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Home My WebLink AboutAGENDA REPORT 2025 0716 CC REG ITEM 08A SUPPLEMENTAL MOORPARK CITY COUNCIL SUPPLEMENTAL AGENDA REPORT TO: Honorable City Council FROM: Doug Spondello, Community Development Director BY: Areli Perez, Associate Planner II DATE: 07/16/2025 Regular Meeting SUBJECT: Consider Zoning Ordinance Amendment No. CD-ZCA-2025-0006 to Modify Table 17.20.060(E)(8) of the Moorpark Municipal Code to Prohibit Energy Storage within a Building in the Industrial Park, Limited Industrial, Institutional, and Industrial-Flex Zones and Making a Determination of Exemption Pursuant to the California Environmental Quality Act in Connection Therewith CORRESPONDENCE RECEIVED Subsequent to the publication of the agenda, the following correspondence was received. Attachment 1: Letter from Prologis dated July 11, 2025 (Request for Continued Support of the Prologis Drifter BESS Project and Industrial Development) Attachment 2: Letter from Prologis dated July 11, 2025 (Clarification and Correction to Indicative Property Tax Estimate for Prologis Drifter BESS Project) Attachment 3: Graphical Information from Prologis on City Benefits with and without Battery Energy Storage Systems (BESS) Item: 8.A. SUPPLEMENTAL 1 Pier 1, Bay 1, San Francisco, California 94111 United States Main +1 303.567.5000 Fax +1 303.567.5903 www.prologis.com July 11, 2025 Jacob Morgan VP of Development, Energy Storage Pier 1, Bay 1 San Francisco, CA 94111 Moorpark City Council City Manager, PJ Gagajena City Attorney, Kevin Ennis 799 Moorpark Avenue Moorpark, CA 93021 Subject: Request for Continued Support of the Prologis Drifter BESS Project and Industrial Development We write to express our strong concern regarding the City of Moorpark’s recent decision to revoke the conditional use of industrial-zoned land for Battery Energy Storage Systems (BESS). This decision, as currently contemplated, places the future of the Prologis Drifter BESS and industrial development at significant risk, despite our substantial investment and compliance with all city requirements to date. We respectfully request that the City reconsider this revocation, or at minimum, allow the Prologis Drifter BESS project to proceed under the previously established conditional use guidelines. This project represents a rare opportunity for Moorpark to host a next-generation, advanced-safety energy storage facility paired with 510k square feet of industrial development— bringing significant environmental, financial, and community benefits. In May 2023, the City of Moorpark approved energy storage as a conditional use on industrially zoned land, provided systems were housed within buildings. In alignment with this policy, we submitted a pre-application in late 2023 incorporating a fully enclosed BESS design, and we purchased the property for $48 million in December 2023 with the intent to proceed under those terms. There is not a more ideal location for a BESS facility in Moorpark. It is directly adjacent to the Moorpark substation, it is set back from Los Angeles Avenue to limit visibility, and nestled under the railroad tracks to create a buffer between the planned industrial development. We began development work in earnest in the summer of 2023, confident in the City’s land use framework. The City’s proposed reversal in May 2025, absent a grandfathering provision, places our project and investment at substantial risk. We would like to address three main points to advocate for the energy storage use case in Moorpark. ATTACHMENT 1 2 Pier 1, Bay 1, San Francisco, California 94111 United States Main +1 303.567.5000 Fax +1 303.567.5903 www.prologis.com 1. Safety – Advancements in Energy Storage Technology The BESS industry has evolved rapidly in recent years. The concerns stemming from earlier BESS incidents at Moss Landing and Otay Mesa are valid but dated. Those facilities utilized Nickel Manganese Cobalt (NMC) chemistry, which is no longer industry standard due to its chemical instability. Furthermore, today’s energy storage systems are governed by rigorous national safety standards, including UL 9540, which certifies system-level fire and electrical safety, and NFPA 855, which establishes comprehensive installation and emergency response criteria. The Drifter project will be fully compliant with these codes, ensuring that the facility meets or exceeds the most current and robust safety requirements in the industry. The Drifter project will utilize Lithium Iron Phosphate (LFP) chemistry, which is a significantly safer atomic compound. In the rare event of thermal runaway, the reaction remains confined within a single module and typically self-extinguishes within 2-4 hours. Air quality assessments from fires induced in a lab confirm that emissions from LFP batteries in open-air settings do not reach levels hazardous to human health. Modern containerized BESS installations incorporate multiple layers of protection, including liquid cooling, ventilation systems, sensors for early anomaly detection, and the ability to electrically isolate individual modules. These safeguards are complemented by an Emergency Response Plan developed in coordination with the local fire department, which includes annual on-site training to ensure familiarity with system functionality and emergency protocols. 2. Significant Economic and Community Benefits for Moorpark The Drifter BESS project includes a 500 MW energy storage facility and a 510,000 square foot industrial development, representing a combined investment of approximately $763 million. Based on current forecasts and standard tax assumptions, the battery component alone is expected to generate approximately $66 million in property tax revenue over 20 years, including an estimated $6 million for the City and over $22 million for the Moorpark Unified School District. These estimates are indicative only and may vary based on future project scope, valuation methods, or tax policies. The project is also projected to contribute $20 million in sales taxes, with approximately $2.8 million benefiting the City—again, based on current estimates. The BESS project is expected to create up to 200 construction jobs and several full-time operational roles. The industrial component adds another approximately 500 construction jobs and 340 full-time positions, but its viability is tied to the BESS facility, which serves as the anchor. By contrast, using the site solely for industrial use would yield a much smaller facility (120,000 sq ft) and an estimated investment of just $42 million, providing more than 2.5 times less economic impact. 3 Pier 1, Bay 1, San Francisco, California 94111 United States Main +1 303.567.5000 Fax +1 303.567.5903 www.prologis.com In addition, the project will deliver key infrastructure improvements, including the widening of Los Angeles Avenue, drainage upgrades, and culvert expansion—enhancing traffic flow and removing the parcel from the 100-year floodplain. 3. Alternative Regulatory Path & State Authority Under AB 205 Should local entitlements be withdrawn, there is no other permitting pathway besides state-level approval through the California Energy Commission (CEC) under Assembly Bill 205 which overrides local permitting. The local permitting authority would lose approval and decision- making rights in the design of the project. The CEC’s recent approval of the 1,150 MW Darden project in Sacramento under this framework illustrates the state's support for high-impact energy projects. Our preference would be to collaborate with the City of Moorpark, and we believe the local permitting path remains the most constructive and offers the most benefits to the community. However, we must consider all available options to advance a project with this level of investment and a contractual obligation to deliver capacity. The Drifter BESS project is a unique opportunity for Moorpark to lead in grid innovation, economic development, and retain control over land use. We respectfully request the City to uphold its original policy, or at the very least, allow our project to proceed under the original conditional use framework. We remain committed to working with the City in a spirit of partnership and are available to meet to address any questions. Sincerely, Jacob Morgan VP of Development, Energy Storage Prologis 4 Pier 1, Bay 1, San Francisco, California 94111 United States Main +1 303.567.5000 Fax +1 303.567.5903 www.prologis.com July 11, 2025 Jacob Morgan VP of Development, Energy Storage Pier 1, Bay 1 San Francisco, CA 94111 Moorpark City Council City Manager, PJ Gagajena City Attorney, Kevin Ennis 799 Moorpark Avenue Moorpark, CA 93021 Subject: Clarification and Correction to Indicative Property Tax Estimate for Prologis Drifter BESS Project We are writing to provide a clarification regarding the indicative property tax estimates previously shared with the City of Moorpark in connection with our Battery Energy Storage System (BESS) project. In our earlier presentation to Councilmembers, we estimated that the project would generate approximately $92 million in property tax revenue over 20 years. This figure was developed using a real estate tax methodology that applied a 3% annual escalation to the projected improvements value, followed by a 1.06% tax rate applied over a 20-year period. At the time, this reflected our best internal understanding of property tax calculations. Prior to providing a more detailed financial analysis to Councilmember Castro, we engaged a specialized tax advisor to validate our assumptions. The tax consultant recommended a personal property tax methodology as more appropriate for the BESS project, due to the nature of the assets involved. Under this revised and more appropriate methodology: •The full value of the BESS improvements is depreciated annually over a 10-year schedule, reflecting their useful life. •System augmentations in Years 5 and 11 account for the replacement of degraded battery components and result in additional taxable value. •The land value is escalated at 2% annually, consistent with the limits set by Proposition 13 on real property appreciation. •A 1.06% tax rate is applied to the depreciated personal property and escalated land values annually. Using this revised approach, our current estimate of the total indicative property tax revenue over 20 years is approximately $66 million. ATTACHMENT 2 5 Pier 1, Bay 1, San Francisco, California 94111 United States Main +1 303.567.5000 Fax +1 303.567.5903 www.prologis.com Importantly, this figure—and all component allocations—should be understood as non-binding, forward-looking estimates based on current project cost forecasts and standard tax assumptions. Actual tax obligations may differ due to future changes in project scope, valuation practices, or applicable tax laws. Within that estimated total: • Approximately $6.03 million (9.08%) may be allocated to the City of Moorpark. • Approximately $22.25 million (33.49%) may be allocated to the Moorpark Unified School District. We sincerely apologize for any confusion caused by the earlier estimate. Our goal has always been to provide accurate, good-faith projections, and we have since taken proactive steps to verify our calculations using subject matter experts. These updated figures represent our best current understanding, but are not intended to serve as commitments or guarantees. We remain committed to transparency, accuracy, and partnership with the City of Moorpark and its community stakeholders. Please do not hesitate to reach out should you have any questions or wish to review the updated financial analysis in detail. Sincerely, Jacob Morgan VP of Development, Energy Storage Prologis 6 City Benefits with and without BESS Current Site Plan –with BESS •500 MW Drifter BESS •(3) Industrial Buildings totaling 510k SF Alternative Site Plan –without BESS •(4) Industrial Buildings totaling 630k SF •(1) 65k SF trailer parking yard BESS INDIND IND Parcel $763m Total Expected Investment $152m $653m BESS $0 $110m Industrial $152m $8.6m Total Property Taxes to City of Moorpark (9.08%) over 20 years $3.5m $40.3m Property Taxes to City of Moorpark + Moorpark Unified School District over 20 years (9.08%+ 33.49%) $16.7m $3.9m Total Sales Tax to City of Moorpark $1.5m INDIND IND IND LOS ANGELES AVE LOS ANGELES AVE Amounts shown are indicative based on today's equipment pricing and EPC quotes. ATTACHMENT 3 7 Property Tax to City of Moorpark & Unified School District from BESS Amounts shown are indicative based on today's equipment pricing and EPC quotes. 8 Sales Tax to City of Moorpark from BESS Drifter BESS Project Costs Equipment & EPC BESS Equipment Batteries $232,000,000 BESS Tariff $104,400,000 EPC $220,400,000 Interconnection Project Collector Substation $23,500,000 Gen-Tie to POI $6,000,000 Interconnection Facility Network Upgrades $28,057,037 Finance County Sales Tax Rate 7.25% Sales Tax $20,015,800 Contingency $17,980,000 Total Total Expected Investment $653,151,787 Total Sales Tax 7.25% $20,015,800 State of CA 6.00% $16,564,800 City of Moorpark 1.00% $2,760,800 County of Ventura 0.25% $690,200 Amounts shown are indicative based on today's equipment pricing and EPC quotes. Assumed sales tax on 100% of BESS, 25% of EPC contract 9 Total Taxes to City of Moorpark from Industrial Current Site Plan - Industrial 510,000.00 Square Feet 110,000,000.00$ TEI 1,166,000.00$ Starting Annual Property Tax (1.06% on TEI) Year 1 2 3 …Total over 20 years Property Value (+2%/year)110,000,000$ 112,200,000$ 114,444,000$ Estimated Property Tax 1,166,000$ 1,189,320$ 1,213,106$ 28,330,733.19$ Property Tax over 20 years assuming 2% escalation 2,572,430.57$ Total tax to City of Moorpark (9.08%) 12,060,393.12$ Total tax to City of Moorpark + Moorpark Unified School Dist (9.08% + 33.49%) Current Industrial Alt Industrial Total Sales Tax 7.25% $7,975,000 $3,045,000 State of CA 6.00% $6,600,000 $2,520,000 City of Moorpark 1.00% $1,100,000 $420,000 County of Ventura 0.25% $275,000 $105,000 Amounts shown are indicative based on today's equipment pricing and EPC quotes. Alt Site Plan - Industrial 120,000.00 Square Feet 42,000,000.00$ TEI 445,200.00$ Starting Annual Property Tax (1.06% on TEI) Year 1 2 3 …Total over 20 years Property Value (+2%/year)42,000,000$ 42,840,000$ 43,696,800$ Estimated Property Tax 445,200$ 454,104$ 463,186$ 10,817,189.03$ Property Tax over 20 years assuming 2% escalation 982,200.76$ Total tax to City of Moorpark (9.08%) 4,604,877.37$ Total tax to City of Moorpark + Moorpark Unified School Dist (9.08% + 33.49%) Total Sales Tax was calculated as 7.25% of TEI 10 Drifter BESS Project Costs Notes Equipment & EPC BESS Equipment Batteries $232,000,000 Sungrow Powertitan 2.0/3.0 technology. Assumed delivery Q1 2028 BESS Tariff $104,400,000 45% tariff scenario EPC $220,400,000 EPC = "Engineering, Procurement, & Construction" Interconnection Project Collector Substation $23,500,000 230kV project substation allowance. Includes 2 230kV MPTs Gen-Tie to POI $6,000,000 1.5 miles of OH 230kV Interconnection Facility Network Upgrades $28,057,037 Latest estimate of interconnection costs based on draft LGIA from 6/27 Finance County Sales Tax Rate 7.25%From Moorpark website Sales Tax $20,015,800 Assumed sales tax on 100% of BESS, 25% of EPC contract Contingency $17,980,000 2% battery contingency allowance, 5% EPC contingency allowance, 1% spare parts allowance Total Total Expected Investment $653,151,787 Drifter BESS Project Budget Amounts shown are indicative based on today's equipment pricing and EPC quotes. 11