HomeMy WebLinkAboutStaff Report 3743
City of Palo Alto (ID # 3743)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 6/17/2013
City of Palo Alto Page 1
Summary Title: Amendment to VMware's Special Facility Contract
Title: Approval and Authorization of the City Manager to Execute the
Amendment to the Special Facilities Agreement with WMware in the Amount
of $691,002 to Add Additional New Special Facilities
From: City Manager
Lead Department: Utilities
RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or his designee to
execute the attached amendment to the Special Facilities Agreement with VMware, Inc.,
including a total fee of $691,002 to add fourteen (14) new electric services and associated
infrastructure, of which seven (7) are considered Special Facilities under Utilities Rule and
Regulation 20.
BACKGROUND
CPAU Rule and Regulation 20 states only one electric service is allowed on a parcel with
multiple commercial buildings except where the Applicant requests CPAU to install multiple
services, and CPAU agrees to make such an installation. This type of installation is considered
“Special Facilities” and the additional costs, as estimated by CPAU, shall be borne by the
Applicant, including such continuing ownership costs as may be applicable. These costs are
calculated by CPAU based on the net present value, and include the City’s long-term
maintenance costs, estimated energy losses, and necessary and reasonable upgrade expenses
associated with the provision of electric service to the Customer.
DISCUSSION
In September 2006, the City of Palo Alto and VMware entered into a Special Facilities
Agreement for the installation of 5 electric services to their parcel at 3401 Hillview Avenue.
VMware has requested an additional 14 services to serve other buildings on their campus.
Utilities staff determined that 7 (seven) transformers/services would normally be required to
serve the proposed VMware load and that VMware would be responsible for paying the
City of Palo Alto Page 2
difference between the requested and required services needs. VMware buildings and services
constructed, in construction, or planned, as part of Phases 1, 2, and 3 are included in the
current calculations of this amendment to the Special Facilities Agreement. When VMware
builds parking garage “CS-G”, as it was not deemed a Special Facility, VMware will pay their
normal share of installation. Any additional facilities beyond the aforementioned phases 1, 2,
3, and CS-G on these same parcels of land will require an amendment to the Special Facilities
Agreement.
The ongoing cost of ownership, Special Facilities fee, of the additional facilities requested by
VMware is $691,002. This is in addition to the cost of construction that is paid by VMware
outside of this agreement.
RESOURCE IMPACT
Funds received through this Special Facilities Agreement will be applied to the Customer Service
capital improvement project in the Electric Enterprise Fund’s FY2013 and 2014 (EL-89028)
budget cycles.
POLICY IMPLICATIONS
This recommendation does not represent a change to current City policies.
ENVIRONMENTAL REVIEW
This project is categorically exempt from California Environmental Quality Act (CEQA) pursuant
to CEQA Guidelines section 15302 (replacement or reconstruction of existing utility systems
and/or facilities involving negligible or no expansion of capacity).
Attachments:
Attachment A: VMWare SFA Amendment 2013 (PDF)
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AMENDMENT NO. ONE TO SPECIAL FACILITIES AGREEMENT
BETWEEN THE CITY OF PALO ALTO AND
VMware, Inc.
This Amendment No. One to Special Facilities Agreement (the “Amendment”) is
entered into as of ________________, 2013 (the “Effective Date”), by and between the CITY OF
PALO ALTO, a California chartered municipal corporation (the “CITY”), and VMware, Inc., a
California corporation (the "CUSTOMER") (individually, a "Party," and collectively, the "Parties").
R E C I T A L S:
A. The Parties entered into an Agreement for Installation of Special Facilities, dated
September 5, 2006 (the “Agreement”).
B. The CUSTOMER now intends to add fourteen (14) electric services in addition to the
five (5) existing electric services at 3401 Hillview Road, Palo Alto, California (the "Premises"), that the
CITY's Electric Utility will serve, of which seven (7) of the new services are considered Special
Facilities, as defined below.
C. The CUSTOMER has submitted to the CITY its additional capacity requirement
estimate of 13,500 KVA (kilovolt-amperes). The new total capacity requirement is 23,500 KVA for
the Premises. Under the City's Utilities Rule and Regulation 20(C)3, Electrical Service Connections
and Facilities on Customer's Premises, one service per parcel will be extended to the Premises.
D. The CUSTOMER has requested fourteen (14) additional services at 480-volts,
consisting of an extension of the electric distribution system on the CUSTOMER’s campus and
fourteen (14) connected secondary services and associated equipment (of which seven are
considered "Special Facilities" for the buildings) constitutes a deviation from the normal practice
regarding provision of electric service.
E. The CUSTOMER acknowledges that its request is at variance with the CITY’s provision of
regular electric utility services, hence under the CITY's Utilities Rule and Regulation 20(J), Special Electric
Utility Regulations, this Agreement will facilitate and accommodate the CUSTOMER’s request for
the provision of additional electric service, which shall be in addition to standard facilities which the
CITY’s Utilities Department would normally provide for the delivery of service at one point and at one
voltage class.
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AGREEMENT:
In consideration of Recitals A through E, inclusive, which constitute a substantive part of
the Agreement and this Amendment, and the following covenants, terms and conditions, the
Parties agree:
SECTION 1. SECTION 1.1 of the Agreement is amended in its entirety to read, as follows:
“1.1 The CITY on behalf of the CUSTOMER will purchase and install the Special Facilities
on or about the Premises, and the costs of the Special Facilities will be borne by the CUSTOMER.
The CUSTOMER shall pay the CITY, in advance, for all costs, expenses and charges that the CITY incurs
in purchasing and constructing and/or installing the Special Facilities on or about the Premises.
The cost of the Special Facilities shall include the costs of the ongoing equipment, including,
without limitation, the transformers, switches, and cables, equipment maintenance
costs, and the value of energy losses to the electric system, which sum ’s net present
value is six hundred ninety one thousand and two dollars ($691,002), due and payable by the
CUSTOMER to the CITY on or before June 30, 2013.
1.1.1 The total paid sum of $691,002, shall be deemed to constitute full payment of the CITY’s
long-term maintenance costs, estimated energy losses, and necessary and reasonable upgrade expenses
associated with the provision of electric services to the CUSTOMER.”
IN WITNESS WHEREOF, the Parties have by their duly authorized representatives
executed this Amendment No. One to Agreement as of the Effective Date.
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APPROVED AS TO FORM:
_____________________________
Senior Assistant City Attorney
APPROVED:
_____________________________
Director of Utilities
CITY OF PALO ALTO
____________________________
City Manager
VMware, Inc.
By:___________________________
Name:_________________________
Title:________________________