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Santa Cruz City Council OKs UCSC conservation funding plan, downtown solar plan

March 1, 2012

By J.M. BROWN - Santa Cruz Sentinel

The City Council approved a plan Tuesday to pour fees paid by UC Santa Cruz when the university exceeds water use limits into a fund for off-campus conservation.

The move comes before a March 7 hearing by the Local Agency Formation Commission to finalize details of a city water service extension to an undeveloped corner of campus for future growth. LAFCO, under its own policy to approve only water-neutral projects, has requested a formal plan to designate overage fees for conservation.

The city's water conservation manager, Toby Goddard, said it was "extremely valuable to the city as a whole" to have a mechanism for funding utility and irrigation upgrades if UCSC, the largest water customer, exceeds 206 million gallons per year. The fee would be nearly $77,000 for each million gallons over the limit.

Opponents complain the limit was established before natural resource agencies have determined how much the city must reduce its diversion on surface water supplies to protect fish habitat. They believe UCSC should pay additional fees, regardless of whether it exceeds limits, to fund water supply improvements that don't involve the city's primary plan, a controversial desalination plant.

Councilwoman Katherine Beiers asked why the usage limit couldn't be lowered to meet UCSC averages from recent years. But water managers said the reduction in UCSC use stemmed from aggressive conservation, and they didn't want to punish the university for surpassing goals to cut back.

Also Tuesday, the council approved an agreement to put solar canopies in parking lots at the Police Department and City Hall Annex. The panels would be designed to generate 80-90 percent of energy used by those buildings.

The project involves a 10-year power purchase agreement with Barry Swenson Builder, which will construct and operate the project, and charge the city for power. The city won't see power savings for a decade, but could buy the project in 10 years for $1 million and begin to see yearly savings of $200,000.

In the meantime, the council approved a low-interest $1.3 million loan from its investment funds to accompany a Santa Cruz County Bank loan of $1.7 million for construction. Ron Pomerantz, chair of the city's transportation and public works commissioner, called the arrangement a "sweetheart deal" for Barry Swenson Builder because the city is not obligated to seek competitive bids for power agreements.

Ross Clark, the city's climate action coordinator, said the city chose the company because it was willing to make an initial investment of $200,000 to qualify for $800,000 in tax savings the city didn't qualify for.

The council also took two steps Tuesday required by the state to unwind the former Redevelopment Agency, a belt-tightening move the Legislature approved last year and the state Supreme Court upheld.

Council members appointed Doug Ley, a managing partner of downtown property owner Redtree Properties, to serve on the agency's oversight board alongside Vice Mayor Hilary Bryant and former redevelopment staffer J. Guevara. County and education leaders will appoint the other four members of the board charged with approving debt repayment plans and any ongoing project spending.

The council also approved a schedule of debts from the shuttered agency, as well as the $260,000 annual administrative budget for the city to handle its role as its successor. The financial plan still has to meet county and state approval.

The council delayed approval of a new policy to give preferences to local businesses when awarding contracts for city work or services other than construction agreements. Council members want more study of a staff recommendation to have the city pay the difference of between 2-4 percent between the price offered by the lowest bidder, if from out of town, and the lowest local bidder.

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