Report to Mayor and City Council
Tuesday, August 06, 2024
Special Orders of the Day
SUBJECT:
Title
PUBLIC HEARING TO CONSIDER INTRODUCTION AND FIRST READING OF AN UNCODIFIED ORDINANCE OF THE CITY OF CARSON, CALIFORNIA: (1) ADOPTING MITIGATED NEGATIVE DECLARATION AND MITIGATION MONITORING AND REPORTING PROGRAM WITH RESPECT TO APPROVAL OF DEVELOPMENT AGREEMENT NO. 32-22; AND (2) APPROVING DEVELOPMENT AGREEMENT NO. 32-22 BETWEEN THE CITY OF CARSON AND AVOCET ENERGY STORAGE, LLC FOR A PROPOSED BATTERY ENERGY STORAGE SYSTEM (BESS) PROJECT AT 23320 ALAMEDA STREET (APN 7315-020-022) (CITY COUNCIL)
Body
I. SUMMARY
On July 9, 2024, the Planning Commission conducted a public hearing and unanimously adopted Resolution No. 24-2871 approving Site Plan and Design Review No. 1887-22 for the construction of 200-megawatt battery energy storage system (BESS) with related infrastructure and Conditional Use Permit No. 1115-21 to allow on-site storage of hazardous material (lithium-ion batteries) at the approximately 6.96-acre project site located at 23320 Alameda Street. However, this approval is contingent upon City Council’s approval of the Mitigated Negative Declaration and the Development Agreement which are subjects of City Council’s consideration included with this item.
The Planning Commission unanimously recommended that the City Council adopt Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (“MND/MMRP,” Exhibits 4-5) and approve Development Agreement No. 32-22 (the “DA”) for this BESS project (Exhibit Nos. 1 and 2).
The Planning Commission also conditionally approved the CUP and DOR entitlements (subject to Council adoption of the MND/MMRP and approval of the DA), because the CMC provides the Planning Commission is the primary approval body for CUP and DOR entitlements. No appeal to the City Council was filed. Therefore, consideration of approval of the CUP and DOR and the required findings for same is not directly before the City Council under this item. However, consideration of adoption of the MND/MMRP and approval of the DA via Ordinance No. 24-2412 (Exhibit 6) is before the City Council for consideration, and the Planning Commission approvals will not take effect unless and until the Council approvals are given and effective.
The Development Agreement includes several deal points; however, the most important is the payment of the “Battery Fee” and the associated generation of sales tax for the City from the Developer’s purchase of the project batteries, with the following payment schedule/key points:
1. Within 30 days of the DA Effective Date, City to collect $100,000 toward the “Battery Fee”;
2. Minimum total amount the City would collect in sales tax revenue plus “Battery Fee” payments if the project is built: $3,067,400;
3. Developer to secure a bond in the amount of $2,967,400 ($3,067,400-$100,000) prior to issuance of any permits to ensure City is paid the “Battery Fee”.
The “Battery Fee” is related to the sales tax generated from the purchase price of the batteries. Further detail is provided in the Fiscal Impact section of this report.
II. RECOMMENDATION
Recommendation
TAKE the following action:
1. OPEN the public hearing, TAKE public testimony, and CLOSE the public hearing;
2. INTRODUCE for first reading, by title only and with full reading waived, Ordinance No. 24-2412, entitled “AN UNCODIFIED ORDINANCE OF THE CITY OF CARSON, CALIFORNIA: (1) ADOPTING MITIGATED NEGATIVE DECLARATION AND MITIGATION MONITORING AND REPORTING PROGRAM WITH RESPECT TO APPROVAL OF DEVELOPMENT AGREEMENT NO. 32-22; AND (2) APPROVING DEVELOPMENT AGREEMENT NO. 32-22 BETWEEN THE CITY OF CARSON AND AVOCET ENERGY STORAGE, LLC FOR A PROPOSED BATTERY ENERGY STORAGE SYSTEM (BESS) PROJECT AT 23320 ALAMEDA STREET (APN 7315-020-022).”
1.
Body
III. ALTERNATIVES
TAKE any other action the City Council deems appropriate.
IV. BACKGROUND
BESS Project Details
Site History and Existing Use
In 1964, the vacant and undeveloped project site was partially developed with several structures associated with the hydrogen gas plant operations being conducted on the northern adjoining property. During the 1990’s, the hydrogen plant operation ended and all structures on the project site were demolished except for an existing single-story building. As part of the hydrogen plant closure, the present-day project site parcel was subdivided from the adjoining northerly parcel.
Since approximately 2003, the project site has operated as an aggregate recycling center with concrete and asphalt crushing, shipping, and receiving activities on an unpaved area.
Project Description
The BESS project site is located in the eastern portion of the city, east of South Alameda Street and north of East Sepulveda Boulevard. The land uses surrounding the project site are predominantly heavy industrial. In addition to the BESS, the subject project includes project-related offsite improvements that traverse portions of the cities of Carson, Los Angeles, and Long Beach.
The project is an approximately 200-megawatt BESS consisting of lithium-ion batteries, medium-voltage transformers, switchgear, a collector substation, and other associated equipment to interconnect into the Southern California Edison (SCE) Hinson Substation located in the City of Long Beach. The steel enclosures will contain battery storage racks, with relay and communications systems for automated monitoring and management of the batteries to ensure design performance. A battery management system will be provided to control the charging/discharging of the batteries, along with temperature monitoring and control of the individual battery cell temperature with an integrated cooling system. Power inverters to convert along with transformers to step up the voltage, would also be included. A single 220kV generation transmission line (gen-tie line) will interconnect the project to the existing SCE Hinson Substation to transfer power.
Gen-tie Route
The gen-tie line route will extend overhead approximately 1.1 miles from two on-site 75-foot high transmission poles, crossing over the Dominguez Channel connecting the gen-tie line to three transmission poles (up to 175 feet in height) located east of the Channel continuing over a City-owned public right-of-way (Intermodal Way) and other heavy industrial-zoned areas located in the City of Carson with the remaining run of the project-related offsite improvements located outside of Carson, extending to the transition point in the City of Los Angeles from which the gen-tie line would run underground to the SCE Hinson Substation located approximately 0.62 miles to the northeast in the City of Long Beach as shown in Exhibit C to the Development Agreement.
For the Hinson Substation, SCE would install one tubular steel pole (TSP) approximately 130 feet tall with approximately a 12-foot wide by 30-foot-deep foundation. SCE would install a conductor from the Hinson Substation rack position to the new SCE-owned TSP and span to the customer-owned point of change of ownership (POCO) TSP.
The overhead portion of the gen-tie line crossing over Intermodal Way will require an aerial easement (transmission) agreement for which the developer will be granted an easement from the City in exchange for $3,000 pursuant to the transmission aerial easement agreement which is attached as Exhibit D to the Development Agreement.
The gen-tie line and SCE features and upgrades to the existing SCE Hinson Substation are collectively referred to as project-related offsite improvements.
Project’s Service
The project will provide a service to the regional electric grid by receiving energy (charging) from the SCE electric transmission system, storing energy on site, and then later delivering energy (discharging) back to the point of interconnection (SCE Hinson Substation). The facilities are intended to operate year-round and would be available to receive or deliver energy 24 hours a day and 365 days a year.
Surrounding Uses and Compatibility
The project site and the project-related offsite improvements are located within predominantly heavy industrial areas.
• Air Products, a hydrogen production facility, adjoins the project site to the north.
• Marathon Refining coke (petroleum) storage facility adjoins the project site to the south.
• Alameda Street adjoins the project site to the west. West of Alameda Street is Union Pacific Railroad and Marathon Los Angeles Refinery (former ARCO refinery).
• Dominguez Channel adjoins the project site to the east. East of Dominguez Channel are industrial uses: tank farm and container storage.
Development Agreement (DA No. 32-22)
DA No. 32-22 (DA) complies with the procedures established by the City Council as required by Government Code Section 65865(c) and in compliance with the provisions of Government Code Sections 65864 through 65869.5, the State development agreement law.
The DA includes conditions, terms, restrictions, and requirements for development of the Property in Articles 3 and 4 (without limitation) and as permitted in Section 65865.2 of the Government Code and contains provisions in Article 7 for termination of the Agreement prior to expiration of its term (which is 20 years, subject to tolling as provided in Section 2.6).
The DA provides for a project that is located within an area suitable for the proposed use. The property is approximately 7 acres which is large enough to accommodate the project with none of the battery enclosures being location within 25 feet of any property line, which is a requirement pursuant to the Conditions for health and safety purposes. The property is located in a heavy industrial area and has no adjacency to existing or planned residential areas. The project will have direct access to Alameda St., a major truck route. However, the project in operation will not involve heavy trucking or a significant amount of traffic trips, because the operation will be remotely monitored and will only require intermittent on-site maintenance. As a result, there will be very few employees on-site (and frequently none).
The project is expected to generate 70-100 jobs for the construction of the project and will generate significant revenues for the City. The project will contribute towards community public benefits to the City. The DA, for its term, confers vested rights to the Developer as described in Articles 4-5 of the DA in exchange for the provision of public/community benefits to the City as provided in Article 3 of the DA.
The proposed DA provides for a public convenience through significant monetary benefits which will contribute to programs and services designed to provide for the health, safety, and welfare of the public, thereby exhibiting good land use practices.
General Plan Consistency
DA No. 32-22 with the inclusion of the Conditions, is consistent with the City’s General Plan and will further the overall public health, safety, and welfare in the City.
The General Plan land use designation for the project site is Heavy Industrial (HI). The Heavy Industrial designation is intended to provide for the full range of industrial uses that are acceptable within the community, but whose operations are more intensive and may have nuisance or hazardous characteristics, which for reasons of health, safety, environmental effects, or general welfare, are best segregated from other uses, and uses handling hazardous materials would be permitted only with proper safeguards and a conditional use permit.
The project site and project-related offsite improvements in Carson are located within a heavy industrial, urbanized area and cross above an open space area (Dominguez Channel). Development of the project and project-related offsite improvements would not physically divide or be incompatible with the established industrial community as the project would develop one parcel surrounded by similar heavy industrial uses.
The proposed development agreement with the conditions of approval is consistent with the General Plan land use and policies: LUR-G-1, LUR-G-15, LU-6, LU-7, CIR-G-5, CSES-P-27, CSES-P-34, SAF-4, CSES-P-33, and SAF-5. (Exhibit 3)
California Environmental Quality Act (CEQA)
The Planning Commission’s (and staff’s) recommended CEQA finding and determination, which is set forth in the proposed Ordinance No. 24-2412 for Council approval (Exhibit 6), is that the Council: (i) find pursuant to CEQA Guidelines Section 15074(b), after consideration of the whole of the administrative record, including the Mitigated Negative Declaration as circulated on April 16, 2024 ("Mitigated Negative Declaration"), and all comments received, with the imposition of mitigation measures, there is no substantial evidence that the project will have a significant effect on the environment; (2) find the Mitigated Negative Declaration has been prepared and considered in compliance with CEQA and contains all required contents pursuant to CEQA Guidelines Section 15071; (3) find the Mitigated Negative Declaration reflects the independent judgment and analysis of the City; (4) find the mitigation measures identified in the Mitigated Negative Declaration have been made enforceable conditions on the project; and (5) adopt the Mitigated Negative Declaration and the Mitigation Monitoring Program prepared for the Mitigated Negative Declaration.
The Draft Mitigated Negative Declaration (State Clearinghouse No. SCH No. 2024040695) dated April 2024 was prepared and made available for a public review and comment pursuant to CEQA Guidelines Section 15070. A Notice of Intent was issued on April 16, 2024. The public review period was from April 16, 2024, through May 16, 2024. Two (2) comment letters were received: one from the State of California Department of Fish and Wildlife dated May 13, 2024, and one from the County of Los Angeles Fire Department, dated May 16, 2024.
Although the CEQA Guidelines do not require a Lead Agency to prepare written responses to comments received, the City, via its Planning staff and environmental consultant, prepared written responses with the intent of conducting a comprehensive and meaningful evaluation of the project, as shown in the Final Initial Study/Mitigated Negative Declaration. An Errata to the Draft IS/MND was included in the Final MND, incorporating text changes resulting from public comments on the Draft IS/MND, or additional information received during the public review period. These changes do not affect the Draft IS/MND’s overall conclusions, rather, provide clarification, amplification, and/or insignificant modifications. The public comments did not warrant, and the text changes do not constitute, substantial revisions to the Draft IS/MND, and therefore did not require Draft IS/MND recirculation pursuant to CEQA Guidelines Section 15073.5.
The Draft Mitigated Negative Declaration found potentially significant impacts to biological resources, cultural resources, geology and soils, and tribal cultural resources. With the inclusion of the mitigation measures set forth in the MND, which are included as enforceable project conditions of approval as set forth in Exhibit “B” to Resolution No. 24-2871 (Exhibit 2 of this staff report), all potential environmental impacts of the project, as assessed and mitigated pursuant to the MND and MMRP and the project conditions of approval, will be mitigated to the maximum extent feasible and below a level of significance.
Based on the entire record, there is no substantial evidence that the project will have a significant effect on the environment. The Mitigated Negative Declaration has been prepared and considered in compliance with CEQA and contains all required contents pursuant to CEQA Guidelines Section 15071 and reflects the independent judgment and analysis of the City. (Exhibits 4 and 5). The Draft and Final MND are also available at <https://ci.carson.ca.us/CommunityDevelopment/AvocetBESS.aspx>.
V. FISCAL IMPACT
• CFD. In lieu of annexing the property into the Citywide CFD and based on an analysis of the Citywide CFD services needed for the project and the project’s impacts on those services, the developer will pay the City a lump sum amount of $137,825 for the full acreage of the property (6.96 acres) at the Maximum Annual Special Tax Rate for the “Industrial - All Other” Land Use Category ($630.17 per acre for FY 2024-25). Payment is due prior to issuance of building permits and the amount is subject to incremental annual increases if not paid during FY 24-25.
• DIF. DIF payment to the City, if paid during FY 2024-25, in the lump sum amount of $372,227.20, calculated at $3.56 per square foot for all square footage of the battery enclosures (approximately 114,920 square feet), inclusive of a credit of $36,888 calculated at $3.18 per square foot at 11,600 square feet for demolition of the existing 11,600 square foot building on the property. Payments shall be made consistent with and in satisfaction of the City’s IDIF ordinance. Payment is due prior to issuance of building permits, and the amount is subject to (i) incremental annual increases based on CPI if not paid during FY 24-25, and (ii) adjustment based on any changes made to the project gross square footage of the battery enclosures.
• Battery Fee. The Development Agreement provides for the Developer to pay the City a Battery Fee in an amount that could be anywhere from $100,000 to $3,067,400, depending on whether and to what extent the project batteries are purchased in a way that generates sales tax revenue (including applicable Bradley Burns sales and use tax and City transaction and use tax) for the City. If the project battery purchase generates no sales tax revenue for the City, the Battery Fee amount will be the maximum $3,067,400 amount. For each dollar of sales tax revenue that the project battery purchase actually generates for the City, the applicable Battery Fee amount will be reduced by one corresponding dollar, down to the minimum amount of $100,000. For example, if the project battery purchase generates $3,067,400 in sales tax revenue for the City (which is anticipated based on the projected cost of project batteries), the City would receive an applicable Battery Fee amount of $100,000 in addition to retaining the $3,067,400 in sales tax revenue.
VI. EXHIBITS
1. Planning Commission Staff Report and Draft Minutes dated July 9, 2024, and Avocet BESS Project Plans (pgs. 9-52)
2. Planning Commission Resolution No. 24-2871 dated July 9, 2024 (pgs. 53-72)
3. Project List of General Plan Goals and Policies Compliance (pgs. 73-75)
4. Mitigation Monitoring Reporting Program (MMRP) (pgs. 76-85)
5. Avocet BESS Initial Study/Mitigated Negative Declaration (MND) and Errata dated June 2024 (pgs. 86-279)
6. (Proposed) Ordinance No. 24-2412 (approval of MND/MMRP, Development Agreement) (pgs. 280-351)
a. Legal Description
b. Development Agreement
Prepared by: McKina Alexander, Senior Planner, Saied Naaseh, Community Development Director