HomeMy WebLinkAboutItem 03 Approval of Settlement Agreement with Duke Energy ocoee
florida
AGENDA ITEM COVER SHEET
Meeting Date: March 17, 2020
Item # 3
Reviewed By:
Contact Name: Rob Frank Department Director: "p(...
Contact Number: 407-905-3100 City Manager:
Subject: Approval of Settlement Agreement with Duke Energy
Background Summary:
Pursuant to City Ordinance 91-18, on July 16, 1991, the City of Ocoee granted an exclusive 30- year
franchise to Duke Energy's predecessor, Florida Power Corporation. Since that time, Florida Power
and now Duke Energy collect and remit to the City of Ocoee franchise fees each month. Ordinance
91-18 is applicable to all properties lying within the City's municipal boundaries.
On July 21, 2009, the City of Ocoee approved an ordinance calling for a referendum for the
annexation of Rose Hill Subdivision Phases 2 and 3 (Rose Hill) into the City's municipal boundaries.
Following the successful annexation by referendum of Rose Hill, all utility companies were notified that
the property is now wholly located within the City. While Duke Energy customers in properties located
in Rose Hill continued to pay franchise fees and/or utility taxes on their bill each month, unbeknownst
to City staff, Duke Energy did not change its records for its Rose Hill customers and the municipal
taxes collected from those residents were erroneously remitted Orange County.
In April 2019, a City resident living in Rose Hill received a letter from Duke Energy notifying the
customer that, after a review of Duke Energy records, the utility determined that the customer's
property is in the City limits. Because the City annexed Rose Hill nearly 10 years ago, the resident
was confused as to why Duke Energy is now notifying residents of its intent to collect taxes and fees
on behalf of the City of Ocoee. The resident provided the letter to City staff.
Upon receipt of the letter, City staff followed up with Duke Energy. Following correspondence on the
matter, Duke Energy confirmed that they had received notice of the annexation in 2009; however, due
to an error in the Duke Energy records, the taxes were paid to Orange County until the City's inquiry in
2019. The inquiry by the City was treated as an audit and Duke Energy has responded with a
proposed settlement agreement with the City of Ocoee.
Per the terms of the settlement agreement, Duke Energy will pay the City $276,470.86, which consists
of $151,541.90 for franchise fees for addresses in Rose Hill from June 2014 through May 2019 and
$124,928.96 for municipal utility taxes for addresses in Rose Hill from June 2016 to May 2019. A
statute of limitations applies to payment of taxes and fees and this is the reason that the repayment
amount is limited in time and does not go back to 2009.
Issue:
Should the honorable Mayor and City Commissioners approve a settlement agreement with Duke
Energy resolving issues with unpaid municipal utility taxes and franchise fees for the properties
located in Rose Hill subdivision?
Recommendations:
Staff recommends the Honorable Mayor and City Commissioners approve a settlement agreement
with Duke Energy resolving issues with unpaid municipal utility taxes and franchise fees for the
properties located in Rose Hill subdivision and authorize the Mayor and City Clerk to execute the
agreement.
Attachments:
Settlement Agreement with Duke Energy.
Financial Impact:
Duke Energy will pay the City $276,470.86 in franchise fees and municipal utility taxes within 30 days of
approval of the Settlement Agreement.
Type of Item: (please mark with an "x")
Public Hearing For Clerk's Dept Use:
Ordinance First Reading x Consent Agenda
Ordinance Second Reading Public Hearing
Resolution Regular Agenda
x Commission Approval
Discussion & Direction
Original Document/Contract Attached for Execution by City Clerk
Original Document/Contract Held by Department for Execution
Reviewed by City Attorney Dana Crosby-Collier N/A
Reviewed by Finance Dept. `- ,1p aukea, N/A
Reviewed by N/A
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CLOSING AGREEMENT
This is a Closing Agreement ("Agreement") between Duke Energy Florida, LLC ("Duke
Energy") and the City of Ocoee, Florida("City"), settling the amounts of Municipal Utility Taxes
("MUT") from January 1, 2009 through May 31, 2019 for addresses located within the City in
the Rose Hill Subdivision.
WHEREAS, in July 2019, the City made an inquiry of Duke Energy related to the
municipal utility taxes and franchise fees owed to the City for Duke Energy customers living in
the Rose Hill Subdivisions, Phases 2 and 3 since the City's annexation of the Rose Hill
Subdivision in 2009;
WHEREAS, Duke Energy and the City have had discussions regarding the amount of
municipal utility taxes and the amount of franchise fees that should have been collected and
remitted by Duke Energy to the City related to the Rose Hill Subdivision since the City's
annexation of the Rose Hill Subdivision in 2009,
WHEREAS, the parties desire to resolve this matter amicably.
NOW THEREFORE, for good and valuable consideration, receipt of which is
acknowledged, the parties agree as follows:
1. Duke Energy will pay the City $276,470.86 ("Settlement Amount"), consisting of
$151,541.90 for franchise fees for certain addresses in the Rose Hill Subdivision from June 2014
through May 2019 and $124,928.96 for MUT for certain addresses in the Rose Hill Subdivision
from June 2016 to May 2019, within 30 days following the effective date of this Agreement, and
the City will accept such payment in full satisfaction of all unpaid MUT and franchise fees that
may be due to the City for periods to and including January 1, 2009 through May 31, 2019,
related to the Rose Hill Subdivision. No portion of the assessment or Settlement Amount consists
of penalty. The City will issue no further assessment or other demand for payment for such
periods.
2. Duke Energy reserves the right to contest any assertion of liability not covered by
this Agreement or any liability asserted in violation of this Agreement. The City reserves the
right to assert that Duke Energy owes MUT or franchise fees for periods that are not covered by
this Agreement.
3. Either party to this Agreement shall be entitled to recover reasonable attorney's
fees and costs in any action required to enforce the terms of this Agreement.
4. The signatories below each represent to the other that they have authority to
execute this Agreement on behalf of their respective principals.
5. The effective date of this Agreement is the date the last signature is added below.
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6. This Agreement may be executed in counterparts, and any counterparts which
together contain the signatures of both parties shall be deemed an original of this Agreement.
True copies of the signatures of the parties shall be treated as equivalent to originals.
Duke Energy Florida, LLC
Title
Date
CITY OF OCOEE, a Florida municipal
corporation
By:
RUSTY JOHNSON
Mayor
Attest:
Melanie Sibbitt, City Clerk
FOR USE AND RELIANCE ONLY BY THE
CITY OF OCOEE, FLORIDA;
APPROVED AS TO FORM AND LEGALITY
this day of , 2020.
SHUFFIELD LOWMAN & WILSON,P.A.
By:
City Attorney
APPROVED BY THE OCOEE CITY COMMISSION
AT A MEETING HELD ON ,2020,
UNDER AGENDA ITEM NO. .
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