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HomeMy WebLinkAboutOCSD 09-04 634218.1 RESOLUTION NO. OCSD 09-04 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT MAKING FINDINGS PURSUANT TO GOVERNMENT CODE SECTION 4217.10 ET SEQ. IN SUPPORT OF AN ENERGY SERVICE CONTRACT AND FACILITY GROUND LEASE FOR AN ENERGY CONSERVATION FACILITY WITH AIR PRODUCTS AND CHEMICALS, INC. (PROJECT NO. SP-134) WHEREAS, the Orange County Sanitation District (“District”) is a duly organized County Sanitation District existing pursuant to the County Sanitation District Act, California Health and Safety Code Section 4700, et seq., providing for the ownership, operation, and maintenance of wastewater collection, treatment, and disposal facilities within Orange County, California; WHEREAS, Air Products and Chemicals, Inc. (“Air Products”) is a major producer of industrial gases, including hydrogen, and is engaged in conducting research and development with various Federal and State agencies pertaining to development of hydrogen fueling infrastructure; WHEREAS, in the course of performing its statutory rights and duties, the District is an energy consumer and the District desires to convert digester gas to produce electricity for use within its facilities and hydrogen for use at a new hydrogen fueling station; WHEREAS, the District and Air Products desire to enter into an Agreement for the purpose of siting a hydrogen energy station and a hydrogen fueling station on plots of District land in furtherance of their individual objectives; WHEREAS, a separate agreement between the District and the University of California Irvine for the operation of the of the hydrogen fueling station will be presented to the District’s Board of Directors subsequently; WHEREAS, California Government Code §4217.10 et seq. facilitates the development of alternate energy supply sources at the facilities of public agencies such as the District; WHEREAS, Government Code §4217.12 allows that, notwithstanding any other provision of law, a public agency may enter into an energy service contract and any necessarily related facility ground lease on terms that its governing body determines are in the best interests of the public agency if the determination is made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance, and if the governing body finds: (1) that the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the public agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases; and (2) that the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent, is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract; WHEREAS, Government Code §4217.12 further provides that an agency may award an energy service contract and/or ground lease on the basis of the experience of the contractor, 634218.1 the type of technology employed, the cost to the local agency, and any other relevant considerations; WHEREAS, the District and Air Products agree that, by proceeding under these provisions of the Government Code, Air Products will be able to provide turn-key services within the schedules established by state and federal oversight and funding agencies; WHEREAS, the District currently pays ten cents ($0.10) per kilowatt hour for electricity from Southern California Edison, which amount is adjusted for inflation from year to year at a typical rate of approximately seven percent (7%); WHEREAS, the District currently consumes approximately two million (2,000,000) kilowatt hours of electricity per year; and, WHEREAS, the District anticipates that the hydrogen energy station will operate for a minimum period of three years. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. All of the recitals herein contained are true and correct and the Board of Directors of the District so finds. Section 2. The cost of electricity to be obtained as a result of the operation of the hydrogen energy station is anticipated to be $400,000, constituting the cost of pre-construction, construction, installation and operation of the hydrogen energy station. Over a three-year period, the average cost of said energy would be less than eight cents ($0.08) per kilowatt hour. The marginal cost, once the hydrogen energy station is constructed and installed, is anticipated to be zero. Section 3. The anticipated marginal cost to the District of electrical energy that would have been consumed by the public agency in the absence of the hydrogen energy station is currently ten cents ($0.10) per kilowatt hour and is anticipated to increase with inflation at a rate of approximately seven percent (7%) per year. Section 4. The anticipated cost to the District for electrical energy provided by the hydrogen energy station under the proposed contract (approximately eight cents per kilowatt hour) will be less than the anticipated marginal cost to the District of electrical energy that would have been consumed by the District in the absence of those purchases (at least ten cent per kilowatt hour). Section 5. The District customarily leases its property only for public purposes and, accordingly, usually leases such property for a nominal amount. In this case, the property to be leased is in the middle of the District’s plant and is not suitable for any use other than the construction and installation of a hydrogen energy station. Accordingly, the fair market value of the lease is nominal. Section 6. In this case, the District will lease the property on which the hydrogen energy station will be located for the amount of one dollar ($1.00). Accordingly, there is no difference between the fair rental value of the real property and the agreed rent. r • Section 7. It is anticipated that the energy to be purchased by the District will be purchased at below-market rates and the energy service contract will provide numerous additional environmental, air quality, and public policy benefits which more than offset the fair-market value of the lease which could be obtained by an alternative use of the property on which the hydrogen energy station will be located. Section 8. This Resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED at a regular meeting held ATTEST: ~fatht!s~~ APPROVED: 634218.1