REPORT TO THE CITY COUNCIL
FROM: RICK STAGGS, Assistant Director
Department of Public Utilities - Wastewater Management Division
BY: JENNIFER LOVING-BIGGERT, Project Manager
Department of Public Utilities - Wastewater Management Division
SUBJECT
Title
Actions related to an Amendment to a Lease and Agreement of City-owned land at the Fresno-Clovis Regional Wastewater Reclamation Facility (RWRF) (Council District 3):
1. Adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 of the California Environmental Quality Act (CEQA) Guidelines
2. Approve a Fifth Amendment to the Lease and Agreement between the City of Fresno and James Cook, an individual, for 485 acres of City-owned land at the RWRF revising acreage for APN 327-030-22s from 127 acres to 36 acres for the remaining three one-year extensions and adjusting the total leased acreage to 394 acres at $189,908 per year
Body
RECOMMENDATIONS
Staff recommends City Council adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 of the CEQA Guidelines; approve a Fifth Amendment to the Lease and Agreement (Lease) with Mr. James Cook, an individual, adjusting total lease acreage from 485 acres to 394 acres for an annual lease amount of $189,908 for the remainder of the Lease and its extensions; and authorize the Department of Public Utilities Director or designee to execute the Fifth Amendment on the City’s behalf.
EXECUTIVE SUMMARY
On December 8, 2016, the City Council approved the Lease between the City of Fresno and Mr. James Cook for the lease of various APNs totaling 550 acres of City-owned land at the RWRF. The Lease allows the lessee to plant non-food crops irrigated with secondary treated wastewater or final effluent (Direct Reuse) provided by the RWRF. The term of the Lease was from January 1, 2017, through December 31, 2019, with the option of two one-year extensions. Through various amendments adjusting acreage, additional one-year extensions, and annual revenues, the total leased acreage at the end of December 2021 was 485 acres at $482 dollars per acre with three remaining one-year extensions.
Due to a recently approved solar project on land leased by Mr. Cook, a Fifth Amendment to the Lease and Agreement adjusts APN 327-030-22s from 127 acres to 36 acres for the remaining three one-year extensions of the Lease updating the total acreage of land leased for farming to 394 acres and annual revenues to $189,908 per year. This adjustment is necessary, as the solar project will take possession of portion APN 327-030-22s on January 1, 2022.
BACKGROUND
Wastewater Management Division (WMD) operates the RWRF which is regulated under Waste Discharge Requirements (WDR) Order No. R5-2018-0080 issued by the California Regional Water Quality Control Board, Central Valley Region (Board). The Board encourages use of recycled water to reduce the amount of secondary treated wastewater (effluent) sent to disposal ponds. WMD leases several tracts of land within the boundaries of the RWRF and recycled water is provided to farmers furthering the use of this valuable resource. Recycled water at the secondary treatment level produced at the RWRF meets Title 22 Recycled Water Criteria and can only be used to irrigate crops not for human consumption, such as cotton, or crops used for animal feed, such as alfalfa, Sudan grass, forage, winter wheat, silage corn and other fibrous crops.
The City advertised for the lease of various APNs at the RWRF in the classified section of the local newspaper. Information forms were sent to area farmers and parties inquiring about the lease of the property. Three farmers submitted lease proposals. Mr. James Cook was determined to provide the best value for the City of Fresno at $482.00 per acre for a total of 550 acres (all parcels).
On December 8, 2016, the City Council approved the Lease with Mr. Cook. The Lease is for a period from January 1, 2017, through December 31, 2019, with an option of two one-year extensions at a rate of $265,100 per year, totaling $795,300 or $1,325,500 if the two one-year options are exercised.
On January 1, 2019, 65 acres were removed (First Amendment) from the Lease adjusting the annual rate to $233,770. The Second Amendment added 51 acres to the Lease starting April 1, 2019 and adjusted the annual rate to $258,352 with three additional one-year extensions for a total of five (5) one year extensions after expiration of the Lease and Agreement. The City Council approved the Second Amendment with conditions which include seeking Council approval prior to the granting of the first one-year extension.
On December 12, 2019, the City Council approved a Third Amendment deleting 51 acres and adjusting the annual rate to $233,770. In addition, the first of five optional extensions were granted extending the Agreement to December 31, 2020
On April 1, 2020, the City Council approved a Fourth Amendment to allow forbearance of rental fees for two quarters totaling $116,885, with no late fees, due no later than December 31, 2020. It also allowed for a payment arrangement option if other funding sources were not available or feasible. On September 3, 2020, the Lessee submitted to Wastewater Management Division a proposal for a payment arrangement consisting of 17 equal installments of $6,875.59 each to be paid on a quarterly basis starting the last quarter of calendar year 2020 and continuing each quarter thereafter if extension options were approved. Although there was not a formal arrangement, the Lessee has voluntarily paid five (5) of the equal installments since December 2020.
Due to a solar project taking possession on January 1, 2022, of land leased by Mr. Cook, a Fifth Amendment is proposed to reduced the leased acreage of APN 327-030-22s from 127 acres to 36 acres for the remaining three one-year extensions of the Lease updating the total acreage to 394 acres of land for farming and revenues of $189,908 per year.
The total revenues for the Lease and Agreement from the start date of January 2017, exercising all amendments, one-year extension options and payment arrangements to be fulfilled by December 2024 will be $1,819,670.53 to go to the Wastewater Management Division Enterprise Fund.
The City Attorney has reviewed and approved the Fifth Amendment as to form.
ENVIRONMENTAL FINDINGS
Staff has performed Environmental Assessment No. P19-03800 of this project and has determined that it falls within the Categorical Exemption set forth in section 15301 (Class 1/Existing Facilities) for the CEQA guidelines which exempts operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public structures and facilities involving no expansion of use beyond that existing at this time because the authorized use specifically included in the Lease and Agreement continues the historical use of the properties for agricultural purposes.
Furthermore, Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines Section 15300.2 apply to this project.
LOCAL PREFERENCE
Local preference was not considered because a bid or award of a construction or services contract is not included.
FISCAL IMPACT
There is no fiscal impact to the General Fund. The cost per acre remains at $482. The annual revenue for calendar year 2022 will be $189,908 for the lease.
Attachments:
Attachment 1 - Fifth Amendment to Lease and Agreement between the City of Fresno and James Cook for the lease of 550 acres of farmland at the Fresno-Clovis RWRF
Attachment 2 - Fourth Amendment to Lease and Agreement between the City of Fresno and James Cook for the lease of 550 acres of farmland at the Fresno-Clovis RWRF
Attachment 3 - Third Amendment to Lease and Agreement between the City of Fresno and James Cook for the lease of 550 acres of farmland at the Fresno-Clovis RWRF
Attachment 4 - Second Amendment to Lease and Agreement between the City of Fresno and James Cook for the lease of 550 acres of farmland at the Fresno-Clovis RWRF
Attachment 5 - First Amendment to Lease and Agreement between the City of Fresno and James Cook for the lease of 550 acres of farmland at the Fresno-Clovis RWRF
Attachment 6 - Lease and Agreement between the City of Fresno and James Cook for the lease of 550 acres of farmland at the Fresno-Clovis RWRF