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Home My WebLink AboutR-11495 approving Amendment No. 1 to the 600 Tank Farm Reimbursement AgreementR 11495 RESOLUTION NO. 11495 (2024 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING AMENDMENT NO. 1 TO THE 600 TANK FARM REIMBURSEMENT AGREEMENT WHEREAS, Covelop, Inc (Developer) is owner of the real property located at 600 Tank Farm Road; and WHEREAS, the City Council has approved a residential mixed-use project at 600 Tank Farm Road, which is within the Airport Area Specific Plan (AASP), through a series of actions and approved entitlements as follows: 1. The Final Environmental Impact Report and associated Mitigation Monitoring and Reporting Plan (including all mitigation measures therein) for the Project certified and adopted by Resolution No. 11304 (2022 Series), on February 1, 2022. 2. An amendment to the General Plan (Resolution No. 11304, 2022 Series), adopted on February 1, 2022, including amendments to the Land Use/ Circulation Element (“LUCE Update”) adopted by Resolution No 10586 (2014 Series), on December 14, 2014. 3. The AASP as amended by Ordinance No. 1708 (2022 Series), on March 1, 2022. 4. The City’s Zoning Ordinance as amended by Ordinance No. 1708 (2022 Series), on March 1, 2022. 5. The Vesting Tentative Map SBVD-0407-2021 approved on February 1, 2022. WHEREAS, there are certain public improvements associated with the 600 Tank Farm Mixed-Use project that must be installed and are greater in size and capacity than required to serve only the project (“Excess Public Improvements”), qualifying said Excess Public Improvements for reimbursement as set forth in San Luis Obispo Municipal Code Section 16.20.110; and WHEREAS, on February 1, 2022, the City Council approved Resolution No. 11305 (2022 Series), authorizing the Mayor to execute a Reimbursement Agreement for 600 Tank Farm; and WHEREAS, on February 18, 2022, the Mayor executed a Reimbursement Agreement with the Developer which specifies (1) the portion of transportation improvements to be constructed by Developer and (2) the transportation improvements eligible for reimbursement; and WHEREAS, since the execution of the Reimbursement Agreement, anticipated costs for transportation improvements to be constructed by developer have increased substantially. As a result of these increases, the Developer has requested a change order to update the reimbursable costs of required transportation improvements; and DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA Resolution No. 11495 (2024 Series) Page 2 R 11495 WHEREAS, the Developer has presented estimates of the costs to design, permit and construct said Excess Public Improvements, and fair share proportionality of the properties that may benefit from the installation of the Excess Public Improvements; and WHEREAS, the total amount of the requested change order exceeds the authority limit of the City Engineer ($45,000) and City Manager ($175,000) and therefore must be approved by City Council; and WHEREAS, the parties have agreed to resolve the increased costs by amending the Reimbursement Agreement to update the costs and eligible reimbursable amounts of the required transportation improvements and to include the increased cost into the calculation of the Citywide Transportation Impact Fee Program; and WHEREAS, the approval of an amendment to the Reimbursement Agreement will assist in the orderly and timely completion of public infrastructure. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Recitals. The above recitals are true and correct and are incorporated herein by this reference. SECTION 2. Amendment. The “Amendment No. 1 to Reimbursement Agreement for 600 Tank Farm Road”, attached as Exhibit A, is hereby approved, and the Community Development Director is authorized to approve minor revisions and execute this Agreement on behalf of the City. SECTION 3. The Finance Director is authorized to administer and implement the Reimbursement Agreement as provided therein. SECTION 4. The Mayor and City staff are authorized to take any actions necessary to carry out the intent of this Resolution. DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA Resolution No. 11495 (2024 Series) Page 3 R 11495 SECTION 5. Environmental Review. The 600 Tank Farm Mixed-Use Development Plan and associated Final Environmental Impact Report (FEIR) were approved and certified by the City Council on February 1, 2022. Installation of the public improvements contemplated under the Reimbursement Agreement were identified as required mitigation measures to address significant transportation impacts resulting from the development proposal. The Reimbursement Agreement relates only to the financial mechanism by which the developer’s costs in excess of fair share will be reimbursed and does not implicate any physical change to the project or the environment. Therefore, no further environmental review is required for this action. Upon motion of Council Member Marx, seconded by Council Member Francis, and on the following roll call vote: AYES: Council Member Francis, Marx, Shoresman, Vice Mayor Pease, and Mayor Stewart NOES: None ABSENT: None The foregoing resolution was adopted this 21st day of May 2024. ___________________________ Mayor Erica A. Stewart ATTEST: ______________________ Teresa Purrington City Clerk APPROVED AS TO FORM: ______________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________ Teresa Purrington City Clerk DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA 5/22/2024 | 12:25 PM PDT 1 AMENDMENT NO. 1 TO REIMBURSEMENT AGREEMENT FOR 600 TANK FARM ROAD This Amendment No. 1 to Reimbursement Agreement for 600 Tank Farm Road (“Amendment No. 1”) is entered into on ____________________________________ by and between the City of San Luis Obispo, a municipal corporation and charter city (“City”) and Covelop, Inc., a California corporation, or its successor(s)-in-interest, (the “Developer”), hereinafter referred to in this Amendment No.1 as “Party” and collectively as “Parties”, as appropriate. RECITALS A. WHEREAS, on February 18, 2022, the City and Developer executed a Reimbursement Agreement (the “Agreement”) for the 600 Tank Farm Road development (the “Development”), and B. WHEREAS, as a condition of approval for the Development, Developer is required to build certain public improvements that are of greater size and capacity than required to serve only the project. The construction of excess public improvements qualifies Developer for reimbursement as set forth in San Luis Obispo Municipal Code Section 16.20.110; and C. WHEREAS, pursuant to the Agreement, the City will provide reimbursements to Developer for certain oversized transportation improvements eligible for reimbursement (“Infrastructure Improvements”), with reimbursement provided from a mix of fund sources, including City General Fund, Citywide Transportation Impact Fees (TIF) collected from other off-site Benefiting Properties, and credits towards Developer’s on-site Citywide TIF obligation for the 600 Tank Farm Road Project; and D. WHEREAS, the anticipated costs to design, permit and construct the Infrastructure Improvements have increased above the estimates initially provided by the Developer and included the Agreement due to ongoing escalation of construction costs, and added complexity related to environmental permitting and right-of-way acquisition. As a result of these circumstances, Developer has submitted change orders totaling $4,818,675 to increase the total project costs eligible for reimbursement from $5,003,980 to $9,822,654, a 96% increase overall (See Exhibit A and B to this Amendment for details); and E. WHEREAS, pursuant to Section 6(a), 6(b) and 6(c) of the Agreement, any increase or decrease in cost must be reflected in the Contractor bid or change order submitted by Developer and approved by the City. Developer has submitted change orders totaling $4,818,675, which exceed the amounts authorized by DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA 5/22/2024 | 12:11 PM PDT 2 Section 6(b) of the Agreement for City Engineer ($45,000), and City Manager ($175,000) approval, and are therefore requiring City Council approval. Cost documentation submitted by Developer, which has been reviewed by City Engineer (or their designee) and deemed complete as of April 22, 2024. F. WHEREAS, the cost for reimbursement-eligible Infrastructure Improvements exceeds the General Fund amounts previously appropriated by the City, and amounts that can be legally collected in the current Citywide TIF program for the Tank Farm/Santa Fe Roundabout project. Availability of funding needed to satisfy full reimbursement to the Developer will depend on approval of additional General Fund appropriations and forthcoming amendments to the Citywide TIF program to increase costs collected from new development for the Tank Farm/Santa Fe Roundabout project. AGREEMENT NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby incorporated into the provisions of this Amendment by this reference, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. Effective Date of Amendment. This Amendment No. 1 shall become effective upon the date that the resolution approving this Amendment No. 1 becomes effective. 2. Amendment. The City and Developer hereby amend the February 18, 2022, Agreement as follows: A. Exhibit A to this Addendum replaces Attachment A to Exhibit 4 (Developer Cost Estimate). B. Exhibit B to this Addendum replaces Attachment B to Exhibit 4 (Estimated Cost and Funding Sources). C. Exhibit C from this Addendum replaces Exhibit 2 (TIF Program Project List). D. Section 2(i) is amended to add Section 2(i)(vi) as follows: (vi) Existing uncommitted Airport Area Specific Plan (AASP) TIF fund funds, not to exceed the amounts programmed in the AASP TIF towards eligible Infrastructure Improvements. E. Section 3(a) is replaced with the following: (a) To budget and appropriate the necessary Eligible Fees to provide reimbursements, including, but not limited to timely appropriation of General Fund amounts, and reservation of any Citywide TIF fees paid by DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA 3 Benefitting Properties. To this end, the City has already appropriated $2,460,000 in General Funds ($1,545,000 at the 2021-22 Mid-Year Budget; $715,000 at the 2021-23 Financial Plan; $200,000 at the 2023- 25 Financial Plan), and the City Manager presently intends to request that the City Council, subject to the City Council’s plenary discretion in the exercise of its budgeting authority and availability of funding, appropriate $267,138 in existing uncommitted AASP TIF funds prior to July 1, 2024, and request appropriation of an additional $1,393,481 in General Funds during or prior to the 2025-27 Financial Plan. F. Section 3 is amended to add Section 3(h) as follows: (h) To complete and present to the City Council for consideration a Impact Fee Study compliant with AB 1600 to update the Citywide TIF program to reflect updated project costs for the Tank Farm/Santa Fe Roundabout project (currently included in Citywide TIF Project #14, per Exhibit 2). It is assumed that an additional $1,983,121 will need to be collected for the roundabout project in the Citywide TIF to reimburse the Developer for eligible costs. The Citywide TIF program update is currently in progress and planned to be presented to the City Council for consideration in early 2025. If the Citywide TIF program has not been updated to capture increased costs related to the Tank Farm/Santa Fe Roundabout by July 1, 2025, City Staff will meet with Developer to discuss and explore alternative funding sources which may be appropriately used towards the reimbursement obligation. G. Section 5 is amended to add Section 5(f) as follows: (f) Where reimbursement to Developer requires amending an existing TIF program to increase costs collected in the TIF for eligible Infrastructure Improvements, the fair share percent of the increased project cost attributable to the 600 Tank Farm development will be subtracted from the Developer’s eligible reimbursement. It is understood that the Citywide TIF program will need to be amended to increase fees collected to cover the increased cost of the Tank Farm/Orcutt Roundabout project by approximately $1,983,121. Because the 600 Tank Farm development is vested under a Citywide TIF rate schedule that does not include this additional cost, the fair share portion of this cost attributed to the 600 Tank Farm development will be subtracted from the reimbursement to Developer coming from the Citywide TIF fund source. This fair share amount is calculated at approximately 1.69% of the $1,983,121 project cost increase ($33,421) based on the traffic growth projections and trip generation rates published in the City’s 2019 Citywide TIF Update Impact Fee Study. DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA 4 3. Remainder of Agreement Unchanged. Except as specifically stated herein, the February 18, 2022 Agreement remains in full force and effect. 4. Counterparts. This Amendment No. 1 may be executed in counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument. 5. Authority. The parties hereby represent that the persons executing this Amendment are expressly authorized to do so for and on behalf of the parties. 6. Exhibits. The following exhibits are incorporated into this Amendment for reference. A. Exhibit A – Attachment A to Exhibit 4, as Amended (Updated Developer Cost Estimates) B. Exhibit B – Attachment B to Exhibit 4, as Amended (Updated Estimated Cost and Funding Sources) C. Exhibit C – Exhibit 2, as Amended (TIF Project List) IN WITNESS WHEREOF, the Parties have executed this Amendment No. 1 as of the first date above. DEVELOPER: Covelop, Inc. By: _______________________________ Date: ______________________ Pat Arnold, President By: _______________________________ Date: ______________________ Damien Mavis, Secretary CITY: City of San Luis Obispo, a California Charter City and Municipal Corporation By: ________________________________ Date: ______________________ Timothea Tway, Community Development Director APPROVED AS TO FORM AND LEGAL EFFECT: By: _________________________________ Date: ______________________ J. Christine Dietrick, City Attorney DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA 5/22/2024 | 11:11 AM PDT 5/22/2024 | 11:12 AM PDT 5/22/2024 | 11:21 AM PDT 5/22/2024 | 11:54 AM PDT EXHIBIT A Attachment A to Exhibit 4 (Developer Cost Estimate), as Amended DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA EXHIBIT B Attachment B to Exhibit 4 (Estimated Cost and Funding Sources), as Amended Uses Santa Fe Road (Area 3) Tank Farm Road (Area 4) Acacia Creek Bike Path Tank Farm Bike Path PSE Total Design 30,306.93$ 262,682.72$ 36,024.83$ 189,750.00$ 518,764.48$ Rights of Way 37,375.00$ 525,500.00$ -$ -$ 562,875.00$ Direct Expense 316,159.86$ 2,837,596.79$ 475,468.73$ -$ 3,629,225.38$ Contingency 40,409.24$ 350,243.63$ 62,049.67$ 37,950.00$ 490,652.54$ Total 424,251.03$ 3,976,023.14$ 573,543.23$ 227,700.00$ 5,201,517.40$ Reimbursement Sources Santa Fe Road (Area 3) Tank Farm Road (Area 4) Acacia Creek Bike Path Tank Farm Bike Path PSE Total General Fund 254,550.61$ 1,560,656.94$ 376,005.65$ 68,310.00$ 2,259,523.20$ Offsite Paid TIF (benefiting properties)120,555.17$ 1,715,876.15$ -$ 159,390.00$ 1,995,821.32$ Direct Project Contribution -$ -$ 197,537.58$ -$ 197,537.58$ Onsite TIF (credits)49,145.24$ 699,490.05$ -$ -$ 748,635.29$ Total 424,251.02$ 3,976,023.14$ 573,543.23$ 227,700.00$ 5,201,517.39$ Total Eligible for Public Reimbursement 424,251.02$ 3,976,023.14$ 376,005.65$ 227,700.00$ 5,003,979.81$ Uses Santa Fe Road (Area 3)1 Tank Farm Road (Area 4)2 Acacia Creek Bike Path3 Tank Farm Bike Path PSE4 Total Design 78,071.72$ 448,912.38$ 15,000.00$ 342,391.80$ 884,375.90$ Rights of Way -$ -$ -$ -$ -$ Construction Costs 145,223.40$ 4,951,060.65$ 824,013.20$ -$ 5,920,297.25$ Soft Costs5 302,207.76$ 1,729,632.11$ 98,096.81$ -$ 2,129,936.68$ Construction Contingency 21,783.51$ 742,659.10$ 123,601.98$ -$ 888,044.59$ Total 547,286.39$ 7,872,264.24$ 1,060,711.99$ 342,391.80$ 9,822,654.42$ Reimbursement Sources Santa Fe Road (Area 3)1 Tank Farm Road (Area 4)2 Acacia Creek Bike Path3 Tank Farm Bike Path PSE4 Total General Fund 328,371.83$ 2,361,679.27$ 1,060,711.99$ 102,717.54$ 3,853,480.64$ Citywide TIF (On-Site Credits and Off-Site Fees from Others)218,914.56$ 5,483,121.13$ -$ -$ 5,702,035.68$ Airport Area TIF (Existing Fund Balance)-$ $27,463.84 -$ 239,674.26$ 267,138.10$ Total Eligible for Public Reimbursement 547,286.39$ 7,872,264.24$ 1,060,711.99$ 342,391.80$ 9,822,654.42$ Cost Increase ($)123,035.37$ 3,896,241.10$ 684,706.34$ 114,691.80$ 4,818,674.61$ Cost Increase (%)29%98%182%50%96% Direct Developer Contribution6 306,573.00$ -$ 5,309,848.96$ 3 Excludes developer share of costs ($306,573), which is equivalent to construction off on-site sidewalk in lieu of wider Class I path. 6 Direct Developer Contribution includes share of improvement costs not eligible for public reimbursement, including 600 Tank Farm frontage improvements along the Santa Fe Extension, within the Tank Farm/Santa Fe Roundabout, and the equivalent cost for a standard sidewalk along the Acacia Creek. 4 30% from GF; 70% from Citywide TIF Amended -- Attachment B to Exhibit 4 Estimated Costs and Funding Sources 1 60% of cost from GF; 40% from Citywide TIF $5,003,275.96 5 Soft costs include expenses related to permitting, soils testing/monitoring, construction management and admin., bonding, etc. 2 Costs split 30% GF and 70% Citywide TIF. No right-of-way costs included in this agreement per Amendment #1. No more than $3,500,000 may be reimbursed from Citywide TIF for Tank Farm/Santa Fe Roundabout until Citywide TIF program is amended to update cost this project. If TIF is amended to increase cost collected for this project, the fair share of this cost increase (1.7% of increase) will be subtracted from the reimbursement to 600 Tank Farm Developer from the TIF fund source. This adjustment is not included in the values presented in this table. Or i g i n a l C o s t A l l o c a t i o n s Up d a t e d C o s t A l l o c a t i o n s DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA EXHIBIT C Exhibit 2: Adopted TIF Project Lists Citywide TIF (Adopted 7/2/2019) DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA Airport Area Specific Plan TIF (Adopted 8/23/2005) DocuSign Envelope ID: 07A0C64C-9351-44C9-B343-D1E41F6AABCA