AGENDA TITLE:
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Adopt a Resolution Authorizing City Manager to Execute Agricultural Leases for White Slough Water Pollution Control Facility (PW)
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MEETING DATE:
July 17, 2024
PREPARED BY:
Public Works Director
recommendation
RECOMMENDED ACTION:
Adopt a resolution authorizing City Manager to execute agricultural leases for White Slough Water Pollution Control Facility.
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BACKGROUND INFORMATION:
The City has two agricultural lease areas at White Slough Water Pollution Control Facility (“WSWPCF”), which total approximately 819 acres (“Agricultural Land”). Both existing Agricultural Land lease agreements expired on December 31, 2023, and continued on a month-to-month term. The Agricultural Land current tenants are Kirschenman Farms (593+ acres) and Lima Ranch (226 + acres) (collectively “Lessees”).
Farming the agricultural reuse areas at WSWPCF comes with significant regulatory constraints, which restricts the farmer’s ability to maximize profits. The primary function of the farming operations is to distribute treated municipal effluent and industrial discharges, primarily from Pacific Coast Producers, to the reuse areas during the summer months (irrigation season) and application of dewatered biosolids as a fertilizer for the crops at various intervals. All irrigation and nitrogen applications are not allowed to exceed agronomic rates in accordance with the City’s land application permit.
In addition, portions of the Agricultural Land has recently been reserved for the proposed Lodi Police Training Facility, Lodi Hydrogen Conversion Project, and the PG&E Hydrogen Infinity Project. The proposed hydrogen projects remain dependent on State and Federal funding yet to be secured. The timing uncertainty of future project construction impacts the Lessee’s crop planning cycle(s) because the acreage associated with both projects (roughly 200 acres) currently remain in production. Both Lessees acknowledge the projects noted above (if constructed) will remove their associated acreage from the farming area.
Both Lessees agreed to the proposed terms of their respective Lease for Agricultural Land agreements in Attachment 1 and Attachment 2 to this item (“Proposed Leases”). The terms of both Proposed Leases will commence retroactively on January 1, 2024 and be for a period of five years. There will be no effect on rental revenue due to the retroactive commencement date. Staff recommends finding that there is justification for entering both Proposed Leases with the current Lessees, as both farmers are familiar with the regulatory pressure to operate at very strict agronomic rates on the Agricultural Land, and the reporting requirements dictated by State and Federal requirements.
Revenues generated for the past five calendar years from the existing Agricultural Land leases are listed below. The variation is related to crop production, which fluctuates based on environmental conditions and the regulatory restrictions noted above.
Year City Revenue
2019 $108,288
2020 $90,286
2021 $61,627
2022 $99,017
2023 $107,163
Staff recommends Council adopt a resolution authorizing the City Manager to execute the Proposed Leases for the Agricultural Land at WSWPCF.
STRATEGIC VISION:
3A. Fiscal Health: Promote City's transparency & fiscal fluency.
FISCAL IMPACT:
The proposed leases provide annual revenue to the General Fund.
FUNDING AVAILABLE:
Not applicable.
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Charles E. Swimley
Public Works Director
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Scott R. Carney
City Manager