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HomeMy WebLinkAbout15.B.1. Levee Drive Parking Lot Power Line Undergrounding 15:f3.l CITY OF SHAKOPEE MEMORANDUM To: Mayor and City Council Mark McNeill, City Administrator From: Mark Themig, Parks, Recreation and Facilities Director Meeting Date: August 3,2005 Subject: Levee Drive Parking Lot Power Line Undergrounding INTRODUCTION City Council is asked to consider ordering the undergrounding of power lines for the Levee Drive parking lot. BACKGROUND AND DISCUSSION At the July 19 joint meeting with the Shakopee Public Utilities Commission, there was discussion between City Council and the Commission on relocating or underground the power lines in the area of the Levee Drive parking lot. There seemed to be consensus between the Council and the Commission that undergrounding was the right option, but disagreement on who should pay for the undergrounding. The undergrounding would run from the west side of MNDOT Bridge No. 4175 east to where the current lines daylight on the west side CSAH 101. The revised estimate for this work is $80,000, according to Public Utilities staff. . Based on the opinion of the City Attorney, the city has the right to order undergrounding, and it is the responsibility of the utility to determine how to pay for the undergrounding (attached). In order to move this issue forward, City Council is asked to order the undergrounding. If you wish to discuss cost sharing, you may want to consider what amount and include that in the motion. However, we do not have funds identified in any current project for this work. REQUESTED ACTION City Council is asked to order the undergrounding of power lines located in the vicinity of 129 Levee Drive from the west side of MNDOT Bridge No. 4175 in order to accommodate the construction of the Levee Drive parking lot and trail head amenities. \ \ \ \ \ \ \ \ \ \ I \ \ \ \ \ \ \ \ \ : \ \ \ I \ \ _~._.__._.-\ .-.-.\ I \ \ ./' \ \ : \ \ ./' ./' ~;;:\ \ . . ----\- -I. _ . ~ . ",,,me 0' / ,. \ \ I \ 41 SPACES ! \ I \ ~.' I \ \ \ \ UI'lOEPoGROUO fO'NE~hfG 0 C...."""'" ~r..... \ _------ _/.\ He ~\~ \ \(":.:_:~ HC "-....~=:::.-" '''''~. \ \ \ \ I ,,,,,,,,,,,, ,,,,.. D"''''' \ I \ \ I \ __~ I I ~,_g='::" I / /1 ,,~ ---'---// I "' ---------- --- - _----- I LEVEE PARKING. - - - I __SCALE: 1:30 LOT: 41 STALLS I I I I I ::L I James M. Strommen 470 US Bank Plaza 200 South Sixth Street Minneapolis MN 55402 & (612) 337-9233 telephone (612) 337-9310 fax jstrommen@kennedy-graven.com CHARTERED MEMORANDUM TO: Mark McNeill, City Administrator FROM: Jim Thomson, City Attorney DATE: July 15, 2005 RE: Huber Park Project/Undergrounding of SPUC Electrical Facilities I am attaching a memorandum from Jim Strommen to me addressing the City's authority with respect to requiring the electrical facilities in Huber Park to be relocated underground as part of the Huber Park Improvement Project. I asked Jim to prepare this memorandum to respond to the issues raised in attorney Andrew Shea's letter dated June 14,2005 to the Shakopee Public Utilities Commission. Jim has concluded that the City has the authority to require the undergrounding of the electrical facilities in Huber Park. I concur with that conclusion. In reaching that conclusion, I want to point out that SPUC has numerous powers and much authority with respect to the operation of the water and electric utilities in the City. Those powers are enumerated in the attached memo, and the City cannot interfere with those powers. Nevertheless, the City has not delegated to SPUC the City's right to regulate and control public grounds, including City-owned park property. That right is an inherent police power right of the City, and it gives the City the authority in this case to require the facilities to be relocated underground. I would be happy to answer any further questions that the City Council or SPUC has with respect to this matter. cc: Lou Van Hout Andrew Shea Mark Themig JIT-265548vl SH155-23 James M. Strommen 470 US Bank Plaza 200 South Sixth Street Minneapolis MN 55402 & (612) 337-9233 telephone (612) 337-9310 fax jstrommen@kennedy-graven.com CHARTERED MEMORANDUM TO: James J. Thomson FROM: James M. Strommen DATE: July 14, 2005 RE: Response to SPUC Position on Undergrounding and Non Right-of-Way Public Ground INTRODUCTION This memorandum is prepared in response to a June 14, 2005 letter from attorney Andrew Shea to the Shakopee Public Utilities Commission commenting on my May 24, 2005 summary regarding the law governing utility undergrounding and relocation in non right-of-way public ground, such as parkland. In his letter, Mr. Shea concludes that by requiring SPUC's electrical distribution facilities in Huber Park to be relocated underground as part of the Huber Park Improvement Project, the City might be improperly exercising "both operational and financial control over [SPUC]" in violation of Minnesota Statutes, Section 412.361. Mr. Shea concludes that the City's ordinance requiring the undergrounding of electric lines in non right-of- way situations might be in conflict with the authority granted to SPUC in Minnesota Statutes, Sections 412.321 et seq. Before addressing my reasoning more fully on the issues raised in Mr. Shea's letter, I think that it is important to highlight issues that are well-settled in Minnesota law: 1. With respect to electrical distribution lines in public rie:hts-of-wav, the City has the JMS-264692v4 1 SH155-157 authority to require investor-owned utilities (Xcel Energy), electric cooperatives (Minnesota Valley Electric Cooperative) and municipal utilities (SPUC) to relocate and underground those facilities at their expense if the City Council requires it in connection with a public improvement project or any other legitimate police power action. 2. With respect to electric distribution lines located in non rie:ht-of-wav, City-owned property (such as Huber Park), the City has the authority to require investor-owned utilities (Xce1 Energy) and electric cooperatives (Minnesota Valley Electric Cooperative) to relocate and underground those facilities at their expense if the City Council requires it in connection with a public improvement project or any other legitimate police power action. The only issue raised in Mr. Shea's letter is whether, with respect to non ri2:ht-of-wav, City-owned property, the City can require a municipal utility (SPUC) to relocate and underground electric distribution facilities at its expense if the City Council requires it in connection with a public improvement project. For the reasons set forth below, I disagree with Mr. Shea's conclusion on that issue. DISCUSSION A. Facts SPUC owns and operates overhead electric distribution facilities in Huber Park. There is no permit, easement, agreement, or City Council resolution setting forth any terms and conditions relating to the location of those facilities. SPUC was created pursuant to Minn. Stat. ~ 412.321, et seq., and various special legislative laws. Beyond those laws, the City has not made any extraordinary delegation to SPUC regarding property rights or police power. Even if such extraordinary delegation of authority had been made, it would probably be regarded as an improper delegation of the City's police powers. See Western States Utilities. Co. v. City ofWaseca. 65 N.W. 2d 255,264 (Minn. 1954). JMS-264692v4 SHl55-157 2 B. Question Raised The City has police power and franchise authority over investor-owned utilities such as Xce1 and cooperative utilities such as Minnesota Valley Electric Cooperative, not only over the right-of-way ("ROW"), but also over non-ROW property. The law clearly supports a required relocation at utility cost unless specific franchise terms altered that. See Minn. Stat. ~ 237.163, subd. 2 (grant of ROW use to telecommunication ROW users subject to municipal ROW management); ~ 300.03 (utility must gain franchise consent to serve within a city and occupy ROW or "other public ground of a city."); ~ 300.04 (corporation obtaining a franchise from a city is subject to conditions and 'restrictions imposed upon it by the city); ~ 216B.36 (public utilities occupying ROW or "other public property within a municipality" are subject to the regulatory acts including placing distribution lines and facilities underground). See also City Code Section 7.17 et seq. There can be no dispute that the City's police power authority empowers it to require either Xcel or Minnesota Valley Electric Cooperative to move facilities in ROW or non-ROW property at their own expense. This right of the City is a fundamental, non-delegable police power right to require the relocation of overhead distribution facilities in such property, which would include a city-owned park. The Minnesota Supreme Court in Village of Blaine v. Ind. School Dist. No. 12, 121 NW2d 183, 190-91 (Minn. 1963) stated: Franchises are given to utilities in order to provide essential public services. These must be subject to reasonable provisions for the protection of the consumer and the public ... The furnishing of light, heat, power, and gas also is properly within the scope of the police power and therefore subject to control and regulation by a municipality. (emphasis added). The Minnesota Supreme Court reiterated the above principle in a second appeal in the Village ofBlaineNillage of Circle Pines municipal gas utility dispute: No one disputes that the police power, to whatever extent it has been vested by JMS-264692v4 SH155-157 3 the Legislature in municipalities such as cities and villages, has application to the furnishing of water, heat, light, power, gas, and other essential public services. Utilities furnishing such services must be subject to reasonable regulations in order to properly protect the consumer and the public. Village of Blaine v. Ind. School Dist. No. 12, 138 NW2d 32, 3 (Minn. 1963). In both Village of Blaine decisions, the Minnesota Supreme Court affirmed that the regulatory authority by a city, even over another city's municipal utility, is clear under Section 412.321, subd. 3, which requires the consent by the city for any municipal utility to occupy public land within the city. See Village of Blaine, 121 N.W.2d at 188-190 and Village of Blaine II, 138 N.W.2d at 45. The Minnesota Court of Appeals in NSP v. City of Oakdale, 588 NW2d 534 (Minn. Ct. App. 1999) recently re-articulated the principles established in the Village of Blaine decisions and confirms that the police power allows a municipality to impose a relocation requirement without reimbursement for the costs of the action. In that decision, the Court of Appeals reaffirmed that a city has the right to require an electric distribution line to be placed underground in a ROW context through both franchise and police powers granted by Section 216B.36, which includes such city rights over ROWand non-ROW use by a utility. Relying upon a city's public safety and general welfare interests in regulating overhead electric lines and the "significant hazard to the public" created by them, the Court of Appeals again concluded that the city's police power authority exists in the utility facility context. Id at 542. Such a fundamental power rests solely with the city and cannot be delegated to or bifurcated between other entities. The question raised in this matter, then, is whether the City has delegated its authority to its municipal utility to regulate City-owned property simply because electric distribution facilities owned by its municipal utility are located on that property. In other words, has the City JMS-264692v4 SH155-157 4 delegated its police power to exercise control over its property to the municipal utility that the City created? c. Lesdslative Intent and Municipal Utilities A statutory city's right to "own and operate" a public utility was established by the Legislature in 1949 in Sections 412.321 through 412.391. The city may operate the utility itself or delegate its powers by establishing a public utilities commission. See Minn. Stat. ~ 412.421, subd. 1. If a city chooses to establish a commission, the statutes enable the commission to exercise many powers. For example, the commission has the power "to extend and to modify or rebuild any public utility and to do anything it deems necessary for its proper and efficient operation." Minn. Stat. ~ 412.361, subd. 1. The commission also has the power to: (1) employ personnel and fix their compensation; (2) buy fuel and supplies; (3) fix rates and adopt service rules; and (4) to enter into agreements with the council for payments by the city for compensation for the use of buildings, equipment, and personnel under the control of the other. Minn. Stat. ~ 412.361, subd. 2, 3, 4 and 5. In 1974 the Legislature established the Public Utilities Commission for the purpose of regulating rates and service of investor-owned electric and gas utilities. Section 216B.01 provides in the Legislative Findings that: It is hereby declared to be in the public interest that public utilities be regulated as hereinafter provided ... Because municipal utilities are presently effectively regulated by the residents of the municipalities which own and operate them, ... it is deemed unnecessary to subject such utilities to regulation under this chapter except as specifically provided herein. Section 216B.02, subd. 2b. defines a municipality as "any city however organized." Section 216B does not separately define a "municipal utility." Section 216B.025 provides that "a municipality may elect to become subject to regulation by the [Public Utilities Commission] pursuant to Sections 216B.10 and 216B.11." As noted in Mr. Shea's letter, Section 216B.36 JMS-264692v4 SH155-157 5 does not include a "municipal utility" in the definition of a "public utility." The obvious reason for this is that the Legislature concluded that a municipality already had sufficient power over its own public utility, so the Legislature did not need to grant franchising, permitting, and undergrounding authority to a municipal utility. 1 Indeed, as recently as 1999, the Legislature did not distinguish between municipalities and their utilities in providing that all right-of-way users are afforded the same rights to use the ROW as telecommunication right-of-way users, "including local government units." Minn. Stat. ~ 237.163, subd. 6(c); see also, Minn. Stat. ~ 237.162 subd. 4 referencing "municipality" when defining other utilities. The fundamental question underlying this issue is whether the Legislature deemed it appropriate for any reason to divest a municipality of its police power authority to regulate the location of utilities within non-ROW property of a city by virtue of the establishment of a municipal utilities commission. The applicable statutes give no indication of such a legislative intent. As stated above and affirmed in the Village of Blaine opinions, only cities are vested with the responsibility and power to carry out the decisions regarding the general interest of the health, safety, and welfare of the city's inhabitants. A municipal utility is not vested with such authority, even if it is being operated by a separate commission. Nothing in the provisions governing the creation of a utilities commission even hints at the broader obligation to carry out police power duties such as street and park maintenance and safety provisions. The municipal utility is established for the purpose of serving the public with water, light, heat, or power that would otherwise be provided by an investor-owned or cooperative utility. It is the City that must decide the location, or even the presence of, electric facilities in a park. See, ~, City of 1 Interestingly, Section 216B.38 establishing assigned service areas for electric utilities does include a "utility owned by a municipality" in the utilities receiving assigned service territories. It is fair to say, however, that such a definition was necessary to allow Section 216B.39, subd. 5, to make sense regarding assigned service territories within a municipality. JMS-264692v4 SH155-157 6 Oakdale, 588 NW 2d at 542, Village of Blaine, 138 NW2d at 39-41. If cities are granted police power authority over the placement of facilities to investor-owned utilities, the Legislature has expressed no reason why a municipal utility should be subject to any less control? In his letter, Mr. Shea cites the language in Section 412.361, subds. 1 and 4, regarding operational and financial control over the operation of the utilities, including the adoption of reasonable rules and regulations. He contends that the City, by exercising facilities placement and relocation control over the municipal utility, is interfering with the operational and financial control vested in the commission. That argument has been soundly rejected in the context of a municipality's police power authority over investor-o~ed and cooperative utilities. For example, the grant of authority to use the ROW in the 1999 utilities legislation of Minn. Stat. ~ 237.162 et seq. states that ROW users are allowed the right to "construct, maintain, and operate conduit, cable, and switches" subject to the regulation of municipalities to do, among other things, "establish and define location and relocation requirements for equipment and facilities." Section 237.163, subd. 2(a) and Section 237.162, subd. 8(4). City of Oakdale, 588 NW2d at 542-543 (rejecting NSP's argument that the City's undergrounding ordinance was an uncompensated taking ). The PUC regulates the rates and services of investor-owned utilities and those cooperatives that choose to be regulated under Chapter 216B. As demonstrated above, Cities are given the right to regulate the location of facilities located on public ground within the city. Minn. Stat ~ 216B.36. Those regulatory decisions profoundly affect the business decisions that all utilities make, but they are not an illegal infringement on their right to operate. There are additional reasons why the City has authority over SPUC's placement of 2 Because the Legislature granted the same rights to all ROW users (e.g., SPUC) in Section 237.163, subd. 6(c), the effect of Sections 237.163, subd. 2 and 237.162, subd. 8(4) is logically to compel the City to exercise the same rights over SPUC as it does over Xcel and Minnesota Valley Electric Cooperation in ROW. There is no indication in law or statutes that the Legislature would somehow prohibit such rights involving public ground. JMS-264692v4 SH155-157 7 facilities in parks and other non-ROW. Statutory cities have the express right to enact ordinances regulating "the use of streets and other public grounds, to prevent encumbrances or obstructions." Minn. Stat. ~ 412.221, subd. 6. This statutory grant of power does not distinguish between utilities and non-utilities or municipal utilities and investor-owned/cooperative utilities. D. Utility Relocation Cost If, as I have concluded, the right exists under the police power to require utility relocation on public ground, the relocation is at the utility's expense, absent an agreement to the contrary. The law is well-settled under the City of Oakdale holding that a police power right to require utility relocation is an act for the general good and does not carry with it a requirement. that the city reimburse the utility for the relocating expenses. In the City of Oakdale case, the court held that Xcel must underground at its own expense, thereby striking down a NSP tariff challenged by the City. In doing so, the Court stated: Similarly, tariff section 5.3A is unenforceable to the extent that it would require compensation for the city's valid exercise of its authority to regulate utility undergrounding under the statute. This comports with the long-held view that the city may regulate a utility without compensation in valid exercise of its police power (citations omitted). The Minnesota Supreme Court has also recognized that legitimate exercise of police power may prohibit the injurious use of property without compensation. (citation omitted). NSP v. City of Oak dale, 588 NW2d 534,542-543. The City of Oakdale decision does not, however, give the City the right to determine the manner in which those costs are to be recovered from the utility customers. SPUC is free to determine how its cost of relocation will be recovered. CONCLUSION Express statutory provisions, fundamental city police power authority and the logic of the relationship between the City, its own utility, or any utility, compel the conclusion that the City can require its municipal utility to underground the electric facilities in Huber Park. Although JMS-264692v4 SH155-157 8 Mr. Shea correctly points out that several statutory sections and some cases deal only with ROW, and not non-ROW public ground, numerous other statutes and court decisions establish the clear right of the City over its own utility in non-ROW situations. That right that is at least as strong as the rights of the City to require relocation of facilities owned by investor-owned or cooperative utilities. In my opinion, the City's police power rights in this situation are well- supported in the law. JMS-264692v4 SH155-157 9