TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, DIRECTOR OF PUBLIC WORKS
SUBJECT
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Approval of Settlement Agreement with K. Hovnanian for Required Accessibility and Public Works Improvements.
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RECOMMENDATION
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It is recommended that the City Council consider and approve the settlement agreement between the City of Chino and K. Hovnanian for required improvements in the City of Chino per the Americans with Disabilities Act, California Law, the Chino Municipal Code and applicable Subdivision Improvement Agreement.
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FISCAL IMPACT
The payment by K. Hovnanian to the City totaling $33,597.50 covers the attorneys’ fees and costs awarded to the City by the Court for defending the complaint filed by K. Hovnanian challenging the City’s requirements for K. Hovnanian to perform improvements to those public facilities that are the subject of the settlement agreement.
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:
• Positive City Image
• Responsible Long-Range Planning
• Effective Technology
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BACKGROUND
The City Attorneys’ office and City staff have been engaged in settlement negotiations with K. Hovnanian’s Sonata at the Reserve, LLC (“Developer”) in connection with Tract Map No. 18778 in the City of Chino that have accessible elements under the Americans with Disabilities Act and California law as well as public works improvements required per the Chino Municipal Code. Tract Map No. 18778 is located south of Bickmore Avenue and north of the Southern California Edison easement, between Rincon Meadows Avenue and Mill Creek Avenue as shown in Exhibit A. The disputes focus on prior City approvals for construction of the above Tract and per the October 29, 2014, Subdivision Improvement Agreement between the City and Developer.
Following extensive negotiations, the parties have reached conceptual agreement on the terms of the settlement of the dispute that was the subject of a complaint filed by Developer against City in the San Bernardino Superior Court, Case No. CIVSB2403234 on January 18, 2024, disputing whether the additional City-requested improvements were required or not appropriately completed and alleged that the City’s requirements constituted a breach of contract. The City successfully defended that Complaint and was awarded $33,597.50 by the Court for the City’s attorneys’ fees and costs in defending the Complaint.
The proposed settlement agreement (Exhibit B) tracks the arrangement of the prior settlement agreements the City entered into in 2022 with KB Homes, Lennar Homes of CA, Lewis Management Company, Richmond American Homes, and Woodside Homes. The approval of the settlement agreement paves the way for the Council to consider the acceptance of various public improvements that have remained unaccepted and the release of bonds in place for those improvements.
ISSUES/ANALYSIS
The prior settlement agreements covered improvements for tracts categorized into Categories A, B, and C, based on the time of the plan approval/approval of encroachment permit as follows:
• CATEGORY A: December 31, 2016 or earlier
• CATEGORY B: January 1, 2017 through December 31, 2019
• CATEGORY C: January 1, 2020 and later
• CATEGORY D: Previously approved projects with corrections already made
The disputes focused on the construction of accessible curb ramps and sidewalks in the projects.
For improvements in Category A: The City accepts all improvements without further work or action by the participating developer, except administrative closeouts. Once all administrative paperwork has been completely submitted, City Staff has 45 days to verify all submittals. Thereafter, the City completes the bond exoneration/release process. The developers are required to take out the required warranty security. At the end of the warranty period, the City releases the warranty security within 10 days upon notice received from each of the developers. After release of the warranty security, no further action will be taken. Upon acceptance, the City assumes responsibility for any claims made regarding all improvements which, by this point, range in age from 6 to 17 years in the field, post-construction and will make the improvement as part of a future maintenance project.
For improvements in Category B: Same as Category A, except the developers of the prior agreements are to pay an “in lieu” fee to allow the City to make corrections or other remedial work that might be necessary to bring accessible elements into compliance. This was chosen due to the knowledge, skill, and facility with accessibility requirements developed over the past 5 years, and the desire of the developers to be “off the projects.” The payments received from those developers are not restricted, and the City retains the discretion on how to program the monies in terms of remediation priorities. Payments under this category are made within 30 days of the City submitting an invoice to the respective developer, using a negotiated amount of $7,000 per corner and 8% of the project area at $7/square foot for sidewalks.
For improvements in Category C: The developers are to construct accessible improvements based on the City’s current accessibility policy and other standards, in effect at the time of the plan approvals. The developers will follow the regular construction process for approvals, submittals, punchlists, acceptance by the Council at an appropriate future date, and standard warranty security requirements.
For improvements in Category D: The developers have constructed all accessible improvements to City standards and are in the final stages of project close out for acceptance by the Council at a future date.
Having been constructed before 2016, the K. Hovnanian improvements fall under Category A above. Approval of the settlement agreement will finally resolve longstanding disputes regarding the scope and extent of accessibility and public works improvements necessary to allow the City Council to accept the improvements as complete. K. Hovnanian will follow the regular construction process for approvals and submittals. Thereafter, Staff will return to Council at an appropriate future date to consider the acceptance of the completed improvements, which will include completion of the improvements required per Exhibit C - Land Development Punchlist of the settlement agreement.
Beyond the required completion of the improvements required per Exhibit C of the settlement agreement, the parties will waive any future claims, damages or any rights to reimbursement of any attorneys’ fees as a result of the disputes.
Attachments:
Exhibit A - Vicinity Map
Exhibit B - Settlement Agreement