HomeMy WebLinkAbout07/19/2011, C16 - AMENDMENT #1 TO THE REIMBURSEMENT AGREEMENT WITH ORCUTT ASSOCIATES, LLC, A CALIFORNIA LIMITED LIABI 0 0
council MeminyDate 07-19-2011
jac,Enaa RepoRt It.Numbs Gp, 16
CITY OF SAN LUIS OBISP O
FROM: Jay D. Walter, Director of Public Works
Prepared by: Timothy Scott Bochum,Deputy Director
SUBJECT: AMENDMENT #1 TO THE REIMBURSEMENT AGREEMENT WITH
ORCUTT ASSOCIATES, LLC, A CALIFORNIA LIMITED LIABILITY
COMPANY FOR OVERSIZING OF IMPROVEMENTS TO ORCUTT ROAD
RECOMMENDATION
Approve Amendment # I to the Reimbursement Agreement with Orcutt Associates, LLC, a
California limited liability company, for oversizing of improvements as part of Tract 2707
(Tumbling Waters), 953 Orcutt Road.
DISCUSSION
Background
A vesting tentative map for Tract 2707 (TR 151-03), formerly known as Tumbling Waters and
now known as Laurel Creek (see Attachment 2 for vicinity map), was approved by City Council
on November 15, 2005. On September 18, 2007, Council approved the Final Map for Tract 2707.
The Laurel Creek developers were required to construct improvements that mitigated impacts
identified in the Environmental Impact Report (EIR) for the Four Creeks Residential Rezoning
Project. These improvements include widening Orcutt Road to four lanes along the adjacent
property and paying upfront costs for improvements at the intersection of Laurel and Orcutt. The
total amount of funding provided by Orcutt Associates in advance of this work was $1,250,000,
which was used to fill a funding shortfall for the City's widening project along Orcutt Road.
The developer was eligible to seek_a reimbursement agreement with the City for costs associated
with these improvements beyond their responsibility. A reimbursement agreement was prepared
and approved by Council on October 2, 2007. As part of that agreement, the City agreed to collect
fees from other developing properties within the surrounding area that also impact the intersection
of Laurel and Orcutt and to pursue additional grant funding to reduce the total amount fronted by
Orcutt Associates. The widening project is now substantially complete, and the City was successful
in delivering a lower cost project, as well as receiving additional grant allocations to reduce the
need to utilize the full developer contribution. Final accounting for the project is now complete, and
a substantial amount of funding can be returned to Orcutt Associates, approximately$899,943.
Sections 66485, 66486, and 66487 of the State of California Subdivision Map Act establish
provisions for requiring certain off-site improvements beyond subdivision property lines and the
allowance for a reimbursement agreement to reimburse the subdivider for that portion of the cost
of those improvements, including an amount attributable to interest, in excess of the construction
required for the subdivision. In addition to these Subdivision Map Act provisions, Section
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Reimbursement Agreement Amendment#1 Orcutt Associates, LLC Page 2
16.20.110 of the City's Subdivision Regulations provides that if one developer/property owner
pays for off-.site improvements (beyond their pro-rata share) and others benefit from the
improvements, then the subdivider may seek reimbursement from the City or from future
development projects that benefit from the improvements. The Subdivision Regulations require
the City to attempt to collect from the benefiting parties prior to issuance of future development
permits for properties in the benefit area.
Current Status
The City has now substantially completed the Orcutt Road widening project from Broad Street to
Laurel Street in the vicinity of Tract 2707. The improvements included substantial changes to the
Union Pacific Railroad crossing as well as widening the road to four lanes from Laurel Lane to
Broad Street and including bicycle lanes and sidewalk connections. Although the primary
widening project is now complete, changes made by UPRR to their track elevations have created
a substantial "dip" in the road that will need adjustment. This minor work along the Rail Road
Line has not yet been done due to coordination with UPRR.
An amount of the "Mitigation Fee" paid by Tract 2707 will need to be withheld in order to
correct this issue. The amount to be withheld is $110,000. When the City has completed this
work, any remaining amount of money from the fees collected will be returned to Orcutt
Associates pursuant to the Reimbursement Agreement. The City was very successful in applying
for and receiving additional grant funding to help reduce the developer and City responsibilities
for the project. Final project cost accounting has now been completed, and we have determined a
final amount of participation for which Orcutt Associates is responsible as part of the
reimbursement agreement.
Based upon the actual costs of the project to date and the additional resources brought to the
project by the City, the following revisions to the Reimbursement Agreement amounts
anticipated in the original agreement can be made based on actual, final project cost:
1. The final Mitigation Fee.as established by Section 1 of the Reimbursement agreement is
now $350,057. This amount reflects actual project cost and results in a significant
reduction from the $1,250,000 estimated in the original Agreement.
2. The revised Maximum Reimbursement amount pursuant to Section 3 of the
Reimbursement Agreement has now been determined to be $339,065. This amount will
be reimbursed by other development pursuant to terms of the agreement, as future
development fees are recovered by the City.
3. The revised Pro Rata Share of Orcutt Associates of the final project Mitigation Fee is
$10,992, (3.14% of project cost). This is a reduction of $26,508 from the amount
estimated in the reimbursement Agreement.
4. The City will, within 30 days of the execution of the Amendment, refund to Orcutt
Associates the amount of $899,943 to reflect the actual construction costs of work to
date on the project and the reduced Mitigation Fee requirements to complete the project.
5. Due to the substantial reduction in the advance amount, along with the reduced
likelihood of an adjacent development occurring any time soon (Tickell), Section 6 of
the agreement that required the City to seek participation of this property owner in
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Reimbursement Agreement Amendment#1 Orcutt Associates, LLC Page 3
advance can now be deleted, and only funding reimbursement to the City and Orcutt for
work completed is now necessary.
Need for Amending the Agreement
In order to complete the refund of the amounts not needed for the Orcutt Road widening project,
the existing Reimbursement Agreement must be amended to reflect changes consistent with the
final project completion cost. Attachment 1 is the draft Amendment 91 of the Reimbursement
Agreement.
Why refund the Money at all? A question that may be asked regarding the refund of this money
is... "Can the mitigation money collected from Orcutt Associates be retained by the City and
used for other trajjic improvement projects in the vicinity of the development project?" The
answer to that question is that State law specifically restricts the City from redirecting mitigation
fees collected from development for purposes other than required to address the impacts and
requirements of the projects. In this case, the City has been very fortunate that project costs were
lower than expected and additional grant funding was brought to bear to complete the project.
The City is restricted by State law from using this money elsewhere even though the amount is
rather large in comparison to other developer contributions. Overall, the "advance" of this
mitigation money by the developer allowed both the private and public projects to move forward
in a mutually beneficial manner for both the City and the developer.
FISCAL IMPACT
There are no significant financial impacts to the General Fund with this proposed Reimbursement
Agreement Amendment or the refund of the advanced mitigation funds. The monies will be
refunded from the project account in the Capital Outlay Fund.
ATTACHMENTS
1. Draft Reimbursement Agreement Amendment#1
. 2. Vicinity Map
Council Reading File: Existing Reimbursement Agreement with Orcutt Associates, LLC
\\chstore4\team\counci1 agenda reports\public works car\2011\dev rev\tract 2707 reim agreement rev 1\car-amendment 1 ra for tract
2707(2).doc
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Attachment 1
FIRST AMENDMENT Draft
TO
REIMBURSEMENT AGREEMENT
THIS FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT ("Amendment")
is made and entered into this day of , 2011,by and between the CITY OF SAN
LUIS OBISPO, a charter city and municipal corporation of the State of California, hereinafter
referred to as "City", and ORCUTT ASSOCIATES, LLC, a California limited liability company,
hereinafter referred to as "Orcutt", with reference to the following facts:
A. The City and Orcutt have previously entered into that certain Reimbursement
Agreement Improvements to Orcutt Road and the Intersection of Broad Street dated
October 2, 2007, and recorded as Document#2007078654 in the Office of the County Recorder
of San Luis Obispo County(the "Reimbursement Agreement"). All capitalized terns in this
Amendment shall have the same meaning as defined in the Reimbursement Agreement, except as
may be differently defined herein.
B. Pursuant to Section 1 of the Reimbursement Agreement, Orcutt deposited with the
City a total of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) (the"Mitigation
Fee") for use by the City in constructing certain road and related improvements at the
intersection of Laurel Lane and Orcutt Road (collectively, the "Improvements").
C. The City has now substantially completed the Improvements. The City was
successful in receiving additional funding for the Improvements from other sources and has now
determined the final amount of participation for which Orcutt is responsible pursuant to the
Reimbursement Agreement.
D. The Tickell Advance pursuant to Section 6 of the Reimbursement Agreement is
no longer beneficial to Orcutt because of the additional funding received for the Improvements,
lack of progress on the Tickell Property project, and the Tickell Property project's uncertain
future.
NOW,THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties hereto, the City and Orcutt agree as follows:
1. Final Total Mitigation Fee. The final total Mitigation Fee which Orcutt is
obligated to pay to the City pursuant to Section I of the Reimbursement Agreement is agreed by
the City and Orcutt to be reduced from One Million Two Hundred Fifty Thousand Dollars
($1,250,000) to a total of Three Hundred Fifty Thousand Fifty-Seven Dollars ($350,057).
2. Refund Amount. Within thirty(30) days of the execution of this Amendment by
both the City and Orcutt, the City shall issue a refund to Orcutt in the sum of Eight Hundred
Ninety-Nine Thousand Nine Hundred Forty-Three Dollars ($899,943) (the"Refund Amount").
3. Revised Maximum Reimbursable Amount. After Orcutt receives the Refund
Amount, City and Orcutt agree that the Maximum Reimbursable Amount pursuant to Section 3
of the Reimbursement Agreement is reduced from One Million Two Hundred Twelve Thousand
SDCA_1871860.1
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Five Hundred Dollars $1,212,500 to Three Hundred Thirty-Nine Thousand Sixty-Five Dollars
($339,065) (the "Revised Reimbursable Amount"). The Revised Reimbursable Amount shall be
reimbursed by the City to Orcutt from time to time pursuant to the terms and provisions of the.
Reimbursement Agreement.
4. Revised Orcutt Share of Mitigation Fee. Section 3 of the Reimbursement
Agreement is revised to reduce Orcutt's pro rata fair share of the Mitigation Fee from the amount
of Thirty-Seven Thousand Five Hundred Dollars ($37,500)to Ten Thousand Nine Hundred
Ninety-Two Dollars ($10,992).
5. Tickell Mitigation Fee Obligations. The Tickell Advance is hereby eliminated
from the Reimbursement Agreement. Therefore, Section 6 of the Reimbursement Agreement is
hereby deleted and replaced with the following: "6. Tickell Mitigation Fee Obligations. Prior to
issuance of building permits for development of the Tickell Property, the City hereby agrees to
exercise its best efforts to collect from the owner of the Tickell Property the documented costs of
the Tickell Frontage Improvements plus Inflation Adjustment on said amount at the rate set forth
in Section 9 below. Pursuant to Section 5, the final actual cost of the Tickell Frontage
Improvements minus the TIF Credit, plus the Inflation Adjustment, shall be reimbursed to
Orcutt."
6. Continued Force and Effect. Except as amended above, all of the terms and
provisions of the Reimbursement Agreement shall remain in full force and effect.
7. Counterparts. This Amendment may be executed in counterparts.
IN WITNESS WHEREOF, the City and Orcutt have executed this Amendment to be
effective upon the date first written above.
CITY:
CITY OF SAN LUIS OBISPO
By:
Mayor Jan Marx
ATTEST:
Elaina Cano, City Clerk
XAPP ED AS TO O
Christine Dietrick, City Attorney
ORCUTT:
2
SOCA_1871860.1
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ORCUTT ASSOCIATES, LLC
a California limited liability company
By:
Randall Jenson, its Manager
3
SDCA_1871860.1
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Vicinity Map Tumbling Waters
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