The Houston-based company that owns the retired Morro Bay Power Plant land, along with operating plants in Moss Landing and Oakland, announced Tuesday that it’s withdrawing its offer of sale of its California sites.
As part of its full-year, 2014 earnings release, Dynegy posted on its website that its California-related sales process has been “terminated as bids were below expectations.”
“The offers we received didn’t reflect their value,” said Dynegy spokesman Micah Hirschfield. “As it relates to Morro Bay, we will continue to explore redevelopment opportunities.”
Hirschfield told The Tribune that the company’s three California properties had been on the market since late last year.
City officials in Morro Bay put out a staff report last week, in advance of its City Council meeting Tuesday night, noting that Dynegy had put the local property on the market and highlighted potential future impacts on the city.
Because the retired local power plant land, consisting of about 100 acres, is privately owned, “the city maintains a certain level of influence over the eventual use of the property … but not control,” Morro Bay City Manager Dave Buckingham and City Attorney Joseph Pannone wrote in a staff report.
Hirschfield said Dynegy decided to wait until its full-year earnings release Tuesday before informing the public, analysts and investors about the decision to hold on to the properties.
The company spokesman wouldn’t comment on whether Dynegy may float the properties for sale again.
He said Dynegy’s other properties are primarily concentrated in the Midwest and Northeast, and it made sense to explore a sale of its California land.
Hirschfield said that Dynegy has worked cooperatively with the city of Morro Bay to keep the site secure and the company will continue to keep the city apprised of any plans for the property and “do everything we can to be a good neighbor.”
On Tuesday night, the Morro Bay City Council discussed what role it could take in shaping the future of the property, which commands a prime location along the city waterfront.
Several council members said the city should be proactive, using its rezoning powers and reaching out to potential buyers. The property is currently zoned coastal dependent industrial.
Councilman Noah Smukler said the city should contact legislators in Washington D.C. to see what kind of re-use they may suggest.
He also supported working to help ensure that the nonprofit Pacific Wildlife Care Center, which rehabilitates non-marine animals, will still have a home when its lease with Dynegy expires in 2021.
Councilman John Headding said his research indicates the company wants to shed its California properties because of the state’s strong environmental standards and the lack of profitability at those sites.
City representatives should meet face-to-face with Dynegy to discuss the site’s future, and be ready to rezone the site, he said.
Headding suggested that the nonprofit Trust for Public Land and similar conservation organizations with access to millions of dollars could help create a preserve that could work in conjunction with some development made possible with a zone change.
“The opportunity is now to get a plan together and hit Dynegy as soon as we can and make a proposal to Dynegy as soon as we can,” he said.
Buckingham and Pannone said Morro Bay could potentially buy the property for $1 in 2033 because of a clause in the current deed requiring the plant to generate electricity or sell. The plant stopped production Sept. 30, 2013 and the city’s ability to purchase the site becomes effective after 20 years.
Buckingham estimated the environmental cleanup costs to be around $50 million, possibly more.