*NOT YET APPROVED*
6056795 UAC
Resolution No.
Resolution of the Council of the City of Palo Alto Approving Amendment No. 3 to the 2009 California-Oregon Transmission Project Long-Term Layoff Agreement with Certain Other Members of the Transmission Agency of Northern California to Extend the Term for 10 Years Until 2034 and to Receive Annual Market Payments
R E C I T A L S
A. The City of Palo Alto (“City”), a municipal utility and a chartered city, became a founding member of the Transmission Agency of Northern California (“TANC”) in 1984, to facilitate construction and joint ownership of transmission projects.
B. The City of Palo Alto, the California cities of Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Redding, Roseville, Santa Clara, and Ukiah; the Modesto Irrigation District (“MID”); the Turlock Irrigation District (“TID”); and the Sacramento Municipal Utility District (“SMUD”) are also members of TANC.
C. TANC currently owns approximately 87 percent of the California-Oregon Transmission Project (“COTP”), a 500-kV transmission line that interconnects with the Bonneville Power Administration at the Captain Jack Substation in Southern Oregon and with Pacific Gas & Electric Company in California at the Tesla Substation.
D. The City became a participant in the COTP in 1990, by executing Project Agreement No. 3 (PA3) and has a 3.6815%, or approximately 50 MW, share of TANC’s current entitlement to transfer capability on the COTP.
E. Due to changes in the value of the COTP to the City’s electric portfolio in 2009 the City, along with the City of Roseville, executed the Long-Term Lay-off Agreement (“2009 LTLA”) to transfer each party’s full COTP entitlement and obligations to MID, TID and SMUD for fifteen years (Resolution No. 8900).
F. Amendment No. 1 to the 2009 LTLA returned Roseville’s COTP interests, rights, and obligations from MID, TID, and SMUD back to Roseville, and clarified the City’s voting rights under TANC PA 3.
G. At TANC’s January 27, 2016 meeting, TANC approved a resolution authorizing the issuance of California-Oregon Transmission Project Revenue Refunding Bonds, 2016 Series, (“the 2016 COTP Bonds”). On March 9, 2016 TANC issued and sold its $173,920,000 California- Oregon Transmission Project Revenue Refunding Bonds, 2016 Series A (the “2016A Bonds”), which have a maturity date of May 1, 2039.
H. Amendment No. 2 to the 2009 LTLA provided that in the absence of a default by MIDTID, and SMUD, Debt Service for the 2016A Bonds and any extension thereof associated with City’s 3.6815 Participation Percentage in TANC’s entitlement to Transfer Capability on the COTP would be paid by MID, TID, and SMUD.
*NOT YET APPROVED*
6056795 UAC
I. The Parties have agreed to execute this Amendment No. 3 to the 2009 LTLA, attached as Exhibit A, to extend the 2009 LTLA for approximately an additional ten years to January 31, 2034 to ensure that all of City’s interests, rights, and obligations associated with its Participation Percentage under TANC PA 3 continue to be laid off to MID, TID, and SMUD for the extended term of the 2009 LTLA in the absence of a default by MID, TID, and SMUD, and to add an annual market payment to City from MID, TID, and SMUD. This Amendment No. 3, by modifying the term of the 2009 LTLA, will also extend the term of ROSEVILLE’s layoff of its South of Tesla (“SOT”) allocation, originally described in Section 4 of the 2009 LTLA.
The Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The Council approves Amendment No. 3 to the 2009 Long Term Layoff Agreement by and Among the Transmission Agency of Northern California and Certain of its Members, attached as Exhibit A to this resolution.
SECTION 2. As permitted by Section 2.30.290 of the City’s Municipal Code, the Council delegates authority to the City Manager, or his designee, to execute further amendments to the 2009 Long Term Layoff Agreement as needed to maintain the value of the City’s laid-off COTP share through the remaining term of the 2009 Long Term Layoff Agreement. Any further amendments shall be in writing, accomplished in accordance with the terms of the 2009 Long Term Layoff Agreement, as amended, and shall not exceed the limits of the authority granted by the Council. Further amendments shall also require approval by the City Attorney’s Office, TANC and the other 2009 Long Term Layoff Agreement participants.
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*NOT YET APPROVED*
6056795 UAC
SECTION 3. The Council finds that the adoption of this resolution does not constitute a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), as an administrative governmental activity which will not cause a direct or indirect phy sical change in the environment. TANC certified the Final Environmental Impact Report for the COTP in 1988.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ ___________________________ City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ ___________________________ Assistant City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
83112.00002\41775073.2
Exhibit A
6056786
Amendment No. 3
Long-Term Layoff Agreement
By and Among
the
Transmission Agency of Northern California
and certain
of its Members
namely
The City of Palo Alto
The City of Roseville
The Modesto Irrigation District
The Turlock Irrigation District
and
The Sacramento Municipal Utility District
83112.00002\41775073.2
Exhibit A
6056786
TABLE OF CONTENTS
RECITALS ....................................................................................................................................................... 2 AGREEMENT .................................................................................................................................................. 3 Section 1. Effective Date ........................................................................................................................... 3 Section 2. Modification of Section 2, “Term” ........................................................................................... 3 Section 3. Addition of Section 3.k, “Annual Market Payment” ............................................................... 4 Section 4. Integration ................................................................................................................................ 4 SIGNATURES .................................................................................................................................................. 4
This Amendment No. 3 of the February 1, 2009 Long Term Layoff Agreement By and Among the Transmission Agency of Northern California and certain of its members (“LTLA”), is entered into as of the Effective Date defined in Section 1 of this Amendment No. 3, by and among the Transmission Agency of Northern California (“TANC”) and certain of its members, namely the City of Palo Alto, referred to as “PALO ALTO”, and, the City of Roseville (“ROSEVILLE”), the Modesto Irrigation District (“MODESTO”), the Turlock Irrigation District (“TURLOCK”), and the Sacramento Municipal Utility District (“SMUD”), with references to each entity individually and collectively as “Party” or “Parties”. Capitalized terms used in this Amendment No. 3 are defined in TANC Project Agreement No. 3, unless otherwise specifically defined in this Amendment No.
3. RECITALS:
A. PALO ALTO, MODESTO, ROSEVILLE, TURLOCK, and SMUD are each Participants in and parties to TANC Project Agreement No. 3 (“TANC PA 3”), entered into March 1, 1990.
B. In the LTLA, PALO ALTO and ROSEVILLE laid off their entitlement to TANC’s Transfer Capability on the California-Oregon Transmission Project (“COTP”) associated with their Participation Percentages under TANC PA 3 to MODESTO, TURLOCK, and SMUD for the fifteen-year term of the LTLA.
C. In the LTLA, MODESTO, ROSEVILLE, TURLOCK, and SMUD accepted and assumed all of PALO ALTO and ROSEVILLE’s Participation Percentages under TANC PA 3 for the term of the LTLA.
D. Amendment No. 1 to the LTLA returned ROSEVILLE’s COTP interests, rights, and obligations from MODESTO, TURLOCK, and SMUD back to ROSEVILLE, and clarified PALO ALTO’s voting rights under TANC PA 3.
83112.00002\41775073.2
Exhibit A
6056786
E. At TANC’s January 27, 2016 meeting, TANC approved a resolution authorizing the issuance of California-Oregon Transmission Project Revenue Refunding Bonds, 2016 Series, (“the 2016 COTP Bonds”). On March 9, 2016 TANC issued and sold its $173,920,000 California-Oregon Transmission Project Revenue Refunding Bonds, 2016 Series A (the “2016A Bonds”), which have a maturity date of May 1, 2039.
F. Amendment No. 2 to the LTLA provided that in the absence of a default by MODESTO, TURLOCK, and SMUD, Debt Service for the 2016A Bonds and any extension thereof associated with PALO ALTO’s 3.6815 Participation Percentage in TANC’s entitlement to Transfer Capability on the COTP would be paid by MODESTO, TURLOCK, and SMUD.
G. The Parties have agreed to execute this Amendment No. 3 to the LTLA to extend the LTLA for approximately an additional ten years to January 31, 2034 to ensure that all of PALO ALTO’s interests, rights, and obligations associated with its Participation Percentage under TANC PA 3 continue to be laid off to MODESTO, TURLOCK, and SMUD for the extended term of the LTLA in the absence of a default by MODESTO, TURLOCK, and SMUD, and to add an annual market payment to PALO ALTO from MODESTO, TURLOCK, and SMUD. This Amendment No. 3, by modifying the term of the LTLA, will also extend the term of ROSEVILLE’s layoff of its South of Tesla (“SOT”) allocation, originally described in Section 4 of the LTLA.
H. The Parties agree that except as amended and modified by Amendment No. 1 and Amendment No. 2, which remain in effect, and this Amendment No. 3, the LTLA remains in full force and effect, without any other changes to any of its provisions.
NOW THEREFORE, in consideration of the premises described in the Recitals, and in consideration of the terms, covenants, and conditions that are set out below, the Parties have entered into this Amendment No. 3 to the LTLA.
AGREEMENT:
Section 1. Effective Date.
This Amendment No. 3 shall become effective and enforceable on January 30, 2024 at 0001 hours Pacific Prevailing Time following the due execution and delivery of this Amendment No. 3 to TANC, or the date on which this Amendment No. 3 is duly executed by all of the Parties and delivered to TANC, if January 30, 2024 passes without such execution and delivery (hereinafter “Effective Date”).
Section 2. Modification of Section 2, “Term”.
Section 2 of the LTLA, entitled “Term”, is hereby modified as follows:
83112.00002\41775073.2
Exhibit A
6056786
“The term of this Agreement shall be approximately twenty five (25) years commencing on the Effective Date and terminating at 0000 hours Pacific Prevailing Time on January 31, 2034, unless the Parties mutually agree in writing to extend the term of the Agreement for another five (5) years (hereinafter “Term”).
Section 3. Addition of Section 3.k, “Annual Market Payment”.
Section 3.k., “Annual Market Payment.” is hereby added:
“Starting May 1, 2024, and on each May 1 thereafter for the term of the LTLA, MODESTO, TURLOCK, and SMUD, in aggregate, will pay PALO ALTO an annual fixed payment of $550,000 per year to PALO ALTO for the 5 years from 2024 through 2028 ($61,820 from MODESTO or
11.24%%, $244,090 from TURLOCK or 44.38%, and $244,090 from SMUD or 44.38%), and $800,000 per year for the 5 years from 2029 through 2033 ($89,920 from MODESTO or 11.24%, $355,040 from TURLOCK or 44.38%, and $355,040 from SMUD or 44.38%). While this payment will be administered by TANC in accordance with section 3.f of the LTLA, MODESTO, TURLOCK and SMUD shall be jointly and severally liable to make the payment annually.”
Section 4. Integration.
Except as amended and modified by Amendment No. 1 and Amendment No. 2, which remain in effect, and this Amendment No. 3, the LTLA remains in full force and effect, without change to any of its provisions other than the text expressly altered by this Amendment No.3.
On the Effective Date this Amendment No. 3 and the LTLA shall be one, integrated Agreement.
The Parties have duly executed and delivered this Amendment via their authorized representatives set forth below.
SIGNATURES:
TRANSMISSION AGENCY OF
NORTHERN CALIFORNIA
By:
Its:
Dated:
CITY OF PALO ALTO
By:
Its:
Dated:
83112.00002\41775073.2
Exhibit A
6056786
TURLOCK IRRIGATION DISTRICT
By:
Its:
Dated:
SACRAMENTO MUNICIPAL
UTLITY DISTRICT
By:
Its:
Dated:
MODESTO IRRIGATION DISTRICT
By:
Its:
Dated:
CITY OF ROSEVILLE
By:
Its:
Dated: