Absent Dave Markss last week, the Colusa City Council voted unanimously to approve a development agreement that will allow Compass Leaf LLC to develop and open a cannabis manufacturing facility on 8.6 acres at Colusa Industrial Properties, where the company will cultivate, manufacture, process and distribute cannabis.
The development agreement is the first step in the city’s cannabis project approval process, and serves as a revenue generator for the city. Compass Leaf will still need to obtain a special use permit and regulatory permit before they can move forward with the project, which they say will be built out in two proposed phases and will, at full build out, employ more than 30 people.
As a part of the development agreement, the Compass Leaf will pay the city a ‘production fee’ on a quarterly basis, which amounts to 3 percent of the company’s gross sales.
Compass Leaf will also pay an annual facility fee in the amount of $15 per gross square foot of the facility used exclusively for manufacturing cannabis for the first 20,000 sq. ft. of the facility area, and $7.50 per square foot for all additional area in excess of the initial 20,000 sq. ft. of area in the entire facility. Compass Leaf will be required to pay the facility fee six calendar months after they begin operations. City Manager Jesse Cain clarified on Monday that the facility fee does not apply to cultivation space – which would constitute the bulk of Compass Leaf’s operations.
All told, the Compass Leaf anticipates that they could potentially generate between $600,000 and $800,000 in revenue for the city of Colusa, projections that Cain described as conservative.
In approving the development agreement, the council followed the recommendation of the city’s planning commission, which it made in a 3-1-1 decision during a meeting on Sept. 12. Kristy Levings, the company’s chief operations officer told the planning commission that it wasn’t yet clear how many square feet the facility would encompass at full build-out. Cain said on Monday that the specifics for the proposed project are still being worked out, but that they would be nailed down by the time Compass Leaf comes before the city council for its special use and regulatory permits during the council’s Oct. 16 meeting.
As has been previously reported, the property that Compass Leaf intends to develop is the majority portion of the 10.6 acres that Cultivation Technologies, Inc. (CTI) – the first cannabis company to obtain a development agreement with the city. CTI recently closed escrow on the remaining two acres, and will need to come back before the planning commission and the council in order to obtain a new development agreement.
“Hopefully, (CTI is) still going to do a project, but now Compass Leaf will come in, with the city’s help, and we’ll get a project going,” said Ed Hulbert, CEO of Colusa Industrial Properties.
Other city council news:
Bids come back too high on Bridge Street water line replacement project
The city’s water line improvement project on Bridge Street recently hit a snag, when the bids for the project came back at nearly double the city’s estimate for the project. The council voted last week to reject all bids and to go out to bid again for a scaled-back project.
“In a nutshell, we have to move, relocate or protect our water line on Bridge Street, due to the… Cal Trans renovation project,” City Manager Cain told the council. “So we sent the project out to bid, just to put in a brand new line and run the new services and all that, and the lowest responsible bidder came in at about $1.83 million, which was a lot more than we expected.”
Cain added that the city had “dumbed down” the project for the next round of bidding.
“We’re not replacing as much of the line, and we are putting projections in place. We are only replacing what we absolutely have to, and we are going to send it out to bid and see if we can get the project under $1 million,” Cain said. “We’re going to shake the trees again, see what falls out, and see if there is a project we can do.”
The city’s initial estimate for the project was $900,000.Cain said that the city applied for a grant in that amount through the California State Water Resources Control Board last year, and that he was told that the city received the grant “awaiting funding.” Cain added it could be three years before the city receives that grant money, which would be after the completion of the Cal Trans project.
“I did ask the question as far as, if we spent the funds now, can this be something we can be reimbursed for,” Cain said. “They said absolutely not. If you have money to pay for it now, we’re not going to give you money.”
Mayor Greg Ponciano asked whether rejecting the bids for the city’s water line project had the potential to hold up the Cal Trans project, and Cain answered that it didn’t “right now.”
“But we’re running on a time-line, where yeah, if we don’t do something in the next six months, then Cal Trans is going to start getting mad.”
Cain said that Cal Trans did offer the city a loan to replace the line, but that the city would need to go back to the voters for another water and sewer rate increase in order to qualify for the loan.
“The issue with that is we just adopted a (Proposition) 218 for a new water and sewer rate structure, and our water rate structure is not set up to absorb the loan,” Cain said. “…In order to get a loan or even qualify for a loan, we actually have to go and do another 218, figure out what the loan repayment is, and actually raise the rates to pay that loan back, and we’re not going to do that.”