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HomeMy WebLinkAbout07-20-2015 NKT Properties - Reimbursement Agreement for University SquareREIMBURSEMENT AGREEMENT This Reimbursement Agreement ( "Agreement ") is entered into this Lo' }'^ day of 'S,, 1 �21 , 2015 (the "Effective Date "), by and between the City of San Luis Obispo, a municipal corporation and charter city ( "City ") and NKT Properties, LLC, a California limited liability company ( "NKT "). WHEREAS, NKT is the owner of certain real property located at 890 Foothill Boulevard, San Luis Obispo, California, 93401 (the "Property ") and is commonly referred to as "University Square "; WHEREAS, NKT is in the process of redeveloping the Property, including, but not limited to, extensive fagade improvements and complete overhaul of the Property's shared parking lot and landscaping; WHEREAS, the City has certain utilities lying within the Property including, but not limited to, a water line and sewer main as more particularly described and depicted in Exhibits A and B (the "Water Line" and "Sewer Main ", respectively) attached hereto and incorporated herein by this reference; WHEREAS, as part of the City's capital improvement plan, the Water Line was proposed to be abandoned as depicted in Exhibit A (the "Work "), however, the funding for such work has not been currently authorized; WHEREAS, the Sewer Main experienced an overflow in 2014 and at that time was found to be in poor condition and in need of replacement as depicted in Exhibit B (the "Work "), however, the funding for such work has not been currently authorized; WHEREAS, Section 901(D) of the City's Charter authorizes the City to reimburse a developer for the replacements of mains and appurtenances as part of a private project; and WHEREAS, NKT is willing to perform the Work as part of its redevelopment of the Property, subject to being reimbursed pursuant to the terms and conditions set forth herein. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Recitals. The above recitals are true and correct and are incorporated herein by this reference as though set forth in full. 1 2. Performance of Work. NKT shall perform the Work to City's satisfaction pursuant to all City standard specifications and rules and regulations. City shall issue to NKT an encroachment permit for any work occurring within the City's right of way. NKT and City each acknowledges that the Work may involve digging trenches or excavations deeper than four feet and hereby incorporate the provisions set forth in Public Contract Code section 7104 as though set forth in full herein. 3. Reimbursement. Subject to the terms and conditions hereof, City agrees to reimburse NKT for its actual costs and expenses of performing the Work, with not to exceed amounts as follows: A. $76,496.06 for the cost of design and construction of water main abandonment and water service relocation work; and B. $46,713.66 for the cost of design and construction of the sewer main replacement work. NKT agrees to provide City with all invoices or other documentation requested by City to confirm NKT's actual costs of the Work. 4. Timing of Reimbursement Payment. City agrees to reimburse NKT upon completion and City's acceptance of the Work and City's approval of all invoices or other documentation as set forth in Section 3 above. 5. Ownership. NKT acknowledges and agrees that notwithstanding the fact that NKT shall perform the Work as described herein, the abandoned Water Line and relocated Sewer Line and related right of way and appurtenance's, are the sole and exclusive property of City. 6. Indemnification. NKT agrees to indemnify, defend and hold City, its officials, agents, employees and contractors harmless from any expense, liability or claim for death, injury, loss, damage or expense to persons or property which may arise or is any way related to NKT's performance of the Work, or that of its contractors or agents or NKT's performance under this Agreement. Notwithstanding the foregoing, NKT shall have no duty to indemnify City for any expense, liability or claim for death, injury, loss, damage or expense to persons or property which may arise from the sole negligence or willful misconduct of City, officials, agents, employees and contractors. 7. Insurance. NKT shall, at all times while performing the Work contemplated in this Agreement, carry, maintain and keep in full force and effect, the following insurance: Commercial General Liability coverage (occurrence form CG 20 10), in the amount of $1,000,000 per occurrence for bodily injury and property damage; Workers' Compensation Insurance as required by law; and, Automobile Liability in the amount of $1,000,000 per 2 accident for bodily injury and property damage. The general liability and automobile liability policies are to contain, or be endorsed to contain, the following provisions: a. The City, its officers, officials, employees, agents and volunteers are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of the NKT; products and completed operations of the NKT; premises owned, occupied or used by the NKT; or automobiles owned, leased, hired or borrowed by the NKT. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, official, employees, agents or volunteers. b. For any claims related to Agreement, the NKT's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, agents and volunteers. Any insurance or self - insurance maintained by the City, its officers, officials, employees, agents or volunteers shall be excess of the NKT's insurance and shall not contribute with it. c. NKT's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. d. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the City. NKT agrees to notify the City in the event that the policy is suspended, voided or reduced in coverage or limits. A minimum of 30 days prior written notice by certified mail, return receipt requested, will be provided. NKT shall require each of its subcontractors to maintain insurance coverage which meets all of the requirements set forth herein. 8. Labor laws and Prevailing Wages. NKT shall comply with and adhere to all applicable labor laws, such as, but not limited to, alien labor, prevailing wages, nondiscrimination, payroll records, apprentices, etc. In accordance with the provisions of Sections 1770 et seq. pf the Labor Code, the Director of the Industrial Relations of the State of California has determined the general prevailing wages applicable to the Work to be done. NKT acknowledges and agrees that it is required to pay to all persons employed to construct the Work wages not less than the wages set forth in the documents entitled "General Prevailing Wage Determination" made by the Director of Industrial Relations pursuant to California Labor Code sections 1170, 1773, and 1773.1 These documents can be reviewed from the State of California and shall be available within the City's Public Works Department. NKT shall post, at each job site, a copy of the prevailing rate of per diem wages. NKT shall forfeit fifty dollars ($50.00) for each calendar day or portion thereof for each worker paid less than the stipulated prevailing rates for any public work done under this Agreement by it or by any subcontractor under NKT. 3 9. Standard Terms and Conditions. City's standard terms and conditions are incorporated herein by this reference as though set forth in full. To the extent that any term or condition in this Agreement conflicts with the City's standard terms and conditions, the term or condition herein shall control. 10. Entire Agreement. This Agreement represents the entire integrated agreement between the City and NKT regarding the Work and any reimbursement therefore, and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be amended only by a written instrument signed by both City and NKT. 11. Governing Law and Venue. The interpretation and implementation of this Agreement shall be governed by the law of California. Venue shall be exclusively San Luis Obispo County. 12. Severability. Invalidation of any provision contained herein or the application thereof to any person or entity by judgment or court order shall in no way affect any of the other covenants, conditions, restrictions, or provisions hereof, or the application thereof to any other person or entity, and the same shall remain in full force and effect. 13. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 14. Notices. All written notices to the parties hereto shall be sent by United States mail, postage prepaid by registered or certified mail addressed as follows: City City Clerk City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 NKT NKT Properties, LLC Mr. Nick Tompkins 684 Higuera Street, Suite B San Luis Obispo, CA 93401 15. Authority to Execute. Both City and NKT do covenant that each individual executing this agreement on behalf of each party is a person duly authorized and empowered to execute Agreements for such party. [Signatures on following page] 4 IN WITNESS WHEREOF, the parties have executed this Agreement as of the first date written above. CITY OF SAN LUIS OBISPO, a NKT Properties, LLC municipal corporation and charter city Jan M ATTE APPROWD AS Tiff FORM: istine Dietrick, City Attorney By: ' Its: 5 Q a L K W I a71Q e' i 5 y C2P -1-- °� I m OI 8 �$.3 I R \ O�' 1 I71 a « r . : • . .. e w r s ❑ 1 O 3-Z 3 Z JI Q Z W Fa' oi� mg a b F Z oo« 0 wo=� s w M ?z °o�� o W° 3Z }a n z $ o o w I a71Q e' i 5 y C2P -1-- °� I m OI 8 �$.3 I R \ O�' 1 I71 a « r . : • . .. e w r s m a x LLJ 0 4 D Goo I Z: 0-3 znz 'm HiNg 0 Council Agenda Report 4D FROM: Carrie Mattingly, Utilities Director Prepared By: Dave Hix, Deputy Director, Wastewater Aaron Floyd, Deputy Director, Water SUBJECT: REIMBURSEMENT AGREEMENT FOR WATER MAIN ABANDONMENT AND SEWER MAIN REPLACEMENT RECOMMENDATIONS Meeting Date: 7 -7 -15 Item Number: C8 1. Approve the transfer of $105,000 (all remaining funds) from the Fire Lateral Reimbursement program to the Water Fund Completed Projects account; and 2. Approve and authorize the Mayor to execute a Reimbursement Agreement, in a form subject to the approval of the City Attorney, reimbursing NKT Properties, LLC for an amount not to exceed $76,500 from the Water Fund Completed Projects account for the cost of design and construction of water main abandonment and water service relocation and an amount not to exceed $46,800 from the Sewer Fund Completed Projects account for the cost of design and construction of the sewer main replacement. DISCUSSION University Square is located at 890 Foothill Boulevard and is undergoing a significant site and facade remodel by NKT Properties, LLC (NKT). The property has 1950's vintage city -owned water and sewer mains that run through easements in the parking lots; one in the back and one in the front of the property. These mains are in poor condition. The water main was identified for replacement in the 2013 -15 Financial Plan due to several mainline breaks. In 2014, the sewer line overflowed flooding the old grocery store building resulting in expensive restoration at the City's expense. Subsequent CCTV inspection resulted in_ the sewer main replacement becoming a high priority project. City staff began discussions with NKT about partnering to replace the water lines when the project was first proposed in March 2014 with the understanding the sewer line would be replaced due to a building going in over the existing line. As the project evolved, NKT's plans changed resulting in a smaller project that no longer impacted the sewer line; therefore it did not require replacement as a result of the project. Based on NKT's project schedule and the poor condition of the infrastructure, City staff verbally discussed with NKT that it take the lead on replacing the sewer and water lines as part of its project and staff would request the City Council authorize reimbursing NKT for its costs. Having NKT abandon and replace this infrastructure while it performed its other site improvements takes advantage of economies of scale related to NKT's larger overall project and reduces the city's costs related to design and construction administration, typically 20 percent of construction costs. With NKT in the lead, project coordination becomes a non -issue and the timeline for an important redevelopment project is not impacted. Instead of NKT working around REIMBURSEMENT AGREEMENT FOR WATER MAIN ABANDONMENT AND SEWER MAIN REPLACEMENT Page 2 failing infrastructure with the City returning to the site relatively soon after project completion to dig into new parking lots and landscape areas it is of mutual benefit to approach the project in a coordinated manner. Additionally, replacing the failed sewer line avoids potential claims associated with sewer back -ups and private property impacts. All of these are strong reasons demonstrating alignment with the best interest of the ratepayer. NKT provided three bids from contractors for this construction project in December 2014 (Attachment 2); the lowest was $1 23,209.72 ($76,496.06 for water and $46,713.66 for sewer) the bid included design, other site work and prevailing wage provisions. The bids were reviewed by city staff and found to be reasonable and appropriate. While it is in the best interest of the ratepayers to prioritize the replacement of these pipelines, sufficient urgency was not ascribed to drafting a reimbursement agreement (Attachment 1) for Council approval and other urgent work was prioritized in front of bringing forward this agreement. Based on its verbal discussions with City staff and its aggressive schedule required to meet deadlines for incoming tenant improvements, NKT moved ahead with the infrastructure replacement based on City's staff's word and prior to Council approval of a reimbursement agreement. NKT received its final building permits in April 2015. Although construction has, for all intents and purposes, been completed prior to Council approval of a reimbursement agreement, NKT's project is built to City design standards, reduces City liability and cost, and completes two high priority CIP projects, all of which is in the best interest of the City's ratepayers. Therefore staff recommends Council approval of the reimbursement agreement as authorized by Section 901(D) of the City Charter (Attachment 3). The City will verify NKT's actual costs and expenses for performing the work including invoices or other documentation consistent with the reimbursement agreement. FISCAL IMPACT It is recommended expenses associated with the water - related portion of this reimbursement are funded from the close -out of the Fire Lateral Replacement program. These funds would be transferred to the Water Fund's Completed Projects account. The Fire Lateral Replacement Program was first adopted by the City in 1991, and was intended to offset the cost associated with the installation of water service lines for fire sprinklers in the commercial fire zone. This program was modified and its sunset date extended in 1998. In 2012, after inquiry into program closure and Council discussion, it was determined that sunsetting the program in 2015 would provide sufficient time for further property owners to come forward. After the transfer from the Fire Lateral Replacement program, there will be $117,463 available in the Water Fund's Completed Projects account to support the water portion of the recommended action. There is currently $102,734.12 in the Sewer Fund Completed Projects account to support the sewer portion of the recommended action. REIMBURSEMENT AGREEMENT FOR WATER MAIN ABANDONMENT AND SEWER MAIN REPLACEMENT ATTACHMENTS 1. Reimbursement Agreement between NKT Properties, LLC and City of San Luis Obispo 2. Summary of bids for replacement of water and sewer infrastructure 3. Excerpt from City Charter TXotincil Agenda RenartsUO 15\2015- Q7- 071Rcinibtir tnteitl Apreenaent for Water Main Mandooment and Sewer Main Replacement Funding Water Fund Completed Projects - Current Balance $12,463 Fire Lateral Reimbursement $105,000 Completed Projects — Balance after transfer $117,463 NTE Reimbursement to NKT Properties, LLC ($76,500) Completed Projects - Balance after reimbursement $40,963 Sewer Fund Completed Projects - Current Balance $102,734.12 NTE Reimbursement to NKT Properties, LLC ($46,800) Completed Projects - Balance after reimbursement $55,934.12 ATTACHMENTS 1. Reimbursement Agreement between NKT Properties, LLC and City of San Luis Obispo 2. Summary of bids for replacement of water and sewer infrastructure 3. Excerpt from City Charter TXotincil Agenda RenartsUO 15\2015- Q7- 071Rcinibtir tnteitl Apreenaent for Water Main Mandooment and Sewer Main Replacement