HomeMy WebLinkAbout06/01/2004, C9 - SUPPLEMENTAL COURT STREET REMEDIATION COSTS council
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CITY OF SAN LU I S O B I S P O
FROM: Jonathan Lowell,City Attorney
SUBJECT: SUPPLEMENTAL COURT STREET REMEDIATION COSTS
CAO RECOMMENDATION
Appropriate $66,385 from the Parking Fund and transfer$22,128 from the CIP Reserve in order to
pay for further costs of Court Street site remediation and resulting additional costs to developer and
its contractor.
DISCUSSION
Pursuant to the Property Exchange Agreement entered into between the City and the Copelands,
each party was to deliver a site to the other on which hazardous materials mitigation and
archeological work had been performed as of the Closing Date (November 5, 2003). The City
caused to be performed certain site remediation and archeological work, and relied upon its
environmental consultant's determination that the site was "clean" in proceeding with the real
property exchange. Subsequent to the Closing Date and the transfer of ownership to the Copelands,
two different instances of contamination were discovered on the Court Street site.
With regard to the first instance, the City has already paid for removal of underground tanks and
related cleanup which occurred in early December 2003. The approximate cost of that work was
$35,500. In the second instance, the developer and its contractor have fronted the costs of cleanup
of contamination and soil removal stemming from a green petrochemical plume discovered
elsewhere on the site in late December 2003. These latter costs total $88,512.67.
Under the terms of the Property Exchange Agreement, the City is obligated to hold the Copelands
harmless from any and all liabilities, claims, demands and expenses of any kind or nature accruing
on or before the Closing Date. The contamination discovered in late December 2003 clearly
accrued prior to the Closing Date. The cleanup and related costs are consequences of the
contamination which the City was obligated to remediate prior to transfer of the property.
CONCURRENCES
The Public Works Director, Economic Development Manager and Director of Finance &
Information Technology concur with this recommended action.
FISCAL IMPACT
Based on the original funding sources for the acquisition of this site, 75% of the sale proceeds have
been credited to the Parking Fund and 25% to the General Fund. As such, we recommend
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Council Agenda Report—Supplemental Court Street Remediation Costs
Page 2
apportioning the supplemental remediation costs in the same manner: $66,385 from the Parking
Fund and $22,128 from the General Fund. We recommend funding the Parking Fund's share from
its un-appropriated working capital balance, and the General Fund's by a transfer from the CIP
Reserve, which has a current balance of$59,600.
ALTERNATIVES
The City could decide to not pay the invoices submitted and leave the matter to resolution through
arbitration and the courts. However, it is unlikely that the City would prevail based upon the
agreement previously entered into between the parties under which each bore the burden of cleanup
of one site and, unfortunately, it was later determined the City's site (Court Street) was dirty while
the Copelands' site (Palm Street at Morro) was clean.
G:Wgenda-Ordinances-Resol\Court Street Remediation Costs.DOC
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