Opinion ID: 3207078
Heading Depth: 2
Heading Rank: 1

Heading: The Ordinances and Statutes

Text: We first set forth the pertinent portions of the City’s code. As an initial matter, it contains definitions of both the terms “franchise” and “license.” It defines “franchise” as “[a]n ordinance or agreement between the city and a franchisee which grants a privilege to use public rights-of-way within the city for a dedicated purpose and for specific compensation.” GRC 6.30.030. It defines “license” as “[a]n ordinance or other document which grants, on a non-exclusive basis, permission to the licensee to use public rights-of-way within the city for a specified and dedicated purpose.” Id. GRC 6.30.070 provides: “(1) License. A license shall be required of any utility that occupies public rights-of-way whether such use is by placing utility facilities in the public rights-of-way, by using utility facilities owned or operated by other utilities, or by attaching or locating utility facilities to, on, upon, or within the utility facilities of another.    No person shall operate a utility    that occupies a public right-of-way without a license. “     “(6) Rights granted. No license granted pursuant to this ordinance shall convey any right, title or interest in the public rights-of-way, but shall be deemed a grant to use and occupy the public rights-of-way for limited purposes and term, and upon the conditions stated in the license. The person granted the license shall have no property interest or other right in the license except as provided by this ordinance. A license granted pursuant to this ordinance is not a contract. “     “(9) Additional Terms and Conditions. The manager and applicant may negotiate additional terms and conditions to clarify, enhance, expand or waive the provisions of this ordinance. The additional terms and conditions may conflict with the terms of GRC Articles 6.30 and 6.35 with Cite as 359 Or 309 (2016) 317 the review and approval of council. Such agreement shall be in writing and signed by both the city and applicant.” [3] GRC 6.30.110 provides: “(1) License Fee. “(a) Each license granted pursuant to this article shall be subject to the condition that the licensee pays a license fee in an amount or by a method or methods established from time to time by council resolution which may include payment of a minimum license fee. The city may elect in the resolution establishing the license fee to dedicate all or a portion of the license fee to specific funds, projects or programs of the city. “     “(6) Privilege Tax. “(a) Any utility that operates without a license for a period of 30 days or more within the city and uses public rights-of-way in the city for other than travel, shall pay a privilege tax in the amount set by council resolution for the use of those public rights-of-way.” Resolution 3056, adopted by the City in May 2011, increased the license fee authorized by GRC 6.30110(1)(a) from five to seven percent. That resolution indicated that the fees would primarily be used to fund “core city-wide services such as Police, Fire and Parks,” and that a smaller portion would be used for streetlights. Thus, the Gresham ordinances contemplate that any utility that uses its rights-of-way will obtain a license to do so, that the city will establish the amount of the license fees by resolution, and that utilities that operate without a license in the city’s rights-of-way will pay a privilege tax in an amount set by resolution. Pursuant to those enactments, the city established a license fee of seven percent. The utilities argue that license fees in excess of five percent are prohibited by state statute, and that, to 3 It does not appear that the PGE or Rockwood PUD licenses at issue in this case contained any additional terms pursuant to this provision. The Northwest Natural license stated some additional terms made pursuant to this provision but those provisions did not pertain to license fees. 318 Northwest Natural Gas Co. v. City of Gresham the extent that the City’s fee exceeds five percent, it is preempted by statute. The current versions of the pertinent statutes are as follows. As an initial matter, ORS 221.410(1) provides that, “[e]xcept as limited by express provision or necessary implication of general law, a city may take all action necessary or convenient for the government of its local affairs.” In addition, ORS 221.415 provides: “Recognizing the independent basis of legislative authority granted to cities in this state by municipal charters, the Legislative Assembly intends by ORS 221.415, 221.420, 221.450 and 261.305 [concerning general powers of people’s utility districts] to reaffirm the authority of cities to regulate use of municipally owned rights of way and to impose charges upon publicly owned suppliers of electrical energy, as well as privately owned suppliers for the use of such rights of way.” ORS 221.420(2) indicates that a city “may” “(a) Determine by contract or prescribe by ordinance or otherwise, the terms and conditions, including payment of charges and fees, upon which any public utility    [or] people’s utility district    may be permitted to occupy the streets, highways or other public property within such city and exclude or eject any public utility or heating company therefrom. “     “(d) Provide for a penalty for noncompliance with the provisions of any charter provision, ordinance or resolution adopted by the city in furtherance of the powers specified in this subsection.” ORS 221.450 provides: “Except as provided in ORS 221.655 [concerning privilege taxes on distribution utilities], the city council or other governing body of every incorporated city may levy and collect a privilege tax from Oregon Community Power and from every electric cooperative, people’s utility district, privately owned public utility, telecommunications carrier as defined in ORS 133.721 or heating company. The privilege tax may be collected only if the entity is operating for a period of 30 days within the city without a franchise from the city and actually using the streets, alleys or highways, or all of them, in such city for other than travel on Cite as 359 Or 309 (2016) 319 such streets or highways. The privilege tax shall be for the use of those public streets, alleys or highways, or all of them, in such city in an amount not exceeding five percent of the gross revenues of the cooperative, utility, district or company currently earned within the boundary of the city. However, the gross revenues earned in interstate commerce or on the business of the United States Government shall be exempt from the provisions of this section. The privilege tax authorized in this section shall be for each year, or part of each year, such utility, cooperative, district or company, or Oregon Community Power, operates without a franchise.” The utilities do not argue that ORS 221.450 fully preempts the City’s licensing provisions. That position is consistent with our determination in Rogue Valley Sewer Services, 357 Or at 455, that “ORS 221.420 and ORS 221.450 do not create a statutory scheme that prevents the state law and local ordinance from operating concurrently.” The utilities argue that, for the most part, the ordinances are consistent with the statute—that both can operate concurrently— but that the resolution increasing the license fee under ORS 6.30.110 from five to seven percent is preempted because the license fee is a type of “privilege tax” and the City is limited to charging a “privilege tax” in “an amount not exceeding five percent of the gross revenues of the cooperative, utility, district or company currently earned within the boundary of the city.” ORS 221.450.