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Board hears proposal to sell transformer capacity to developers to accelerate infrastructure funding
Summary
A board member proposed a plan for selling transformer capacity to developers upfront to create funds for substations and redundancy; members raised concerns about recession risk, fairness, and developer pushback and no formal action was taken.
A board member proposed a policy idea to sell transformer capacity to developers up front as a way to accelerate funding for substations and transmission capacity. Under the concept, the utility would price capacity on a per-transformer basis (using transformer cost as a baseline) and require developers to pay their proportionate share of transformer capacity at the time of approval rather than relying solely on impact fees and reimbursements.
Supporters said advance capacity payments could give the city funds to build larger shared assets sooner and would require developers to have “skin in the game,” reducing risks from speculative plats that never build out. Staff described current practice: the impact fee analysis assumes substations and transmission are provided by the city and distribution lines are built by developers; the proposal would move transformer costs outside the impact-fee model and collect them earlier from developers.
Board members raised multiple concerns: potential developer opposition and litigation over how capacity costs are allocated (developers could argue they should pay only the proportionate share of an installed transformer), the risk of stranded assets in a development slowdown or recession, and the administrative complexity of pricing and refunding capacity. One member recalled past experience with transformers purchased for developers that sat idle after a market downturn.
No motion was offered. Staff and the board treated the idea as conceptual and asked for additional analysis before the board or City Council would consider any change to the impact-fee framework.
