By any measure, the December 16 decision by the La Quinta City Council was one of the most consequential infrastructure votes the city has taken in years.
In a 4–0 vote, with councilmember John Pena recused, the council approved a package of agreements and funding commitments designed to unlock new electrical capacity at Imperial Irrigation District’s Avenue 58 substation. The action authorizes the city to advance up to $10 million from general fund reserves to secure long-lead-time power equipment and reserve future capacity for development, with the expectation that developers will ultimately repay those funds.
City officials described the decision in stark terms during the meeting: without new substation capacity, La Quinta’s ability to approve and build new housing and commercial projects would effectively grind to a halt.
A substation at the breaking point
The Avenue 58 substation, located north of Avenue 58 and west of Monroe Street, is nearing its maximum electrical capacity. According to city staff and IID representatives, the facility cannot reliably serve significant additional development without a major expansion.
The plan approved by the council centers on adding a fourth transformer bank, a 50-megavolt-ampere (MVA) addition that would yield roughly 40 MVA of usable capacity. That expansion could support an estimated 3,000 to 4,000 new homes, along with associated commercial demand.
The total projected cost of the expansion is $23.25 million. Under the framework approved by the council, IID may contribute up to 20 percent of that total, recognizing that the upgrade also benefits its broader system. Developers are expected to fund at least half of the remaining cost. The city and Riverside County would act as backstops, advancing funds if developer participation initially falls short, then recovering those costs as additional projects come online.
“This is about getting ahead of the problem,” city staff told the council. “Once you wait until capacity is gone, it’s already too late.”
Why the city is fronting the money
A key element of the decision is timing. The equipment required for the substation expansion, including large transformers, breakers, switchgear, and control systems, has long lead times. While those timelines have improved from pandemic-era extremes, staff said delivery still takes roughly 14 to 16 months from order placement.
To avoid losing years to procurement delays, La Quinta agreed to advance funds to enable IID to immediately begin engineering and ordering equipment. Those city-advanced dollars are structured as a loan to the La Quinta Financing Authority and are intended to be the first dollars repaid as developers begin making their required milestone payments.
City Manager John McMillan, who has led weekly coordination calls with IID and developers for months, framed the decision bluntly during the meeting: without this action, La Quinta would be effectively “closed for new business.”
La Quinta Mayor Linda Evans.
Mayor Linda Evans also noted, importantly, that another option available was to essentially have the city’s ratepayers fund the expansion through a rate surcharge – something she and her colleagues did not want to do. “As we have options for addressing this kind of funding gap in advance, this is a preferred option over doing a cost-share agreement, where, for example, our sister city, Indio, has made two rate surcharges for all of its ratepayers. For me, this makes more sense than just outright surcharging all city ratepayers, because we know the rates are going to be changing via IID. They don’t need to be changed by us, per se. So it’s a good path, and thank you to the developer community for sticking with us. I know it helps to have a city on board and writing a check, but once this is approved, the expectation is that you all start writing checks as well to reserve your capacity.”
Growth pays for growth, but someone must start
The La Quinta approach mirrors a broader policy shift by IID, which has made clear that new growth must pay for new infrastructure. That stance has increasingly forced cities and developers into complex negotiations over who carries upfront costs and how those costs are recovered.
The issue has become a flashpoint across the Coachella Valley, mostly the the eastern sector. It’s well known that business leaders and developers are concerned that insufficient power capacity is delaying projects and threatening new development and economic growth. Thus, IID and developers must jointly fund major infrastructure projects rather than relying on one party to bear the burden.
La Quinta’s decision reflects that reality. Rather than waiting for developers to fully subscribe to capacity before moving forward, the city chose to act as a catalyst, absorbing short-term financial risk to ensure long-term development viability.
At the December meeting, staff emphasized that developer interest already exceeds available capacity, with requests totaling more than 100 percent of the expanded substation’s capacity. That demand, officials said, increases confidence that city funds will be reimbursed over time.
Community pressure and policy context
The power capacity issue has also been driven by public input. At the city’s 2025 community workshop, residents and business leaders ranked addressing IID infrastructure needs as their top priority, ahead of other capital projects.
Compounding the problem are newer building codes and broader electrification trends. State requirements for electric-ready construction, combined with the rapid adoption of electric vehicles and heat pumps, have significantly increased baseline electrical demand. Even without new development, substations across the valley are under strain.
La Quinta’s staff explicitly tied the Avenue 58 decision to these larger forces, describing it as part of a necessary shift in how cities plan for energy infrastructure in a hotter, more electrified future.
A calculated risk with regional implications
The council’s action does not guarantee smooth sailing. If developer participation stalls or projects are delayed, the city and county could temporarily carry a larger share of the cost. Council members acknowledged that risk during the discussion, but largely agreed that inaction posed a much greater threat.
What is clear is that the old assumption that utilities alone would build ahead of growth no longer holds. For La Quinta, the message from December 16 was unambiguous: securing power is now as critical to growth as water, roads, or zoning. Waiting is no longer an option.
All new IID substations and expansions in progress in Greater Palm Springs
Click here for a map of all of the IID substations in progress being financed and initiated in part with local public agencies and private organizations.
