HomeMy WebLinkAbout06-18-2019 Item 04 - Avila Ranch Reimbursement Agreement
Department Name: Public Works
Cost Center: N/A
For Agenda of: 6/18/2019
Placement: Consent
Estimated Time: N/A
FROM: Daryl Grigsby, Public Works Director
Prepared By: Jake Hudson, Deputy Public Works Director
SUBJECT: AVILA RANCH REIMBURSEMENT AGREEMENT
RECOMMENDATION
Adopt a resolution (Attachment A) approving a Reimbursement Agreement (Attachment B) for
the construction of specific public improvements by Avila Ranch, LLC that benefit other
citywide existing and planned development, and authorize the City Manager to execute this
Agreement.
DISCUSSION
Avila Ranch LLC has secured various rights of development including Vesting Tentative and
Final Tract Map approvals for the construction of residential communities within the Airport
Area Specific Plan. As a part of those approvals, Avila Ranch LLC has been conditioned to
complete various off-site public infrastructure projects that are necessary to support traffic
generated by Avila Ranch as well as traffic that will be generated by other properties in the
vicinity. Also, as part of those approvals the City entered into a development agreement which
commits the City to attempt to facilitate distribution of those project costs above and beyond
Avila’s fair share proportionally to other benefitted properties, the proposed reimbursement
agreement is the mechanism to achieve this.
Under the proposed reimbursement agreement, the City will condition future private
development projects on those benefitted properties to pay their fair share of costs for these
improvements and to reimburse those funds to Avila such that Avila is not required to bear the
full costs of improvements above and beyond their fair proportionate share. Pursuant to Section
16.20.110 of the City of San Luis Obispo Municipal Code, reimbursements shall be made only
when the city collects money from the developers of new projects. Failure or error by the City
resulting in funds not being collected will not subject the City to any liability, obligation or debt
owed the developer, but the City has committed to establish operational protocols to ensure that
benefitted properties are identified and appropriate fee contributions are conditioned on the
properties when development applications are submitted, or consistent with negotiated
annexation agreements for Benefitted Properties that are not currently within the City.
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Municipal Code Section 16.20.110 establishes the Eligibility and Conditions for Reimbursement
Payments which are allowed for the oversizing of infrastructure. When satisfied, the provisions
allow a developer to request reimbursement for offsite work, and if approved, the City will
attempt collection of a proportional share of the costs from other benefitting properties. These
funds will then reimburse Avila Ranch for infrastructure costs that directly benefit others and are
above and beyond Avila Ranch’s proportional share.
The justification for satisfying eligibility and conditions under Municipal Code 16.20.110 is
provided below.
Eligibility: “Whenever improvements are required to be installed adjacent to property other than
that being developed or in greater size or capacity than that is required for the development of
the property owner…”
Avila Ranch is required to install offsite improvements along Earthwood, Horizon, Suburban,
Buckley, and at the intersection of Higuera & Vachell. These improvements are being installed
adjacent to and for the benefit of property other than Avila Ranch, which satisfies the eligibility
requirement for reimbursement.
Condition 1: “The City and Developer agree that the improvements significantly benefit and
serve property that is not within the subdivision or site development area.”
Because these improvements are not within the subdivision or site development area and the
following benefits are provided, the eligibility requirement for reimbursement is satisfied.
a) Improvements to be installed by Avila on Earthwood, Horizon, & Suburban would
otherwise be a requirement of the properties that front those streets under Municipal Code
section 16.20.020, Physical Improvement Standards & Procedures, if not constructed first
by Avila Ranch.
b) Based on the General Plan and the Avila Ranch EIRs, Trip generation from new
development on benefitted properties would trigger the same requirements on other
benefitted properties for improvements at Higuera & Vachell and Buckley road, if not
constructed first by the Avila Ranch Development.
c) Based on the General Plan and Avila Ranch EIRs these off-site improvements serve the
primary access routes and trip generation into the benefitted area.
Condition 2: “The City and Developer enter into a reimbursement agreement, in a form
approved by the City Attorney.”
Council adoption of the proposed resolution and City Manager execution of the agreement as
proposed satisfy this condition of the municipal code.
Condition 3: “Evidence shall be submitted within sixty days of the city’s acceptance of the
improvements. Failure to timely submit evidence shall void the reimbursement agreement.”
Avila Ranch will be required to submit these materials in order to satisfy this condition of the
municipal code.
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The estimated fair share cost allocation to these benefitted properties is based on trip generation
under the City’s General Plan and Zoning or in the case of Froom Ranch, their specific project
proposal currently in process. Exhibit A of the attached reimbursement agreement estimates
specific properties and their fair share cost allocation for each of the five improvements
contemplated under this reimbursement agreement. These are however only estimates based on
the best information we have available; the agreement establishes the framework for calculating
fair share payment which will be done at the time of building permits. Fair share fee amounts
will be calculated based on trip generation of project proposals at the time of those proposals. If
the improvements are installed by adjacent properties prior to Avila, the costs and fair share
proportionality will be recalculated.
As it relates to annexation areas that include benefitted properties, the City is in the process of
negotiating pre-annexation agreements that will include the framework for fee collection from
those benefitted properties that are likely to vary from the calculations included and will depend
on the City’s ability to reach mutually agreeable terms with the property owners in that area to
accomplish the objective of completing orderly annexation and reducing the likelihood that the
properties will develop in the County with inadequate contributions to City fee programs. The
reimbursement agreement includes language regarding the commitments to consult and attempt
to reach agreement with Avila regarding any changes to amounts that can be collected pursuant
to negotiated annexation agreements with those owners of benefitted properties not currently
within the City.
Also, if projects come forward on other parcels and are identified as benefitting from these
improvements, those may be included in the reimbursement, lowering overall proportionate
shares.
Policy Context
This recommendation is supported by the approved Avila Ranch Development Plan &
Environmental Impact Report, Airport Area Specific Amendment 1318-2015, General Plan
Amendment 1319-2015.
Municipal Code Section 16.20.110 establishes the authority to collect fair share costs from other
benefitted properties and to reimburse those that construct improvements at a cost which is above
and beyond their fair share.
The City adopted a Development Agreement between the City and Avila Ranch LLC which
requires the City to reimburse or provide for the reimbursement by other landowners or
developers, for infrastructure installation costs beyond Avila Ranch’s fair share. However, the
City is not required to fund reimbursement from its own resources or from funds it does not yet
possess.
Public Engagement
Notices of the public reimbursement agreement, information regarding the implications for
future development, and the Council Hearing date was mailed to all affected property owners the
week of May 13, 2019. Staff met with several property owners individually and a meeting was
also held for affected property owners on May 28, 2019.
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Below is a broad summary of the requested changes we have received over the course of the
Public Engagement and staff’s assessment:
1. Exclude City permitting fees from the reimbursable costs.
Reimbursement of permitting fees was previously agreed to as a term of the Avila Ranch
Development Agreement. Excluding these fees would be a breach of that contract.
2. Make adjustments to the estimated developable area.
The currently estimated developable area is based on the best information at this time. However,
these are only estimates, reimbursement fees will be based on actual development proposals.
3. Limit reimbursable soft costs in some way such as a % of construction costs.
The method for cost controls is already established in the municipal code and reimbursement
agreement which require an extensive audit and approval process to control both soft and
construction costs. Reimbursement is eligible for actual costs as opposed to estimates.
4. Find other funding sources to reimburse Avila such as amend the Citywide Traffic Impact
Fee Program to include the Buckley Road Extension and Higuera/Vachell Intersection.
The proposed reimbursement agreement includes updated terms that provide the flexibility to
reimburse from other funding sources, as described, if and when those other sources are
identified and authorized.
The Buckley extension was initially considered for inclusion in the Citywide Traffic Impact Fee
program, a potential alternative funding source, however it was ultimately excluded in order to
reach target Development Impact Fee rates and fund projects that had a broader city-wide
benefit. The Council may direct staff to return with an assessment of adding the Buckley
extension and Higuera & Vachell intersection into the fee program, however that would result in
higher Citywide traffic impact fees.
5. Provide some discount or consideration for frontage improvements already installed or to be
installed by benefitted property owners.
These requests were regarding frontage improvements of the adjoining properties which are not
eligible for reimbursement under Municipal Code 16.20.110. If future off-site improvements are
required of these parcels those maybe eligible for a reimbursement agreeme nt such as the one
proposed.
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6. Reconsider the methodology for identifying benefitted property owners and remove them
from the list.
The method for identifying benefitted properties is based on the Eligibility and Conditions for
reimbursements as established in the Municipal Code. However, in response to these comments
the proposed reimbursement agreement includes updated terms that allow for flexibility if there
are opportunities to change funding sources and means in which the conditions of approval and
mitigation measures are achieved.
7. Tie Reimbursement Agreement termination date to 15 years after construction.
The proposed reimbursement agreement includes updated terms that terminate the agreement at
15 years after execution of the Reimbursement Agreement. However, the Development
Agreement commits the City to have a reimbursement mechanism in place for 15 years after
termination of the Development Agreement, therefore after termination of the Reimbursement
Agreement the Council would need to consider some means of reimbursement after 15 years in
order to be consistent with the Development Agreement.
CONCURRENCE
The City’s Attorney, Community Development & Finance Departments have reviewed this staff
report and concur with its recommendation.
ENVIRONMENTAL REVIEW
The improvement projects contemplated under this agreement were adequately analyzed in the
City’s General Plan EIR and Avila Ranch EIR. The proposed agreement in and of itself is a
financial mechanism to equitably distribute costs of infrastructure after the infrastructure is
constructed and therefore does not constitute a “Project” under CEQA Guidelines Sec. 15278.
All relevant projects were evaluated and appropriately mitigated as part of the previously
certified Avila Ranch EIR and no project changes are implicated by this Agreement.
FISCAL IMPACT
Budgeted: No Budget Year: On-Going
Funding Identified: No
Fiscal Analysis:
At this time there is no fiscal impact to the City associated with entering into the recommended
reimbursement agreement alone. The City’s role is to act as a conduit between the developer who
is installing the improvements and future developers who will benefit from and whose project
approvals in the City will require those improvements.
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However, the Council is scheduled to consider an annexation agreement for the East Airport
Area at its 9/3/2019 meeting, which affects properties not currently in the City, but identified
under this reimbursement agreement. That annexation agreement currently contemplates capping
transportation fees at $1,000,000 in order to facilitate the orderly annexation of the properties
into the City and ensure the City’s right to obtain fees that might not otherwise be recoverable if
development of those properties proceeded in the County, under current County development
regulations and existing entitlements.
The combination of this reimbursement agreement and that upcoming annexation could reduce
Transportation Impact Fee revenue by as much as $1.2 million over the course of the 30-year fee
program, using an analysis that assumes full, current City fees applicable to properties currently
within the City could be imposed on and collected from annexation area properties. If those
properties were to proceed with development in the County, under current County rules, the City
would not realize such fees. A more in-depth fiscal analysis and options for ensuring the
ongoing balancing of the overall fee program, as greater certainty regarding future annexation
and development potential, will be presented as part of the Annexation Agreement Council item
currently scheduled for 9/3/2019 that takes into account more intense development under the
City’s applicable land use regulations than otherwise allowed in the County.
ALTERNATIVES
1. Continue consideration of this item. The City Council may continue consideration of the
recommendation is more information is needed to make a decision. Direction should be
provided to staff regarding the additional analysis or data needed for the Council to
conclude the item.
2. Deny the request. The City Council may deny the request for a reimbursement agreement.
This action is not recommended because it has the potential to delay housing production
within the Avila Ranch neighborhood and may be considered a breach of the Development
Agreement if an alternative means of reimbursement cannot be identified.
Attachments:
a - Resolution Approving Reimbursement Agreement
b - Reimbursement Agreement
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R _____
RESOLUTION NO. (2019 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN LUIS OBISPO, CALIFORNIA, APPROVING A REIMBURSEMENT
AGREEMENT WITH AVILA RANCH, LLC FOR OVERSIZED PUBLIC
IMPROVEMENTS
WHEREAS, Avila Ranch LLC, has made application for the approval of an “Infrastructure
Reimbursement Agreement” concerning the development of residential projects in the Airport Area
Specific Plan (AASP) Planning Area; and
WHEREAS, Avila Ranch LLC has secured various approvals to construct said residential
communities subject to conditions of approval that require the orderly and timely completion of public
infrastructure improvements to support growth within the AASP and beyond; and
WHEREAS, there are certain public improvements associated with the Avila Ranch projects
that include public improvements that must be installed and are greater in size and capacity than
required to serve only the Avila Ranch project (“Excess Public Improvements”), thereby qualifying
said Excess Public Improvements for reimbursement as set forth in San Luis Obispo Municipal Code
Section 16.20.110; and
WHEREAS, Avila Ranch LLC has presented estimates of the costs to design, permit and
construct said Excess Public Improvements, as well as fair share proportionality of the properties that
may benefit from the installation of the Excess Public Improvements; and
WHEREAS, the approval of a 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. The “Infrastructure Reimbursement Agreement” is hereby approved, and the
City Manager is authorized to approve minor revisions and execute said Agreement on behalf of the
City.
SECTION 2. The Public Works Director is authorized to administer and implement the
“Infrastructure Reimbursement Agreement” as provided therein.
SECTION 3. The Mayor and City staff are authorized to take action necessary to carry out
the intent of this resolution.
SECTION 4. Environmental Review. The Avila Ranch Development Plan and an
associated Final Environmental Impact Report (FEIR) were approved and certified in September
of 2017. Approval of this Reimbursement Agreement would not result in any new environmental
impacts that were not previously addressed in the certified Avila Ranch FEIR. Therefore, no
further environmental review is required for this action.
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Resolution No. (2019 Series) Page 2
R _____
SECTION 5. To the extent allowed under the Development Agreement The Mayor and City staff
are authorized to enter into the “Infrastructure Reimbursement Agreement” with another party if
so assigned or if development rights are purchased by a different party before such time as said
agreement is executed.
Upon motion of _______________________, seconded by ________________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this ______ day of _______________ 2019.
____________________________________
Mayor Heidi Harmon
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, this ______ day of ______________, 2019.
____________________________________
Teresa Purrington
City Clerk
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INFRASTRUCTURE REIMBURSEMENT AGREEMENT
Private
(Avila Ranch Vesting Tentative Tract Map 3089)
This Infrastructure Reimbursement Agreement ("Agreement") is entered into this day
of , 2019 (the "Effective Date"), by and between the City of San Luis Obispo,
a municipal corporation and charter city ("City") and Avila Ranch, LLC, a California limited
liability company ("Avila Ranch"). The City and Avila Ranch are sometimes hereinafter
referred to individually as a "party" and collectively as "parties."
RECITALS
A. WHEREAS, on September 17, 2017, the San Luis Obispo City Council certified the Final
Environmental Impact Report; approved the Avila Ranch Development Plan, Airport Area
Specific Plan Amendment 1318-2015, General Plan Amendment 1319-2015, Vesting
Tentative Tract Map 3089 (“VTTM”), Ordinance 1638 (2017 Series) approving a rezone
of the Avila Ranch property and Ordinance 1369 (2017 Series) approving Development
Agreement 2017-1 (“Development Agreement”), and formation of a Community Facilities
District (collectively “Project”); and
B. WHEREAS, the Project is subject to various City requirements and conditions of approval,
including but not limited to, those of the VTTM, the Development Agreement, and the
Avila Ranch Final Environmental Impact Report (SCH # 2015081034); and
C. WHEREAS, the Project creates a fractional demand for certain transportation
improvements (“Transportation Improvements”) not included in the City’s Transportation
Impact Fee Program and Avila Ranch has agreed to construct these Transportation
Improvements subject to reimbursement from other properties benefiting from the
improvements (“Benefitted Properties” or individually, “Benefitted Property”) for that
portion of the cost of the Transportation Improvement exceeding the pro rata share of the
Transportation Improvement attributable to the Property (“Reimbursable Costs”) ; and
D. WHEREAS, Exhibit C to the Development Agreement identifies the Transportation
Improvements to be constructed by Avila Ranch subject to reimbursement from the
Benefitted Properties and Avila Ranch’s fair share of each Transportation Improvement
based on the Project’s pro rata share of the capacity of the Transportation Improvements;
and
E. WHEREAS, the Benefitted Properties, the Transportation Improvements subject to
reimbursement from Benefitted Properties, and the proportionate share subject to
reimbursement are identified in Exhibit A to this Agreement;
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F. WHEREAS, Section 5.04.2(g) of the Development Agreement provides that the City shall
enter into a reimbursement agreement with the developer which provides for the
reimbursement of all excess costs and expenses incurred by Avila Ranch in constructing
infrastructure beyond its fair share in accordance with Government Code section 66485 et
seq. and section 16.20.110 of the City’s Municipal Code; and
G. WHEREAS, Section 5.05.3(a) of the Development Agreement provides that the City shall
reimburse, or provide for the reimbursement by other landowners or developer, the actual
hard and soft costs associated with Avila Ranch’s funding or construction of that portion
of any improvement that is attributable to a project or area other than the Project or Project
property; and
H. WHEREAS, because Avila Ranch is paying for the construction and/or installation of the
Transportation Improvements, with the development of the Project, Developer is eligible
to be reimbursed for the Reimbursable Costs, to the extent and on the terms and conditions
set forth in this Agreement.
AGREEMENT
Subject to the terms and conditions set forth below, the parties agree as follows:
1. Recitals. The above recitals are true and correct. The recitals set forth above, and
all defined terms set forth in such recitals and in the preamble preceding the recitals,
are hereby incorporated into this Agreement as though set forth in full.
2. Term. The term of this agreement shall be fifteen (15) years from execution or until all
Reimbursable Costs have been fully reimbursed, per this agreement, whichever is
sooner. Pursuant to Section 5.05.3(g) of the Development Agreement if costs have not
been fully recovered within the term of this agreement the Council shall enter into a
subsequent reimbursement agreement or alternative means of reimbursement for a
period of up to 15 years from the expiration of the development agreement.
3. Construction of Transportation Improvements. Avila Ranch shall construct the
Transportation Improvements in substantial conformance with the Project’s
Transportation Improvement Plans approved by the City (“Approved Plans”), any
approved alterations thereto directed by the City Engineer or staff.
4. Reimbursable Costs.
a. The Transportation Improvements and each of the Benefitted Properties' prorated
share of the Reimbursable Costs are shown on Exhibit A, attached hereto and
incorporated herein by this reference. Subject to Section 6 of this Agreement, the
City shall reimburse Avila Ranch for the actual Developer Costs determined in
accordance with Section 8 and this Agreement, together with the Applicable
Annual Rate of Inflation, which shall be Construction Cost Index. “Developer
Costs” means the actual cost of designing, permitting and constructing each of the
Transportation Improvements adopted in Table B-2 of the Development Agreement
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and listed in Exhibit A to this Agreement. Developer Costs shall include the cost of
all right-of-way acquisitions secured by Avila Ranch, if any, including the legal,
accounting, project management, and costs of such rights of way acquisition.
Developer Costs shall include eligible Developer hard and soft costs. Soft costs
shall include Developer’s legal, accounting, and engineering costs.
b. Exhibit A shows the current estimated prorated shares of the cost of the
Transportation Improvements, considering the current development potential of the
Benefitted Properties. The amount of the Reimbursable Cost for any Benefitted
Property may be adjusted based on the actual development proposed for that
property, changes in baseline conditions, or to account for any right of way or
improvements that are contributed or constructed by the Benefitted Property. The
list of Benefitted Properties and proportional share allocated to each shown in
Exhibit A shall be modified if and when the City determines additional properties
benefit from one or more of the Transportation Improvements. If City determines
additional properties benefit from one or more of the Transportation Improvements,
the City shall require those properties to pay a prorated share of documented
Reimbursable Costs in accordance with Section 6 of this Agreement. As it relates
to annexation areas that include Benefitted Properties, the Parties acknowledge that the
City must negotiate pre-annexation agreements that will include the framework for fee
collection from those Benefitted Properties. City agrees to consult with Avila Ranch if
the proposed terms of pre-annexation agreements may vary from the estimates and
calculations included in this Agreement, which are based on otherwise applicable City
fee requirements, as though the annexation area Benefitted Properties were currently
within the City. The City and Avila will attempt to reach mutual agreement on any
changes to the amounts to be collected from Benefitting Properties prior to final City
approval of any annexation agreements and City shall consult with and advise Avila of
final agreement terms negotiated with and Benefitted Properties that will yield
reimbursement amounts less than those estimates reflected in this Agreement. Avila
Ranch shall assist the City to the maximum degree practicable to accomplish the
objective of completing orderly annexations and reducing the likelihood that the
Benefitted Properties will develop in the County with inadequate contributions to City
fee programs and with no ability of the City to collect fees for reimbursement to Avila.
c. Within fifteen days of execution of this Agreement, the City agrees to implement a
collection mechanism that ensures collection of funds from Benefitted Properties
consistent with each property’s obligation to pay its prorated share, estimated based
on current development potential in Exhibit B, or as such share may be required to
be adjusted based upon the actual development proposed on any Benefitted
Property. To the extent permitted by law, the City further agrees to record a notice
of this agreement against the Benefitted Properties.
5. Benefitted Properties. City and Avila Ranch agree that the Transportation Improvements
significantly benefit the Benefitted Properties because the Transportation Improvements
are improvements that the City would require the individual Benefitted Properties to install
as conditions of improvement in the City, and/or would otherwise be necessary conditions
of approval or environmental mitigations to allow development of the Benefitted Properties
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at their maximum development potential. The prorated allocation of costs to each of the
Benefitted Properties is based on the developable, but currently undeveloped, acreage of
each Benefitted Property. In the case of vacant properties, 100 percent of the acreage is
counted; in the case of underdeveloped properties 50 percent of the acreage is counted;
and, in the case of properties that have substantial constraints such as flood plains, steep
slopes, etc., the net developable acreage is counted. The allocated cost for each Benefitted
Property was determined using the zoning for each property and the corresponding adopted
Trip Generation Rate for each land use in Table A-2 of the City’s Capital Facilities Fee
Nexus Study, as shown in Exhibit B. The parties acknowledge that it may be mutually
advantageous for the City and Avila Ranch to modify the estimated amounts to be
collected from Benefitting Properties that are subject to annexation to ensure annexation
of the properties and secure payments from the Benefitted Properties consistent with
reimbursement obligations under this Agreement. City agrees to consult with Avila Ranch
on any modifications that it deems desirable and necessary to secure reimbursement
contributions from annexed Benefitting Properties subject to this Agreement, as well as
contributions to city impact fees in general and ad hoc fees as necessary. Avila Ranch
agrees to negotiate in good faith to assist the City in implementing the City’s annexation
objectives, and City agrees to negotiate in good faith to collect the estimated amounts in
this agreement.
6. Reimbursement.
a. Subject to the terms and conditions hereof, City will require the Benefitted
Properties to pay a prorated share of the documented Reimbursable Costs, as shown
in Exhibit A; or a proportional fraction of the share if: (i) the Benefitted Property
grants any right of way or constructs improvements which decrease the Benefitted
Property’s demand for or impact on any of the improvements as shown in Exhibit
A; (ii) the Benefitted Property is proposed and approved to be developed at less
than the developable acreage on which the prorated share reflected herein for the
Benefitted Properties was calculated or is otherwise subject to limitation upon the
amount of fees assessed pursuant to terms of annexation;; (iii) the land use or
zoning designation of the property is proposed and approved to be changed; (iv) the
baseline conditions change in a manner which renders the traffic impacts of
development within the Benefitted Property to be less than estimated in Exhibit A;
or (v) other circumstances arise which legally prohibit the City from imposing the
fee, including negotiated limitations upon the amount of fees assessed pursuant to
terms of annexation for properties not currently within the City, as may be
necessary to the orderly annexation of such properties. Similarly, in the event the
Benefitted Properties are proposed and approved to be developed in a manner that
results in a demand for Transportation Improvements greater than reflected in the
prorated shares herein, the City will amend the prorated shares accordingly and will
collect amounts from the Benefitted Properties commensurate with the demands
and impacts of the development actually approved. For Benefitted Properties
within the City’s jurisdiction, the City shall require payment of the prorated shares
of the Reimbursable Costs as a condition of any discretionary entitlement or
approval, including Architectural Review Committee (whether administrative,
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quasi-judicial, or legislative) on which such a condition legally may be imposed,
and payment shall be required prior to issuance of building permits. For properties
in the County’s jurisdiction, City will require Benefitted Properties to pay their
prorated share of documented Reimbursable Costs as a condition of annexation,
subject to the negotiated limitations on such properties necessary to facilitate
orderly annexation and secure the City’s legal obligation to collect fees from such
properties. City shall not be required to reimburse Avila Ranch more money than it
actually collects. Any amount of Reimbursable Costs City collects within a
calendar quarter shall be sent to Avila Ranch within thirty (30) days following the
end of such calendar quarter, subject to the provisions of Section 6b. All
reimbursements shall be by check or warrant made payable to: Avila Ranch, LLC
and mailed to
Avila Ranch, LLC
Attn: Andy Mangano
3596 Broad Street, Suite 104
San Luis Obispo, CA 93401
b. Costs and reimbursement amounts may be adjusted as a result of land or fee
contributions or construction completed prior to Avila Ranch phasing
requirements, which may be contributed by or constructed by others. . For
example, if improvements that are subject to reimbursement as part of this Agreement
are to be constructed by a Benefitting Property, such parties may negotiate agreements
with the City that would reduce Avila’s construction requirements and/or
contemplated reimbursement consistent with this Agreement. City agrees to consult
in good faith and attempt to meet mutual agreement with Avila on any such
changes prior to any final approvals of agreements with other Benefitted
Properties
c. If any costs included in the agreement are later adopted into any citywide or
subarea Transportation Impact Fee Program, those costs will be removed from the
Private Reimbursement agreement and the respective shares and allocated costs to
the Benefitting Properties would be reduced accordingly by the City.
d. If any owner or developer of one or more of the Benefitted Properties pays all or a
portion of the Reimbursable Costs under protest, City shall not be required to make
reimbursements under this Agreement until the limitation period under
Government Code section 66020 for instituting court action to seek a refund of such
funds paid under protest has passed, and no court action ("Action") has been
instituted. If an Action is instituted seeking refund of funds paid under protest, or
to prevent City from collecting such funds, or challenging any provision of this
Agreement, City shall not pay such funds to Avila Ranch until the Action has been
finalized and the authority of City to collect such funds and reimburse Avila Ranch
has been sustained. City shall promptly notify Avila Ranch in writing of the Action.
City shall reasonably support Avila Ranch's efforts to participate as a party to the
Action, to defend the Action or settle the Action. Furthermore, City shall have the
right to turn over the defense of the Action to Avila Ranch. If, within fifteen (15)
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days of City mailing a notice in compliance with Section 15 below requesting that
Avila Ranch defend the Action, Avila Ranch fails to undertake the defense of the
Action at Avila Ranch's sole cost and expense, City may stipulate to return of the
funds so paid under protest, to cease collecting such funds, or enter into any other
settlement of the Action acceptable to City, and Avila Ranch shall lose any right to
reimbursement under this Agreement of the amount contested in the Action. Avila
Ranch shall reimburse City for its costs and attorneys' fees incurred in defense of
the Action, including reasonable payment for legal services performed by the City's
City Attorney, and for any liability City incurred in the Action, and such costs, fees
and liability shall not be Reimbursable Costs. In addition, if City fails to impose a
requirement upon development projects proposed by owners or developers of the
Benefitted Properties, to pay their respective prorated share of the Reimbursable
Costs, as specified in Exhibit A or as determined by the Director under Section 4
of this Agreement, or fails to collect such funds, Avila Ranch may exercise all of
its legal rights to collect such funds from the Benefitted Properties.
7. Bids for Installation of Transportation Improvements. In order to assure the Benefitted
Properties that the costs of construction of the Transportation Improvements are
reasonable, prior to commencing construction of the Transportation Improvements, Avila
Ranch shall obtain at least three (3) non-collusive bids for construction of the
Transportation Improvements, and provide copies to City. Avila Ranch is not required to
accept any particular bid. However, when Avila Ranch provides City with evidence of
actual costs under Section 8, Avila Ranch must provide an explanation of its reasons for
selecting one of the higher bids if the difference between the bids is greater than 10% and/or
above the engineer's estimate set forth in Exhibit A. City may require such explanation but
may not delay reimbursement to question Avila Ranch’s explanation. As part of the bid
packages both contractor and Avila Ranch shall provide Non-Collusion Affidavits in a
form approved by the City Attorney.
8. Proof and Due Date of Reimbursable Costs.
a. At the time of contract award for each Transportation Improvement, City shall
provide Avila Ranch and the contractor with a detailed description of the nature
and extent of bills, invoices, contracts, and other documentary evidence necessary
for reimbursement of Reimbursable Costs (“Documentation of Costs”). All
submittals shall clearly show costs eligible for reimbursement pursuant to this
Agreement. City shall approve payment of Reimbursable Costs within sixty (60)
days of receipt of Documentation of Costs unless additional information is
requested pursuant to section 8b below.
b. If within sixty (60) days of submission of invoices and other documentation, City
notifies Avila Ranch, in writing, that the additional Documentation of Costs is
required, Avila Ranch shall respond to such notice within sixty (60) days. If Avila
Ranch complies with the request for additional Documentation of Costs, City may
request additional information only insofar as it relates to the additional
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documentation provided.
c. If the Director disapproves any of Avila Ranch's claimed costs, the Director shall
meet and confer with Avila Ranch to resolve the dispute. If the Parties do not
meet to resolve the dispute within thirty (30) days of the Director's invitation to
meet and confer, the Director shall have ultimate authority to determine the
amount subject to reimbursement.
d. If final Reimbursable Costs should increase or decrease pursuant to change orders
or other cost modifications allowed in this Agreement, the parties shall meet and
confer within five (5) days of Avila Ranch notifying the City of the change to reach
agreement on allocation of costs and may be modified in accordance with this
Agreement. Developer and the City Engineer, together, may approve a change
order if the total Reimbursable Cost increase is Twenty-Five Thousand Dollars
($25,000) or less and the net total of the change orders theretofore approved does
not exceed the contingency amount. Developer and the City Manager together may
approve a change order if the cost increase is One Hundred Thousand Dollars
($100,000) or less and the net total of the change orders theretofore approved does
not exceed the contingency amount.
9. Reduction of Reimbursable Costs by Other Reimbursements. Avila Ranch may enter into
agreements with other property owners or developers of the Benefitted Properties or
others, addressi ng Avila Ranch's right to reimbursement resu l ting from Avila Ranch's
oversizing or construction of Transportation Improvements that will benefit development
of those other properties. To the extent Avila Ranch enters into such agreements or
receives payment or consideration from others for costs that are otherwise
"Reimbursable Costs" under this Agreement, such payments or consideration will be
credited agai nst the Reimbursab le Costs otherwise due Avila Ranch under this
Agreement. Notwithstanding the foregoing, Avila Ranch has no obligation to attempt
to pursue reimbursement from other property owners or developers of the Benefitted
Properties.
10. Indemnification. Avila Ranch 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 (including attorney’s fees and costs) to persons or property
which may arise or is any way related to: City’s attempt to collect the Reimbursable Costs
pursuant to the terms of this Agreement, Avila Ranch's construction of the Transportation
Improvements, or Avila Ranch's performance under this Agreement, or that of its
contractors or agents; or from Avila Ranch's failure to pay prevailing wages for the
construction of the Transportation Improvements or comply with applicable provisions of
the Labor Code; or any litigation or Action under Section 6 or Section 7. Notwithstanding
the foregoing, Avila Ranch 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. In the event Avila Ranch fails to provide such a defense to City, Avila Ranch
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shall be liable to the City for its attorney’s fees and litigation costs incurred to defend itself
beginning on the sixteenth (16th) day from the date of the City’s notice and request for a
defense.
11. Entire Agreement /Amendment. This Agreement represents the entire integrated
agreement between the City and Avila Ranch regarding the private reimbursement
for the Transportation Improvements, and supersedes all prior negotiations,
representations or agreements, either written or oral, but expressly does not supersede the
letter agreement executed between the City and Avila Ranch on April 3, 2018 relating to
the Transportation Impact Fee, LOVR Subarea Fee, and fee credits, the Development
Agreement or any public Reimbursement Agreement. This Agreement may be amended
only by a written instrument signed by both City and Avila Ranch.
12. Governing Law and Venue. The interpretation and implementation of this Agreement
shall be governed by the law of California, except for those provisions preempted by
federal law. However, the laws of the State of California shall not be applied to the
extent that they would require or allow the court to use the laws of another state or
jurisdiction. The parties agree that all actions or proceeding arising out of or relating to
the Agreement shall be tried and litigated only in the County of San Luis Obispo or the
United States District Court for the Central District of California.
13. 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 i n full force and effect.
14. 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.
15. Notices. All notices, demands, invoices, or written communications to the parties required
or permitted hereunder shall be in writing and delivered personally or by U.S. mail,
postage prepaid , to the following addresses or such other address as the parties may
designate in accordance with this section:
City Director Public Works 919 Palm Street
San Luis Obispo , CA 93401
With a copy to: City Attorney 990 Palm Street
San Luis Obispo, CA 93401
Avila Ranch: Avila Ranch, LLC
Attn: Andy Mangano
3596 Broad Street, Suite 104
San Luis Obispo 93401
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With a copy to: Amy Higuera
Thomas Law Group
455 Capitol Mall, Suite 801
Sacramento, CA 95814
lwalker@thomaslaw.com
16. Interpretation/Ambiguity. This Agreement was negotiated by the Parties, with the advice
and assistance of their respective counsel, and shall not be construed in favor of or
against either Party, regardless of who may have drafted it or any of its terms. Any rule
of construction to the effect that ambiguities are to be resolved against the drafting party
shall not be applied in interpreting this Agreement.
17. Assignment. Avila Ranch shall not assign, transfer or convey any of its rights, duties or
obligations under this Agreement without the prior written approval of City. City shall
not unreasonably wit hhol d approval of any assignment. Any other assignment shall be
null and void.
18. Authority to Execute . Both City and Avila Ranch d o 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first date
written above.
City OF SAN LUIS OBISPO a municipal
corporation and charter city
____________________________________
ATTEST: Derek Johnson, City Manager
________________________
City Clerk
APPROVED AS TO FORM:
_______________________________
J. Christine Dietrick, City Attorney
Avila Ranch
Avila Ranch, LLC
By: Andrew Mangano
Its: Managing Partner
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Exhibit A
Estimated Reimbursement Costs and Allocation to Benefitted Properties
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