greater than six (6.0%) percent, or to reduce the percentage used to calculate the amount to be paid by the Grantee as consideration for this franchise to any percentage which is less than one (1.0%) percent. The Grantor's option hereunder shall be limited solely to the percentage to be used in the calculation of the amount to be paid by the Grantee as consideration for this franchise and as specifically set forth in this subsection, and no other section or provision of this franchise ordinance, aside from the percentage identified in Section 5 above, may be altered, amended or affected by the Grantor without the concurrence of the Grantee. Nothing herein shall require the Grantor to exercise its option hereunder Section 7. As a further consideration, during the term of this Franchise, the Grantor agrees: (a) not to engage in the distribution and/or sale, in competition with the Grantee, of electric capacity and/or electric energy to any ultimate consumer of electric utility service (herein called a "retail customer") or to any electrical distribution system established solely 8 i to serve any retail customer formerly served by the Grantee; and (b) not to participate in any proceeding or contractual arrangement, the purpose or terms of which would be to obligate the Grantee to transmit and/or distribute, electric capacity and/or electric energy from any third party(ies) to any other retail customer's facility(ies); provided, however, that the Grantor shall not be considered a "third party" or an "other retail customer" for purposes of this provision. Nothing specified herein shall prohibit the Grantor from engaging with other utilities or persons in wholesale transactions which are subject to the provisions of the Federal Power Act, or from utilizing generators and/or other electricity or energy-generating equipment during emergency situations. Nothing specified herein is intended to restrict the Grantor from providing services other than retail electricity service, which is the subject of the Grantor's agreement not to compete set forth in this paragraph. Nothing specified herein shall prohibit the Grantor, if permitted by law: (i) from purchasing electric capacity and/or electric energy from any other person or utility; or (ii) from seeking to have the Grantee transmit and/or distribute to any facility(ies) of the Grantor electric capacity and/or electric energy purchased by the Grantor from any other person or utility in compliance with applicable laws and regulations; provided, however, that before the Grantor elects to purchase electric capacity and/or electric energy from any other person or utility, the Grantor shall notify the Grantee. Such notice shall include a summary of the specific rates, terms and conditions that have been offered by the other person or utility and identify the Grantor's facility(ies) to be served under the offer. The Grantee shall thereafter have ninety (90) days to evaluate the offer and, if the Grantee offers rates, terms and conditions which are equal to or better than those offered by the other person or utility, the Grantor shall be obligated to continue to purchase from the 9 Grantee electric capacity and/or electric energy to serve the previously-identified facility(ies) of the Grantor for a term no shorter than that offered by the other person or utility. If, within such ninety (90) day period, the Grantee does not offer rates, terms and conditions that are equal to or better than those offered by the other person or utility, then the Grantor shall be free to consummate such purchase transaction with such other person or utility, and all of the terms and conditions of this Franchise shall remain in effect. Nothing herein shall prohibit the Grantor: (i) from purchasing renewable electric energy, which may include either or both of electric capacity or electric energy that is produced within Grantor's corporate limits using any technology recognized as renewable under Section 377.803 or Section 366.91, Florida Statutes (as same may be amended from time to time), or any applicable successor statute(s) that defines renewable energy, from any other person or utility in compliance with applicable laws and regulations; or (ii) from seeking to have the Grantee transmit and/or distribute to any facility(ies) of the Grantor renewable electric energy produced within the corporate limits of the Grantor and purchased by the Grantor from any other person or utility in compliance with applicable laws and regulations; provided, however, that if Grantor seeks to purchase such renewable energy from any other person or utility by conducting a competitive solicitation process for the provision of such renewable energy, then the Grantee shall have the right, but not the obligation, to participate in such competitive solicitation process on the same basis, under the same terms and conditions, and with the same opportunity to be awarded the contract to provide the renewable energy sought by the City, as any and all other proposers or bidders participating in the process. All of the terms and conditions of this 10 Franchise shall remain in effect without regard to whether the Grantee, or any other vendor, is awarded the contract to provide renewable energy to the Grantor, provided the Grantor awards the contract pursuant to its competitive solicitation process, or alternatively awards the contract in accordance with Section 2-367 of the Code of the City of Miami Beach (as same may be amended from time to time) or any successor ordinance(s) without going through the competitive solicitation process. Grantee agrees that it will not initiate any territorial complaint or territorial dispute litigation against any supplier of renewable energy with which the Grantor contracts following such competitive procurement process or following the award of the contract without going through the competitive solicitation process in accordance with Section 2-367 of the Code of the City of Miami Beach or any successor ordinance(s). Section 8. If during the term of this New Franchise Agreement the Grantee enters into a franchise agreement with any other municipality or county government located in Miami-Dade County, Broward County, or Palm Beach County, Florida, the terms of which provide for the payment of franchise fees by the Grantee at a rate greater than 6.0 percent of the Grantee's residential, commercial and industrial revenues (as such customers are defined by Grantee's tariff), under the same terms and conditions as specified in Section 5 hereof, then the Grantee, upon written request of the Grantor, shall negotiate and enter into a new franchise agreement with the Grantor in which the percentage to be used in calculating monthly payments under Section 5, using the same terms and conditions as specified in Section 5 hereof, shall be the greater rate provided to the other Miami-Dade County, Broward County, or Palm Beach County, Florida municipality or county; provided, however, that if the franchise with such other Miami-Dade 11 County, Broward County, or Palm Beach County, Florida municipality or county contains additional benefits given to Grantee in exchange for the increased franchise rate, and such additional benefits are not contained within this New Franchise Agreement, then Grantee shall have the sole discretion to include within such new franchise agreement with Grantor the additional benefits found within the triggering franchise (i.e., the franchise that triggers the operation of this Most Favored Nations provision) which Grantee may choose to include in the new franchise agreement with Grantor. In addition to the foregoing, if during the term of this New Franchise Agreement the Grantee enters into a franchise agreement with Miami-Dade County on terms and conditions that the Grantor reasonably determines are materially more favorable to Miami- Dade County than the terms and conditions contained herein, then the Grantee, upon written request of the Grantor, shall negotiate and enter into a new franchise agreement with the Grantor that contains the terms and conditions that the Grantor has identified in the Miami-Dade County franchise as being materially more favorable to Miami-Dade County; provided, however, that if the franchise with Miami-Dade County contains additional benefits given to Grantee in exchange for the materially more favorable terms and conditions, and such additional benefits are not contained within this New Franchise Agreement, then Grantee shall have the sole discretion to include within such new franchise agreement with Grantor the additional benefits found within the triggering franchise (i.e., the Miami-Dade County franchise that triggers the operation of this Most Favored Nations provision) which Grantee may choose to include in the new franchise agreement with Grantor. 12 Section 9. If the Grantor grants a right, privilege or franchise to any other person or utility or otherwise enables any other such person or utility to construct, operate, or maintain electric light and power facilities within any part of the incorporated areas of the Grantor in which the Grantee may lawfully serve or compete on terms and conditions which the Grantee reasonably determines are materially more favorable than the terms and conditions contained herein, the Grantee may at any time thereafter terminate this Franchise Agreement if such terms and conditions are not remedied within the time period provided hereafter. The Grantee shall give the Grantor at least 180 days advance written notice of its intent to terminate, and the Grantor and Grantee agree to negotiate in good faith toward a mutually acceptable resolution of Grantee's claimed disadvantage during this 180 day period. Such notice shall, without prejudice to any of the rights reserved for the Grantee herein, advise the Grantor of such terms and conditions that it considers materially more favorable. The Grantor shall then have 120 days in which to correct or otherwise remedy the terms and conditions complained of by the Grantee. If the Grantee reasonably determines that such terms and conditions are not remedied by the Grantor within said time period, the Grantee may terminate this Franchise Agreement by delivering written notice to the Grantor's Clerk and termination shall be effective on the date of delivery of such notice. Nothing contained herein shall be construed as constraining Grantor's rights to legally challenge at any time Grantee's determination of "materially more favorable terms or conditions" leading to termination under this Section. Section 10. If as a direct or indirect consequence of any legislative, regulatory or other action by the United States of America or the State of Florida (or any department, agency, authority, instrumentality or political subdivision of either of them), any person or 13 utility is permitted to provide electric service within the incorporated areas of the Grantor to a customer then being served by the Grantee, or to any new applicant for electric service within any part of the incorporated areas of the Grantor in which the Grantee may lawfully serve, and the Grantee reasonably determines that its obligations hereunder, or otherwise resulting from this Franchise in respect to rates and service, place it at a material competitive disadvantage with respect to such other or utility person, the Grantee may, at any time after the taking of such action, terminate this Franchise Agreement if such material competitive disadvantage is not remedied within the time period provided hereafter. The Grantee shall give the Grantor at least 120 days advance written notice of its intent to terminate. Such notice shall, without prejudice to any of the rights reserved for the Grantee herein, advise the Grantor of the consequences of such action which resulted in the material competitive disadvantage. The Grantor shall then have 120 days in which to correct or otherwise remedy the material competitive disadvantage, and the Grantor and Grantee agree to negotiate in good faith toward a mutually acceptable resolution of Grantee's claimed disadvantage during this 120 day period. If such material competitive disadvantage is, in the reasonable determination of Grantee, not remedied by the Grantor within said time period, and if no mutually acceptable resolution of the matter is reached through negotiation, the Grantee may terminate this Franchise Agreement by delivering written notice to the Grantor's Clerk and termination shall take effect on the date of delivery of such notice. Nothing contained herein shall be construed as constraining Grantor's rights to legally challenge at any time Grantee's determination of "material competitive disadvantage" leading to termination under this Section. 14 Section 11. Failure on the part of the Grantee to comply in any material respect with any of the provisions of this Franchise shall be grounds for forfeiture. In the event Grantor reasonably determines that it will invoke this forfeiture provision, Grantor shall give the Grantee at least 180 days advance written notice of its intent to invoke the forfeiture provision, and the Grantor and Grantee agree to negotiate in good faith toward a mutually acceptable resolution of the claimed basis for the forfeiture during this 180 day period. Such notice shall, without prejudice to any of the rights reserved for the Grantor herein, advise the Grantee of the substance of the alleged failure of Grantee to comply in a material respect with the provisions of this Franchise that Grantor considers to be the basis for the forfeiture. The Grantee shall then have 120 days in which to correct or otherwise remedy the claimed basis for the forfeiture. If the Grantor reasonably determines that such claimed basis for the forfeiture is not remedied by the Grantee within said time period, the Grantor may invoke this forfeiture provision by delivering written notice to Grantee's Corporate Secretary and forfeiture shall be effective on the date of delivery of such notice. Nothing contained herein shall be construed as constraining Grantee's rights to legally challenge at any time Grantor's determination of the claimed basis for the forfeiture leading to termination under this Section. The Grantor maintains the right, at its discretion, to grant such additional time to the Grantee for compliance as necessities in the case require. Section 12. Failure on the part of the Grantor to comply in substantial respect with any of the provisions of this Franchise, including but not limited to: (a) denying the Grantee use of Public Rights-of-Way for reasons other than as set forth in Section 2 hereof; (b) imposing conditions for use of Public Rights-of-Way contrary to Florida law or 15 the terms and conditions of this Franchise; (c) unreasonable delay in issuing the Grantee a use permit, if any, to construct its facilities in Public Rights-of-Way, shall constitute breach of this Franchise and entitle the Grantee to withhold such portion of the payments provided for in Section 5 hereof as a court of competent jurisdiction has, upon action instituted by Grantee, determined to be equitable, just, and reasonable, considering the totality of the circumstances, until such time as a use permit is issued, or a court of competent jurisdiction has reached a final determination (after the expiration or exhaustion of all rights of appeal) in the matter. The Grantor recognizes and agrees that nothing in this New Franchise Agreement constitutes or shall be deemed to constitute a waiver of the Grantee's delegated sovereign right of condemnation and that the Grantee, in its sole discretion, may exercise such right as provided by law. The Grantee recognizes and agrees that nothing in this New Franchise Agreement constitutes or shall be deemed to constitute a waiver of the Grantor's delegated sovereign right of condemnation and that the Grantor, in its sole discretion, may exercise such right as provided by law, provided that the Grantor shall not exercise such right so as to violate the Grantor's covenant, set forth in Section 7 hereof, not to compete against the Grantee in the distribution and/or sale of electricity to retail customers. Section 13. The Grantor may, p at its option, upon reasonable notice to Grantee � p , within 180 days after each anniversary date of this Franchise, at the sole expense of Grantor, examine the books and records of Grantee as such books and records relate to the calculation of the franchise fee payment to the Grantor for the calendar year preceding such anniversary date. Grantee shall use a system of accounts and form of materials as prescribed by applicable law or regulation. Grantee shall attach to each payment to 16 Grantor a statement of its gross revenues against which the franchise fee is to be calculated as to all residential, commercial, and industrial accounts. Acceptance of payment by Grantor shall not stop Grantor from asserting that the amount paid is not the amount due. Grantee shall make available for review all accounts and records of Grantee that Grantor may reasonably request or require relative to calculating the franchise fee. Such examination of books and records of Grantee by Grantor shall be made during the regular business hours of the Grantee at the general office of the Grantee. Records not prepared by the Grantee in the ordinary course of its business may be provided at the Grantor's expense and as the Grantor and the Grantee may agree in writing. Additionally, where copies of Grantee's records may be properly obtained by Grantor for purposes of this Section, said copies will be made at the Grantor's expense. Information identifying the Grantee's customers by name or their electric consumption shall not be taken from the Grantee's premises. Such audit shall be impartial and all audit findings, whether they decrease or increase payment to the Grantor, shall be reported to the Grantee. The Grantor's right to examine the records of the Grantee in accordance with this Section shall not be conducted by any third party employed by the Grantor whose fee, in whole or part, for conducting such audit is contingent on findings of the audit. Records shall be retained by Grantee for a period of five (5) years. The provisions of this Section shall survive termination of this New Franchise Agreement. Notwithstanding the preceding paragraph, Grantor shall have one (1) year following the expiration of the Current Franchise Agreement within which to conduct the examination and audit contemplated by this Section, as to such Agreement; such 17 examination and audit to cover the last three (3) years of the Current Franchise Agreement. Section 14. Notwithstanding any provision of this New Franchise Agreement, nothing herein shall prevent, prohibit, or in any way restrict the Grantor's ability to take advantage of all applicable services set forth in Grantee's tariffs as those tariffs are approved from time-to-time by Grantee's regulators, and nothing herein shall prevent, prohibit, or in any way restrict the Grantor's ability to avail itself of all rights accruing to Grantor as a retail customer of Grantee under Florida law and the rules and regulations of the Florida Public Service Commission. Section 15. Should any section or provision of this New Franchise Agreement or any portion hereof be declared by a court of competent jurisdiction to be invalid, such decision shall not affect the validity of the remainder hereof as a whole or any part hereof, other than the part declared to be invalid. Section 16. Grantee understands and acknowledges that Grantor's policies strongly favor undergrounding of utilities and improvement of safety and aesthetics. Grantee has filed a tariff and has adopted a Mechanism for Governmental Recovery of Undergrounding Fees (MGRUF), along with other undergrounding tariffs. Requests made by Grantor for undergrounding shall by implemented by Grantee in accordance with the applicable tariffs in effect on the date of Grantor's request. Section 17. Grantee acknowledges that Grantor's policies strongly favor the widespread dissemination of meters featuring "smart grid technology" which utilize an interactive monitoring network capable of providing real time electrical energy usage information to both Grantee and Grantee's retail customers via an advanced, two-way 18 communication device. If this technology is implemented by Grantee, Grantee shall utilize its best practicable efforts to provide such technology to retail customers located in the incorporated area of Grantor consistent with good and prudent utility practice. Section 18. Grantee understands and acknowledges that Grantor's policies strongly favor strengthening electric utility infrastructure. Grantee has filed and received Florida Public Service Commission (FPSC) approval for a plan which includes strengthening feeders delivering power to critical infrastructure facilities, including feeders located within the Grantor's boundaries. Subject to continued FPSC or regulatory approval, Grantee will implement its infrastructure hardening plan within the Grantor's boundaries. Section 19. Grantor acknowledges it is fully informed concerning the existing franchise granted by Miami-Dade County, Florida, to the Grantee herein, and accepted by the Grantee as set out in Ordinance No. 60-16, adopted on May 3, 1960, and subsequently renewed and accepted by the Grantee as set out in Ordinance No. 89-81, adopted on September 5, 1989 by the Board of County Commissioners of Miami-Dade County, Florida. Grantor agrees to indemnify and hold Grantee harmless against any and all liability, loss, cost, damage and expense incurred by Grantee in respect to any claim asserted by Miami-Dade County against Grantee arising out of the franchise set out in the above referenced ordinances for the recovery of any sums of money paid by Grantee to Grantor under the terms of this New Franchise Agreement. Grantee acknowledges and Grantor hereby relies on the Dade County Resolution No. R-709-78, adopted on June 20, 1978, in the granting of this Franchise. 19 Section 20. As used herein, "person" means an individual, a partnership, a corporation, a business trust, a joint stock company, a trust, an incorporated association, a joint venture, a governmental authority or any other legal entity of any nature whatsoever. Section 21. Ordinance No. 82-2294, passed and adopted January 20, 1982 and all other ordinances and parts of ordinances and all resolutions and parts of resolutions in conflict herewith, are hereby repealed. Section 22. As a condition precedent to the taking effect of this Ordinance, the Grantee shall file its acceptance hereof with the Grantor's Clerk. Grantor and Grantee agree and acknowledge that Grantee shall deliver its Acceptance to Grantor on or before February 21, 2012, provided that this Ordinance has passed on first and second reading on or before February 21, 2012, and in that event the effective date of the New Franchise Agreement shall be the date on which said Acceptance is delivered to the Grantor's Clerk by Grantee. PASSED on first reading this 14th day of December , 2011. PASSED AND ADOPTED on second reading this 8th day of February AA II�� 12. 1 BF� CITY OF MIAMI BEACH, FLORIDA * INCORP ORATED: * By: �'• 40 ATTEST: "9,4 ... • ';�OJ cN 26 � �� �' SEAL BY 7a (SEAL) City Clerk of the City of Miami Beach, Florida APPROVED AS TO FORM &LANGUAGE &FOR EXECUTION 20 c om COMMISSION ITEM SUMMARY Condensed Title: An Ordinance Granting To Florida Power And Light Company, Its Successors And Assigns, An Electric Franchise Imposing Provisions And Conditions Relating Thereto, Providing For Monthly Payments To The City Of Miami Beach, And Providing For An Effective Date. Key Intended Outcome Supported: Sup ortin Data (Surveys, Environmental Scan, etc.): Issue: Shall the City Commission approve the ordinance granting FPL a franchise agreement? Item Summary/Recommendation: At the December 14, 2011, Commission Meeting, the Ordinance was approved on First Reading and referred to the Neighborhood/Community Affairs Committee between first and second reading. In addition, the following recommendations were made: • Renegotiate better conditions between first and second reading, • Discuss use of renewable energy technology on City owned facilities without violating franchise agreement, and • Commitment on streamlined process for the underground. At the January 11, 2012 Commission meeting, the item was opened and continued to February 8, 2012. The City Manager was also directed to meet with representatives from the Sunset Islands Nos. 3 & 4 HOA regarding their proposal that certain costs associated with their Islands, proposed undergrounding project be either waived or absorbed by the City. Regarding the recommendations made at the December 14, 2011 Commission Meeting, the following were achieved: • There has been no change to the terms and conditions between first and second reading • FPL has agreed to implement a number of renewable energy projects, conservation initiatives, and services that will refurnish to the City at no cost, and which will be memorialized in a letter agreement. • A process flow template defining City and FPL responsibilities and time frames for completing the different stages of underground conversion requests is being finalized and will be memorialized in a letter of agreement. The City has made significant gains in the proposed new franchise agreement (when compared both to the terms of the existing franchise). The most significant are as follows: ■ Most Favored Nation (MFN) Clause — If FPL enters into a franchise with any other city or county in either Miami- Dade, Broward, or Palm Beach County offering a franchise rate greater than 6.0%, then, at City's request, FPL will match such rate for City. If the County negotiates a new franchise with more favorable terms and conditions (beyond just the rate)than the City's franchise agreement, then the City can also avail itself of those. ■ Franchise Fee-At the September 14, 2011, City Commission meeting, the Commission directed the Administration to negotiate a franchise fee that would not result in an increase to residential customers (i.e. the direction was to essentially keep the fee "flat"). Following this direction, the formula for this scenario was adjusted so that total FPL payments to the City for the franchise fee, permits and fees maintain the net effective franchise rate charged to customers and remitted to the City at 5.29% of the revenue that FPL collects from the sale of electricity. • Right-of-Way (ROW) Relocation — Requires FPL to remove or relocate its facilities within 30 days if they unreasonably interfere with the safe, continuous use, maintenance, improvements, extension or expansion of a public road, or if FPL facilities interfere with reasonable egress/ingress to abutting property. • Indemnity—FPL has agreed to include the City's indemnity language (rather than FPL's standard provision), which affords the City broader protection and survives termination or expiration of the Franchise Agreement. • Right to Purchase Power from Others — For the first time, however, the non-compete clause will contain certain exceptions, to the extent that the City will have the right to purchase power from others for its own facilities, provided FPL has the right to match the third party offer. ■ Renewable Energy Purchases — For the first time, the City will have the right to purchase any technology recognized as "renewable electrical energy" under Florida State Statutes that is developed within City limits; or to have FPL distribute, to City facilities, renewable electrical energy that is developed within City limits. The Administration recommends approval of the Ordinance after a Second Reading Public Hearing. Advisory Board Recommendation: None Financial Information: Source of Amount Account Approved Funds: Financial Impact Summary: City Clerk's Office Legislative Tracking: Fred H. Beckmann, P.E., Ext 6012 Sign-Offs: Department Director Assistant City Manager City Managg FHB DRB JMG T:\AGENDA\2012\1-11-12\FP r r ment- SUMM.docx i Q� EJDI tTEE Y -M! iE H MIAMI BEACH City of Miami Beach, 1700 Convention Center Drive,Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM TO: Mayor Matti Herrera Bower and Members of the City Commission FROM: Jorge M. Gonzalez, City Manager SECOND READING PUBLIC HEARING DATE: February 8, 2012 SUBJECT: AN ORDINANCE GRANTING TO FLORIDA POWER AND LIGHT COMPANY, ITS SUCCESSORS AND ASSIGNS, AN ELECTRIC FRANCHISE IMPOSING PROVISIONS AND CONDITIONS RELATING THERETO, PROVIDING FOR MONTHLY PAYMENTS TO THE CITY OF MIAMI BEACH, AND PROVIDING FOR AN EFFECTIVE DATE. BACKGROUND The City's current thirty (30) year non-exclusive franchise agreement with FPL was originally set to expire on January 22, 2012. At the request of the Commission and Staff, FPL agreed to extend the existing franchise so that it now expires February 21, 2012. Since January, 2011, representatives of the City Manager and City Attorney's Office (with the assistance of specialized outside counsel) have been negotiating the terms and conditions of a new franchise agreement with FPL. At the September 14, 2011, meeting of the City Commission, the vote on the first reading of the proposed new franchise agreement was deferred, and a recommendation made to schedule a public workshop, as initially recommended by Commissioner Weithorn, to further discuss the terms of the proposed new agreement. The subject public workshop, moderated by Commissioner Weithorn, was held on November 28, 2011, at the Miami Beach Golf Course Clubhouse, and attended by Miami Beach residents, non-residents (including the Mayors of the Village of Pinecrest and the City of South Miami, respectively), FPL representatives, and City staff. The workshop commenced with presentations by FPL and the City, respectively, regarding the terms of the proposed new agreement, including identifying those issues where the City was able to negotiate better or new terms in the new agreement than those contained in the current agreement. Following the presentations, Commissioner Weithorn entertained questions and comments from the public. At the workshop, residents (including the aforementioned officials from Pinecrest and South Miami), expressed their opinions on the franchise agreement. A major concern was the 30-year term, which, notwithstanding the City's continuous efforts to reduce, FPL indicated could not be modified. Residents from the Sunset Islands 3 & 4 neighborhood addressed concerns regarding the difficulties surrounding the process of undergrounding, and recommended that the City Commission consider enacting some type of legislation which would dedicate a percentage of the funds collected from the franchise fee to be set aside for use toward the underground placement of overhead utilities. Commission Memorandum- FPL Franchise Agreement February 8, 2012 Page 2 of 5 At the end of the workshop, Commissioner Weithorn recommended that an item regarding the calculation of current and proposed franchise payments be scheduled for discussion at the next Finance and Citywide Projects Committee meeting. On December 6, 2011 at the Finance and Citywide Projects Committee meeting, a discussion was held regarding FPL payments to the City of Miami Beach. The Committee discussed the calculation of the current and proposed franchise payments. No after action was required. At the December 14, 2011, Commission Meeting the Ordinance was approved on First Reading. and referred to the Neighborhood/Community Affairs Committee between First and Second Reading. In addition, the following recommendations were made: • Renegotiate better conditions between first and second reading, • Discuss use of renewable energy technology on City owned facilities without violating franchise agreement, and • Commitment on streamlined process for the underground. At the January 11, 2012 Commission meeting, the item was opened and continued to February 8, 2012. In order to accommodate the City's process, Florida Power and Light (FPL) agreed to a one-month extension on the existing franchise agreement, so that the current franchise will expire February 21, 2012 if it is not renewed and accepted prior to that time. The City Manager was also directed to meet with representatives from the Sunset Islands No. 3 & 4 Homeowners Association regarding their proposal that certain costs associated with the Islands' proposed undergrounding project be either waived or absorbed by the City. ANALYSIS There has been no change to the FPL Franchise Agreement terms and conditions presented at First Reading. Following First Reading, additional negotiations between City Staff and FPL, held on January 20, 2012, resulted in a number of significant renewable energy projects, conservation initiatives, and services that will be furnished at no cost to the City and which will be memorialized in a letter agreement to be executed between FPL and the City. The renewable energy projects include: • A donation to fully fund the installation of solar panels with backup batteries to power the lighting for the Henry Flagler Memorial, on Monument Island. • Agreement to partner with the City to work with the Miami-Dade County School District to allow for the implementation of solar demonstration programs at three schools in Miami Beach. • Conduct three Home Energy Makeover Initiatives (HEMI), one each at: 710 Jefferson Avenue, 259 Washington Ave, and 542 Jefferson Avenue. There are a total of 68 residents that live in these 3 buildings. • Conduct a Non Profit Energy Makeover (NEMO) in one of the buildings owned by the Miami Beach Development Corporation. • Conduct energy audits on key city owned facilities • Encourage citizens to participate in FPL's Home Energy Surveys. • Fund 2 City employees to attend LEED certification classes. • Investigate the potential of installing a renewable wind turbine demonstration project at South Pointe Pier. Commission Memorandum-FPL Franchise Agreement February 8, 2012 Page 3 of 5 • Partner with Miami Beach to implement FPL's educational Energy Conservation Program for the schools. This program targets K-8 grades. • Partner with Miami Beach during the planning process of the Department of Energy grant awarded to the South Florida Regional Planning counsel for electrical vehicles ("EV) charging and infrastructure installations. The goal of the project is to develop comprehensive plans and streamline local regulations (including permitting) to facilitate and expand the penetration of electric vehicles in this region. FPL and the City have committed to a streamlined undergrounding process. A process flow template defining City and FPL responsibilities and time frames for completing the different stages of the overhead to underground conversion request is being finalized and will be memorialized in a the letter of agreement. As directed, the City Administration also met with representatives from the Sunset Islands 3 & 4 Homeowners Association (HOA) and it was agreed that the HOA will pay for all undergrounding costs charged by FPL, AT&T, Sprint, Atlantic Broadband, and all other third party costs. The City agreed to fund costs internal to the City. A summary of the terms agreed to between the City and the HOA, which will be memorialized in a memorandum of understanding between the parties to be presented to the City Commission at its March Meeting, is attached and incorporated as Attachment "A" to this commission Memorandum. Following its referral at the December 14, 2011 Commission Meeting, the item was presented at the January 30, 2012 Neighborhood/Community Affairs Committee was informed that there had been no change to the FPL Franchise Agreement terms and conditions presented at the First reading. No action was taken by the Committee. The City has made significant gains in the proposed new franchise agreement (when compared both to the terms of the existing franchise, and what was initially proposed by FPL). The most significant are as follows (see also Attachment "B" hereto, for overview of Franchise Agreement Terms): • Most Favored Nation (MFN) Clause— If FPL enters into a franchise with any other city or county in, either Miami-Dade, Broward, or Palm Beach County offering a franchise rate greater than 6.0%, then, at City's request, FPL will match such rate for City. Additionally, since the Miami-Dade County franchise is coming up for renewal in 2019, if the County negotiates a new franchise with more favorable terms and conditions (beyond just the rate) than the City's franchise agreement, then the City can also avail itself of those. Per FPL, this is the first time it has agreed to such an expanded MFN claim (among its 177 franchises). • Franchise Fee - At the September 14, 2011, City Commission meeting, the Commission directed the Administration to negotiate a franchise fee that would not result in an increase to residential customers (i.e. the direction was to essentially keep the fee "flat"). Following this direction, the formula for this scenario was adjusted so that total FPL payments to the City for the franchise fee, permits and fees maintain the net effective franchise rate charged to customers and remitted to the City at 5.29% of the revenue that FPL collects from the sale of electricity. In this case, the total revenue figure upon which the franchise fee payment is based was adjusted to deduct un-collectables. As a result of the proposed new agreement, there would be no change in the average residential electric bill as a result of the franchise fee. A comparison of franchise fee calculation follows: Commission Memorandum-FPL Franchise Agreement February 8, 2012 Page 4 of 5 Revenue Type Current Agreement New Agreement Residential: $59,989,154 $59,989,154 Commercial: 84,245,585 84,245,585 Industrial: 112,193 112,193 Total Revenue: (1) $144,346,932 $144,346,932 Less Un-collectables: (1) - 245,255 Net Revenue: $144,346,932 $144,101,677 % of Revenue Applicable to FPL Payments to City: 6.00% 5.29% 6% of Revenue: $8,660,816 $7,622,979 Other payments by FPL: Permits/Fees: ($ 4,175) ($4,175) Property Taxes: (1,041,983) - Franchise Fees Payment to CMB: $7,614,658 $7,618,804 $7,614,658 Difference: $4,146 (1) Franchise revenues and uncollectible amounts are actual 12 months ending June 2011. • Right-of-Way (ROW) Restoration — The new franchise agreement requires FPL to remove or relocate its facilities if they unreasonably interfere with the safe, continuous use, maintenance, improvements, extension or expansion of a public road, or if FPL facilities interfere with reasonable egress/ingress to abutting property. If FPL fails to perform the removal or relocation within thirty (30) days, then the City may proceed with removal or relocation and charge back to FPL. • If a City ROW is excavated, damaged, or impaired by FPL (or its contractors), the franchise agreement requires FPL to restore within a reasonable time. However, pursuant to subsequent discussions between the City's Public Works Department and FPL, the City has determined, and FPL has agreed, that it can require FPL (or its contractors) to post a bond or cash security as a condition of obtaining a use permit for doing work on the City's ROW. • Indemnity — For the first time, FPL has agreed to include the City's indemnity language (rather than FPL's standard provision), which affords the City broader protection and survives termination or expiration of the Franchise Agreement. • Right to Purchase Power from Others — Typically, all of FPL's franchises contain a "non- compete" clause, whereby the county or municipal government granting the franchise agrees not to sell or distribute electric capacity and/or electric energy to "retail customers" (i.e. in competition with what FPL does). For the first time, however, the non-compete clause will contain certain exceptions, to the extent that the City will have the right to purchase power from others for its facilities, provided FPL has the right to match the third party offer. Additionally, the City will also have the right to purchase and/or distribute power to serve its own facilities; to engage in wholesale transactions; and, of course, to utilize generators and/or other electricity or energy-generating equipment during emergencies. • Renewable Energy Purchases — One of the policy concerns going into negotiation of the new franchise was that the City wanted the opportunity, and certain flexibility, with regard to its ability to be able to avail itself of new technologies that may become Commission Memorandum- FPL Franchise Agreement February 8, 2012 Page 5 of 5 available during the term of the new franchise agreement. Accordingly, for the first time, the City will have the right to purchase any technology recognized as "renewable electrical energy" under Florida State Statutes that is developed within City limits; or to have FPL distribute, to City facilities, renewable electrical energy that is developed within City limits. FISCAL IMPACT In the past five years, the City has received 40,473,785.73 in FPL franchise fee payments. The projected revenue for the first year at a 5.29% franchise fee rate is $7,618,804. At a 1% increase per year over the next five years, the City would receive payments in the amount of $39,252,193; At a 3% increase over the next five years, the City would receive payments in the amount of $41,662,743. Therefore, if the ordinance is not approved, the impact to the City's general fund over the next five years ranges from approximately $39,000,000 to $42,000,000. CONCLUSION The Administration recommends approval of the Ordinance after a Second Reading Public Hearing at the February 8, 2012, Commission Meeting. Attachments: Attachment A: Summary of Terms Agreed to Between CMB Sunset Islands 3 &4 HOA Attachment B: Table— FPL Franchise Agreement Overview JMG/DRB/FHB T:\AGENDA\2012\1-11-12\FPL Franchise Agreement- MEMO.doc Attachment A Proposed Basis for Memorandum of Understanding.Between the City of Miami Beach and the Property Owners Association of Sunset Islands 3 &4 1. Timeframe. At the March City Commission meeting,the Administration will place,for the City Commission's consideration, a proposed Memorandum of Understanding (MOU) between the City and the Sunset Islands 3 &4 Property Owner's Association (POA), memorializing the terms contained in this memo. At either the February Commission meeting (if we can prepare it in time to placed as a supplemental item)or at the March meeting,the Administration will also place a Resolution on the agenda pertaining to the election requirement previously imposed by the City Commission, as a condition to its final approval for these type of special assessment districts. The proposed Resolution will 1.) request that the Commission allow the election to proceed prior to the adoption of the first Resolution establishing the district; and 2.) establish general guidelines and internal procedures for the City, since it will be handling the election "in- house," under the auspices of the City Clerk's Office and City Attorney's Office. In order for the City to prepare the election ballot question and mail out the ballots to the proper parties, the City and POA shall have the following respective responsibilities: 1.)The POA will be responsible for providing the City with its most current list of the names and addresses of the 117 property owners within the proposed district, which will then be verified by the City; and 2.) Provided the City has all the required information, including the aforestated updated, verified list, the final estimated costs of the proposed undergrounding project, and—based on such costs—the amount of the individual assessments for each property owner(both if paid up front, in full, or in installments over the agreed upon period of 10 years, if the property owner elects to finance), the City will prepare and send out the ballots for a mail ballot election, which—as per the POA's request—will be scheduled sometime in April. 2. Funding. The City agrees to fund costs internal to the City. These include:the FPL-CIP Liaison,the CIP Management Fee, annual administration fees, and the internal cost of conducting the election (if conducted by the City and not by the County). The property owners will responsible for all 3`d party costs. Financing costs (interest, issuance,tax collector, debt service reserve, and other 3rd party and related borrowing costs)will be assessed to those property owners who do not pay the assessment up front, in full, and who elect to use the City financing option to pay for their portion in installments. 3. Traffic Circle and Sidewalk. We discussed a traffic circle located as you come over the Sunset Island 4 Bridge from the mainland side onto Sunset Island 4 and the extension of the sidewalk connecting Sunset Island 3 &4 bridges along Sunset Drive. There was concern expressed regarding the sidewalk and more information required regarding the traffic circle. 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