HomeMy WebLinkAboutA20-05Costco reimbursement agmt amend 1FIRST AMENDMENT T O
REIMBURSEMENT AGREEMEN T
FOR REALIGNMENT OF CALLE JOAQUIN SOUT H
THIS FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT FO R
REALIGNMENT OF CALLE JOAQUIN SOUTH ("First Amendment") is mad e
effective as of June 2006, by and between THE CITY OF SAN LUIS OBISPO,a
charter city and municipal corporation of the State of California (the "City") and
COSTCO WHOLESALE CORPORATION, a Washington corporation ("Costco").
As a condition of approval of its warehouse project in the City (the "Costc o
Project"), Costco was required to (i) obtain all necessary permits for the Calle Joaqui n
Realignment of Calle Joaquin South (the "Calle Joaquin Realignment"), (ii) enter into a
construction contract for the Calle Joaquin Realignment, (iii) post a completion bond, an d
(iv) complete the Calle Joaquin Realignment within two (2) years following satisfactio n
of all Army Corps of Engineers permit conditions necessary to the commencement o f
construction of the Calle Joaquin Realignment .
The Calle Joaquin Realignment is the first phase of a larger Los Osos Valle y
Road/Highway 101 interchange project (the "Interchange Improvements"), for which th e
City has established a sub-area traffic impact fee program (the "Sub-Area TIF").
The parties agreed that Costco would advance the costs incurred in connectio n
with obtaining right of way for, designing, entitling and permitting, and constructing th e
Calle Joaquin Realignment, including, without limitation, costs of wetland and othe r
mitigation measures . The parties acknowledged that the costs that would be advanced b y
Costco would substantially exceed the costs associated with the Calle Joaqui n
Realignment and the Interchange Improvements that were fairly attributable to the fai r
share impacts of the Costco Project (the "Costco Sub-Area TIE").
The City and Costco entered into that certain Reimbursement Agreement fo r
Realignment of Calle Joaquin South, dated February 25, 2005 (the "Reimbursemen t
Agreement"), pursuant to which the City agreed to reimburse Costco from collection o f
fees under the Sub-Area TIF for costs incurred in connection with the Calle Joaqui n
Realignment in excess of the Costco Sub-Area TIF .
The Reimbursement Agreement determined the amount of reimbursable costs i n
connection with the Calle Joaquin Realignment, subject to a change order procedure fo r
cost increases under which the City shall not unreasonably withhold its approval ,
provided that it is reasonable for the City to deny any change order resulting from a caus e
other than unforeseen conditions or City-initiated changes .
Since the execution of the Reimbursement Agreement, anticipated costs for th e
Calle Joaquin Realignment and for the Interchange Improvements have increased a t
higher rates than anticipated by the parties ; construction to accommodate recognition o f
more complex site conditions, permit requirements and other cost factors for the Call e
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Joaquin Realignment have changed from those anticipated in the Reimbursemen t
Agreement ; and the City has requested certain design changes . As a result of thes e
circumstances, Costco has requested a change order to increase the reimbursable costs of
the Calle Joaquin Realignment .
The City has questioned whether some items included in Costco's propose d
change order should have been foreseen at the time of the Reimbursement Agreement ,
whereas Costco has presented evidence to support its position that the increased costs
result from circumstances that could not have been foreseen at the time of th e
Reimbursement Agreement .
The parties have agreed to resolve these differences by Costco not seeking a
change order with respect to certain soft costs incurred or to be incurred in connectio n
with the Calle Joaquin Realignment, by the City approving the change order with respec t
to other increased costs of the Calle Joaquin Realignment, and by Costco agreeing t o
have the Costco Sub-Area TIF re-calculated to reflect the recently revised Sub-Area TI F
currently applicable to other property owners in the area .
NOW, THEREFORE, in consideration of the mutual covenants herein containe d
and for other good and valuable consideration, the receipt and sufficiency of which ar e
hereby acknowledged, the City and Costco hereby amend the Reimbursement Agreemen t
as follows :
1.
Exhibits .Exhibits A and B to the Reimbursement Agreement are replace d
by Exhibits A and B attached hereto .
2.Costco Sub-Area TIF .The Costco Sub-Area TIF shall be $1,681,000, an d
this number shall apply for the purposes of and replace the $910,000 amount previousl y
specified in the Reimbursement Agreement .
3.
Costs of Calle Joaquin Realignment and Wetlands Mitigation : Design an d
Permitting Costs .Section 1(a) of the Reimbursement is revised to read as follows :
Costco has submitted, and the City approves, the design, permitting an d
acquisition costs incurred or quantified through February 2005, in the amount o f
$1,050,900 for the Calle Joaquin Realignment as shown on line 11 of Exhibit B
(the "Spreadsheet"). While Costco anticipates incurring future costs for desig n
and permitting in at least the amount shown on lines 41 through 48 of th e
Spreadsheet, Costco agrees to bear all such cost increases without reimbursement .
Line Item 19 is for fees to City acquisition consultants advanced by Costco fo r
future reimbursement by the City in Reimbursement Payments . Costco ma y
advance these costs for City acquisition consultants, with right of reimbursement ,
upon approval and submission to Costco by the City Attorney of invoices fro m
the City's acquisition consultants ; these costs and the costs of the actual lan d
acquisition shall be exempt from the change order procedures provided in th e
Reimbursement Agreement as amended by the First Amendment .
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4.Costs of Calle Joaquin Realignment and Wetlands Mitigation : Acquisition
Costs .Section 1(b)(i) is revised to read as follows, with subsections (ii) and (iii )
remaining unchanged :
The parties acknowledge that the sum of $186,000 included within th e
total Soft Costs at Line 11 of the Spreadsheet is an amount for acquisition of righ t
of way based on an appraisal of the interest to be acquired from one affecte d
landowner (Hansen), and it is subject to adjustment beyond the control of the Cit y
or Costco . Accordingly, Costco shall advance and the City shall reimburs e
Costco for the actual acquisition cost for the Hansen property, and the amoun t
thereof shall be exempt from the change order procedure under th e
Reimbursement Agreement as amended by the First Amendment .
5.Costs of Calle Joaquin Realignment and Wetlands Mitigation : Mitigatio n
Monitoring .Contrary to the assumptions made at the time that the Reimbursemen t
Agreement was entered into, the ACOE has not approved the City undertaking an d
performing much of the mitigation monitoring activities for the Calle Joaqui n
Realignment, and the ACOE substantially increased the mitigation and monitorin g
requirements above anticipated levels . On the other hand, no fairy shrimp mitigation i s
required . Accordingly, Section 1(c) of the Reimbursement Agreement is revised to rea d
as follows :
The amount of $243,363 per line 33 of the Spreadsheet is approved as o f
the date of this First Amendment as the cost of wetland mitigation monitoring ,
subject to change orders as provided in Section 2 of the Reimbursemen t
Agreement as amended by the First Amendment .
6.
Costs of Calle Joaquin Realignment and Wetlands Mitigation :
Construction Costs .Section 1(d) of the Reimbursement Agreement is revised to read a s
follows :
The amount of $5,160,970 per line 7 of the Spreadsheet is approved as o f
the date of this First Amendment as the aggregate of the Calle Joaqui n
Construction Budget and the Wetlands Construction Budget, subject to chang e
orders as provided in Section 2 of the Reimbursement Agreement as amended b y
the First Amendment .
7.Change Order Procedure .Following satisfaction of ACOE permi t
conditions for site access, Costco and its consultants have had access to the site that wa s
not available at the time the Reimbursement Agreement was executed . Investigation s
enabled by this access have revealed the conditions that have resulted in much of th e
increased costs reflected in Exhibit B to this First Amendment . With the investigation s
since the ACOE permit conditions were satisfied, the site of the Calle Joaqui n
Realignment has been studied carefully, and the parties expect that most unforesee n
conditions have been eliminated . Nevertheless, some unforeseen conditions might arise .
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Accordingly, and consistent with other provisions of this First Amendment, Section 2 of
the Reimbursement Agreement is revised to read as follows :
There shall be no increase in cost from the amount shown on Line 35 o f
the Spreadsheet as the aggregate of the Calle Joaquin Construction Budget, th e
Wetlands Construction Budget and the wetlands mitigation monitoring cost s
unless the increase is reflected in a change order approved by Costco and City o r
excepted from such approval pursuant hereto . The only change orders excepted
from City approval are (a) those in which Costco shifts cost savings from one lin e
item of a component of the Line 35 total to another line item, (b) those for whic h
Costco does not seek reimbursement from the City, and (c) those incurred by Cit y
acquisition consultants and as the cost of acquiring right of way pursuant t o
Section 3 (with respect to Line Item 19) and Section 4 of this First Amendment .
Costco and the City Engineer together may approve a cost change order (a s
opposed to a design change order) if the cost increase above the Line 35 total i s
Twenty-Five Thousand Dollars ($25,000). Costco and the City Administrativ e
Officer together may approve a cost change order (as opposed to a design chang e
order) if the cost increase above the Line 35 total is One Hundred Thousan d
Dollars ($100,000) or less . Any change order in excess of $100,000 shall b e
submitted to the City Council for its consideration . If Costco is prepared t o
approve a change order not excepted from City approval pursuant to th e
foregoing, Costco shall submit the change order proposal to the City for approva l
with a categorization of those changes necessitated by unforeseen conditions an d
those necessitated by City-initiated conditions . The City's approval shall not b e
unreasonably withheld, delayed or conditioned ; provided it shall be reasonable fo r
the City to deny any change order resulting from a cause other than unforesee n
conditions or City-initiated changes . The City shall accompany any rejection wit h
a written statement of the basis therefor . To the extent the change order does no t
require City approval of a design revision, Costco may proceed with the wor k
covered by the change order pending City approval of the change order, or eve n
after City rejection of the change order, but Costco shall do so at its own risk t o
the extent that the City raises valid objections to the change order proposal . An y
change order that is submitted to the City for approval shall be deemed accepted i f
not accepted or rejected by the City within ten (10) days of such submittal ,
provided, however, any change order submitted to the City Council fo r
consideration shall be deemed accepted if not accepted or rejected by the Cit y
Council within forty five (45) days of such submittal .
8 .Collection of Sub-Area TIF Fees .The second sentence of Section 3 of th e
Reimbursement Agreement is revised to read as follows : "Such Sub-Area TIF fees shal l
be the amount for each Benefited Property indicated on the Reimbursement Map an d
Rate Sheet attached as Exhibit A to the First Amendment, adjusted in accordance wit h
Section 4 of the Reimbursement Agreement or any adjustment provisions within o r
modifications to the Sub-Area TIF program, whichever is greater ."
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9.
Appreciation Factor .Section 4 of the Reimbursement Agreement i s
revised to read as follows :
Without limiting any right of the City otherwise to modify the Sub-Are a
TIF program, the Sub-Area T1F fees for each Benefited Property will b e
automatically adjusted on July 1, 2006, and on July 1 of each subsequent year b y
the annual percentage change in the U .S . Consumer Price Index, All Urban
Consumers (or comparable successor index, if applicable) for the prior calenda r
year . Similarly, the balance of the Reimbursement Payments remaining du e
hereunder as of July 1 of any year will be automatically adjusted on the July 1
following substantial completion of the Calle Joaquin Realignment and on July 1
of each subsequent year by the annual percentage change in the U .S . Consumer
Price Index, All Urban Consumers (or comparable successor index, if applicable )
for the prior calendar year .
10.Time of Reimbursement .In the second sentence of Section 5 of th e
Reimbursement Agreement, the reference to the appreciation factor in "Section 6" i s
corrected to "Section 4". Additionally, Costco and the City agree to meet and confe r
within ninety (90) days after the date of this First Amendment regarding a possibl e
further amendment to the Reimbursement Agreement to allow a City program for partia l
deferral and financing of Sub-Area TIF fees that would be collected from automobil e
dealers locating in the Sub-Area, with a resulting pro tanto deferral of Sub-Area TIF fees
available for the Reimbursement Payments .
11.
Notices .The address for a copy of the notice to Costco is revised to rea d
as follows :
Preston Gates & Ellis LLP
55 Second Street, Suite 170 0
San Francisco, CA 9410 5
Attention :
David B . Frankli n
Fax No .:
(415) 882-811 9
12.Commencement of Construction .Provided this First Amendment ha s
been approved and executed by and is binding on both of the parties by June 23, 2006 ,
Costco shall commence construction of the Calle Joaquin Realignment by July 5, 2006 .
13.Construction of this First Amendment .Except as expressly modified b y
the First Amendment, the Reimbursement Agreement shall continue in full force and
effect . Unless otherwise defined in this First Amendment, all terms defined in th e
Reimbursement Agreement shall have the same meaning when used in this Firs t
Amendment .
14.Counterpart and Faxed Signatures .This First Amendment may b e
executed in multiple counterparts, each of which shall be deemed a duplicate original ,
and all of which, taken together, shall constitute one and the same instrument . This Firs t
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Amendment may be executed and delivered by facsimile or email transmission and suc h
facsimile or email transmission shall have the same effect as the delivery of origina l
counterparts .
[SIGNATURES FOLLOW ON NEXT PAGE ]
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THIS FIRST AMENDMENT is executed as of the date and year first abov e
written .
CITY :
CITY OF SAN LUIS OBISP O
/ David F . Romero
Mayor
APPROV D AS TO FORM :
Jonathan P . Lowell, City Attorney
ATTEST :
COSTCO :
Its :CHARD J . OLIN
'A st . Secretary
COSTCO WHOLESALE CORPORATIO N
a Washington corporation
By :
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)0
I IT "A „
TRANSPORTATION IMPACT FEE S
LOS OSOS VATTTRY ROAD/US 101 INTERCHANGE SUB AREA FEES
Land Use Unit Fte With Avilla
Banc ..
SFR Dwelling Unit $ 4,972
MFR Dwelling Unit_$ 3,26 6
Retail Square foot $ 12.0 0
Retail Auto Square foot $ 9 .78
Motel/Hotel Room $2,71 0
Business Park Square Foot $6.30
Manufacturing Square Foot $3 .6 1
Service Commercial Square Foot $7 .3 1
Other PM Trip $ 4,874
Note : Due to the variety of uses possible in Service Commercial, fee is based upon ICE Land Use/flip Estimates for Offic e
Park Designation .
Calle Joaquinff-Site Reimbursement Agreemelkost Spreadshee tExhibit "B "
Construction Related Costs Amount
Calle Joaquin Realignment Construction Costs (based on 5-2-06 bid)$4,651,78 ,
Wetland Mitigation Construction Required by ACOE (Boysen Ranch Wetland Construction)$99,022
PG&E / AT&T Utility Construction $22,000
Construction Sub Total $4,772,80 3
7% Construction Contingency $334,09 6
3% Inflation Factor (amt . from original agreement)$54,07 1
Total Calle Joaquin Construction Costs $5,160,970
Soft Costs
(Contained in Reimbursement Agreement of 2/21/05)Amoun t
Soft Costs contained in Reimbursement Agreement and Incurred as date of the origina l
agreement of 2/21/05 $1,050,90 0
Total Soft Cost Incurred to Date $1,050,90 0
Soft Costs
(Est . Future Expenses based on ACOE Permit Req . per 2/21105 Agreement)Fixed Cost s
Preston Gates & Ellis (formerly Berg & Parker)$20,000
MulvannyG2 Architecture $8,80 0
Morro Group $22,02 0C-annon Associates (Agency Permitting Services)7,00 0Cannon Associates (Engineering & Const . Admin . Services)$73,00 (
Property Acquisition Consultants - City contract (Note : work is still ongoing by city'
s consultant and additional cost will be incurred)$49,94 5
Construction Sub Total $180,76 5
7% Construction Contingency (applies to Cannon Const . Admin Services only)$5,11 0
Total Calle Joaquin Soft Costs $185,87 5
Wetland & Fairy Shrimp Soft Cost s
(Add . costs to be absorbed by the City as a reimb . expense, or in-kind service)Amount
Fairy Shrim p
Fairy Shrimp Mitigation Construction & Mitigation _
Fairy Shrimp mitigation construction _
Fairy Shrimp 5-yr . post construction monitoring _
Wetland Mitigation Monitorin g
Boysen Ranch Wetland 5-Year Monitoring Requirement $123,89 83-Yr . Monitoring of temp . disturbed wetland area for Calle Joaquin construction $9,00 0
Calle Joaquin wetland impact monitoring required by ACOE during construction (Balanc e
Hydrologics hydrology monitoring, materials testing of street construction by Kleinfelder ,
Morro Group const . monitoring and revegetation assistance)$110,46 5
Total of Additional Costs $243,36 3
TOTAL OF ABOVE COSTS $6,641,10 8
LESS REVISED TIF OBLIGATION ($910,000 +$771,000)$1,681,00 0
NET REIMBURSEMENT AMT.$4,960,108
6/7/200 6
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0 EXHIBIT O
ESTIMATED SOFT COSTS TO BE ABSORBED BY COSTCO Estimate d
(Costco will be responsible for all additional soft costs)Amoun t
Preston Gates & Ellis (formerly Berg & Parker)$37,65 4
MulvannyG2 Architecture $41,20 0
Morro Group $25,23 0
Cannon Associates (Agency Permitting Services)$8,00 0
Cannon Associates (Engineering & Const . Admin . Services )_0....__. _$10,37 0......_.___
Boysen Ranch Wetland 5-Year Monitoring Requirement $_
3-Yr. Monitoring of temp . disturbed wetland area for Calle Joaquin construction $-
Cane Joaquin wetland impact monitoring during construction (Kleinfelder geotechnica l
studies of existing conditions)$5,10 0
TOTAL ESTIMATE OF FUTURE SOFT COSTS $127,55 4
ADDITIONAL TIF FEE TO BE PAID BY COSTC O
(amount already included in "Less Revised TIF Obiligation" line item)$771,00 0
TOTAL OF EST . ADDITIONAL COSTS TO BE INCURRED BY COSTCO $898,554
61712006
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