...Title
Water Services Department 23rd Avenue Wastewater Treatment Plant Microgrid - Amendment - Ordinance S-45905 (Ordinance S-47119)
Description
Request to authorize the City Manager, or his designee, to execute an amendment to Ordinance S-45905 to modify the agreement with Arizona Public Service (APS) to a 30-year term, to enter into a 30-year lease agreement, and to execute all related agreements and easements necessary in support of the Microgrid agreement. Further request to authorize the City Treasurer to accept all funds related to the agreements.
Report
Summary
Ordinance S-45905 approved a 20-year agreement for APS to provide standby power to the 23rd Avenue Wastewater Treatment Plant through a 6.25-megawatt microgrid. This amendment will allow for a 30-year agreement instead of 20 years and will provide for a coterminous lease and related real property rights for the microgrid site on City-owned property. The leased site is approximately 5,400 square feet and will not interfere with the City’s current use or improvements. All other conditions and stipulations previously stated in the above referenced ordinance will remain the same.
Financial Impact
The anticipated expenses for the City remain unchanged at $3.4 million in capital costs, which began in Fiscal Year 2019-20, and it is anticipated there will be an additional $1.1 million in fuel costs to the City over the life of the contract. The aggregate value of the contract will not exceed $4.5 million; however, if the agreement is terminated early due to an uncured breach by the City, the City is obligated to compensate APS for its expenses and unrealized benefits of the full term of the agreement.
This amendment will authorize a ground lease rental rate to be paid by APS to the City of $2,572.94 per year, plus applicable taxes, and will increase 3 percent-per-year. APS will prepay the entirety of the rent at the beginning of the lease term.
Concurrence/Previous Council Action
- The Water, Wastewater, Infrastructure and Sustainability Subcommittee heard this item for information only at its June 5, 2019 meeting.
- The City Council approved Microgrid Agreement (Ordinance S-45905) on July 3, 2019.
Location
23rd Avenue Wastewater Treatment Plant
Council District: 7
Department
Responsible Department
This item is submitted to Deputy City Manager Karen Peters and the Water Services Department.