20200616 Regular City Council Meeting - Packet (3)June 12, 2020
Honorable Mayor Leticia Lopez
City of Vernon
City Hall
4305 S. Santa Fe Avenue
Vernon, CA 90058
RE: Jawbone Canyon Property
Dear Honorable Mayor Lopez:
SILVERADO
C O M P A N Y
June 16, 2020
Item # 14
Silverado Company
Thank you and the City Council, City Administrator, City Clerk, City Attorney and all the others who toured
the Jawbone Canyon property last week. It shows a great step forward in finding a solution to this
important City asset. We believe there is a great opportunity to assist the City in developing a viable
solution and creating a world -class renewable energy project.
From our understanding, the City purchased approximately 30,000 acres (The Jawbone Property) in 2008
for about $42 million. In 2010, the city sold approximately 12,500 acres to NextEra Energy for $40 million.
At this time, the City discontinued their CAISO studies and attempted to sell the remainder of the Jawbone
property. There were various attempts to sell the property that resulted in two requests for proposals and
one public auction sale; those efforts were abandoned.
Today, the City still owns approximately 17,480 acres. A significant hurdle for the City is the interest
payments on the $40 million bond that was issued to purchase the property. Our understanding is the
City pays approximately $3.5 million per year, at an interest rate of 7%, and that City is unable to prepay
or refinance the bond. Other than the annual bond payments, the City has expended almost $1.0 million
on partially finished environmental studies and other related expenses such as yearly
maintenance/security, property taxes, consultants, etc. If the City has an estimated 18 years remaining
on the bond payment (plus additional annual expenses), then the City, over this time, is liable for
approximately $70 million. Today, there is currently no income from the property.
After touring the Jawbone property, we believe there is a great opportunity to pursue a renewable energy
project of wind and solar energy that will generate income, meet renewable energy mandates, and create
jobs. This income would allow the City to pay off their bond debt without using its reserves. The project
has received strong support from the building trades and union groups and we wanted to thank the
following leaders for touring the property with us: John Spaulding (Kern County Executive Secretary of
800 Silverado Street - Suite 301 - La Jolla, California 92037
SILVERADO
C O M P A N Y
Building and Trades Unions), Pat Lavin (International Brotherhood of Electrical Workers Local 47), Jim
Elrod (International Brotherhood of Electrical Workers Local 428), John Moralez (International
Brotherhood of Teamsters). Additionally, we want to thank and recognize Ron Miller (Executive Secretary
of the Los Angeles and Orange County Building Trades) for expressing his support for a potential project.
We support organized labor groups and would commit to a project labor agreement that encompasses all
of them.
Should a project commence, Silverado would propose the following:
• Silverado agrees to pay the City fair market rent for a lease on the property;
• The City agrees to purchase a mutually agreed upon amount of power, with the option to
purchase additional as needed;
• Silverado agrees to obtain construction financing through existing lines of credit;
• Silverado will defend the City in related lawsuits;
• Silverado agrees that Kern County should be the lead agency;
• Given limited transmission line availability, Silverado understands that time is of the
essence.
We thank you for your time and consideration. We look forward to establishing a long-term relationship
with the City of Vernon.
Thank you,
Anthony Barkett
Silverado Company
CEO and President
CC:
Mayor Pro -Tern Melissa Ybarra,
Councilmember Diana Gonzales,
Councilmember William Davis,
Councilmember Carol Menke
City Administrator Carlos Fandino, Jr.
City Attorney Arnold Glasman
800 Silverado Street - Suite 301 - La Jolla, California 92037