HomeMy WebLinkAbout2022-10-11; City Council; ; Update on Status of Negotiations to Relocate San Diego Gas & Electric’s North Coast Service CenterCA Review CKM
Meeting Date: Oct. 11, 2022
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: Gary Barberio, Deputy City Manager, Community Services
gary.barberio@carlsbadca.gov, 442-339-2822
Cindie K. McMahon, City Attorney
attorney@carlsbadca.gov, 442-339-5986
Subject: Update on Status of Negotiations to Relocate San Diego Gas & Electric’s
North Coast Service Center
District: 2
Recommended Action
Receive status update and provide direction on negotiations to relocate SDG&E’s North Coast
Service Center.
Executive Summary
On July 26, 2022, the City Council received a status update on the negotiations between
Brookfield Properties, NRG Energy, and San Diego Gas and Electric to relocate the SDG&E North
Coast Service Center from its current location near the northeast corner of Carlsbad Boulevard
and Cannon Road as anticipated in the “Settlement Agreement dated as of January 14, 2014
Between and Among The City of Carlsbad, Carlsbad Municipal Water District, Cabrillo Power I
LLC, Carlsbad Energy Center LLC, and San Diego Gas and Electric Company.”
At that meeting, SDG&E informed the City Council that the city-owned parking lot at The
Shoppes location was not an acceptable relocation site, but that SDG&E was committed to
making another SDG&E site work. The City Council instructed staff to continue efforts to
negotiate an appropriate relocation site and return on Oct. 11, 2022, with a progress report,
term sheet and identification of a suitable relocation site with an emphasis on the Lot 11 site
owned by SDG&E.
The parties have continued to negotiate and have determined that the Lot 11 site is also not a
feasible relocation site, primarily because of cost, environmental and timing concerns.
The parties are now looking at various options for reconfiguring the service center on its
current site to free up property that could be transferred to the city. Although the parties do
not have a specific proposal to present for the City Council’s consideration at this meeting,
discussions of these options have been encouraging and the city’s negotiation team hopes that
Oct. 11, 2022 Item #8 Page 1 of 4
it will be able to return to update the City Council with more details on these discussions by the
end of the year.
Discussion
As part of the settlement agreement, SDG&E offered to relocate its service center so that the
city could take ownership of the existing service center property along with two other SDG&E
properties, essentially allowing the return of the property from industrial to other more
appropriate coastal uses. In the settlement agreement, the transfer was made possible by
having NRG pay the costs of the relocation, with the signed agreement committing NRG to
paying $22.5 million for the relocation, thereby saving SDG&E ratepayers money.
Since the July 26, 2022, City Council meeting, city staff have participated in over five joint
meetings as well as other smaller group meetings with the parties to the settlement agreement
to explore options for a relocation site for the service center. Although the parties have not
been able to identify a relocation site that meets all of the parties’ needs, significant progress
has been made in the settlement discussions.
Recently, SDG&E has led discussions regarding alternative configurations of the service center
on the current site, including options that would give the city control over a portion of the site.
There are many variables to consider in determining a reconfiguration of the site that would
meet all of the parties’ needs. The city’s negotiation team is hopeful that with additional time
to explore the reconfiguration options and discuss the different variables, the parties should be
able to decide upon an acceptable alternative and return to the City Council on Dec. 13, 2022,
with a progress report, term sheet and identification of a suitable relocation site.
Staff are also seeking direction from the City Council on discontinuing efforts to include the site
known as Lot 11, on the north side of Cannon Road at Armada Drive, in the negotiations based
on its infeasibility as a suitable site for relocation of the service center.
If the parties are unable to reach agreement on relocation or reconfiguration of the service
center, the city will not take title to the properties identified in the settlement agreement. In
that event, as noted in the attached April 2022 staff report, the city would receive $10 million
from NRG and SDG&E would forego the $22.5 million expense of relocating the Service Center.
Fiscal Analysis
No additional funding is being requested.
Next Steps
Upon receiving City Council direction, staff will continue negotiations with the other parties and
return to City Council for further direction on Dec. 13, 2022.
Environmental Evaluation
This action does not require environmental review because it does not constitute a project
within the meaning of the California Environmental Quality Act under California Public
Resources Code Section 21065 in that it has no potential to cause either a direct physical
change or a reasonably foreseeable indirect physical change in the environment.
Oct. 11, 2022 Item #8 Page 2 of 4
Public Notification
This item was noticed in accordance with the Ralph M. Brown Act and was available for public
viewing and review at least 72 hours prior to scheduled meeting date.
Exhibits
1. July 26, 2022, City Council Staff Report, with exhibits (on file in the Office of the City Clerk)
Oct. 11, 2022 Item #8 Page 3 of 4
Exhibit 1
July 26, 2022, City Council Staff Report
(on file in the Office of the City Clerk)
Oct. 11, 2022 Item #8 Page 4 of 4
Gary Barberio, Deputy City Manager,
Community Services
Cindie K. McMahon, City Attorney
Oct. 11, 2022
Status of Negotiations to
Relocate SDG&E Service Center
{ City of
Carlsbad
SETTLEMENT AGREEMENT
•Settlement Agreement approved by City Council
on Jan. 14, 2014
•Between and among: City of Carlsbad, NRG and
SDG&E
ITEM 8: NORTH COAST SERVICE
CENTER NEGOTIATIONS
{ City of
Carlsbad
SDG&E NORTH COAST SERVICE CENTER
•City and SDG&E work together to find “mutually acceptable” relocation site
–subject to SDG&E specs and cost neutrality
•NRG to fund up to $22.5 million
•If successful:
–city takes ownership of SDG&E parcels
–city and NRG work on joint development strategy
•If not successful:
–NRG pays city $10 million
ITEM 8: NORTH COAST SERVICE
CENTER NEGOTIATIONS
{ City of
Carlsbad
Qrwn,er
NRG
I I SDG&.E
1 -A qua No, Shore P'arcel
2-Fishing Beach
3-Hubbs Site
-4 -Bluff A.re a
5-South P'ow er Pl ant
6 -SDG&E Service Center
7 -Cannon Park
PAST ACTION
•City Council received status update on July
26, 2022
•Instructed staff to continue to negotiate an
appropriate relocation site with emphasis
on Lot 11
•Directed staff to return on Oct. 11, 2022
with progress report
ITEM 8: NORTH COAST SERVICE
CENTER NEGOTIATIONS
{ City of
Carlsbad
UPDATE ON NEGOTIATIONS
•SDG&E has determined that Lot 11 is
not a feasible site due to
•Cost
•Environmental Concerns
•Timing Concerns
ITEM 8: NORTH COAST SERVICE
CENTER NEGOTIATIONS
{ City of
Carlsbad
Carfsb.r,rd
DesaJin-atian Plant
Proposed Carlsbad_
Energy Genter Project
NRG Properly
Endna Pov.<er Station
SDG&E Subst;aion &
-Swrtch Yards
SDG&E Norlfl Co.ast
.--... SeNice Cenler
C.armOl'l" Park
RECONFIGURATION OF
CURRENT SITE
•Parties are looking at various options to
reconfigure current site
–Relocate North Coast Service Center on SDG&E & NRG property
–free up portion of SDG&E property that would be transferred to city
ITEM 8: NORTH COAST SERVICE
CENTER NEGOTIATIONS
{ City of
Carlsbad
OPTION TO TERMINATE NEGOTIATIONS
•If the parties are unable to reach agreement on
relocation or reconfiguration of the service center
–city will not take title to the properties identified in
the settlement agreement
–city would receive $10 million from NRG
–SDG&E would forego the $22.5 million expense of
relocating the Service Center.
ITEM 8: NORTH COAST SERVICE
CENTER NEGOTIATIONS
{ City of
Carlsbad
RECOMMENDATION
•Provide direction to discontinue efforts to include Lot 11
in the negotiations
•Provide direction to negotiation team to continue
discussions regarding reconfiguration of current site
–Staff will return on Dec. 13, 2022 with a progress
report, term sheet and identification of suitable
relocation site
ITEM 8: NORTH COAST SERVICE
CENTER NEGOTIATIONS
{ City of
Carlsbad