To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Title
Ordinance Approving the First Amendment to the Franchise Agreement between the Town of Castle Rock and the Intermountain Rural Electric Association (Second Reading - Passed 7-0 on First Reading on March 28, 2017) [Riverwalk Project]
Body
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Executive Summary
Town Council approval of an ordinance approving the First Amendment to the Franchise Agreement between the Town and Intermountain Rural Electric Association (IREA) is recommended. The amendment would alter the allowed uses for the existing franchise credit IREA owes to the Town under the agreement to include various Town public improvements, as well as private improvements that the Town determines provide a public benefit.
The amendment is sought for two primary reasons: 1) to update the use language to reflect current practices for Town projects such as waterlines, well sites and other public improvements; and 2) to allow for uses to include private improvements, such as the electric relocation work necessitated by the pending Riverwalk project.
Discussion
The current franchise agreement with IREA was approved in November 2010. It provides traditional franchise agreement provisions governing the use of Town right-of-way and easements, repair of right-of-way, liability protections, franchise fee payments for the use of Town right-of-way, and other provisions common to franchise agreements. The agreement also includes a provision that 1% of IREA’s gross revenues generated in Town shall be applied to certain electric work undertaken by IREA on behalf of the Town.
The current agreement provides that this work shall be to make street or sidewalk improvements, including, but not limited to, pole relocations, pole changes and underground conversions. Recent practice has widened these uses to include the addition of new street lights, electric changes associated with water facilities, and other uses; however, this is a broad interpretation under the ordinance.
The franchise credit program has been successfully used to reduce the Town’s cost on public projects, make necessary improvements, relocate unsightly above-ground electric lines, and make other improvements. The 1% credit is in addition to the franchise fee paid pursuant to the franchise agreement, comes from IREA general revenues, and cannot be recovered through any surcharge on IREA customers within the Town of Castle Rock.
As part of the financial incentives for the Riverwalk project - planned for downtown, north and south of Sellars Gulch on the west side of Wilcox - the Town development agreement will include a provision for the use of up to $350,000 in IREA franchise credits. (Town Council consideration of the Riverwalk redevelopment agreement is planned for April 18). This incentive is viewed as an appropriate use of these credits because it will be a valuable incentive for the Riverwalk project, providing additional incentive beyond fee rebates and tax-sharing under the DDA TIF.
The electric upgrades planned for Riverwalk also provide an additional redundant electric source for Town Hall and the upgraded Festival Park. Town Council approval of the IREA credit use for Riverwalk will occur separately and only if the proposed ordinance is approved.
Staff Recommendation
Staff recommends approval of the ordinance, approving the First Amendment to the franchise agreement between the Town of Castle Rock and IREA.
Proposed Motion
“I move to approve Ordinance 2017-008, as introduced by title on second and final reading.”
Attachments
Attachment A Ordinance
Attachment B First Amendment to the Franchise Agreement Between the Town of Castle Rock and IREA