HomeMy WebLinkAbout2024-02-22; Maerkle Reservoir Solar Project Inquiries (District 2); Haber, JasonTo the members of the:
CllY COUNCIL
Dat~Zf/24 CA/ CC ~ /
CM _ AC M VocM (3) _JL"
Cou ncil Memorandum
February 22, 2024
To:
From:
Via:
Re :
Honorable Mayor
Jason Haber, lntergove
r and Members of the City Council
tal Affairs Director
Scott Chadwick, City ~:Riitttr-
{cityof
Carlsbad
Memo ID# 2024015
This memorandum provides information on unsolicited emails received by the city regarding the
Maerkle Reservoir Solar Project.
Background
On February 16, 2024, the City Council and staff received an unsolicited email from Dr. Phil
Watts, CEO of Chair Resource -www.resourcerenewables.com with the Subject: Maerkle
Reservoir Solar Project Has Arrived (Attachment A). Dr. Watts' email requests that the City
Council review and consider approving an Exclusive Negotiating Agreement (ENA) with Resource
Renewable Energy, Ine. (Attachment B).
The ENA proposed by Dr. Watts states his company's interest in:
1. lnvestigating the possibility of constructing and operating a solar facility on certain
undeveloped land owned by the city
2. Establishing an exclusive negotiating period with the city (six months, plus an optional
additional six months)
3. Conducting the necessary project studies and investigations
4. Preparing and submitting a response to a "California Choice Energy Authority & Clean
Energy Alliance 2024 Request for Proposals ("RFP") for Lang-Term RPS-Eligible
Renewable Energy & Mid-Term Reliability Capacity"
The proposed ENA states that "the city is interested in the possibility of the development of a
solar facility on city-owned land," and further states that the city and the company "desire to
enter into exclusive negotiations regarding the terms of the various agreements needed for the
company to develop and operate the solar facility ... "
On February 21, 2024, Council Members also received an email from Carlsbad resident Phil Rogul
with the Subject: $80 million in economic development available. Mr. Rogul's email suggests that
City Council Members should participate in a Zoom meeting with Dr. Watts to discuss "some type
City Manager's Office
lntergovernmental Affairs
1200 Carlsbad Vil lage Drive I Carlsbad, CA 92008 I 442-339-2820 t
Council Memo -Maerkle Reservoir Solar Project lnquiries (District 2)
February 22, 2024
Page 2
of special program that offers excellent opportunity for our city." No additional context was
provided.
Discussion
Dr. Watts approached the city with a similar proposal in 2021, and he has been informed by city
staff on several occasions that Carlsbad Municipal Code (CMC) Section 3.28.060(A) Professional
Services Procurement states:
1. Request for proposals should be used when professional services are needed. The
selection of professional services for, private architectural, landscape architectural,
engineering, environmental, land surveying or construction project management firms
should be based on the professional qualifications necessary for the satisfactory
performance of the professional services required, on demonstrated competence, and
on a fair and reasonable price consistent with Government Code Section 4526.
The ENA proposed by Dr. Watts constitutes an offer to perform professional services on behalf of
the city. As such, staff does not recommend City Council Members meet with Dr. Watts regarding
the subject inquiry, nor that they consider approving the ENA proposed by Dr. Watts.
In addition, the response deadline for the Cai Choice & Clean Energy Alliance Request for
Proposal (RFP) cited by Dr. Watts expired yesterday, February 21, 2024, at 5 p.m. PDT. Therefore,
an ENA to conduct studies and investigations necessary to prepare and submit a response to that
RFP is moot.
Staffare preparing a separate Carlsbad Municipal Water District (CMWD) Board Memorandum
for distribution next week, which will provide an update on the Maerkle Reservoir Solar Study
Project. The memorandum will provide background information, a summary of preliminary staff
and consultant research into the project and anticipated next steps to be pursued in advancing a
solar energy generation project at the Maerkle Reservoir.
Next Steps
Staff will contact Dr. Watts and Mr. Rogul regarding their recent communications and provide
them with copies of the forthcoming CMWD Board Memorandum referenced above. Staff will
present an item at the April 16, 2024, CMWD Board meeting to discuss the preliminary research
findings and seek input from the CMWD Board regarding the process for determining project
feasibility and evaluating the preferred development, ownership and operation al models to be
used in advancing a solar energy generation project at the Maerkle Reservoir.
Attachments: A. Email from Dr. Phil Watts dated February 16, 2024
B. Exclusive Negotiating Agreement with Resource Renewable Energy, Ine.
cc: Geoff Patnoe, Assistant City Manager
Cindie McMahon, City Attorney
Jason Haber
From:
Sent:
ph i l@resou rcerenewa bles.com
Friday, February 16, 2024 1 :02 PM
Attachment A
To: Council Internet Email; Teresa Acosta; Keith Blackburn; Priya Bhat-Patel; Melanie Burkholder; Carolyn
Luna
Cc:
Subject:
Attachments:
City Clerk; City Attorney; Jason Haber; Vickiquiram; Abinash Tiwari; Rex Wilson; Manager Internet
Email
Maerkle Reservoir Solar Project Has Arrived
2024-CalChoice_CEA-Long-Term-RPS-and-lncremental-Capacity-RFP _FINAL-1.pdf; Renewable
Energy ENA Blank.docx
Dear Carlsbad City Council,
We respectfully ask you look at and consider approving the attached agreement.
The time to consider a solar project at Maerkle Reservoir has arrived, because there is a Clean Energy Alliance RFP for
local clean energy resources, and because a local development team dedicated to making the project happen is all set to
begin.
Here are three key points ofthis public-private partnership:
-It is rare for all of these conditions to be assembled at the same time
-The project we will propose has so many benefits it fully pays for itself
-You will have around 4 months to consider and approve our solar proposal
The RFP document is attached here, and this is the CalChoice link:
https:/ /urldefense.com/v3/ _https://californiachoiceenergyauthority.com/rfps/*toggle-id-l_;lw ! !E_ 4xU6-vwMWK-
Q!oJ3nLYFKGQ6Ndu4QoPFEXS4MOzN0T6Xtvf-jMTB4unME_sGPpxbHxgNGjZShPRRgG_gBTxnOr-lKVKJ2Ci59Ts91U FTi$
Site control would be granted by City Council to Resource Renewable Energy, Ine. by approving the Exclusive Negotiating
Agreement (ENA) attached here. This is a no cost and no expectation agreement that gives us developers a chance to
make our case.
Similarly, our response to the RFP does not guarantee the solar project will happen. lnstead, the City of Carls bad gets
around 4 months to consider and digest the highest and best use of the land we can propose, and the 10 or more
financial benefits.
We understand the city has diverse priorities and many considerations, but the Water District has a substation there, and
it reserves the right to operate its equipment on clean energy, and make revenue from se Iling residual power to the CEA.
The Utility Department receives a land lease to bolster its budget and benefit city residents, while the environmental
benefits boost the city RPS position and pay for most of the solar power, and the CEA gets to beat SDG&E at its own
game.
We respectfully ask you look at and consider approving the attached agreement.
Thank you,
1
Phil
Dr. Phil Watts
CEO, Chair Resource
Cell: 562-607-2132
https://urldefense.com/v3/ _http://www.resourcerenewables.com_; ! ! E_ 4xU6-vwMWK-
Q!oJ3nLYFKGQ6Ndu4QoPFEXS4MOzN0T6Xtvf-jMTB4unME_sGPpxbHxgNGjZShPRRgG_gBTxnOr-lKVKJ2Ci59TpVhZR-s$
CAUTION: Do not open attachments or click on links unless you recognize the sender and know the content is safe.
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ATTACHMENT B
EXCLUSIVE NEGOTIATING AGREEMENT
TIDS EXCLUSIVE NEGOTIATING AGREEMENT (the "ENA") is entered into as of
______ , 2024 ("Effective Date"), by and between the CITY OF ______ , a municipal
corporation and charter city (the "City"), and RESOURCE RENEWABLE ENERGY, INC., a
Delaware C corporation (the "Company"), on the terms and provisions set forth below. The City and
Company are sometimes referred to individually herein as a "Party" and, collectively, as the "Parties."
RECI T ALS
A. The Company is interested in investigating the possibility of constructing and operating
a solar facility on certain undeveloped land owned by the City. To that end, the Company desires to
establish a period during which (i) the City will negotiate exclusively with the Company conceming
development of a solar facility on such land, (ii) the Company will conduct the investigations and
studies it believes are necessary, and (iii) the Company will prepare and submit a response to
"California Choice Energy Authority & Clean Energy Alliance 2024 Request for Proposals for Long-
Term RPS-Eligible Renewable Energy & Mid-Term Reliability Capacity" being managed by Pacific
Energy Advisors, Inc.(the "RFP") for a solar facility on such land and for the solar facility's design,
construction, commissioning, financing, and operation.
B. The City is interested in the possibility of the development of a solar facility on city-
owned land that may provide power to ______ (the "CCA").
C. The City and Company accordingly desire to enter into exclusive negot1at1ons
regarding the terms of the various agreements needed for the Company to develop and operate the solar
facility, such as a land lease with the City, power purehase agreement for power offtake by CCA,
resource adequacy agreement for energy reserves with CCA, and other necessary agreements.
NOW, THEREFORE in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the City and Company
agree as follows:
1. Exclusive Negotiation. The City and Company agree fora period of six (6) months
from the Effective Date (the "Negotiation Period") to negotiate diligently and in good faith to agree on
the terms and form of any and all agreements necessary for the Company to design, construct,
commission, finance, and operate a solar facility as further described in Section 3 of this ENA (the
"Project") on approximately ______ acres of undeveloped City-owned land located at
______ , Califomia (Assessor's Parcel Number -----~ (the "Site"), including,
without !imitation, the terms and form ofthe foliowing agreements: (i) a land lease agreement pursuant
to which the Company will lease the Site from the City; (ii) a power purehase agreement for power
offtake by CCA; (iii) a resource adequacy agreement for energy reserves with CCA; and (iv) such other
agreements that may be necessary for the design, construction, commissioning, financing, and
operation of the Project. During the Negotiation Period, including any extension thereof, the City
agrees that it shall not negotiate with any other person or entity for the development of the Site, thereby
satisfying in principle the Site requirements in the RFP.
2. Option to Extend Negotiation Period. The Company may extend the Negotiation
Period once for six (6) additional months by giving written notice to the City at least thirty (30) days
prior to the initial expiration of the Negotiation Period.
3. Proposed Project. The Project consists of one or more solar power and energy storage
facility, with a medium voltage interconnection to the distribution grid. The Project is expected to be
placed in a special purpose entity ("SPE"), and to havethird party financing and ownership. Depending
on the results of various interconnection, distribution circuit, and load studies, the Project will
nominally be of the following size, subject to change as necessary:
Solar Power: MW ----and Energy Storage: MWh ----
4. Required Actions. The Parties agree to take the following actions during the
Negotiation Period in response to the RFP:
(a) The Parties agree to exchange information for the purpose of evaluating the
Project. Subject to all legal and/or contractual !imitations, the City shall make available data on
electricity generation costs, settlement costs, overhead expenses, load profiles, and other related
information that enable energy arbitrage opportunities to be identified and the total cost of energy
delivered to be calculated. The Company shall make available data on project performance such as
energy production, project cost, yearly revenue, yearly profits, cost of energy, intemal rate of return,
among other pro forma metrics that enable the highest and hest use of City-owned land to be
demonstrated and the economic viability of the Project to be guaranteed.
(b) The Parties agree to make commercially reasonable efforts to diligently and in
good faith negotiate the terms and form of the following agreements: (i) a land lease agreement
pursuant to which the Company will lease the Site from the City; (ii) a power purehase agreement for
power offtake by CCA; (iii) a resource adequacy agreement for energy reserves with CCA; and (iv)
such other agreements that may be necessary for the design, construction, commissioning, financing,
and operation of the Project. Neither Party shall be obligated to execute any of the foregoing
agreements. Any agreement(s) resulting from the negotiations hereunder shall become effective only
after and if such agreement has been considered and approved by City in the manner required by law.
(c) The Company agrees to provide to the City comprehensive development plans
for the Project. Such development plans must comply with all applicable laws, rules, and regulations
of City and all other government entities having jurisdiction. The Company further agrees to make
oral progress reports and written reports from time to time as requested by the City, advising the City
on all marters and all studies being made with respect to the Project. The Company agrees to generally
cooperate with the City and agrees to supply such other documents and information as may be
reasonably requested in writing by the City.
( d) The Company shall submit to City satisfactory evidence of its ability to meet
its responsibilities relative to financing (both construction and long-term) the lease of the Site and
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construction/operation of the Project. The Company shall make and maintain full disclosure to the
City of its methods of financing to be used in the development of the Site and construction/operation
of the Project.
( e) The Company shall make full disclosure to the City of its principals, officers,
major stockholders, major partners, joint ventures, key managerial employees, and other associates,
and all other material information conceming the Company and its associates. Any significant change
in the principals, associates, partners, joint venturers, negotiators, development manager, consultants,
professionals, and directly involved managerial employees of the Company is subject to the approval
of the City, where such approval shall not be unreasonably withheld or delayed.
5. Fees, Costs & Expenses. The Company shall be solely responsible for all fees, costs
and expenses of investigating and studying the Site and designing, constructing, commissioning,
financing, and operating the Project.
6. City Approval of Subsequent Agreement(s). If negotiations culminate in one or
more agreement that is/are mutually agreeable to the Parties, such agreement(s) shall not become
effective until all state and local requirements forthe lease ofCity-owned property have been complied
with and approved by the City Council and any other applicable legislative or administrative body
required by law. The Parties agree and acknowledge that, while this ENA provides that the Parties
shall negotiate in good faith, this ENA does not obligate either the City or Company to enter into any
agreement(s) or other instrument(s) for development ofthe Project, and approval of such agreement(s)
or other instrument( s) for development of the Project shall require the approval of both Parties, with
the City Council giving its approval, if at all, only after consideration at a regular meeting of the City
Council and following all other proceedings required by law, including, without !imitation, compliance
with the Califomia Environmental Quality Aet (California Public Resources Code§§ 21000, et seq.).
7. Event ofDefault. The failure ofthe City or Company to reasonably and timely comply
with its obligations under this ENA, if not due to circumstances beyond the reasonable control ofthe
City or Company, as the case may be, shall be considered a default hereunder. Prior to exercising any
remedies hereunder for the default of this ENA, the Pmiy asserting a default shall provide written
notice to the other Party describing the alleged default, and such Party shall have thirty (30) days to
cure such default.
8. Notices. All notices under this ENA shall be given in writing by personal delivery, or
by certified mail, or registered United States Mail, return receipt requested, postage prepaid, or by
facsimile and shall be deemed communicated when received if given by personal delivery or upon
receipt or rejection if mailed as provided above or upon receipt by facsimile on a business day during
business hours in the location where received, and if not then on the next business day, as the case may
be. Mailed notices shall be addressed as set forth below, but either party may change its address by
giving written notice thereof to the other in accordance with the provisions ofthis section.
City:
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Company: Dr. Phil Watts, CEO
Resource Renewable Energy, Ine.
5318 E 2nd Street, #695
Long Beach, CA 90803
9. Assignment. This ENA shall not be assigned by the Company, except to a dedicated
SPE meant to hold the Project assets and only the Project assets, without prior written approval of the
City, which the City may grant or refuse at its sole discretion.
10. Warranty of Authority. The signatories to this ENA represent and warrant that they
have the authority to execute this ENA on behalf of the princip les they purport to represent.
11. Broker's Fee. Bach Party represents to the other Party that no broker has been engaged
in connection with this transaction and no fee shall be paid in connection herewith.
12. Attorneys' Fees. In any action between the parties to interpret, enforce, award,
modify, rescind, or otherwise in connection with any of the terms or provisions of this ENA, the
prevailing party in the action shall be entitled, in addition to damages, injunctive relief, or any other
relief to which it might be entitled, to reasonable costs and expenses including, without }imitation,
litigation costs, reasonable attomeys' fees and expert witness fees.
13. Applicable Law, Jurisdiction and Venu e. This ENA has been executed and
delivered in the State of Califomia and the validity, interpretation, and enforcement of any of the
clauses of this ENA shall be determined and govemed by the laws of the State of Califomia. Both
Parties further agree that ______ County, Califomia, shall be the venue for any action or
proceeding that may be brought or arise out of, in connection with or by reason of this ENA.
14. Limitations of ENA. By its execution of this ENA, the City is not committing itself
to or agreeing to undertake: (a) disposition ofland to the Company; or (b) any other acts or activities
requiring the subsequent independent exercise of discretion by City. This ENA does not constitute a
disposition of property or exercise of control over property by the City and does not require a public
hearing. Execution of this ENA by the City is mere ly an agreement to enter into a period of exclusive
and good faith negotiations according to the te1ms hereof, reserving final discretion and approval by
the City as to any subsequent agreement(s) and all proceedings and decisions in connection therewith.
15. Complete Agreement. This ENA reflects the complete and total understanding
between the Parties hereto and all agreements or understandings between the Parties hereto are
contained herein. Any changes, modifications, amendments or addenda to this ENA must be in writing
and signed by all Parties to be effective.
[Signatures begin on next page.]
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above.
IN WITNESS WHEREOF, the Parties have executed this ENA as ofthe date first set forth
COMPANY:
RESOURCE RENEW ABLE ENERGY, INC.,
a Delaware C corporation
By: -----------------
Name: ----------------
Its: -----------------
CITY:
CITY OF ______ , a Califomia municipal
corporation and charter city
By: ---------------
Name: ----------------
Its: -----------------
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