TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
title
Amendment No. 2 to the Construction Reimbursement Agreement and Partial Acceptance of Improvements 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) Accept the completed portions of the public improvements associated with the Merrill Avenue widening and Euclid Avenue improvements; 2) approve a budget increase for Project R2501 - Merrill Avenue Widening, Interconnect, and Euclid Avenue Median Improvements for the remaining change order work and landscaping on Merrill Avenue, increasing the project budget by $984,250 for a revised total project budget not to exceed $18,677,118; 3) appropriate $868,150 to Transportation Fund 320 and approve an immediate budget transfer in the same amount from The Preserve Circulation Development Impact Fee Fund (Fund 260); 4) appropriate $116,100 from the Euclid Ave. Relinquishment Program; 5) approve an Amendment No. 2 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 $984,250 for a total not-to-exceed amount of $18,677,118; and 6) authorize the City Manager to execute all the necessary documents on behalf of the City.
body
FISCAL IMPACT
Increase the Project R2501 budget by $984,250, with corresponding budget transfers of $868,150 from The Preserve Circulation Development Impact Fee Fund 260 and an appropriation of $116,100 from the Euclid Ave Relinquishment Reserves Program. Sufficient funds are available in all the funds listed below for this purpose.
|
Funding Source |
Current Budget |
Appropriation-Amendment |
Revised Budget |
|
Scannell Deposit (Fund 320-35335) |
$ 4,764,984 |
$ - |
$ 4,764,984 |
|
Preserve DIF (Fund 260) |
$ 5,274,329 |
$868,150 |
$ 6,142,479 |
|
Citywide DIF (Fund 220) |
$ 4,344,528 |
$ - |
$ 4,344,528 |
|
Euclid Deposits (Fund 220-24270) |
$ 3,309,027 |
$ - |
$ 3,309,027 |
|
Euclid Ave Relinquishment Funds (Fund 1007135- Reserves) |
$ - |
$116,100 |
$ 116,100 |
|
Total Budget |
$17,692,868 |
$984,250 |
$18,677,118 |
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: Various Funds listed in chart |
|
Transfer In: Click or tap here to enter text. |
Transfer Out: |
BACKGROUND
In 2020, the City of Ontario Planning Commission approved Parcel Map No. 20016 for Euclid Land Venture, LLC (“Developer”). The approximately 80.65-acre industrial and business park includes seven warehouse buildings totaling up to 1.676 million square feet. The Project is generally bound by Eucalyptus Avenue, Sultana Avenue, Merrill Avenue, and Euclid Avenue within the Ontario Ranch Business Park Specific Plan area (Exhibit A).
As a condition of approval, the Developer was required to construct public improvements along Merrill Avenue and Euclid Avenue, including improvements located within the City of Chino. On October 18, 2022, the Developer entered into a Public Improvement Agreement with the City and provided the required securities for completion of the improvements (Exhibit B).
Merrill Avenue Improvements
Along Merrill Avenue, the Developer was conditioned by the City of Ontario to construct roadway improvements adjacent to Chino Airport, including street pavement, traffic signals, signing and striping, curb and gutter, and storm drain facilities. The City and Developer subsequently agreed to expand the scope to provide a more complete ultimate improvement, including sidewalks, parkway landscaping, streetlights, and traffic signal interconnect improvements. The expanded scope required additional funding beyond the improvements originally required as a condition of the development.
Funding for the expanded scope included a $5.0 million contribution received from the Scannell/FedEx project for improvements specifically along the Chino Airport perimeter. A portion of the contribution funded an airport right-of-way survey, with the remaining funds allocated toward eligible Merrill Avenue improvements. Costs not covered by the developer contribution are eligible for funding through the Preserve Circulation Development Impact Fee (DIF) Program.
Euclid Avenue Improvements
The Project also includes construction of the raised median, traffic signal modifications, and other associated public improvements along Euclid Avenue between Merrill Avenue and Eucalyptus Avenue. Development along the Euclid Avenue corridor has historically contributed in-lieu-of-construction deposits toward the raised median improvements. These available deposits are being applied to the Project, with remaining eligible costs funded through the Citywide Circulation DIF Program, consistent with the Preserve DIF Program, which includes median improvements south of Kimball Avenue.
Reimbursement Agreement
On June 10, 2024, staff presented the proposed Merrill Avenue and Euclid Avenue improvements and funding approach to the Infrastructure and Streets Committee. The Committee expressed no objections to proceeding to the City Council. Subsequently, on July 30, 2024, the City and Developer executed a Construction Reimbursement Agreement establishing a total project budget of approximately $15.7 million and the framework for reimbursement of eligible improvement costs (Exhibit C).
On September 30, 2025, staff provided the Infrastructure and Streets Committee with an update on construction progress, expenditures, and the anticipated budget adjustment. As construction progressed, several unforeseen field conditions, scope changes, and additional construction costs were identified, resulting in an increase to the estimated project cost from approximately $15.71 million to $17.69 million. These increases were partially offset by project savings, unused contingency, and the Developer maintaining 2022-unit pricing with All American Asphalt.
On December 2, 2025, the City Council approved Amendment No. 1 in the amount of $1,983,767 to the Construction Reimbursement Agreement, increasing the total not-to-exceed reimbursement amount to $17,692,868 to address the revised project costs and funding requirements (Exhibit D).
|
Agreement |
Not-to-Exceed Amount |
|
Original Agreement |
$15,709,100 |
|
Amendment No. 1 |
$ 1,983,767 |
$17,692,867
ISSUES/ANALYSIS
In July 2026, staff provided the Infrastructure and Streets Committee with an update on the status of the Merrill Avenue and Euclid Avenue improvements, including construction progress, current expenditures, and the anticipated budget adjustment needed to complete the project. The installation of parkway landscaping on Merrill Avenue was also discussed, and the Committee suggested that staff explore whether the County of San Bernardino (County) could participate in the cost of installing these improvements since they will front Chino Airport. Following the Committee’s suggestion, staff reached out to the County to discuss potential cost-sharing opportunities. Although the County has not provided a definitive commitment to reimburse the City for any costs, staff will continue to coordinate with the County to determine whether reimbursement or other cost-sharing may be available in the future.
Construction of the Merrill Avenue and Euclid Avenue improvements is substantially complete. The City of Ontario accepted the improvements constructed within its jurisdiction on April 13, 2026, with only limited improvements remaining. Within the City of Chino, the remaining work consists primarily of various approved change order work and the completion of parkway landscaping, sidewalk, and related improvements on Merrill Avenue.
As construction progressed, several additional eligible work items were identified that were not included in the original project scope. These items resulted from unforeseen field conditions, design and scope refinements, and additional improvements requested or supported by City staff following the relinquishment of Euclid Avenue. A significant portion of the additional funding is needed to cover the cost of installing the parkway landscaping along Merrill Avenue. Although the project budget includes contingency funds and savings from work that was ultimately not performed, those funds are insufficient to cover all remaining eligible costs. Accordingly, staff is requesting Amendment No. 2 to the Construction Reimbursement Agreement in the amount of $984,250 (Exhibit E), which will provide the additional funding necessary to reimburse the Developer for the remaining eligible improvements and associated costs required to complete the project.
Staff is also recommending acceptance of the completed improvements within the City’s right-of-way up to the curb & gutter, as shown in Exhibit F. The improvements recommended for acceptance as part of this action have been constructed in accordance with the City’s standards and specifications, including applicable accessibility requirements, and have been completed to the satisfaction of the Public Works Inspector. The improvements that are not included in this acceptance and remain under construction will be presented for acceptance at a later date upon completion.
On July 15, 2026, staff conducted a final walkthrough of the improvements included in this acceptance, and all punch list items identified for those improvements were subsequently completed. Because the improvements were substantially complete and the period between the final walkthrough and the anticipated City Council acceptance is relatively short, staff determined that establishing July 15, 2026, as the commencement of the warranty period presented minimal risk to the City. This approach also allowed the warranty period to begin while the City Council was dark during August rather than delaying its commencement until the next available City Council meeting. Accordingly, July 15, 2026, was established by staff as the start of the one-year warranty period. Security for the one-year warranty period has been provided to the City, and under the warranty bond obligation, the Developer remains responsible for correcting any defects identified during the warranty period.
Upon acceptance, the completed improvements will become the sole and exclusive property of the City, and the City will assume responsibility for their operation and maintenance. The anticipated maintenance responsibilities for the accepted improvements are summarized below:
Maintenance Obligations:
Public Street Sweeping: By the City
Storm Drain Catch Basins: By the City
Traffic Signals: City of Ontario
Euclid Median Landscape: City of Ontario
Accessibility
The improvements recommended for acceptance are limited to those within the public right-of-way up to the curb & gutter, as shown in Exhibit F. It does not include the remaining sidewalk, parkway landscaping, streetlight, traffic signal interconnect, and curb ramp improvements that are still under construction. These improvements will be presented to the City Council for acceptance upon completion.
Attachments:
Exhibit A - Location Map, PM 20016
Exhibit B - Fully Executed Public Improvement Agreement
Exhibit C - Fully Executed Construction and Reimbursement Agreement
Exhibit D - Fully Executed Amendment No. 1 Construction and Reimbursement Agreement
Exhibit E - Amendment No. 2 Construction and Reimbursement
Exhibit F - Public Improvements Atlas