TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
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Construction Credit and Reimbursement Agreement with Chino Development Corporation, a California Corporation, and Chino Preserve Development Corporation, a California Corporation for the Construction of the Southern California Edison (“SCE”) Easement Trail Improvements in The Preserve.
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RECOMMENDATION
Approve a Construction Credit and Reimbursement Agreement with Chino Development Corporation, a California corporation and Chino Preserve Development Corporation, a California corporation for an amount not to exceed $3,278,269.60 for the construction of the SCE Easement Trail Improvements in The Preserve; 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. The developer will utilize development impact fee credit toward future building permits until the terms of the agreement are fulfilled.
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
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BACKGROUND
In 2004, the City of Chino (“City”) entered into a Development Agreement (“DA”) with three entities of the Lewis Management Corporation known as Chino Development Corporation, Chino Preserve Development Corporation, and Chino Holding Company, LLC (collectively referred to as “Lewis”). The DA was executed to help guide the orderly development of The Preserve, which was envisioned as a master-planned residential and commercial community. Additionally, the DA set the terms and conditions of development on property owned by Lewis and established the rights and obligations of the developer and the City during development.
The amended Preserve Development Agreement (DA), along with the conditions of approval for Tracts 16419, 16419-1, 16420, 16420-1, 16797, 17057, 17571, 17572, and 19994, obligated Lewis to install landscaping and trails within the Southern California Edison (“SCE”) easement on Lewis’s properties as a condition for developing The Preserve as shown on Exhibit A.
The improvements were initially installed per the approved plans in 2016. However, during the City's final inspection, it was determined that additional trail improvements were necessary to comply with the Americans with Disabilities Act (“ADA”) accessibility standards for a public trail system. These revisions included an 8-foot-wide decomposed granite trail section within an approximately 20-foot-wide compacted miscellaneous base section.
In November 2022, the City and the Developer reached an agreement on construction standards as part of a legal settlement addressing accessibility concerns. A copy of the settlement agreement is attached. The Developer subsequently completed the revised improvements in 2023, which were inspected and accepted by the City. Additionally, the Developer dedicated a public trail easement over the area, ensuring accessibility for public use.
The SCE Trail improvements are included in the Miscellaneous Residential Amenities Development Impact Fee (“DIF”) program for The Preserve. The City’s Municipal Code, Chapter 3.45, titled Development Impact Fees, provides that if, as a condition of approval of a development project, a developer constructs a public facility identified in the DIF Nexus and Calculation Report, for which a DIF is imposed, the Developer shall be eligible to receive reimbursement and/or fee credit toward the DIFs imposed on the development project for the same type of public facility so constructed and shall be entitled to credit for eligible costs of constructing the public facilities.
ISSUES/ANALYSIS
In July 2024, Lewis submitted documentation to the City to validate costs related to the SCE Trail improvements, necessitating a DIF Construction Credit / Reimbursement Agreement. The City reviewed the final accepted/approved "as-built" plans, specifications and supporting documentation and determined that $3,278,269.60 is eligible for DIF credit and/or reimbursement.
Upon the costs being validated by the City, staff reconciled the Miscellaneous Residential Amenities DIF credits issued to all Lewis developments through April 2024, totaling $8,433,065, which is summarized below. The credits issued were deducted from the validated costs above, bringing the DIF credit balance to $5,154,795.40.
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Total DIF Credits Issued through April 2024 |
$8,433,065.00 |
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Validated Costs SCE Trail |
$3,278,269.60 |
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Miscellaneous Residential Amenities DIF Credit Balance |
$5,154,795.40 |
The DIF credit balance will be allocated toward future improvements by Lewis, including additional enhancements to the SCE Trail along Pine Avenue, located behind the multi-family apartments on the Van Vliet property. Upon completion of these improvements, the actual costs will be reconciled, and the verified expenditures will be deducted from the DIF credit balance. Consequently, the agreement for the SCE Trail will be amended to incorporate the additional trail segment and associated costs. The construction of this additional segment is contingent upon Lewis completing Pine Avenue - Stage 3.
In the interim, Lewis will continue accruing DIF credits for future building permits, as the planned perimeter trail and paseo improvements throughout The Preserve are projected to require significant funding, potentially amounting to millions of dollars. Lewis previously entered into Construction Credit Reimbursement Agreements for Miscellaneous Residential Improvement projects completed after 2019. Additionally, under the terms of the Preserve Development Agreement (DA), Lewis qualifies for credits in recognition of their contributions to the development of public facilities.
Staff will maintain oversight of the construction progress-to-credit ratio to ensure the developer's accumulation of DIF fee credits remains in balance with project advancements.
Therefore, staff recommends that the City Council approve a construction credit/reimbursement agreement with Lewis for an amount not to exceed $3,278,269.60 for the SCE Trail improvements in The Preserve.
The improvements, located within the SCE easement, are maintained by the Preserve Master Maintenance Corporation (“PMMC”) under a Maintenance Agreement between the City, PMMC, and the Lewis.
Attachments: Exhibit A - SCE Easement Trail Improvements
Construction Credit/Reimbursement Agreement
Settlement Agreement