DATE: November 17, 2015
SUBJECT:
Title
RESOLUTION GRANTING CONCEPTUAL APPROVAL TO MARINE GROUP BOAT WORKS, LLC FOR PROPOSED 500kW ROOF MOUNTED SOLAR PHOTOVOLTAIC INSTALLATION AT ITS LEASEHOLD LOCATED AT 1313 BAY MARINA DRIVE, NATIONAL CITY, CALIFORNIA
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EXECUTIVE SUMMARY:
Marine Group Boat Works, LLC (MGBW) has submitted a tenant project application for the installation of a 500kW roof mounted solar photovoltaic array on the roof of a District owned building at its National City Leasehold, located at 1313 Bay Marina Drive. The proposed solar project, estimated to cost $1.2 million, is anticipated to generate 700,000 kWh annually.
Under Board of Port Commissioners Policy No. 357 (BPC 357) this project requires Board approval. The project is proposed to be installed on a District owned building with an anticipated cost of $1.2 million. Pursuant to the term of the Lease with MGBW, the District owns the building, although MGBW is responsible for maintenance of the building. Should the Board approve this project, it would be at the District’s discretion at the end of Lease term to determine whether or not the solar installation should be removed.
The capital investment associated with this project would qualify for lease term extension under Board of Port Commissioners Policy No. 355 (BPC 355); however, due to construction completion time constraints associated with the State’s Net Metering program, MGBW is not currently seeking lease term extension with the conceptual approval of this project. If a lease amendment is brought before the Board for its consideration in the future, lease term extension for this qualifying capital investment may be recommended at that time.
This project, if approved, would be one of the largest solar installations in compliance with the California Solar Initiative on District Tidelands. This proposed project sets a good example of tenant investment in environmental stewardship projects along the Bay, in alignment with the District’s Climate Action Plan (CAP) goals. Staff recommends that the Board grant concept approval for the proposed project.
RECOMMENDATION:
Recommendation
Adopt a Resolution granting concept approval to Marine Group Boat Works, LLC for its proposed 500kW roof mounted solar photovoltaic installation project.
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FISCAL IMPACT:
The proposed Board action will not result in any direct fiscal impact to the District. MGBW is responsible for all applicable costs associated with project approvals and construction. MGBW currently pays the District $715,392 annually in rent, with an annual Consumer Price Index adjustment due on April 1, 2016.
Compass Strategic Goals:
This agenda item supports the following Strategic Goal(s).
• A thriving and modern maritime seaport.
• A Port with a healthy and sustainable bay and its environment.
• A Port that is a safe place to visit, work and play.
DISCUSSION:
Background
MGBW’s current lease with the District covers approximately 268,420 square feet including 85,562 square feet of building space and 95,453 square feet of water area located at 1313 Bay Marina Drive, in National City, as depicted on the Vicinity Map (Attachment A). On March 11, 2013 MGBW assumed the former Knight and Carver Lease with the District, through the United States Bankruptcy Court. The current lease is for 30-years, expiring on March 31, 2027, as summarized on the “Lease Information Summary” (Attachment B).
Under BPC 357 this project requires Board approval. The project is proposed to be installed on a District owned building with an anticipated cost of $1.2 million. Pursuant to the term of the Lease with MGBW, the District owns the building, although MGBW is responsible for maintenance of the building. Should the Board approve this project, it would be at the District’s discretion at the end of Lease term to determine whether or not the solar installation should be removed.
The proposed project is a qualifying capital investment for lease term extension under BPC 355. However, due to construction time constraints related to the end of the State’s current Net Metering program MGBW plans to participate in, MGBW is not asking for lease term extension with the conceptual approval of this project. To qualify under the current State program, MGBW must complete this project by December 31, 2015. MGBW and District staff anticipates bringing forward to the Board for its consideration an Amended Restated and Combined Lease at a future time. Any future amendment may include the incorporation of an adjacent leasehold and updated lease language, among other items. Such price and term negotiations will be brought before the Board in closed session, prior to any recommended lease amendment. If a lease amendment is brought before the Board for its consideration in the future, lease term extension for this qualifying capital investment may be recommended at that time.
Proposed Project
The proposed project includes the installation of a 500kW solar panel system on the existing District owned building roof structures along with its associated electrical and roofing works. It includes the installation of approximately 1,558 solar modules, utilizing a stationary racking system, in three separate arrays. The panels will be installed at the highest point of the roof, at the same angle as the roof, standing approximately 7” from the top of the solar module to the top of the roof. The proposed project has been designed to have a minimal impact on existing site lines of the facility. A conceptual layout of the proposed project is attached (see Attachment C).
This project, if approved, would be one of the largest solar installations in compliance with the California Solar Initiative on District Tidelands. Once installed, the project is anticipated to generate 700,000 kWh annually. This project has a total anticipated cost of $1.2 million. Prior to beginning this project, MGBW is replacing the roof structure as part of its repair and maintenance program. The solar modules have a warranty of 25 years, and the State Net Metering program MGBW plans to participate in, is currently scheduled to last until 2035, long beyond the current lease expiration of 2027. If the District chose to keep the installation at the end of lease term, the District could then benefit from the installation.
The proposed project serves as a good example of a tenant investment in environmental stewardship projects along the Bay, in alignment with the District’s CAP goals.
Conclusion
MGBW investment of $1.2 million in a 500kW solar array at its leasehold in National City is a good example of environmental stewardship and investment on a District owned building, with long term benefits. Staff recommends that the Board grant concept approval for the proposed project. Because the proposed project is a qualifying capital investment for term extension under BPC 355, after project approval, staff may recommend a lease amendment granting term extension, at a future Board meeting.
General Counsel’s Comments:
The Office of the General Counsel has reviewed the proposed recommendation to the Board and finds no legal concerns as presented.
Environmental Review:
The proposed Board action to grant concept approval for the installation of a roof mounted solar photovoltaic system is Categorically Exempt pursuant to California Environmental Quality Act (CEQA) Guidelines Sections 15301 (Class 1 - Existing Facilities) and/or 15303 (New Construction or Conversion of Small Structures) and Sections 3.a. (3) and/or 3.c. (3) of the District’s Guidelines for Compliance with CEQA because the project in question will involve a negligible expansion of use beyond that previously existing and will have no permanent effects on the environment. No further action under CEQA is required.
In addition, the proposed Board action is considered an “excluded development” pursuant to Section 8.a. (1) (Existing Facilities) and/or 8.c. (2) (New Construction or Conversion of Small Structures) of the District’s Coastal Development Permit (CDP) Regulations; therefore, issuance of a CDP is not required.
Equal Opportunity Program:
Not Applicable
PREPARED BY:
Christie Coats
Senior Asset Manager, Maritime
Attachment(s):
Attachment A: Vicinity Map
Attachment B: Lease Information Summary
Attachment C: Conceptual Layout