CALEXICO — Several potentially high-revenue cannabis cultivation and manufacturing projects proposed in Calexico are on hold due to the unavailability of electricity from the Imperial Irrigation District, city officials said recently.
No immediate long-term solution was in sight.
“We’ve got all of the projects lined up but can’t get ‘will serve’ letters (for two to three of the projects) because of (a lack of power transmission) capacity,” Calexico City Manager David Dale said Feb. 7. “So, the projects are stymied at the moment.”
Talks are ongoing between Calexico and the district, IID spokesman Robert Schettler said Feb. 7. Discussions focus on ways to provide power to projects and build a new substation in the area, Schettler said, adding he “can’t provide further info at this time.”
Calexico Mayor Bill Hodge called the stalled projects “high-power moneymakers” for the city during an interview Feb. 6, referring to the potential cannabis revenue the city has continued to expect out of the industry.
In recent years the Calexico City Council has sought to create a major cannabis industry in the city through a series of votes to attract and establish growers, manufacturers and distributors of the drug and related products.
Revenues Short
With no retail shops opened and none of the cultivation projects yet underway, Calexico has lowered its cannabis-revenue projections for the last two years. The city has collected around $80,000 in revenue, but it has largely been in permitting and building fees, and some activity tied to distribution and manufacturing.
Recently, the city lowered its projected cannabis revenue for the current 2019-20 fiscal year ending June 30 from $250,000 to $150,000. In total, cannabis revenues for fiscal years 2018-19 and 2019-20 could be less than a quarter of the $900,000 initially projected, city officials reported.
Up to three large-scale cultivation and manufacturing projects have been stalled. This is because they cannot get the required “will serve” letter from IID to bring power to the location, Dale explained.
The stalled projects include including the 220,000-square-foot indoor Orchid Ventures project. It broke ground with much fanfare during a late September press event. Names of the other projects delayed were not immediately available from city planning officials.
The overriding issue is that the capacity of the IID’s substation serving Calexico’s north end is “maxed out” with no immediate solution on the horizon on how to overcome the problem, Dale added.
$11 Million Needed
The short answer, Dale said, is the IID needs to build a new substation for the area at a cost of around $11 million. However, not any one entity is prepared to foot that bill, including the district, the city nor the developers in need of the power.
Non-cannabis developments are also affected, including the proposed commercial/light industrial Calexico Mega Park at Jasper Road and Highway 111.
Even though the Orchid project plans to power its operations with an on-site solar farm and battery storage, it still cannot move ahead without the IID “will serve” letter, Dale added. The project would be a “massive” power consumer of more than 5,000 amps. Reportedly anything over 300 amps is currently difficult to secure from the district, Dale said.
Possible Solutions
Dale said he did not have an assessment of the status of discussions with IID. While the district has some one- to two-year remedies, projects cannot move forward without assurances of a long-term fix, meaning a new substation, he explained.
About three months ago, Dale called an informational meeting in city council chambers with several prospective developers (in and outside the cannabis industry), IID Energy officials and others to discuss how to fund a new substation.
Some of the talk included establishing a special-financing district that could sell 30-year bonds to build a substation. That would be paid back by developers or landowners within that area.
Other alternatives were a “micro grid” for localized energy generation and storage, or buying power directly from geothermal plants near Heber.
However, all those ideas would require widespread commitments, upfront money and some degree of transmission from one point to another. Calexico, in the midst of recovering from budget deficits, has no such funds, Dale added.
So far, no one has committed to much of anything and there have not been any similar meetings held, the city manager explained.
Calexico has projects in the pipeline now that need power, both cannabis and non-cannabis-related, and there is no time to wait, Dale said.
Even if there was $11 million available today and the district was ready to build a new substation tomorrow, it would take two to four years before power was moving through that station.
“We’ve come to a holding pattern,” he said. “We’ve got ideas, but it falls on the IID; it’s their utility.”
Cannabis Zone Addition
Meanwhile, as a potential stopgap measure for moving smaller cultivation and manufacturing projects forward, a parcel previously left out of the city’s Cannabis Overlay Zone was reintroduced and approved 3-0 on Feb. 5. Among other advantages, the site at 120 W. Cole Blvd. already has power on its premises, Dale and Hodge confirmed.
Previously, the city Planning Commission rejected including the parcel in July 2019. The decision was appealed to the council and upheld that same month. However, parcel owner and longtime Calexico businessman, Alex Campillo, and his family, pressed the city to reconsider.
Including the new parcel gives the city more than 79,000 square feet of warehousing space available for cannabis operations, a city planning official said. That means prospective businesses can rehabilitate warehouse space through tenant improvements instead of the lengthier and costlier process of building from the ground up.
This story is featured in the Feb 13, 2020 e-Edition
