z 2025-02-18 CC Staff Report - IID Energy UpgradesMOTION — A motion was made and seconded by Councilmembers McGarrey/Sanchez
to adopt La Quinta Strategic Plan as presented. Motion passed: ayes — 4, noes — 0,
abstain — 0, absent — 1 (Pena).
COUNCILMEMBER PENA RETURNED TO THE DAIS AT 4:52 P.M.
2. RECEIVE AND FILE FISCAL YEAR 2023/24 GENERAL FUND YEAR-END
BUDGET REPORT AND APPROVE THE AMENDED BUDGET CARRYOVERS
Finance Director Martinez presented the staff report, which is on file in the Clerk's Office.
Council discussed the flexibility of committed reserves; the transparency of the City's
budget reports; the budget transparency website currently underway; and noted that La
Quinta ranked No. 7 in fiscal strength out of 419 cities in California with reported data.
MOTION — A motion was made and seconded by Councilmembers Sanchez/Fitzpatrick
to receive and file fiscal year 2023/24 General Fund Year -End Budget Report and
approve the amended budget carryovers from 2023/24 to 2024/25 as presented. Motion
passed unanimously.
STUDY SESSION
1. DISCUSS LA QUINTA'S ELECTRICAL CAPACITY AND IMPERIAL
IRRIGATION DISTRICT (IID) ENERGY UPGRADES
COUNCILMEMBER PENA RECUSED HIMSELF FROM PARTICIPATING IN THE
DISCUSSION ON STUDY SESSION ITEM NO. 1 DUE TO A CONFLICT OF
INTEREST STEMMING FROM A REASONABLE PROBABILITY OF FUTURE
INCOME AND/OR INVESTMENT INCOME FROM AN ELECTRIC POWER
COMPANY (SECURE ENERGY SOURCE), AS NOTED DURING
CONFIRMATION OF AGENDA ABOVE, AND LEFT THE DAIS AT 5:11 P.M.
City Manager McMillen presented the staff report, which is on file in the Clerk's Office.
Council discussed its willingness to front funds for substations with repayment by
developers later, over a year ago when the cost and lead time for substations was far
less; timeline and initial tasks of the proposed Coachella Valley Power Agency Joint
Powers Agreement (CVPA JPA); the extent to which IID's scheduled increase of power
cost over the next three years will be applied to deferred maintenance; explaining to
residents what they get in exchange for increased rates; micro -grids; other sources of
energy; locations of additional substations; electric capacity analysis of current
substations; and developers' "will -serve" letters reserve power for their future project or
loose it if developers do not proceed timely.
CITY COUNCIL MINUTES
Page 5 of 8 FEBRUARY 18, 2025
PRESENTERS: IID Government and Communications Officer Antonio Ortega and
Superintendent of Customer Operations and Planning Guillermo Barraza provided
additional information on current IID electricity rates and the scheduled rate increases;
the proposed use of the proceeds from the increased rates; planned upgrades to
substations servicing La Quinta; approximately three -to -four-year timing for delivery and
installation of new transformers; use of recent transformers received; solutions will be
valley -wide and must be fair; generation of power is not the issue, it's the distribution of
power; pilot program underway for power feeders; and information is available at
www.IID.cori .
Council discussed getting more information on micro -grids; getting information to
customers who may not be able to afford IID's rate increases coming; periodic reports on
IID maintenance programs; preference for consistent low rate increases versus larger
jumps in rates every 10 years; long-term goals and long-term power provision by IID;
immediate steps to begin long-term solutions; power issues are stalling growth; staff's
continued work with consultant NBS Governmental Finance Group dba NBS related to
utility infrastructure impact fee study; allowance of micro -grids in City's Code; funding
options for electric infrastructure improvements and cost share agreements; and the
formation of CVPA and the execution of a JPA soon to be under discussion.
COUNCILMEMBER PENA RETURNED TO THE DAIS AT 6:24 P.M. FOR THE
REMAINDER OF THE CITY COUNCIL MEETING
PUBLIC COMMENT ON MATTERS NOT ON THE AGENDA — Continued
PUBLIC SPEAKER: Christopher Morgan, La Quinta — resides at the Watercolors
residential development; expressed concerns regarding the upcoming mandatory bulk
cable services being implemented by the homeowners' association (HOA), which are
unaffordable for some residents; and the HOA legal council is not helpful — just wearing
down residents who object.
Council and staff provided information on some resources available to Mr. Morgan.
PUBLIC HEARINGS — None
DEPARTMENTAL REPORTS — All reports are on file in the City Clerk's Office.
5. DESIGN AND DEVELOPMENT DEPARTMENT — PROPOSED KENNEDY
STORE AT VISTA SANTA ROSA
Mayor Evans said WRITTEN PUBLIC COMMENTS for Departmental Report Item No. 5
providing parking recommendations for the proposed Kennedy store in the Vista Santa
Rosa area were received from resident Alena Callimanis, which were distributed to
Council, made public, published on the City's website, and included in the public record
of this meeting.
CITY COUNCIL MINUTES
Page 6 of 8 FEBRUARY 18, 2025
City of La Quinta
CITY COUNCIL MEETING
STAFF REPORT
February 18, 2025
STUDY SESSION ITEM NO. 1
AGENDA TITLE: DISCUSS LA QUINTA'S ELECTRICAL CAPACITY AND IMPERIAL
IRRIGATION DISTRICT ENERGY UPGRADES
RECOMMENDATION
Discuss La Quinta's electrical capacity and Imperial Irrigation District energy upgrades.
EXECUTIVE SUMMARY
• Imperial Irrigation District (IID) power distribution substations in La Quinta are
nearing or have reached capacity and need to be expanded or upgraded for both
existing customers and new developments, including affordable housing projects.
• I ID's policy is that growth pays for growth, and if there isn't enough electrical capacity
for new projects, IID requires developers to pay for electrical substation upgrades
estimated to cost more than $20 million per 50-megawatt upgrade.
• The City has been working with IID and affected developers on a cost -sharing
agreement that was delayed when IID said it would not support expanding the
substation at Avenue 58, which would benefit La Quinta's current and future
ratepayers.
• Addressing the energy equipment needs was ranked as No. 1 priority by residents
attending the February 6, 2025, annual Community Workshop and echoed by the
Financial Advisory Commission (FAC) on February 12, 2025.
FISCAL IMPACT — As this item is for discussion only, there is no fiscal impact.
BACKGROUND/ANALYSIS
Under a 99-year Compromise Agreement entered into with the Coachella Valley Water
District (CVWD) in 1934, IID has been the electrical service provider for La Quinta and
neighboring cities in the Coachella Valley for over 90 years but has not planned for the
valley's growing electrical needs.
IID power distribution substations in La Quinta are nearing or have reached capacity and
need to be expanded or upgraded for both existing customers and new developments,
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including affordable housing projects. Today, the Coachella Valley makes up more than
60% of IID's energy ratepayers.
When the substations were first built in the La Quinta service area, it was expected that
they would be adequate for build out of the city. But existing ratepayers are using at least
30% more energy than 20 or 30 years ago due to electrification mandates by the State,
increased sales of electric vehicles, and an increase in year-round residents.
IID has approved a 109% residential rate increase spread out over three years, where
the rate per kilowatt hour will go from $0.1169 to $0.2438. The increase will pay for higher
service costs and up to $1.3 billion in upgrades to aging infrastructure, but not for new
distribution substations that increase electrical capacity for existing customers and new
development.
IID's policy is that growth pays for growth, and if there isn't enough electrical capacity for
new projects, IID requires developers to pay for electrical substation upgrade estimated
to cost more than $20 million per 50-megawatt upgrade.
Over the last year, staff held meetings with developers, with projects in various stages of
the development process, to discuss developer and City participation in sharing the cost
for adding capacity at the Avenue 58 substation.
A cost -sharing agreement between the City, developers, and IID was in the works, but
IID pulled the upgrade to the Avenue 58 substation as an option when the Coachella
Valley Energy Commission (CVEC) expressed a desire to transition to a standalone utility
provider. The CVEC ultimately supported the formation of the Coachella Valley Power
Agency (CVPA) Joint Powers Authority (JPA) in the IID service area. In December 2024,
Council also voiced support for forming the CVPA JPA.
IID has proposed a solution further east that would involve two substations outside of La
Quinta's boundaries with a combined 200-megawatt capacity, amounting to a 15- to 20-
year solution at an estimated cost of $80 million. This project would involve more than 25
developers with projects in the La Quinta and Riverside County to participate in a cost -
sharing agreement which is a huge undertaking. One of the substations would be at
Avenue 64 and Van Buren Street but the second substation location at Avenue 53 and
Monroe Street is only proposed, which leaves developers with unknowns. Many of the
developers have repeatedly requested that the Avenue 58 substation upgrade be
reconsidered.
The Marshall substation at Avenue 50 and Washington Street also needs a new
transformer to meet the growing needs of existing customers, the expansion of St. Francis
of Assisi Church, tenant improvements at Washington Park commercial center as well as
infill development within the area. With the Marshall substation operating beyond its
design capacity, which is typically 80% of rated capacity, IID's "will serve" letters for
development projects impose a condition to upgrade transformer banks which in the case
of the Marshall Station can cost in excess of $10 million.
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In consideration of rising costs and 3- to 4-year lead times for new transformers and
switch gear it is crucial that the City act now to implement a cost -sharing agreement with
developers and IID that includes reimbursement provisions that the City be paid back
over time as additional developments or projects come forward. At its February 12, 2025,
meeting, the FAC discussed the use of Measure G reserves to fund a cost -sharing
agreement, with the stipulation that the City be reimbursed.
ALTERNATIVES
As this item is for discussion only, no alternatives are recommended.
Prepared by:
Approved by:
Sherry Barkas, Marketing and Communications Specialist
Jon McMillen, City Manager
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