City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: October 8, 2024 FROM: PUBLIC UTILITIES DEPARTMENT WARDS: 6 SUBJECT: LEASE OF VACANT PROPERTY WITH ROHR, INC., A PART OF COLLINS AEROSPACE, A DELAWARE CORPORATION FOR NINE ACRES OF VACANT LAND LOCATED AT 8200 ARLINGTON AVENUE, FOR A FIVE-YEAR TERM, FOR THE CONSTRUCTION MATERIALS YARD FOR THE RIVERSIDE TRANSMISSION RELIABILITY PROJECT 69KV SYSTEM, IN THE AMOUNT OF $500,000; WORK ORDER 642975 FOR THE EXPENDITURE IN THE AMOUNT OF $500,000 ISSUE:
Approve the Lease of Vacant Property with Rohr, Inc., a part of Collins Aerospace, a Delaware corporation for approximately nine (9) acres of vacant property located at 8200 Arlington Avenue, for a five-year term, for a construction materials yard for the Riverside Transmission Reliability Project 69kV sub-transmission system, in the amount of $500,000.
RECOMMENDATIONS:
That the City Council:
Approve the Lease of Vacant Property with Rohr, Inc., a part of Collins Aerospace, a Delaware corporation for approximately nine (9) acres of vacant property located at 8200 Arlington Avenue, for a five-year term, for a construction materials yard for the Riverside Transmission Reliability Project 69kV sub-transmission system, in the amount of $500,000; and Authorize the City Manager, or their designee, to execute the Lease of Vacant Property, including making minor non-substantive changes, and to sign all documents necessary to complete the transaction.
BOARD RECOMMENDATION:
On July 08, 2024, the Board of Public Utilities, with 8 members present, voted unanimously to recommend that the City Council approve the Lease of Vacant Property with Rohr, Inc., a part of Collins Aerospace, a Delaware corporation for nine (9) acres of vacant property located at 8200 Arlington Avenue, for a five-year term, for a construction materials yard for the Riverside Transmission Reliability Project 69kV sub-transmission system, in the amount of $500,000.
BACKGROUND:
The Riverside Transmission Reliability Project (Project) is a joint project with Southern California Edison (SCE) to provide the City of Riverside a second connection to the state electric transmission grid to address the capacity and reliability needs of the City. As part of Project, improvements are required to Riverside Public Utilities’ (RPU) 69kV sub-transmission system within the City to increase capacity between key substations.
The Project includes construction of approximately nine miles of double circuit 230kV transmission lines by SCE, installation by RPU of approximately 10 miles of 69kV sub-transmission lines within the City of Riverside, construction of two new substations – Wildlife (SCE) and Wilderness (RPU), improvements to five existing RPU 69kV substations, RPU system improvements for reconfiguration of existing sub-transmission and distribution lines, and installation of new telecommunication lines by RPU.
The construction of RPU’s 69kV sub-transmission component of the Project requires a material yard for material storage and equipment needed for construction. In February 2015, RPU staff, in collaboration with Real Property Services of Riverside’s Community & Economic Development Department, searched for a suitable property to accommodate the need for the 69kV construction without any impediment to the project progress. The search began with City owned properties and expanded to include private properties. The approximate nine (9) acre site at Rohr, Inc. was sought as the preferred economic and environmentally favorably location to support the project needs subject to the Board and City Council approval.
On July 10, 2017, the Board of Public Utilities approved the expenditure for a five-year lease and recommended to the City Council to approve the lease of nine (9) acres of vacant property with Rohr, Inc., located at 8200 Arlington Avenue for a construction materials yard for RPU’s portion of the Project, the 69kV sub-transmission system, in the amount of $500,000.
On July 25, 2017, the City Council approved the lease agreement with Rohr, Inc. for the nine (9) acres of vacant land located at 8200 Arlington Avenue, for three years plus two one-year options to extend the agreement. The City Council also authorized the City Manager, or their designee, to execute the lease agreement for three years and the two one-year options to extend, including making minor and non-substantive changes, and to sign all documents necessary to complete the transaction.
On August 7, 2017, the City of Riverside Public Utilities (RPU) entered into the lease agreement with Rohr, Inc., but the lease period did not commence until May 1, 2019, after completion of the preliminary site preparation by the property owner (Rohr, Inc.) per the agreement. The initial three years term expired on April 30, 2022. But before that, the City exercised its options on February 8, 2022, to extend the agreement through April 30, 2024, due to the construction status of the RTRP.
Vacant property on Arlington Avenue
DISCUSSION:
The construction status for RRPU’s 69kV portion of the Project requires a new land lease for five years to be used for a construction materials yard. The Project is projected to be completed by late 2028. This necessitated RPU staff to initiate meetings with Rohr, Inc. to explore the possibility of a new five-year lease term to support RTRP until its projected completion by the end of 2028. Rohr, Inc. approved the new lease, and both parties agreed to the amount of $500,000 for a five-year term.
No additional improvements are needed to the property. RPU previously installed temporary power, sufficient lighting to illuminate the entire material yard, remote monitoring security, and constructing facilities for the safe handling and secure storage of materials at the location. The property is flat; its surface is a combination of concrete, asphalt, and gravel, and security fences enclose the property. It is ideal for the safe handling and secure storage of materials, and it is centrally located within the project area. The property is large enough to allow for the safe navigation of large equipment that is required to handle materials that will be staged at the property.
RPU and Real Property Services staff, after careful consideration, determined that the five-year term lease for $500,000 is a fair lease price. This determination was based on a thorough analysis of the current market value and inflation, and a comparison to the original leased amount of $500,000 from the initially executed lease in August 2017. Staff also investigated various options and concluded that the proposed new lease agreement is fair to all parties. It provides the most economical, environmental, and efficient means to provide the logistics needed to construct RPU’s portion of the Project.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 6 - Infrastructure, Mobility and Connectivity and Goal 6.2 – Maintain, protect, and improve assets and infrastructure within the City’s built environment to ensure and enhance reliability, resiliency, sustainability, and facilitate connectivity.
This item aligns with each of the five Cross-Cutting Threads as follows:
Community Trust – This land lease is part of overall Riverside Transmission Reliability Project that underwent a significant public outreach campaign, which included numerous public meetings and extensive collaboration with the key stakeholders to receive public input and build community trust.
Equity – RPU endeavors to provide safe and reliable electric service to all its customers. Since RPU’s electric system is an interconnected network, investments made to individual parts of the system improve the reliability of the overall system, thereby providing an equitable benefit to all customers.
Fiscal Responsibility – RPU investigated various options and negotiated to ensure the best price for this new lease extension for the material yard. In addition, prior improvements made to the site make it ideal and ready for continuous use without having to spend any additional funding on the site.
Innovation – A collaborative and innovative approach will be used to maintain and manage facilities in such a way to minimize potential disruptions to RPU resources in order to maintain customer satisfaction.
Sustainability & Resiliency – RPU is committed to meeting the needs of the present without compromising the needs of the future and ensuring the City’s capacity to persevere, adapt and grow during good and difficult times alike.
FISCAL IMPACT:
The total fiscal impact of this action is $500,000 for the five-year term of the agreement or $100,000 per year. Sufficient funds for the agreement are budgeted and available in Electric Fund, Riverside Transmission Reliability Project Account No. 6130000-470685.
Prepared by: David Garcia, Utilities General Manager
Certified as to
availability of funds: Kristie Thomas, Finance Director/Assistant Chief Financial Officer Approved by: Rafael Guzman, Assistant City Manager Approved as to form: Phaedra A. Norton, City Attorney
Attachments:
2024 Land Lease Agreement
RPU Board Meeting Minutes 7/8/2024
Presentation
Work Order No. 642975 – Land Lease with Rohr Inc. for Laydown Yard ● Page 2