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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 08/19/2014 - FIRST READING OF ORDINANCE NO. 109, 2014, AUTHORIZAgenda Item 10 Item # 10 Page 1 AGENDA ITEM SUMMARY August 19, 2014 City Council STAFF Lindsay Kuntz, Real Estate Specialist Norm Weaver, Senior Energy Services Engineer SUBJECT First Reading of Ordinance No. 109, 2014, Authorizing the Mayor to Execute a Lease Agreement with Clean Energy Collective, LLC for the Use of City Property for a Community Solar Garden Project with an Associated Access Easement. EXECUTIVE SUMMARY The purpose of this item is to authorize the lease of City property located at 500 Riverside Avenue to Clean Energy Collective, LLC (through its subsidiary, CEC Solar #1038, LLC), to build and operate a community solar farm project, including an access easement to enter the property from the Wastewater plant entry road on Mulberry Street. The City has entered into a Power Purchase Agreement with Clean Energy Collective, LLC (CEC) to develop a community solar project in Fort Collins. The City property located at 500 Riverside Avenue was determined by staff and CEC to be a feasible site for the location of the project. To facilitate the development of the solar garden, CEC has requested a lease agreement for the use of the City’s property for a period of 25 years for the building and operation of the solar farm project. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION The Riverside Community Solar Garden (farm) Project is proposed to be located at the northeast corner of East Mulberry Street and Riverside Avenue, formerly the site of the Dreher pickle plant. The City’s property, which is currently owned by the Utilities and Parks Departments, was purchased in 1995 to meet the objectives of the City’s Poudre River Land Use Framework and provide a buffer around the Mulberry Water Reclamation Facility. The funds used to purchase the property were provided 50% from the City’s Conservation Trust Fund account and 50% from the Wastewater Utility. The intent of this project, proposed as part of the 2013-2014 BFO Offer: 110.3 - Community Renewables / Community Solar Garden, is to expand small-scale renewable options for the benefit of Fort Collins Utilities’ customers who do not have favorable sites for their own roof-top or ground mounted solar energy systems. Residential and small commercial electric utility customers may participate by purchasing panels in the project and receiving credits on their Fort Collins Utilities electric bill. The developer of the project, Clean Energy Collective, LLC (CEC), was the successful respondent to a City Request for Proposal to partner with Fort Collins Utilities to develop a community solar farm. CEC is proposing to use property leased from the City to build, operate, and maintain a community solar farm facility that can be expanded up to 600 kilowatts of ground mounted solar modules. The solar modules will harvest solar energy to supplement Fort Collins Utilities energy supply, supporting the Colorado Renewable Energy Standard (RES) deliverable of receiving 10% of retail electric energy from renewable sources by 2020. In addition, CEC will work with the City’s Art in Public Places Program to investigate how the development of a solar farm facility on Agenda Item 10 Item # 10 Page 2 this property might be integrated into the Mulberry corridor community gateway project. In order to facilitate the development of the solar farm, CEC has requested a lease through its subsidiary CEC Solar #1038, LLC of approximately 3 acres of the City property. The term of the lease will be for 25 years with optional extension terms of up to 10 additional years. On May 2, 2014 the City Director of Purchasing signed a Power Purchase Agreement with CEC, entering into a 25-year agreement to offer a project site, acquire the power produced by the project, and provide on-bill credits to participating utility customers, conditioned on CEC’s completion of construction and commencing operation of the solar farm facility. Use of the leased premises for the solar farm appeared to render a portion of the former pickle plant site unavailable for its originally intended conservation uses and Wastewater Utility purposes. As such, Utilities staff explored the degree to which the funds originally used to purchase the site needed to be repaid under the City Code and Charter. Upon further analysis, it was determined the solar farm will not actually interfere with the intended buffering of the Mulberry Wastewater plant, nor otherwise impair the services enjoyed by ratepayers of the Wastewater Utility. Accordingly, no repayment will be made by the project to the Wastewater Enterprise Fund for use of the site. Staff further determined that 30-50% of the site shall also remain open space, to the north and west of the leased premises, with such area available for trail and overlook development, as was originally intended through use of Conservation Trust Fund monies to purchase the site. Partial occupation of the site for the project will nevertheless cause some diminution of conservation use of the site, and management staff is currently formalizing the specific amount of repayment to be made to the City’s Conservation Trust Fund account. FINANCIAL / ECONOMIC IMPACTS The power purchased from the community solar farm project will contribute renewable energy helping the City to meet requirements of the Colorado Renewable Energy Standard (RES). Council authorized funds in the 2013-2014 budget in the amount of $500,000 for incentives to participating utility customers comparable to solar rebates offered for rooftop solar arrays. Given that CEC will build the solar farm at their expense and that the project will benefit the City and Utilities customers, staff has proposed a nominal rental rate for the City property in the amount of ten dollars per year. ENVIRONMENTAL IMPACTS This project is one of a limited number of options to utilize the 500 Riverside Avenue site due to limitations on development tied to the buffer around the Mulberry Water Reclamation Facility and environmental matters. The minimal soil disturbance intended in constructing the solar farm is advantageous for this site with known sodium chloride contamination from prior pickling operations at this location. A recent environmental assessment was completed and verified that the soil and groundwater conditions of the site are stable and improving. Monitoring of the site will be conducted during the construction of the project and follow-up monitoring will be conducted after construction and periodically during the course of the lease term. BOARD / COMMISSION RECOMMENDATION This item is scheduled to be presented to the Water Board on August 21, 2014. The execution of the Lease Agreement will be contingent on approval by the Water Board prior to second reading of this item. PUBLIC OUTREACH A neighborhood meeting under the development review process occurred on July 8, 2014. ATTACHMENTS 1. Location Map (PDF) 2. Lease Area Detail (PDF) ATTACHMENT 1 $PNNVOJUZ4PMBS(BSEFO1SPKFDU-FBTF"SFB%FUBJM 1BHFPG ATTACHMENT 2 $PNNVOJUZ4PMBS(BSEFO1SPKFDU-FBTF"SFB%FUBJM 1BHFPG $PNNVOJUZ4PMBS(BSEFO1SPKFDU-FBTF"SFB%FUBJM 1BHFPG - 1 - ORDINANCE NO. 109, 2014 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE MAYOR TO EXECUTE A LEASE AGREEMENT WITH CLEAN ENERGY COLLECTIVE, LLC FOR THE USE OF CITY PROPERTY FOR A COMMUNITY SOLAR GARDEN PROJECT WITH AN ASSOCIATED ACCESS EASEMENT WHEREAS, the City is the owner of a certain parcel of real property, known as the “Pickle Plant” (the “Property”), consisting of 5 acres, located in Larimer County, Colorado identified as parcel number 97124-00-907; and WHEREAS, the Property was conveyed to the City in 1995 to meet the objectives of the City’s Poudre River Land Use Framework and to provide a buffer around the Mulberry wastewater facility; and WHEREAS, the purchase of the Property was funded with equal contributions from the City’s Conservation Trust Fund account and the Wastewater Enterprise Fund in addition to lease revenues that were applied to the purchase price; and WHEREAS, after reviewing responses to an RFP for partners to install and operate a community solar farm and provide renewable solar energy to the City’s Utility Distribution Grid, the City selected Clean Energy Collective, LLC (“CEC”) as the successful photovoltaic system developer; and WHEREAS, the City and CEC identified the Property as an appropriate location for the solar farm based on several factors, including visibility, access, and compromised soil composition of the Property that made other forms of development impractical; and WHEREAS, City staff believes the solar farm is one of few beneficial uses compatible with soil contamination issues existing on the Property; and WHEREAS, on May 2, 2014, the City entered into a power purchase agreement with CEC for up to 25-years, with extensions for an additional 10 years, to design, construct, operate and maintain a solar farm on the Property; and WHEREAS, CEC will require use of the Property during construction, during the maintenance period, and for periodic equipment replacement; and WHEREAS, CEC has requested a land lease in the form attached hereto as Exhibit ‘A” and incorporated herein by this reference (the “Lease”) through a subsidiary entity for the construction, maintenance, and operation of a solar farm; and WHEREAS, the proposed land area of the Lease consists of 3 acres of the Property (the “Leased Area”), as described on Exhibit “A”, to the Lease; and WHEREAS, CEC has also requested an associated access easement over a portion of the - 2 - Property, to provide legal access from the entry road for the Mulberry wastewater facility (“Access Easement”), as described on Exhibit “D” to the Lease; and WHEREAS, the Access Easement will not create an undue impact on the Property or the Mulberry wastewater facility entrance that is different from or greater than the use the City would need in order to otherwise develop the Property; and WHEREAS, the proposed Lease term will be for a period of twenty five (25) years; and WHEREAS, as a condition of the Lease, CEC Solar will be required to restore the Property upon expiration of the power purchase agreement and lease; and WHEREAS, use of the Property for a solar farm will not interfere with the buffering of the Mulberry wastewater facility which was intended when the City applied Wastewater Utility funds to purchase the Property, nor will the solar farm otherwise impair the services enjoyed by Wastewater Utility customers, and no additional compensation will be required of the project to the Wastewater Enterprise Fund; and WHEREAS, use of the Property for a solar farm limits potential conservation uses for the site that may have been considered when the City used Conservation Trust Funds to purchase the Property; however, staff has determined that the majority of the site shall remain open space and available for conservation uses, and therefore no repayment will be required to the City’s Conservation Trust Fund account as a result of locating the project on the Property; and WHEREAS, due to the collaborative nature of the solar farm project, the benefits realized by the City’s Utility customers from the local generation of Renewal Energy Credits by the solar farm, the enhanced screening of the Mulberry wastewater facility the project will provide without additional cost to Utility ratepayers, and CEC’s investment to create a useful development upon otherwise undevelopable portions of the Property, the staff has recommended CEC be charged only minimal rent for the use of the Leased Area and easement; and WHEREAS, Section 23-111 of the City Code provides that City Council is authorized to sell, convey, or otherwise dispose of any and all interests in real property owned in the name of the City, provided that Council first finds, by ordinance, that any sale or other disposition will not materially impair the viability of any City utility system as a whole of which the property is a part, will benefit the City’s citizens, and will be in the best interest of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That leasing of the Leased Area and an associated access easement on, over, and across City Property to Clean Energy Collective, LLC, through its subsidiary, CEC Solar #1038, LLC, as provided herein, will not materially impair the viability of any City utility system as a whole of which the property is a part, will benefit the City’s citizens, and will be in the best interest of the City. - 3 - Section 2. That the Mayor is hereby authorized to execute a negotiated lease agreement for the Leased Area and an associated easement to CEC Solar #1038, LLC and such documents as may be necessary to convey the Access Easement to the Property, in substantially the form as attached hereto as Exhibit “A” and on terms and conditions consistent with this Ordinance, together with such additional terms and conditions as the City Manager, in consultation with the City Attorney, determines are necessary or appropriate to protect the interests of the City, including, but not limited to, any necessary changes to the legal descriptions of the Leased Area or Access Easement, as long as such changes do not materially increase the size or change the character of the Leased Area or Access Easement. Introduced, considered favorably on first reading, and ordered published this 19th day of August, A.D. 2014, and to be presented for final passage on the 2nd day of September, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 2nd day of September, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk