Council Struggles with Debt Liability Posed by Regional Energy Council
A connection between Piedmont’s future debt exposure and lack of voting power –
Participation in a regional Joint Powers Association of 15 members urged by StopWaste will again be looked at by the Council on Monday, February 4. In an effort to address Council concerns regarding Piedmont’s liability for the debts of this new regional agency known as the “Energy Council”, Assistant Planner Kevin Jackson prepared a supplemental staff report.
The Energy Council will have the power to “incur debts, liabilities or obligations”.
The Staff report advises the Council of its further discussions on JPA language to attempt to shield the City of Piedmont from future liability for the debts of this new regional agency. The staff report does not address the problem of future changes to the JPA agreement, which may be amended by a 2/3s vote of the membership at any time in the future. The JPA states:
AMENDMENTS
This Agreement may be amended by the affirmative vote of the governing bodies of not less than two-thirds of all Agencies.
The City of Piedmont is 1 of 15 entities being solicited for the regional agency. Piedmont will be entitled to 1 out of 15 (or more) votes.* All member agencies, including Piedmont, will be governed by any 2/3s vote of the members regarding future debt obligations and contributions. A solution to limit this future risk is not offered.
The JPA will be authorized to incur debt for any energy project or purpose “to support research, development, demonstration, innovation, and commercialization of sustainable energy technologies by public and private entities operating in Alameda County”, as well as “to acquire, construct, manage, maintain, operate and control any buildings, works, or improvements”. These broad provisions would appear to authorize a wide range of energy-related projects, including the construction of energy-saving buildings, enterprises, or proof-of-concept power plant for which substantial debt may be required.
The supplemental staff report outlines the various purposes of the Energy Council, including seeking grants and setting forth “opt-in” ordinances for members to adopt. Specific advantages to the City of Piedmont obtained by joining the JPA are not specified in the staff report.
The distinction between the new Energy JPA and a recently terminated JPA, which resulted in liabilities of approximately $200,000 to the City of Piedmont based on its single vote out of 14 members, has not been clarified.
The JPA provisions originally proposed by StopWaste included the power to “impose taxes or fees on residents, businesses, property owners or any other entity, public or private”. This power was eliminated following objections from a number of the proposed member agencies.
*The City of Piedmont will have 1 vote. The other 14 entities being solicited as members will also have at least 1 vote. Piedmont’s voting power (1 of 15) will decrease if the regional agency adopts a “weighted” voting structure giving 2 votes to larger entities (e.g. Oakland, Fremont, Hayward, and the County of Alameda). The final voting structure has not yet been determined.
There is no connection between Piedmont’s future debt exposure and membership in the proposed JPA. From the agreement:
1. CREATION OF THE ENERGY COUNCIL
Pursuant to the Act, the Agencies hereby create a separate joint powers agency, which is named the Energy Council, to exercise in the manner set forth in this Agreement powers common to each of the Agencies. The Energy Council shall be a public entity separate from the Agencies within the meaning of Government Code section 6507. No debt,liability, or obligation of the Energy Council shall constitute a debt, liability or obligation of any Agency.
Piedmont and the other cities that hopefully join the JPA are the “Agency” referred to in that section. At the recommendation of city staff, additional language is being proposed to the JPA that will protect Piedmont’s liabilty as a board member of the Energy JPA. The entire JPA can be read at:
http://www.ci.piedmont.ca.us/html/govern/staffreports/2013-02-04/energycouncilJPA.pdf
And there is no comparison between the proposed Energy JPA and the recently terminated ACAP JPA. I am told that in that JPA, Piedmont’s liability was expressely listed as 1/15 of the JPA and hence Piedmont ended up paying an equal share of that failed JPA’s liability. The proposed language of the Energy JPA expressly protects Piedmont from JPA liability. With that langauge and more diligent oversight of JPA management, Piedmont would be well served to join the Energy JPA, even under the weighted voting structure.
Your discussion of the Energy JPA should raise questions about the other JPAs Piedmont is party to – transportation and solid waste. Are those JPAs as protective of Piedmont’s liability as the proposed Energy JPA?