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HomeMy WebLinkAboutMinutes - City Council - 1982-07-14 182 N i i City Council , Special Meeting Police Dept. & Council Chambers r Redding, California July 14, 1982 4:00 P.M. The meeting was called to order by Mayor Gard with the following Council Members present: Fulton, Pugh, Kirkpatrick, and Gard. Absent: Council III Member Demsher. Also present were Assistant CitY Mana er CourtneY� CitY AttorneY Ha Electric Director Lindley, City Clerk Nichols , and Minute Clerk Rupp. CCPA AMINOIL - Agreement No. 2 With the concurrence of Council , this item was discussed out of sequence on / the agenda. - Electric Director Lindley explained that subsequent to Council 's decision :1- not to participate in the Central California Power Agency Aminoil Project, Aminoil has proposed a new agreement for consideration by CCPA members. He stated that the new agreement provides that CCPA pay a total of $25 million in exchange for the right to purchase production payments and rights to royalties payable from the gross revenue from the developed acreage. Additional CCPA payments are required for 50% of the development costs for 1. the parcels. Mr. Lindley advised that the development costs are estimated OP � to be $4 million to $8 million annually. Mr. Lindley indicated that Redding' s 6% share of the total would amount to an initial expenditure of approximately $1 .8 million plus estimated ongoing , annual expenditures of between $250,000 and $500,000. He said that the large initial expenditure would require a substantial rate increase in Redding's electric utility rates , beyond those already in effect or pro- posed. It is the recommendation of staff that, considering the exploratory risks involved and Redding's ongoing prior commitments to geothermal power source development, the Council reaffirm its prior decision to not authorize participation in the project. Councilman Pugh emphasized that this is a very important decision to make. He said he agrees with the recommendation, but stressed that rejecting participation in the Aminoil Project severely restricts Redding' s prospects for future geothermal power source development. Mr. Pugh noted that this may put Redding in a position of coming in on the tail end of some geo- thermal projects and some of the benefits to control steam rights will be lost. He agreed that the City is not in a position to make such a large financial commitment to the Aminoil Project. Mr. Pugh stressed that this virtually forecloses the City' s prospects in the geothermal area. b. Mayor Gard concurred that the City has limited financial resources and should attempt to participate in a few viable projects that can come to fruition in a reasonable amount of time. MOTION: Made by Councilman Pugh, seconded by Councilman Kirkpatrick k reaffirming Council ' s decision to reject participation in the Central California Power Agency Aminoil Project. The Vote: Unanimous Ayes III FEDERAL MINERAL RESERVE PARCEL BIDDING - Central California Power Agency l , Electric Director Lindley reviewed his memo to Council dated July 13 , 1982. 1-911) I He stated that during the CCPA study session of July 9, 1982, the CCPA Commission approved CCPA's participation in bidding on mineral rights leases for various parcels of land to be offered for bid by the U.S. f E t 1 1 7/14/82 183 Department of Interior, Bureau of Land Management. He explained that the parcels are located within the KGRA Geysers Geothermal Area, and bids for the respective leases will be accepted July 20, 1982. Mr. Lindley advised that each bid requires a 20% of total bid value deposit followed by two successive annual payments of 40% of bid value. In addi- 111 tion, annual rental payments in the amount of $2.00 per acre for the first five years and $1 .00 per acre annual escalation prior to production are required. 1 Mr. Lindley stated that disclosure of the exact number and location of parcels or the amount of the bids is not possible because of required pre-bid confidentiality; however, staff has reviewed each of the parcels and bids and recommends that the City not approve participation with CCPA 1 in the subject bids. MOTION: Made by Councilman Pugh, seconded by Councilman Fulton that the City not participate with CCPA in Federal Mineral Reserve Parcel Bidding J within the KGRA Geysers Geothermal Area. The Vote: Unanimous Ayes 1 FEDERAL MINERAL RESERVE PARCEL BIDDING - M-S-R Electric Director Lindley reviewed his memo to Council dated July 13, 1982. He stated that the M-S-R Joint Power Agency has scheduled a special meet- ing, which will be held July 15, 1982 , to consider bidding on mineral rights leases for various parcels of land to be offered for bid by the U.S. Department of Interior, Bureau of Land Management. Each of the parcels is 3 located within the KGRA Geysers Geothermal Area and bids for the various 1 leases will be accepted July 20, 1982. 4 Mr. Lindley explained that the M-S-R General Manager has requested that each member request authorization to participate with M-S-R in the bidding /(, (D1� I process. Disclosure of the exact number and location of parcels of the s amount of the individual bids is not possible because of the required pre-bid confidentiality. Mr. Lindley indicated that Redding' s total commitment, should all bids be successful , would not exceed $450,000 plus the annual rental fee of $2.00 3 per acre for the first five years and $1 .00 per year per acre annual escalation prior to production. He reviewed the payment schedule. It is the recommendation of staff that Council authorize the City' s participation with M-S-R in the bidding within the limits herein established. Should Council authorize the recommended participation, Mr. Lindley indicated that funds will be included in the 1982/83, 1983/84, and 1984/85 budgets. MOTION: Made by Councilman Kirkpatrick, seconded by Councilman Pugh authorizing the City' s participation with M-S-R in the Federal Mineral Reserve Parcel Bidding as outlined in the Electric Directors memorandum to Council dated July 13, 1982. The Vote: Unanimous Ayes i ADJOURNMENT 4 There being no further business, at the hour of 4:15 P.M. , Mayor Gard declared the meeting adjourned. I APPROVED: a 1 ( .Y.-SJ/ (;V1 AfX (7(2&A" J4-1(LL) i ATTEST: MI,Tor j 1 ret;/-/Z, 072 a City Clerk i d 1 i 7/14/82