Title
Extend Clean Energy Lease and Fuel Purchase Agreement (Ordinance S-44055)
Description
Request to authorize the City Manager, or his designee, to amend Airport Agreement 114156 with Clean Energy to extend the term of the Natural Gas Vehicle Fueling Facility Lease and Gas Purchase Agreement and Fuel Dispensing Permit, and to relocate facility infrastructure. Further request authorization for the City Treasurer to accept, and for the City Controller to disburse, all funds related to this item. The City will pay Clean Energy a not-to-exceed amount of $670,000 reimbursement for infrastructure relocation. Clean Energy will continue to pay land lease as specified in the agreement.
Report
Summary
In 2004, the Aviation Department entered into Agreement 114156 with Clean Energy to lease land to develop natural gas fueling facilities and to provide natural gas fuel to Aviation's bus fleet. The bus fleet provides passenger service between the Rental Car Center and airport terminals, and provides contingency service during special events and irregular operations. The Aviation Department is granted a preferential fuel rate, which saves the Department approximately $50,000 per month on natural gas purchasing.
The facility also provides public access to natural gas. Clean Energy pays the City a fuel flowage fee for all fuel dispensed to non-City vehicles. The fuel flowage fee is $0.10 per gas gallon equivalent. In 2016, the total paid to the City for public natural gas dispensed was $35,912.
Stage 2 of the Phoenix Sky Train extends the train guideway west from Terminal 3 to the Rental Car Center (RCC), and, upon completion, will replace the busses as the primary means of transport between terminals and RCC. The Sky Train extension is under construction and is projected to be complete in late 2021. In order to maintain bus service through the completion of the Sky Train extension, Aviation requests to extend the Clean Energy agreement four years, with two, one-year extension options to be exercised at the sole discretion of the Aviation Director, to allow contingency for construction.
In addition, the path of the guideway extension requires that a portion of the RCC Fuel Facility infrastructure be relocated. Under the current agreement, the City reserves the right of relocation, if in its sole discretion it determines the premises are needed for other purposes. The estimated cost to move the infrastructure is $670,000, not including taxes, utilities, or permitting fees. To accommodate the move, Aviation requests to reimburse Clean Energy a not-to-exceed amount of $670,000. Clean Energy will be responsible for any additional costs.
Procurement Information
This amendment is requested because it is impractical to compete, as the term of the agreement is not long enough to allow a new vendor to amortize an investment in new natural gas fuel facilities.
Contract Term
This amendment will extend the term of the agreement four years, with two, one-year extension options to be exercised at the sole discretion of the Aviation Director.
Financial Impact
The City will pay Clean Energy a not-to-exceed amount of $670,000 reimbursement for infrastructure relocation. Clean Energy will continue to pay land lease as specified in the agreement, totaling approximately $26,680 per year, and $0.10 per gas gallon equivalent fuel flowage fee, which totalled $35,912 in calendar year 2016. The preferential fuel rate to the Aviation Department will remain unchanged. Funding is available in the Aviation Capital Improvement Program budget.
Concurrence/Previous Council Action
This agreement was approved by Phoenix City Council on Sept. 8, 2004.
The Downtown, Aviation, Economy and Innovation Subcommittee heard this item on Nov. 1, 2017 and recommended approval by a vote of 3-0.
Location
3400 E. Sky Harbor Blvd, Phoenix Sky Harbor International Airport
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Aviation Department.