TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
title
The Ontario Ranch Business Park Project (referred to as REDA) Merrill Avenue Widening, Interconnect, and Euclid Median Improvements.
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RECOMMENDATION
recommendation
1) Create Capital Improvement Project MS253 titled “Merrill Avenue Widening, Interconnect, and Euclid Avenue Median Improvements”; 2) appropriate $15,709,100 to the Transportation Fund 320; 3) schedule year-end transfers from the following: reserve fund balance for perimeter and circulation enhancements around Chino Airport, primarily along Merrill Avenue, funded by Scannell Properties (FedEx development) reserve account (320-35335), totaling $4,764,984; Future Improvements deposit account (220-24270) totaling $3,309,027 for the Euclid Median/Widening; Citywide Circulation (Streets, Signals and Bridges) Development Impact Fee Fund (220) totaling $2,021,986; and The Preserve Circulation (Streets, Signals and Bridges) Development Impact Fee Fund (260) totaling $5,613,104; 4) approve a construction reimbursement agreement not to exceed $15,709,100 between the City and the developer, Euclid Land Venture, LLC, a Delaware limited liability company, for the Merrill Avenue Widening, Interconnect, and Euclid Avenue Median Improvements; 5) approve the Right of Entry Agreement between the City and San Bernardino County to obtain access to certain portions of airport property necessary for constructing the Merrill Avenue public improvements; 6) approve the Memorandum of Understanding between the City and Euclid Land Venture, LLC, a Delaware limited liability company, to transfer the rights under the Right of Entry Agreement to the developer for the construction of the Merrill Avenue Public Improvements; and 8) authorize the City Manager to execute all necessary documents on behalf of the City.
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FISCAL IMPACT
Requires an appropriation to the Transportation Fund 320 in the amount of $15,709,100. This appropriation has no impact on the General Fund. Scannell Properties (FedEx project) deposited $5,000,000 with the City as stipulated in Section 2.13.6 of the Development Services Conditions of Approval for Master Site Approval PL16-0719. From this deposit, $4,764,984 remains and will be allocated to perimeter and circulation improvements around Chino Airport, focusing primarily on Merrill Avenue. Furthermore, developments along the Euclid Avenue corridor north of Merrill Avenue have contributed in-lieu-of-construction fees for the Euclid median and widening enhancements in the amount of $3,309,027. The City will use these deposits to help cover costs related to improving Euclid Avenue. While the developer's deposits largely fund improvements on Merrill and Euclid Avenues, a shortfall of $7,635,089 remains. There are sufficient funds in each of the funds and accounts listed below. This deficit will be supplemented by Development Impact Fees (“DIFs”), as summarized on the next page:
|
Year-End Backfill Accounts |
Amount |
|
Scannell Fed Ex Deposit-320-35335 |
$ 4,764,984 |
|
Euclid Avenue Developer Deposits-220-242770 |
$ 3,309,027 |
|
Citywide Circulation DIF- Fund 220 |
$ 2,021,986 |
|
The Preserve Circulation DIF-Fund 260 |
$ 5,613,104 |
|
Transportation Fund 320 Appropriation |
$ 15,709,100 |
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above furthers the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Positive City Image
• Financial Stability
• Responsible Long-Range Planning
• Public Service Excellence through Internal and External Partnerships
|
Revenue: Click or tap here to enter text. |
Expenditure: 3207100-40010-MS253 |
|
Transfer In: 3201000-50001 |
Transfer Out: 220-24270/2201000-40001/2601000-40001 |
BACKGROUND
On October 27, 2020, the City of Ontario Planning Commission approved Parcel Map No. 20016. This map consists of seven numbered lots and one lettered lot on approximately 80.653 acres of land, as presented by the Developer, Euclid Land Venture, LLC. The proposed project consists of an industrial / business park to include seven warehouse buildings ranging from 43,400 square feet (sf) to 1,099,000 sf, totaling a maximum development of 1,676,000 sf of warehouse and office uses (“Project”). The Project area is bounded by Eucalyptus Avenue on the north, Sultana Avenue on the east, Merrill Avenue on the south, and Euclid Avenue on the west located in The Ontario Ranch Business Park Specific Plan area (Exhibit A).
As a condition of project approval and under the terms outlined in the existing development agreement between the Developer and the City of Ontario, the Developer is obligated to design and construct certain public improvements along the perimeter of Merrill Avenue. These improvements include but are not limited to, full-width ultimate street improvements on the north side of Merrill Avenue within the Ontario City limits, including curb, gutter, sidewalk, landscaping, and streetlights, as part of the Merrill Avenue widening. The Developer must construct the ultimate improvements on Merrill Avenue to be eligible for reimbursement through Ontario’s Development Impact Fee (“DIF”) program.
Additionally, the Developer is required to design and construct improvements along the south side of Merrill Avenue within the Chino City limits, adjacent to Chino Airport. The conditioned improvements are limited to the roadway pavement, signing and striping, curb and gutter installations, ADA ramps, and storm drain catch basins. The conditioned improvements did not include sidewalks, landscaping, and streetlights, as these components were not negotiated between the City of Ontario and the Developer as part of the conditions of approval at that time. The estimated cost for the conditioned improvements is $7,015,250, based on the actual bid, which also includes 10% for project contingencies and 25% for soft costs.
On October 18, 2022, the Developer entered into a Public Improvement Agreement with the City of Chino, providing the necessary securities to ensure timely completion of the conditioned improvements, attached as Exhibit B.
Recently, the Developer and the City of Chino mutually agreed to extend the scope of improvements on Merrill Avenue to include additional improvements. The additional improvements include traffic signal interconnect, sidewalks, landscaping, and streetlights. This decision goes beyond what the City of Ontario required in its conditions of approval for the project. The estimated cost for the additional improvements is $3,362,838, which also includes 10% for project contingencies and 25% for soft costs. Concurrently, the Developer is finalizing engineering plans for these additional improvements while commencing construction on the initial Merrill Avenue improvements. This coordinated approach aims to prevent project delays, minimize road closures, adhere to the construction schedule, and reduce disruptions to local traffic and the community.
The City received $5.0 million from the Scannell/Fed-Ex project, earmarked for future enhancements along the Chino Airport perimeter primarily on Merrill Avenue. A portion of these funds were utilized by the City to conduct a comprehensive airport right-of-way survey, critical for implementing full-width improvements on Merrill Avenue. Pending ultimate approval from the Federal Aviation Administration (“FAA”), the City plans to acquire the necessary ultimate right-of-way for streets surrounding the airport.
The remaining developer deposit will be allocated towards the additional improvements on Merrill Avenue, specifically for sidewalk construction, landscaping enhancements, and streetlights.
Additionally, under the terms of the development agreement and project approval conditions, the Developer was obligated to design and construct public improvements on Euclid Avenue to mitigate traffic impacts resulting from the Project. This includes the Euclid Median between Merrill and Eucalyptus Avenues, within Chino's jurisdiction.
Over the years, developments along the Euclid Avenue corridor north of Merrill Avenue have contributed in-lieu-of-construction fees for the Euclid median and widening. The City intends to utilize these deposits to offset costs associated with the Euclid Avenue improvements, estimated at $5,331,013, which includes 10% for project contingencies and 25% for soft costs. While these deposits may not fully cover the City's share of the project costs, City staff plans to include this project in the next DIF Nexus Study update to address remaining funding needs.
As a result, the total estimated cost to the City for the Merrill Avenue and Euclid Avenue Improvements is $15,709,100. It is imperative for staff, the Developer, and San Bernardino County to collaborate on a comprehensive plan addressing the timing of construction, financing, and the necessary right-of-way dedications essential for completing these improvements.
On June 10, 2024, City staff delivered an informational presentation to the Infrastructure Committee regarding the improvements planned for Merrill Avenue and Euclid Avenue. The next steps outlined by staff involved collaborating with San Bernardino County to obtain the necessary right of way along Merrill Avenue adjacent to the airport and initiating negotiations for a construction reimbursement agreement with the developer. The Infrastructure Committee did not express any objections to staff’s proposed approach during the meeting.
ISSUES/ANALYSIS
The Developer, at its own expense, will provide all necessary equipment and materials to diligently and professionally execute and complete the public improvements as per the approved construction plans per applicable standards and regulations. To facilitate timely construction, the City and Developer intend to enter a construction reimbursement agreement, attached as Exhibit C. This agreement will establish the framework for reimbursing the Developer for eligible costs incurred during construction. It will also outline the methodology for determining reimbursement amounts and specify the timing and process for reimbursement requests throughout the construction phase.
Additionally, The Preserve and Citywide Circulation DIF programs will offset costs not covered by developer deposits for the construction of Merrill Avenue and the Euclid Median improvements, as established in Chapters 3.40 and 3.45 of the Chino Municipal Code. DIFs have been established by City to finance public facilities in furtherance of the goals and objectives of City’s general plan, various facility master plans, capital improvement plans, and the nexus report. The DIF Ordinance provides that if, as a condition of approval of a development project, a developer constructs a public facility identified in the nexus reports, the Developer shall be entitled to reimbursement for eligible costs of constructing the public facility. The DIF ordinance specifically requires that the Developer and City enter into a reimbursement agreement.
Upon completion of the public improvements, the City Engineer and staff will review the final accepted/approved "as-built" plans, specifications, and supporting documentation and will determine the actual costs.
As previously noted, the City has completed a comprehensive airport right-of-way survey for the purposes of acquiring the ultimate right-of-way along the Chino Airport perimeter, which is currently pending approval from the County and FAA. In response, the City engaged with the County to establish a Right of Entry Agreement. This agreement, attached as Exhibit D, grants construction access to the portion of the public improvements along Merrill that lie within the County's property prior to the City obtaining the necessary right-of-way from the FAA. The access area is specifically allocated for the construction of roadway pavement, signing and striping, curb and gutter installations, ADA ramps, storm drain catch basins, sidewalk, landscape, and the installation of dry utility conduit.
In addition, the Memorandum of Understanding, attached as Exhibit E, between the City and the Developer, transfers the City's rights and obligations under the Right of Entry Agreement necessary for completing construction on Merrill Avenue within the designated access area. These agreements are effective for a period of up to five years or until the City, at its discretion, formally records easements for the access area or pertinent portions required for the Developer's activities.
Lastly, to enhance support for the community and local businesses affected by the construction on Merrill Avenue, both the City and Developer are committed to expediting the completion of Public Improvements. The City approved plans for a full closure of Merrill Avenue from Euclid Avenue east to just west of Stearman Drive beginning July 25, 2024, through November 30, 2024, as indicated in Exhibit F. Detours will be carefully planned to minimize disruption to businesses at the airport and signage will be required of the contractor to inform motorists that airport businesses remain open during construction and guide them around the closure. The Developer assures proper notice to affected properties and pledges to take necessary steps to assist local businesses in the area. City staff has also engaged some of the airport businesses to inform them in advance of the closures and reviewed their concerns. City staff used these discussions to guide the developer on mitigating the closure impacts. Furthermore, the accelerated construction schedule will necessitate extended hours for night and weekend work. The City is prepared to allocate additional funds within the construction contract to facilitate this effort, recognizing the benefits to the community and acknowledging the financial challenges faced by nearby businesses.
Therefore, it is staff recommendation that the City Council approve the following: a construction reimbursement agreement between the City and Euclid Land Venture, LLC for a not to exceed amount of $15,709,100 for the Merrill Avenue Widening, Interconnect, and Euclid Avenue Median Improvements; the Right of Entry Agreement between the City and San Bernardino County to obtain access to certain portions of airport property necessary for constructing the Merrill Avenue public improvements.; and the Memorandum of Understanding between the City and Euclid Land Venture, LLC to transfer the rights under the Right of Entry Agreement to the developer for the construction of the Merrill Avenue public Improvements.
Attachments: Exhibit A - Location Map PM 20016
Exhibit B - Fully Executed Public Improvement Agreement
Exhibit C - Construction & Reimbursement Agreement
Exhibit D - Right of Entry Agreement
Exhibit E - Memorandum of Understanding
Exhibit F - Detour Plan