TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
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Water Source, Storage and Distribution Development Impact Fee (“Water DIF”) Credit Reconciliation Through May 31, 2025, for Various Preserve Development Projects.
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RECOMMENDATION
Approve the Water Source, Storage and Distribution Development Impact Fee (“Water DIF”) Credit Reconciliation through May 31, 2025, for various Preserve development projects in the amount of $29,712,190.54 and authorize the City Manager to execute all the necessary documents on behalf of the City.
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FISCAL IMPACT
There is no direct fiscal impact on the City.
Staff will continue to conduct annual reconciliations of Water DIF credits and reimbursements and will return to the City Council periodically with updated reconciliations until all outstanding obligations and balances under the applicable agreements have been fully resolved.
Public improvements financed through Community Facilities District No. 2003-3 are not eligible for cash reimbursement under the City’s Development Impact Fee Program. Such improvements may only be recognized as Water DIF credits to the extent permitted under the applicable agreements and consistent with the City’s Water DIF Program requirements.
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
• Public Service Excellence through Internal and External Partnership
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BACKGROUND
Before the City Council for consideration is a Water Source, Storage and Distribution Development Impact Fee (“Water DIF”) Credit and Reimbursement Reconciliation associated with various Preserve development projects and related backbone public water infrastructure improvements constructed by the City’s master developer, Lewis Companies (“Lewis”). The reconciliation provides a comprehensive accounting of Water DIF credits issued, credits utilized, reimbursements processed, and remaining balances through May 31, 2025.
Over the years, the City and Lewis entered into multiple Water DIF agreements establishing the framework for the issuance of Water DIF credits and reimbursements for eligible backbone public water infrastructure improvements necessary to support growth within The Preserve Specific Plan area. Eligible improvements generally include water treatment facilities, supply wells, potable water distribution facilities, recycled water infrastructure, and related backbone transmission improvements.
The reconciliation includes eligible water infrastructure improvements constructed in connection with Preserve developments between 2004 and 2019, together with several project-specific Water DIF agreements associated with subsequent Preserve development phases and related infrastructure improvements, including, but not limited to, the following:
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Contract No. |
Project Description |
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Contract No. 2024-236 |
Projects (2004-2019) |
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Contract No. 2022-029 |
Pine Avenue (Stages 1-4) |
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Contract No. 2022-163 |
Town Center (Tract 16420-3) |
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Contract No. 2023-249 |
Block 9 Independence (Tract 16420-4) |
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Contract No. 2024-277 |
Block 3A (Tract 16420-4) |
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Contract No. 2026-209 |
Block 11 (Tract 16420) |
Pursuant to the applicable agreements, the City and Lewis completed a reconciliation of all Water DIF credits issued, credits utilized, reimbursements processed, and remaining balances through May 31, 2025. The reconciliation determined that a total of $29,712,190.54 in Water DIF construction credits has been issued under the applicable agreements, of which $29,331,909.27 has been utilized, leaving a remaining Water DIF credit balance of $380,281.27.
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Water DIF Credit Summary |
Credit Amount |
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Contract No. 2024-236 |
$28,753,683.02 |
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Contract No. 2022-163 |
$958,507.52 |
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Contracts 2022-029, 2023-249, 2024-277, 2026-209 |
$0.00 |
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Total Water DIF Construction Credits Issued |
$29,712,190.54 |
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Less: Water DIF Credits Utilized Through May 31, 2025 |
($29,331,909.27) |
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Remaining Water DIF Credit Balance |
$380,281.27 |
ISSUES/ANALYSIS
Consistent with the applicable agreements and the City’s ongoing administration of the Water DIF Program, staff completed a comprehensive reconciliation of all Water DIF credits issued, credits utilized, reimbursements processed, and remaining balances associated with eligible backbone public water infrastructure improvements constructed within The Preserve Specific Plan area through May 31, 2025. The reconciliation was performed to verify the accuracy of existing Water DIF records, confirm remaining obligations and balances under the various agreements, and establish an updated baseline for future administration of the City’s Water DIF Program and upcoming DIF Nexus Study Update.
The reconciliation further identifies approximately $5,713,543 in additional estimated eligible Water DIF improvements associated with the remaining project-specific agreements. These improvements have not yet been fully completed, accepted, or submitted to the City for final cost verification and reconciliation, with the exception of $958,507.52 previously submitted and approved under Contract No. 2022-163 associated with the Town Center project, which is included within the reconciled totals above.
Accordingly, no additional Water DIF credits or reimbursements beyond the previously approved amounts have been issued at this time for the remaining project-specific agreements. Any future Water DIF credits and/or reimbursements associated with these improvements will remain subject to completion of the improvements, City acceptance, verification of eligible costs, and compliance with the applicable agreements and Water DIF Program requirements.
Approval of this item will finalize the City’s Water DIF Credit and Reimbursement Reconciliation through May 31, 2025, bring the related Water DIF records current, improve the accuracy and defensibility of the City’s DIF records, and establish a clean baseline for future Water DIF administration as staff continues implementation of the upcoming Development Impact Fee Nexus Study Update.
Staff will continue conducting annual reconciliations of Water DIF credits and reimbursements and anticipate returning periodically with updated reconciliation items to ensure all related agreements, balances, reimbursements, and obligations remain current and accurately reflected within the City’s Water DIF program records.
Attachment: Exhibit A - Water DIF Credit Reconciliation