I. RECOMMENDATION:
Staff recommends that the City Council Authorize the City Manager to Execute an updated Project Development Agreement (PDA) with Johnson Controls to Develop an Energy Services Project (Water Treatment Plant Solar PV System with Battery Backup) pursuant to California Government Code 4217.10-4217.18.
II. BACKGROUND:
Staff has been working with Johnson Controls Inc. (JCI) to develop a solar facility with battery backup at the Water Treatment Plant on Palmer Ave. This project was expected to be placed on land adjacent to the existing water treatment plant. The first step in the process was to execute a project development agreement (PDA). This provided the basis for scope, schedule, and deliverables of the PDA as well as the obligations of both parties, and the financial criteria representing the intended outcome of the project.
Since the original execution of the PDA staff has been working to obtain the property adjacent to the WTP to no avail. Staff retained the services of the City's real estate broker to assist with no response from the owner. this led to exploring a different approach with JCI to utilize their resources to develop an alternative approach to delivering this project.
III. DISCUSSION:
The purpose of the updated Project Development Agreement (“PDA") is to amend the project scope from a design, bid build to developing a Power Purchase Agreement for the purchase of solar energy thorough JCI. This PDA will provide the basis of the scope, schedule, and deliverables of the PDA as well as the obligations of both parties, and the financial criteria representing the intended outcome of the updated project. The scope of the project includes engineering cost and savings estimates for the following facility Improvement measures (FIMs):
- Water Filtration Plant Solar PV
- Battery Energy Storage and/or Back up Generation to increase the resiliency of the Water Filtration Plant
Upon execution of the amended contract, the City agrees that JCI will incur significant cost by providing the services required by the PDA and that all reasonable, actual, project development costs incurred will be included in the Total Price of the Work in the Energy Savings Performance Contract. Since the City does not control the property adjacent to the Water Treatment Plant at this time, JCI, under this agreement will secure a lease agreement for this land and utilize its resources of their company to secure the land. If the land is not secured the City will not be responsible to any costs incurred up to that point.
If JCI proposes a project that meets the Financial Criteria, and the City chooses not to enter into the Energy Savings Performance Contract within sixty (60) days after JCI submits the deliverables of the PDA, the City will be responsible for paying JCI $75,000 as reasonable compensation for services provided under this PDA.
The City shall have no obligation to pay JCI for services performed as part of the Project Development Agreement if:
- JCI and the Customer enter into the Power Purchase Agreement for the proposed project within 60 days after JCI provides the Deliverables of the PDA; or
- JCI is unable to secure a land lease from neighboring property owners for the site of the Solar PV array; or
- JCI is unable to deliver a Power Purchase agreement that is less than or equal to the customer’s ongoing operating costs outlined in the Financial Criteria.
IV. ALTERNATIVES:
- Do not enter into the PDA with JCI and direct staff accordingly.
V. FISCAL IMPACT:
The fiscal impact to the City would be $75,000 if the City chooses not to proceed the a ESPC after JCI has met all of its obligations under the PDA and presents a viable project. If the obligations of the PDA have been met and the City chooses to move forward, the $75,000 would be absorbed in the financials related to the power purchase agreement terms. |