REPORT TO COUNCIL
SUBJECT
Title
Action on Fund Transfer from Silicon Valley Power to General Fund for Use of City-Owned Property at 2975 Lafayette Street for Electric Utility Use and Related Budget Amendment [APN: 224-36-056 (Portion)] [Council Pillar: Deliver and Enhance Quality Efficient Services and Infrastructure]
Report
BACKGROUND
The City’s Electric Utility Department dba Silicon Valley Power (SVP) owns and maintains streetlights, utility poles and fiber infrastructure that serve as a foundation for its power and communications services. Besides supporting electric services, the SVP’s poles and fiber infrastructure are also leased to fiber carriers and wireless providers to attach their equipment and provide communication services to Santa Clara.
The City of Santa Clara owns approximately 1.077 acres of land zoned for heavy industrial use at 2975 Lafayette Street that was previously used as a fire station and police pistol range. A small portion of the property (0.148 acres or 6,455 square feet) has been and currently is used and managed by SVP as the hub site for the Outdoor Distributed Antennae System (ODAS) project (Exhibit A). Previous actions on this project include:
• On December 9, 2014, Council approved Capital Improvement Program (CIP) project Distributed Antenna System Development (No. 2413) funded with SVP funds for the design and development of a carrier-neutral ODAS project and a service agreement with DAS Group Professionals (DGP) to establish and manage a City-owned ODAS network to benefit Wireless Service Providers (WSPs) to generate revenue for the City.
• In 2015, the ODAS hub site, and 15 nodes (streetlight antennae) were deployed on City-owned land, poles, power and fiber infrastructure.
• On October 20, 2015, a Master License Agreement (MLA) was executed between the City and Verizon Wireless that allowed for Verizon Wireless to boost its cellular signal around the Levi Stadium and Great America Parkway during Super Bowl 50 and beyond.
SVP operates and manages the City-owned land (6,455 square feet) on which the ODAS hub site and fiber network reside. This underutilized land parcel is adjacent to a gas compressor that supports the Don Von Raesfeld (DVR) power plant, and also includes City Facilities Services Program’s storage buildings and onsite parking.
DISCUSSION
With the construction of the ODAS project and license agreement with Verizon, other City uses for this portion of the property are limited. The proposed fund transfer would compensate the City for SVP’s exclusive use of the property for the term of the MLA. The market purchase price for the 0.148 acre portion of the property is appraised at $580,000.
SVP expects to net approximately $1.3 million over the initial 10-year term of the MLA. SVP would continue operations to ensure customer support and security for the ODAS. A portion of the gross lease revenues fund the operations and management of the system. With design and construction costs ($2.5 million) plus this proposed transaction SVP has spent approximately $3.1 million on the facility. The MLA also provides Verizon with two options for 5-year lease extensions. If Verizon exercises its options to extend, or if any other carriers also lease the facility, staff will review whether the General Fund should receive additional compensation for the continued use of the City property.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378 (b) (4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment. (See also, CEQA Guidelines section 15382, Significant Effect on the Environment) [2018 California Environmental Quality Act & CEQA Guidelines: p. 315 and p. 317.]
FISCAL IMPACT
The market purchase price for the 0.148 acres at 2975 Lafayette Street is appraised at $580,000. In FY 2015/16, Council approved a total of $2.0 million for the Distributed Antenna System Development project as mentioned above, in order to develop the wireless carrier-support service and platform which includes the hub site at 2279 Lafayette Street, Santa Clara and City-owned power, fiber infrastructure, and 15 ODAS street light poles with wireless antennas. To date, the project supports one wireless carrier and generates over $150,000 annually to SVP in hub and streetlight antenna lease revenues. Funding is available in the project budget for the land transfer from the City to the Electric Utility.
A budget amendment to transfer funds from the Electric Utility Capital Fund to the General Fund for this transaction is detailed below. In the Electric Utility Capital Fund, this includes the carryover of unspent FY 2019/20 funds of $580,000 for the Construction - Distributed Antenna System Development project and the subsequent use of those project funds to support the transfer to the General Fund.
Budget Amendment
FY 2020/21
|
|
Current |
Increase/ (Decrease) |
Revised |
|
General Fund |
|
|
|
|
Transfers In |
|
|
|
|
Transfer from the Electric Utility Capital Fund |
$0 |
$580,000 |
$580,000 |
|
|
|
|
|
|
Reserves |
|
|
|
|
Land Sale Reserve |
$23,908,392 |
$580,000 |
$24,488,392 |
|
|
|
|
|
|
Electric Utility Capital Fund |
|
|
|
|
Carryover of FY 2019/20 Unspent Project Funds: |
|
|
|
|
Beginning Fund Balance |
|
|
|
|
Unrestricted Beginning Fund Balance |
$93,973,594 |
$580,000 |
$94,553,594 |
|
|
|
|
|
|
Expenditures |
|
|
|
|
Construction - Distributed Antenna System Development project (591-2413) |
$0 |
$580,000 |
$580,000 |
|
Use of Carryover Funds for Transfer to General Fund: |
|
|
|
|
Expenditures |
|
|
|
|
Construction - Distributed Antenna System Development project (591-2413) |
$580,000 |
($580,000) |
$0 |
|
Transfers Out |
|
|
|
|
Transfer to General Fund |
$0 |
$580,000 |
$580,000 |
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov>.
RECOMMENDATION
Recommendation
1. Approve the Electric Utility transfer of funds to the City General Fund for the City Property at 2975 Lafayette Street;
2. Approve the transfer of $580,000 to the City’s General Fund from Electric CIP project Distributed Antenna System Development (No. 2413) for the land at the appraised value; and
3. Approve the FY 2020/21 budget amendment in the Electric Utility Capital Fund to increase the Beginning Fund Balance and the Construction - Distributed Antenna System Development project by $580,000 to reflect the carryover of unspent funds from FY 2019/20 and the subsequent reduction of the Construction - Distributed Antenna System Development project to fund the transfer to the General Fund in the amount of $580,000; in the General Fund, recognize the transfer from the Electric Utility Capital Fund of $580,000 and allocate the funding to Land Sale Reserve.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Appraisal Report
2. Legal Description, Platt Map, and Closure of the ODAS Hub Site at 2975 Lafayette Street