SUBJECT:
Title
A Resolution of the Town Council of the Town of Erie Approving a Joint Funding Agreement for the Xcel Off-site Distribution Line Extension
Body
DEPARTMENT: Economic Development
Planning & Development
Public Works
Department
PRESENTER(S): Malcolm Fleming, Town Manager
Patrick Hammer, Deputy Town Manager
First Name Last Name, Title
TIME ESTIMATE: N/A
only required for non-consent items
FISCAL SUMMARY:
Cost as Recommended: $411,418.96
Balance Available: $0
Budget Line Item Number: 110-22-910-605000-252202
New Appropriation Required: Yes
POLICY ISSUES:
The policy issue is whether the Town, as one of property owners in Town Center, should contribute to the shared cost for Xcel Energy to construct an electrical line “reinforcement” to provide electrical capacity to support the private and public development projects at this location. Without this agreement, and the Town’s contribution, Xcel does not have sufficient capacity to serve Erie Town Center. If approved, the Town will recoup its investment through reimbursements in future development agreements with Evergreen (for the Town-owned property) and Tebo (or the eventual developer for this site).
STAFF RECOMMENDATION:
Recommendation
Approve the Joint Funding Agreement.
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
The Erie Town Center includes approximately 145 acres and five key sites at the intersection of Erie Parkway and E. County Line Road, with five owners, including Erie Four Corners (now subdivided to include Erie Four Corners, Toll Brothers and FDG/Forum), the Town of Erie (with Evergreen Devco), Ranchwood, Tebo Properties, and Erie Commons (developed by CDG).
Xcel Energy provides electrical power to four of the five properties west of County Line Rd. (excluding Erie Commons, served by United Power). Pursuant to the Town Center Plan and PD, both Erie Four Corners and Ranchwood completed necessary site plans, plats, and development agreements and applied to Xcel to provide electrical power to both properties. In Aug. 2023, Xcel said there is not currently sufficient electrical capacity on their system for either development, or any other site in Town Center, and that development of these properties would require a new electrical line (“reinforcement”) to be constructed from the existing substation north on County Line Road (by Calvary Bible Church) to provide additional capacity to Erie Town Center.
The Town has been working with the affected property owners since that time to get additional information, identify the costs for construction, timing for completion, and required credit contribution by Xcel from the tariff filed with the PUC. Toll Brothers was the first applicant to request connection from Xcel and received a proposal to pay for the applicant’s portion of the construction cost, allowing Xcel to begin design and construction of this new utility. The total construction cost from Xcel is $1,855,580.95 (shown in Exhibit F of the Joint Funding Agreement) and deducting Xcel’s extension credit of 35% ($649,453.33), the remaining balance billed to Toll Brothers is $1,206,507.21.
Because the construction of this off-site reinforcement will provide the required electrical capacity to serve all property owners and also support the development of Erie Town Center, the property owners with active development projects agreed to share the cost, based on proposed usage, using a formula for estimated housing units and commercial square footage.
The Town will recoup its contribution through a future development agreement with its partner, Evergreen Devco, once the Town-owned site reaches that stage. Additionally, Tebo Properties stated they are not yet ready to develop their site and may not be ready for another five years. As such, Tebo chose not to participate in the cost-sharing program in the Joint Funding Agreement. In order to keep the cost sharing formula fair and equitable to the remaining property owners, Town staff proposed to include the cost for Tebo’s property (13.4% or $161,671.97) in the Town’s costs, increasing the Town’s total contribution to 34.1% and $411,418.96, and then recoup that contribution through reimbursement in a future development agreement for the Tebo property once it gets to that stage.
Incorporating that proposal, the attached Joint Funding Agreement, if approved by Town Council, commits the Town to provide a total $411,418.96 investment towards the construction of the off-site distribution line extension with Xcel Energy, which will then be reimbursed as the Town and Tebo properties are developed. The funds are not yet budgeted in the Town CIP so must be included in the 2025 Spring Supplemental.
The remaining four property owners have all signed the Joint Funding Agreement and are ready to remit payment to the Escrow Agent for each owner’s share. If the Town Council approves Resolution 25-048, the Town will return the fully executed Joint Funding Agreement to Toll Brothers, who will pay the full balance to Xcel Energy, and Xcel will begin design and construction. The cost proposal from Xcel expires on Mar. 30, 2025, so it is time-sensitive for the Town Council to consider on Mar. 25.
COUNCIL PRIORITY(S) ADDRESSED:
ü Attractive Community Amenities
ü Prosperous Economy
ü Small Town Feel
ü Effective Governance
ü Fiscally Responsible
ATTACHMENT(S):
1. Resolution 25-048
2. Xcel Joint Funding Agreement
3. Vicinity Map