20-1467ORDINANCE NO.20-1467
AN ORDINANCE OF THE CITY OF DENTON, TEXAS, A TEXAS HOME-RULE MUNICIPAL
CORPORATION, GRANTING TO ATb40S ENERGY CORPORATION, MID-TEX DIVISION, A
TEXAS AND VIRGINLA CORPORATION, ITS SUCCESSORS AND ASSIGNS, A NON-EXCLUSIVE
FRANCHISE TO FURNISH, TRANSPORT AND SUPPLY NATURAL GAS TO THE GENERAL
PUBLIC IN THE CITY OF DENTON AND DENTON COUNTY, TEXAS, TO CONSTRUCT,
MAINTAIN AND OPERATE PIPELINES AND EQUIPMENT IN THE CITY OF DENTON, TEXAS,
FOR THE TRANSPORTATION, DELIVERY, SALE, AND DISTR[BUTTON OF NATURAL 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; PROVIDING THAT
SUCH FEE SHALL BE IN LIEU OF OTHER FEES AND CHARGES, EXCEPTING AD VALOREM
TAXES; REPEALING ALL PREVIOUS ATMOS ENERGY GAS FRANCHISE ORDINANCES;
PRESCRIBING THE TERMS, CONDITIONS, OBLIGATIONS AND LIMITATIONS UNDER WHICH
SUCH FRANCHISE SnALL BE EXERCISED; A MOST FAVORED NATIONS CLAUSE; A
SEVERABILITY CLAUSE; AND PROVDING AN EFFECTrVE DATE.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DENTON,
TEXAS :
SECTION 1. GRANT OF AUTHORITY
A. The City of Denton, Texas (“City”) grants to Atmos Energy Corporation, Mid-Tex
Division (“Atmos Energy”) its successors and assigns, consent to use and occupy the present and future
Public Rights-of-Way, for the purpose of laying, maintaining, constructing, protecting, operating and
replacing therein and thereon Atmos Energy’s System to deliver, transport and distribute natural 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 October 1, 2030 (“expiration date”). Unless written notice of its intent to renegotiate is
provided by either the City or Atmos Energy at least 60 calendar days prior to the expiration of any term,
the franchise shall be extended for up to two (2) additional terms of five years each from the expiration date
on the same terms and conditions as set forth herein.
B. The provisions set forth in this Ordinance represent the terms and conditions under which
Atmos Energy shall construct, operate and maintain the System within the City, hereinafter sometimes
referred to as the “Franchise.” in granting this Franchise, the City does not in any manner surrender or
waive its regulatory or other rights and powers under and by virtue of the Constitution and statutes of the
State of Texas as the same may be amended, nor any of its rights and powers under or by virtue of present
or future generally applicable ordinances of the City not in conflict with the Franchise. Atmos Energy, by
its acceptance of this Franchise, agrees that all such lawful regulatory powers and rights as the same may
be from time to time vested in the City shall be in full force and effect and subject to the exercise thereof
by the City at any time.
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, 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 Atmos Energy, a Person that controls, is controlled
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by, or is under common control with Atmos Energy. 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 percent
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. “Atmos Energy” shall mean Atmos Energy Corporation, Mid-Tex Division, a Texas and
Virginia corporation, and its successors and assigns, but does not include an Affiliate, which shall have no
right or privilege granted herein except through succession or assignment in accordance with Section 17.
(_'. “City” shall mean the City of Denton, Texas, a Texas home rule municipality and local
governmental entity located in Denton County, Texas.
D.“City Manager” means City’s Manager or the City Manager’s designee.
E
amended.
“Code of Ordinances” means the City’s Code of Ordinances and Development Code as
F. “Gross Revenues” shall mean:
(1) all revenues received by Atmos Energy, from the sale of gas to all classes of
customers (excluding gas sold to another gas utility in City for resale to its customers within City)
within the corporate limits of City; including base rate revenues and revenues from Atmos Energy’s
purchased gas adjustment tarife
(2) all revenues received by Atmos Energy from the transportation of gas through the
System of Atmos Energy within the City to customers located within the City (excluding gas
transported to another gas utility in City for resale to its customers within City);
(3) the value of gas transported by Atmos Energy for transport customers through the
System ofAtmos Energy within the City (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 Atmos Energy’s monthly Weighted Average Cost of Gas charged to Transport
Customers in the Mid-Tex division, as reasonably near the time as the transportation service is
performed; and
(4) fees collected pursuant to this agreement, revenues received but not ultimately
collected or received by Atmos Energy, contributions in aid of construction, state gross receipts
fees, and the following “miscellaneous charges”: charges to connect, disconnect or reconnect gas,
and charges to handle returned checks from all customers located within the City.
“Gross Revenues” shall not include:
(a)the revenue of any affiliate or subsidiary of Atmos Energy;
(b) sales taxes paid to City;
(C)any interest or investment income earned by Atmos Energy; and
(d) all monies received from the lease or sale of real or personal property,
provided, however, that this exclusion does not apply to the lease of facilities
within the City’s Public Rights-of-Way.
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G. “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 the City or any employee, agent, servant, representative or official
of the City.
H. “Public Facility” shall mean all present and future electric lines, poles, and facilities, water
lines and facilities, sanitary sewer lines and facilities, storm sewer lines, communications lines, irrigation
lines, drainage facilities, traffic control devices, signage, street lights, and all other publicly-owned
equipment, installations, and amenities under the jurisdiction and control of the City.
1. “Public Right-of-Way” shall mean all present and future public streets, avenues, highways,
alleys, sidewalks, trails, boulevards, drives, tunnels, public utility easements, grounds, bridges and other
such similar passageways, thoroughfares and public ways under the jurisdiction and control of the City.
J. “System” or “System Facilities” shall mean all of Atmos Energy’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 located in
the Public Right-of-Way within the corporate limits of the City.
K. “Transport Customer” shall mean any Person for which Atmos Energy transports gas
through the System of Atmos Energy within the City’s Public Rights-of-Way for delivery within the City
(excluding other gas utilities in City who resell gas to their customers within the City).
SECTION 3. CONSTRUCTION, MAINTENANCE, OPERATION AND RELOCATION OF
ATMOS ENERGY FACILITIES.
A. All construction and work done by Atmos Energy, and the operation of its business, under
and by virtue of this Ordinance, shall be in conformance with the City’s ordinances, rules and regulations,
policies and procedures now in force and that may hereafter be adopted or amended by City related to the
use of its Public Rights-of-Way, provided such ordinances, rules and regulations, and policies and
procedures are not in express conflict with this Franchise. If the Franchise does not provide an express
provision governing the use of the Public Right-of-Way, the requirements of the City’s Code of Ordinances
control
B. 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 Atmos Energy
believes are contrary to any federal, state or local law or regulations.
C. Atmos Energy’s System Facilities shall be constructed so as not to interfere with the
existing installation, maintenance and operations of any Public Facilities, franchised utilities, or other
authorized occupants of the Public Right-of-Way. Atmos Energy shall promptly clean-up, repair and restore
in compliance with applicable provisions of the City’s Code of Ordinances and policies, all thoroughfares
and other surfaces which it may disturb. Atmos Energy shall maintain in good condition and repair all
Public Right-of-Way and easements it occupies in the City and shall promptly restore and repair any such
Public Rights-of-Way and easements upon receipt of complaints or other communications, either verbal or
written, from adjacent property owners or occupants regarding the condition of such Public Rights-of-Way
and easements.
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D. Atmos Energy shall install, maintain, construct, operate and replace its System Facilities
in accordance with applicable provisions of the City’s Code of Ordinances and policies to minimize
interference with traffic, and shall place or cause to be placed appropriate barriers to mark excavations or
obstrbctions, and restore to approximate original condition all Public Rights-of-Way that it may disturb. In
determining the location of new Public Facilities of the City and other users’ facilities within Public Right-
of-Way, City shall reasonably minimize interference with then existing facilities ofAtmos Energy and shall
work with Atmos Energy and other users of Public Rights-of-Way to minimize, to the extent reasonably
possible, interference with existing facilities of Atmos Energy by other users of Public Rights-of-Way. In
the event of a conflict between the location of the proposed System Facilities of Atmos Energy and the
location of the existing facilities of City or other users of Public Rights-of-Way within Public Rights-of-
Way that cannot otherwise be resolved through the parties’ good faith efforts, City or an authorized agent
of City shall resolve the conflict and determine the location of the respective System Facilities within the
Public Rights-of-Way consistent with gas distribution industry standard safe operating practices. Facilities
are deemed to be in conflict to the extent that the proposed Facilities are determined by Atmos Energy to
be inconsistent with gas distribution industry standard safe operating practices.
E. When Atmos Energy 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 Atmos Energy as a result of such removal or relocation, and such reimbursement
is required to be handled through City, Atmos Energy costs and expenses shall be included in any
application by City for reimbursement ifAtmos Energy 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 Atmos Energy of the deadline for Atmos Energy 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 Atmos Energy, within 60 calendar
days of receipt, the portion of reimbursement related to the relocation or removal of Atmos Energy’s
facilities
F. Atmos Energy’s obligation to remove or relocate its mains, laterals, or other System
Facilities lying within the Public Rights-of-Way for construction, improvement, or relocation of Public
Facilities, shall be as provided in the City’s Code of Ordinances and policies then in force at the time of
said removal and relocation obligation. Such removal or relocation of System Facilities that are in conflict
shall be at Atmos Energy’s expense unless such relocation or removal is required for the primary purpose
ofbeautification or to accommodate a private developer. System Facilities are deemed to be conflict to the
extent that the proposed Public Facilities are determined by Atmos Energy to be inconsistent with gas
distribution industry safe operating practices for existing System Facilities. Atmos Energy shall not be
required to relocate the facilities to a depth of greater than four (4) feet unless prior agreement is obtained
from Atmos Energy.
G. When Atmos Energy is required to remove or relocate its mains, laterals or other System
Facilities to accommodate construction by City without reimbursement from City, Atmos Energy 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 Atmos Energy 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 Atmos Energy is required by City to perform
relocation. City shall not require that Atmos Energy 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.
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H. If City abandons any Public Rights-of-Way in which Atmos Energy has System Facilities
for public safety reasons or in furtherance of a public project, such abandonment will be governed by the
provisions of City’s Rights-of-Way Rules and Regulations contained in the Code of the City of Denton and
applicable policies. If City elects to abandon Public Rights-of-Way in these circumstances, City shall
determine whether it is appropriate to retain a public utility easement in such Public Right-of-Way for use
by Atmos Energy. If City determines, in its sole discretion, that the continued use of the Public Right-of-
Way by Atmos Energy 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 Atmos Energy an easement for such use, and the abandonment of the Public Right-of-Way
shall be subject to the right and continued use of Amos Energy. 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, Atmos
Energy shall be responsible, subject to the provisions of this 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 Atmos Energy’s right to maintain
use of the former Public Right-of-Way. If the third party requests Atmos Energy to remove or relocate its
System Facilities from the former Public Right-of-Way and Atmos Energy agrees to such removal or
relocation, such removal or relocation shall be done within a reasonable time at the expense of the party
requesting the removal or relocation. In the event of a third party requesting the relocation, if 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.
1. Promptly after completion of any construction, installation, replacement, or relocation of
System Facilities, Atmos Energy will provide the City accurate and complete “as-built” plans showing the
nature and specific location of all work done.
J. Upon request by City for a public health or safety purpose, Atmos Energy shall provide
maps in a digital format 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. All maps provided
by Atmos Energy to the City shall be deemed confidential and proprietary and will be provided solely for
the City’s use. The City agrees to maintain the confidentiality of any non-public information obtained from
Atmos Energy to the extent allowed by law. If the City receives a request under the Texas Public
Information Act that includes Atmos Energy’s previously designated proprietary or confidential
information, the City shall provide notice to Atmos Energy of any request for release of information
previously designated by Atmos Energy as proprietary or confidential non-public information. City will
comply with the law, as amended.
SECTION 4 LAYING OF LINES IN ADVANCE OF PUBLIC IMPROVEMENTS
A. Whenever City shall decide to make public improvements in the Public Right-of-Way in
which Atmos Energy’s System Facilities already exist or in which Atmos Energy may propose to install its
System Facilities, Atmos Energy will be provided the opportunity, at no expense to City, in advance of
such improvements 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 may be
located provided such activities do not delay the City’s public improvements.
B. Atmos Energy shall be given written notice of the intention of City to make major public
improvements to any Public Facility, including, but not limited to, pavements, sidewalks, water lines,
sanitary sewer lines, storm sewer lines and communications lines, in any such Public Rights-of-Way.
Within 90 calendar days from receipt of such notice, Atmos Energy shall initiate work and thereafter
proceed in a workman-like manner to completion of the necessary work to relocate or adjust its lines and
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facilities to accommodate the City’s public improvements and complete such work within three months to
preclude the delay of said public improvements. Atmos Energy shall take reasonable measures to ensure
uninterrupted service to its customers and shall reconnect all customer service lines disconnected in the
normal course of construction at its own expense. IfAtmos Energy should fail to so proceed, and any street
or alley is thereupon paved, except in an emergency or in response to a request for initiation of new service,
Atmos Energy shall for three years thereafter not be allowed to cut such pavement or excavate in such
paved street or alley for any purpose. All pavement cuts or excavations within the three-year period, except
in response to an emergency or in response to a request for initiation of new service, shall be performed
only upon written permission of the City Engineer under such terms and conditions as the City Engineer
may prescribe. Atmos Energy shall obtain a permit for emergency work as soon as possible after the
commencement of such work in accordance with the City’s Code of Ordinances, now in force and that may
hereafter be adopted or amended by City and not in conflict with this Franchise.
SECTION 5. LIABILITY INSURANCE. Atmos Energy will maintain insurance in amounts
consistent with the City’s Code of Ordinances now in force and that may hereafter be adopted or amended
by City. Such insurance may be in the form of self-insurance to the extent permitted by applicable law,
under an approved formal plan of self-insurance maintained by Atmos Energy in accordance with sound
accounting and risk-management practices. A certificate of insurance shall be provided to the City. Atmos
Energy 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 solely for Atmos
Energy’s operations within the City will name the City as an additional insured up to the amounts required
by City’s ordinance.
SECTION 6. INSTALLATION OF METERS. If a meter is to be installed in or near the Public
Rights-oFWay, Atmos Energy 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, Atmos Energy will comply so long as City reimburses Atmos Energy for the reasonable costs
incurred by Atmos Energy in changing meters. In no event, however, shall underground meters be required.
SECTION 7. EXTENSIONS FOR CUSTOMERS. Atmos Energy shall, at its expense, extend
distribution mains in any Public Right-of-Way up to one hundred (100) 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. Atmos Energy 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 Atmos Energy agrees to
such extension by a written agreement between Atmos Energy and a customer.
SECTION 8. DUTY TO SERVE
A. Atmos Energy agrees that it shall not arbitrarily refuse to provide service to any Person
having a service location within the City and meeting Atmos Energy’s reasonable credit requirements that
it is economically feasible for Atmos Energy 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
45 calendar days from the date of the request for hearing. The City Council may order Atmos Energy to
provide service or take any other action necessary to bring Atmos Energy into compliance with the intent
of the City Council in granting this Franchise, including the adoption of an ordinance or resolution in
accordance with Section 15.B. The City Council may render its opinion at its next regular meeting but in
no event shall it be required to act in less than 14 calendar days.
B. Commencing five calendar days following the adoption of a resolution or an ordinance of
the City that finds and determines a failure of Atmos Energy to comply with operational or maintenance
standards as required by this Franchise. Ordinance, the City may elect to terminate this Franchise in
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accordance with Section 15 .
SECTION 9 CUSTOMER SERVICE STANDARDS: LOCAL PAY STATION
A. Atmos Energy 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. Atmos Energy 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. Atmos Energy shall furnish reasonably adequate service to the public at
just and reasonable rates and charges therefore, Atmos Energy shall maintain its System in good order and
condition. Atmos Energy’s rates and charges shall be established and shall be subject to revision and change
by City or Atmos Energy in accordance with all applicable statutes and ordinances. Atmos Energy shall
maintain on 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, ATMOS
ENERGY 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,
INJnRIES 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
ATMOS ENERGY'S HVTENTIONAL AND/OR NEGLIGENT ACTS OR OMISSIONS IN
CONNECTION WITH ATMOS ENERGY'S CONSTRUCTION, RECONSTRUCTION,
MAINTENANCE, REPAIR, USE, OPERATIONS OR DISMANTLING OF SYSTEM OR ATMOS
ENERGY'S PROVISION OF SERVICE; EXCEPT THAT THE INDEMNITY PROVIDED FOR INTHIS PARAGRAPH SHALL NOT APPLY TO THE EXTENT ANY LIXBILITY 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 ATMOS ENERGY 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 ATMOS ENERGY AND crrY, RESPONSIBILITY FOR ALL COSTS OF
DEFENSE SIIALL BE APPORTIONED BETWEEN CITY AND ATMOS ENERGY BASED UPON
THE COMPARATIVE FAULT OF EACH.
B. By entering into this Franchise Ordinance, City does not consent to suit, waive any
governmental immunity available to the City under Texas law or waive any defenses of the parties under
Texas law.
C. In the event any action or proceeding shall be brought against the Indemnitees by reason
of any matter for which the Indemnitees are indemnified hereunder, Atmos Energy shall, upon notice from
any of the Indemnitees, at Atmos Energy’s sole cost and expense, resist and defend the same with legal
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counsel selected by Atmos Energy, provided; however, that Atmos Energy shall not admit liability in any
matter on behalf of the Indemnitees without their written consent and provided further that Indemnitees
shall not admit liability for, nor enter into any compromise or settlement of, any claim for which they are
indemnified hereunder, without the prior written consent of Atmos Energy. Atmos Energy’s obligation to
defend shall apply regardless of whether Atmos Energy is solely or concurrently negligent provided that
Indemnitees may be held responsible for the cost of such defense paid for by Atmos Energy. Indemnitees
shall give Atmos Energy prompt notice of the making of any claim or commencement of any action, suit
or other proceeding covered by the provision of this Section 1 1. Nothing herein shall be deemed to prevent
the Indemnitees at their election and their own expense from cooperating with Atmos Energy and
participating in the defense of any litigation by their own counsel
D. In fulfilling its obligation to defend and indemnify City, Atmos Energy shall have the right
to select defense counsel, subject to City’s approval, which shall not be unreasonably withheld. Atmos
Energy shall retain defense counsel within seven business days of City’s written notice that City is invoking
its right to indemnification under this Franchise. IfAtmos Energy fails to retain counsel within such time
period, City shall have the right to retain defense counsel on its own behalf, and Atmos Energy shall be
liable for all defense costs incurred by City, except as otherwise set out in this Section 1 1 .A.
SECTION 12 RESERVATION OF RIGHTS: NON-EXCLUSIVE FRANCHISE
A. City reserves to itself the right and power at all times to exercise, in the interest of the
public and in accordance with State law, regulation and control ofAtmos Energy’s use of the Public Rights-
oFWay to ensure the rendering of efficient public service and the maintenance ofAtmos Energy’s System
in good repair throughout the term of this Franchise.
B. The rights, privileges and franchises granted by this Franchise 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.
C. City expressly reserves the right to own and/or operate its own system for the purpose of
transporting, delivering, distributing or selling gas to and for the City and inhabitants thereof.
D. Nothing herein shall impair the right of City to fix, within constitutional and statutory
limits, a reasonable price to be charged for natural gas, or to provide and fix a scale of prices for natural gas
and other charges, to be charged by Atmos Energy to residential consumers, commercial consumers,
industrial consumers or to any combination of such consumers, within the territorial limits of the City as
same now exists or as such limits may be extended from time to time hereafter.
SECTION 13. PAYMENTS TO CITY
A. In consideration of the privilege and license granted by City to Atmos Energy to use and
occupy the Public Rights-of-Way in the City for the conduct of its business, Atmos Energy, its successors
and assigns, agree to pay and City agrees to accept, such franchise fees in the amount and manner described
herein. Except as otherwise provided for in Section 13.B., such payments shall be made on a quarterly basis,
on or before the 15th day of November, 2020 and the 15th days of February, May and August 2021, and on
or before the same days of each succeeding year during the life of this Franchise the last payment of the
initial term being made on the 15th day of November, 2030, a sum of money which shall be equivalent to
5 percent of the quarterly Gross Revenues, as defined in Section 2 above, received by Atmos Energy during
the preceding calendar quarter and shall be for the rights and privileges during the quarter in which the
payment is made.
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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 3 1 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, 2021 and will be based on CIAC received from
January 1 through December 31, 2020. Unless this Franchise is extended pursuant to Section 1, the fInal
payment of franchise fee amounts based on CIAC will be April 30, 203 1, for the calendar year ending in
2030
C. The initial payment made under this Franchise for the rights and privileges herein provided
shall be on November 15, 2020, and shall be for the privilege period October 1 through December 3 1, 2020,
and each succeeding payment shall be for the privilege period of the calendar quarter in which the payment
is made as follows:
Payment Due Date Quarter Upon Which Payment is
Based
Quarter for Which Payment is
Made
February 15th
May 15th
August 15th
November 15th
October 1 - December 3 1
January 1 - March 3 1
April 1 - June 30
July 1 - September 30
January 1-March 3 1
April 1 - June 30
July 1 - September 30
October 1 - December 3 1
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 an ad valorem,
special or other character of tax or charge), registration fees, 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 Atmos Energy or Atmos Energy’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, Atmos Energy’s separate obligations to reimburse the City for City’s reasonable rate case
expenses and for street repairs or other damage to Public Facilities caused by Atmos Energy employees or
Contractors in accordance with City’s Code of Ordinances are not affected by Atmos Energy’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 Atmos Energy’s obligations, if any, to pay any such occupation taxes,
licenses, charges, fees or rentals.
E. If Atmos Energy fails to pay when due any payment provided for in this Section, Atmos
Energy 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 . Effect of Other Municipal Franchise Ordinance Fees Accepted and Paid by Atmos Energy.
If Atmos Energy should at any time after the effective date of this Ordinance agree to a new municipal
franchise ordinance, or renew an existing municipal franchise ordinance, with another municipality in
Atmos Energy’s Mid-Tex Division, which municipal franchise ordinance determines the franchise fee owed
to that municipality for the use of its public rights-of-way in a manner that, if applied to the City, would
result in a franchise fee greater than the amount otherwise due City under this Ordinance, then the franchise
fee to be paid by Atmos Energy to City pursuant to this Ordinance may, at the election of the City, be
Page 9 of 18
increased so that the amount due and to be paid is equal to the amount that would be due and payable to
City were the franchise fee provisions of that other franchise ordinance applied to City. The City
acknowledges that the exercise of this right is conditioned upon the City’s acceptance of all terms and
conditions of the other municipal franchise in toto. The City may request waiver of certain terms and Atmos
Energy may grant, in its sole reasonable discretion, such waiver.
G.Atmos Energy Franchise Fee Recovery Tariff.
( 1 ) Atmos Energy 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 percent recovery of such franchise fees as part of Atmos
Energy’s rates; (ii) if City intervenes in any regulatory proceeding before a federal or state agency
in which the recovery ofAtmos Energy’s franchise fees is an issue, the City will take an affirmative
position supporting 100 percent recovery of such franchise fees by Atmos Energy 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 percent recovery of such
franchise fees by Atmos Energy; 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 Atmos Energy.
H. Lease of Facilities within City ’s Rights-of-Way. Atmos Energy shall have the right to lease,
license or otherwise grant to a party other than Atmos Energy the use of its System Facilities within City’s
Public Rights-of-Way provided: (i) Atmos Energy 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) Atmos Energy
makes the franchise fee payment due on the revenues from such lease pursuant to Section 13 of this
Franchise. This authority to lease System Facilities within City’s 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
Rights-of-Way user fees.
I. City shall endeavor to, within 30 calendar days of final approval and submission to the
Texas Comptroller of Public Accounts, give Atmos Energy notice of annexations and disannexations of
territory by City, which notice shall include a map and addresses, if known. Upon receipt of said notice,
Atmos Energy shall promptly initiate a process to reclassify affected customers into the City limits no later
than 60 calendar 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, Atmos Energy will provide documentation to verify
that affected customers were appropriately reclassified and included for purposes of calculating franchise
payments. In no event shall Atmos Energy be required to add premises for the purposes of calculating
franchise payment prior to the earliest date that the same premises are added for purposes of collecting sales
tax
SECTION 14. BOOKS AND RECORDS
A. Atmos Energy agrees that at the time of each quarterly payment, Atmos Energy shall also
submit to the City a statement showing its Gross Revenues, as defined in Section 2.E., for the preceding
calendar quarter. City shall be entitled to treat such payment as though it were sworn and signed by an
officer ofAtmos Energy.
B City may, if it sees fit, upon reasonable notice to the Atmos Energy, have the books and
Page 10 of 18
records ofAtmos Energy examined by a representative of said City to ascertain the correctness of the reports
agreed to be filed herein. City has the right to audit payments for the last four years from the date the audit
notice is provided to Atmos Energy. Atmos Energy 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. Atmos Energy shall assist City in its
review by providing all requested information no later than 15 business days after receipt of a request. The
cost of the audit shall be borne by City unless the audit discloses that Atmos Energy has underpaid the
franchise fee by five percent or more, in which case the reasonable costs of the audit shall be reimbursed to
the City by Atmos Energy. If such an examination reveals that Atmos Energy has underpaid City, then upon
receipt of written notification from City regarding the existence of such underpayment, Atmos Energy 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 13.E. Should Atmos
Energy determine through examination of its books and records that City has been overpaid, upon receipt
of written notification from Atmos Energy regarding the existence of such overpayment, City shall review
Atmos Energy’s cIaim and if said overpayment is confirmed, remit the amount of overpayment to Atmos
Energy
C. If, after receiving reasonable notice from City of City’s intent to perform an audit as
provided herein, Atmos Energy fails to provide data, documents, reports or information required to be
furnished hereunder to City or fails to reasonably cooperate with City during an audit conducted under the
terms hereunder, Atmos Energy shall be liable for payment of a fee as set forth herein. City shall give
Atmos Energy written notice of its intent to impose a fee and shall provide Atmos Energy with a period to
cure its failure, such period not to exceed five business days. If Atmos Energy fails to cure the alleged
failure within the prescribed time period, Atmos Energy’s alleged failure to comply shall be heard at a
public meeting of the City Council. Atmos Energy shall be given written notice of the public meeting no
later than five calendar days prior to the posting date of the agenda for the City Council meeting at which
such failure is scheduled to be considered by the City Council. The notice to Atmos Energy shall include a
list of the failures complained of. Atmos Energy shall have an opportunity to address the City Council at
such public meeting. Commencing five calendar days following the adoption of a resolution or an ordinance
of the City that finds and determines a failure of Atmos Energy to comply with the requirements of this
Section, the City may elect to terminate this Franchise in accordance with Section 15 .
D. If Atmos Energy provides confidential or proprietary information to the City, Atmos
Energy 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. City agrees to maintain the
confidentiality of any nonpublic information obtained from Atmos Energy so designated to the extent
allowed by law. City shall not be liable to Atmos Energy for the release of any information City is required
to release by law. If City receives a request under the Texas Public Information Act that includes Atmos
Energy’s proprietary or confidential information, City will notify the Texas Attorney General of the
proprietary or confidential nature of the document(s). City also will provide Atmos Energy with a copy of
this notification, and thereafter Atmos Energy is responsible for establishing that an exception under the
Texas Public Information Act allows 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 this Franchise and all rights and privileges pertaining thereto, in the event
that Atmos Energy violates any material provision of the Franchise.
Page 11 of 18
B. Procedures for Termination.
( 1) City may, at any time, terminate this Franchise for a continuing material violation
by Atmos Energy of any of the substantial terms hereof. In such event, City shall give to Atmos
Energy written notice, specifying all grounds on which termination or forfeiture is claimed, by
registered mail, addressed and delivered to Atmos Energy at the address set forth in Section 16. A.
Atmos Energy shall have 60 calendar days after the receipt of such notice within which to cease
such violation and comply with the terms and provisions hereof. In the event Atmos Energy fails
to cease such violation or otherwise comply with the terms hereof, then Atmos Energy’s Franchise
is subject to termination under the following provisions, provided; however, that ifAtmos Energy
commences work or other efforts to cure such violations within 30 calendar 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 Atmos Energy is afforded the full opportunity to be heard
and to respond to any such notice of violation or failure to comply. Atmos Energy shall be provided
at least 15 days prior written notice of any public hearing concerning the termination of the
Franchise. In addition, 10 calendar days’ notice by publication shall be given of the date, time and
place of any public hearing to interested members of the public, which notice shall be paid for by
Atmos Energy.
(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 Atmos Energy 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 Atmos Energy from appealing the final
decision of the City Council to a court or regulatory authority having jurisdiction.
nI
(5) Nothing herein stated shall prevent City from seeking to compel compliance by
suit in any court of competent jurisdiction if Atmos Energy fails to comply with the terms of this
Franchise after due notice and the providing of adequate time for Atmos Energy to comply with
said terms.
SECTION 16. NOTICES
A. Any notices required or desired to be given from one party to the other party 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 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 each party
designated for notice shall remain such party’s address for notice.
Page 12 of 18
CITY ATMOS ENERGY
City Manager
City of Denton
215 E. McKinney St.
Denton, Texas 76201
Manager of Public Affairs
Atmos Energy Corporation
Mid-Tex Division
1681 Corporate Drive
McKinney, Texas 75069
City Attorney
City of Denton
215 E. McKinney St.
Denton, Texas 76201
B. Atmos Energy shall provide to the City a local or toll-free telephone number that is manned
24 hours a day, seven 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 Atmos Energy’s Call Center. If Atmos
Energy cannot timely respond to an emergency with Atmos Energy employees, Atmos Energy will attempt
to respond to the emergency with qualified local contractors. Atmos Energy’s contact information shall be
kept current at all times. Atmos Energy 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
A. The rights granted by this Franchise inure to the benefit of the Atmos Energy. Atmos
Energy may, without consent by City, transfer or assign the rights granted by this Franchise to an Affiliate
provided that such Affiliate assumes all obligations ofAtmos Energy hereunder and is bound to the same
extent as Atmos Energy hereunder, and has net capital and liquid assets reasonably equivalent to the Atmos
Energy’s as of the month immediately preceding the transfer or there are provided other guarantees or
assurances of the transferee’s or assignee’s financial ability to perform this Franchise reasonably acceptable
to the City. Atmos Energy shall give City written notice thirty (30) calendar days prior to such assignment.
B. City will have the right to approve the transfer or assignment of the franchise, except as
provided in Section 17(A). City shall grant approval unless the Assignee is unable to demonstrate its credit
worthiness. For the purpose of this section, “credit worthiness” means that the long term unsecured debt
rating of the Assignee is investment grade as rated by both S&P and Moody’s. If the Assignee is unable to
demonstrate its credit worthiness, the City may request additional documents and information reasonably
related to the transaction and the legal, financial, and technical qualifications of the Assignee. City agrees
that said approval shall not be unreasonably withheld or delayed. Any such assignment or transfer shall
require that said Assignee assume all obligations of Atmos Energy be bound to the same extent as Atmos
Energy hereunder. If within the first 90 calendar days after assignment to Assignee, City identifies a failure
to comply with a material provision of this Franchise, City shall have the right, after notice and opportunity
before City Council, to terminate this Franchise.
SECTION 18. RENEGOTIATION. If either City or Atmos Energy requests renegotiation of
any term of this Ordinance, Atmos Energy 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.
SECTION 19. NO WAIVER. Either City or Atmos Energy shall have the right to waive any
requirement contained in this Ordinance, which is intended for the waiving party’s benefit, but, except as
Page 13 of 18
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. 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 21. NO THIRD PARTY BENEFICIARIES. This Franchise is made for the exclusive
benefit of the City and Atmos Energy, and nothing herein is intended to, or shall confer any right, claim or
benefit in favor of any third party.
SECTION 22. COMPLIANCE WITH LAWS, CHARTER AND ORDINANCES. This Franchise
is granted subject to the laws of the United States of America and its regulatory agencies and commissions
and the laws of the State of Texas, the Denton City Charter, as amended, and all other generally applicable
ordinances of the City of Denton as amended and in conflict with this Franchise, including, but not limited
to, ordinances regulating the use of Public Rights-of-Way.
SECTION 23. FORCE MAJEURE. Notwithstanding anything expressly or impliedly to the
contrary contained herein, in the event either the City or Atmos Energy is unable to comply with any
obligation or undertaking contained herein by reason of any event of force majeure, then, while so
prevented, compliance with such obligations or undertakings shall be suspended, and the time during which
such party is so prevented shall not be counted against such party for any reason. The term “force majeure”
as used herein shall mean any cause not reasonably within the control of the party unable to comply with
its obligation or undertaking hereunder and includes, but is not limited to, acts of God, strikes, lock-outs,
wars, riots, orders or decrees of any lawfully constituted federal, state or local body, contagions or
contaminations hazardous to human life or health, fires, storms, floods, wash-outs, explosions, breakage or
accident to machinery or lines of pipe, inability to obtain or delay in obtaining rights-of-way, materials,
supplies or labor permits, temporary failures of gas supply, or necessary repair, maintenance or replacement
of facilities used in the performance of the obligations contained in this Ordinance.
SECTION 24. PREVIOUS ORDINANCES. When this Franchise becomes effective, all gas
franchise ordinances and parts of franchise ordinances applicable to Atmos Energy or its predecessors in
interest granted by the City of Denton, Texas, are hereby repealed.
SECTION 25. 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 26 ACCEPTANCE OF FRANCHISE
A. The City shall provide Atmos Energy with a certified copy of this Franchise by certified
mail within five calendar days of passage. In order to accept this Franchise, Atmos Energy must file with
the City Secretary its written acceptance of this Franchise Ordinance within 30 calendar days after its final
passage and approval by City. If such written acceptance of this Franchise Ordinance is not filed by Atmos
Energy, the franchise ordinance shall be rendered null and void.
Page 14 of 18
B. Unless extended pursuant to Section 1, at 11:59 P.M. on October 1, 2030 ALL rights,
franchises and privileges herein granted, unless they have already at that time ceased or been forfeited or
extended by mutual agreement while a new franchise is being negotiated, shall at once cease and terminate.
SECTION 27. EFFECTIVE DATE. IfAtmos Energy accepts this Ordinance, it becomes effective
as of October 1, 2020. Atmos Energy’s obligation to submit payments to the City in compliance with
Section 13 will begin October 1, 2020.
––-–-––--–- THIS SPACE LEFT BLANK INTENTIONALLY -------------------
Page 15 of 18
FIRST READING AND VOTE
The motion to approve the first reading
O<rokcd Hu{\spetb\ and seconded by3Qk9
was passed and approv6d by the following vote [_]_ - 4 :
R\{ an
of this Ordinance was made by
_, the Ordinance
Aye Nay Abstain Absent
Mayor Chris Watts:
Gerard Hudspeth, District 1 :
Keely G. Briggs, District 2:
Jesse Davis, District 3 :
John Ryan, District 4:
Deb Armintor, At Large Place 5 :
Paul Meltzer, At Large Place 6: v/
,in
V''
V’
34,/
Jd
The first reading of this Ordinance was DULY PASSED AND APPROVED by the City Council
,f th, City ,fD,„t,„, Ti,„, ,„ th, W d,y ,f Ao808t , 2020.
CHRIS WATTS, MAYOR
.„:
ATTEST
ROSA RIOS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY 'EY
Page 16 of 18
SECOND READING AND VOTE
The motion to approve the first reading of this Ordinance was made by
and seconded by , the Ordinance
was passed and approved by the following vote
Aye Nay Abstain Absent
Mayor Chris Watts:
Gerard Hudspeth, District 1 :
Keely G. Briggs, District 2:
Jesse Davis. District 3 :
John Ryan, District 4:
Deb Armintor, At Large Place 5 :
Paul Meltzer, At Large Place 6:
The first reading of this Ordinance was DULY PASSED AND APPROVED by the City Council
of the City of Denton, Texas, on the day of , 2020.
CHRIS WATTS, MAYOR
ATTEST:
ROSA RIOS, CITY SECRETARY
By:
APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY ATTORNEY
By:
Page 17 of 18
THIRD AND FINAL READING AND VOTE
The motion to approve the first reading of this Ordinance was made by
and seconded by , the Ordinance
was passed and approved by the following vote L - J :
Aye Nay Abstain Absent
Mayor Chris Watts:
Gerard Hudspeth, District 1 :
Keely G. Briggs, District 2:
Jesse Davis, District 3 :
John Ryan, District 4:
Deb Armintor, At Large Place 5 :
Paul Meltzer, At Large Place 6:
The first reading of this Ordinance was DULY PASSED AND APPROVED by the City Council
of the City of Denton, Texas, on the day of , 2020.
CHRIS WATTS, MAYOR
ATTEST:
ROSA RIOS, CITY SECRETARY
By:
APPROVED AS TO LEGAL FORM:
AARON LEAL, CITY ATTORNEY
By:
Page 18 of 18