21-1019_RIVERSTREET SJC, LLC_Agenda Report_E7City of San Juan Capistrano
Agenda Report
TO: Honorable Mayor and Members of the City Council
FROM: Benjamin Siegel, City Manager
SUBMITTED BY: Charles View, Assistant City Manager
DATE: October 19, 2021
SUBJECT: Reimbursement Agreement between the City and River
Street SJC LLC for Design and Construction of Sewer
Improvements Along Los Rios Street for The River Street
Project
RECOMMENDATION:
Approve and authorize the City Manager to execute a reimbursement agreement between
the City, or its successors or assigns, and River Street SJC LLC, providing for
reimbursement from the Sewer Fund to River Street SJC LLC for a portion of its costs of
designing and constructing sewer improvements along Los Rios Street, as a required
mitigation measure of the Environmental Impact Report for the River Street Project.
EXECUTIVE SUMMARY:
The River Street Project environmental impact report (EIR) requires the developer to
upsize the sewer line in Los Rios Street to Del Obispo Street from 8-inch diameter to 12-
inch diameter to accommodate sewer flows from the Project and from upstream of the
Project. The EIR mitigation measure for the upsizing also states that “the project applicant
and the City shall enter into a development reimbursement agreement for said
improvements such that the applicant will be reimbursed for costs incurred in exceedance
of its fair share contribution.” A reimbursement agreement that would meet that EIR
requirement is included as Attachment 1 and is recommended for approval. The
agreement provides for a reimbursement amount of $210,385 that would be credited
against the Project’s Sewer Impact Fees of that same amount. The City’s share of the
total cost of design and construction is estimated to be $480,769 as shown in Exhibit “A”
to the proposed reimbursement agreement. River Street LLP has agreed to absorb the
estimated $270,384 not covered by their Sewer Impact Fee obligation.
10/19/2021
E7
PREPARED BY: Steve May, Project Manager
City Council Agenda Report
October 19, 2021
Page 2 of 3
With the planned annexation of the City’s sewer system and transfer of the Sewer Fund
to Santa Margarita Water District (SMWD) in the near future, the proposed agreement
would allow for reimbursement to occur before the annexation is completed. In
accordance with the Annexation Agreement between the City and Santa Margarita Water
District, the proposed agreement has been provided to Santa Margarita Water District for
review.
DISCUSSION/ANALYSIS:
The existing sewer line along the easterly side of Los Rios Street, which runs down to Del
Obispo Street, is an 8-inch diameter line that is already deficient in size. Due to the
existing deficiency, it is necessary for the Los Rios line to be upsized to accommodate
Project sewer flows together with existing flows from upstream. The proposed
reimbursement agreement provides for reimbursing the developer the cost of the pipe
upsizing, with the maximum reimbursement capped at the Project’s Sewer Impact Fee
amount of $210,385. Exhibit “A” to the agreement shows the planned new sewer layout
and identifies which portions are developer responsibility and which portions are City
responsibility. Exhibit “B” to the agreement is a table of all design and construction costs
for both the developer’s share and the City’s share.
The proposed agreement is different than the typical reimbursement agreement in that
the reimbursement by way of offsetting Sewer Impact Fees will be completed before the
actual construction of the upsized sewer line. This is proposed so that the cost of the
reimbursement and subsequent loss of Sewer Fund revenues will be identified before the
utility annexation to SMWD occurs. This arrangement will result in the developer paying
a total of $449,472 of the project’s costs that will not be reimbursed but will allow the
developer to proceed with relative certainty as to their total financial obligation for the
project before the utilities annexation. This will also avoid the need for complicated
financial reporting between the developer and SMWD post-annexation.
The costs shown in Exhibit “A” to the Agreement are based on actual design costs and
the lowest of three competitive construction bids that included prevailing wages. With the
total of the design costs and estimated construction costs being more than double the
reimbursement amount, staff is confident that the reimbursement amount will not be more
than the developer’s actual costs.
FISCAL IMPACT:
The proposed reimbursement agreement will reduce Sewer Impact Fee revenues for the
Sewer Fund by the reimbursement amount of $210,385. As described above, the credit
is less than the City’s actual fair share cost of the project.
ENVIRONMENTAL IMPACT:
The recommended action of approving a reimbursement agreement is not subject to
CEQA pursuant to Section 15060(c)(3) of CEQA Guidelines because the action is not a
City Council Agenda Report
October 19, 2021
Page 3 of 3
project as defined in Section 15378 of the CEQA Guidelines, and the action would have
no potential for resulting in physical change to the environment, directly or indirectly.
The reimbursement agreement involves the construction of a sewer line for the River
Street project. The City Council certified a final environmental impact report for the River
Street project, including the subject sewer line, by adoption of Resolution Number 19-10-
15-01 on October 15, 2019.
PRIOR CITY COUNCIL REVIEW:
There have been no prior City Council reviews of this item.
COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS:
This item does not require commission, committee, or board review.
NOTIFICATIONS:
Daniel C. Ferons, General Manager, Santa Margarita Water District
Dan Almquist, River Street SJC LLC
Douglas D. Dumhart, 3-D Advisors LLC (for River Street SJC LLC)
ATTACHMENT:
Attachment 1: Proposed Reimbursement Agreement
1
SEWER IMPROVEMENT REIMBURSEMENT AGREEMENT
On the effective date, as defined below, this agreement ("Agreement") is made
and entered into between the City of San Juan Capistrano, a California municipal
corporation ("City”), and River Street SJC, LLC ("Developer"). The City and Developer
may be referred to individually in this Agreement as a “Party” and together as the
“Parties.”
RECITALS
WHEREAS, the City entered into a Development Agreement No. 18-002 with
Developer on December 6, 2019 (“Development Agreement”) record as instrument No.
2020000328826 on July 10, 2020, in the office of the County Recorder of the County
of Orange, California for the development of an office/commercial development at
31825 Los Rios Street, San Juan Capistrano, California (the "Project"); and,
WHEREAS, a Draft Environmental Impact Report (EIR) was prepared for the
Project in January 2019 (State Clearinghouse No. 2018011019) (the “Draft EIR”) and
a Final EIR for the Project was certified by the City in October 15, 2019; and,
WHEREAS, Section 5.14.1.7, Mitigation Measures, of the Draft EIR provides for
and requires the Developer to construct sewer improvements as follows: “Prior to
issuance of building permits, the project applicant shall upsize pipe segment D15704
between manhole D10135 on Los Rios Street and manhole D11155 on Del Obispo,
from 8-inch to 12-inch diameter pipe.”
WHEREAS, Section 5.14.1.7 of the Draft EIR requires that prior to upsizing the
line, the project applicant and the City shall enter into a development reimbursement
agreement for said improvements such that the applicant will be reimbursed for
Developer’s costs incurred to construct the sewer improvements; and,
Attachment 1, Page 1 of 8
2
WHEREAS, the sewer improvement work described above and referred to as
UD20-0009, along with any other necessary accessories that must be constructed
and/or purchased and installed, including but not limited to, flow meters, shall be
referred to collectively in this Agreement as the “Sewer Improvement”; and
WHEREAS, Developer will be obtaining construction bids for the Sewer
Improvement that will provide the basis for the reimbursement amount to be provided
by the City in the form of credits to the Developer against future Project-required sewer
connection fees; and,
WHEREAS, the Parties desire to enter into this Agreement before the sewer
system for the Project is turned over to the Santa Margarita Water District; and,
WHEREAS, in order for the City to avoid the burden of auditing construction
costs, it is in the City’s best interests to enter into this Agreement.
AGREEMENT
In consideration of the foregoing recitals and the obligations undertaken by the
Parties as established in Exhibit A and hereinafter set forth, the Parties agree as follows:
1. Obligations of the Developer
1.1 The Scope of this Agreement is the City's obligation to reimburse the
Developer for the cost of constructing the Sewer Improvement, subject to the terms and
limitations set forth in this Agreement. Nothing in this Agreement is intended to alter or
waive any obligations or duties of the Developer to comply with existing City
ordinances, policies, procedures, plans and specifications related to the construction of
the Sewer Improvement, including any requirements to obtain approval of construction
plans or obtain necessary building, street-work, encroachment or other permits or to
Attachment 1, Page 2 of 8
3
comply with any requirements or conditions placed on the issuance of those permits
(e.g. insurance, improvement security, etc.).
1.2 As the City is reimbursing the Developer the Eligible Construction Costs
(as defined in Section 1.4 below) to construct the Sewer Improvement, the Sewer
Improvement is a "Public Work" as defined by California Labor Code, section 1720(a).
Developer agrees (a) to pay, and shall cause its contractors and subcontractors to pay,
prevailing wages for the construction of the Sewer Improvement and (b) comply with
the other applicable provisions of Labor Code, section 1720 et seq. and implementing
regulations of the Department of Industrial Relations, necessary to determine that
prevailing wages have been paid as required by law. During the construction of the
Sewer Improvement, Developer shall, or shall cause its contractor, to post at the Project
area the applicable prevailing rates of per diem wages. Developer shall indemnify, hold
harmless and defend (with legal counsel reasonably acceptable to the City) the City
against any claim for damages, compensation, fines, penalties or other amounts arising
out of the failure or alleged failure of any person or entity (including Developer, its
contractors and subcontractors) to pay prevailing wages as required by law or to
comply with the other applicable provisions of Labor Code sections 1720 et seq. and/or
the implementing regulations of the Department of Industrial Relations in connection
with construction of the Sewer Improvement.
1.3 Developer shall obtain bids from various subcontractors and turn over the
bid package to the City for review.
1.4 "Eligible Costs" or "Eligible Construction Costs" means the amounts for
design, engineering, administration, and construction of the Sewer Improvement as
submitted by the Developer and approved by the City. The Eligible Costs shall include
“soft costs” for the engineering design, plan check, permitting, inspection, cultural
monitoring, traffic control and project administration of the Sewer Improvement.
Construction bid amounts may include a Contingency of up to ten percent (10%) of the
construction costs for the Sewer Improvement. The Eligible Costs shall also include a
Project Administration expense in the amount of up to ten percent (10%) of the all the
Eligible Costs for the Sewer Improvement. The Eligible Costs, are defined in Exhibit B
Attachment 1, Page 3 of 8
4
attached hereto and incorporated herein by reference and shall not be subject to any
further review or approvals after this Agreement has been approved.
2. City's Obligations
2.1 The City shall reimburse 100% of the Eligible Costs of the Sewer
Improvement as submitted by the Developer and approved by the City.
2.2 City shall issue the reimbursement in the form of credits to the Developer
against future Project-required sewer connection fees.
2.3 The Developer shall only be responsible for future Project-required sewer
connection fees as were in effect on the Effective Date of this Agreement.
2.4 Notwithstanding anything to the contrary stated herein, in no event shall
the City reimburse Developer, through credits or otherwise, more than the cost of the
Sewer Improvement or the Developer’s Project-required sewer connection fees,
whichever is less.
3. Miscellaneous Terms
3.1 Binding upon Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their predecessors, successors, assigns,
past, present, or future affiliated and related entities, officers, members, agents,
employees, and representatives (collectively “successors”), including but not limited to
successors to the City’s wastewater utility operation).
3.2 Integration. This Agreement constitutes the complete and final
agreement of the parties with respect to the subject matters referred to in the
Agreement.
3.3 Modification. Any modifications of the Agreement must be in writing and
signed by all parties. No oral modifications shall be effective to vary or alter the terms
of this Agreement.
Attachment 1, Page 4 of 8
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3.4 Severability. If any provision or any part of any provision of the Agreement
shall, for any reason, be held invalid, unenforceable, or contrary to public policy or law,
the remainder of the Agreement shall not be affected thereby, and shall continue to be
valid and enforceable.
3.5 Counterparts. This Agreement may be executed in counterparts,
including true and accurate copies of the original, all of which, when taken together,
shall be deemed on original agreement. Any executed copy shall not be binding upon
any Party until all Parties have duly executed a copy of this Agreement.
3.6 Attorneys’ Fees. If either Party commences any proceeding or legal
action to enforce or interpret any term, covenant or condition of this Agreement, the
prevailing party in such proceeding or action shall be entitled to recover from the non-
prevailing party its reasonable attorneys’ fees and legal expenses.
3.7 Waiver of Terms. The waiver by either Party of a breach by the other of
any provision of this Agreement shall not constitute a continuing waiver or a waiver of
any subsequent breach of either the same or a different provision of this Agreement.
No provisions of this Agreement may be waived unless in writing and signed by all
parties to this Agreement. Waiver of any one provision herein shall not be deemed to
be a waiver of any other provision herein.
3.8 Effective Date. This Agreement shall be deemed effective as of the date
when the last party to the Agreement signs the Agreement.
[Signatures on Following Page]
Attachment 1, Page 5 of 8
The parties have executed this Agreement at San Juan Capistrano, California, on
the day and year first above written.
CITY OF SAN JUAN CAPISTRANO ,
A Municipal Corporation
By: __________ _
Benjamin Siegel, City Manager
ATTEST:
MARIA MORRIS
C ity Clerk
By: __________ _
Date : ---------
APPROVED AS TO FORM:
JEFFREYS. BALLINGER
City Attorney
By :_9_~ __
3_~_-__
Date: September 20, 2021
Attachments:
Exh ibit A -Sewer Improvement Obligations
Exhibit B -Eligible Costs
DEVELOPER
River Street SJC, LLC
By: a~
Dan Almquist, Manager
APPROVED AS TO FORM:
DEVELOPER ATTORNEY
6
Attachment 1, Page 6 of 8
A-1
EXHIBIT A
SEWER IMPROVEMENT OBLIGATIONS
Line Segment A-B
Line Segment B-C Line Segment C-D
Line Segment D-E
Total Los Rios Sewer Line = 236’
Line Segments A-B + B-C = 71’ or 30%
Line Segments C-D + D-E = 165’ or 70%
Developer obligation:
Line Segments A-B and B-C
Sewer Manholes #4 and 5
City Obligation:
Line Segments C-D and D-E
Sewer Manholes #2 and 3 Attachment 1, Page 7 of 8
B-1
EXHIBIT B
ELIGIBLE COSTS
UD20-0009 Los Rios Sewer Improvement - 12" Upsizing
City City
Item Description Unit Qty. Unit $ Amount Share Amount
Design, Plan Check, and Permitting
Engineering Design L.S. 1 $ 7,200 70% $ 5,040
City Plan Check Fees Exh. I $ 16,116 70% $ 11,281
City Inspection Fees Exh. I $ 17,165 70% $ 12,016
Shoring Plans L.S. 1 $ 2,000 70% $ 1,400
OCTA/Metrolink Permitting L.S. 1 $ 6,500 70% $ 4,550
Traffic Control Plans L.S. 1 $ 4,400 70% $ 3,080
City Encroachment Permit Fee L.S. 1 $ 794 70% $ 556
As-built Plans L.S. 1 $ 2,500 70% $ 1,750
Total $ 56,675 70% $ 39,672
Construction Costs
Sewer Manhole Ea. 4 $ 12,500 $ 50,000 25% $ 12,500
8" PVC Sewer Main L.F. 83 $ 291 $ 24,120 0% $ -
Trench, Backfill & Resurface S.F. 1380 $ 118 $ 162,840 70% $ 113,988
12" Sewer Main L.F. 165 $ 259 $ 2,700 100% $ 42,700
Connect to Existing Manhole Ea. 1 $ 6,500 $ 6,500 100% $ 6,500
Repair and Replace Existing Driveway L.S. 1 $ 12,915 $ 12,915 0% $ -
Remove Existing Sewer L.S. 1 $ 3,000 $ 3,000 100% $ 3,000
Shoring/Excavation L.S. 1 $ 62,415 $ 62,415 100% $ 62,415
Boring L.S. 1 $ 75,306 $ 75,306 100% $ 75,306
Traffic Control L.S. 42 $ 357 $ 15,000 70% $ 10,500
Sub Total $ 454,796 $ 326,909
Contingency 10% $ 45,480 70% $ 32,691
Total $ 500,276 $ 359,600
Additional Construction Costs
RxR Flagmen L.S. /Day 15 $ 1,750 $ 26,250 100% $ 26,250
RxR Signal Cable mark-out L.S. 1 $ 500 $ 500 100% $ 500
SCRRA Inspections L.S./Day 1 $ 1,500 $ 1,500 100% $ 1,500
RWP Safety Training Class L.S. 2 $ 1,500 $ 3,000 100% $ 3,000
SCRRA Performance Bond $180K L.S. 1 $ 3,600 $ 3,600 100% $ 3,600
City Performance Bond $193K L.S. 1 $ 3,870 $ 3,870 0% $ -
Cultural Monitoring Hrly 56 $ 75 $ 4,200 70% $ 2,940
Total $ 42,920 $ 37,790
Project Administration L.S. 1 10% $ 59,987 $ 43,706
Grand Totals $ 659,857 $ 480,769
Attachment 1, Page 8 of 8