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HomeMy WebLinkAboutPower Point 2025 07 07 Mason County PUD No 1 Franchise Agreement PP for BoCC Public Hearing FINALFranchise Agreements Public Hearing Mason County PUD No. 1 July 7, 2025 Josh Thornton Real Property Specialist Jefferson County Public Works 1 1 Agenda July 7, 2025 2 Franchise Agreements Mason County PUD No. 1 Public Process Questions Next Steps 2 Franchise Agreements July 7, 2025 3 3 Franchise Agreements – What are they & why do we have them? July 7, 2025 4 •RCW 36.55.010 authorizes BOCC to grant franchises: “Any board of county commissioners may grant franchises to persons or private or municipal corporations to use the right-of-way of county roads in their respective counties for the construction and maintenance of waterworks, gas pipes, telephone, telegraph, and electric light lines, sewers and any other such facilities.” •JCC 13.56.070 (1) To the extent permitted by law, a franchise shall be required of any utility provider who currently occupies or desires in the future to occupy rights-of-way and to provide utility services to any person or area in the county.Utility provider shall pay all the fees and/or taxes as provided herein and in the franchise agreement. A franchise is a formal, legally binding agreement between the county, and utility or service provider. The agreement grants the franchisee (the provider) the non-exclusive right to install, maintain, and operate its infrastructure, such as pipelines, cables, conduits, and poles, within the public land designated for roads, streets, and highways—known as the public right-of-way. It acts as a long-term contractual permission, outlining specific terms, conditions, and responsibilities for the company's use of public space to deliver services. Counties have right-of-way franchises primarily to manage and control the use of their public infrastructure for the benefit of their residents. These agreements allow essential services like electricity, natural gas, water, internet, and cable television to be delivered throughout the county by providing a legal framework for utility companies to access and utilize public land. Without such franchises, counties would lack the necessary authority to regulate the placement and maintenance of critical infrastructure, potentially leading to haphazard development, safety hazards, and disputes over public space. Furthermore, right-of-way franchises enable counties to ensure public safety, protect their assets, and recover costs associated with managing the rights-of-way. They often include provisions for proper construction standards, restoration of disturbed areas, and the ability to require relocation of facilities if road improvements are necessary. For certain services like cable television, federal and state laws also permit counties to collect franchise fees, providing a revenue stream that can help offset the administrative and oversight costs of managing these essential public corridors. 4 Franchise Agreements – Exemptions July 7, 2025 5 JCC 13.56.070(1)(a) Franchises will not be required for the construction and maintenance of utility facilities serving one single-family residence where such facilities will cross the rights- of-way perpendicular to the rights-of-way line, plus or minus 10 degrees. Persons who fall under this franchise exemption shall enter into an indemnification agreement before a utility permit will be issued. This Jefferson County Code provision is a good thing for small single-user providers whose improvements in the public right of way are minimal and it streamlines the process for connecting individual residences to utilities. By exempting them from the lengthy and complex franchise application process, it saves both them and the county significant time, money, and administrative burden. The indemnification agreement still transfers risk from the county to the provider for losses or damages. This exemption makes it much simpler and quicker to get single-family service connected across a right-of-way. 5 Types of Franchise Agreements July 7, 2025 6 Types of Franchise Agreements •Telecommunications •Cable TV •Basic Telephone Service •Small Cell Wireless Facilities / Traditional Wireless Communication Facilities •Other Telecommunications (Internet or enhanced services operating on telephone or cable) •Utility •Water Provider – irrigation or potable water •Sewer / Septic / Effluent Transport •Electric Power •Natural Gas •Drainage •Learn More: MRSC - Franchising -An Essential Tool for Right-of-Way Management Federal and Washington State laws treat cable TV, telephone, and traditional utility providers differently. Cable TV franchising requirements and fees are limited under the federal Cable Act. Some legacy telephone companies (for example successor to Pac Bell), are exempt from needing a county granted franchise due to a statewide "grant" stemming from RCW 80.36.040. Other utility providers such as power, water, sewer & gas as well as enhanced telecommunications services offered by telephone & fiber companies have the least amount of state and federal restrictions when it comes to county negotiated franchise agreements. 6 Franchise Fee Legal Background July 7, 2025 7 Prior to the 2019 WA State Supreme Court decision in King County vs. King County Water Districts, 194 Wn.2d 830, 453 P.3d 681 (2019), non-cable TV provider franchise fees were limited to only the administrative costs for developing, negotiating & finalizing franchises. This was because the legal interpretation at the time often viewed attempts to charge more than administrative costs as an unauthorized tax or an overreach of county authority. In King County vs. King County Water Districts, the Supreme Court ruled franchise fees are not a tax but rather a bargained-for amount allowing a utility to make use of right-of-way (“a valuable property right”) for the operation of the utility. JCC 13.56.150, JCC 13.72.100, and JCC 13.88.050 specifies the BoCC may establish fair and reasonable compensation to be paid for use of public right of way by a franchised utility provider. Newly negotiated franchise agreements incorporate a provision allowing the exercise of this right. 7 PILT – Payment in Lieu of Taxes July 7, 2025 8 Payment in Lieu of Taxes (PILT) is a program designed to compensate the County for property owned by a property tax exempted governmental entity such as public utility districts (PUDs). Non-government providers do not pay PILT, and instead pay property tax. RCW 54.16.425(1) Limits PILT payment requirements to retail PUD internet service providers. Mason County PUD No. 1 is operating in a wholesale capacity and not directly selling broadband service. The Assessor’s office confirmed the focus is on valuing personal property for PILT assessment, and not real property (right of ways, etc.). 8 Mason County PUD No. 1 July 7, 2025 9 9 Franchise Agreement with Mason County PUD No. 1 July 7, 2025 10 •Telecommunications Franchise Agreement •Located along Forest Dr, Cedar Ct, Maple Ave and Birch Ct near US-101 south of Brinnon, WA at the southern border of the County. •Key Provisions Include: 25 Year Term Relocation of Facilities Indemnification Insurance Dispute Resolution Termination / Assignment of Franchise System Map & Coordinated Excavations 25 Year Term: Franchise is granted for a 25 years term and has option to renew at the sole discretion of the board. Relocation: Utility provider will relocate or modify facilities to accommodate public improvement projects at their own expense. County reimbursement related to failure to timely relocate or modify. If subsequent relocation for public improvement project within 5 years the County will bear cost or relocation or modification. Indemnification: the County is protected from financial liability, including legal fees, for any issues arising from the provider's operations within the franchise, unless caused solely by the county's own negligence. In cases of concurrent negligence of both County and provider, providers liability is limited to extent of negligence attributable to provider its agents, employees, representatives, lessees, contractors, and subcontractors. Insurance: Commercial general liability of at least 2 Million required with the County, its elected and appointed officers, officials, employees, agents, and representatives shall be named as additional insureds with respect to activities occurring within the Franchise Area. Dispute Resolution: Multilevel dispute resolution language. First level consists of County Engineer or designee & provider’s manager or designee. If unsuccessful at level one after 15 days option to move to level two consisting of County Administrator or designee & provider’s manager or designee. If unsuccessful at level two after 15 days option to move to terminate franchise or institute a legal proceeding. Termination: County may terminate franchise for failure to cure material breaches of the 10 agreement within 60 days of notification of breach or for disputes after going through dispute resolution stage 1 & 2 outlined previously. Board has option to grant extension to cure material breaches for an additional period of 30 days in certain circumstances. Assignment of Franchise: Provider may not assign franchise to another party without approval of County. Assignee must agree to perform all terms and conditions of franchise agreement. System Map & Coordinated Excavations: Provider agrees to provide facility map for import as a GIS layer. County and provider agree to best reasonable effort to provide notification for coordination on excavations occurring in franchise area. 10 Public Process July 7, 2025 11 11 Franchise Agreement Procedural Process Requirements July 7, 2025 12 RCW 36.55.040 Application—Notice of hearing. On application being made to the county legislative authority for franchise, it shall fix a time and place for hearing the same, and shall cause the county auditor to give public notice thereof at the expense of the applicant, by posting notices in three public places in the county seat of the county at least fifteen days before the day fixed for the hearing. The county legislative authority shall also publish a like notice two times in the official newspaper of the county, the last publication to be not less than five days before the day fixed for the hearing.The notice shall state the name or names of the applicant or applicants, a description of the county roads by reference to section, township and range in which the county roads or portions thereof are physically located, to be included in the franchise for which the application is made, and the time and place fixed for the hearing. [1985 c 469 s 49; 1963 c 4 s 36.55.040. Prior: 1961 c 55 s 3; prior: 1937 c 187 s 38, part; RRS s 6450-38, part.] State Law RCW 36.55.040 requires a public hearing take place and details that notices must be posted in three public places at least 15 days before the hearing date. Another requirement is that the public hearing notice be published two times in the county's official newspaper. The last publication must be no less than five days before the hearing. 12 Franchise Agreement Procedural Process Requirements July 7, 2025 13 RCW 36.55.050 Hearing—Order. The hearing may be adjourned from time to time by the order of the board of county commissioners. If, after the hearing, the board deems it to be for the public interest to grant the franchise in whole or in part, it may make and enter a resolution to that effect and may require the applicant to place his or her utility and its appurtenances in such location on or along the county road as the board finds will cause the least interference with other uses of the road. [2009 c 549 s 4094;1963 c 4 s 36.55.050. Prior:1961 c 55 s 4; prior: 1937 c 187 s 38, part; RRS s 6450-38, part.] 13 Franchise Agreement Public Process Timeline July 7, 2025 14 •Public Hearing Notice – Consent Agenda (June 9, 2025) •Publication in The Port Townsend & Jefferson County Leader on June 11, 2025 and June 18, 2025 •Hearing Notice Posted on Jefferson County’s Website (June 11, 2025) •Hearing Notice Posted in 3 Public Locations (June 13, 2025) Courthouse Public Library Port Townsend Post Office •Public Hearing (July 7, 2025) Jefferson County, WA | Official Website 14 Next Steps July 7, 2025 15 15 Franchise Agreement Public Process July 7, 2025 16 •After closing the public hearing, the Board may: •grant the franchise without revision; •request Public Works compile and respond to comments from hearing & develop recommended revisions to submit to BoCC & Applicant for consideration; or, •deny franchise for cause (for example, no or insufficient public benefit, safety concerns, failure to meet application requirements, applicants inability to perform or environmental impact). •If Board approves the agreement, Public Works will forward to Mason County PUD No. 1 for acceptance within 60 days along with a bill for any costs exceeding application fee if applicable. •Agreement will be recorded with signed copies distributed to BoCC, Public Works & Applicant. 16 Questions? 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