CITY OF SIMI VALLEY
MEMORANDUM
September 15, 2025
TO: City Council
FROM: Office of the City Manager
SUBJECT: APPROVAL OF A SUPPLEMENTAL BUDGET REQUEST IN THE AMOUNT OF $5,431,816 FOR PAYMENT OF 90% OF THE FEDERAL
SELF GENERATION INCENTIVE PROGRAM – EQUITY RESILIENCY
(SGIP-ER) INCENTIVE GENERATED FROM THE INSTALLATION OF SIX
TESLA BATTERY ENERGY STORAGE SYSTEMS AT CITY FACILITIES
STAFF RECOMMENDATION
It is recommended that the City Council approve a supplemental budget request from the General fund (Fund 100) in the amount of $5,431,816 for payment to Corporate Credit, Inc. (CCI).
BACKGROUND AND OVERVIEW
On November 9, 2020, the City Council authorized the City Manager to sign contracts with Tesla to install six battery energy storage systems at City facilities . The project required no out -of-pocket cost to the City, as it was funded through California ’s Self Generation Incentive Program-Equity Resiliency (SGIP-ER) program, which the batteries qualified for. Tesla managed the application and administration of the SGIP-ER program, and all six projects were awarded incentives.
Tesla, Inc. partnered with Corporate Credit, Inc. (CCI ) to develop these projects as part of a 200-project portfolio. Tesla assigned its rights in the City of Simi Valley contracts to CCI. As a result, the SGIP-ER incentive, which was initially allocated to the City and then assigned to Tesla, has now been reassigned by Tesla to CCI.
In 2022, after the contracts were signed, Congress passed the Inflation Reduction Act (IRA) to allow non -taxable entities to receive the full value of the associated tax credits for eligible clean energy development projects through ‘Direct Pay,’ which can be applied to offset project costs. The SGIP-ER administrators clarified that the program rules would not reduce SGIP proceeds if the federal subsidy were utilized. However, the total subsidy realized by the City cannot exceed the total cost incurred by the City.
To reflect this change, t he City and CCI/Tesla amended all six of the contracts through executed addendums, updating the purchase price to include both the ‘assignment of the state incentive’ and the newly created federal incentive.
AGENDA ITEM NO.
Consent (4)
2 FINDINGS AND ALTERNATIVES
Tesla/CCI worked with the City to create and file the necessary federal tax forms, resulting in $5,948,651.29 plus interest, for a total amount of $6,035,316.86 received by the City.
The already executed addendum has no cost to the City and simply calls for the payment to CCI of 90% of the Federal incentive received by the City. The City will retain 10%, or $603,500, to cover the cost of administration and legal fees.
The following alternatives are available to the City Council:
1. Approve a Supplemental Budget Request in the amount of $5,431,816 in the General Fund (Fund 100) and payment in that same amount to Corporate Credit, Inc. / General Capital for 90% of the Federal incentive received by the City.
2. Do not approve the supplemental budget request and provide direction to staff.
Staff recommends alternative No. 1.
SUGGESTED CITY COUNCIL MOTION
I move to approve a Supplemental Budget Request in the amount of $5,431,816 from the General Fund (Fund 100) and payment in that same amount to Corporate Credit, Inc. / General Capital for 90% of the Federal incentive received by the City.
3 SUMMARY
On November 9, 2020 City Council authorized the City Manager to execute contracts with Tesla for the installation of six battery energy storage systems at City facilities. , at no-out - of-pocket cost to the City, from the assignment of the California incentives that the Batteries would qualify for, through the Self Generation Incentive Program -Equity Resiliency (SGIP- ER) program. Tesla administered the application and administration of the SGIP-ER program, and all 6 projects were awarded an incentive. Tesla, Inc. partnered with CCI to develop these projects as part of a 200-project portfolio. Tesla assigned its rights in their contracts with the City of Simi Valley to CCI. So that the SGIP-ER, which was initially allocated to the City and had been assigned in the installation agreement to Tesla, has now been further assigned by Tesla to CCI. Tesla/CCI worked with the City to create and file the necessary federal tax forms, resulting in $5,948,651.29 plus interest, for a total amount of $6,035,316.86 received by the City.
The al
ready executed addendum has no cost to the City and simply calls for the payment to CCI of 90% of the Federal incentive received by the City. The City will retain 10%, or $603,500, to cover the cost of administration and legal fees. ___________________________________
Samantha C. Argabrite
City Manager
Pr
epared by: Carolyn Johnson, Administrative Services Director