For City Council Meeting [August 22, 2023]
TO: Honorable Mayor and City Council
APPROVAL: Henry Garcia, Interim City Manager
FROM: Timothy Sullivan, Director of Maintenance and Facilities
Title
Request City Council to Approve the Reconciliation of Public Improvement Costs Associated with the Construction Fee Credit and Reimbursement Agreement Related to Century Communities of California, LLC., a Delaware Limited Liability Company.
(ACTION)
Body
BACKGROUND
Christopher Development Group, Inc., ("Developer”) submitted various planning and development applications (PPD 2018-0062 and EAR 2018-0066) to the City to develop 66 detached single-family dwelling units and 118 attached townhome dwelling units. The Project is located on 16 acres of land at 1096 W. Foothill Boulevard on the north side of Foothill Boulevard and west of Spruce Avenue ("Project”). A Project vicinity map is included as Attachment 1.
On November 7, 2018, the Transportation Commission reviewed the Traffic Study for the Project and set related conditions of approval. On March 13, 2019, the Development Review Committee ("DRC”) approved the Precise Plan of Design subject to Conditions of Approval which are included as Attachment 2. The Conditions of Approval for the Project require the Developer to construct specified off-site improvements in accordance with the Foothill Boulevard Specific Plan ("Off-Site Improvements”) including:
• Widening and reconstructing the existing roadway to the half-street width improvement standard (60 feet) along the Project’s frontage on the north side of the centerline of Foothill Boulevard; and,
• Construct a 16-foot wide raised landscaped median island along the Foothill Boulevard frontage.
The Developer agreed to construct the off-site improvements subject to a Construction Fee Credit and Reimbursement Agreement (“Agreement”) which was adopted by City Council on June 11, 2019, and is included in this report as Attachment 3. Section 3.33.100 of the Rialto Municipal Code ("Fee Credits”) states that:
...if as a condition of approval of a development project a Developer constructs a public facility identified in a Nexus Report for which a development impact fee is imposed, then the Developer shall be eligible to receive a fee credit toward the development impact fee imposed on the development project for the same type of public facility so constructed. The Developer shall not be entitled to reimbursement for any excess in the costs to construct the public facility over the amount of the Developer's obligation to pay the development impact fee for the type of public facility constructed unless a separate reimbursement agreement is approved by the City Council.
On June 20, 2020, an assignment and assumption agreement was made by the Developer and Century Communities of California.
Pursuant to the Agreement, the Project owed an estimated $522,042 in Regional Traffic Development Impact Fees (“RTDIF”). The estimated construction cost for the eligible RTDIF improvements was $850,734, as shown on Exhibit E of the Agreement. Under the Agreement, if the actual cost exceeded the Project’s estimated RTDIF obligation of $522,042, the Developer could request a full fee credit and reimbursement for the actual costs exceeding the Project’s RTDIF. Under the Agreement, the City‘s estimated reimbursement obligation from RTDIF was $328,692; however, the final reimbursement was to be based on actual eligible construction costs and actual fee credits.
ANALYSIS/DISCUSSION
The Foothill Boulevard Specific Plan requires the street median for traffic flow efficiencies and aesthetic enhancements, and the raised landscaped median along Foothill Boulevard qualifies as an eligible improvement and credit against Street Median Development Impact Fees in accordance with RMC 3.33.180. The City and Developer considered several options to construct the street median and agreed to construct the segment of the median between the Project’s Foothill Boulevard main entry and Spruce Avenue (Attachment 4), with a credit for the $7,677 Street Median Impact Fee, but otherwise no other credit or reimbursement from the City to the Developer.
The Project owed an estimated $7,677 in Street Median Development Impact Fees. Under the option selected by the developer, the estimated construction cost for the street median improvements was $342,777. The Developer agreed to receive a $7,677 credit but otherwise absorb the estimated $335,100 cost differential.
The table below summarizes the Off-Site Improvement costs, estimated fee credits, and potential reimbursements:
Section 5.3.4 of the Agreement specifies that the Developer shall have no right to receive the reimbursement ("Reimbursement”) unless and until all of the following are met: (i) the off-site Improvements are completed and accepted by the City, (ii) the City has sufficient funds in the City’s Regional Traffic Fee to pay the Reimbursement, and (iii) the City Council appropriates said funds to pay the Reimbursement in accordance with the priority schedule for City Council approved projects.
Required Public Improvements/ Regional Traffic Fee
Century Communities has provided the City with evidence of the actual costs of construction of the various public improvements and requested reconciliation of all credits and reimbursements in accordance with the Construction Fee Credit and Reimbursement Agreement.
The Engineering Services Department staff completed the review of the construction costs and invoices submitted by Century Communities for credit and reimbursement in accordance with the Construction Fee Credit and Reimbursement Agreement. The review determined that certain costs and invoices, for eligible improvements, are fair and reasonable given the scope of work.
Credit and Reimbursement
The total costs of the public improvements submitted for credit and reimbursement were $1,194,818.18. The City of Rialto Engineering Services Department deemed $432,243.33 of the total cost to be ineligible for credit or reimbursement, resulting in a fee credit and reimbursement for hard costs at $762,574.85 and $114,386.23 for soft costs. Therefore, the final credit is $529,719.00, and the reimbursement based on staff’s evaluation is $347,242.08 for a total of $876,961.08.
A Notice of Completion for the project will be filed with the County’s Recorder’s office for this project.
ENVIRONMENTAL IMPACT
On February 27, 2019, the Planning Commission adopted a Mitigated Negative Declaration (EAR 2018-0066) for the Project. This environmental review analyzed the construction of the on-site private and off-site public improvements. No further environmental review is warranted. Approval of the Construction Fee Credit and Reimbursement Agreement is an administrative or fiscal action by the legislative body that will not result in any additional direct or indirect physical change in the environment than what was already analyzed (Section 15378(b) of the California Environmental Quality Act (CEQA) Guidelines).
GENERAL PLAN CONSISTENCY
The City of Rialto has identified several goals and objectives within the City’s recently adopted General Plan through which the City looks to improve the community. The proposed action to acquire right-of-way is consistent with the following goals and objectives contained in the General Plan:
Goal 3-1: Strengthen and diversify the economic base and employment opportunities and maintain a positive business climate.
Goal 3-6: Require that all developed areas within Rialto are adequately served with essential public services and infrastructure.
Goal 3-7: Upgrade public infrastructure as an inducement to promote private investment.
LEGAL REVIEW
The City Attorney reviewed and supports this staff report.
FINANCIAL IMPACT
Operating Budget Impact
There are no immediate impacts to the operating budget. The additional roadway improvements will increase street maintenance expenditures in the future.
Capital Improvement Budget Impact
The Regional Traffic Fee Street improvements will be reimbursed from the Regional Traffic DIF Fund, Account No. 250-500-4312-3001 in the amount of $869,284.08 (the applicable street costs), and in Street Median DIF Fund, Account No. 255-500-4314-3001 in the amount of $7,677 (the applicable median costs) for the reimbursement in the total amount of $876,961.08 payable to Century Communities for public improvements constructed under the Construction Fee Credit and Reimbursement Agreement.
The Finance Department will add new improvements to the City’s fixed asset system in compliance with Governmental Accounting Standard Board (GASB) 34 Standards for Financial Reporting of Infrastructure Assets.
RECOMMENDATION
Staff recommends that the City Council Approve the Reconciliation of Public Improvement Costs Associated with the Construction and Credit Agreement Related to Century Communities of California, LLC., a Delaware Limited Liability Company.