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CITY COUNCIL AGENDA ITEM NO. 5

Meeting Date: February 28, 2006

Subject/Title: Adopt a Resolution approving and authorizing the City Manager to execute a Reimbursement Agreement with Brentwood Sand Creek Partners, LLC, Subdivision No. 8788, for costs associated with southern phase of the Lone Oak Road, Lone Oak Court and Saddle Creek Court Sewer and Water Improvements and Adopt a Resolution to direct staff to establish a benefit district for these and related improvements.

Prepared by: Engineering: B. Bornstein

Submitted by: Engineering: B. Grewal


RECOMMENDATION
Adopt a Resolution approving and authorizing the City Manager to execute a Reimbursement Agreement with Brentwood Sand Creek Partners, LLC, Subdivision No. 8788, for costs associated with southern phase of the Lone Oak Road, Lone Oak Court and Saddle Creek Court Sewer and Water Improvements and Adopt a Resolution to direct staff to establish a benefit district for these and related improvements.

PREVIOUS ACTION
On March 2, 2004, Planning Commission of the City of Brentwood adopted Planning Commission Resolution No. 04-10, approving Vesting Tentative Subdivision Map (VSTM) No. 8788, with conditions.

On May 3, 2005, Planning Commission amended Resolution No. 04-10, to modify eleven of the conditions of approval for Vesting Tentative Subdivision Map No. 8788.

On May 24, 2005, by Resolution No. 2005-115, City Council adopted the City’s 2005/06 – 2009/10 Capital Improvement Program (CIP), which included the Lone Oak Road Utility Improvements.

BACKGROUND
Brentwood Sand Creek Partners, LLC (Lennar Homes), Subdivision No. 8788, is located south of Grant Street and east of the Union Pacific Railroad. This subdivision consists of 311 lots, a four acre and a one acre park and the new Marsh Creek Elementary School. Condition of Approval No. 31 for Subdivision No. 8788 requires the Developer to construct certain off-site sewer and water improvements on Lone Oak Road, Lone Oak Court, Saddle Creek Court and Gracie Lane. Since these are off-site improvements and do not directly benefit the Developer, they are under the State Subdivision Map Act and are subject to reimbursement from the City. These improvements were required to provide sewer and water facilities for the existing residents on the above mentioned roads; these improvements provide the option for them to connect to City services since their properties are all on septic systems and private wells that have deteriorated significantly over the years. This allows these residents the option to convert over to City utilities when their existing on-site systems have failed or are too costly to maintain.

Staff has been working closely with Lennar Homes, the developer, to complete the design and procure the necessary right-of-way to complete these utility improvements. This project is broken into “South” and “North” utility improvements. The ”South” improvements are on Lone Oak Court, Lone Oak Road up to Caper Drive and Saddle Creek Court. Lennar Homes is conditioned to construct these improvements prior to the 101st building permit. These improvements were just recently completed and Lennar Homes is requesting reimbursement for these improvements. The “North” improvements are on Lone Oak Road north of Caper Drive to Grant Street and Gracie Lane. Lennar Homes is conditioned to construct these improvements prior to the 201st building permit. The “North” improvements construction will begin this spring. City staff directed Lennar Homes not to begin the “North” improvements due to concern with starting major excavations and removal of existing drainage swales in any of these roadways during the winter months. Unfortunately due to right-of-way acquisition delays, the project was unable to break ground earlier in last year’s construction season. The “North” improvements will be rebid in February/March this year and City staff will bring back a subsequent staff report for a reimbursement agreement for the approval of the “North” improvements and associated costs.

Staff has reviewed all of Lennar Homes’ contractor’s bids and the costs for the Lone Oak “South” improvements and this project represent the lowest responsive responsible bid, as well as costs for engineering, design and soils inspection/testing. The total construction cost includes project change orders that will be reviewed and finalized by the Engineering Department.

This spring, staff will bring back a subsequent staff report for approval of a reimbursement agreement for the Lone Oak Road “North” improvements and a request to amend/increase the project budget to complete these improvements.

It is staff’s recommendation that a portion of the Redevelopment Agency’s costs to construct the north and south Lone Oak improvements be recovered. The best mechanism for reimbursement is the formation of a benefit district. By establishing a benefit district, any future subdivision of the adjacent 48 parcels that would benefit from the installed water and sewer improvements will be required to pay their fair share of the costs. The level of recovered costs is uncertain at this time and should not be considered a guarantee of 100% recovery. For consideration and approval on tonight’s City Council agenda is a resolution to direct staff to proceed with the formation of a benefit district for both the north and south improvements. The City Council is not being asked to form a benefit district this evening. Formation of a district can only occur after a noticed public hearing.

When the Capital Improvement Program and the Agency’s operational budget that included Lone Oak Road Utility Improvements were approved in 2005, Council and Agency members believed that a benefit district would be established among both the existing and future homeowners to recover the Agency’s costs to fund this project. However, during the ongoing discussions with the homeowners in the Lone Oak Road area regarding the adjacent S&S Farms development, there were no discussions about existing homeowners sharing a portion of the cost of water and sewer improvements except for connection fees. Consequently, the existing property owners will pay into the proposed benefit district only if they subdivide or do any additions to their properties in the future.

Currently, a written policy does not exist for the Council and Agency to use in its evaluation to fund public improvements in existing developments and subdivisions. In situations where Agency funds are the identified funding source, a measurement of benefit is analyzed prior to making a funding commitment, findings are made that the project meets the Agency’s investment strategies, or a recovery of the costs is identified. In this case, the formation of a benefit district paid by the existing homeowners as a method to recover the Agency costs was not pursued as intended by the Council and Agency. The funding of the Lone Oak Utility Improvements should not be construed as setting precedent for funding by the Agency or the City of future public improvements in existing developments or subdivisions. Analysis of the appropriateness of the City and Agency’s financial participation in projects and programs has been and will continue to be, an examination of benefit districts, fair share payments, economies of benefit, return of tax increment, funding priorities, investment strategies and necessary findings and criteria for consideration by the City and Agency prior to making funding commitments to projects. A formal, written policy establishing the guidelines for analyzing the appropriateness of the City and Agency’s financial participation in projects and programs is being drafted and will be brought to the Council and Agency Board for consideration and approval at a later date.

FISCAL IMPACT
The Lone Oak Road Utility Improvements project is included in the adopted 2005/06 – 2009/10 Capital Improvement Program and the total project budget contains $1,490,000 from Redevelopment Funds. The Lone Oak “South” Reimbursement Agreement is also on tonight’s Redevelopment Agency agenda for funding approval. In the event that the Redevelopment Agency does not approve the funding, it will be necessary to continue this agenda item at a later date to reevaluate funding options. The Reimbursement Agreement with Brentwood Sand Creek Partners, LLC to design and construct the Lone Oak “South” improvements is for the amount of $642,000.

The reimbursement to Lennar Homes for the cost of these improvements will be paid entirely by the Brentwood Redevelopment Agency’s Tax Allocation Bonds, Series 2001. There is no impact on the City’s General Fund.

As mentioned above, staff will bring back a subsequent staff report for approval of a reimbursement agreement for the Lone Oak Road “North” improvements and a request to amend the project budget to complete these improvements.

Attachments:
Resolution
Reimbursement Agreement with Exhibits
RESOLUTION NO.


A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE A REIMBURSEMENT AGREEMENT WITH BRENTWOOD SAND CREEK PARTNERS, LLC, SUBDIVISION NO. 8788, FOR COSTS ASSOCIATED WITH SOUTHERN PHASE OF THE LONE OAK ROAD, LONE OAK COURT AND SADDLE CREEK COURT SEWER AND WATER IMPROVEMENTS.


WHEREAS, on March 2, 2004, Planning Commission of the City of Brentwood adopted Planning Commission Resolution No. 04-10, approving Vesting Tentative Subdivision Map (VSTM) No. 8788, with conditions; and

WHEREAS, on May 3, 2005, Planning Commission amended Resolution No. 04-10, to modify eleven of the conditions of approval for Vesting Tentative Subdivision Map No. 8788; and

WHEREAS, on May 24, 2005, by Resolution No. 2005-115, City Council adopted the City’s 2005/06 – 2009/10 Capital Improvement Program (CIP), which included the Lone Oak Road Utility Improvements; and

WHEREAS, Brentwood Sand Creek Partners, LLC, is required to construct certain off-site sewer and water improvements on Lone Oak Road, Lone Oak Court and Saddle Creek Court; and

WHEREAS, since these are off-site improvements and provide no benefit to the Developer, they are subject to reimbursement from the City; and

WHEREAS, these improvements were required to provide sewer and water facilities for the existing residents on the above mentioned roads; these improvements provide the option for them to connect to City services since their properties are all on septic systems and private wells that have deteriorated significantly over the years; and

WHEREAS, this allows these residents the option to convert over to City utilities when their existing on-site systems have failed or are too costly to maintain; and

WHEREAS, staff has reviewed all of Brentwood Sand Creek Partners, LLC contractor’s bids and the costs for this project represent the lowest responsive responsible bid, as well as costs for engineering, design and soils inspection/testing.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby approve and authorize the City Manager to execute a Reimbursement Agreement with Brentwood Sand Creek Partners, LLC Subdivision No. 8788, for Lone Oak Road, Lone Oak Court and Saddle Creek Court sewer and water improvements.




PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting on the 28th day of February 2006 by the following vote:

RESOLUTION NO.


A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD DIRECTING STAFF TO PROCEED WITH THE FORMATION OF A SEWER AND WATER BENEFIT DISTRICT FOR THE LONE OAK ROAD, GRACIE LANE, SADDLE CREEK COURT, AND LONE OAK COURT SEWER AND WATER IMPROVEMENTS.


WHEREAS, Brentwood Sand Creek Partners, LLC, is required to construct certain off-site sewer and water improvements on Lone Oak Road, Gracie Lane, Saddle Creek Court, and Lone Oak Court (the “Improvements”); and

WHEREAS, since the Improvements are off-site and provide no benefit to the Developer, they are subject to reimbursement from the City; and

WHEREAS, the Improvements were required to provide sewer and water facilities for existing residents on the above mentioned roads; and

WHEREAS, by establishing a benefit district, any future subdivision of the adjacent 48 parcels that would benefit from the installed water and sewer improvements will be required to pay their fair share of the costs; and

WHEREAS, the formation of a sewer and water benefit district will recover some of the redevelopment funds to pay for the Improvements; and

WHEREAS, by adopting this Resolution the City Council is not taking a final action on the formation of a benefit district and such action will only occur, if at all, after a noticed public hearing.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby direct staff to proceed with the formation of a sewer and water benefit district for the Lone Oak Road, Gracie Lane, Saddle Creek Court, and Lone Oak Court sewer and water improvements.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting on the 28th day of February 2006 by the following vote:

 

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