| ITEM #: 18. DATE: 07/08/2024 AI #:2050 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | RAINBOW VALLEY ENERGY STORAGE ANNEXATION REQUEST |
| STAFF PRESENTER(S): | Katie Wilken, AICP, Development Services Director |
OTHER PRESENTER(S):
Jordan Rose, Rose Law Group
SUMMARY
Discussion and possible direction to staff on the annexation of 828.33 acres of unincorporated Maricopa County, generally located 4 miles south of State Route 238, west of the Maricopa County / Pinal County line.
STRATEGIC PLAN ALIGNMENT
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RECOMMENDATION
Council direction regarding the proposed annexation of 828.33 acres of land generally located 4 miles south of State Route 238, west of the Maricopa County/Pinal County line. (Katie Wilken, AICP, Director of Development Services)
FISCAL IMPACT
Authorizing staff to initiate the required annexation procedures incurs no immediate fiscal impact. This item can allow the process to move forward without committing the Council to final approval of either the annexation or any subsequent rezoning action. An initial fiscal impact analysis was submitted by the Applicant ("Applicant's Fiscal Analysis") on April 9, 2024, reflecting the previous annexation proposal of 711.17 acres. The proposed land annexation of 828.33 acres requires a revised report that will be requested if the Council directs staff to proceed. The revised report will include information on potential costs of infrastructure and service needs in addition to impacts to other taxing districts such as Mobile Elementary School District and Maricopa County.
Based on the submitted report, a summary of the potential tax revenues to the City based on the annexation and non-annexation options is included below. The Applicant’s Fiscal Analysis of the potential tax revenue to the City from this project is included (Attachment F).
Annexation Option: If the property is annexed and developed entirely within the City of Goodyear, the project would generate to the City an estimated one-time use tax of $3,230,800 and an estimated ongoing $171,500 per year in personal property tax (for an estimated total of $6,002,000 over a 35-year period).
Non-annexation Option: If the city were to process permits and related approvals within the existing city limits to allow the development of the solar power generation facility within the City, and with the associated Battery Energy Storage Systems (BESS) facility being developed in unincorporated Maricopa County, the project would generate to the City an estimated one-time use tax of $2,423,100 and an estimated ongoing $78,400 per year in personal property tax (for a total of $2,744,000 over a 35-year period).
Based on the submitted report, a summary of the potential tax revenues to the City based on the annexation and non-annexation options is included below. The Applicant’s Fiscal Analysis of the potential tax revenue to the City from this project is included (Attachment F).
Annexation Option: If the property is annexed and developed entirely within the City of Goodyear, the project would generate to the City an estimated one-time use tax of $3,230,800 and an estimated ongoing $171,500 per year in personal property tax (for an estimated total of $6,002,000 over a 35-year period).
Non-annexation Option: If the city were to process permits and related approvals within the existing city limits to allow the development of the solar power generation facility within the City, and with the associated Battery Energy Storage Systems (BESS) facility being developed in unincorporated Maricopa County, the project would generate to the City an estimated one-time use tax of $2,423,100 and an estimated ongoing $78,400 per year in personal property tax (for a total of $2,744,000 over a 35-year period).
BACKGROUND AND PREVIOUS ACTIONS
This is a request submitted by EDF Renewables (Applicant) for annexation of 828.33 acres of land in unincorporated Maricopa County, to be included as part of a larger 2,178.42 acre solar power generation facility with a Battery Energy Storage System (BESS). The Applicant's request is included as an attachments to the report (Attachments A through G). The remaining land required for the solar power generation facility and BESS (1,350.09 acres) is currently within Goodyear’s municipal boundaries. This site is currently undeveloped land with no infrastructure in place and is native Sonoran desert. The request will involve multiple parcels with multiple owners including State Trust Land and the applicant has indicated there is agreement from all property owners to negotiate moving forward with the annexation and project development.
Given the challenges of the site, any annexation and development will require a pre-annexation agreement to be negotiated and executed prior to annexation. For the solar power generation facility and BESS, a special use permit and several zoning and general plan changes will be required. The time frame for annexation would be approximately one year, if Council directs staff to move forward on this request.
The city received a request from the Applicant, to annex into the City of Goodyear 828.33 acres of land generally located 4 miles south of State Route 238, west of the Maricopa County / Pinal County line. The 828.33 acres is part of a larger 2,178.42 acre proposed solar power generation facility and BESS project, which would be considered under a separate Special Use Permit at a future date. The properties requested for annexation are contiguous to parcels within the existing city limits and would extend the corporate limits of the City of Goodyear an additional 1.5 miles further south. The area for annexation is undeveloped land currently zoned as RU-190 under Maricopa County. The equivalent zoning in City of Goodyear would be Agricultural Urban (AU), which would be the zoning for the property upon annexation.
The Applicant is looking for assurances that the property will be annexed into the City and permitted by the City to allow the development of the project. However, as is reflected in the Rainbow Valley Solar Annexation Map (Attachment C), the property to be annexed consists of more than 27 different parcels with no common ownership. It is not clear whether the various property interests needed for the project can be acquired or leased once it has been annexed into the City.
As part of staff’s evaluation and analysis of the applicant’s request, the applicant was asked whether the solar power generation facility and BESS could be built without an annexation of land into the City. The applicant indicated that the project could be completed without annexation into the City, but the project would need to be separated and permitted by two different permitting agencies: the City (1,350.09 acres) and Maricopa County (828.33 acres). This option is not preferable to the applicant, as developing the project would be more manageable working with one permitting agency.
Arizona State Law imposes certain requirements for annexation. Property being annexed has to be contiguous to the exterior boundary of the annexing city, and the requirements that must be met before property is considered contiguous are set forth in A.R.S. § 9-471(H). The proposed annexation property does meet these requirements.
Arizona state law also requires that “[O]n or before the date the governing body adopts the ordinance annexing territory, the governing body shall have approved a plan, policy or procedure to provide the annexed territory with appropriate levels of infrastructure and services to serve anticipated new development within ten years after the date the annexation becomes final.” (ARS §9-471(P)). Based on staff’s preliminary review of the Applicant’s request, there is currently no such plan. This review would be completed as part of the next steps should this annexation request move forward.
In addition to considering the annexation requirements set forth in A.R.S. ARS § 9-471, the Goodyear City Council adopted its own annexation policy to govern the analysis of whether to annex property. In 2001, the Goodyear City Council adopted Resolution 2001-768 adopting an annexation policy that required Council approval prior to the initiation of the annexation process. The annexation policy included criteria to be used in the evaluation of such requests, including the requirement for an approved plan, policy or procedure be in place to provide annexed territory with appropriate levels of infrastructure and services to serve the anticipated new development within ten years. The annexation policy criteria is discussed below.
Given the challenges of the site, any annexation and development will require a pre-annexation agreement to be negotiated and executed prior to annexation. For the solar power generation facility and BESS, a special use permit and several zoning and general plan changes will be required. The time frame for annexation would be approximately one year, if Council directs staff to move forward on this request.
The city received a request from the Applicant, to annex into the City of Goodyear 828.33 acres of land generally located 4 miles south of State Route 238, west of the Maricopa County / Pinal County line. The 828.33 acres is part of a larger 2,178.42 acre proposed solar power generation facility and BESS project, which would be considered under a separate Special Use Permit at a future date. The properties requested for annexation are contiguous to parcels within the existing city limits and would extend the corporate limits of the City of Goodyear an additional 1.5 miles further south. The area for annexation is undeveloped land currently zoned as RU-190 under Maricopa County. The equivalent zoning in City of Goodyear would be Agricultural Urban (AU), which would be the zoning for the property upon annexation.
The Applicant is looking for assurances that the property will be annexed into the City and permitted by the City to allow the development of the project. However, as is reflected in the Rainbow Valley Solar Annexation Map (Attachment C), the property to be annexed consists of more than 27 different parcels with no common ownership. It is not clear whether the various property interests needed for the project can be acquired or leased once it has been annexed into the City.
As part of staff’s evaluation and analysis of the applicant’s request, the applicant was asked whether the solar power generation facility and BESS could be built without an annexation of land into the City. The applicant indicated that the project could be completed without annexation into the City, but the project would need to be separated and permitted by two different permitting agencies: the City (1,350.09 acres) and Maricopa County (828.33 acres). This option is not preferable to the applicant, as developing the project would be more manageable working with one permitting agency.
Arizona State Law imposes certain requirements for annexation. Property being annexed has to be contiguous to the exterior boundary of the annexing city, and the requirements that must be met before property is considered contiguous are set forth in A.R.S. § 9-471(H). The proposed annexation property does meet these requirements.
Arizona state law also requires that “[O]n or before the date the governing body adopts the ordinance annexing territory, the governing body shall have approved a plan, policy or procedure to provide the annexed territory with appropriate levels of infrastructure and services to serve anticipated new development within ten years after the date the annexation becomes final.” (ARS §9-471(P)). Based on staff’s preliminary review of the Applicant’s request, there is currently no such plan. This review would be completed as part of the next steps should this annexation request move forward.
In addition to considering the annexation requirements set forth in A.R.S. ARS § 9-471, the Goodyear City Council adopted its own annexation policy to govern the analysis of whether to annex property. In 2001, the Goodyear City Council adopted Resolution 2001-768 adopting an annexation policy that required Council approval prior to the initiation of the annexation process. The annexation policy included criteria to be used in the evaluation of such requests, including the requirement for an approved plan, policy or procedure be in place to provide annexed territory with appropriate levels of infrastructure and services to serve the anticipated new development within ten years. The annexation policy criteria is discussed below.
STAFF ANALYSIS
Requesting Council’s direction on whether staff should move forward with the annexation request is the first step in consideration for land to be included for annexation into the City of Goodyear. This application has been reviewed using the City’s Annexation Policy as a guiding document. Additionally, staff’s analysis includes review of the appropriate Arizona Revised Statutes, the General Plan, and Zoning Ordinance.
The City’s Annexation Policy, adopted in 2001, provides that staff evaluate annexation requests on the following criteria:
A. The city’s ability to provide basic services in a timely manner with an acceptable revenue to cost ratio;
B. Long-term desirability for community development and economic growth;
C. Likelihood of the area being developed in Maricopa County or being annexed by another city or town;
D. Ability to control the quality of land uses and infrastructure standards; and
E. Compatibility with General Plan, infrastructure needs, and timing of development
The City’s Ability To Provide Basic Services In A Timely Manner With An Acceptable Revenue To Cost Ratio:
Water/Wastewater: The annexation property is not located within the City’s current water or wastewater service area and it is not included in the City’s Integrated Water Master Plan, which is currently being updated. The city’s current water portfolio does not include water resources to serve this property. In addition to water resources, additional infrastructure would be needed, and given the distance from existing infrastructure, it would be extremely difficult to provide these services within the required 10-year time frame. Similarly, there are no wastewater facilities available to serve the property. The Applicant has stated in its request that the solar power generation facility and BESS project would not require water or wastewater connection or service.
Public Safety: The annexation property would extend the need for public safety services. Any extension of the service area would require modification of the existing police protection contract with the Maricopa County Sheriff’s Office. Funding for the increase in services could be addressed with the Applicant in a pre-annexation agreement. Staff has not identified a plan on how the Goodyear Fire Department would be able to address medical emergencies and/or fires on the annexation property. Any fire response would require a source of water available from a city system to extinguish fires. Additionally, there are no existing roads to provide access to and within the annexation property. Fire Department personnel have expressed public safety concerns regarding the development of the proposed battery energy storage systems (BESS) facility. These facilities can present significant risks to life safety in the case of a fire. BESS facilities have been the subject of concern from fire departments across the country as battery fires are very difficult to extinguish and expose fire personnel to significant physical hazards. The Applicant has indicated that onsite emergency medical services for employees during construction would be provided by contracted private fire companies. If viable, contracted fire and emergency response services could be addressed in a pre-annexation agreement.
Transportation: There are currently no roads providing access to the annexation property. The development of the annexation property would require the construction of several miles of roads to meet minimum access standards. In addition, roadways running east and west through the annexation property would be needed to ensure connectivity as well as emergency access. Financial guarantees related to road improvements, including construction and on-going maintenance costs would need to be addressed as part of a pre-annexation agreement. The Applicant has acknowledged responsibility for roadway development costs. This project is located within the I-11 corridor and the Applicant has stated that an easement would be provided to assist with alignment of the highway.
Development Services: Given the distance of this site from city services, third party inspections would need to be addressed as part of a pre-annexation agreement.
Parks and Recreation: Given that this site will have no permanent residents or homes based on the proposed project, this annexation request will likely have no impact on Parks and Recreation.
Long-term Desirability For Community Development And Economic Growth:
The development of a solar power generation facility and BESS will have limited impact in furthering community development or economic growth within the city, except for the one-time and on-going revenues associated with the project. With respect to employment and jobs impact, according to the Applicant’s Fiscal Analysis (Attachment F), during construction of the project a number of construction-related jobs will be created, but upon completion only 5 direct jobs will be associated with the project. The Applicant's Fiscal Analysis further assumes that, given the location of the project, very few employees would live in the City of Goodyear and the secondary impacts of employee spending during construction will be realized in the City of Maricopa or unincorporated Maricopa County.
Likelihood of the area being developed in Maricopa County or being annexed by another city or town:
There may be development pressures within the next 10-15 years to develop in the area surrounding the annexation property. These pressures will likely come from the east as demand for land around the City of Maricopa increases. Likely development would be in the form of residential master-planned communities. Based on this, it is conceivable that the annexation property would potentially be of interest to the City of Maricopa, but to meet the contiguity requirements, an annexation of substantial amounts of property would be necessary for the City of Maricopa to accommodate the annexation property. As noted earlier in the report, a portion of the project could be permitted and developed in unincorporated Maricopa County.
Ability to control the quality of land uses and infrastructure standards:
Any annexation allows the city to control the quality of land uses and infrastructure standards. In this case, Council would be asked to approve Agricultural / Urban (AU) zoning for the majority of the site, with the exception of the area designated for the BESS, which may require rezoning. Surrounding the property is land with existing residential zoning. If this project is built, when it reaches the end of its useful life, the underlying AU zoning would allow for development of one acre residential lots.
Compatibility with General Plan, infrastructure needs, and timing of development:
The City’s General Plan designates this area as Scenic Neighborhood. The existing county zoning for this property is Rural-190 (RU-190). Upon annexation, the property would be designated with the equivalent City of Goodyear zoning district which is Agricultural/Urban (AU), which would allow for the construction of single-family homes and accessory uses as outlined in Table 3-2-2 (Residential Districts Use Classifications) in the Zoning Ordinance.
This zoning designation is consistent with the General Plan. However, if this project goes forward, battery storage facilities are industrial uses under the city’s zoning ordinance and the property may need to be rezoned. Staff is reviewing the BESS system to determine if it is a standalone use requiring rezoning or if it is ancillary to the larger solar facility. Determination will be made by staff if directed to move forward processing the annexation.
Summary of Challenges
The challenges presented by this annexation request include the following:
Challenges:
1. The remoteness of this site makes it very difficult to provide municipal services in a cost-effective manner.
2. The lack of infrastructure needed for the city to provide any services to the proposed annexation property.
3. Battery Energy Storage Systems pose unique challenges and concerns to the Fire Department.
4. Roadway improvements will be required to access this area. Once dedicated to the public, there will be significant maintenance costs, which may exceed property tax revenue.
5. The risks to the city if the project does not come to fruition. If the annexation is approved and the solar project does not go forward, the city is still obligated to provide services to this area. The entity that intends to develop the proposed project has not yet acquired the property for this project and there are multiple owners, including the State Land Trust. It is not clear whether the property interests needed for the project to move forward can be acquired or leased even if it is annexed into the City.
If Council directs staff to move forward with this annexation request, staff would begin working with the Applicant to negotiate a pre-annexation agreement in order to address staff concerns regarding the request and the proposed solar power generation facility and BESS project. A pre-annexation agreement would provide an opportunity for the Applicant and the City to address the unknown development and financial concerns. While not a guarantee of being able to come to an agreeable outcome for all parties, it does allow for discussions to occur to be able to provide additional information to the Council for consideration at a later date.
Pre-annexation agreements have been used on prior projects when there are still unanswered questions, and help ensure that the fiscal and development needs of the City regarding the annexation will be fully met. It clearly sets expectations of performance by both the Applicant and the City as well as remedies should either party not live up to the agreement.
If City Council’s direction is for staff to pursue a pre-annexation development agreement, staff would return to Council first for approval of the agreement. The Pre-Annexation Development Agreement would terminate if Council ultimately decides not to annex. Once any required Pre-Annexation Agreement is in place, Council would vote to authorize the gathering of petitions for the annexation. Once the petitions had been gathered, and assuming the petitions met the statutory requirements, and after the expiration of the waiting period, Council would vote on the actual annexation.
Staff requests direction and comments from Council regarding this annexation request application.
The City’s Annexation Policy, adopted in 2001, provides that staff evaluate annexation requests on the following criteria:
A. The city’s ability to provide basic services in a timely manner with an acceptable revenue to cost ratio;
B. Long-term desirability for community development and economic growth;
C. Likelihood of the area being developed in Maricopa County or being annexed by another city or town;
D. Ability to control the quality of land uses and infrastructure standards; and
E. Compatibility with General Plan, infrastructure needs, and timing of development
The City’s Ability To Provide Basic Services In A Timely Manner With An Acceptable Revenue To Cost Ratio:
Water/Wastewater: The annexation property is not located within the City’s current water or wastewater service area and it is not included in the City’s Integrated Water Master Plan, which is currently being updated. The city’s current water portfolio does not include water resources to serve this property. In addition to water resources, additional infrastructure would be needed, and given the distance from existing infrastructure, it would be extremely difficult to provide these services within the required 10-year time frame. Similarly, there are no wastewater facilities available to serve the property. The Applicant has stated in its request that the solar power generation facility and BESS project would not require water or wastewater connection or service.
Public Safety: The annexation property would extend the need for public safety services. Any extension of the service area would require modification of the existing police protection contract with the Maricopa County Sheriff’s Office. Funding for the increase in services could be addressed with the Applicant in a pre-annexation agreement. Staff has not identified a plan on how the Goodyear Fire Department would be able to address medical emergencies and/or fires on the annexation property. Any fire response would require a source of water available from a city system to extinguish fires. Additionally, there are no existing roads to provide access to and within the annexation property. Fire Department personnel have expressed public safety concerns regarding the development of the proposed battery energy storage systems (BESS) facility. These facilities can present significant risks to life safety in the case of a fire. BESS facilities have been the subject of concern from fire departments across the country as battery fires are very difficult to extinguish and expose fire personnel to significant physical hazards. The Applicant has indicated that onsite emergency medical services for employees during construction would be provided by contracted private fire companies. If viable, contracted fire and emergency response services could be addressed in a pre-annexation agreement.
Transportation: There are currently no roads providing access to the annexation property. The development of the annexation property would require the construction of several miles of roads to meet minimum access standards. In addition, roadways running east and west through the annexation property would be needed to ensure connectivity as well as emergency access. Financial guarantees related to road improvements, including construction and on-going maintenance costs would need to be addressed as part of a pre-annexation agreement. The Applicant has acknowledged responsibility for roadway development costs. This project is located within the I-11 corridor and the Applicant has stated that an easement would be provided to assist with alignment of the highway.
Development Services: Given the distance of this site from city services, third party inspections would need to be addressed as part of a pre-annexation agreement.
Parks and Recreation: Given that this site will have no permanent residents or homes based on the proposed project, this annexation request will likely have no impact on Parks and Recreation.
Long-term Desirability For Community Development And Economic Growth:
The development of a solar power generation facility and BESS will have limited impact in furthering community development or economic growth within the city, except for the one-time and on-going revenues associated with the project. With respect to employment and jobs impact, according to the Applicant’s Fiscal Analysis (Attachment F), during construction of the project a number of construction-related jobs will be created, but upon completion only 5 direct jobs will be associated with the project. The Applicant's Fiscal Analysis further assumes that, given the location of the project, very few employees would live in the City of Goodyear and the secondary impacts of employee spending during construction will be realized in the City of Maricopa or unincorporated Maricopa County.
Likelihood of the area being developed in Maricopa County or being annexed by another city or town:
There may be development pressures within the next 10-15 years to develop in the area surrounding the annexation property. These pressures will likely come from the east as demand for land around the City of Maricopa increases. Likely development would be in the form of residential master-planned communities. Based on this, it is conceivable that the annexation property would potentially be of interest to the City of Maricopa, but to meet the contiguity requirements, an annexation of substantial amounts of property would be necessary for the City of Maricopa to accommodate the annexation property. As noted earlier in the report, a portion of the project could be permitted and developed in unincorporated Maricopa County.
Ability to control the quality of land uses and infrastructure standards:
Any annexation allows the city to control the quality of land uses and infrastructure standards. In this case, Council would be asked to approve Agricultural / Urban (AU) zoning for the majority of the site, with the exception of the area designated for the BESS, which may require rezoning. Surrounding the property is land with existing residential zoning. If this project is built, when it reaches the end of its useful life, the underlying AU zoning would allow for development of one acre residential lots.
Compatibility with General Plan, infrastructure needs, and timing of development:
The City’s General Plan designates this area as Scenic Neighborhood. The existing county zoning for this property is Rural-190 (RU-190). Upon annexation, the property would be designated with the equivalent City of Goodyear zoning district which is Agricultural/Urban (AU), which would allow for the construction of single-family homes and accessory uses as outlined in Table 3-2-2 (Residential Districts Use Classifications) in the Zoning Ordinance.
This zoning designation is consistent with the General Plan. However, if this project goes forward, battery storage facilities are industrial uses under the city’s zoning ordinance and the property may need to be rezoned. Staff is reviewing the BESS system to determine if it is a standalone use requiring rezoning or if it is ancillary to the larger solar facility. Determination will be made by staff if directed to move forward processing the annexation.
Summary of Challenges
The challenges presented by this annexation request include the following:
Challenges:
1. The remoteness of this site makes it very difficult to provide municipal services in a cost-effective manner.
2. The lack of infrastructure needed for the city to provide any services to the proposed annexation property.
3. Battery Energy Storage Systems pose unique challenges and concerns to the Fire Department.
4. Roadway improvements will be required to access this area. Once dedicated to the public, there will be significant maintenance costs, which may exceed property tax revenue.
5. The risks to the city if the project does not come to fruition. If the annexation is approved and the solar project does not go forward, the city is still obligated to provide services to this area. The entity that intends to develop the proposed project has not yet acquired the property for this project and there are multiple owners, including the State Land Trust. It is not clear whether the property interests needed for the project to move forward can be acquired or leased even if it is annexed into the City.
If Council directs staff to move forward with this annexation request, staff would begin working with the Applicant to negotiate a pre-annexation agreement in order to address staff concerns regarding the request and the proposed solar power generation facility and BESS project. A pre-annexation agreement would provide an opportunity for the Applicant and the City to address the unknown development and financial concerns. While not a guarantee of being able to come to an agreeable outcome for all parties, it does allow for discussions to occur to be able to provide additional information to the Council for consideration at a later date.
Pre-annexation agreements have been used on prior projects when there are still unanswered questions, and help ensure that the fiscal and development needs of the City regarding the annexation will be fully met. It clearly sets expectations of performance by both the Applicant and the City as well as remedies should either party not live up to the agreement.
If City Council’s direction is for staff to pursue a pre-annexation development agreement, staff would return to Council first for approval of the agreement. The Pre-Annexation Development Agreement would terminate if Council ultimately decides not to annex. Once any required Pre-Annexation Agreement is in place, Council would vote to authorize the gathering of petitions for the annexation. Once the petitions had been gathered, and assuming the petitions met the statutory requirements, and after the expiration of the waiting period, Council would vote on the actual annexation.
Staff requests direction and comments from Council regarding this annexation request application.
Attachments
- Attachment A Aerial Map (General Area)
- Attachment B - Land Use Map
- Attachment C Applicants Annexation Map
- Attachment D Resolution 2001-0768 Annexation Policy
- Attachment E Applicants Narrative
- Attachment F Applicants Fiscal Analysis
- Attachment G Applicant Project Fact Sheet
- Staff powerpoint