CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable City Council
FROM: City Manager
SUBJECT: A Resolution of the City Council approving a License Agreement with Commerce Energy Storage, LLC to allow for the installation of high-voltage electric transmission lines within the City of Commerce; and a Resolution Approving the Agreement for Sale of Real Property between the City of Commerce and Commerce Energy Storage, LLC, for the acquisition of land located at 5960 Garfield Avenue (APN# 6356-017-900) in the City of Commerce Meeting Date: June 28, 2022
RECOMMENDATION:
The City Council will consider adopting Resolutions to: 1) Execute a License Agreement for Transmission Lines with Commerce Energy Storage, LLC to allow for the installation of high-voltage electric transmission lines along South Garfield Avenue and up to the Laguna Bell Substation (Garfield Avenue and E. Gage Avenue); and 2) Approve an Agreement for Sale of Real Property between City of Commerce and Commerce Energy Storage, LLC, for the acquisition of land located at 5960 Garfield Avenue (APN# 6356-017-900), and authorize the Mayor to sign the resolution on behalf of the City.
ANALYSIS:
During the early part of 2021, Commerce Energy Storage, LLC (Applicant) approached the City about a proposal to redevelop a vacant, 2.6-acre flag lot under the effective ownership of the California Department of Toxic Substances Control (“DTSC”) and located at 6904 East Slauson Avenue to allow for the construction of a specialized warehouse land use that will house a utility-scale battery energy storage system comprised of lithium-ion batteries and control equipment within a single-story building. The proposed facility is intended to store electricity from the existing high-voltage Southern California Edison (“SCE”) electric grid in periods of excess supply and then return that electricity back to Edison, when energy demand is at its highest, which is typically in the late afternoon. This proposed facility would be unoccupied and will be outfitted with the necessary technology to allow for full remote operation so there would be minimal new demand on City services.
On May 18, 2022, the Planning Commission considered and conditionally approved the project. Among those conditions, the Applicant was required to obtain all necessary approvals to allow for the use of City streets to run the necessary infrastructure to energize the proposed facility.
In order to send and receive electricity, the Applicant is required to successfully connect to the nearest power station, the SCE Laguna Bell Substation located at the northwest corner of the intersection of Garfield Avenue and East Gage Avenue. To achieve this, the Applicant is requesting a license to install an approximately 0.4-mile long underground electric tie-line under Garfield Avenue from the subject site and to the nearest point of the Laguna Bell Sub-Station along Garfield Avenue. To do this, the Applicant is requesting to enter into a License Agreement with the City for Transmission Lines.
Some of the important items to consider as part of this License Agreement include:
Allowing for an electric Tie-Line to be installed across a portion of the Garfield Avenue right of way in an approximately seven (7) foot by four (4) foot area below grade, along with an approximate 1,800 linear foot distance run along Garfield Avenue and terminating at the Laguna Bell Substation; Compensation for the City - a non-refundable, guaranteed, upfront, lump sum License Fee (“Guaranteed Term License Fee”) of $250,000 for the initial twenty-year term plus an additional $250,000 for each of up to two 10-year Extension Terms; An annual license fee to the City of $35,000 plus annual increases, subject to a percentage equal to the change in Consumer Price Index (CPI) for the Los Angeles-Riverside-Orange County area; and The Agreement shall commence on the Effective Date and shall continue for an initial period of twenty (20) years (“Initial Term.”) In addition, the applicant is requesting to enter into an Agreement for Sale of Real Property to acquire a remnant land-locked city-owned parcel measuring approximately 2,100 square feet and located at the rear of 6904 East Slauson Avenue (Subject Site), and addressed, 5960 Garfield Avenue (APN# 6356-017-900). An independent appraisal of the property conducted in December 2021 indicated a fair market value range of $60,000-$80,000. To compensate the City, the Applicant is offering $90,000 to acquire the land in “As-Is” condition.
As part of its research, staff determined that the parcel in question served some sort of utility purpose in the past. A current search yielded no additional information as to its current use, and therefore found no productive use of this parcel in quite some time. As such, its sale and disposition is of no major concern for the City and can be better used by the Applicant as part of their overall development.
The real property acquisition consists of one property, which is briefly described as follows:
5960 Garfield Avenue (APN# 6356-017-900) -- consists of a generally rectangular-shaped, land-locked parcel totaling approximately 2,100 square feet and located over 800 linear feet from the intersections of Slauson and Garfield Avenues. The property is currently undeveloped and previously contained small utility facilities.
To conclude, staff recommends that the City execute said Agreements in the best interest of the City. In reference, to the License Agreement, the City stands to generate both one-time and re-occurring revenues with the execution of the agreement. Also, the PSA will allow the City to sell a small remnant land-locked parcel that is not utilized by the City of Commerce. It is best to sell the parcel and allow the applicant to incorporate and maintain this parcel in conjunction with their intended use of the site.
ALTERNATIVES:
Approve staff recommendation
Disapprove staff recommendation
Provide further direction to staff
FISCAL IMPACT:
The City of Commerce stands to benefit from both one-time and reoccurring fees associated with this action. In addition the sale of an under-performing parcel will allow the City to divest in the maintenance of a parcel that has no positional benefit to the City.
RELATIONSHIP TO STRATEGIC GOALS:
This report relates to the following Strategic Focus Area: Create and pursue opportunities for collaboration and regional partnerships to maximize resources and address regional issues.
Prepared by: Jose D. Jimenez, Director of Economic Development and Planning Reviewed by: Vilko Domic, Assistant City Manager
Approved as to form: Noel Tapia, City Attorney
Respectfully submitted: Edgar P. Cisneros, City Manager ATTACHMENTS:
Resolution - License Agreement for Transmission Lines with Commerce Energy Storage, LLC Resolution - Agreement for Sale of Real Property
Draft License Agreement
Agreement for Sale of Real Property
Assessor Parcel Map for APN# 6356-017-900