Skip to main content
File #: 23-1300   
On agenda: 12/12/2023 Final action: 12/12/2023
Enactment date: Enactment #: Resolution No. 23-396, Agreement No. 23-675, Agreement No. 23-676, Agreement No. 23-677, Agreement No. 23-678, Agreement No. 23-679, Agreement No. 23-680, Agreement No. 23-681
Recommended Action(s)
1. Conduct a public hearing in accordance with California Government Code ? 4217.12 for the Board to determine that the terms of each of the proposed energy services Agreements with FFP BTM SOLAR, LLC (ForeFront Power) (in recommended action #3) are in the best interests of the County, and to find that the anticipated costs to the County for electrical energy or conservation services to be provided by the solar photovoltaic energy systems under each of those proposed Agreements, respectively, will be less than the County's anticipated marginal costs for the purchase of such energy and conservation services in the absence of each such proposed Agreement, respectively; 2. Adopt and authorize the Chairman to execute Resolution making the determinations and findings as described in recommended action No. 1 (Gov. Code, ? 4217.12); 3. Approve and authorize the Chairman to execute the following Energy Services Agreements with ForeFront Power, to finance, design, construct, install, operat...
Attachments: 1. Agenda Item, 2. Exhibit A, 3. Resolution No. 23-396, 4. Agreement A-23-675 ESA with Forefront Power - Animal Control, 5. Agreement A-23-676 ESA with Forefront Power - Area 2 Sheriff Substation, 6. Agreement A-23-677 ESA w/ Forefront Power - Behavioral & Mental Health, 7. Agreement A-23-678 ESA with Forefront Power - Hamilton Yard, 8. Agreement A-23-679 ESA with Forefront Power - Health & Wellness Center, 9. Agreement A-23-680 ESA with Forefront Power - Pontiac Offices, 10. Agreement A-23-681 ESA with Forefront Power - Woodward Library, 11. General Terms and Conditions of ESA No. 20-066

DATE:                     December 12, 2023

 

TO:                     Board of Supervisors

 

SUBMITTED BY:                     Robert W. Bash, Director, Internal Services/Chief Information Officer

 

SUBJECT:                     Solar Photovoltaic Energy Services Agreements for Seven Locations with FFP BTM SOLAR, LLC (ForeFront Power)

 

RECOMMENDED ACTION(S):

TITLE

1.                     Conduct a public hearing in accordance with California Government Code § 4217.12 for the Board to determine that the terms of each of the proposed energy services Agreements with FFP BTM SOLAR, LLC (ForeFront Power) (in recommended action #3) are in the best interests of the County, and to find that the anticipated costs to the County for electrical energy or conservation services to be provided by the solar photovoltaic energy systems under each of those proposed Agreements, respectively, will be less than the County’s anticipated marginal costs for the purchase of such energy and conservation services in the absence of each such proposed Agreement, respectively;

 

2.                     Adopt and authorize the Chairman to execute Resolution making the determinations and findings as described in recommended action No. 1 (Gov. Code, § 4217.12);

 

3.                     Approve and authorize the Chairman to execute the following Energy Services Agreements with ForeFront Power, to finance, design, construct, install, operate, and maintain solar photovoltaic energy systems, including solar panels, allowing the County purchase of energy at specified rates, at each of the following locations:

 

a.                     Animal Control

b.                     Area 2 Sheriff Substation

c.                     Behavioral Health and Mental Health Services

d.                     Hamilton Yard

e.                     Health and Wellness Center

f.                     Pontiac Offices

g.                     Woodward Library

 

Effective upon execution for an initial twenty-year term, with an optional five-year renewal term, totaling a potential twenty-five (25) year term, with the option to purchase the solar photovoltaic energy systems after the fifth anniversary of commercial operation of each solar photovoltaic energy system; and

 

4.                     Authorize the Director of Internal Services/Chief Information Officer (the Director/CIO) to approve and execute any further documents, instruments, estoppel, acknowledgement certificates, and memoranda of agreements, all subject to the approval of County Counsel as to legal form and Auditor-Controller/Treasurer-Tax Collector as to accounting form, necessary to finalize the recommended ESAs, including any financing that ForeFront Power might later obtain in relation to such Agreements.

REPORT

There is no Net County Cost associated with the approval of the recommended actions, which will allow the County to enter into the recommended Energy Service Agreements (ESAs) with ForeFront Power for each of the solar photovoltaic energy system identified above.

 

The recommended ESAs have been made available to the County through the School Project for Utility Rate Reduction (SPURR) cooperative bid process and came directly from the non-binding Letter of Interest (LOI) signed by your Board on December 13, 2022.  This LOI allowed ForeFront Power to explore ten potential solar photovoltaic energy system, evaluate their viability, and submit Interconnection Applications, all under the California Public Utilities Commission's (CPUC) Net Energy Metering rules 2.0 (NEM 2.0), before these rules governing solar projects changed in April of 2023.  Interconnection applications have been submitted for these listed locations, grandfathering in these projects to the previous, more favorable, NEM 2.0 rules. Internal Service Department - Facility Services division (ISD - Facility Services) staff is ready to move forward with the next steps in order to have seven of these solar photovoltaic energy systems operational by the NEM 2.0 deadline of April 14, 2026.

 

Your Board’s approval of the recommended actions will allow the County to enter into the recommended ESAs with ForeFront Power for the design, construction, installation, operation, and maintenance of each of the following solar photovoltaic energy system(s) (System or collectively, Systems): (1) an estimated 384.93 kW Direct Current (DC) System located at Animal Control at 1510 W Dan Ronquillo Drive, (2) an estimated 458.64 kW DC System located at the Area 2 Sheriff Substation at 1129 N. Armstrong Avenue, (3) an estimated 999.18 kW DC System located at Behavioral Health and Mental Health located at 5555 E. Olive Avenue, (4) an estimated 1,081.08 kW DC System located at Hamilton Yard for multiple buildings at the corner of S. Maple and E. Hamilton Avenues, (5) an estimated 434.07 kW DC System located at the Health and Wellness Center at 1925 E. Dakota Avenue, (6) an estimated 409.50 kW DC System located at Pontiac Building Offices at 333 W. Pontiac Way, and (7) an estimated 262.08 kW DC System located at the Woodward Park Regional Library at 944 E. Perrin Avenue. Each separate location has a certain ESA with a possible 25-year term. After the fifth anniversary of commercial operation for each separate System, the County has the option to purchase the Systems.

 

This item pertains to locations in Districts 1, 2, 3, and 5.

 

ALTERNATIVE ACTION(S):

 

Should your Board choose not to approve the recommended ESAs, the County will not be able to take advantage of the NEM 2.0 rules, under which the County was grandfathered in and which will provide energy savings to the County, and for which applications have already been submitted. Your Board may approve all, some, or none of the recommended ESAs.

 

FISCAL IMPACT:

 

There is no Net County Cost associated with the recommended actions. By design, the proposed ESAs for the Systems yield a positive cashflow during the first year since it is anticipated that the purchase price per kilowatt hour generated will be less than what the County is currently paying for energy from Pacific Gas and Electric Company (PG&E). As a result, the County is expected to realize savings in all years of each ESA’s term.

 

Costs associated with these ESAs will be charged back to user departments, including the Department of Public Health, the Department of Behavioral Health, the Department of Internal Services, and the Sheriff’s Office. ISD - Facility Services anticipates significant net savings over PG&E rates for the duration of each ESA, each of which are listed in more detail in Exhibit A. The anticipated gross cumulative savings for all seven ESAs together is over $540,000 in the first year and $23,000,000 across the initial 20-year term of the collective ESAs.

 

DISCUSSION:

 

Introduction - Enabling Laws

 

The Legislature has declared its intent (in Public Resources Code § 25008) for the State to promote all feasible means of energy and water conservation and all feasible uses of alternative energy and water supply sources. To help implement that policy and extend it to local government facilities, California Government Code § 4217.10 allows public agencies, such as the County, to develop energy conservation, and alternate energy supply sources at their facilities in accordance with § 4217.10 through and including § 4217.18. Government Code § 4217.12 expressly allows a public agency, such as the County, notwithstanding any other provision of the law, to enter into an energy services agreement on terms that its governing body determines are in the best interests of the public agency, if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body makes certain findings, discussed below.

 

The recommended ESAs are proposed under California Government Code § 4217.12. As required by Government Code § 4217.12, public notice of this hearing was given, at least two weeks in advance, on November 27, 2023.  Specifically, the County posted notice of today’s hearing in the same places as notices are given for Board meeting, as well as on the County’s website under the heading “Announcements,” and at the Animal Control, Hamilton Yard, Health and Wellness Center, Pontiac Building 6, and the Woodward Regional Library where members of the public frequently visit.

 

Recent Forefront Power Project - 2020 JJC Campus Project

 

On February 4, 2020, County staff presented before your Board, and your Board approved, a solar generation and battery storage project at the Juvenile Justice Center (JJC) with project specific terms and conditions and general terms and conditions (Agreement No. A-20-066, referenced below) to govern the energy services agreement between ForeFront Power and the County for such project.

 

In March of 2022, the solar generation portion of the project became operational and has been successful in offsetting a significant portion of the energy costs of that campus.

 

The County is still working with ForeFront Power on the energy storage component of the JJC project due to delays in PG&E approvals. To date, the County has realized over $900,000 in savings from the solar generation portion in the first year. The JJC project was even recognized as the 2022 Solar Builder C&I Ground-Mount Project of the Year by Solar Builder Magazine.

 

Changes in Net Metering Energy Rules

 

In late 2022, the CPUC announced changes to the existing NEM 2.0 rules that govern solar energy projects.  On December 15, 2022, the CPUC officially approved new Net Energy Metering rules (NEM 3.0) which are significantly less favorable than solar generation solutions.  Under the NEM 3.0 rules, entities receive a less favorable return on energy typically generated by a solar system when not coupled with a storage solution.

 

Non-binding 2022 Letter of Interest with Forefront Power

 

On December 13, 2022, your Board approved the execution of a non-binding LOI with ForeFront Power to evaluate potential solar energy projects at ten County premises, assess the feasibility of installing solar projects at these locations, and submit interconnection applications on behalf of the County to PG&E for any projects that were deemed feasible. ISD anticipated that NEM 3.0 rules would be broadly less advantageous to the County and pursued using the more advantageous NEM 2.0 rules. Of the ten identified potential projects, ISD is returning before your Board now with seven of those locations for which PG&E interconnection applications have been submitted prior to the April 14, 2023, deadline. This grandfathers-in these projects and secures their NEM 2.0 status for 20 years after the date of first operation so long as these projects are operational by April 14, 2026. The other three locations originally identified did not have interconnection applications submitted as they were deemed not suitable for this type of project after further assessment was completed.

 

In consultation with ForeFront Power, ISD staff determined that pursuing storage solutions would add complexity and potentially delay the implementation of these solar projects, so storage options were not included in these projects. Should the County wish to pursue energy storage solutions in the future at these locations, the grandfathered NEM 2.0 rules will be unaffected.

 

It is important to note that if the County is required to utilize the NEM 3.0 rules, the rates already agreed to by ForeFront Power under the recommended ESAs will not change, but the comparable savings in relation to the PG&E bill would be less. (See “Consequences of changes to NEM 2.0 Rules,” below, for further discussion on this point).

 

Procurement Process and Public Hearing

 

On November 19, 2019, which was the first Board hearing regarding the JJC solar project, your Board raised questions about the JJC project and why it was not directly bid by the County pursuant to a County Request for Proposal (RFP) process.

 

The County’s direct use of its own RFP process is not the exclusive means by which the County obtains competitive pricing. The County’s Purchasing Manual states that contract buying groups are considered to take the place of competition if, in Purchasing's opinion, it is in the best interest of the County. The Department believes a County RFP of this complexity would have less predictable timing than the cooperative use of another public agency’s bid process (i.e. using SPURR) which could hinder the County’s ability to maximize tax incentives that indirectly benefit the County through negotiated Power Purchase Agreement (PPA) rates. The Department maintains that the benefits of the County’s procurement through another public agency’s bid process by “piggyback” for this project is the best option for the County. Accordingly, the Purchasing Manager determined that utilizing SPURR to procure the Systems would best meet the County’s needs. Because of this, ISD utilized the SPURR cooperative bid process.

 

SPURR, a joint powers authority (i.e., a governmental agency), operates cooperative procurement programs for natural gas, electricity, renewable energy and energy storage, energy demand response, LED lights and controls, telecommunications and networking, and utilities data management and conservation. SPURR publicly describes itself as a buying group of public agencies focused on utility services. By way of background, on July 19, 2017, SPURR issued an RFP seeking responsive proposals for solar energy and energy storage services. SPURR received eight responses to the RFP, and awarded the bid to ForeFront Power, LLC, an affiliate of ForeFront Power, in this item. The PPA rate and terms accepted by SPURR have been confirmed in the REAP Master Contract, dated October 26, 2017 (the RMC) between SPURR and ForeFront Power, LLC, which allows the County, as a public agency, to contract directly with ForeFront Power. One of SPURR’s programs, the Renewable Energy Aggregated Procurement (REAP), allows member agencies to “piggyback” on SPURR’s competitively-bid RFP to procure solar energy and energy storage solutions.

 

Government Code § 4217.12 allows public entities, such as the County, the flexibility to dispense with public bidding for energy conservation projects, when at a public hearing, the public entity’s governing body finds this method to be in the entity’s best interest. The Department believes the County has satisfied the requirements of Government Code § 4217.12, by presenting the recommended Resolution and ESAs. The Department also has relied upon the Purchasing Division’s use of the contract buying groups, and in this case, the County Purchasing Manager made the determination that the Department’s use of the SPURR RFP process is in the County’s best interest.

 

Recommended Energy Services Agreement

 

Under the recommended ESAs, ForeFront Power would finance, design, construct, implement, operate, and maintain the Systems, from which the County receives and purchases energy from ForeFront Power at specified, pre-negotiated rates (Energy Services). Under the recommended ESAs, PG&E will continue to provide Energy Services to the sites for any consumption that is not covered by the System. The recommended ESAs also contain provisions guaranteeing that each System shall generate no less than 95% of the estimated annual production of that System (Minimum Guaranteed Output). If any System fails to produce at least the Minimum Guaranteed Output for that System, then ForeFront Power will credit the County for its lost savings, up to a certain amount, based on a predefined formula.

 

The recommended ESAs also have a possible term of twenty-five years, with one twenty-year initial term, and one five-year renewal, with the option to purchase each System after the fifth anniversary of the commercial operation. Commercial operations will commence sixty days from the date on which PG&E authorizes ForeFront Power to schedule an inspection to energize and test the System. The County will make payments for Energy Services monthly, in arrears, for energy produced the prior month. The purchase price for each System, which may be purchased after the fifth anniversary of the commercial operation, shall be the greater of fair market value, or the price set out in the specific recommended ESA, which purchase price decreases each year of the recommended ESA.

 

The County also has the ability to terminate the recommended ESAs early, if necessary, but there are costs associated with such termination. Specific costs are outlined and available in each ESA, which includes the cost of removal of the System from each site, all of which is more generally described below. Additionally, after the fifth year of commercial operation the County may terminate the recommended ESAs by the purchase of the Systems.

 

Each ESA has certain language regarding early termination fees, which tie early termination fees back to applicable sections in the already approved General Terms and Conditions of Energy Services Agreement No. A-20-066 for the JJC Solar Project. Specifically:

 

                     County purchases the System (General Terms and Conditions Sec. 2.1(b)):

 

o                     The County may terminate the ESA for any reason, other than for a non-appropriation of funds, upon sixty (60) days’ prior written notice to ForeFront Power.

o                     If the County terminates the ESA during the initial term of the applicable ESA, the County would pay the Early Termination Fee set forth on Schedule 3, Columns 1a and 1b of the applicable ESA.

 

                     County default under an ESA (General Terms and Conditions Sec. 11.2(b)):

 

o                     In the event of a County default under an ESA, where ForeFront Power would not terminate the ESA, and would seek payment from the County as follows. In this situation, the General Terms and Conditions of the ESAs impose several limits on ForeFront Power’s right and remedies, which need to be read together with the applicable ESA:

 

§                     ForeFront Power’s rights and remedies are limited to the County’s then-current fiscal year;

§                     ForeFront Power’s rights and remedies are limited to the portion of the early termination fee (which is as set forth in Column 1 of Schedule 3 in the General Terms) allocable only to the County’s then-current fiscal year;

§                     ForeFront Power’s rights and remedies shall be without acceleration of any future payment by the County before any such payment is due and payable; and

§                     ForeFront Power expressly waives any right and/or remedy at law or in equity to accelerate any payment before any such payment is due and payable by the County.

 

The recommended General Terms and Conditions in the recommended ESAs also provide that ForeFront Power’s rights (including, but not limited to, the right to enforce any of the County’s obligations) and remedies, and the County’s obligations under the ESA, shall not be construed, or applied in any manner that violates the County’s constitutional debt limitation.

 

Additionally, each ESA has language in Schedule 2 relating to unforeseen construction costs. While the projects have already been accepted and reviewed by PG&E, there is the potential that unforeseen changes may arise, such as, for example, necessary changes to comply with the Americans with Disabilities Act (ADA), which were not included in the current plans. ForeFront Power will then be required to provide an updated scope of work that directly outlines the additional materials and costs relating to the unforeseen changes. The County has two options in response: either paying for the entire amount of the additional costs with no change to the PPA rate, or for every $0.01 per watt DC of such associated costs accepting an increase to the PPA; this increase is specific to each individual ESA. If the second option is selected and the total cost exceeds a specific kWh rate, specific again to each ESA, the County then has the option to terminate the agreement and remove the system subject to the early termination fees discussed above.  Despite such language regarding unforeseen costs, ISD-Facility Services has determined that the benefits of the solar projects for the County outweigh the potential risks of the aforementioned language.

 

Performance Guarantee and Estimated Savings

 

Under each recommended ESA ForeFront Power would provide electrical energy to the County at the specific final, negotiated PPA rate (each of which are specified in Exhibit A).

 

At the November 19, 2019, Board Hearing your Board expressed a desire for ForeFront Power to guarantee a certain amount of dollar savings set forth in its cash flow analysis. ForeFront Power stated that it cannot guarantee dollar savings, as dollar-based savings would necessarily depend on PG&E’s future actions in setting its rates.

 

Although the recommended ESAs do not provide a guaranteed dollar-based savings, Forefront Power makes the following quantifiable guarantees under the recommended ESAs:

 

                     Under the recommended ESAs, ForeFront Power guarantees to produce a certain amount of power at a specified minimum PPA rate (i.e., the minimum guaranteed output of the Solar PV System shall be no less than 95% of the estimated annual production of the Solar PV System, but subject to the following exclusions: acts or omissions of the County or the local electric utility including a defined disruption period; or an event of “force majeure”).

o                     If ForeFront Power does not meet the foregoing guarantee during a full term year, ForeFront Power shall credit the County an amount equal to the County’s lost savings (based on a formula) on the next invoice or invoices during the following term year under the ESA.

 

As a result of these, the County is expected to realize savings in all years each ESA’s term with the anticipated gross cumulative savings for all seven ESAs together is over $540,000 in the first year and $23,000,000 across the initial 20-year term of the Agreements.

 

Recommended ESAs compared to the JJC Solar Project ESA.

 

As mentioned above, the County has already entered an ESA with ForeFront Power for the JJC project, similar to the proposed ESAs, with the same General Terms and Conditions of Agreement No. A-20-066 that govern the JJC project will govern the recommended ESAs. The collective seven recommended ESAs are broadly similar in scale to the one JJC project with the total solar capacity for the seven sites combined is approximately 4 Megawatts compared to the JJC’s solar capacity of 3.6 Megawatts.

 

The biggest difference between the JJC project and the seven recommended ESAs is the type of System being constructed, which effects the energy savings for each site. The JJC was a large-scale project with ground-mounted panels. In contrast, the recommended ESAs include seven, smaller-scale projects with canopy-mounted panels. This means a difference for materials and building costs, which does impact the cost of electricity at each site.  Additionally, overall higher cost of some of the critical equipment translates into higher rates as well. The total benefit of the recommended ESAs is anticipated to be broadly similar to that already realized through the JJC solar project, and the County anticipates savings in all years of the recommended ESAs terms.

 

Consequences of changes to NEM 2.0 Rules

 

If any of the solar projects fail to be grandfathered into the NEM 2.0 rules, meaning the projects are not deemed operational before the April 14, 2026, deadline, the County has the opportunity to terminate the agreement without penalty. However, it is possible that the California Public Utility Commission could retroactively eliminate grandfathered NEM 2.0 rules. 

 

Should CPUC retroactively change any of these rules, the County has a few options. If the Systems are not yet complete and operational, the County still has the ability to terminate the ESA and incur no penalties for cancellation. After the Systems are in operation, if the CPUC retroactively changes the rules that govern NEM 2.0, the County does not have the ability to cancel the ESAs without incurring monetary penalties. These repercussions are specific to each site and detailed in the individual ESAs and include both a purchase and removal option. Even if the NEM 2.0 rules are changed retroactively though, the County can continue operations under the ESAs and carry-on realizing savings from the projects, just on a smaller scale.

 

As stated above, it is important to note that if the County is required to utilize the NEM 3.0 rules, the rates already agreed to by ForeFront Power under the recommended ESAs will not change, but the comparable savings in relation to the PG&E bill (without the solar project) would be less.

 

General Terms and Conditions

 

The recommended ESAs have the same General Terms and Conditions (as are in the ESA for the JJC solar project), including the following key provisions:

 

Construction for a solar project will start no later than 730 days following the execution of its recommended ESA, and the guaranteed commencement of operations date will be no later than 60 days following the construction start date (“Commercial Operation Date”).

 

Each recommended ESA contains a non-standard non-appropriations clause, which provides the following:

 

                     The County represents that it is the present intention and expectation of the County, as of the Effective Date of the ESA, that the Board, within the limits of the County’s available funds and revenues, will make an appropriation of a sufficient amount to fund the County’s obligations under the ESA during each County fiscal year of the term of the ESA.

 

                     The County agrees that it will use reasonable, good faith efforts to ensure that the County Administrative Officer (“CAO”) will take such action as necessary to include in its annual operating budget funds sufficient to purchase the Energy Services under the ESA.

 

                     However, if the CAO proposes, as part of the annual budget to be presented to the Board, that the Board not appropriate funds for the ESA, the County will give ForeFront Power thirty (30) days’ notice of such proposal prior to the Board’s annual budget hearing.

 

                     Notwithstanding anything to the contrary in the ESA, to the extent that the Board, in its discretion, does not budget funds for the ESA, the County shall, within thirty (30) days’ of any such non-appropriations event, give notice to Forefront Power of any such event.

 

                     Following a County notice of a non-appropriations event to Forefront Power, ForeFront Power has the option to either (a) continue to operate the System and provide Energy Services to the County without payment by the County, (b) continue to operate the System and deliver the Energy Services to a third party or a local electric utility, or (c) terminate the ESA and remove the System, in which case County will not be required to pay the Early Termination Fee. If ForeFront Power chooses either Option (a) or (b), the procedures above will apply to each subsequent year the System is still operating during the term of the ESA.

 

Each recommended ESAs contains a mutual indemnification and defense clause, as well as a limitation on liability clause, which provides:

 

                     Except as expressly provided in the ESA, neither Party shall be liable to the other Party or its Indemnified Persons for any punitive, exemplary, indirect, or consequential damages, losses or damages for lost revenue or lost profits, whether foreseeable or not, arising out of, or in connection with the ESA.

 

                     A Party’s maximum liability to the other Party under the ESA shall be limited to the aggregate Estimated Remaining Payments as of the date of the events giving rise to such liability, provided, the limits of liability shall not apply with respect to (i) indemnity obligations hereunder in respect of personal injury, property loss or damage, or environmental claims, (ii) any obligation of Purchaser to pay Energy Service Payments, the Early Termination Fee or the Option Price, and (iii) any obligation of ForeFront Power to pay for Lost Savings in accordance with the ESA, if applicable.

 

Each recommended ESA also contains a limitation on publicity. It requires that the parties coordinate and cooperate with each other when making public announcements related to the System prior to its Commercial Operation date. It also requires that no publicity releases shall be made by either party without the prior written consent of the other party. But the recommended ESA provides that it shall be subject to public disclosure under the Brown Act and the Public Records Act, and all other applicable laws pertaining to disclosure by public entities.

 

Other Documents and Instruments

 

Recommended action #4, above, requests your Board to authorize the Director of Internal Services/Chief Information Office (CIO) to approve and execute any further documents, instruments, estoppel and acknowledgement certificates, memoranda of agreements, as stated above. During contract negotiations, ForeFront Power informed the County’s team that ForeFront Power’s financing party may need to require the County, under each recommended ESA, to provide estoppel and acknowledgement certificates to ForeFront Power’s financing party, and memoranda of agreements (i.e., providing public notice of ForeFront Power’s license to operate at each of the specified locations) to be recorded against the premises for the project. ForeFront Power has not yet received a commitment from a financing party for the recommended ESAs, due to the length of time remaining until the project Commercial Operation date. Although the County’s team has negotiated the terms of a form of each of those documents with ForeFront Power’s team, the documents are subject to change and possible further negotiation.

 

Federal Income Tax Review - Sheriff’s Substation No. 2

 

The Sheriff’s Substation No. 2 is one of the locations for one of the solar projects.

 

The County spent $4,082,938 of proceeds from 2006 tobacco bonds towards a portion of the cost of the development and construction of the Sheriff’s Substation No. 2.

 

The 2006 tobacco bonds are tax-exempt. Therefore, the bonds are governed by federal income tax laws, which strictly limit the amount of “private business use” of the projects they finance.  Typically, “private business uses” occur when the County grants a special legal entitlement to non-governmental entities to lease, own, or, in some cases, manage bond-financed properties.

 

In this case, the proposed solar project at the Sheriff’s Substation No. 2 will not be mounted on any of any substation building or improvement that were financed with the proceeds of 2006 tobacco bonds; instead, they will be mounted on parking canopy structures provided by Forefront Power. Any incidental equipment and cabling connecting the solar project to the substation building is expected to have a negligible “use” (i.e., occupancy) of the substation building. 

 

CEQA

 

Staff from the Department of Public Works & Planning have evaluated the projects in compliance with the California Environmental Quality Act (CEQA), Sections 21000 et seq. guidelines, and have issued a categorical exemption of such projects based on those guidelines. If your Board approves the recommended ESAs, a notice of exemption, for each location, above, will be filed by staff with the County Clerk upon approval of the ESAs that your Board may approve.

 

Approval of the recommended actions will execute seven separate ESAs with ForeFront Power to finance, design, construct, install, operate, and maintain seven solar photovoltaic energy systems at the specified County locations, above.

 

REFERENCE MATERIAL:

 

BAI #49, December 12, 2022

BAI #33, September 6, 2022

BAI #39.1, July 13, 2021

BAI #5, February 4, 2020

BAI#7, November 19, 2019

 

ATTACHMENTS INCLUDED AND/OR ON FILE:

 

Exhibit A

On file with Clerk - Resolution

On file with Clerk - ESA with Forefront Power - Animal Control

On file with Clerk - ESA with Forefront Power - Area 2 Sheriff Substation

On file with Clerk - ESA with Forefront Power - Behavioral Health and Mental Health Services

On file with Clerk - ESA with Forefront Power - Hamilton Yard

On file with Clerk - ESA with Forefront Power - Health and Wellness Center

On file with Clerk - ESA with Forefront Power - Pontiac Offices

On file with Clerk - ESA with Forefront Power - Woodward Library

On file with Clerk - General Terms and Conditions of ESA No. 20-066

 

CAO ANALYST:

 

Ahla Yang