TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
title
Construction credit/reimbursement agreement with LS College Park, LLC for the construction of public improvements associated with the College Park Development.
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RECOMMENDATION
1) Fund Correction - Authorize a fund balance (cash) transfer of $2,805,564.01 at June 30, 2025 from the Water Fund 520 to reimburse $694,297.90 to the Citywide Water Source, Storage, and Distribution DIF (Fund 253) and $2,111,266.11 to the Preserve Water Source, Storage, and Distribution DIF (Fund 261) for prior period expenses related to Project No. WA19C – Eastside Water Treatment Facility (EWTF) Phase 3; 2) Reimbursement Agreement- Appropriate $543,602 from the Storm Drain Fund 540 with a corresponding budget transfer in/out from the Citywide Storm Drainage Collection System Facilities Development Impact Fee (Fund 255) for FY 2025-26; and 3) Appropriate $200,000 from the Water Fund 520 Fund with a corresponding budget transfer in/out from the Citywide Water Source, Storage and Distribution Development Impact Fee Fund (Fund 253) for FY 2025-26; 4) approve a Construction Credit/Reimbursement Agreement with LS College Park, LLC, a Delaware limited liability company in an amount not to exceed $8,822,740 for the construction of master-planned public facilities required as a condition of approval for the College Park Development project; and 5) authorize the City Manager to execute all the necessary documents on behalf of the City.
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FISCAL IMPACT
The proposed fund correction will address the current deficit in the Citywide Water Development Impact Fee Fund (Fund 253), thereby enabling the City to issue a progress payment to the developer for completed, DIF-eligible improvements related to water infrastructure. To implement these corrections and appropriations, the following actions are required:
1. Fund Correction Summary – Reallocation of Ineligible EWTF Expenditures
A total of $2,805,564.01 in ineligible prior-year expenditures previously charged to DIF funds for Project No. WA19C – EWTF Phase 3 will be corrected and charged to the Water Fund (Fund 520), as detailed below:
|
Expended From |
Amount |
Reallocated To |
|
Fund 253 - Citywide Water Source/Storage/Distribution DIF |
$694,297.90 |
520 (Water Fund) |
|
Fund 261 - Preserve Water Source/Storage/Distribution DIF |
$2,111,266.11 |
520 (Water Fund) |
|
Total |
$2,805,564.01 |
|
|
|
|
|
2. Additional Appropriations and FY 2025-26 Year-End Transfers
To support reimbursement for eligible infrastructure improvements, the following appropriations and corresponding year-end transfers are recommended:
|
Appropriation From |
Amount |
FY 2025-26 Year-End Transfer From |
|
540 – Storm Drain Fund |
$543,602 |
255 Fund – Citywide Storm Drainage Collection Facilities DIF |
|
520 – Water Fund |
$200,000 |
253 Fund – Citywide Water Source/Storage/Distribution DIF |
|
Total |
$743,602 |
|
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
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Revenue: Click or tap here to enter text.
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Expenditure: Various Accounts |
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Transfer In: Click or tap here to enter text. |
Transfer Out: Click or tap here to enter text. |
BACKGROUND
In 2004, the City approved the multi-phase College Park development, a master-planned community encompassing residential neighborhoods, public parks, school sites, and a mixed-use commercial component, all consistent with the land use designations and development standards set forth in the adopted College Park Specific Plan.
As part of the final phase of the College Park project, the developer, LS College Park, LLC was conditioned by the City to construct several off-site public improvements including the installation of master-planned storm drain facilities, potable and recycled water mains, construction of Mountain View Well No. 19 and its associated reservoir to enhance the City’s water production and storage capacity.
The public improvements constructed by the developer are identified as master-planned facilities within the City’s adopted Development Impact Fee (DIF) program. Pursuant to the City’s DIF Ordinance, if a developer constructs a public facility listed in the DIF Nexus and Calculation Report as a condition of approval, the developer is eligible to receive reimbursement and/or credit against DIF obligations for that corresponding facility type. Accordingly, execution of a construction credit and reimbursement agreement with the City is warranted.
On November 15, 2022, the City Council formally accepted the public improvements required as part of this project (excluding Mountain View Well and Reservoir, which were accepted on August 13, 2018). This action coincided with the Council’s approval of global settlement agreements resulting from coordinated negotiations between the City Attorney’s Office, City staff, and multiple developers, including LS College Park, LLC. The settlements resolved long-standing disputes related to compliance with accessibility standards under the Americans with Disabilities Act (ADA) and applicable California accessibility laws for various City-approved developments dating back to the mid-2000s. Presented together, the settlement agreements established a standardized framework for the acceptance of public improvements, release of securities, and closeout of development tracts in accordance with assigned resolution categories.
The tracts within College Park are classified as Category A under the settlement framework, which applies to developments with improvement plans approved on or before December 31, 2016. These projects require no additional corrective work beyond administrative closeout. The City Council’s acceptance of the public improvements on November 15, 2022, authorized the release of posted securities upon receipt of all required documentation, initiated the applicable warranty period, and transferred long-term 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 for the off-site public improvements as aforementioned. City staff conducted a comprehensive review and verified the actual construction costs for eligible master-planned facilities against the cost thresholds established in the City’s DIF Nexus and Calculation Report. The reconciliation of DIF credits and reimbursements is summarized in Exhibit B of the attached Construction Credit and Reimbursement Agreement.
A summary of the public improvements is as follows:
|
Project |
DIF Eligible Costs |
DIF Credits |
Reimbursement |
|
48” Storm Drain |
$2,691,571 |
($2,147,970) |
$543,602 |
|
Potable Water Mains |
$1,825,097 |
($1,415,403) |
$0.00¹ |
|
Recycled Water Mains |
$1,056,072 |
$0.00 |
$1,056,072 |
|
Mt. View Well / Reservoir |
$3,250,000 |
$0.00 |
$3,250,000 |
|
Total |
$8,822,740 |
($3,973,067) |
$4,849,674 |
¹ No DIF reimbursement due to the developer for potable water mains; the cost delta was offset through Community Facilities District 2005-1.
The City has sufficient funds available to fully reimburse the developer for the 48” storm drain improvements in the amount of $543,602.
However, the Citywide Water DIF Fund (Fund 253) is currently in a deficit due to prior-year expenditures incorrectly charged to the Eastside Water Treatment Facility (EWTF) Phase 3 Project - WA19C. Under the adopted DIF Nexus Study, only Phases 1 and 2 of the EWTF are eligible for DIF funding. Phase 3 was excluded due to both local funding constraints and prohibitions tied to external state and federal grants and loans.
To correct this issue, prior-year expenditures related to EWTF Phase 3 that were inappropriately charged to the Citywide Water DIF Fund (Fund 253) and the Preserve Water DIF Fund (Fund 261) must be reallocated. Staff recommend that the Water Fund (Fund 520) reimburse each impacted DIF fund to rectify the misallocation. This correction will restore a positive balance to the affected DIF fund and enable the City to issue a partial payment to the developer in the amount of $200,000 for completed, DIF-eligible water infrastructure improvements.
Staff presented the College Park Credit and Reimbursement Agreement to the Infrastructure/Streets Committee on June 24, 2025. The Committee expressed support for staff’s recommendation regarding the agreement and the proposed reimbursement to the developer. Additionally, earlier this year, staff informed both the Infrastructure/Streets Committee and the City Council that fund corrections related to Capital Improvement Projects (CIPs) would be addressed as part of an ongoing financial cleanup effort. These anticipated corrections were discussed during the annual budget process and are now being implemented. Specifically, the EWTF fund correction was initially brought forward as part of staff’s reconciliation of the Pine Avenue Connector project, reflecting broader efforts to properly allocate prior-year’s expenditures.
Therefore, it is staff’s recommendation to the City Council to authorize the proposed fund corrections and appropriations necessary to implement the Construction Credit/Reimbursement Agreement with LS College Park, LLC, in an amount not to exceed $4,849,674.
Attachments: Exhibit A - Construction Credit & Reimbursement Agreement