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CITY OF BURBANK
PUBLIC WORKS DEPARTMENT
MEMORANDUM
DATE: October 21, 2008
TO: Mary Alvord, City Manager
FROM: Bonnie Teaford, Public Works Director
by: Ari Omessi, Assistant Public Works Director - Fleet & Building SUBJECT: APPROVAL OF A LEASE WITH CLEAN ENERGY TO BUILD A TIME-
FILL CNG STATION AT THE PUBLIC WORKS YARD
PURPOSE:
To obtain Council authorization for the City Manager to execute a lease with Clean Energy to build and operate a time-fill CNG fueling station located at the Public Works Yard.
BACKGROUND:
On July 23, 2002, Council approved an agreement with Clean Energy (formerly ENRG) for the design, construction and 10-year operation of a CNG fueling station located a t 810 N. Lake Street. The station opened on April 23, 2003 and has been operating since then under Clean Energy’s management.
On September 12, 2006, staff presented a report to Council requesting a budget appropriation to facilitate the construction of a time-fill CNG fueling facility to be located at the Yard. Council requested staff to conduct a cost/benefit analysis comparing the development options for a public fast-fill CNG fueling station, a time-fill fueling facility, or a CNG fueling station located at the Burbank Airport.
While staff was conducting its research on the various types of time-fill stations and their costs, Clean Energy contacted the City with a proposal to extend the term of its current agreement. In addition, Clean Energy’s propo sal included an offer to build a time-fill CNG station at the Yard valued at $750,000. Staff reviewed this proposal with the Transit Task Force Committee, which unanimously recommended moving forward with the contract amendment.
Attachment 2 - October 21, 2008 Staff Report
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On July 29, 2008, City Council approved a First Amendment to the agreement with Clean Energy. This amendment included provisions to
extend the existing contract with Clean Energy for 10 additional years in exchange for having Clean Energy design, build, and operate a private-access (open only to the City) time-fill fueling station at the Public Works Yard; allow Clean Energy to control retail costs of fuel to the public; require Clean Energy to keep the current billing rate structure in place for the City;
require Clean Energy to provide City employees, residents of Burbank, and the City’s contract fleet vehicles (such as our transit buses) a preferential rate for CNG that is the same as the City’s rate; and
require Clean Energy to provide the City with half of the payments it receives from the Volumetric Excise Tax Credit.
The First Amendment included a provision that it would terminate and have no effect on the operation of the current station unless the City and Clean Energy entered into a lease agreement for the new time-fill station by November 1, 2008.
ANALYSIS:
Clean Energy, utilizing their capital up to $750,000, will design, build and operate a private-access CNG time-fill fueling station at the Yard located at 124 S. Lake Street.
This station will be used to fill the C ity’s fleet of CNG refuse vehicles overnight, saving refuse drivers time during their daily routes and relieving congestion at the public station previously caused by City refuse vehicles fueling at that location.
Clean Energy estimat es that construction will take nine (9) to twelve (12) months to complete. Fuel at this station will be billed at the same rate the City currently pays at the existing public-access CNG station at 810 N. Lake Street. All maintenance, repair and fuel station equipment replacement costs will be paid by Clean Energy.
Burbank Municipal Code § 2-2-201.B provides that the City may lease City property to groups serving the public interest and that such lease may contain provisions allowing for other considerations in lieu of rental at fair market value.
The lease with Clean Energy will serve the public interest by allowing CNG refuse vehicles to use the new time-fill station and no longer have to use the public station.
This will allow for more efficient use of City employee time and for overnight fueling of the refuse vehicles.
In lieu of the fair market rental value that has been determined to be $5, 851 per month, pursuant to the First Agreement approved by Council in July 2008, the City will receive discounts on the fuel cost and a 50% share of the Volumetric Excise Tax Credit. In addition, the time- fill station will be constructed solely at Clean Energy’s expense and Attachment 2 - Page 2
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the City will have the option at the end of the term of the lease to purchase the station for $1.00. The construction of the time-fill CNG station is at no cost to the City.
It is in the public interest to continue to have alternate fuels used for City vehicles. The new time-fill CNG station will provide a more efficient way to continue to maintain a varied portfolio of alternately fueled City vehicles, and will relieve congestion at the existing public station.
ENVIRONMENTAL STATUS:
This project has been determined to be Categorically Exempt from the California Environmental Quality Act (CEQA) under Section 15303(e) of the State CEQA Guidelines pertaining to new construction or the conversion of small structures. This class of exemption consists of construction and location of limited numbers of new, small facilities or structures.
FISCAL IMPACT
:
The construction and maintenance of the time-fill CNG station will be paid for by Clean Energy and present no additional costs
to the City for the life of the agreement, which
will not expire until September 1, 2022. Currently, the City has funds in the amount of $496,766.12 appropriated in project account number 498.PW31A.15022.0000.15718 (CNG Time-Fill Station), which will return to Fund 498 (Refuse Fund) upon the closing of the account.
RECOMMENDATION
:
Staff recommends adoption of the resolution authorizing the City Manager or her designee to execute a lease with Clean Energy to build and operate a time-fill CNG fueling station located at the Public Works Yard.
Attachment: Lease Agreement (with Exhibits A and B)
Attachment 2 - Page 3