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HomeMy WebLinkAbout10/19/2004, BUS 5 - STENNER CANYON HYDROELECTRIC FEASIBILITY STUDY PHASE II council ° ,o.Iq-off j acEnbA REpoRt I ng CITY OF SAN L U I S O B I S P O FROM: John Moss,Utilities Directo Prepared By: Gary Henderso Water Division Manager SUBJECT: STENNER CANYON HYDROELECTRIC FEASIBILITY STUDY PHASE II CAO RECOMMENDATION 1. Receive and file the Stenner Canyon Hydroelectric Feasibility Study Phase II, July 2004. 2. Direct staff to cancel implementation of the Stenner Canyon Hydroelectric Project. 3. Direct staff to inform Federal Energy Regulatory Commission (FERC) of the current project status and accept termination of the current FERC license. DISCUSSION Background The Stenner Canyon Hydroelectric Plant was constructed in 1984-85 at which time the City contracted with PG&E to sell the energy generated. The original contract with PG&E required full power generation during all peak energy periods. This contract requirement could not be guaranteed due to potential limitations in water quality and storage at Salinas Reservoir which provides the raw water source for the hydro operation. In the mid-1990's, City staff were notified by PG&E that we were in violation of the terms of our contract. As such, the contract was converted to a Standard Offer #1 (SOI) contract which allows excess power purchases at any time. The SOI contract pays much less for the energy generated than the original contract. The hydroelectric facility has not been operated since the early 1990's due to modifications at the Water Treatment Plant and the Cuesta Tunnel as the result of the State Water Project pipeline construction. Based on the changes, there were many issues that needed evaluation prior to reactivation of the hydroelectric facility. The Hydroplant has been studied by several consultants over the years, but the consultants were unable to adequately address concerns relative to potential impacts to the water treatment plant operations. Black and Veatch Corporation was retained by the City to prepare the plans and specifications for the Water Treatment Plant Master Plan Improvements and evaluation of the hydroelectric plant operations was included in their contract. On November 18, 2003, the Stenner Canyon Hydroelectric Feasibility Study prepared by Black and Veatch was presented to the City Council. The study recommended further evaluation of Alternative 2B which involved reactivation of the hydroelectric facility and utilizing the power produced to operate the Water Treatment Plant and selling the excess power produced back to � f Stenner Canyon Hydroelectric Feasibility Study Phase II Page 2 PG&E. This alternative identified the potential for net annual savings of approximately$55,000. The total capital cost associated with Alternative 2Bwas estimated to be $2,137,000. Based on this analysis, Council approved an amendment to the contract with Black and Veatch for Phase H of the feasibility evaluation. Phase HStudy The Stenner Canyon Hydroelectric Feasibility Study Phase II provided a more in-depth evaluation of the following issues: A. Alternatives for the electrical power supply for the water treatment operation (WTP) when the hydroelectric plant is not generating. B. Possible modifications to the City's Power Purchase Agreement(PPA)with PG&E. C. Development of procedures for daily hydroelectric and WTP startup and shutdown. D. Revision to project feasibility based on a rate analysis performed by PG&E. The Executive Summary (Attachment 1) provides a summary of the above issues. The critical issue involves the financial feasibility of the project following detailed discussions and correspondence with PG&E relative to the PPA and newly approved charges for customers departing from the electrical grid. This issue is discussed in more detail below. Modifications to City's Power Purchase Agreement(PPA) The City's current agreement with PG&E provides for the City to sell all power that is generated to PG&E. The agreement would not allow the City to deliver power for the operation of the WTP and sell the excess power generated to PG&E. To provide this option, the agreement with PG&E would need to be converted to a "Surplus Sale" operating option. This will require a renegotiation of the contract with PG&E for purchase of the surplus power. Since the WTP would continue to operate off peak, the price paid for energy during these periods is likely to be minimal. Revised Financial Evaluation The revised financial analysis was prepared following discussions with PG&E and more detailed evaluation of the operating strategy for the WTP and the hydroelectric facility. The two major issues that have affected the financial viability of the project are listed below: 1. A resolution adopted by the California Public Utilities Commission on July 8, 2004 which implements the customer generation load Cost Responsibility Surcharge (departing load charge). The departing load charge is associated with stranded assets and state surcharges. This requires the City to pay a charge to PG&E for power generated and used for operation of the WTP. This will reduce the project's estimated net energy revenue. 2. The recalculation of the cost of power purchases the City would be making under Standby Schedule "S" as determined by PG&E. This charge, would apply to power purchased when the hydroelectric facility is not operating. There is a relatively small amount of s=a Stenner Canyon Hydroelectric Feasibility Study Phase II Page 3 energy that is used at the WTP during the daily non-operational periods for various plant components. This energy use would be charged at the Standby rates which are considerably higher than are current rates. Based on these revised changes, the financial analysis was recalculated and the Phase II Final Report identifies that the previously projected annual net savings of$55,000 would be reduced to $7,000. The analysis was prepared prior to the adoption of the departing load charges but assumed a charge of $0.01 per kwh produced. The adopted departing load charge is actually $0.01673 per kwh. With the revision of this charge, the project now shows a net annual loss to the City of about $5,000. It should be noted that there are a number of optimistic assumptions used in the revenue analysis which may not be achievable at all times and would further reduce the project benefit. The analysis took a best case scenario look at the use of the hydroelectric facility to provide electrical demand for the WTP. The following are the main assumptions which may not be valid at all times: 1. The City will utilize three pumps from Salinas Reservoir at all times during the summer period and two pumps from Salinas during the winter period. Due to water availability or water quality issues, this assumption will very likely not be achievable at all times. In fact, if Salinas Reservoir approaches or reaches minimum pool, little or no water would be delivered from Salinas. It should be noted that current operations often use a blend of water from both Salinas and Whale Rock Reservoirs. 2. The hydroelectric facility is assumed to run at all times during the year with only a two week window for maintenance during the winter period. With the exception of this two week period, it is assumed that the hydroelectric plant would provide all of the electricity needed for the WTP during operational periods. Again, a very optimistic assumption. Phase II Study Recommendation Based on the revised evaluation of the power purchase agreement, provisions for buying power, and the recently adopted departing load charges, the revised financial analysis indicates that the alternative to operate the hydroelectric plant and use the energy to operate the Water Treatment Plant is not a cost effective option. As was presented to Council on November 18, 2003, this was the most cost feasible alternative. As a result of the revised analysis, it is recommended that the Council direct staff to cancel implementation of the project or otherwise defer further action until such time that the project net benefit can be shown to justify the capital expenditure or that the standard PG&E power purchase terms are revised by the CPUC to be more favorable. Stenner Canyon Hydroelectric Feasibility Study Phase II Page 4 Federal Energy Regulatory Commission License The final issue that Council should consider involves the license to operate the hydroelectric facility which is issued by the Federal Energy Regulatory Commission (FERC). The license requires that the facilities be operated and maintained to remain valid. FERC has been requesting action from the City for many years relative to the facility's decommissioned status. FERC has requested that the City either operate the facility or abandon the current FERC license. City staff have requested numerous time extensions of the deadlines that FERC has imposed for reactivation of the facility or termination of the license. Since the City has been studying this issue for many years, FERC has been cooperative in allowing additional time for the evaluations. Assuming that Council agrees with not pursuing the reactivation of the hydroelectric facility at this time, staff would recommend that Council direct staff to inform FERC of the current project status and accept termination of the current FERC license. FISCAL IMPACT There is no fiscal impact associated with the recommendation to cancel implementation of the hydroelectric project. ALTERNATIVES 1. Reconsider Project Alternative 1B —The Council could direct staff to move forward with the reactivation of the existing hydroelectric facility and sell all power back to PG&E under the terms of the existing power purchase contract. The previous analysis estimated an annual net benefit of $16,000 for Alternative IB. This is a best case scenario and actual savings would likely be less based on the optimistic assumptions utilized in the analysis as previously discussed. Additionally, operation of the facility will have additional impacts to staff resources that would likely offset any savings or revenues. Alternative 1B had an estimated capital cost of $1.25 million. Based on the limited potential rate of return on the capital investment and the uncertainty in achieving the annual savings, staff does not recommend this alternative. ATTACHMENTS 1. Executive Summary from"Stenner Canyon Hydroelectric Feasibility Study Phase 11, July 2004" AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE 1. Stenner Canyon Hydroelectric Feasibility Study Phase 11, July 2004 C.' 0 Attachment 1 City of San Luis Obispo B&V Project 132365 1 ' WTP Improvement Project July 23,2004 Stenner Canyon Hydroelectric Feasibility Study, Phase II Technical Memorandum FINAL To: Gary Henderson—Water Division Manager Dan Gilmore—Utilities Engineer From: Paul Kneitz Project Manager Prepared By: Paul Kneitz Reviewed By: Dean Rubinson EXECUTIVE SUMMARY Overview The objective of the Stenner Canyon Hydroelectric Feasibility Study Phase II task is to refine and further develop the conceptual design associated with the preferred alternative selected from the Phase I feasibility study for the Stenner Canyon Hydroelectric Project. This task addresses the following topics: • Alternatives for the electrical power supply for water treatment plant (WTP) operation when the hydroelectric plant is not generating. ■ Possible modifications to the City's Power Purchase Agreement(PPA)with PG&E. • Development of procedures for daily hydroelectric and WTP startup and shutdown. • Revisions to project feasibility based on a rate analysis performed by PG&E. Introduction The Stenner Canyon Hydroelectric Feasibility Study Phase I work focused on identifying and evaluating alternatives for re-starting the hydroelectric facility after being out-of- service since the mid-1990's. Based on the recommendations contained in the Phase I Technical Memorandum, October 2003, it was the decision of the City to proceed with further engineering development of Alternative 2B. Alternative 2B involves re-starting and operating the existing hydroelectric facility to utilize the available hydroelectric resource to operate the WTP. The point of interconnection (POI) with PG&E for the hydroelectric facility would remain at the hydroelectric facility site. ES-1 BLACK& VEATCH ,r �r Attachment 1 City of San Luis Obispo B&V Project 132365 `i WTP Improvement Project July 23,2004 ® Stenner Canyon Hydroelectric Feasibility Study, Phase lI Technical Memorandum FINAL Alternatives for WTP Power Supply The City would operate its WTP facilities using a portion of the energy generated by the hydroelectric facility, with the excess being sold to PG&E. Further, because the hydroelectric facility uses water that is being conveyed to the WTP, the hydroelectric facility is only being operated when the WTP is operating. However, even when the WTP is not operating, it still has a small "baseline" electrical demand resulting from lighting, ventilation systems, and other non-process systems (such as the ozone diffusers air feed). There were two (2) alternatives identified and evaluated for supply of electrical power to the WTP when the hydroelectric plant is not generating: • Alternative 1 -Buy Power at the WTP • Alternative 2-Buy Power at the Point of Interconnection PG&E prepared a rate analysis comparing the two above alternatives based on typical operating scenarios provided by Black & Veatch (B&V). The results of the PG&E analysis are presented in Appendix A. According to PG&E, standby power should be provided using the Standby Tariff, Schedule S, regardless which service point is chosen by the City. PG&E states that since the amount of hydroelectric generation exceeds the. size of the electrical load at the WTP, Schedule S is applicable. Given PG&E's position that standby power be purchased at the Schedule S rates, at either location, then the comparison between buying power at the WTP or at the POI was made by summarizing the relative construction costs and monthly charges associated with each alternative. As described more fully in Section 2, Alternative 2, Purchase Power at the POI, appears to be the more cost effective approach to implement. ES-2 BLACK&VEATCH �- 1p Attachment 1 RMCity of San Luis Obispo B&V Project 132365 ENQ' WTP Improvement Project July 23,2004 Stenner Canyon•Hydroelectric Feasibility Study, Phase II Technical Memorandum FINAL Possible Modifications to the City's Power Purchase Agreement (PPA) with PG&E The current Standard Offer No. 1 (SO 1) PPA provides for the City to sell all power that is generated by the hydroelectric facility to PG&E, less any "station service" electrical demand. There are no other internal uses allowed. This is called a "Net Sale" operating option. As part of the plan to generate hydroelectric power and use it at the WTP to offset PG&E power purchases, the PPA would need to be converted to a "Surplus Sale" operating option, which permits the City to sell generating output minus station service plus any other uses by the City. A change in contract type, from "net" sale to "surplus" sale, can be accomplished by a letter of request from the City of San Luis Obispo and associated review by PG&E's Power Contracts department. However, requesting a change in contract type could result in a renegotiation of certain contract terms (to be determined). The PPA also contains a provision under Section 23,Abandonment,requiring a minimum amount of energy that the City is obligated to deliver in either a 6-month or 15-month period. As explained more fully in Section 3 of this TM, it appears that the PPA would need to be modified so that the City may remain in compliance with these provisions given that less energy will be available for sale to PG&E after satisfying the WTP demand. Operating Strategy Section 4 describes a step-by-step procedure that defines integrated operation of the Salinas raw water system, Sterner Canyon hydroelectric facility, and City's WTP. Operational protocols are developed for the daily startup and shutdown routines, as well as for planned and unplanned shutdowns of the hydroelectric facility. The objective is to achieve seamless operation of all facilities and minimize the extent of PG&E power purchases needed to operate the major WTP process equipment. 1s:/o ES-3 BLACK&VEATCH rl I� Attachment 1 City of San Luis Obispo B&V Project 132365 1 ` WTP Improvement Project July 23,2004 Stenner Canyon Hydroelectric Feasibility Study, Phase II Technical Memorandum FINAL Revised Financial Evaluation i The Phase H study included updating and refining the Phase I Feasibility Study estimates of energy revenue, power costs, and financial analyses based on concept changes resulting from discussions between the City and PG&E, and the proposed operating j strategy described in Section 4 herein. The Phase I Feasibility Study estimates of energy revenue have been recalculated to account for the following recent changes to the project requirements: • The addition, by PG&E, of departing load payments as a City-paid expense (see Section 3.3). This will have the effect of reducing the project's estimated net energy revenue. ■ The recalculation of the cost of power purchases the City would be making under Standby Schedule "S"as determined by PG&E. The Phase I Feasibility Study financial analysis was recalculated for the above changes. Previously, the project showed an annual net benefit to the City of approximately $55,000. Given the revisions, the project now shows an annual net benefit to the City of approximately$7,000. Note that this net benefit will be further reduced in the event that the City does utilize the Whale Rock raw water supply on an interim operating basis to supplement the Salinas Reservoir raw water supply,due to any short-term lack of supply or lesser water quality. I t 1 When the Whale Rock supply is used to supplement or replace the Salinas supply, then the hydroelectric facility will operate at reduced power output levels,or not at all if no Salinas supply is used, and the City will have to buy power from PG&E to operate the WTP. t ES-4 BLACK &VEATCH�� —� J Attachment 1 City of San Luis Obispo B&V Project 132365 1 ' WTP Improvement Project July 23, 2004 Stenner Canyon Hydroelectric Feasibility Study, Phase II Technical Memorandum FINAL I Reconsideration of Project Alternatives lA/ 1B In light of the above, Alternatives IA / 1B as described in the Phase I feasibility study were given further consideration. These alternatives provide for re-starting the hydroelectric facility for sale of power to PG&E under the City's existing S01 power purchase agreement. Compared with Alternative 2B, the feasibility of these alternatives is not adversely affected by the recent changes imposed by PG&E during Phase II of the study. The previous analysis showed an estimated annual net benefit of about $35,000 for Alternative 1A. However, this alternative was not favored by City staff because it lacked the operating storage needed to provide a steady discharge flowrate to the WTP as required for proper operation of the ozone system. The previous analysis also showed an estimated annual net benefit of at best $16,000 for I Alternative 1B. However, given that the City does need to use the Whale Rock supply in I lieu of the Salinas supply from time-to-time, this net benefit may be lost, or possibly 1 become a negative benefit. f Phase II Study Recommendations Based on the further evaluation of the power purchase agreement and provisions for buying power under the standby rate, the revised financial analysis now shows the project is at essentially breakeven, compared to a previously expected benefit of approximately $55,000 per year for Alternative 2B. I. As a result of this revised analysis, it is recommended that the City cancel implementation of the project or otherwise defer further action until such time that the project net benefit can be shown to justify the capital expenditure, or that the standard PG&E power purchase terms are revised by the CPUC to be more favorable. f I � po ES-5 BLACK &VEATCH <-� r w a ti M DICAL ... CANNA1515 RECEIVED LsL,oc-iTycL-E-R-Kj 5LO CITYCOUNCIL MEETING 10- 19-04 7:00 P.m. -r CITY HALL 990 Falm ,5trect itional EInformation RED FILE Pre ING AGENDA > _ Cc)[) uIh -�� ri- .4 # � /i A0 'FIN C r' r, ACAO Z FIRE CHIEF Fa cL et ;,�ATTORNEY Z-PW DIR O 'fi}CLERKORIQ �POLICECHF I-I DEPT HEADS WRFC DIR jt T_ 11711. ( IR r oma$ SAN LUIS OBISPO CrrY COUNCIL PROPOSED MEDICAL CANNABIS ORDINANCE ' October 19,2004 This report is submitted in connection with the Council's consideration of an ordinance authorizing and regulating medical cannabis caregivers and medical cannabis dispensaries in the City of San Luis Obispo. Background The City of San Luis Obispo has a well documented history supportive of medical cannabis. In 1993, the City adopted Resolution 8195, supporting the use of medical cannabis and urging the State and Federal Government to restore cannabis to the list of available medicines which can be prescribed by liceri sed physicians. Resolution 8195 also requested that the government takes steps to ensure the safe and affordable supply of cannabis far medical use. In 1996,California voters approved Proposition 215 (Health and Safety Code§11362.5)which authorizes . the possession, cultivation and distribution of medical cannabis by qualified patients and their primary caregivers upon the oral or written recommendation of a physician. In January 2004,the State Legislature adopted SB 420(Health and Safety Code§11362.7)which established minimum state guidelines regarding quantities of medical cannabis possessed by each qualified patient and primary caregiver,allowed primary caregivers to receive compensation for their services,and provided for the establishment of a voluntary identification card program through the County Health Department. Additionally,SB 420 encouraged and authorized cities to enact their own medical cannabis guidelines. Since the passage of Proposition 215 and the implementation of SB 420, several cities have passed ordinances regulating medical cannabis and authorizing medical cannabis dispensaries. The City of San Luis Obispo now has the opportunity to adopt its own ordinance to ensure the safe and affordable supply of medical cannabis,consistent with Resolution 8195,Proposition 215 and SB;420. Outline of Proaosdd Ordinance Need for Ordinance Persons within the City of San Luis Obispo are acting as primary caregivers to qualified patients in the absence of the local guidelines encouraged by SB 420. The adoption of an ordinance would give patients and caregivers additional protection,peace of mind, safe access to medicine and would clarify the issue for all involved parties. In summary,the establishment of an ordinance will meet the needs of the community in the following fashion: 1. The proposed ordinance will serve local qualified patients' needs that California voters,the legislature and the Courts of this state have sanctioned -� 2. The proposed ordinance will codify and clarify guidelines for qualified patients, designated primary caregivers, medical cannabis dispensaries and law enforcement Draft of Proposed Ordinance O Attached for review of the Council is a draft of a Proposed Ordinance related to medical cannabis and medical cannabis dispensaries. The Proposed Ordinance is based on Proposition 215,SB 420 and California case law including.People vs. Mower (2001) 28 C.A.4`h 457 and Raich vs. Ashcro (2003) 352 F.3d 1222 (pending review by the U.S. Supreme Court in 2005). The Proposed Ordinance was drafted after review and analysis of medical cannabis dispensary ordinances adopted by the cities of Auburn, Berkeley, Citrus Heights, City of Angels, Elk Grove, Jackson, Oakland, Plymouth and Roseville. Summary of Proposed.Ordinance ' ■ Authorizes and regulates the operation of licensed medical cannabis dispensaries in San Luis Obispo ■ Sets qualifications and standards regarding the operation of medical cannabis dispensaries based on the guidelines set forth in Proposition 215 and SB 420. ■ Limits authorized dispensaries to those persons or entities granted permits by the City of San Luis Obispo Goals of Proposed Ordinance OFairly authorize and regulate distribution of medical cannabis in the City of San Luis Obispo consistent with the parameters of Proposition 215 and SB 420 with a minimum of bureaucratic oversight ■ Provide basis and reference point for qualified patients, designated primary caregivers and medical cannabis dispensary operators to insure compliance with California law. ■ Provide basis and reference point for local law enforcement to supplement and clarify its current policy regarding possession,cultivation and distribution of medical cannabis. Comment on Draft of Proposed Ordinance In regards to local law enforcement, a minority of cities with medical cannabis dispensary ordinances have imposed an additional and unnecessary burden on local police by requiring the police chief to review each medical cannabis dispensary application and accept or deny the application based on various criteria. Involving the police chief in the permitting process is not authorized or even contemplated by Proposition 215 and SB 420. Also, it discourages qualified patients and primary caregivers from participating and invites legal challenges against the City. O Additionally and significantly, the Police Department of the City of San Luis Obispo is not qualified, trained or willing to take on this responsibility. Chief of Police Deborah Linden has previously stated her opposition to police screening and review of medical cannabis patients in San Luis Obispo. A copy of Chief Linden's memorandum,dated July 31,2003, is included herein. i As a result,the Proposed Ordinance does not include any direct involvement by the Police Department in the medical cannabis dispensary application process. Under the terms of the Proposed Ordinance,no additional bureaucratic burden would be placed on the City. ' Instead, the City would process the medical cannabis dispensary applications similarly to other business license permit applications,and would receive a license fee from the applicant The basic terms of the Proposed Ordinance are directly based on the language of Proposition 215 and SB 420. The balance of the Proposed Ordinance mimics the language of the medical cannabis dispensary ordinances which have been successfully implemented in the California cities mentioned above. Conclusion The issue of medical cannabis is best addressed by the implementation of an ordinance which fairly addresses the needs of qualified patients and designated primary caregivers within our City and which is based on the mandate and guidelines set forth in both Proposition 215 and SB 420. The City Council should implement the spirit and letter of Resolution 8195, Proposition 215 and SB 420 by adopting an ordinance authorizing and regulating licensed medical cannabis caregivers and medical cannabis dispensaries within San Luis Obispo. Submitted by: LOUIS KOORY,ESQ. JAMES MCMERNAN LAWYERS 21-SANTA ROSA STREET SurrE 300 SAN Luis OIMPO,CA 93405 (805)541-5411 tkaoiT@mckiernantaw.com O RESOLUTION NO. 8195 (1993 Series) CITY-OF SAN LUIS OBISPO RESOLUTION SUPPORTING THE USE OF MEDICAL MARIJUANA WHEREAS; For the purposes of this resolution, "Cannabis/Marijuana medical preparations" shall mean: all products made from Cannabis/Marijuana, in any form intended or used for human consumption,for the treatment of any disease, the relief of pain, or as an adjunct to any medical procedure for the treatment of Cancer, Glaucoma, or HIV/AIDS; or for any other medical healing purpose defined within the bounds of the patient/doctor relationship; and. WHEREAS,Scientific and medical studies by the National Academy of Sciences Ohave shown Cannabis/Marijuana to be a safe and effective medicine with very low toxicity compared to most prescription drugs, and that Cannabis/Marijuana has been shown to be effective in the treatment of glaucoma, epilepsy, multiple sclerosis, muscle spasticity and arthritis,the nausea, vomiting and appetite loss associated with chemotherapies, anxiety and depression, and the symptoms of withdrawal from alcohol and narcotics; and WHEREAS, Studies show that one-third of all c?ncer patients discontinue potentially life-saving chemotherapy due to severe and debilitating side effects, and -that the same is true for many HIV/AIDS patients receiving AZT or other similar therapies, and that a 1990 poll of oncologists conducted by the John F. Kennedy School of Public Policy at Harvard University, found overwhelming acceptance of O Resolution No. 8145 (1993 Series) Page 2 J Cannabis/Marijuana's medical utility, and that nearly 70% of the cancer specialists said they would prescribe Cannabis/Marijuana if it were legal to do so; and WHEREAS, Despite a federal court order recognizing the "clearly.established medical value" of Cannabis/Marijuana andmandating that it be reclassified and available by prescription, the federal government continues to deny access to this substance; and NOW, THEREFORE, BE IT RESOLVED, that within thirty (30) days of the adoption of this resolution, the San Luis Obispo City Council shall transmit the text of this resolution to the County of San Luis Obispo and to the President of the United States, the Governor of the State of California, and the Federal and State LegisiativE� Representatives of the City of San Luis Obispo, and urge them to take whatever actions may be.in their power to: A) Restore Cannabis/Marijuana preparations to the list of available medicines which can be prescribed by licensed physicians. B) Provide for by law and institute such-mechanisms as may be necessary, to ensure a safe and affordable supply of Cannabis/Marijuana for medical use; and BE IT FURTHER RESOLVED that the Mayor communicate the City Council's support of Senate Joint Resolution #8 to the City's state legislative representatives. Upon motion of councii. Kambar Rnmorn , seconded by council Member Settle and on the-following roll call voter Resolution No: 8195 (1993 Series) OPage 3 AYES: Council Members Romero, Settle, Rappa, Roalman and Mayor Pinard NOES: none ABSENT: Hone the foregoing resolution was adopted this 20th day of July . 1993. MayorfPeg Pinard ATTEST: at{Well, City CtOK . APPROVED: I hereby cerxif-y that the forag3!rr, is a Putt, L and correct copy of Resolution No. 8195 (1993 Series) on fire in ft-Office of the C=i Y Cie;k. In wits-ss herec€ y.harsJ aW,-ffscipi sept 7/22/93 Date Orr . C: dvie`L ity Gerk Cay of Sas. Luis Obispo ' r ttor ey / L*�O crty of san Luis.ompo , Memorandum Department Memorandum 1042 Walnut 03 SLO, CA 93401 (805)781-7317 "Service,Pride,rraegrity" July 31,2003 To: Vice Mayor Christine Mulholland Via: gen Hampian, CAO )Kew From: Deborah Linden, Chief of Police Subject: Physician Recommendations for Medicinal Marijuana. You recently called me and asked me whether or not medical marijuana users who possess written recommendations from physicians should proactively present the recommendation to SLO PD prior to any contact with officers. After discussing the idea with Captain Dan Blanke,I do not recommend this course of action for several reasons, outlined below. Our reasons and recommendations are consistent with the information we provided Council several months ago in a report titled, "Analysis of Proposition 215 Implementation in San Luis Obispo". In essence, having medical marijuana users present their recommendations in advance would basically create a San Luis Obispo Police Department registry system, which would not be practical or desirable for the following reasons: • Recommendation Verification—Currently, the District Attorney's Office has a detailed process in place for verification of case-specific physician recommendations. The verification process is necessary to determine the validity of a defendant's Prop. 215 assertion. This process can be quite time-consuming. More specifically, a recommendation.is not good indefinitely,and it requires research to ensure the recommendation is valid. Like a prescription,itis only valid as long as the medical condition being treated exists. Unlike the case-spec investigations conducted by the DA's Office,maintaining a San Luis Obispo Police Department registry would not only. require initial verifications, but continued periodic investigations. The Department is not appropriately staffed to assume that additional workload. • Medical Privacy—Verifying and maintaining registry information would require the collection and maintenance of health information and medical data for medical marijuana users. This data would constitute medical records, which are subject to specific legal requirements for their maintenance and confidentialityunder both state and federal laws. The Police Department is not at all equipped or prepared to maintain medical records subject to specific privacy laws, and this area is entirely out of our expertise and experience. I would be greatly concerned about the City's legal liability,if, for example, a medical record was improperly disclosed 1 • 1 / 1 My oP san Luis owspo Police Department O Quantity and Circumstances of Marivjuana.Possession—Regardless of whether or not a person has a verified physician's recommendation for medicinal marijuana, officers must evaluate each.situation based on the totality of the circumstances. The quantity of marijuana possessed must be appropriate for the condition being treated. Additionally, even in the case of possession of small quantities of marijuana,Proposition 215 does not provide a defense in all cases. For example, a physician's recommendation does not allow a patient to possess marijuana in a motor vehicle, or to drive under the influence of marijuana. Police officers have an obligation to investigate people who maybe involved in illegal activity,particularly when another citizen calls in a complaint. Registering their recommendations with the Police Department could give patients a false sense of immunity from law enforceme4t scrutiny regarding their marijuana-related activities. There are communities in California that have medical marijuana patient registries, but it is my understanding that the registries are maintained by local health departments, which are better able to deal with the issues regarding.the medical records. Creating and maintaining a medical marijuana registry within the Police Department is completely outside our expertise and is not consistent with our role as a law enforcement agency. While the creation of a.Police Department registry is not practical, the Department remains committed to protecting the rights of all citizens, including medicinal marijuana patients. As indicated in our February report, we are currently working with the District Attorney's Office to provide our Officers information and investigative tools to assist them in their field evaluations O of Proposition 215 defense claims. There are also legal issues pending at both the State and Federal levels concerning Prop. 215 that may or may not clarify some of these issues. cc: Mayor and City Council City Attorney O 2 ORDINANCE AUTHORIZING SAFE AND LAWFUL ACCESS TO MEDICAL CANNABIS IN SAN LUIS OBISPO CHAPTER 1. MEDICAL CANNABIS. SECTION 1. FINDINGS AND PURPOSES. On November 5, 1996, the voters of the State of California adopted by initiative the Compassionate Use Act of 1996 (Proposition 215), codified as Health and Safety Code § 11362.5, relating to the medical use of cannabis. In January of 2004, the California legislature implemented SB 420, codified as Health and Safety Code § 11362.7. The City of San Luis Obispo supports the lawful use of medical cannabis in accordance with Health and Safety Code§11362.5 and§ 11362.7. The purpose of this chapter is to implement Health and Safety Code § 11362.5 and Health and Safety Code § 11362.7 by facilitating medical cannabis patients' lawful production and obtaining of medical cannabis and to recognize and protect the rights of qualified patients, their primary caregivers, and physicians, as well as to ensure lawful access to safe and affordable medical cannabis within the City of San Luis Obispo. In support of this purpose, the City of San Luis Obispo recognizes that qualified - --.- --patients,-primary_caregivers,_and..medicaLcannabis_dispensaries_as defined herein__ may provide services- to..facilitate or. assist in the lawful cultivation,. manufacture, acquisition and distribution of safe and affordable medical cannabis to qualified patients in a consistent;reliable acid-legal fashion.- SECTION ashion.SECTION 2. DEFINITIONS. "Medical cannabis dispensary" is any facility or location where a primary caregiver acquires, makes available, sells, distributes or otherwise provides medical cannabis to two or more qualified patients as defined in Health and Safety Code § 11362.5 and Health and Safety Code § 11362.7. An entity may be authorized as a medical cannabis dispensary if designated as such by the City of San Luis Obispo pursuant to this Chapter. "Qualified patient" means a person who obtains a written or oral recommendation from a physician for the use of medical cannabis. "Primary caregiver" means a person who is designated by a qualified patient to assume responsibility for the housing,health, or safety of the qualified patient, including the lawful cultivation, acquisition, and delivery of medical cannabis. SECTION 3. MEDICAL CANNABIS DISPENSARY PROGRAM. The City of San Luis Obispo establishes a medical cannabis dispensary program through the authorization and regulation of designated medical cannabis dispensaries. A medical cannabis dispensary pursuant to this Chapter is any facility or location where a primary caregiver acquires, makes available, sells, distributes or otherwise provides medical cannabis to two or more qualified patients as defined in Health and Safety Code § 11362.5 and Health and Safety Code § 11362.7. An entity may be authorized as a medical cannabis dispensary if designated as such by the City of San Luis Obispo Opursuant this Chapter. The City of San Luis Obispo authorizes the establishment and operation of designated medical cannabis dispensaries if the medical cannabis dispensary meets the specific qualifications set forth in this Chapter, upon application to the City of San Luis Obispo. SECTION 4. MEDICAL CANNABIS DISPENSARY: APPLICATION and PERMIT. Prior to initiating operations, and as a continuing prerequisite to conducting legally valid operations, any persons or entity wishing to operate a medical cannabis dispensary shall apply for and be issued from the City Clerk a medical cannabis dispensary permit, on the terms and conditions set forth herein. The applicant for a medical cannabis dispensary permit shall submit to the City Clerk an application for a medical cannabis dispensary permit. The application for a medical cannabis dispensary permit shall be filed in conjunction with a Business Tax Certificate Application, and shall contain such information and fees as requested by the City, including the following: (a) A complete and detailed description of the type, nature and extent of the enterprise to.be conducted and for which application is made, including, but not limited - - - - --to-an-estimate--of the-number-of qualified patients-for-which_the_dispensaryw.dl_be-..-.— Oproviding services; _ __(b) -The address ofthe location-from which the medical cannabis dispensary for which application is made will be operated; (c) The name and address of the person who owns the medical cannabis dispensary for which application is made; (d) The application shall include a non-refundable application fee of$50.00. SECTION 5. TERMS and CONDITIONS of OPERATION. Based on the information set forth in the medical cannabis dispensary application, the City Clerk may impose reasonable terms and conditions on the proposed operations, consistent with Health & Safety Code Section 11362.5 and 11362.7 and with the public health, safety, and welfare. Such terms and conditions may include,but not be limited to, the following: (a) The medical cannabis dispensary shall not be located within 1,000 feet of any elementary school, middle school or high school. O (b) The medical cannabis dispensary shall comply will applicable local, state and federal regulations and laws pertaining to building codes and the Americans with Disabilities Act. (c) The medical cannabis dispensary shall provide adequate security on the premises, including lighting and alarms, if necessary, to insure the safety of persons on the premises and to protect the premises from theft. (d) The medical cannabis dispensaries shall provide to the City Clerk, if requested, with evidence to the Clerk's satisfaction that the medical cannabis dispensary is not engaged in interstate commerce. (e) The medical cannabis dispensary will pay an annual license fee submitted at the time of the application to the City of San Luis Obispo in the amount of $1,000.00. If the application is denied, the City Clerk shall return the license fee. (f) The City Clerk may require that the medical cannabis dispensary sign a liability waiver in favor of the City of San Luis Obispo. (g) The City Clerk may restrict the location of the medical cannabis dispensary based on Zoning Ordinances and regulations, set forth in the San Luis Obispo Municipal Code. (h) Based on a review of the medical cannabis dispensary application, the City Clerk may issue.a medical cannabis dispensary permit to the.applicant, or deny the application. (i) A medical cannabis dispensary permit shall be valid for only one year. ..An operator of a-medical cannabis dispensary may re-apply-fora permit for subsequent- year(s)• (j) If necessary, the City Clerk-may limit the number of medical cannabis dispensary permits issued each year. SECTION 6. IDENTIFICATION CARDS. In order to ensure that qualified patients and medical cannabis primary caregivers are not subject to criminal prosecution or sanction and to ensure that only qualified patients and qualified primary caregivers have access to medical cannabis, and to assist in the verification of the legal status of qualified patients and primary caregivers, the medical cannabis dispensaries authorized under this Chapter may issue identification cards to qualified patients and qualified primary caregivers upon receipt of written verification of the recipient's legal status, including but not limited to, a physician's recommendation or approval for medical cannabis or a primary caregiver designation. SECTION 7. TRANSPORTATION AND DELIVERY OF MEDICAL CANNABIS. . All activities entailing the cultivation, possession, transportation and delivery of medical cannabis in accordance with this Chapter shall be lawful when conducted by qualified patients, primary caregivers, and medical cannabis dispensaries, where the quantity cultivated, possessed, transported and delivered are reasonably related to the medical needs of qualified patients. SECTION 8. PRIMARY CAREGIVER SERVICES. OQualified patients, primary caregivers, and medical cannabis dispensaries authorized by the City of San Luis Obispo under this Chapter may receive or provide consideration or compensation for actual expenses, including reasonable compensation for performing or providing primary caregiver services for qualified patients and shall not, on the sole basis of that fact, be in violation of Health and Safety Code §11359 or §11360. SECTION 9. NO LIABILITY. To the fullest extent permitted by law, the City of San Luis Obispo shall assume no liability whatsoever and expressly does not waive any governmental imr-hunities with respect to the medical cannabis provider program established herein or for the activities of any medical cannabis dispensaries. SECTION 10. VIOLATIONS. Violations by the medical cannabis dispensary of the terms and conditions of operation set forth herein, of this Chapter, the San Luis Obispo Municipal Code or of applicable local and state rules, regulations and laws shall be unlawful, and shall be grounds for revocation of the medical cannabis dispensary permit or for non-renewal. Revocation of the medical cannabis dispensary permit shall result in a forfeit of the -license fee.- - SECTION 11. APPEAL. The City Clerk shall issue notice of her decision regarding the medical cannabis dispensary application or revocation to the applicant by personal service or by certified U.S. Mail, postage pre-paid, return receipt requested. An applicant may appeal the denial or revocation to the City Council by filing a written notice to the City Clerk within fourteen(14) calendar days of the applicant's receipt of the notice. If the notice of appeal is not timely filed, the decision of the City Clerk shall be final. SECTION 12. HEARING-NOTICE and COUNCIL ACTION. .Upon timely appeal to the City Council, the medical cannabis dispensary application or revocation shall be scheduled by the City Clerk for a public hearing within sixty(60) days. Notice of the hearing shall be mailed to the applicant at least five (5) days before the hearing, and shall be posted outside of City Hall not less than five (5) days prior to the date of the hearing. Following public hearing, the City Council may grant or deny the medical O cannabis dispensary application, or uphold or overturn the revocation. The decision of the City Council shall be final.