AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: GABINO LUNA
ACTING PUBLIC WORKS DIRECTOR
SUBJECT: RESOLUTION OF INTENT TO GRANT A PIPELINE FRANCHISE TO ZENITH ENERGY WEST COAST TERMINALS, LLC.
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summary
Summary:
Zenith Energy West Coast Terminals LLC (Zenith) is requesting to renew a pipeline franchise to operate its pipeline facilities within the City’s right-of-way. The City Council will consider the request from Zenith to renew the pipeline franchise. If approved, the City Council would adopt the proposed resolution and set a public hearing for May 12, 2026.
Strategic Plan Goal(s):
Goal No. 1: Financial Stability: Ensure the City’s long-term financial stability and resilience.
Goal No. 2: Community Safety: Maintain community safety by supporting public safety services and increasing emergency preparedness.
recommendation
Recommendation:
1. Waive further reading and adopt the following resolution, entitled:
A RESOLUTION OF INTENT OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, DECLARING ITS INTENTION TO GRANT A FRANCHISE TO ZENITH ENERGY WEST COAST TERMINALS, LLC AND THE INTERESTS, RIGHTS, PRIVILEGES, AND DUTIES TO LAY AND USE PIPES AND APPURTENANCES FOR TRANSMITTING AND DISTRIBUTING OIL AND PETROLEUM PRODUCTS FOR ANY AND ALL LAWFUL PURPOSES UNDER AND ALONG THE PUBLIC STREETS, WAYS, ALLEYS, AND PLACES, AS THE SAME NOW OR MAY HEREAFTER EXIST, WITHIN THIS CITY.
2. Set a public hearing for May 12, 2026.
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Fiscal Impact:
There is minimal fiscal impact associated with the recommended action. Renewal of the existing franchise would authorize the continued collection of annual franchise fees. For the 2025 calendar year, the City received $3,644.94 in franchise fees from Zenith under Ordinance No. 2004-02-1326 (Attachment A). The franchise fee is calculated based on the total amount and size of the pipeline. The City updates the franchise fee annually based on inflation, and the Finance Department utilizes current fees evaluated against change in the Consumer Price Index (CPI) to prepare annual invoices (current fees are shown in Table A below). In addition, Zenith submitted a payment deposit of $5,000 to the City for staff and media publication costs associated with processing the pipeline franchise.
Background:
Franchise agreements are legal agreements wherein a local jurisdiction provides a utility with a right to serve customers within its boundaries. A common type of franchise agreement is one between a city and a telecommunications provider for internet and cable service. Franchise agreements include the length of the service period, providing certain rights to the franchise holder to install infrastructure, and establish fees paid to the local municipality in exchange for franchise rights. Franchise agreements also establish expectations between the local municipality and the franchisee that regulate its operations, including ongoing and emergency maintenance. Signal Hill has pipelines underground that transfer crude oil to different destinations, and these pipelines are maintained and operated by companies that specialize in transmission services.
Analysis:
In 2004, the City Council adopted Ordinance No. 2004-02-1326, granting a franchise to Pacific Terminals LLC (Pacific) to operate pipelines in the City’s right-of-way. In 2009, Plains All American Pipeline, LP (PAAP) acquired Pacific and its pipeline system in Southern California and renamed Pacific to Plains West Coast Terminals, LLC (PWCT). In 2019, the City engaged in a franchise renewal process with PWCT, but due to staff changes on both ends, the renewal was not completed. In 2020, Zenith Energy US, LP then acquired PWCT and its pipeline system from PAAP and renamed PWCT to Zenith Energy West Coast Terminals, LLC. Zenith pipeline system consists of one active 16” pipeline that runs the length of 33rd street within the City’s boundaries. In 2025, Zenith connected with the City about renewing the now expired franchise originally owned by Pacific.
Next Steps:
Given that the previous franchise term expired, and Zenith has continued to make annual franchise fee payments as required by Section 4(b) of Ordinance No. 2004-02-1326, staff recommends the City Council adopt the resolution stating the City’s intent to grant a franchise to Zenith (Attachment B). If adopted, the resolution would set a public hearing for May 12, 2026. The public hearing would allow the City Council to receive public comment on the proposed granting of the pipeline franchise to Zenith.
Reviewed for Fiscal Impact:
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Siamlu Cox
Attachment(s):
A. Pacific Franchise Ordinance No. 2004-02-1326
B. Zenith Resolution of Intent