MEMORANDUM
TO: Board of Supervisors
FROM: Mireya Turner, Community Development Director
Michelle Irace, Senior Planner
DATE: August 12, 2025
SUBJECT: Approve Joint Lease Termination Notice and Release of Liability of Geothermal Agricultural Park Lease (No. 015254) Between the County of Lake and S-Bar-S Quarry located at 7765 S State Hwy 29, Kelseyville, APN 009-022-56 (formerly -50) and Authorize the Chair to Sign
EXHIBITS
A. Geothermal Ag Park Lease (No. 015254), as Amended December 1, 2000
B. Memorandum Regarding Site Closure, Dated August 21, 2006
C. Joint Lease Termination Notice and Release for Board Approval
D. Email Correspondence from the Property Owner Requesting Lease Termination
EXECUTIVE SUMMARY
On October 1, 1985, the County of Lake Board of Supervisors approved a Geothermal Agricultural Park Lease (No. 015254) between the County of Lake and S-Bar-S Quarry (hereinafter referred to as "Lease”). The Lease’s purposes included the development of geothermal water resources and providing heat to a vocational greenhouse facility and demonstration project to be operated by Mendocino-Lake Community College. The total Lease area encompassed 22.45 acres; a 10,000 square foot area was identified for the Mendocino College greenhouses and the remaining area could be rented to commercial greenhouse operators and other geothermal agricultural operations (hereinafter referred to as "Ag Park"). The Lease specifies that the County could sell energy to commercial operators at a price which would cover the County’s operation, maintenance, replacement, and other costs required to maintain the geothermal and irrigation systems. The executed Lease is attached here as Exhibit A.
At that time the County had grant funding for the development of a commercially viable site to use low temperature geothermal resources for greenhouse heating. Two geothermal production wells and one injection well were drilled, along with other improvements that were made to bring the site into operation. The Mendocino-Lake Community College, in partnership with the County operated a greenhouse facility successfully for several years. The next step in attracting commercial operators to the site required reservoir testing and expanding the infrastructure, which required additional funds. However, the County was unable to acquire adequate funds and a continued presence at the site by the County and College was terminated in 1994.
The term of the Lease was specified for a period of 20 years, commencing on October 1, 1985 and ending on September 30, 2005, unless the lease is terminated earlier or extended per the terms of the Lease. The terms of the lease required the County to complete cleanup and abandonment of the site by the end of the 20 years. Records indicate that the original lease was modified in 1992 and 1997. Additionally, the Lease was modified in 2000 to transfer all termination rights to future property owners and allow the County additional time to obtain funds to reclaim the site. Records further show that in 2006, the County worked with the property owner and State’s Division of Oil, Gas and Geothermal Resources to obtain a contractor to abandon the wells, and close the site. A memorandum dated August 21, 2006, prepared by the Special Districts Administrator at the time, Mark Dellinger, confirming site closure is included in Exhibit B.
At this time the property owner seeks to formally terminate the full lease with the County, thereby removing it entirely from the title report for the property. In order to do so, Staff recommends the Board of Supervisors execute the attached termination and release (Exhibit C). Both the property owner and Staff agree that the Ag Park has been returned to its pre-Lease state, as indicated in correspondence from the property owner (included in Exhibit D).
RECOMMENDATION
Approve and adopt the attached termination and release agreement, formally terminating the Geothermal Agricultural Park Lease (No. 015254) between the County of Lake and S-Bar-S Quarry located at located at 7765 S State Hwy 29, Kelseyville, APN 009-022-56 (formerly -50) and authorize the Chair to sign.