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12 - FIRST READING - ORDINANCE GRANTING FRANCHISE TO ATMOSItem No. 12 memorandum TO: City Council John Godwin, City Manager FROM: Gene Anderson, Finance Director SUBJECT: FIRST READING ON AN ORDINANCE GRANTING A FRANCHISE TO ATMOS ENERGY CORPORATION DATE: July 30, 2015 BACKGROUND: Utility companies that wish to use the City's right -of -ways for distribution of their services can only do so under the authority of a franchise agreement approved by a City Council ordinance. Atmos Energy had been operating under a franchise originally granted to Lone Star Gas Company. This franchise agreement expired April 13, 2015, but Atmos will continue to operate under the terms of that franchise until a new franchise agreement has been approved. The proposed effective date of the new ordinance is October 1, 2015 with a maximum ending date of September 30, 2030. STATUS OF ISSUE: Adoption of a new franchise ordinance requires three public readings on three different dates. The first reading will be August 10, 2015 at the Council's regular meeting. BUDGET: The franchise fee under this proposed ordinance is 5% of gross revenues as defined in the ordinance. The previous franchise ordinance also required a 5% fee. RECOMMENDATION: Public reading only. No action required at this time. ORDINANCE NO: AN ORDINANCE OF THE CITY OF PARIS, TEXAS GRANTING TO ATMOS ENERGY CORPORATION, A TEXAS AND VIRGINIA CORPORATION, ITS SUCCESSORS AND ASSIGNS, A FRANCHISE TO CONSTRUCT, MAINTAIN, AND OPERATE PIPELINES AND EQUIPMENT IN THE CITY OF PARIS, LAMAR COUNTY, TEXAS, FOR THE TRANSPORTATION, DELIVERY, SALE, AND DISTRIBUTION OF GAS IN, OUT OF, AND THROUGH SAID CITY FOR ALL PURPOSES; PROVIDING FOR THE PAYMENT OF A FEE OR CHARGE FOR THE USE OF THE PUBLIC RIGHTS -OF -WAYS; AND PROVIDING THAT SUCH FEE SHALL BE IN LIEU OF OTHER FEES AND CHARGES, EXCEPTING AD VALOREM TAXES; PROVIDING FOR A TERM AND EFFECTIVE DATE; PROVIDING FOR WRITTEN ACCEPTANCE OF THIS FRANCHISE; PROVIDING THAT THE MEETING AT WHICH THIS ORDINANCE IS PASSED IS OPEN TO THE PUBLIC; PROVIDING FOR SEVERABILITY; AND ORDAINING OTHER PROVISIONS RELATED TO THE SUBJECT MATTER HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS: SECTION 1. GRANT OF AUTHORITY. The City of Paris, Texas, hereinafter called "City," hereby grants to Atmos Energy Corporation, Mid -Tex Division, hereinafter called " Atmos Energy" or "Company," its successors and assigns, consent to use and occupy the present and future streets, alleys, highways, public utility easements, public ways and other public places ( "Public Rights -of- Way"), for the purpose of laying, maintaining, constructing, protecting, operating, and replacing therein and thereon pipelines and all other appurtenant equipment (the "System ") to deliver, transport, and distribute gas in, out of, and through City for persons, firms, and corporations, including all the general public, and to sell gas to persons, firms, and corporations, including all the general public, within the City corporate limits, as such limits may be amended from time to time during the term of this franchise. Said consent being granted for a term ending September 30, 2020 provided that, unless written notice is given by either party hereto to the other not less than sixty (60) days before the expiration of this Franchise, it shall be automatically renewed for two additional periods of five (5) years from such expiration date. SECTION 2. DEFINITIONS. For the purposes of this Ordinance, the following terms, phrases, words, and their derivations shall have the meanings given herein. When not inconsistent with the context, words in the present tense include the future, words in the plural number include the singular number, Page I 4340464.4 and words in the singular number include the plural number. The word "shall" is always mandatory and not merely directory. a. "Affiliate" shall mean in relation to Company, a Person that controls, is controlled by, or is under common control with Company. As used in this definition, the term "control" means, with respect to a Person that is a corporation, the ownership, directly or indirectly, of more than 50% of the voting securities of such Person or, with respect to a Person that is not a corporation, the power to direct the management or policies of such Person, whether by operation of law, by contract, or otherwise. b. "City" shall mean the City of Paris, Texas. C. "Company" shall mean Atmos Energy Corporation, Mid -Tex Division, its successors and assigns, but does not include an Affiliate, which shall have no right or privilege granted hereunder except through succession or assignment in accordance with Section 17. d. "Gross Revenues" shall mean: (1) all revenues received by Company from the sale of gas to all classes of customers (excluding gas sold to another gas utility in the City for resale to its customers within City) within the City; (2) all revenues received by Company from the transportation of gas through the System of Company within the City to customers located within the City (excluding any gas transported to another gas utility in City for resale to its customers within City); (3) the value of gas transported by Company for Transport Customers through the System of Company within the City ( "Third Party Sales ") (excluding the value of any gas transported to another gas utility in City for resale to its customers within City), with the value of such gas to be established by utilizing Company's monthly Weighted Average Cost of Gas charged to industrial customers in the Mid -Tex division, as reasonably near the time as the transportation service is performed; and (4) "Gross Revenues" shall also include fees paid pursuant to this agreement, revenues billed but not ultimately collected or received by Company, and the following "miscellaneous charges ": charges to connect, disconnect, or reconnect gas, contributions in aid of construction, charges to handle returned checks from consumers within the City, and State gross receipts fees. Page 2 4340964.4 (5) "Gross Revenues" shall not include: (A) the revenue of any Affiliate or subsidiary of Company; (B) sales tax paid to the City; (C) interest or investment income earned by Company; and (D) monies received from the lease or sale of real or personal property, provided, however, that this exclusion does not apply to the lease of System Facilities within the Public Right -of -Way. e. "Person" shall mean any natural person, or any association, firm, partnership, joint venture, corporation, or other legally recognized entity, whether for - profit or not - for - profit, but shall not, unless the context clearly intends otherwise, include City or any employee, agent, servant, representative or official of City. f. "Public Right -of -Way" shall mean public streets, alleys, highways, bridges, public easements, public places, public thoroughfares, grounds, and sidewalks of City, as they now exist or may be hereafter constructed, opened, laid out, or extended within the present limits of City, or in such territory as may hereafter be added to, consolidated, or annexed to City. g. "System" or "System Facilities" shall mean all of Company's pipes, pipelines, gas mains, laterals, feeders, regulators, meters, fixtures, connections, and all other appurtenant equipment used in or incident to providing delivery, transportation, distribution, supply and sales of natural gas for heating, lighting, and power, located in the Public Right -of -Way within the corporate limits of the City. h. "Transport Customer" shall mean any Person for which Company transports gas through the System of Company within the Public Right -of -Way for delivery within the City (excluding other gas utilities in City who resell gas to their customers within City). SECTION 3. CONSTRUCTION MAINTENANCE OPERATION & RELOCATION OF COMPANY SYSTEM FACILITIES. A. Company's System shall be so constructed as not to unreasonably interfere with any existing water and wastewater lines, electric facilities, storm sewer lines, open drainage areas, cable, fiber optic cable, roadways, sidewalks, alleys, traffic control devices, public signs, or any other publicly owned or publicly franchised facility. Company shall promptly clean-up, repair, and restore in compliance with applicable provisions of the Paris City Code, all thoroughfares and other surfaces which it may disturb. Page 3 4340964.4 B. Company shall install, maintain, construct, operate, and replace its facilities in accordance with applicable city ordinances and so as to interfere as little as possible with traffic. In determining the location of new facilities of the City and other users of Public Right -of -Way within City, City shall minimize interference with then- existing System Facilities of Company and agrees to work with Company and other users of Public Rights -of -Way in order to minimize, to the extent reasonably possible, interference with existing System Facilities of Company by other users of the Public Right -of -Way. In determining the location of the Company's new facilities in the City, the Company shall minimize interference with then existing or documented planned underground structures of the City or with existing facilities of other users of the Public Right -of -Way. In the event of a conflict between the location of the proposed System Facilities of Company and the location of the existing facilities of City or other users of Public Rights -of- Way within Public Rights -of -Way and the parties involved have been unable to resolve such conflict through their good faith efforts, City or an authorized agent of City shall resolve the conflict and determine the location of the respective facilities within the Public Rights -of -Way, subject however to the terms and conditions of this Franchise and giving effect to generally accepted industry operational and safety practices. C. Company's property and operations within the Public Rights -of -Way of the City shall be subject to such reasonable rules and regulations of the City as may be authorized by applicable law from time to time for the protection of the general public. This Franchise shall in no way affect or impair the rights, obligations, or remedies of the parties under the Texas Gas Utility Regulatory Act, or other state or federal law. Nothing herein shall be deemed a waiver, release, or relinquishment of either party's right to contest, appeal, or file suit with respect to any action or decision of the other party, including ordinances adopted by the City that Company believes are contrary to any federal, state, or local law or regulation. The City shall endeavor to provide Company with reasonable notice and opportunity to review and comment upon any new or revised City laws, rules, or regulations that impact Company's use of the Public Rights -of- Way, but the failure to do so shall not affect the applicability of such laws, rules, or regulations to Company. D. Company or contractors working on behalf of Company shall be required to obtain permits for construction in Public Rights -of -Way as provided in City ordinances, but shall not be required to pay for such permits. Page 4 4340964.4 E. The City's annual capital improvements plan as well as any updates or changes as soon as the plan, update, or change will be made available to Company. City shall notify Company as soon as reasonably possible of any projects that will affect Company's System Facilities located in the Public Rights -of -Way. F. Any and all excavations and obstructions in and upon the streets, alleys, and other public places in the City caused by the Company's operations under this ordinance shall be repaired and removed as quickly as is reasonably possible under the circumstances. All excavations shall be repaired in a good and workmanlike manner and restored to the approximate condition that existed prior to the excavation. Replacement of sod is to be of like kind, smoothed, shaped, rolled, and compacted for proper landscape maintenance. The public shall be protected by barriers and lights placed, erected, marked, and maintained by the Company in accordance with the standards set forth in the current Texas Manual on Uniform Traffic Control Devices ( "TMUTCD "), as well as any other applicable local, state, and federal requirements. Company warrants that any such restoration work performed in the Public Rights -of -Way shall be in satisfactory condition pursuant to Paris's right -of -way management ordinance. In the event that the Company fails to repair or restore an excavation site within fourteen (14) calendar days after receipt of written notice from the City of a deficiency, the City may, at its option, perform the needed repair or restoration and the Company shall promptly reimburse the City for the reasonable cost of such repair or restoration. Except for repairs, day to day maintenance, or in cases of emergency conditions, work conducted within the Public Rights -of -Way shall require an approved permit issued by the City prior to commencement of work. In no instance shall Company be required to pay fees or bonds related to its use of the Public Rights -of -Way. G. The City reserves the right to lay, and permit to be laid, any City -owned facilities, such as storm water, sewer, gas, water, wastewater and other pipe lines, cable, and conduits, or other improvements and to do and permit to be done any underground or overhead work that may be necessary or proper in, across, along, over, or under Public Rights -of -Way occupied by Company. The City also reserves the right to change in any manner any City -owned curb, sidewalk, highway, alley, public way, street, and City -owned utility lines, storm sewers, drainage basins, drainage ditches, and other City facilities. H. If City, in constructing, reconstructing, improving, widening, or straightening its Public Right -of -Way, sewers, drainage, water lines, or other utilities, including modifications to Page 5 4340964.4 sidewalks or other Public Rights -of -Way required by the Americans with Disabilities Act, should request that Company remove or relocate its mains, laterals, and other System Facilities lying within Public Rights -of -Way, Company shall do so at its own expense for System Facilities that are in conflict, unless such work is for the primary purpose of beautification or to accommodate a private developer. Company and City shall jointly determine whether System Facilities are in conflict and the extent that the proposed City facilities are determined by City and Company to be inconsistent with gas distribution industry standard safe operating practices for existing facilities. All such relocations shall be performed in accordance with applicable City ordinances. Company shall not be required to relocate System Facilities to a depth of greater than four (4) feet unless prior agreement is obtained from Company I. When Company is required by City to remove or relocate its mains, laterals, and other facilities lying within Public Rights -of -Way to accommodate a request by City, and costs of utility removals or relocations are eligible under federal, state, county, local, or other programs for reimbursement of costs and expenses incurred by Company as a result of such removal or relocation, and such reimbursement is required to be handled through City, Company costs and expenses shall be included in any application by City for reimbursement if Company submits its cost and expense documentation to City prior to the filing of the application. City shall make all reasonable efforts to provide reasonable written notice to Company of the deadline for Company to submit documentation of the costs and expenses of such relocation to City in order for City to be able to submit its application for reimbursement to such program in a timely manner. Upon receipt of an amount of reimbursement intended for utility relocation including, but not limited to, gas utilities, City shall remit to Company, within sixty (60) days of receipt, the portion of reimbursement related to the relocation or removal of Company's facilities. If Company is required by City to remove or relocate its mains, laterals, or other System Facilities lying within Public Rights -of -Way to accommodate a private developer or for projects whose primary purpose is beautification or for any reason other than the construction, reconstruction, improving, widening, or straightening of its Public Right -of -Way, sewers, drainage, water lines, or other utilities by City, Company shall be entitled to reimbursement from City or others of the cost and expense of such removal or relocation. J. When Company is required to remove or relocate its mains, laterals or other System Facilities to accommodate construction by City without reimbursement from City, Page 6 4340964.4 Company shall have the right to seek recovery of relocation costs as provided for in applicable state and/or federal law. Nothing herein shall be construed to prohibit, alter, or modify in any way the right of Company to seek or recover a surcharge from customers for the cost of relocation pursuant to applicable state and/or federal law. City shall not oppose recovery of relocation costs when Company is required by City to perform relocation. City shall not require that Company document request for reimbursement as a pre- condition to recovery from customers of such relocation costs pursuant to applicable state and/or federal law. Notwithstanding the foregoing, the City shall have the right to request other project documentation to the full extent provided by state law. K. If City abandons any portion of the Public Rights -of -Way in which Atmos Energy has System Facilities, for public safety reasons or in furtherance of a public project, City shall determine whether it is appropriate to retain a public utility easement in such Public Right -of- Way for use by Company. If City determines, in its sole discretion, that the continued use of the Public Right -of -Way by Company is compatible with the abandonment of the Public Right -of- Way, then in consideration of the compensation set forth in Section 13, and to the maximum extent of its right to do so, City shall grant Company an easement for such use, and the abandonment of the Public Right -of -Way shall be subject to the right and continued use of Company. If City determines, in its sole reasonable discretion, that it is not appropriate to retain a public utility easement in such Public Right -of -Way, Company shall be responsible, subject to the provisions of Section 3, for relocating its System from such Public Right -of -Way, as directed by City. If Public Right -of -Way is sold, conveyed, abandoned, or surrendered by City to a third party, such action shall be conditioned upon Company's right to maintain use of the former Public Right -of -Way. If the third party requests Company to relocate its System from the former Public Right -of -Way, and if such relocation is agreed to by Company, such relocation shall be at the expense of the party requesting same. In addition, in the event of a third party requesting the relocation, if the relocation cannot practically be made to another Public Right -of -Way, the expense of any right -of -way acquisition shall be considered a relocation expense to be reimbursed by the party requesting the relocation. L. Upon request by City, Company shall provide maps showing the location of its System Facilities and cooperate in locating its System Facilities when necessary to avoid conflict and protect the health and safety of the public. Page 7 4340964.4 SECTION 4. LAYING OF LINES IN ADVANCE OF PAVING. A. Whenever City shall conclude to pave any Public Right -of -Way in which Company's System Facilities already exist or in which Company may propose to install its System Facilities, Company will be provided the opportunity, at no expense to City, in advance of such paving to renew such System Facilities, if defective or inadequate in size, and to lay System Facilities, or renew same, if inadequate in size or defective, to the property lines where buildings are already located. B. At least ninety (90) calendar days prior to the planned paving or repaving of Public Rights -of -Way, City shall give Company written notice of the intention of City to pave any such Public Right -of -Way. Upon receipt of such notice, Company shall initiate its review process to determine the need to renew its System Facilities, and the need to lay or renew service lines underneath the portions of the Public Rights -of -Way to be paved. If Company determines such a need, Company shall promptly initiate such work and shall thereafter proceed in a good faith and workmanlike manner to completion of the necessary work within ninety (90) calendar days after receipt of the notice from the City. Company's failure to complete the necessary work within the ninety (90) day period may be excused at the City's discretion, if Company has promptly notified the City of the circumstances that have caused the delay, and has requested an extension of the construction period. City shall grant the extension unless withheld for good cause. C. If Company should fail to take advantage of the pre - paving opportunity to undertake new construction or repairs to existing System Facilities in the Public Rights -of -Way to be paved, and such street or alley is thereafter paved, except in an emergency or in response to a request for initiation of new service, Company's ability to thereafter cut or excavate in such pavement shall be governed by the provisions of Chapter 29, Streets, Sidewalks, & Certain Other Public Ways and Property, Paris City Code. SECTION 5. LIABILITY INSURANCE. Company shall, at its sole cost and expense, obtain, maintain, or cause to be maintained, and provide, throughout the term of this Franchise, insurance in the amounts, types and coverages in accordance with the following requirements. Page 8 4340964.4 Such insurance may be in the form of self - insurance to the extent permitted by applicable law or by obtaining insurance, as follows: A. Commercial general or excess liability on an occurrence or claims made form with minimum limits of five million dollars ($5,000,000) per occurrence and ten million dollars ($10,000,000) aggregate. This coverage shall include the following: (1) Products /completed operations to be maintained for a warranty period of 2 years, (2) Personal and advertising injury, (3) Contractual liability, and (4) Explosion, collapse, or underground (XCU) hazards. B. Automobile liability coverage with a minimum policy limit of one million dollars ($1,000,000) combined single limit each accident. This coverage shall include all owned, hired, and non -owned automobiles. C. Workers compensation and employers liability coverage. Statutory workers compensation benefits in accordance with the statutes and regulations of the State of Texas. Company must provide the City with a waiver of subrogation for workers compensation claims. D. Any contractors or subcontractors working in the Public Right -of -Way on behalf of Company are agents of Company. Company shall remain the responsible party for damage to and/or in the Public Right -of -Way resulting from any work of Company or its agents. City shall submit claims for any such damage to the Public Right -of -Way to Company. Upon request, Company shall provide the City with proof of insurance for any of Company's contractors or sub - contractors that perform work in the Public Right -of -Way. E. The Company will provide proof of insurance in accordance with this Franchise within thirty (30) days of the effective date of the Franchise. Company will not be required to furnish separate proof when applying for permits. SECTION 6. INSTALLATION OF METER. If a meter is to be installed in or near the Public Right -of -Way, Company agrees to discuss with the City's representative the aesthetics of the meter placement and to accommodate the request of City to the maximum extent possible. If City requests a meter upgrade, Company Page 9 4340964.4 will comply so long as City reimburses Company for the reasonable costs incurred by Company in changing meters. In no event, however, shall underground meters be required. SECTION 7. EXTENSIONS FOR CUSTOMERS. Company shall, at its expense, extend distribution mains in any street no less than fifty (50) feet for any one residential or commercial customer so long as the customer at a minimum uses gas for unsupplemented space heating and water heating. Company shall not be required to extend transmission mains in any Public Rights -of -Way within City or to make a tap on any transmission main within City unless Company agrees to such extension by a written agreement between Company and a customer. SECTION 8. DUTY TO SERVE. Company shall not arbitrarily refuse to provide service to any Person having a service location within the City and meeting Company's reasonable credit requirements that it is economically feasible for Company to serve. In the event that a Person is refused service, said Person may request a hearing before the City Council of City or its designee, said hearing to be held within forty -five (45) days from the date of the request for hearing. The Council may order Company to provide service or take any other action necessary to bring Company into compliance with the intent of the Council in granting this Franchise, including termination or forfeiture of the Franchise in accordance with Section 15. The Council may render its opinion at this meeting but in no event shall it be required to act in less than fourteen (14) days. SECTION 9. CUSTOMER SERVICE STANDARDS; LOCAL OFFICE. A. Company shall maintain a local, toll -free or collect call telephone access line which will be available to its customers 24 hours a day, seven days a week. B. Company shall make a good faith effort to maintain within City one or more locations where customers can pay their bills. In no circumstance shall the absence of such a location be considered violation of a material provision of this Franchise as outlined in Section 15. SECTION 10. RATES. Company's rates and charges shall be established and shall be subject to revision and change in accordance with all applicable statutes and ordinances. Company shall maintain on Page 10 4340964.4 file with City copies of its current tariffs, schedules or rates and charges, customer service provisions, and line extension policies. SECTION 11. INDEMNITY. A. In consideration of the granting of this Franchise, Company agrees to indemnify, defend, and hold harmless City, its officers, agents, employees (City and such other persons and entities being collectively referred to herein as "Indemnitees "), from and against all suits, actions or claims of injury to any person or persons, or damages to any property brought or made for or on account of any death, injuries to, or damages received or sustained by any person or persons or for damage to or loss of property arising out of, or occasioned by Company's intentional and/or negligent acts or omissions in connection with Company's operations; except that the indemnity provided for in this paragraph shall not apply to the extent any liability is determined to have resulted from negligence or intentional acts or omissions of City, its officers, agents, and employees. In the event of joint and concurrent negligence or fault of both Company and City, responsibility and indemnity, if any, shall be apportioned comparatively in accordance with the laws of the State of Texas without, however, waiving any of the defenses of the parties under Texas law. Further, in the event of joint and concurrent negligence or fault of both Company and City, responsibility for all costs of defense shall be apportioned between City and Company based upon the comparative fault of each. B. In fulfilling its obligation to defend and indemnify City, Company shall have the right to select defense counsel, subject to City's approval, which shall not be unreasonably withheld. Company shall retain defense counsel within seven (7) business days of City's written notice that City is invoking its right to indemnification under this Franchise. If Company fails to retain counsel within such time period, City shall have the right to retain defense counsel on its own behalf, and Company shall be liable for all defense costs incurred by City, except as set out in Section 1 LA. C. The Company will require its self - insurance to respond to the same extent as if an insurance policy had been purchased naming the City as an additional insured, and any excess coverage purchased for the sole purpose of insuring Company's obligations pursuant to this agreement will name the City as an additional insured up to the amounts required by City's ordinance. Page 11 4340964.4 SECTION 12. NON - EXCLUSIVE FRANCHISE. The rights, privileges, and franchises granted by this ordinance are not to be considered exclusive, and City hereby expressly reserves the right to grant, at any time, like privileges, rights, and franchises as it may see fit to any other person or corporation for the purpose of transporting, delivering, distributing, or selling gas to and for City and the inhabitants thereof. SECTION 13. PAYMENTS TO CITY. A. In consideration of the privilege and license granted by City to Company to use and occupy the Public Rights -of -Way in the City for the conduct of its business, Company, its successors and assigns, agrees to pay and City agrees to accept, such franchise fees in the amount and manner described herein. Except as provided for in Section 13.B., such payments shall be made on a quarterly basis, on or before the 15'' day of February, 2016, and on or before the 15th day of February, May, August, and November during the term of this franchise. The last payment under the initial term being made on the 15d' day of November, 2020. The franchise fee shall be a sum of money that shall be equivalent to five percent (5 %) of the quarterly Gross Revenues, as defined in Section 2 above, received by Company during the preceding calendar quarter. B. The franchise fee amounts based on "Contributions in Aid of Construction" ( "CIAC ") shall be calculated on an annual calendar year basis, i.e., from January 1 through December 31 of each calendar year. The franchise fee amounts that are due based on CIAC shall be paid at least once annually on or before April 30 each year based on the total CIAC recorded during the preceding calendar year. The initial CIAC franchise fee payment will be due on or before April 30, 2016, and will be based on CIAC received from January 1, 2015, through December 31, 2015. Unless this Franchise is extended pursuant to Section 1, the final payment of franchise fee amounts based on CIAC will be April 1, 2021, for the calendar year ending December 31, 2020. C. The initial payment for the rights and privileges herein provided shall be for the privilege period October 1, 2015 through December 31, 2015, and each succeeding payment shall be for the privilege period of the calendar quarter preceding the quarter in which the payment is made. D. It is also expressly agreed that the aforesaid payments shall be in lieu of any and all other and additional occupation taxes, easement, franchise taxes or charges (whether levied as Page 12 4340964.4 an ad valorem, special, or other character of tax or charge), municipal license, permit, and inspection fees, bonds, street taxes, and street or alley rentals or charges, and all other and additional municipal taxes, charges, levies, fees, and rentals of whatsoever kind and character that City may now impose or hereafter levy and collect from Company or Company's agents, excepting only the usual general or special ad valorem taxes that City is authorized to levy and impose upon real and personal property. Except however, Company's separate obligations to reimburse the City for City's reasonable rate case expenses and for street repairs in accordance with City's ordinances, are not affected by Company's payment of franchise fees hereunder. If the City does not have the legal power to agree that the payment of the foregoing sums of money shall be in lieu of occupation taxes, licenses, fees, street or alley rentals or charges, easement or franchise taxes or charges aforesaid, then City agrees that it will apply so much of said sums of money paid as may be necessary to satisfy Company's obligations, if any, to pay any such occupation taxes, licenses, charges, fees, or rentals. E. If Company fails to pay when due any payment provided for in this Section, Company shall pay such amount plus interest consistent with the rate for customer deposits under Texas Utilities Code Section 183.003 from such due date until payment is received by city. F. Atmos Energy Franchise Fee Recovery Tariff (1) Company may file with the City a tariff or tariff amendment(s) to provide for the recovery of the franchise fees under this agreement. (2) City agrees that (i) as regulatory authority, it will adopt and approve the ordinance, rates, or tariff which provide for 100% recovery of such franchise fees as part of Company's rates; (ii) if the City intervenes in any regulatory proceeding before a federal or state agency in which the recovery of Company's franchise fees is an issue, the City will take an affirmative position supporting 100% recovery of such franchise fees by Company and; (iii) in the event of an appeal of any such regulatory proceeding in which the City has intervened, the City will take an affirmative position in any such appeals in support of the 100% recovery of such franchise fees by Company; and (iv) it will take no action, nor cause any other person or entity to take any action, to prohibit the recovery of such franchise fees by Company. G. Lease of System Facilities Within Public Rights -of -Way. Company shall have the Page 13 4340964.4 right to lease, license, or otherwise grant to a party other than Company the use of its System Facilities within the Public Rights -of -Way provided: (i) Company first notifies the City of the name of the lessee, licensee or user; the type of service(s) intended to be provided through the System Facilities, and the name and telephone number of a contact person associated with such lessee, licensee, or user; and (ii) Company makes the franchise fee payment due on the revenues from such lease pursuant to Section 13 of this Ordinance. This authority to lease System Facilities within Public Rights -of -Way shall not affect any such lessee, licensee, or user's obligation, if any, to pay franchise fees, access line fees, or similar Public Right -of -Way user fees. H. City shall endeavor to, within thirty (30) days of final approval and submission to the Texas Comptroller of Public Accounts, give Company notice of annexations and disannexations of territory by City, which notice shall include a map and addresses, if known. Upon receipt of said notice, Company shall promptly initiate a process to reclassify affected customers into the City limits no later than sixty (60) days after receipt of notice from City. The annexed areas added to the City limits will be included in future franchise payments in accordance with the effective date of the annexation if notice was timely received from City. Upon request from City, Company will provide documentation to verify that affected customers were appropriately reclassified and included for purposes of calculating franchise payments. SECTION 14. BOOKS AND RECORDS. A. Company agrees that at the time of each quarterly payment, Company shall also submit to the City a statement showing its Gross Revenues for the preceding calendar quarter. B. City may, if it sees fit, upon reasonable notice to the Company, have the books and records of Company examined by a representative of said City to ascertain the correctness of the reports agreed to be filed herein. Company shall make available, during normal working hours and upon reasonable notice, such personnel and records as City may in its reasonable discretion request in order to complete such audit, and shall make no charge to the City therefor. Company shall assist City in its review by providing all requested information no later than fifteen business (15) days after receipt of a request. The cost of the audit shall be borne by City unless the audit discloses that the Company has underpaid the franchise fee by 10% or more, in which case the reasonable costs of the audit shall be immediately reimbursed to the City by the Company. If such an examination reveals that Company has underpaid City, then upon receipt Page 14 4340964.4 of written notification from City regarding the existence of such underpayment, Company shall undertake a review of City's claim and if said underpayment is confirmed, remit the amount of underpayment to City, including any interest calculated in accordance with Section D.E. Should Company determine through examination of its books and records that City has been overpaid, upon receipt of written notification from Company regarding the existence of such overpayment, City shall review Company's claim and if said overpayment is confirmed, remit the amount of overpayment to Company including any interest calculated in accordance with Section 13.E. C. If the Company provides confidential or proprietary information to the City, the Company shall be solely responsible for identifying such information with markings calculated to bring the City's attention to the proprietary or confidential nature of the information. The City agrees to maintain the confidentiality of any non - public information obtained from Company so designated to the extent allowed by law. City shall not be liable to Company for the release of any information the City is required to release by law. If the City receives a request under the Texas Public Information Act that includes Company's proprietary or confidential information, City will notify the Texas Attorney General of the proprietary or confidential nature of the document(s). The City also will provide Company with a copy of this notification, and thereafter Company is responsible for establishing that an exception under the Texas Public Information Act allows the City to withhold the information. SECTION 15. TERMINATION. A. Right to Terminate. In addition to any rights set out elsewhere in this Ordinance, City reserves the right to terminate the Franchise and all rights and privileges pertaining thereto, in the event that Company violates any material provision of the Franchise. B. Procedures for Termination. (1) City may, at any time, terminate this Franchise for a continuing material violation by Company of any of the substantial terms hereof. In such event, City shall give to Company written notice, specifying all grounds on which termination or forfeiture is claimed, by registered mail, addressed and delivered to Company at the address set forth in Section 16.A. hereof. Company shall have sixty (60) days after the receipt of such notice within which to cease such violation and comply with the terms and provisions hereof. In the event Company fails to cease such violation or otherwise comply with the terms hereof, then Company's Franchise is subject to termination under Page 15 4340964.4 the following provisions. Provided, however, that if Company commences work or other efforts to cure such violations within thirty (30) days after receipt of written notice and shall thereafter prosecute such curative work with reasonable diligence until such curative work is completed, then such violations shall cease to exist, and the Franchise will not be terminated. (2) Termination shall be declared only by written decision of the City Council after an appropriate public proceeding whereby Company is afforded the full opportunity to be heard and to respond to any such notice of violation or failure to comply. Company shall be provided at least fifteen business (15) days prior written notice of any public hearing concerning the termination of the Franchise. In addition, ten (10) days notice by publication shall be given of the date, time and place of any public hearing to interested members of the public. (3) City, after full public hearing, and upon finding material violation or failure to comply, may terminate the Franchise or excuse the violation or failure to comply, upon a showing by Company of mitigating circumstances or upon a showing of good cause of said violation or failure to comply as may be determined by the City Council. (4) Nothing herein stated shall preclude Company from appealing the final decision of the City Council to a court or regulatory authority having jurisdiction. (5) Nothing herein stated shall prevent City from seeking to compel compliance by suit in any court of competent jurisdiction if Company fails to comply with the terms of this Franchise after due notice and the providing of adequate time for Company to comply with said SECTION 16. NOTICES. A. Any notices required or desired to be given from one party to the other parry to this Ordinance shall be in writing and shall be given and shall be deemed to have been served and received if: (i) delivered in person to the address set forth below; (ii) deposited in an official depository under the regular care and custody of the United States Postal Service located within the confines of the United States of America and sent by certified mail, return receipt requested, and addressed to such party at the address hereinafter specified; or (iii) delivered to such party by courier receipted delivery. Either party may designate another address within the confines of the Page 16 4340964.4 continental United States of America for notice, but until written notice of such change is actually received by the other party, the last address of such party designated for notice shall remain such party's address for notice. CITY City Manager City of Paris 135 SE lst Street Paris, Texas 75057 COMPANY Manager of Public Affairs Atmos Energy Corporation, Mid -Tex Division 7909 Traders Cir. Greenville, Texas 75402 B. The Company shall provide to the City a local or toll -free telephone number that is manned twenty -four (24) hours a day, seven (7) days a week to provide available information relating to emergency situations. The City understands that this telephone number is not equipped to handle calls from the public, and the City will not provide this number to customers, but will direct them to the Company's Call Center. If the Company cannot timely respond to an emergency with Company employees, the Company will attempt to respond to the emergency with qualified local contractors. The Company's contact information shall be kept current at all times. The Company and the City shall periodically, and upon request by either party, meet to discuss and address emergency response issues, in order to rectify any problems identified by either party. SECTION 17. SUCCESSORS AND ASSIGNS. The rights granted by this Franchise inure to the benefit of the company and any parent, subsidiary, affiliate, or successor entity now or hereafter existing. SECTION 18. RENEGOTIATION. If either City or Company requests renegotiation of any term of this Ordinance, Company and City agree to renegotiate in good faith revisions to any and all terms of this Ordinance. If the parties cannot come to agreement upon any provisions being renegotiated, then the existing provisions of this Ordinance will continue in effect for the remaining term of the Franchise. Page 17 4340964.4 SECTION 19. NO WAIVER. Either City or Company shall have the right to waive any requirement contained in this Ordinance, which is intended for the waiving party's benefit, but, except as otherwise provided herein, such waiver shall be effective only if in writing executed by the party for whose benefit such requirement is intended. No waiver of any breach or violation of any term of this Ordinance shall be deemed or construed to constitute a waiver of any other breach or violation, whether concurrent or subsequent, and whether of the same or a different type of breach or violation. SECTION 20. SEVERABILITY. This Ordinance and every provision hereof, shall be considered severable, and the invalidity or unconstitutionality of any section, clause, provision, or portion of this Ordinance shall not affect the validity or constitutionality of any other portion of this Ordinance. If any term or provision of this Ordinance is held to be illegal, invalid, or unenforceable, the legality, validity, or unenforceability of the remaining terms or provisions of this Ordinance shall not be affected thereby. SECTION 21. ACCEPTANCE OF FRANCHISE. City shall provide Company with a certified copy of this franchise by certified mail within five (5) days of passage. In order to accept this franchise, Company must file with the City Secretary its written acceptance of this franchise ordinance within thirty (30) days after its final passage and approval by City. If such written acceptance of this franchise ordinance is not filed by Company, the franchise ordinance shall be rendered null and void. SECTION 22. PARAGRAPH HEADINGS. CONSTRUCTION. The paragraph headings contained in this ordinance are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several paragraphs hereof. Both parties have participated in the preparation of this ordinance and this ordinance shall not be construed either more or less strongly against or for either party. SECTION 23. EFFECTIVE DATE. Page 18 4340964.4 This Franchise shall be effective on October 1, 2015, if City has received Company's acceptance as provided by Section 21 herein. The Company's obligation to submit payments to the City in compliance with Section 13 will begin October 1, 2015. PASSED AND APPROVED ON FIRST READING on this the day of , 2015. PASSED AND APPROVED ON SECOND READING on this the day of , 2015. FINALLY PASSED AND APPROVED ON THIRD READING on this the day of , 2015. ATTEST: Janice Ellis, City Clerk AJ Hashmi, Mayor City of Paris, Texas STATE OF TEXAS § COUNTY OF LAMAR § CITY OF PARIS § I, Janice Ellis, City Clerk of the City of Paris, Lamar County, Texas, do hereby certify that the above and foregoing is a true and correct copy of an ordinance passed by the City Council of the City of Paris, Texas, at a session, held on the day of 2015, as it appears of record in the Minutes in Book , page WITNESS MY HAND AND SEAL OF SAID CITY, this the _ day of 2015. Janice Ellis, City Clerk City of Paris, Texas Page 19 4340964.4