BACKGROUND:
Tract No. 28639-1, a 261 residential lot subdivision named “Rio Vista”, was recorded in 2001. Upon recordation of Tract No. 28639-1, the developer posted bonds to ensure the public improvements would be completed in accordance with the California Subdivision Map Act. A portion of this tract was re-subdivided in 2005 into a 70-lot residential subdivision as Tract No. 32559. The subdividers of both tracts failed to complete the required public improvements in these subdivisions.
In 2018, HPH Homebuilders 2000, L.P., (HPH), a subsidiary of the D. R. Horton Company, purchased several vacant lots in both subdivisions, their “Takedown # 1” (see attached Exhibit), intending to build and sell single family residences. In consideration of the issuance of building permits and obtaining final building inspections, HPH executed an Improvement Agreement with the City, dated July 12, 2019, in which it agreed to complete the missing public improvements in the portions of the two tracts being developed by HPH. This work included the completion of public streets and alleys, sewer and water mains, water and sewer services, utilities, alleys, and the improvement of 3 park lots. HPH secured its performance of the Agreement by the posting of faithful performance and labor and material bonds, and a cash bond to guarantee completion of missing monuments and property corners.
In 2019, HPH purchased additional lots in both tracts, their “Takedown #2” (see attached Exhibit), and the Improvement Agreement was amended by the execution of Amendment No. 1, in which HPH took on the obligation of constructing additional public improvements on the streets and alleys in the locations of the “Takedown #2” lots. HPH secured its performance of that work by the posting of additional bonds and cash securities for the public improvements.
HPH subsequently acquired all the vacant residential lots in Tract No. 32858, their “Takedown #3” (see attached Exhibit), a 52 lot R-1 subdivision in the same Rio Vista neighborhood. In October of 2020, HPH executed Amendment #2 to the July 2019 Agreement, which added the obligation to complete all the public improvements in Tract No. 32858 to the July 2019 Agreement. HPH posted additional surety bonds to guarantee the public improvements in Tract No. 32858.
HPH completed all the required improvements covered in the original July 2019 Agreement and Amendment 1 and in February 2022, the City Council adopted a Resolution accepting those improvements, and authorized the release of the bonds and securities posted as securities to complete the public improvements.
All the remaining improvements within the portions of Tract No. 28639-1 and Tract 32858, covered by Amendment 2 to the original Agreement in “Takedown #3,” have now been completed. The public improvements are now ready to be certified and accepted and the securities released.
DISCUSSION:
A Notice of Completion (NOC) has been prepared and will be filed by the Director of Public Works upon approval of the Resolution, noting that all the improvements have been completed. No claims have been filed with the City against any of the posted securities. Upon adoption of the Resolution, the surety bonds guaranteeing faithful performance will be released. Pursuant to State law, the surety bonds guaranteeing payment for labor and materials posted with the Improvement Agreement will be released by the Director of Public Works ninety (90) days after recordation of the Notice of Completion.
The Developer has posted a one-year warranty bond to guarantee repair of any defects in materials or workmanship in the public improvements in the development. This warranty bond will be released by the Director of Public Works one year after adoption of this Resolution provided no claims have been filed or problems arise due to problems with materials or workmanship.
Lastly, all the required monuments have been set in development and the surveyor of record has submitted evidence that he has been compensated for those services.
Therefore, the cash securities for monuments can be released.
The securities posted by the Developer to be released in accordance with the terms of the Improvement Agreement, Amendment 2 and as outlined in the Resolution are as follows (all from Liberty Mutual Insurance Company):
For faithful performance: $1,031,500; Bond # 016229791 For labor and materials: $ 515,750, Bond # 016229791 For monumentation: $ 12,000 Cash deposit paid October 21, 2020.
The Rio Vista master Covenants, Conditions and Restrictions (CC&Rs) provide that the local homeowner’s association (HOA) will perform the maintenance of the alleys and landscaped park lots improved by HPH. Therefore, just the public streets listed in the Resolution (portions of Rio Vera Cruz, Rio Guadalupe, Rio Felicia and Rio Madre) are being accepted into the City maintained street system.
In summary, Staff is requesting that the City Council adopt a Resolution certifying the public improvements constructed within portions of Tract No. 28639-1 and Tract No. 32858 by HPH Homebuilders 2000, L.P. (Developer), pursuant to its Improvement Agreement with the City and Amendment No. 2 to that same Agreement, were completed in accordance with City standards and specifications. Authorize the release of the Improvement Agreement securities and deposits as described in the attached Resolution. Authorize the City Manager to execute and the Director of Public Works to file a Notice of Completion for the project, respectively and accept the improvements into the City maintained street system.
FISCAL IMPACT:
With the adoption of this Resolution, there will be minimal fiscal impact upon the City.
The public alleys and park lots listed in the Resolution will be maintained by the Homeowner’s Association, and the public street maintenance will be absorbed into the normal maintenance duties of the Public Works Department.
FIVE-YEAR STRATEGIC PLAN:
GOAL B: COMMUNITY INVESTMENT
Objective: Cathedral City roads, gateways, public spaces, and other city infrastructure are well planned, designed, constructed, and
maintained.
GOAL C: FISCAL STABILITY AND SUSTAINABILITY
Objective: Cathedral City has economically prospered by facilitating the investment of private dollars in high quality development which benefits the community. We remain financially solvent by instituting prudent fiscal policies and transparent financial practices.