CARLSBAD — The Carlsbad City Council on April 15 approved a long-awaited settlement agreement with San Diego Gas & Electric and Cabrillo Power, a subsidiary of NRG Energy, to relocate SDG&E’s coastal service yard and transfer several properties to the city for public use.
The deal, known as the “Seaside Transaction Agreement,” includes the transfer of approximately six acres of coastal property to the city, including Cannon Park and surrounding parcels, while SDG&E relocates operations to a 9.2-acre inland site acquired from Cabrillo Power.
Deputy City Manager Gary Barberio described the deal as “a great result,” highlighting that the agreement achieved everything staff said it would when last presented to the council in December 2023.
“We were successful, and what we had told you is a great result,” Barberio said.
The resolution had been in the making for more than a decade. The issue stems from a 2014 agreement between the city, SDG&E and NRG Energy, which negotiated terms to demolish the Encina Power Station, construct a 632-megawatt natural gas peaker plant (Carlsbad Energy Center), and relocate SDG&E’s North Coast Service Center, which is used for fleet maintenance, repairs, emergency services and training.
The original agreement stipulates that the new service center must be situated west of El Camino Real with good freeway access. The parcel must be 10 to 12 acres and relatively flat to allow for a new 30,000 to 32,000-square-foot building.
If unable to relocate the center, NRG would pay the city $10 million, per the original agreement. All three parties were responsible for agreeing upon a final location for the new service center by 2016.
Under last week’s agreement, the city will gain ownership of additional lands, including a 5.75-acre parcel on the north shore of Agua Hedionda Lagoon, bluff lands stretching from the Warm Water Jetty to the Terramar neighborhood, the middle and inner lagoon basins, and the underlying land along portions of Carlsbad Boulevard and Cannon Road.
Another component of the agreement grants the city an easement across Lot 11, allowing development of a trailhead and improved access to the Hub Park trail system. SDG&E will also contribute $1 million toward the development of the trail.
Barberio emphasized that the deal will be implemented in phases, beginning with a 180-day due diligence period. Regulatory approvals from the California Public Utilities Commission, California Coastal Commission and the city will be required before land transfers and construction activities can proceed.
“All of the transactional costs, etc., will be equally split by Cab One and SDG&E,” Barberio said. “The city will not bear any of these costs.”
If regulatory approvals are not obtained, the city would still receive a $10 million payment from Cabrillo Power and retain the ability to take ownership of the bluff lands, lagoon basins and Carlsbad Boulevard frontage.
City Attorney Cindie McMahon called it “the most sophisticated agreement that I’ve ever been a part of,” adding that it creates shared incentives for all parties to complete the required steps.
Mayor Pro Tem Priya Bhat-Patel praised the agreement as “a solution to move forward” and made the motion to adopt both resolutions related to the agreement, which the council approved unanimously.
