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<br /> <br />ITEM NO. 1 <br />STAFF REPORT <br /> <br /> <br />DATE: JUNE 28, 2023 <br />TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS <br />FROM: BILL SMITH, CITY MANAGER <br />PREPARED BY: BRIAN DICKINSON, PUBLIC WORKS AND UTILITY SERVICES <br />DIRECTOR <br />SUBJECT: APPROVE 2ND AMENDMENT TO THE DREWS SUBSTATION <br />LEASE AGREEMENT WITH COLTON POWER, LLC, AND <br />RESOLUTION AMENDING THE BUDGET FOR FISCAL YEAR 2022- <br />23, RESOLUTION R-67-23. <br />RECOMMENDED ACTION <br /> <br />Staff recommends that the City Council take the following action: <br /> <br />1. Approve Second Amendment to Drews Substation Lease Agreement. <br /> <br />2. Adopt Resolution R-67-23 Amending the FY2022-23 Budget to increase revenue to <br />recognize the one-time payment included in the terms of the Lease Amendment <br /> <br />BACKGROUND <br /> <br />On December 20, 2000, the City entered into a lease agreement with Alliance Colton, LLC for <br />the Drews Substation. The City and Alliance Colton, LLC amended the lease on April 4, 2001 to <br />modify the lease renewal procedure. On July 20, 2001, the City consented to an assignment of <br />the lease from Alliance Colton, LLC to the current lessee, Colton Power, LLC (Colton Power). <br /> <br />The initial term of the lease was for 15 years beginning January 31, 2001 through January 31, <br />2016, with the option for the lessee to extend the term for two additional 5-year terms through <br />January 31, 2026. On May 12, 2015, Colton Power exercised its renewal option for the first <br />additional 5-year term through January 31, 2021. In January 2022, the City agreed to extend the <br />agreement through June 2022 and monthly thereafter. On December 6, 2022, the City Council <br />adopted Resolution No. R-122-22 extending the term through December 31, 2027 so the parties <br />could negotiate a long-term extension of the lease. Unfortunately, Colton Power indicated they <br />1 <br />Packet Pg. 5