Title
Hold a public hearing on a request to rezone approximately 1.7 acres from “CG” (General Commercial) to “PS” (Public / Semi-Public) and a request for a Special Use Permit on the same property, MAP-23-0007 (Stella B.E.S.S.), to operate a Battery Energy Storage Station (B.E.S.S.), generally located along the east side of Caroline Street and south of Farm to Market Road 646 (Director of Planning)
Background:
Project Timeline
August 10, 1999 - The property was initially zoned as “SDR” (Suburban Development District - Residential).
August 30, 2005 - The property was zoned “CO-PUD” (Office Commercial within a Planned Unit Development Overlay District) as part of the City’s Zoning Map and Ordinance revisions of 2005.
April 11, 2006 - The property was zoned from “CO-PUD” to “CG.”
August 31, 2023 - The applicant held a neighborhood meeting at the Johnnie Arolfo Civic Center in League City. The sign-in sheet indicates no residents or owners attended the meeting.
September 11, 2023 - The applicant submitted a Rezoning and SUP request to the Planning Department.
January 31, 2024 - A public hearing notice was published in the newspaper, a sign was posted on the property and notices were mailed to the surrounding property owners.
February 19, 2024 - Planning & Zoning Commission held a public hearing and the motion to approve failed by a vote of 0-7-0.
March 26, 2024 - The item was originally scheduled to the March 26, 2024, meeting. The applicant requested the item be rescheduled to a subsequent meeting.
April 23, 2024 - City Council is scheduled to conduct a public hearing and consider the request on first reading.
May 14, 2024 - If approved on first reading, City Council will consider the second reading of the request.
Over the last two years, City staff has met with numerous companies interested in developing B.E.S.S. sites within League City and its ETJ. All the facilities we have spoken with, to date, have proposed a lithium-ion battery system within a series of storage “modules” which are in a grid pattern and interlinked into one system. The proposed locations of these facilities have been near public utility substations. Currently, League City has only one, 10 MW facility, located on Floyd Road on the west side of League City.
In general, a B.E.S.S. system is defined as one or more devices (i.e. group of batteries), assembled together capable of storing energy in order to supply electrical energy at a future time. B.E.S.S. facilities will receive electricity from the electrical grid when there is excess electrical power, store it in a series of batteries and then return it to the grid when additional electricity is needed. This can help stabilize the grid during extreme weather events.
Project Summary:
The request is being made to rezone approximately 1.7 acres to “PS” (Public / Semi-Public) with a Special Use Permit (SUP) for the purpose to operate a 10-Megawatt (MW) B.E.S.S. (Battery Energy Storage System) facility. According to the Electric Reliability Council of Texas (ERCOT), one (1) megawatt of electricity can power approximately 200 Texas homes during periods of peak demand.
The requested area is part of a larger 5.568-acre tract of land that was purchased for the project. The remaining 3.87 acres that is closer to Caroline Street, is to remain “CG” with the intent to be developed for commercial purposes. The proposed battery site would be approximately 330 feet south of Farm to Market Road 646, approximately 700 feet east of Caroline Street and approximately 1,000 feet from the nearest residence in League City.
The use is classified in the Unified Development Code (UDC) as a Private Utility, and requires a Special Use Permit (SUP) in the “IL” (Limited Industrial), “PS” (Public/Semi-Public), and “OS” (Open Space) zoning districts.
Analysis:
Below is a summary of factors that can be used to evaluate the request.
Comprehensive Plan
The proposed zoning conforms to the 2035 Comprehensive Plan’s Future Land Use Map, which identifies the area as “Enhanced Auto Dominant Commercial”. Additionally, Section 10 of the City’s Comprehensive Plan, entitled Infrastructure states, “Infrastructure systems serve as the physical backbone of a community and provide households and businesses with the basic requirements to function on a daily basis.” In keeping with the Comprehensive Plan, utility facilities are intended to be setback away from roadways to maximize the value of the commercial frontage and minimize their impacts on the surrounding environment, currently and in the future.
Zoning
The “PS” zoning district is intended to provide for a range of public and institutional development, including governmental facilities, park and recreation facilities, hospitals, educational facilities, cultural and institutional facilities, and other similar and supporting uses. Additionally, many of the public electrical substations around the city are located on properties zoned “PS.”
Life Safety
While lithium-ion batteries have a benefit of having a high energy density. There is risk associated with the technology due to the potential for fire and the concerns for releasing toxic materials into the air and/or the ground.
The Fire Marshal’s Office has been an active participant in staff’s discussions with B.E.S.S. proposals. The Fire Marshal’s Office has discussed key requirements such as Chapter 12 of the 2021 IFC (International Fire Code) and the NFPA (National Fire Protection Association) 855, water runoff retention, air monitoring, water fire flow analysis, 24/7 monitoring with the ability to detect abnormalities, necessary equipment, annual training, and an Emergency Action Plan (EAP) with annually updated contacts. If approved, this site will be required to meet those standards and be confirmed during the permitting phase. Staff has recommended that these requirements be codified in the conditions adopted with this SUP.
As indicated in the above, the applicant will be required to provide annual training to the fire department for hazards and responses and supply them with all needed equipment to monitor the air in the event of an emergency. The Fire Department has indicated they have no major objection to the proposed Emergency Response Plan but reserve the right to modify requirements of the plan at the permitting stage of the project.
As a commitment to ensure the safety of these facilities, the City has contracted with a third party B.E.S.S. expert to review these sites, Davidson Code Concepts, LLC. The consultant, Robert Davidson, has over 33 years of experience in volunteer and career fire service, law enforcement, emergency management, and EMS. He is also on the NFPA 855 Board, which creates the safety regulations for B.E.S.S. Sites. Mr. Davidson will provide a safety analysis of the site, permit reviews, and site inspections while the site is under construction. All costs incurred by the City for the third-party reviews will be reimbursed by the applicant. The initial safety analysis is provided as Attachment #7.
Nuisances - Visual & Noise Impacts
In researching battery storage facilities, the most common facilities containerize the lithium-ion batteries, which are then assembled in a modular grid pattern. The containers are elevated off the ground to avoid any flooding concerns as well as to minimize the impervious coverage of the site.
B.E.S.S. sites have three main sources of noise, which are 1) the result of inverters, 2) the result of electrical transformers and 3) the result of ventilation and cooling of the batteries. Staff recently visited the existing B.E.S.S. site in League City with a sound meter and observed the ambient noise level was between 50 and 54 decibels sounding similar to an air conditioner unit for a house.
The Stella site proposes to mitigate any visual and sound impacts by providing a 20-foot-wide landscaped buffer yard and a masonry screening wall on the north, east and west sides of the property, at least as high as the battery module containers. A buffer yard is not needed along the south side since the site backs up to the high-power transmission corridor, located outside of the city limits.
Access, Traffic, and Location
Direct access to the properties is provided from Caroline Street. In conjunction with the development of the B.E.S.S. facility, a curbed concrete roadway from Caroline Street to the perimeter of the facility would be constructed, also providing cross access for the future commercial development on the site.
The site will be monitored and operated remotely. A technician is dispatched on-site during normal maintenance for no more than 8 hours, once a month. As a result, traffic to the B.E.S.S. site will be minimal.
The proposed BESS site will be located more than 700 feet from Caroline Street and approximately 330 feet from FM 646. There is one house located in League City within a 1,000-foot radius of the property. In the future, the properties along FM 646 and Caroline Street will develop with commercial uses, which will completely screen the site from view along all roadways. In addition, the site is located directly adjacent to a high power, powerline corridor, which is consistent with the proposed use of the facility.
Surety: Insurance & Decommissioning Bond
The BESS site will hold general liability insurance with a $5,000,000 umbrella policy per occurrence.
A bond will be required to cover the costs of decommissioning the site, should the operator no longer be able to properly decommission the site. Currently, no known B.E.S.S. facilities have reached the end of their life. If not repowered, a site is estimated to have a life span of 20 to 25 years. It was determined that the best cost estimate for decommissioning should be based on today’s dollars with the consideration of inflation. The inflation rate is based on the Consumer Price Index by the United States Bureau of Labor’s Statistics. The average inflation rate of past 10 years is approximately 2.73%.
Taxable Value/Depreciation
In Texas, stand-alone B.E.S.S. sites are subject to property tax. Potential tax abatements were brought up by concerned citizens at the Planning and Zoning Commission meetings. Currently, Chapter 403 of the Texas Local Government Code speaks to tax abatements for Energy and Technology jobs. Section 403.602(8)(b) specifically disqualifies BESS sites from applying for a tax abatement under this section. Chapter 312 of the Texas Local Government Code also allows for tax abatements, but those abatements are at the discretion of the municipality. The applicants have indicated that they will not request or receive any tax abatements for their projects.
The B.E.S.S. sites in Galveston County range between 10 and 15 MW of battery storage and have taxable values between 2.59 and 3.6 million dollars. For larger 100 to 260 MW sites in Texas, the value ranges between 48 and 84 million dollars in taxable value. Overall, the average taxable value of existing B.E.S.S. sites in Texas currently ranges between approximately $200,000 and $300,000 per MW of battery storage power. Based on this information, it is estimated the 1.7-acre site would have a total taxable value between 2.0 and 4.5 million dollars, or between approximately 1.17 million and 2.64 million dollars per acre. The applicant has indicated that the initial value of the site will be approximately 3.36 million dollars.
In comparison, the 2023 tax valuation of a random sample of 35 commercial properties (ranging from 1.97 to 26.98 acres) across League City with uses such as business parks, restaurants, grocery stores, hotels, and hospitals, is approximately 1.1 million dollars per acre.
There have been several concerns raised related to the potential depreciation of the facilities. The applicants have indicated that the batteries do depreciate over time, and depending on the total usage of the batteries, they have the option to recharge the site and bring the value back up. This is dependent upon the current economics of the site and the power needs of the grid in the area. Although the BESS applicants have anticipated a high depreciation rate averaging approximately 15.4% over the first 10 years, the Galveston County Appraisal District has not shown the expected depreciation rate on the existing facilities. The existing facility in League City has depreciated at an average annual rate of 1.9% each year. The site has depreciated from the initial value in 2021 from $3,745,740 to the current value of $3,605,240.
On February 19, 2023, the Planning and Zoning Commission held a public hearing. During the public hearing nine residents spoke in opposition to the request. The Planning and Zoning Commission failed to recommend approval by a vote of 0-7-0 with one member absent.
As a result of our third party analysis, several conditions have been modified since the Planning and Zoning Commission meeting. A summary of the changes/considerations is listed below.
- The BESS facilities shall comply with the 2024 version of the IFC.
- The BESS facilities shall comply with the 2023 version of the NFPA 855.
- The fire service command center and water supply must be located 300 feet from the BESS Site.
- Although noted in the 3rd Party report that some SUP conditions are redundant or unnecessary, the League City Fire Department wishes to maintain all comments that were considered by the Planning and Zoning Commission.
Recommendation
Based on the information above, the site is in a preferred location and is compliance with the Comprehensive Plan. Staff recommends approval of the rezoning and the SUP, subject to the following conditions:
1. An SUP associated with a B.E.S.S. development should expire after a period of 24 months beginning upon the date of adoption of the SUP ordinance by City Council if no formal application is submitted to the City for the development of the site.
2. The only use permitted by this SUP is the Private Utilities use, specifically a B.E.S.S. (Battery Energy Storage System) facility operated by Stella Energy Solutions, LLC.
3. The site shall be developed in accordance with the League City Code of Ordinances:
a. The site layout shall be substantially similar to what is shown in the site and landscaping plans.
b. To buffer the site from the surrounding area, the site shall provide the following screening:
i. A screening masonry wall located along the perimeter of the site that is as high as or higher than the height of the battery modules so as to be fully screened from view.
ii. A 20-foot-wide Landscaped Buffer Yard shall be provided along the east, north, and west sides along the outside perimeter wall consisting of:
1. Eight (8) trees provided for each 100 linear feet with half of them being oak trees and half being eastern white pine trees.
2. A continuous hedge of shrubs not less than 3 or more than 4 feet in height.
c. The roadway leading from the public roadway to the entrance of the site, shall be a concrete roadway designed and constructed to League City standards.
4. The site shall comply with all applicable fire codes and actions, but not limited, to the following:
a. 2024 IFC, Chapter 12 and the listed NFPA references with Chapter 12
b. NFPA 855 (2023): Standard for the Installation of Stationary Energy Storage Systems
c. An Environmental site plan shall be provided to include firefighting water runoff retention.
d. There shall be some form of air monitoring system for vapor detection to the satisfaction of the Fire Marshal.
e. A Water fire flow analysis shall be provided at the permitting phase to ensure the existing water infrastructure can support the firefighting demands.
f. There shall be redundant 24/7 site monitoring with the ability to detect and prevent thermal runaway.
g. A technician shall respond in-person within 1 hour of being notified by the Fire Department in the event of an emergency incident at the site.
h. The company shall provide the Fire Department with the equipment needed to monitor and test the air and the water for any hazards at these sites during emergencies.
i. Provide the Fire Department with a Plume model on a satellite image of the area they plan on doing the installation.
j. Provide annual training to the fire department for hazards and responses.
k. Provide an emergency procedure guide and emergency contacts that shall be updated annually or when significant changes are made whichever is earlier.
l. The fire service command center and water supply must be located 300 feet from the BESS Site.
5. Prior to the City’s authorization to operate the facility, the Applicant shall:
a. Provide and receive approval from The Office of Emergency Management, a finalized Emergency Action Plan (EAP) for the site. Any future updates to the EAP shall be provided within 60 days of the update.
b. Provide a Decommissioning Plan of the facility to the Planning Department. Any future updates to the plan shall be provided within 60 days of the update.
c. Provide a Decommissioning Bond, with the Applicant as the Principal and the instrument shall run to the City, as oblige, and shall become effective on or before the beginning of operations at the site and shall remain in force until the property is fully decommissioned. The amount shall be based on a Professional Engineer’s signed and sealed estimate of today’s costs to decommission the site, at build out, with an adjusted inflation rate of 2.73% each year for the next 20 years.
6. Upon the ceasing of operations or the end of life of the facility, whichever comes first, the site shall be decommissioned based on the following criteria:
a. All above and below ground features (i.e. containers, underground utilities, foundations, gravel, etc.) shall be removed from the site with the exception of the drainage improvements and access road with the site returned to its natural pre-construction ground state.
b. All material removed from the site shall be disposed, reused, and recycled in accordance with state and federal requirements.
c. Any adverse substances that may have entered the ground during the course of the operations shall be removed from the property and properly disposed of.
d. The Operator of the facility shall maintain, at a minimum, the amount of insurance that is currently provided.
7. Allow a variance to permit on-site overhead lines with electrical poles and pole mounted transformers to be provided along the southern property line, adjacent to the high-power line corridor. Any poles installed along a right-of-way shall be concrete.
8. All BESS Sites will be reviewed and inspected by a third-party expert contracted by the City. All costs associated with the review and inspection of the BESS sites shall be reimbursed by the developer.
Attachments:
1. Zoning Map
2. Distance Map of Site
3. Planning and Zoning Commission Staff Report
4. Excerpt Minutes from the February 19, 2024, P&Z Commission Meeting
5. Applicant Presentation
6. Emergency Response Plan
7. Safety Analysis
8. Depreciation Analysis
Origination:
Planning Department
Applicant: Stella Energy Solutions, LLC.
Owner: MLH Land Holdings, LLC.
FUNDING
{X} NOT APPLICABLE
STRATEGIC PLANNING
{X} NOT APPLICABLE