z 2025-12-16 FA Staff Report - Avenue 58 Substation Expansion - Funding & AgreementsCity of La Quinta
FINANCING AUTHORITY SPECIAL MEETING: December 16, 2025
STAFF REPORT
AGENDA TITLE: ADOPT RESOLUTION TO: (1) ACCEPT FUNDING FROM CITY TO
THE LA QUINTA FINANCING AUTHORITY THROUGH A FINANCING AGREEMENT
BETWEEN THE CITY AND THE FINANCING AUTHORITY FOR THE PURCHASE OF
CERTAIN LONG LEAD-TIME POWER EQUIPMENT AND RESERVATION OF POWER
CAPACITY, AND (2) APPROVE TWO AGREEMENTS WITH IMPERIAL IRRIGATION
DISTRICT RELATED TO THE AVENUE 58 SUBSTATION ELECTRICAL
INFRASTRUCTURE IMPROVEMENTS AND PROCUREMENT OF CERTAIN POWER
EQUIPMENT
RECOMMENDATION
Adopt Resolution to:
A) Accept funding in the amount of $10 million from City to the La Quinta Financing
Authority through a Financing Agreement between the City and the Financing
Authority for purposes of executing two agreements with Imperial Irrigation District
and other stakeholders, for the purchase of certain long lead-time power
equipment and reservation of power capacity; and authorize the Executive Director
to execute the Financing Agreement substantially in the form attached to this staff
report, allowing for minor and non-substantive changes subject to review by the
Authority Counsel.
B) Approve (1) Engineering and Procurement Agreement (for certain long lead-time
equipment to be paid by the City, subject to reimbursement thereof) and
(2) Funding and Reservation of Capacity Agreement for Avenue 58 Transformer
Bank Addition, with Imperial Irrigation District, Riverside County, and prospective
developers for the Avenue 58 substation expansion to construct a fourth
transformer bank; and authorize the Executive Director to execute the agreements
substantially in the forms attached to this staff report, to effectuate their respective
purposes, allowing for minor and non-substantive changes subject to review by the
Authority Counsel.
EXECUTIVE SUMMARY
Since 2023, the City has been working with Imperial Irrigation District (IID) and
private developers on a cost-share plan to expand electrical power capacity at the
Avenue 58 substation to accommodate projects in various stages of approval
and/or construction, at an estimated cost of $23.25 million.
BUSINESS SESSION ITEM NO. 1
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On November 18, 2025, IID Board of Directors unanimously approved two
agreements regarding the Avenue 58 substation expansion:
1) Engineering and Procurement Agreement for the funding and procurement
of certain engineering efforts and long lead-time power equipment to be
paid for by the City, subject to reimbursement thereof; and
2) Funding and Reservation of Capacity Agreement for the Avenue 58
Transformer Bank Addition, which provides for the complete funding of the
new facility by developers with the City and/or Riverside County (County)
participating financially should there be a shortfall by private developers.
On December 16, 2025, the City appropriated up to $10 million for a loan to the
Financing Authority for the Financing Authority to then effectuate the purchase of
certain long lead-time power equipment, including a distribution transformer,
breakers, switchgear, and a control house that can take up to 16 months to receive,
and to provide a funding backstop in the event there is a shortfall by private
developers for which the Financing Authority would be reimbursed pursuant to the
terms of the agreements. The Financing Authority would be responsible for re-
paying the loan to the City pursuant to the terms and conditions in the Financing
Agreement.
FISCAL IMPACT
On December 16, 2025, the City Council appropriated up to $10 million from General
Fund Unassigned Reserves to be loaned by the City to the Financing Authority (Fund
310) for the procurement of certain long lead-time power equipment necessary for the
Avenue 58 substation expansion. These funds would be reimbursed by developers upon
commencement of their milestone payments in accordance with the Funding and
Reservation of Capacity Agreement.
BACKGROUND/ANALYSIS
At the City’s 2025 Community Workshop, La Quinta residents listed addressing the
pending IID/Coachella Valley Water District (CVWD) Agreement of Compromise that
terminates on January 1, 2033, and equipment needs as their No. 1 priority.
With electrical use rising due to new technology, building codes requiring additional
electrification for new construction, and a shift toward electric vehicles, power substations
in La Quinta and throughout the Coachella Valley are near capacity, which has stalled
new and expanded development.
IID’s policy is that growth pays for growth, and it is appropriate for developers to pay their
proportionate share for new, expanded, or upgraded substations based on power
capacity requirements for their individual projects.
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Since 2023, the City has been working with IID and private developers on a cost-share
plan to expand electrical power capacity at the Avenue 58 substation, located north of
Avenue 58 and west of Monroe Street in La Quinta, to accommodate projects in various
stages of approval and/or construction.
On November 18, 2025, the IID Board of Directors unanimously approved two
agreements listed below for the Avenue 58 substation electrical infrastructure
improvements and procurement of certain power equipment, at an estimated cost of
$23.25 million, which includes adding a fourth transformer bank and associated
improvements that has the ability to serve 3,000 to 4,000 new homes:
(1) Engineering and Procurement Agreement (for certain long lead-time equipment to
be paid by the City, subject to reimbursement thereof), and
(2) Funding and Reservation of Capacity Agreement for the Avenue 58 Transformer
Bank Addition.
IID would continue to own, maintain, and operate the substation. The two agreements
with IID would ensure the cost for the substation expansion is shared between IID, the
City, County, and the prospective developers’ based on their proportionate power use.
IID will contribute up to 20% of the costs associated with the Avenue 58 substation
expansion. Developers will reserve capacity and contribute their proportional share based
on their individual projects. The total contribution by developers is required to meet a
minimum threshold of 50% of remaining costs after IID’s contribution. Finally, if there is
any remaining capacity after the developers’ contribution, then the City and County will
become the backstop and contribute the remainder at a 65% City and 35% County split,
with expected reimbursements pursuant to the two agreements’ terms.
The long lead-time power equipment is projected to be received 14 to 16 months from
purchase with construction of the fourth bank expected to start in 2027 and be completed
in 2028.
On December 3, 2025, staff provided a presentation to the Financial Advisory
Commission (FAC) on the progress made in negotiating agreements between the City,
IID, County, and interested developers. This was not an action item, but the FAC
expressed support for the City’s progress and plan for financing the project subject to
developer reimbursement.
The agreements approved by the IID Board of Directors contain the material terms
relating to amount appropriated and purpose for use of the funds, but specific provisions
relating to the City’s funding approach by using the Financing Authority may be requested
and agreeable to both IID and the County. Regardless, the preferred funding mechanism
for the City, including for “bookkeeping” purposes and to account for immediate City
disbursement and anticipated repayments to be well into the future, has integrated a
Financing Agreement between the City and Financing Authority.
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Because modifications to the respective agreements may be amenable to IID and the
County, staff requests authorizing the Executive Director, with the Authority Counsel’s
review, to revise the agreements in their forms attached to this staff report, to effectuate
their respective purposes but in no event would the Executive Director have authority to
increase the appropriated amount or change the specified uses of these City funds
without obtaining Council approval in advance.
ALTERNATIVES
The Authority may elect not to accept the fund transfer and not to approve any or all of
these agreements, though staff does not recommend this alternative.
Prepared by: Sherry Barkas, Communications Specialist
Monika Radeva, Authority Secretary
Claudia Martinez, Finance Director
Approved by: Jon McMillen, Executive Director
Attachments:
1. Engineering and Procurement Agreement
2. Funding and Reservation of Capacity Agreement for Avenue 58 Transformer Bank
Addition
3. Financing Agreement
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