FROM:
Engineering
SUBJECT:
Title
Termination of Solar Power Purchase Agreement with Fontana Solar Project 2019, LLC for Assessor Parcel Number 0192-031-23
End
RECOMMENDATION:
Recommendation
1. Terminate the solar Power Purchase Agreement (PPA) with Fontana Solar Project 2019, LLC for Assessor Parcel Number 0192-031-23.
2. Authorize the City Manager to enter into all documents to satisfy the termination on behalf of the City of Fontana.
3. Remit a termination payment in the amount of $490,019.00 to Fontana Solar Project 2019, LLC.
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COUNCIL GOALS:
• To invest in the City’s infrastructure (streets, sewers, parks, etc.) by maintaining and improving the city's existing infrastructure.
• To invest in the City’s infrastructure (streets, sewers, parks, etc.) by providing for the development of new infrastructure.
DISCUSSION:
In January 2019, the City of Fontana (“City”) entered a twenty-five-year solar power purchase agreement (with the option of an additional two five-year terms) with General Electric International, Inc. (“GE”) for the purchase of electric energy via solar panels at several City properties including the City Hall and Development Services Office (DSO) buildings, located at 8353 Sierra Avenue. In July 2019, the agreements were subsequently assigned to Fontana Solar Project 2019, LLC, which is now the Seller under the Power Purchase Agreement (PPA) and the Tenant under the Site Lease. The Commercial Operation Date for the procured equipment was in December 2019. Recently, the City demolished the existing City Hall building and awarded contract to replace it with a two-story building to encompass additional parking and municipal office space.
In anticipation of the aforementioned renovation, City staff contacted the Seller and informed it of the City’s plans that it would no longer be conducting business at the City Hall building, and confirmed with staff that the solar equipment used for the existing building would not be of adequate size for the new structure and thus could not be relocated to the renovated City Hall building. As a result of this, the Seller recommended a Mutual Termination Agreement. The Purchaser’s Termination Payment amount was mutually agreed to be based on the PPA’s ‘Termination Payment Schedule - Exhibit 5’. The City is in its 6th year of operation, therefore the City must render a termination payment in the amount of $490,019.00.
FISCAL IMPACT:
The fiscal impact associated with the approval of this item is $490,019.00 for the termination payment. The termination amount is included in the FY 2026-27 budget in the City Hall Renovation Project # 37600012-601-A-8320.
MOTION:
Approve staff recommendation.