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HomeMy WebLinkAbout~Master - Amendment to Schedule 3 of the Energy Services Agreement with ForeFront Power Regarding SunSmart Ames Community Solar Farm RESOLUTION NO. 20-664 RESOLUTION APPROVING AMENDMENT TO SCHEDULE 3 OF THE ENERGY SERVICES AGREEMENT WITH FOREFRONT POWER REGARDING SUNSMART AMES COMMUNITY SOLAR FARM FOR THE CITY OF AMES, IOWA WHEREAS, on July 23, 2019, the City Council approved an Energy Services Agreement with ForeFront Power(FFP Origination,LLC)for the SunSmart Ames community solar farm; and, WHEREAS, the Agreement contains two scenarios in which the City could terminate the contract prior to the expiration of the Agreement in 25 years; and, WHEREAS,the first scenario provides for ForeFront to remove the solar system in exchange for an early termination fee per watt, where the penalty is high in year one, but reduces each year until year 25; and, WHEREAS,the first scenario is intended to capture both the costs to remove the equipment and the lost revenue ForeFront and its investors would no longer receive for the remainder of the project; and, WHEREAS,the second scenario provides for the City to take possession of the system,and for the City to pay the greater of the appraised value of the system or a scheduled option price per watt, where the minimum option price decreases each year; and, WHEREAS,in the second scenario,the City is not eligible to consider purchasing the system until at least 63 months from the first date of commercial operation; and, WHEREAS,as the Commercial Operation Date approaches in the next few weeks,ForeFront has reached the stage of the proj ect development in which it can now secure a tax equity partner;and, WHEREAS,this third-party interaction is necessaryto monetize the tax incentives generated by the farm, and this structure was a contributing factor to pursuing the chosen model for the community solar farm; and, WHEREAS, ForeFront's tax equity partner brought to ForeFront's attention that the Early Termination Fee schedules in the contract, which were developed in 2018 when the contract was agreed to with Forefront, no longer reflect the expected Fair Market Value of the system, and as a result, the tax equity partner is concerned that the low early termination fee exposes them to an unacceptable risk; and, WHEREAS,ForeFront is requesting an Amendment to the Early Termination Fee Schedules; and, WHEREAS,the proposed changes to the option price(if the system is purchased by the City) is only changing the minimum option price in the first two years of the option period; and, WHEREAS,the proposed changes to the option price(if the system was removed)affected the entire duration of the contract and these proposed changes to the Early Termination Fee schedule are significant; and, WHEREAS,since the City has signed a fully executed contract with ForeFront,and although staff s preferred choice is to keep the contract as originally signed,agreeing to ForeFront's requested changes will allow ForeFront to finalize its financing and allow the solar farm to move to commercial operation on December 23, 2020. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ames, Iowa, that the Amendment to the Early Termination Fee and Option Tables (Schedule 3) of the Energy Services Agreement with ForeFront Power regarding Sunsmart Ames Community Solar Farm is hereby approved. ADOPTED THIS 22nd day of December, 2020. Diane R. Voss, City Clerk John A. Haila, Mayor Introduced by: Beatty-Hansen Seconded by: Betcher Voting aye: Beatty-Hansen, Betcher, Corrieri, Gartin, Junck, Martin Voting nay: None Absent: None Resolution declared adopted and signed by the Mayor this 22nd day of December, 2020.