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City OKs plan for Sempra to acquire solar project lease

The City Council cleared Sempra U.S. Gas and Power to acquire Acciona Solar Power Inc.’s property lease option agreement to the Copper Mountain Solar 4 project Tuesday night, though the lease’s terms have been tabled for further discussion.

The council debated the memorandum of understanding with Sempra, but the two sides failed to reach an agreement.

“The purpose of the M.O.U. is that we’re using it to identify areas of common interest within the city and Sempra prior to lease negotiations,” City Attorney Dave Olsen said. “The M.O.U. will set the stage for parameters when negotiating the lease.”

Olsen said the city and Sempra plan to substantially follow the form of the Copper Mountain Solar 2 lease from 2009, the most recent lease between the city and Sempra.

Olsen told the council the city was not bound by the agreement. But council members raised concerns that the city would be bound by the agreement, which could include an increase in rent per year that would be paid after the initial lease term expires in 20 years, if the deal follows the same terms as the Copper Mountain 2 project.

The annual percentage of increased rent will be discussed later, Olsen said.

“Sempra is paying for the development that Acciona did, which is OK, but they sat on the property through the good times, didn’t build on it, and made money off of us off that option that the city never got to exercise,” Councilman Cam Walker said. “It’s one thing we have to consider as a city because we had no right to do anything and they had an option that really didn’t have a lease tied to it.”

Walker said they’re seeking an option that will benefit Boulder City residents annually going forward.

The city needs to ensure that the contract’s details would be fair to both Boulder City and Sempra, which proposed a rental rate of $1,450 per acre for the Copper Mountain Solar 4 site. Sempra’s rate is $75 per acre more than what Acciona paid for the Nevada Solar One lease option agreement.

Sempra plans to develop the project on 687 acres of land in the Eldorado Valley. Olsen said the two sides can begin a lease agreement in about 30 days.

The Copper Mountain projects are part of the renewable energy portfolio, for Sempra Energy which had net income of $859 million income and nearly $10 billion in revenue in 2012, a February 2013 Securities and Exchange Commission filing shows.

Further talks of Sempra’s memorandum of understanding with the project are scheduled for the July 8 council meeting.

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