HomeMy WebLinkAbout09662
As Amended
February 10, 2020
City Clerk’s Office Item # R-9
Background Paper for Proposed
Ordinance
COUNCIL MEETING DATE: January 27, 2020
TO: President Dennis E. Flores and Members of City Council
CC: Mayor Nicholas A. Gradisar
VIA: Brenda Armijo, City Clerk
FROM: Daniel C. Kogovsek, City Attorney
SUBJECT: AN ORDINANCE SUBMITTING TO THE ELIGIBLE ELECTORS OF THE CITY
OF PUEBLO, COLORADO AT THE SPECIAL MUNICIPAL ELECTION TO BE
HELD ON MAY 5, 2020, PROPOSED AMENDMENTS TO THE CHARTER OF
THE CITY OF PUEBLO AUTHORIZING THE BOARD OF WATER WORKS OF
PUEBLO, COLORADO TO OPERATE A WATER AND ELECTRIC WORKS BY
THE ADOPTION OF ORDINANCE NO. 9654 AND TERMINATING THE
FRANCHISE AGREEMENT WITH BLACK HILLS/COLORADO ELECTRIC
UTILITY COMPANY, LP AND AUTHORIZING THE PURCHASE OR
CONDEMNATION OF THE ELECTRIC DISTRIBUTION, TRANSMISSION AND
GENERATION SYSTEMS OF BLACK HILLS/COLORADO ELECTRIC UTILITY
COMPANY, LP OR OTHERS LOCATED IN THE STATE OF COLORADO AS
DETERMINED NECESSARY BY THE BOARD OF WATER WORKS OF
PUEBLO, COLORADO
SUMMARY:
Attached is a proposed Ordinance referring the issue of electric municipalization to the voters of
the City of Pueblo at the May 5, 2020 Municipal Special Election.
PREVIOUS COUNCIL ACTION:
On September 25, 2017, by Resolution No. 13790, the City Council declared the City of Pueblo’s
intent to terminate its Franchise Agreement with Black Hills/Colorado Electric Utility Company, LP
(“Black Hills”) on August 11, 2020, and to create a municipal electric utility enterprise, if a due
diligence feasibility study showed that municipalization was an economically viable option.
On November 13, 2017 by Resolution No. 13820, the City Council created the Electric Utility
Commission (“EUC”) whose mission was to advise the Mayor and Council whether the City,
operating as a Municipal Electric Utility Enterprise, could successfully provide electric utility
service beginning on August 11, 2020.
On August 13, 2018, by Resolution No. 14032, the City Council approved an Agreement with EES
Consulting, Inc., a Washington corporation (“Consultant”) to perform a first phase (“Phase 1”)
feasibility study to evaluate the legal, technical and financial requirements necessary for the City
to assume control of the electrical utility services currently provided by Black Hills.
On August 27, 2018, by Ordinance No. 9338, City Council established Public Power Project No.
CI1818 for purposes of evaluating the feasibility of moving away from an investor owned utility
and creating a municipal electric utility enterprise. Funds from this Project were used to pay for
Phase 1 and Phase 2 studies of electric utility municipalization.
On May 13, 2019, by Ordinance No. 9452, the City Council approved an Amendment to the
Agreement with the Consultant for Consultant to perform a second phase (“Phase 2”) study which
would provide a more detailed technical and financial analysis of the municipalization process.
On June 10, 2019, by Ordinance No. 9485, the Mayor retained the Denver law firm of Fairfield
and Woods, P.C. (“Law Firm”) for a Phase 2 legal analysis of electric municipalization, with the
approval of the City Council.
BACKGROUND:
The City of Pueblo, as a home rule city, has the constitutional right to use the power of eminent
domain to create and operate a municipal electric utility. The Colorado Constitution expressly
grants home rule cities the power “within or without \[their\] territorial limits to . . . condemn and . .
. operate . . . public utilities . . . and everything required therefore.” Colo. Const. Art. XX Sec. 1
and 6.
In its Phase 1 report dated January 14, 2019, the Consultant gave the opinion that electric
municipalization is feasible due to projected lower power supply costs, operating costs and capital
costs. In its Phase 2 report dated October 9, 2019, the Consultant reiterated that municipalization
would provide City customers with a retail rate savings of approximately 10% if the City purchased
or condemned the Black Hills electric distribution system located within the City limits and retail
rate savings of approximately 12% if the City acquired Black Hills electric distribution system
located both in the City and Pueblo County. In addition, the Law Firm has provided the City with
its legal opinion that the City may condemn Black Hills’ facilities in both the City and Pueblo
County, subject to certain conditions being met.
C.R.S. 31-15-707(1)(a)(I) requires that before a City purchases or condemns the facilities of an
investor owned electric utility, the question of municipalization be submitted to the municipality’s
voters at a regular or special election. Similarly, C.R.S. 31-15-707(1)(a)(IV) requires that the
election authorizing the condemnation or purchase of electric facilities occur at or before the ten-
year anniversary of the awarding of the electric utility’s franchise. The City’s “off ramp” for
municipalization expires on August 10, 2020. The election authorizing municipalization must take
place on a Tuesday before that date.
The County Clerk and Recorder of Pueblo County (“County Clerk”) has agreed to conduct the
municipalization election as a mail ballot election, subject to approval of an appropriate
Intergovernmental Agreement between the City and Pueblo County for such purposes. In order
to save costs, the County Clerk has recommended that the municipalization election take place
on Tuesday, May 5, 2020 in conjunction with a mail ballot election to be conducted by the County
Clerk on behalf of the Pueblo West Metropolitan District and perhaps other special districts
located in Pueblo County.
FINANCIAL IMPLICATIONS:
The City will incur the cost of a Special Municipal Election on May 5, 2020, to be conducted as a
mail ballot election by the County Clerk. The costs of the election are currently unknown, but
costs will be shared with the Pueblo West Metropolitan District and perhaps other special districts
also holding elections on May 5, 2020.
BOARD/COMMISSION RECOMMENDATION:
On November 21, 2019, the EUC recommended, by a unanimous vote, that the City create a
municipal electric utility and purchase or condemn Black Hills electric facilities located in the City
and Pueblo County.
STAKEHOLDER PROCESS:
Members of the public are the primary stakeholders affected by the proposed Ordinance. The
issue of creating a Municipal Electric Utility has been discussed at various public City Council
meetings and work sessions and public meetings of the EUC for the past two years.
ALTERNATIVES:
If this Ordinance is not approved, the voters of the City of Pueblo will not be given the opportunity
to vote on the creation of a municipal electric utility.
RECOMMENDATION:
This Ordinance must be adopted in order to refer the municipalization ballot measure to the voters.
Attachments: Proposed election ordinance and proposed Ordinance No. 9654.
As Amended
February 10, 2020
ORDINANCE NO. 9662
AN ORDINANCE SUBMITTING TO THE ELIGIBLE
ELECTORS OF THE CITY OF PUEBLO, COLORADO AT
THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON
MAY 5, 2020, PROPOSED AMENDMENTS TO THE
CHARTER OF THE CITY OF PUEBLO AUTHORIZING THE
BOARD OF WATER WORKS OF PUEBLO, COLORADO TO
OPERATE A WATER AND ELECTRIC WORKS BY THE
ADOPTION OF ORDINANCE NO. 9654 AND TERMINATING
THE FRANCHISE AGREEMENT WITH BLACK
HILLS/COLORADO ELECTRIC UTILITY COMPANY, LP
AND AUTHORIZING THE PURCHASE OR
CONDEMNATION OF THE ELECTRIC DISTRIBUTION,
TRANSMISSION AND GENERATION SYSTEMS OF BLACK
HILLS/COLORADO ELECTRIC UTILITY COMPANY, LP OR
OTHERS LOCATED IN THE STATE OF COLORADO AS
DETERMINED NECESSARY BY THE BOARD OF WATER
WORKS OF PUEBLO, COLORADO
BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that:
SECTION 1.
There is hereby submitted to a vote of the registered electors of the City of Pueblo
at the Special Municipal Election to be held on May 5, 2020 proposed amendments to the
Charter of the City of Pueblo authorizing the Board of Water Works of Pueblo, Colorado
to operate a Water and Electric Works by the adoption of Ordinance No. 9654 and further
authorizing the City to terminate the Franchise Agreement with the Black Hills/Colorado
Electric Utility Company, LP (“Black Hills”) and further authorizing the Board of Water
Works of Pueblo, Colorado to purchase or condemn the Certificate of Public Convenience
and Necessity of Black Hills or others and any electric distribution, transmission and
generation systems located in the State of Colorado as determined necessary by the
Board of Water Works of Pueblo, Colorado. The ballot question (submission, clause and
title) therefore shall be as follows:
QUESTION NO. 2A - WATER AND ELECTRIC WORKS
SHALL THE FRANCHISE AGREEMENT WITH BLACK HILLS/COLORADO ELECTRIC
UTILITY COMPANY, LP BE TERMINATED AND SHALL THE CHARTER OF THE CITY
OF PUEBLO BE AMENDED TO AUTHORIZE THE BOARD OF WATER WORKS OF
PUEBLO, COLORADO TO OPERATE A WATER AND ELECTRIC WORKS BY THE
ADOPTION OF ORDINANCE NO. 9654 AND SHALL THE BOARD OF WATER WORKS
OF PUEBLO, COLORADO, AS AN ENTERPRISE AND INSTRUMENTALITY OF THE
CITY OF PUEBLO, BE AUTHORIZED TO PURCHASE, CONDEMN OR OTHERWISE
ACQUIRE BY ANY LAWFUL MEANS, THE CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY OF BLACK HILLS/ COLORADO ELECTRIC UTILITY COMPANY, LP,
OR OTHERS AND ANY, ELECTRIC DISTRIBUTION, TRANSMISSION AND
GENERATION SYSTEMS LOCATED IN THE STATE OF COLORADO, AS
DETERMINED NECESSARY BY THE BOARD OF WATER WORKS OF PUEBLO,
COLORADO, INCLUDING WITHOUT LIMITATION DISTRIBUTION FACILITIES,
TRANSMISSION LINES, GENERATING STATIONS, EQUIPMENT, ELECTRIC LIGHT
AND POWER WORKS AND ALL APPURTENANCES THERETO INCLUDING BOTH
REAL AND PERSONAL PROPERTY AND SHALL THE BOARD OF WATER WORKS
OF PUEBLO, COLORADO, AS AN ENTERPRISE AND INSTRUMENTALITY OF THE
CITY OF PUEBLO, HAVE THE AUTHORITY TO CONSTRUCT, RELOCATE, INSTALL
AND EXPAND THE EQUIPMENT AND FACILITIES AND OTHER ASSETS
COMPRISING THE ELECTRIC DISTRIBUTION, TRANSMISSION AND GENERATION
SYSTEMS OF BLACK HILLS/COLORADO ELECTRIC UTILITY COMPANY, LP OR
OTHERS WITHIN THE STATE OF COLORADO, PAYING ALL NECESSARY AND
INCIDENTAL COSTS RELATED THERETO AND BE AUTHORIZED TO ENTER INTO
CONTRACTS WITH THIRD PARTIES TO MAINTAIN AND OPERATE SUCH ELECTRIC
DISTRIBUTION, TRANSMISSION AND GENERATION SYSTEMS AND SHALL THE
CITY COUNCIL BE AUTHORIZED TO ADOPT FUTURE ORDINANCES AND
RESOLUTIONS AND SHALL THE BOARD OF WATER WORKS OF PUEBLO,
COLORADO BE AUTHORIZED TO ADOPT FUTURE RESOLUTIONS AND SHALL THE
MAYOR BE AUTHORIZED TO TAKE FUTURE ACTIONS NECESSARY OR
APPROPRIATE TO CARRY OUT THE REQUIREMENTS, PURPOSE AND INTENT OF
THIS MEASURE?
_____ For the measure
_____ Against the measure
SECTION 2.
The text of Ordinance No. 9654 is as follows:
BE IT ORDAINED BY THE PEOPLE OF THE CITY OF PUEBLO that (brackets
indicate matter being deleted; underscoring indicates new matter being added):
SECTION 1.
Sections 2-5, 15-2, 15-5 and 15-6 of the Charter of the City of Pueblo are
hereby amended to read as follows and Sections 15-7 and 15-8 are hereby
added to Article 15 of the Charter of the City of Pueblo:
Section 2-5. Appointive Boards and Commissions - Unless
otherwise required by law, all boards and commissions shall be appointed
by the Mayor, subject to Council confirmation and shall have such powers
and perform such duties as are prescribed by the Charter or by ordinance.
Appointments by the Mayor shall specify the term of office of each individual
in order to achieve overlapping of tenure.
All members shall be subject to removal by the appointing authority.
All boards and commissions shall choose their own chairmen and operate in
accordance with the rules of procedure as set forth by the appointing authority.
Notwithstanding the foregoing, the Mayor and Council shall have no
jurisdiction or control over the independent Board of Water Works of Pueblo,
Colorado and shall act in accordance with \[Section 15-2\] Article 15 of this
Charter.
Section 15-2. Board of Water Works of Pueblo, Colorado - The
Board of Water Works of Pueblo, Colorado is hereby authorized to
operate a Water and Electric Works which shall be an enterprise and
instrumentality of the City of Pueblo. Title to the properties of the former
water districts \[now\] previously consolidated and any property of the water
and electric works \[is in the City of Pueblo\] shall be in the name of the
Board of Water Works of Pueblo, Colorado as an enterprise and
instrumentality of the City of Pueblo. The entire control, management
and operation thereof shall be exercised by an independent Board named
“Board of Water Works of Pueblo, Colorado” over which the Council and
the Mayor shall have no jurisdiction or control, but shall adopt all ordinances
requested by said Board which shall be reasonably necessary to assist the
Board in the management of the water and electric works system and
property, or to \[enable\] assist said Board to purchase or condemn
additional water, water rights, reservoirs, reservoir sites and electric
distribution, transmission and generation systems or property of any
kind, needed to supply water and electricity. \[to the City or its inhabitants.\]
The Board shall consist of the five current members of the Board of
Water Works of Pueblo, Colorado who shall continue to serve until
their respective terms of office expire. \[all elected at large for six year
terms as hereafter provided. The Board shall initially consist of the following
five members: one previously elected holding a six year term expiring
December 31, 1965; one previously elected holding a six year term expiring
December 31, 1967; one holding a six year term expiring December 31,
1969, elected at the November 1963 election; one appointed by the City
Council from January 1, 1964 to December 31, 1965, and one appointed by
the City Council from January 1, 1964 to December 31, 1967.\] Members of
the Board of Water Works of Pueblo, Colorado shall be elected at large
for six year terms. As the term of each member expires, a member to fill a
new term of six years shall be elected, said terms to commence the first day
of January next after their election. \[The Board of Water Works shall have
and exercise all powers which are granted to cities of the first class by the
Constitution and Laws of the State of Colorado.\] E\[e\]xcept for the power to
levy and collect taxes directly or indirectly, the Board of Water Works of
Pueblo, Colorado will have and exercise all the powers of the City
including those granted by the Constitution and by the laws of the
State of Colorado, now or in the future, in regard to purchasing,
condemning, acquiring, constructing, leasing, extending and adding
to, maintaining, conducting and operating the water and electric works
for all uses and purposes, and everything necessary, pertaining or
incidental thereto, including authority to dispose of real or personal
property not useful for or required in the water or electric works. The
Board of Water Works of Pueblo, Colorado shall have authority to
generate and dispose of energy for water works purposes or any other
purpose of the City and may sell energy to territories outside the City.
Surplus water may be supplied to territories outside the City until same is
needed by the inhabitants of the City. \[It\] The Board of Water Works of
Pueblo, Colorado, in its name, shall have power to make and execute
contracts, \[in the name of the City\] take and give instruments of
conveyance, and do all other things necessary or incidental to the
powers herein granted and in so doing may make such special
designation in such documents as will indicate that the Board of Water
Works of Pueblo, Colorado is acting as an enterprise and
instrumentality of the City pursuant to the Charter. The Board of Water
Works of Pueblo, Colorado shall institute and defend all litigation affecting
its powers and duties, \[or in relation to the water works system, and as to
all other property under its management\] the water and electric works,
and any of its property and rights. In any matter affecting the powers,
duties, properties, operations or trusts of the Board of Water Works of
Pueblo, Colorado, process shall be served on the Board of Water
Works of Pueblo, Colorado. The Executive Director of the Board of
Water Works of Pueblo, Colorado is hereby designated as the officer
upon whom process may be served in any matter in which the Board
of Water Works of Pueblo, Colorado has the sole authority to act for
the City. The enumeration of particular powers in this Charter is not
exclusive of others. The members of the Board shall continue to receive
their present salaries until changed by ordinance of the Council. This
amendment shall become effective \[January 1, 1964\] when adopted by
the eligible electors of the City of Pueblo.
Section 15-5. Election - The nomination and election of the
\[Commissioners and Trustees and\] members of the Board of Water Works
of Pueblo, Colorado shall be conducted in the same manner as is herein
provided for the nomination and election of members of the Council.
Section 15-6. Contracts - No contract shall be entered into, and no
purchase shall be made by the \[Trustees or Commissioners of the existing
water districts, or by the\] Board of Water Works of Pueblo, Colorado
\[involving the expenditure of a sum in excess of One Thousand Dollars
($1,000.00)\] except for personal, professional or technical services not
lending themselves to competitive bidding, until after the publication of a
proposal for bids \[for the materials and services covered by such contracts
or purchase shall have been advertised by one publication in a daily
newspaper of general circulation in Pueblo, at least ten days prior to the
making of such contract or purchase\] in accord with a procurement
policy which the Board of Water Works of Pueblo, Colorado may
prescribe by resolution.
Section 15-7. Enterprise - The Board of Water Works of Pueblo,
Colorado shall deliver electric power and water services as an
enterprise, as that term is defined by Colorado law. The Board of Water
Works of Pueblo, Colorado shall be operated and maintained as an
enterprise so as to exclude its activities from the application of Article
X, Section 20 of the Colorado Constitution. The Board of Water Works
of Pueblo, Colorado may adopt, by resolution, rules governing its
organization, the calling of special meetings and the conduct of its
business. A majority of the members of the Board of Water Works of
Pueblo, Colorado will constitute a quorum.
Section 15-8. Revenue Bonds - In accordance with and through
the provisions of this section and in exercising its powers pursuant to
Article 15 of this Charter, the Board of Water Works of Pueblo,
Colorado is authorized to issue bonds or other obligations payable
solely from the revenues derived or to be derived from the functions,
services, benefits or facilities of such enterprise or from any other
available funds of such enterprise. Such bonds or other obligations
shall be authorized by resolution, adopted by the Board of Water
Works of Pueblo, Colorado. Such bonds or other obligations may be
issued without voter approval, provided that, during the fiscal year of
the Board of Water Works of Pueblo, Colorado preceding the year in
which the bonds or other obligations are authorized, the Board
received under ten percent (10%) of its annual revenue in grants from
all Colorado state and local governments combined or, during the
current fiscal year of the Board of Water Works of Pueblo, Colorado, it
is reasonably anticipated that the Board will receive under ten percent
(10%) of its revenue in grants from all Colorado state and local
governments combined. The terms, conditions, and details of said
bonds, notes or other obligations, and the procedures related thereto
shall be set forth in the resolution of the Board authorizing said bonds
or other obligations. Each bond, note or other obligation issued under
this section shall recite in substance that said bond, note or other
obligation, including the interest thereon, is payable from the revenues
and other available funds of the Board of Water Works of Pueblo,
Colorado pledged for the payment thereof. Notwithstanding any other
provision of law to the contrary, such bonds, notes or other
obligations may be issued to mature at such times as are authorized
by the authorizing resolution, shall bear interest at such rates, and
shall be sold at or above the principal amount thereof, all as shall be
determined by the Board of Water Works of Pueblo, Colorado.
Notwithstanding anything in this section to the contrary, in the case of
short-term notes or other obligations maturing not later than one year
after the date of issuance thereof, the Board of Water Works of Pueblo,
Colorado may authorize its officials to fix principal amounts, maturity
dates, interest rates, and purchase prices of any particular issue of
such short-term notes or obligations, subject to such limitations as to
maximum term, maximum principal amount outstanding, and
maximum net effective interest rates as the Board of Water Works of
Pueblo, Colorado prescribes. Refunding bonds of the Board of Water
Works of Pueblo, Colorado shall be issued as provided in Part 1 of
Article 56 of Title 11, C.R.S. as currently enacted or as subsequently
amended. The powers provided in this section to issue bonds, or other
obligations are in addition and supplemental to, and not in substitution
for, the powers conferred by any other law, and the powers provided
in this section shall not modify, limit, or affect the powers conferred
by any other law either directly or indirectly. Bonds, notes, or other
obligations may be issued pursuant to this section without regard to
the provisions of any other law. Insofar as the provisions of this
section are inconsistent with the provisions of any other law, the
provisions of this section shall control with regard to any bonds
lawfully issued pursuant to this section. Any pledge of revenue or
other funds of the Board of Water Works of Pueblo, Colorado shall be
subject to any limitation on future pledges thereof contained in any
resolution of the Board.
SECTION 2.
If any section, provision, paragraph, clause or phrase of this Ordinance
is held or decided to be unconstitutional, invalid or unenforceable for any
reason, such decision shall not affect the constitutionality, validity or
enforceability of the remaining portions of this Ordinance.
SECTION 3.
All other ordinances or portions thereof inconsistent or conflicting with
this Ordinance or any portion hereof are hereby repealed to the extent of such
inconsistency or conflict.
SECTION 4.
The People of the City of Pueblo find that this Ordinance is necessary for
the immediate preservation of the public health, safety and welfare.
SECTION 5.
This Ordinance shall become effective immediately after approval of
same by the eligible electors of the City of Pueblo.
End of Ordinance No. 9654
SECTION 3.
The officers and staff of the City are authorized and directed to perform any and
all acts consistent with this Ordinance to implement the policies and procedures described
herein.
SECTION 4.
This Ordinance shall become effective on the date of final action by the Mayor and
City Council.
Action by City Council:
Introduced and initial adoption of Ordinance by City Council on January 27, 2020.
Final adoption of Ordinance by City Council on February 10, 2020.
President of City Council
Action by the Mayor:
☒ Approved on February 12, 2020 .
☐ Disapproved on based on the following objections:
Mayor
Action by City Council After Disapproval by the Mayor:
☐ Council did not act to override the Mayor's veto.
☐ Ordinance re-adopted on a vote of , on
☐ Council action on __________________failed to override the Mayor’s veto.
President of City Council
ATTEST
City Clerk