San Francisco will likely stop collecting fossil fuel revenues in Kern County, but instead of taking a hit to the budget, The City may replace them with proceeds from a solar energy project.
Earlier this year, many were surprised to learn that San Francisco, with its environmentally friendly reputation, has for decades profited from fossil fuel extraction from hundreds of acres in Kern County.
Half of the revenues go to the San Francisco Public Library and half to the Recreation and Parks Department to help manage Golden Gate Park.
The revenue agreement with Chevron became widely known after a “hunch” and public records requests by Jed Holtzman, a coordinator with the environmental group 350 San Francisco, found documents detailing the arrangement. Holtzman’s interest in the issue came amid the group’s efforts to combat fracking statewide and build on the “keep it in the ground” movement.
In response, Supervisor John Avalos introduced legislation in March that would prohibit The City from entering into new leases or extending existing leases for the extraction of fossil fuels from city-owned land. The Board of Supervisors Budget and Finance Committee approved the legislation Wednesday, which is expected to pass the full board Tuesday.
“We are on a trajectory that will get us to catastrophe if we do not start making changes in how we do our business,” Avalos said, referring to the impacts of climate change. “We need institutional change.”
Since March, San Francisco Public Utilities Commission officials and John Updike, The City’s director of real estate, have analyzed other uses of the site.
In 1941, Alfred Fuhrman’s estate bequeathed to The City 1,480 acres in Fresno and Kern counties, which includes 800 acres currently under lease with Chevron. The City receives 15 percent of royalties from Chevron under the lease, which expires in 2020.
One of the biggest concerns about Avalos’ proposal was the loss of revenue. The condition of the land gift was a 50-50 split in revenues for the library and Golden Gate Park. Updike noted that the timing seemed optimal for the proposal, since oil revenues have been declining sharply, from $951,840 in 2011 to last year’s $319,59, while at the same time there is a greater demand for solar energy.
“SFPUC has evaluated use of 484 acres in Kern County and Fresno County as a solar power project,” reads a report by Budget Analyst Harvey Rose. “According to Mr. Updike, The City could potentially lease the 484-acre site in Kern County and Fresno County to a private solar energy company, at an estimated rent of $1,000 per acre or $484,000 per year.”
Lori Mitchell, the SFPUC’s renewable energy manager, said that the land could result in a power purchase agreement for its community choice aggregation program, CleanPowerSF.
“Definitely some exciting opportunities here,” Mitchell said.
The exact use of the acreage will take more time to hammer out, but time they have since the lease doesn’t expire until March 2020. Some are already offering input.
Eric Brooks, a local clean energy advocate, said, “This one is pretty much a no-brainer. Learning that the city and county of San Francisco was making money off of fossil fuel was something out of bizarro world.”
He said that The City shouldn’t sell any of the land or lease the grounds. “We should own any solar panels or wind turbines. All these things should be owned by the community. We wouldn’t get as much revenue just leasing it out to corporations.”