TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
title
Construction credit/reimbursement agreement with Lennar Homes of California, a California corporation for the construction of public improvements for Tract Map No. 18972 (University Park).
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RECOMMENDATION
recommendation
1) Appropriate and authorize the reimbursement of $302,591.16 from the Citywide Circulation (Streets, Signals & Bridges) Development Impact Fee Fund 220; 2) appropriate and authorize the reimbursement of $250,428.00 from the Citywide Water Source Storage and Distribution Development Impact Fee Fund 253; 3) approve a Construction Credit/Reimbursement Agreement with Lennar Homes of California, LLC, a California corporation, in an amount not to exceed $553,019.16 for the construction of master-planned public facilities required as a condition of approval for Tract Map No. 18972; and 4) authorize the City Manager to execute all the necessary documents on behalf of the City.
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FISCAL IMPACT
Approval of this agreement will result in a total appropriation of $553,019.16. This includes:
1. An appropriation of $302,591.16 from the Citywide Circulation (Streets, Signals & Bridges) Development Impact Fee Fund 220; and
2. An appropriation of $250,428.00 from the Citywide Water Source, Storage, and Distribution Development Impact Fee Fund 253.
Sufficient fund balances are available in Funds 220 and 253. There is no impact to the General Fund.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City's values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
* Financial Stability
* Responsible Long-Range Planning
Revenue:
Expenditure: 2207005-43640 & 2537005-43640
Transfer In:
Transfer Out:
BACKGROUND
Tract Map No. 18972 (University Park), developed by Lennar Homes of California, LLC, consists of 147 single-family detached condominium units on approximately 20.82 adjusted gross acres within the East Chino Specific Plan area. The project site is located on the north side of Eucalyptus Avenue, between Fern Avenue and Euclid Avenue, as depicted in Exhibit A of the Subdivision Improvement Agreement attached hereto. The project received Planning Commission approval on December 21, 2015.
Pursuant to the Engineering Conditions of Approval (COA), the developer was required to construct various public improvements, including but not limited to curb, gutter, sidewalk, streetlights, asphalt concrete pavement, landscaping, traffic signals, as well as sewer, water, recycled water, and drainage improvements. To ensure the timely completion of these improvements, the developer executed a Subdivision Improvement Agreement with the City and posted the required securities. The agreement was approved by the City Council on May 2, 2017.
Certain public improvements constructed as part of the project are master-planned facilities identified in the City's Development Impact Fee (DIF) program. Under the DIF Ordinance, if a developer constructs a public facility identified in the DIF Nexus and Calculation Report as a condition of project approval, the developer is eligible to receive reimbursement and/or a credit toward the DIFs imposed for that same type of facility. Accordingly, a construction credit and reimbursement agreement with the City is warranted.
The public improvements required as part of this project were accepted by the City Council on November 15, 2022. This action was taken in conjunction with the Council's approval of global settlement agreements resulting from negotiations between the City Attorney's Office, City staff, and various developers, including Lennar Homes of California. These agreements resolved disputes related to compliance with accessibility standards under the Americans with Disabilities Act and California law for various City-approved developments dating back to the mid-2000s. Presented concurrently to the City Council, the settlement agreements established a standardized framework for accepting public improvements, releasing securities, and closing out tracts based on designated categories.
Tract Map No. 18972 was included in Category A of the settlement framework, which applies to developments with improvement plans approved on or before December 31, 2016, and requires no additional corrective work beyond administrative closeout. Acceptance of the public improvements on November 15, 2022, authorized the release of posted securities upon receipt of all required documentation, initiated the warranty period, and transferred maintenance responsibilities to the City.
ISSUES/ANALYSIS
Following final acceptance of the public improvements, the developer submitted a complete cost package to the City, including approved as-built plans, specifications, and supporting documentation. City staff conducted a comprehensive review of the submitted materials and verified the actual construction costs for DIF-eligible, master-planned facilities against the cost thresholds established in the City's DIF Nexus and Calculation Report.
A full reconciliation of the developer's financial contributions, the corresponding DIF credits, and any applicable cash reimbursements is provided in Exhibit B of the proposed Construction Credit and Reimbursement Agreement and summarized in the table below.
Additionally, staff presented an informational item to the Infrastructure/Streets Committee at the June 24, 2025, meeting regarding the proposed Construction Credit and Reimbursement Agreement with Lennar Homes for Tract Map No. 18972.
During that meeting, the Committee raised questions regarding the traffic signal at Fern and Eucalyptus. Specifically, concerns were raised about Lennar's financial contribution of $553,500 to the City to fund construction of the signal through the City's Capital Improvement Program (CIP). This prompted uncertainty over whether the deposit fully covered the cost of the improvement and whether the developer should receive DIF credit, given they did not directly construct the improvement.
Staff returned to the Committee on July 29, 2025, with a follow-up report itemizing all DIF-eligible public improvements constructed or funded under Tract Map No. 18972 and provided a detailed reconciliation of credits and reimbursements as shown in the table below.
Projects
Nexus Study Costs
Developer Costs
DIF Credits Issued
Reimbursement (Cash)
Traffic Signal: Fern / Eucalyptus
$296,112
$553,500
($296,112)
$0.00
Traffic Signal: Euclid / Eucalyptus
$296,112
$212,484
($91,104)
$121,380
Improvements: Euclid / Edison
$1,075,604
$181,211
$0.00
$181,211
16" Water Line: Euclid
$2,408,000
$384,085
($133,657)
$250,428
Total
$553,019
Staff clarified that under the City's DIF program, eligibility for credit is based on demonstrated financial responsibility for eligible improvements, regardless of whether the developer self-performs the construction or contributes funds through the City's Capital Improvement Program. Accordingly, Lennar's $553,500 cash contribution toward the Fern and Eucalyptus traffic signal qualifies for credit issuance consistent with the Nexus Study allocation. It should be noted that the developer is only eligible to receive credit up to the Nexus Study cost estimate of $296,112, as the cash deposit amount was negotiated separately through a settlement agreement with the City and does not entitle the developer to credit beyond the established program thresholds.
Therefore, it is staff's recommendation to approve the Construction Credit and Reimbursement Agreement with Lennar Homes of California, LLC, in the amount of $553,019.16, and authorize the necessary appropriations to facilitate reimbursement in accordance with the terms outlined in the agreement and the City's DIF program.
?Attachments: Exhibit A - Fully Executed Subdivision Improvement Agreement
Exhibit B - Construction Credit & Reimbursement Agreement