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Home My WebLink About09-Public Works CIT'Y OF SAN BERNARDltlO F ~ No. 8.081 - REQUEliT FOR COUNCIL ACTION Dept: Public Works/Engineering Assignment of Petroleum Pipeline Subject: Franchise -- SOUTHERN PACIFIC PIPE LINES, INC. fb From: ROGER G . HARDGRAVE Date: 10-18-88 Synopsis of Previous Council action: 07-19-82 -- Resolution No. 82-308 adopted granting a franchise to Southern Pacific Pipelines to construct, maintain and operate pipelines within the City of San Bernardino. Recommended motion: That the requested assignment of the franchise from Southern Pacific Pipe Lines, Inc. to Southern Pacific Pipe Lines Partnership, L.P., be approved; and the City Attorney directed to prepare the appropriate resolution to assign the franchise. cc: Jim Robbins Jim Richardson Jim Penman Contact person: Roger G. Hardgrave Phone: 5025 Supporting data attached: Staff Report, letter Ward: N/A FUNDING REQUIREMENTS: Amount: N/A Source: (Acct. No.) (Acct. DescriPtion) Finance: 8' ;6 W'# SllJO BUGI '.:1:10 'NIHQf-'Q.~3a Council Notes: 7 c:;._n")t::.? Q CIT'y OF SAN BERNARDlh~ - REQUE~ r FOR COUNCIL AC1".ON STAFF REPORT A franchise was granted to Southern Pacific Pipe Lines, by Resolution No. 82-308, to construct and maintain pipelines within street rights-of-way. This franchise was for a period of 25 years. Before the franchise was to become effective, a written acceptance of the terms and conditions was to be filed with the City Clerk. Also, a surety bond in the amount of $25,000 was to be kept on file with the City Clerk and maintained in good standing. An annual franchise fee, completed on the basis of two percent of the gross annual receipts, shall be paid to the City. Section 9 provides that the franchise is not to be sold or assigned without the prior consent of the Mayor and Common Council. Southern Pacific Pipe Lines intends to reorganize and recapitalize, which would entail assigning their franchise to Southern Pacific Pipe Lines Partnership, L.P. A request for this assignment has been made by letter dated 10-13-88, a copy of which is attached for reference. The transfer of assets to the new company is scheduled to occur in November, 1988, but the franchise will not be transferred until consent is received from the City. Approval must be secured from several other agencies before the transfer can occur. For this reason, Southern Pacific Pipe Lines, Inc. requests that the City grant consent promptly, but take no action to actually transfer the franchise until further notice is received. 10-18-88 75-0264 Southern Pacific Pipe Lines, Inc. ~ 888 South Figueroa Street Los Angeles. California 90017 213/614-1095 October 13, 1988 VIA FEDERAL EXPRESS . , Ocr l 4' ;;UiJu{, .~ .1988.. Enn~:. ." ~'\.~:,~:", ." .. ;';II,I;;C/i" \~ .,11 I.!J" ,;J,j ~ <" "-. -\ 9. Honorable Mayor and Members of the Common Council of City City of San Bernardino 300 North "D", 3rd Floor San Bernardino, California 92418 Attention: Roger Hardgrave Director of Public Works Re: Assignment of Petroleum Pipeline Franchise Granted to Southern Pacific Pipe Lines, Inc. ("SPPL") by City of San Bernardino, Resolution No. 82-308 Honorable Mayor and Members of the Common Council of City: Southern Pacific Pipe Lines, Inc. ("SPPL") and Southern Pacific Pipe Lines PartnerShip, L.P. (the "SPPL Partnership") hereby request your consent to the assignment of the above-referenced franchise and all rights relating thereto (the "Franchise") by SPPL to the SPPL Partnership pursuant to the provisions of Resolution No. 82-308 of the City of San Bernardino (the "City"). A copy of said resolution is attached hereto as Exhibit A. I. IDENTIFICATION OF PARTIES A. ASSIGNOR: Southern Pacific Pipe Lines, Inc. ("SPPL") is a Delaware corporation with its principal executive office in Los Angeles, California. B. ASSIGNEE: Southern Pacific Pipe Lines Partner- ship, L.P. (the "SPPL Partnership") is a Delaware limited partnership with its principal executive office in Los Angeles, California. SPPL is the general partner of the SPPL Partnership. A Santa Fe Southern Pacific Company Page 2 - Honorable Mayor and Members of - October 13, 1988 the Common Council of City City of San Bernardino II. CONTEMPLATED TRANSACTION SPPL currently operates a refined petroleum products pipeline system. A portion of that system uses rights-of-way granted to SPPL by the Franchise. SPPL intends to reorganize and recapitalize its pipeline business. This would be accomplished by, among other things, a transfer by SPPL of its operating assets, including the Franchise, to the SPPL Partnership, which would thereafter own the pipeline system. As noted above, SPPL would be the general partner of the SPPL Partnership. As such, SPPL would continue to be responsible for operation and maintenance of the system. The transfer of the Franchise would be made pursuant to an Assignment of Franchise in the form attached hereto as Exhibit B. As assignee, the SPPL Partnership would assume all obligations of SPPL as owner of the Franchise. The transfer of SPPL's assets to the SPPL Partner- ship is scheduled to occur in November 1988, after California Public utilities Commisssion approvals have been obtained and other conditions to the transfer have been satisfied. Because transfer of the Franchise requires your consent, however, the Franchise will not be transferred to the SPPL Partnership until your consent has been obtained. Your prompt consideration of this request would thus be greatly appreciated. III. BOND AND INSURANCE The SPPL Partnership is prepared to post a bond with and for the benefit of the City prior to or concurrently with the proposed transfer, in accordance with the provisions of applicable law. Pursuant to the prov1s1ons of the Franchise Resolution, SPPL has posted a $25,000.00 Bond with the City. We assume that this existing bond will be released to SPPL upon the consummation of the transfer of the Franchise and the posting by the SPPL Partnership of a replacement bond. If this is not correct, please inform us promptly. Please note that numerous approvals and consents, in addition to that requested of you, must be obtained before the proposed transfer of assets can be implemente~, and that the decision as to whether or not the transaction can and will be consummated is contingent upon a number of factors which are beyond our control. As a result, we respectfully request that Page 3 - Honorable Mayor and Members of - October 13, 1988 the Common Council of City City of San Bernardino you promptly grant your consent to the proposed transfer of the Franchise but that you take no action which would have the effect of actually transferring the Franchise to the SPPL partnership (or of terminating the existing Franchise if a new Franchise is to be issued to the SPPL Partnership) until we or our counsel in this matter inform you that the transfer has been or is ready to be made. Should the City Councilor any of its staff have any questions regarding the proposed assignment or any matters relating thereto, or if further information is required, please contact either of the applicants at the address shown above or our counsel, O'Melveny & Myers, 400 South Hope Street, Los Angeles, California 90071, Attention: Peter Benudiz, Gregory B. Thorpe or Edward W. HieronYmus (Telephone: 213-669-6000). Respectfully submitted, SOUTHERN PACIFIC PIPE LINES, INC., a Delaware corporation/ I / ;/ ( By: Name: John M. Abboud Title: ' Senior vice President SOUTHERN PACIFIC PIPE LINES PARTNERSHIP, L:P., a Delaware limited partnership By: SOUTHERN PACIFIC PIPE LINES INC., a Delaware corporation, its general partner / ./ By: Name: Title: - ,/ ,. // (' / :: John M. Abboud Senior Vice President