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May 23, 2023
ITEM TITLE
Reimbursement Agreement and Appropriation: Approve a Reimbursement Agreement with Millenia 2022, LLC for a Portion of the Cost of Construction of the Eastlake Parkway Pedestrian Bridge and Various Traffic Signals and Appropriate Funds
Report Number: 23-0101
Location: Otay Ranch Eastern Urban Center (“EUC”), known as “Millenia”: East of SR-125, bounded by Birch Road on the north, Eastlake Parkway on the east and Hunte Parkway on the south Department: Development Services
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act (“CEQA”) State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Adopt a resolution approving a reimbursement agreement with Millenia 2022, LLC for Construction of a pedestrian bridge and various traffic signals and appropriate funds for that purpose. (4/5 Vote Required)
SUMMARY
Millenia 2022, LLC (“Developer”) has constructed the Eastlake Parkway Pedestrian Bridge and certain traffic signals within the Millenia project . The Developer is entitled to receive reimbursement for costs of construction exceeding the project’s Pedestrian Bridge Development Imp act Fee (“PBDIF”) obligation pursuant to Ordinance No.’s 2013-3273 and 2005-3017, and Traffic Signal Fee obligation pursuant to Council Policy 478-1. The Developer has received credits for a portion of the DIFs and now seeks cash reimbursement for a portion of the remainder of the costs. The total reimbursable costs to be paid to Developer under this Reimbursement Agreement for certain Bridge and traffic signal improvements is $2,755,266.91 , plus any applicable interest from three identified funds.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with CEQA and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because the proposed activity does not result in a physical change in the environment; P a g e | 2
therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
Thus, no environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
The Otay Ranch Eastern Urban Center (“EUC”) Sectional Planning Area (“SPA”) was approved by Council in September 2009. The Developer gave the master-planned community the marketing name “Millenia” and started construction in 2013. The project includes approximately 3.5 million square feet of non-residential and 2,983 multi-family housing units. Construction of the project has progressed steadily over the past 10 years, including public infrastructure such as a fire station, six parks, off-site sewer, major roadways, traffic signals, dedication of right-of-way, a transit stop for BRT line, and a pedestrian bridge connecting the EUC with Otay Ranch Village 11. Millenia is nearing completion and the Developer seeks reimbursement for eligible costs of certain public improvements.
Eastlake Parkway Pedestrian Bridge (“Bridge”)
The bridge was contemplated by the Otay Ranch General Development Plan and serves to continue and connect the regional trail system in place in Otay Ranch Village 11, east of Millenia. The bridge was designed to support not only pedestrians and bicycles but neighborhood electric vehicles (“NEVs”) and was constructed in two phases. The first phase abutments were constructed in 2014-2015 as part of the early grading and development to avoid potential construction conflicts with certain neighborhoods. The second phase was the bridge itself, and was started in mid-2019 and completed and accepted by the City in 2020.
The Council adopted two ordinances to establish Development Impact Fees (“DIFs”) to fund the construction of the bridge. Ordinance No. 3273 established the EUC Pedestrian Bridge DIF (“EUC PBDIF”) and the benefit area included the entire EUC. The EUC PBDIF was to fund 50% of the cost of the Eastlake Parkway bridge. Ordinance No. 3017 established a PBDIF for the Otay Ranch Village 11 (“Village 11 PBDIF”) community, which was to fund the other 50% of the bridge. Both ordinances provide for the developer who constructs the bridge to receive PBDIF credits and a cash reimbursement for costs that exceed its PBDIF obligation.
City staff has determined the total eligible cost of the bridge to be $3,244,904.25. The Developer has already received a portion of the cost in PBDIF credits in the amount of $796,604.35. The Developer is entitled to a cash reimbursement of $1,622,452.13 from the Village 11 PBDIF (50% of bridge cost) and $388,077.95 from EUC PBDIF funds for a total reimbursement of $2,010,530.08 as reflected in Table One below. The Developer will be eligible for an additional reimbursement of up to $318,813.90 for up to 699 remaining units within EUC property owned by another developer if and when the units are constructed in the future. The Developer will receive future reimbursements annually at the rate of $456.10 per multi- family dwelling unit based on the actual units constructed.
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Table One – Millenia Pedestrian Bridge Reimbursement
Traffic Signals
City Council Policy 478-1 adopted by Council Resolution No’s. 9221 and 13857 established a policy for participation by private developers of the financing and/or installation of traffic signals on public streets.
The fee is applied citywide. Building permits for all new development are subject to the traffic signal fee.
Private developments which are required to construct traffic signals are eligible for fee credits against their traffic signal fees and cash reimbursement to the extent the construction costs exceed the project’s traffic signal obligation. The Developer was required to construct eight traffic signals in Millenia that were delineated on public improvement plans approved by City. Depending on the location of each traffic signal, some legs of a signal are eligible for Eastern Transportation DIF (“ETDIF”) credits, and some legs are eligible for Traffic Signal Fee credits. The Developer has already received fee credits for ETDIF in the amount of $313,381 and Traffic Signal Fee credits in the amount of $498,760.17. This Agreement only addresses the eligible cash reimbursement from the Traffic Signal Fees. The total cash reimbursement for traffic signals is: $744,736.83, as reflected in Table Two below.
Table Two: Millenia Traffic Signal Reimbursement
Eligible Expenses 3,244,904.25$
Village 11 50% 1,622,452.13$
Available Cash in EUC PBDIF 388,077.95$
Total Reimbursement 2,010,530.08$
Notes
Maximum future reimbursement
from EUC PBDIF if all 699 multi-family
units are built by other developer: 318,813.90$
EUC PFDIF credits previously applied: 796,604.35$
Millenia Pedestrian Bridge Reimbursement
Eligible Expenses 1,243,497.00$
Less EUC PBDIF Credits previously applied: (498,760.17)$ Total Reimbursement: 744,736.83$
ETDIF credits previously applied: $313,381.00
Millenia Traffic Signal Reimbursement
Note
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Staff recommends approval of the Agreement and reimbursement to the Developer the following funds listed in Table Three below.
Table Three – Millenia Reimbursement Summary
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council members and has found no property holdings within 1,000 feet of the boundaries of the property which is the subject of this action. Consequently, this item does not present a disqualifying real property-related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(7) or (8), for purposes of the Political Reform Act (Cal. Gov’t Code §87100, et seq.). Staff is not independently aware, and has not been informed by any Councilmember, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no current year fiscal impact to the General Fund as a result of this action. The action appropriates the following amounts plus any applicable interest: $1,622,452.13 from the Village 11 PBDIF Fund (Fund #580941,) $388,077.95 from the EUC Ped Bridge Fund (Fund #580981,) and $744,736.83 from the Traffic Signal Fund (Fund #590354) from the respective revenue and fund balances for reimbursement to the developer.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact to the General Fund as a result of this action. Reimbursements to other developers in the future from these funds will require Council approval.
ATTACHMENTS
1. Millenia Reimbursement Agreement
Staff Contact: Kimberly Elliott, Facilities Financing Manager Laura C. Black, AICP, Director of Development Services
1,622,452.13$
388,077.95$
744,736.83$
2,755,266.91$
Reimbursement Summary
Village 11 PBDIF Fund:
EUC PBDIF Fund:
Traffic Signal Fee Fund:
Total: