The URL can be used to link to this page

Home My WebLink AboutCC AG PKT 2009-12-14 #GRevised 12 -14 -09 AGENDA STAFF REPORT DATE: December 14, 2009 TO: Honorable Mayor and City Council THRU: David Carmany, City Manager FROM: Mark Persico, Development Services Director SUBJECT: RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF SEAL BEACH AND AMONIX, INCORPORATED SUMMARY OF REQUEST: Staff's recommends that the City Council adopt a Resolution No. 5945 approving an agreement between the City of Seal Beach and Amonix, Incorporated. BACKGROUND: Amonix, Incorporated: Amonix Incorporated ("Al" or "Amonix ") was founded in 1989. Its business goal was to develop utility scale high concentration photovoltaic (HCPV) systems that provide consumers with cost effective, clean renewable energy. The Electric Power Research Institute (EPRI) approached the company and asked it to solve the efficiency limit problem, which was a constraint that existed with silicon solar cells. HCPV systems were unable to achieve commercialization, because their silicon solar cells made them expensive; and, the bulky module construction made them difficult to manufacture, transport and install. Using the company's extensive semi - conductor background, Amonix developed a silicon solar cell under concentration, which led to the development of a back junction point contact solar cell, which improved solar cell efficiency by 27.6 %. The back - junction point- contact silicon solar cell became the cornerstone of the company's HCPV systems. Recently, Amonix transitioned into using multijunction solar cells, which were initially developed for use in space. The multifunction solar cells, which replaced the silicon solar cells, have resulted in the achieving of in excess of 37% efficiency. Amonix's HCPV systems achieve maximum energy output and optimize multijunction solar cell performance. Today, the HCPV product is the seventh generation of Amonix's product and the first to incorporate multijunction solar cells. Agenda Item Q7 Page 2 Amonix is the world leading designer and proprietary manufacturer of patented, high concentration photovoltaic (HCPV) solar - powered panels, for large commercial and industrial users. AI's Seal Beach facility, located on Apollo Court, assembles, manufactures and ships the proprietary MegaModule design, which incorporates the Fresnel lens, integrated structure and multijunction solar cells into a fabricated and aligned an Amonix HCPV panel assembly. Amonix has 13 MW of HCPV panel systems installed worldwide, in utility scale installations. The HCPV systems are located in Nevada, Arizona and Spain. Al has a manufacturing capacity plan, which projects the deployment and installation of 275 MW of HCPV- solar powered systems globally, by the year 2012. The Al business plan forecasts the expansion of capital investment and manufacturing capacity. Early in AI's existence, the company engaged in research and development related programs and government funded research efforts. Over the past couple years; Al has been commercializing its proprietary technology. The main investor in the commercialization of Al was Goldman Sachs, which continues to own a substantial portion of Al. In November, Al closed on the first portion of a corporate financing. This first round of funding by top tier investors includes Kleiner- Perkins Caufield and Byers. Al is also the recipient of a $13.0 million, Department of Energy "Solar Power Initiative" grant, which is a cost sharing research and development grant. Al has applied for a Section 48 (c) Manufacturing Investment Tax Credit, from the federal government. The program is allocated to several renewable technologies, i.e., solar, wind, biomass, and so forth. Al should hear whether its application is approved, in December 2009. Al plans to expand its facilities in Seal Beach. AI's projections for its Seal Beach facility indicate that the capital investment will generate 180 jobs, as well as, generate additional sales tax and property tax revenue; and, otherwise improve economic and physical conditions in the City. Proposed Agreement: The major capital investment that Amonix is making in the Seal Beach facility promises to be a substantial economic benefit to the community. Besides the increased jobs and property tax, AI's investment will enhance Seal Beach's economic vitality and contribute to the community's financial and physical well- being. Further, their investment should lead to the generation of increased sales and use tax revenues. In order to encourage Al to expand its Seal Beach facilities, Al and the City staff have negotiated an agreement whereby the City would provide Al with financial assistance contingent on Al actually producing sales and use tax revenue for the City. Page 3 The terms of the proposed agreement are fairly straightforward. The term of the agreement would be five years, starting from the first fiscal quarter in which Al produces at least $25,000 in sales and use tax for the City. For every quarter during those five years that Al produces $25,000 or more in sales and use tax revenue for the City, the City would pay Al an amount equal to 30% of all sales and tax revenue generated during that quarter. If sales and use tax receipts do not exceed $24,999.99 in a given fiscal quarter, there would be no obligation on the part of the City to pay anything to AI for that quarter. Al can cancel the agreement at any time upon 90 days written notice to the City. Upon cancellation, the City would not be obligated to provide financial assistance to Al for that fiscal year (or future years). Further, Al would be obligated to repay the City any financial assistance provided during the fiscal year in which the agreement is cancelled. FINANCIAL IMPACT: Unknown at this time. Potential increase in sales tax revenue from planned expansion of AI's operations. In the event such revenue exceeds a certain threshold in any particular quarter, the City will provide financial assistance to Amonix in an amount equal to 30% of such revenue- actually received by the City. RECOMMENDATION: Staff recommends that the City Council adopt the attached resolution entitled: "Resolution of the Seal Beach City Council Approving An Agreement Between The City of Seal Beach and Amonix, Incorporated" SUBMITTED BY: Mark Persico Director of Development Services NOTED AND APPROVED: David Carman , City Manager Attachments: A. Proposed Resolution No. 5945 Revised 12/14/09 RESOLUTION NUMBER 5945 RESOLUTION OF THE SEAL BEACH CITY COUNCIL APPROVING AN AGREEMENT BETWEEN THE CITY OF SEAL BEACH AND AMONIX, INCORPORATED THE CITY COUNCIL OF THE CITY OF SEAL BEACH DOES HEREBY RESOLVE: Section 1. The City Council hereby approves that certain agreement between the City of Seal Beach and Amonix, Incorporated, dated December 14, 2009 ( "Agreement "), a copy of which is on file with the City Clerk's office. Section 2. The Council hereby directs the City Manager to execute the Agreement. PASSED, APPROVED AND ADOPTED by the City Council of Seal Beach, at a meeting-hereof held on the 14th day of December , 2009 by the following vote: AYES: COUNCILMEMBERS NOES: COUNCILMEMBERS ABSENT: COUNCILMEMBERS ABSTAIN: COUNCILMEMBERS Mayor ATTEST: City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Linda Devine, City Clerk of Seal Beach, California, do hereby certify that the foregoing resolution is the original copy of Resolution Number 5945 on file in the office of the City Clerk, passed, approved, and adopted by the City Council of the City of Seal Beach, at a regular meeting thereof held on the 14th day of December 2009. City Clerk