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ITEM 3
City Council Memorandum Government Relations & Transportation Policy Memo No.
Date:
June 21, 2021
To:
Mayor and Council
Thru:
Joshua H. Wright, Acting City Manager
From:
Ryan Peters, Government Relations and Policy Manager
Subject:
Resolution No. 5496 SRP 230kV Transmission Project Agreement.
Proposed Motion:
Move City Council pass and adopt Resolution No. 5496 authorizing an Agreement with Salt River Project Agricultural Improvement and Power District (SRP) regarding the location and under-grounding of a 230kV transmission system in South Chandler and authorizing the Mayor to execute the Agreement; and move City Council approve a General Fund, Contingency account transfer to the Water Operating Fund for $4.350M and Wastewater Operating Fund for $10.150M, allowing for their fund balances to be spent for the needed City utility line relocations.
Background/Discussion:
Salt River Project Agricultural Improvement and Power District (SRP) is in the process of expanding its 230kV transmission system to the Intel Ocotillo Campus to meet the power demands of Intel's planned plant expansion. To meet the demand, SRP must construct new 230kV transmission lines from two different substations in South Chandler. One project segment will connect the Intel Campus to the Henshaw Substation located near Old Price Road and Germann Road. This project segment will generally follow the Old Price Road alignment to the Intel Campus. The second project segment will connect to Intel from the Schrader Substation located near Arizona Avenue and Ocotillo Road. SRP examined various route alternatives from the Schrader substation and, in consultation with the City, has identified a route that generally follows the railroad tracks east of Arizona Avenue from Schrader south to Chandler Heights Road, then west to Alma School Road, then north to Lake Drive, then southwest on Chaparral Way to Dobson Road before entering the Intel Campus.
The City and SRP have negotiated an agreement to underground a 2.65-mile segment of the transmission lines from the Schrader substation in order to minimize the negative impacts of new transmission lines in areas that do not currently have any overhead utilities. Due to the fact that SRP's standard of construction for the type of transmission lines proposed in this project is overhead, the City is agreeing to pay the difference through a combination of the value of the rights-of-way being contributed to the project for a perpetual easement for the transmission lines, moving existing City-owned underground utilities, and payment through funds accrued to the City through the SRP Aesthetics Fund Program.
SRP has agreed that with the City's approval of this agreement, it will file an application with the Arizona Power Plant and Transmission Line Siting Committee requesting approval of the route agreed to by SRP and the City. Pursuant to the terms of the agreement, the City will support this route with the under-grounding portions. The parties have agreed to work with each other during the installation of the transmission lines to minimize disruption to the residences, schools, and businesses along the corridor. The goal of this agreement is to facilitate economic development while protecting Chandler residents and businesses by undergrounding the majority of the new transmission lines and keeping overhead lines within existing overhead utility corridors.
Financial Implications:
Each year, SRP provides annual funding allotments to the City through their Municipal Aesthetics Program to conduct aesthetic improvements to SRP water and power distribution facilities. While aesthetics funds are held by SRP, the annual allotments to municipalities are calculated using: the municipality's share of irrigation acreage, percentage of Salt River Valley Water Users Membership within the municipality, the municipality's percentage share of total electric facility revenue, and the total cost of electric system work accomplished during SRP's prior fiscal year period. The City has received nearly $49 million from SRP for aesthetics projects since the program's inception in 1989. Although transmission projects are not typically allowed under SRP Municipal Aesthetics Program rules, SRP will authorize a special exception through this agreement to make available a total of $19.5M in program funds by using the existing fund balance of $7.250M and advancing up to $12.250M in future aesthetics fund allocations for this project.
The City will contribute to the difference in cost to construct underground transmission lines through a combination of granting SRP a permanent easement for the underground transmission lines in City rights-of-way for a value of $4.5M and use $12.5M of SRP Municipal Aesthetics Program funds accrued to the City.
Additionally, the City will relocate City-owned water, wastewater, and reclaimed utility lines that conflict with the underground transmission lines within the dedicated easement area on Chandler Heights Road, Alma School Road, Lake Drive, and Chaparral Way for an estimated cost of $14.5M. The remaining balance of $7M from the $19.5M in Municipal Aesthetics Program funds will be used to reimburse the City for a portion of this work. The City will also seek additional funding opportunities to offset the costs associated with the utility work through the State or other programs intended to help support public infrastructure projects required for semiconductor manufacturing, but until this information is known, the City must fund the difference of $7.5M.
Since this was not a project anticipated in the Capital Improvement Plan (CIP), an appropriation transfer from General Fund, Contingency (101.1290.5911) will be required to the Water Operating Fund for $4.350M (30% of the cost) and Wastewater Operating Fund for $10.150M (70% of the cost), allowing for their fund balances to be spent for the total of $14.5M. After the receipt of the $7M in Municipal Aesthetics Program funds from SRP to be deposited in the Water ($2.1M) and Wastewater ($4.9M) Operating Funds, the estimated cost impact for the City utility line relocations will be $2.250M from the Water and $5.250M from the Wastewater Operating Funds.
Capital Account No. Fund Name CIP Program Name Dollar Amount
605.3820.6714.0.6WA688 Water Operating Fund Utility Line Relocation $ 4,350,000
615.3910.6813.0.6WW688 Wastewater Operating Fund Utility Line Relocation $10,150,000
Total $14,500,000
Attachments
Resolution No. 5496
SRP Agreement
Letter of Support - Sellers
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