TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
title
Amendment to the Construction Reimbursement Agreement for the Ontario Ranch Business Park Project (referred to as the REDA Project) - Merrill Avenue Widening, Interconnect, and Euclid Avenue Median Improvements Project R2501.
end
RECOMMENDATION
recommendation
1) Approve a budget amendment, as shown in the Fiscal Impact section of this report, reallocating and updating project funding sources for Project R2501 (Merrill Avenue Widening, Interconnect, and Euclid Avenue Median Improvements) to reflect approved change order work and updated cost allocations among appropriate funding sources, and increase the total project budget by $1,983,767, for a revised total project budget not to exceed $17,692,868; 2) appropriate $2,322,542 to the Transportation Fund 320 with a back fill from the Citywide Circulation Development Impact Fee Fund 220 to support the revised project budget and reduce the Preserve Fund 260 budget by ($338,775); 3) approve an amendment to the Construction Reimbursement Agreement between the City of Chino and Euclid Land Venture, LLC, a Delaware limited liability company, increasing the reimbursement amount by $1,983,767 for a total not-to-exceed amount of $17,692,868; and 4) authorize the City Manager to execute all the necessary documents on behalf of the City.
body
FISCAL IMPACT
The budget adjustment includes an additional appropriation of $2,322,542 from the Citywide Circulation DIF Fund (220) to address increased costs associated with Euclid Avenue change orders and additive work with a budget reduction of ($338,775) from the Preserve DIF Fund 260. The Merrill Avenue portion of the project is anticipated to close with a surplus of $338,775, which will be returned to the Preserve Circulation DIF fund balance as summarized in the table below.
|
Funding Source |
Original Budget |
Budget Appropriation-Amendment |
Revised Project Budget |
|
Scannell Deposit Fund 320-35335 |
$4,764,984 |
$0.00 |
$4,764,984 |
|
Preserve DIF (Fund 260) |
$5,613,104 |
($338,775) |
$5,274,329 |
|
Citywide DIF (Fund 220) |
$2,021,986 |
$2,322,542 |
$4,344,528 |
|
Euclid Deposits Fund 220-24270 |
$3,309,027 |
$0.00 |
$3,309,027 |
|
Total Budget |
$15,709,101 |
$1,983,767 |
$17,692,868 |
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
|
Revenue: Click or tap here to enter text. |
Expenditure: 3207100-40010-R2501/2601000-R2501/2201000-r2501 |
|
Transfer In: 3201000-50000 |
Transfer Out: 2201000-40001 |
BACKGROUND
On October 27, 2020, the City of Ontario Planning Commission approved Parcel Map No. 20016. The subdivision includes seven numbered lots and one lettered lot totaling approximately 80.65 acres, proposed by Euclid Land Venture, LLC (“Developer”). The project consists of an industrial and business park featuring seven warehouse buildings ranging from 43,400 to 1,099,000 square feet (sf), totaling up to 1,676,000 sf of warehouse and office uses (“Project”). The Project area is bounded by Eucalyptus Avenue to the north, Sultana Avenue to the east, Merrill Avenue to the south, and Euclid Avenue to the west, within the Ontario Ranch Business Park Specific Plan area (Exhibit A).
Under the conditions of project approval and the Development Agreement between the Developer and the City of Ontario, the Developer was required to design and construct public improvements along the north side of Merrill Avenue within the Ontario city limits. These improvements included full-width ultimate street improvements (curb, gutter, sidewalk, landscaping, and streetlights) as part of the Merrill Avenue widening.
The Developer was also conditioned to construct certain public improvements along the south side of Merrill Avenue within the City of Chino, adjacent to Chino Airport. These improvements included roadway pavement, signing and striping, curb and gutter, ADA ramps, and storm drain catch basins. The conditioned improvements did not include sidewalks, landscaping, or streetlights, as these elements were not part of Ontario’s negotiated conditions of approval. The estimated cost for these conditioned improvements is $7,015,250, inclusive of a 10% contingency and 25% soft costs.
On October 18, 2022, the Developer entered into a Public Improvement Agreement with the City of Chino, providing the required securities to guarantee completion of the conditioned improvements (Exhibit B).
Subsequently, the City and Developer mutually agreed to expand the Merrill Avenue scope to include additional improvements such as traffic signal interconnect, sidewalks, landscaping, and streetlights (beyond those required by the City of Ontario’s conditions of approval). The estimated cost for the additional improvements is $3,362,838, including 10% contingency and 25% soft costs.
The City received $5.0 million from the Scannell/FedEx project, earmarked for enhancements along the Chino Airport perimeter, primarily Merrill Avenue. A portion of these funds supported a comprehensive airport right-of-way survey, critical for implementing full-width improvements. The remaining Scannell developer deposit is allocated toward sidewalk, landscape, and streetlight improvements along the south side of Merrill Avenue.
As part of the project approval, the Developer was also required to design and construct improvements on Euclid Avenue between Merrill and Eucalyptus Avenues within the City of Chino. These improvements include median construction and traffic mitigation work.
Over the years, developments along the Euclid Avenue corridor north of Kimball Avenue have contributed in-lieu-of-construction fees for the median and widening improvements. The City intends to utilize these deposits to offset costs associated with the Euclid Avenue work, estimated at $5,331,013, including contingencies and soft costs. While the deposits do not fully cover the City’s share, the remaining costs are being offset through the Citywide Circulation DIF program, which will be updated to include the Euclid Avenue median north of Kimball Avenue so that it’s consistent with The Preserve DIF program, which already contains the Euclid median south of Kimball Avenue.
As a result, the total estimated cost for the Merrill Avenue and Euclid Avenue improvements is $15,709,100.
On June 10, 2024, staff presented an informational update to the Infrastructure Committee outlining the Merrill and Euclid Avenue improvements, right-of-way coordination with San Bernardino County, and the forthcoming construction reimbursement agreement. The Committee expressed no objections to the proposed approach.
On July 30, 2024, the City and Developer executed a Construction Reimbursement Agreement (Exhibit C), establishing the framework for reimbursing the Developer for eligible improvement costs. Per the Agreement, the City’s Preserve and Citywide Circulation DIF programs shall fund any costs not covered by developer deposits, consistent with Chapters 3.40 and 3.45 of the Chino Municipal Code.
Per the City’s DIF Ordinance, when a developer constructs a public facility identified in the Nexus Report, they are entitled to reimbursement for eligible construction costs through an executed reimbursement agreement with the City.
ISSUES/ANALYSIS
The Merrill Avenue and Euclid Avenue improvements are nearing completion. On September 30, 2025, staff provided an update to the Infrastructure and Streets Committee outlining project progress, current expenditures, and the anticipated budget adjustment needed to close out the construction phase.
Under the DIF Construction and Reimbursement Agreement with the Developer, the project’s not-to-exceed budget was established at $15.7 million, supported by four primary funding sources:
• Merrill Avenue Improvements: Scannell/FedEx Deposit and Preserve Circulation DIF
• Euclid Avenue Median Improvements: Citywide Circulation DIF and Euclid Avenue in-lieu-of-construction deposits
To date, the City has processed nine progress payments totaling approximately $15.4 million. Throughout construction, City staff and the developer worked closely together to review change orders, evaluate cost impacts, and track expenditures to ensure the project remained in compliance with the reimbursement agreement.
Following a detailed cost reconciliation, the total estimated actual cost for the Merrill Avenue and Euclid Avenue improvements is now projected at $17.69 million, an increase of approximately $1.98 million from the original budget, as detailed in the Fiscal Impact section of this report.
Several factors contributed to the overall cost increase:
• Reconstruction of an existing 24-inch City domestic water line along Bon View Avenue north of Merrill Avenue to resolve a utility conflict with a planned master storm drain improvement.
• Removal of an unforeseen concrete base layer within Euclid Avenue right-of-way that conflicted with the proposed project improvements.
• Expansion of the street pavement rehabilitation limits to include southbound No. 2 Lane on Euclid Avenue between Eucalyptus Avenue and Merrill Avenue.
• Installation of additional concrete pavement at the intersections of Euclid Avenue with both Eucalyptus Avenue and Merrill Avenue.
These increases were partially offset by savings in other areas, including reduced traffic signal interconnect work, unused contingency funds, and the developer’s ability to maintain 2022-unit pricing with All American Asphalt. This helped limit escalation despite rising material and labor costs throughout construction.
Completion of the Merrill Avenue and Euclid Avenue Improvement Project represents a major step forward in improving circulation and connectivity in the southern portion of the City. The project delivers full-width street improvements, upgraded utilities, landscaped parkways, and new safety enhancements along one of Chino’s most visible corridors.
As construction nears completion, staff may coordinate with the developer to reduce the performance and labor bonds to cover only the remaining work associated with the Chino Airport perimeter, including landscaping, sidewalk, streetlights, and other related frontage improvements along the south side of Merrill Avenue. Once this remaining work is completed, staff will return to the City Council for formal acceptance of the public improvements, at which time final retention will be released to the developer.
Staff and the developer have worked collaboratively from design through construction to manage costs, coordinate field changes, and minimize escalation. The outcome reflects a well-coordinated effort that strengthens the City’s transportation network, enhances the appearance of the Airport corridor, and supports Chino’s long-term infrastructure and economic development goals.
Attachments:
Exhibit A - Location Map, PM 20016
Exhibit B - Fully Executed Public Improvement Agreement
Exhibit C - Construction and Reimbursement Agreement
Exhibit D - Amendment No. 1 Construction and Reimbursement Agreement