Benicia City Council split 3-2 Tuesday night on authorizing Community Sustainability Commission grant money, narrowly supporting Councilmember Alan Schwartzman’s proposal to award Valero Benicia Refinery money for a boiler project if it withdraws its condensate recovery project.

If the refinery drops seeking Valero-Good Neighbor Steering Committee settlement agreement money for its second phase of the condensate recovery project, another $1.6 million to award other water conservation projects, Schwartzman said.

The refinery had applied for $852,000 for a boiler construction project that would save 38 million gallons of water each year and annually prevent the release of the equivalent of 3,796 metric tons of carbon dioxide into the air.

Schwartzman’s proposal, also supported by Councilmembers Mark Hughes and Christina Strawbridge and opposed by Mayor Elizabeth Patterson and Vice Mayor Tom Campbell, gave Valero $829,000 of its request, conditioned on the refinery’s acting in 30 days.

His motion also granted the sustainability commission $18,000 for the city’s application and assessment to join Marin County’s community choice aggregation nonprofit organization that buys power primarily from renewable sources, and sells electricity to customers through Pacific Gas and Electric (PG&E) lines.

The Council decision meant that several other grant applications that had been endorsed by the CSC weren’t approved Tuesday, although some may be be considered for funding once the matter with Valero’s projects is settled.

It also meant that CSC members weren’t happy.

Ex-officio member Marilyn Bardet, who also is a member of the Good Neighbor Steering Committee that negotiated the settlement agreement with the refinery that provides the money for CSC grants, called the action “sad.”

She reminded the Council that applicants had worked hard to convince the CSC of the worthiness of their projects. She noted that many applicants had sat in the Council Chamber three hours, hoping to hear that their grants had been awarded.

Instead, Bardet said, they hadn’t been given “the full measure of your attention.”

She challenged the Council’s decision to award money to a project that the CSC had put at the bottom of a list of 13 applications.

Earlier in the meeting, CSC Vice Chairperson Kathy Kerridge, speaking as a Good Neighbor Steering Committee member, questioned whether Valero had met the conditions to receive money for its condensate recovery project, among which are a CSC review and the obtaining of necessary permits.

“Today you have the opportunity for this money to be used by the community,” Kerridge said.

While the city has sided with the Commission on that issue, Valero officials have been contending the refinery had met the settlement’s requirements for eligibility to use the money.

Several Valero employees have said that a presentation made before the Commission served as the review, and that no additional permits are needed for the second phase of the project that would reduce the refinery’s water consumption by capturing water vapor that had turned to steam.

The CSC had put the $18,000 community choice aggregation feasibility assessment at the top of its list. That was the only CSC-endorsed application the Council approved.

Below that, according to CSC rankings, were $105,680 for a sustainable back yard urban farming project by the Benicia Community Gardens; $100,000 of the $500,000 requested by the Benicia Economic Development Division to continue its Benicia Resource Incentive Program (BRIP) that is designed to reduce power and water use as well as trash production in the Benicia Industrial Park; $20,000, or half the request by the CSC, for its Bicycle Benicia program to encourage bicycling throughout the city; $11,328 for Benicia High School’s ECH20 Academy; $35,000 for the Benicia Tree Foundation’s project to plant 1,000 trees; and $20,000 for the Benicia Public works plan to offer water rebates.

The CSC had planned to fund other applications if the $1.6 million also became available, and had hoped to shift some funding around to take advantage of the restriction that the additional money could be used only for water-saving projects.

The panel had offered the Council two options if the city declared the additional money available.

In one, the CSC would get $716,301.58 to spend on its own water and energy rebate conservation program, and $46,000 would be awarded to Benicia Parks and Community Services for drip irrigation and $153,000 for its water irrigation system.

Also, the Benicia Unified School District would get $60,970 for a CalSense water management system, Solano Resource Conservation District would get $48,407.42 for a Suisun Marsh Watershed Education program, and WattzOn, the city’s consultant that handles residential water and power use analysis, would have $293,653 of its funding shifted so its water conservation portion would come from Valero-Good Neighbor Steering Committee money that is restricted to water-saving projects.

The Commission also offered the Council another alternative that would add $40,000 Benicia Makerspace requested to obtain a community work space.

Under the original recommendation, that did not depend on the $1.6 million, the schools’ CalSense water management system, the Parks and Community Services water and drip irrigation systems, the Solano RCD education program, Benicia Makerspace and Valero would not have received funding.

Jasmine Powell, vice president of Dunlop Manufacturing and member of the Benicia Industrial Parks Association board, looked at the original recommendation and reminded the Council that one of the priorities of the Valero-Good Neighbor Steering Committee Settlement Agreement was to fund water saving projects.

According to a chart the Commission furnished to the Council, the amount of water that could be saved through community choice aggregation, Bicycle Benicia and the Benicia Tree Foundation were negligible, and could not be determined for the Economic Development BRIP program.

While the Community Gardens, ECH20 Academy and Public Works rebates offered thousands of gallons in water savings, Powell noted that other projects, each with savings in the millions of gallons, had been recommended for no funding.

“I question the priority,” she said. “The projects saving water aren’t being funded at all.”

Sue Fisher Jones, speaking both as Valero’s public affairs manager and as a Benicia resident, agreed. “When you look below the line,” she said, speaking of projects that hadn’t been recommended for funding, “there are a lot of water savings.”

Schwartzman had noticed the same thing.

“We have a water issue,” he said about California’s drought. “There are stark differences in what the savings will be.” He called Valero’s boiler project “great savings.”

At that point, he suggested if Valero would be willing to relinquish any claim on the $1.6 million in Valero-GNSC funds, “it’s a win-win, with everybody getting something.”

He asked John Hill, the refinery’s vice president and general manager, if it was “out of ine” to expect Valero to withdrawing of its condensate recovery phase 2 project in favor of getting money for the boiler project.

“No, not at all,” Hill said.

Patterson, speaking longdistance from Washington, where she was attending President Barack Obama’s first White House Maker Faire, disagreed with the proposal.

“I take extreme exception,” she said about Schwartzman’s proposal to revamp CSC’s grant recommendation.

Siding with Kerridge’s observation, Patterson said if the refinery built the boiler project with its own money, it would pay for itself within a year.

She reminded the rest of the Council that the Valero-GNSC money should be available to those who otherwise couldn’t afford to do the projects they’ve proposed.

“I’m going to stick with the recommendation the CSC made, and for community choice,” she said. “Please respect the process. It’s hard on a commission to have its work disregarded.”

“I’m trying to free up that money,” Schwartzman explained.

Hughes said he had respect for the CSC, but reminded the Council that city commissions, boards and committees are “advisory in nature.”

The Council retains the authority of approval, he said. “If we are going to be a rubber stamp, to bring it to us.”

He said he was “taken aback” by the recommendations, particularly since they didn’t recommend funding many of the water conservation projects.

“The high priority project should be water. We’re looking at a water surcharge and buying water,” he said.

He went through the list of recommended applicants and pointed out those whose projects don’t save water at all. “I think we need to go for the biggest bang for the buck.”

As for giving the refinery a grant, “Valero shouldn’t be treated differently,” Hughes said, backing his assertion by quoting the Valero-Good Neighbor Steering Committee agreement.

“We are in a serious situation with the drought,” Strawbridge said. “I like what Alan came up with.”

Unless the city, the steering committee and Valero modify their pact that created the settlement agreement fund, the additional money would need to be spent on projects that demonstrated significant water savings.

That’s why Schwartzman made sure his motion left $18,000 available for the community choice aggregate feasibility study.

Even with the money earmarked, some Councilmembers weren’t ready Tuesday to agree to join Marin Clean Energy, the community choice organization that operates in Marin County and Richmond.

In a separate agenda item, the Council authorized City Manager Brad Kilger to send a letter asking Marin Clean Energy to consider Benicia for membership and contract for the technical study.

But for a time Tuesday night, that vote was no sure thing.

Hughes opened discussion by asking the Council to continue the matter until a future meeting, a motion seconded by Strawbridge.

But MCE executive officer Dawn Weisz said her board would be ordering power and would need Benicia’s application in time to be put on its July 3 agenda.

“We are under a time crunch,” she said. “We have two requests. We’ll be doing our procurement in a couple of months. That’s one reason the item is on the agenda tonight.”

She said the July 3 meeting packet is released June 26, “so we need information for the packet.”

Had the Council not agreed to proceed, Benicia’s application would not be considered for membership until next year, she said.

MCE is racing against another clock, too. Legislation is under consideration on the state level that would change how customers participate in community choice aggregation.

Under current law, when a local government is approved for community choice aggregation (CCA), customers automatically are switched from their commercial utility, such as PG&E, to the CCA service.

They don’t experience any change in services, since PG&E infrastructure handles delivery and billing.

Those who object are given a period to declare they prefer to stay with the commercial utility.

Under proposed legislation, the procedure would change so that when a CCA is established, customers would remain with the commercial utility unless they request service through the CCA, Weisz said.

Kerridge said schools are saving tens of thousands of dollars, and communities save thousands as well, when a CCA opens. “If you pass that up, it’s dead,” she said.

If the Council didn’t authorize the city’s application, “the opportunity may not come back.”

She said there were “tons of reasons to pursue this,” not only so money that might otherwise go to utility shareholders could stay in the city, but also significant greenhouse gas savings.

She pointed out that Hughes had a career with PG&E before his retirement, but Hughes assured her, “I won’t compromise my integrity.”

However, he was concerned that deciding the item was premature, since the Council hasn’t had its own comprehensive discussion about the pros or cons of joining a CCA.

“We haven’t heard testimony from customers,” he said.

He agreed to withdraw his motion so the application could be sent, since the Council would get a chance to vote one more time before Benicia could join the MCE.

Schwartzman offered the motion to proceed with the first steps that could lead to MCE membership. However, he agreed the Council needed a workshop on CCAs before casting its final vote.

“I’m not as passionate as others,” he said, “but I am absolutely a believer in renewable energy.”