1 CITY OF CHULA VISTA
REIMBURSEMENT AGREEMENT
WITH MILLENIA 2022, LLC
FOR CONSTRUCTION OF THE HUNTE PARKWAY TRUNK SEWER EXTENSION
This REIMBURSEMENT AGREEMENT ("Agreement") is entered into as of this ___day of _______ 2024 (the "Effective Date") by and among the City of Chula Vista, a chartered municipal corporation ("City") and Millenia 2022, LLC, a Delaware limited liability company ("Developer") (collectively, the "Parties" and, individually, a "Party") with reference to the following Recitals:
RECITALS
A. WHEREAS, Developer and its predecessors have been developing the master planned Millenia project (“Millenia”), formerly known as the Eastern Urban Center, in the Otay Ranch area of the City; and
B. WHEREAS, City required Developer to construct a sewer extension improvement in the Salt Creek Sewer Basin known as the Hunte Parkway Trunk Sewer Extension (“Sewer Extension”); and
C. WHEREAS, the City Council, by Ordinance No. 2617, established the Salt Creek Sewer Basin Development Impact Fee (“ DIF”), as updated over time, to provide the funding for various sewer improvements within the Salt Creek Basin including the Sewer Extension; and
D. WHEREAS, this ordinance provides for Fee Credits to developers who construct all or part of the identified sewer basin improvements to apply against their Salt Creek Sewer Basin DIF obligations, and reimbursement to the extent the cost of construction exceeds the developer’s obligations; and
E. WHEREAS, Developer has constructed the Sewer Extension, City has reviewed and approved the design, inspected, and accepted the Sewer Extension and determined that they were constructed in such a manner as to qualify for reimbursements and/or credits pursuant to the above authorities; and
F. WHEREAS, Developer has submitted a Reimbursement Request and provided the City with the required documentation for City to determine the actual and Eligible Expenses incurred by Developer to construct the Sewer Extension; and
G. WHEREAS, City staff has reviewed Developer’ s Reimbursement Request and determined the amount of Eligible Expenses; and
H. WHEREAS, Developer has requested, and City has already issued Fee C redits against the Salt Creek Sewer Basin DIF obligation for a portion of the cost of the Sewer Extension; and
2 I. WHEREAS, Developer now seeks reimbursement for Reimbursable Costs (defined below) for the Sewer Extension exceeding Millenia’s Salt Creek Sewer Basin fee obligations, as shown in Exhibit “A” hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals, the covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which the Parties hereby acknowledge, City and Developer agree as follows:
ARTICLE 1. DEFINITIONS
In this Agreement, unless the context otherwise requires, the following terms and phrases shall have the following meanings:
1.1. Agreement. “Agreement” means this Reimbursement Agreement between the City and the Developer. The term “Agreement” shall include any amendment (s) to the Agreement properly approved and executed pursuant to the terms of this Agreement.
1.2. City. “City” means the City of Chula Vista. Unless specifically provided otherwise, whenever this Agreement requires an action or approval by City, that action or approval shall be performed by the City representative designated by the Agreement.
1.3. Developer. “Developer” has the meaning given to such term in the preamble.
1.4. Fee Credit s. “Fee Credits” m eans credits against Salt Creek Sewer Basin fees that Developer has received or may receive in the future from the City for Eligible C osts Developer incurred in designing and/or construction the Sewer Extension.
1.5. Director of Development Services. “Director of Development Services” means the director of Development Services of City or their designee.
1.6. Eastern Urban Center. “Eastern Urban C enter” or “EUC” means the master -planned community, sectional planning area located in Otay Ranch in the eastern portion of Chula Vista.
1.7. Eligible Expenses. “Eligible Expenses” means the total costs of design and construction expended by Developer and determined by the Director of Development Services to be eligible for Fee Credits or reimbursement for costs of the Sewer Extension.
1.8. Holiday. “Holiday” means the City-observed holidays listed below (if any holiday listed falls on a Saturday, then the Saturday and the preceding Friday are both legal Holidays. If the holiday should fall on a Sunday, then the Sunday and the following Monday are bo th legal holidays):
3 Holiday
New Year’s Day
Martin Luther King, Jr. Day
Caesar Chavez Day
Memorial Day
Juneteenth
Independence Day
Labor Day
Veteran’s Day
Observed On
January 1
Third Monday in January
March 31
Last Monday in May
June 19
July 4
First Monday in September
November 11
1.9. Millenia. “Millenia” is the property located within the EUC being developed by Developer.
1.10. Salt Creek Sewer Basin DIF Fund. “Salt Creek Sewer Basin DIF Fund” is the separate fund established to collect Salt Creek sewer basin fees pursuant to Ordinance No. 2617.
1.11. Payment Date. “Payment Date” means twenty (20) Working Days following the date of this agreement.
1.12. Reimbursement Request. “Reimbursement Request” means a reimbursement request package submitted to the City containing the items requested by the City to adequately determine Eligible Costs.
1.13. Reimbursable Costs. “Reimbursable Costs” means the amount of Eligible Expenses of Sewer Extension less Millenia’s Salt Creek Sewer Basin DIF obligation.
1.14. Working Day(s). “Working Day(s) means Monday through Friday, excluding Holidays.
ARTICLE II. SUBJECT OF THE AGREEMENT
The above-listed Recitals are true and correct and are hereby incorporated by this reference. All attachments to this Agreement as Exhibits ae incorporated into this Agreement by this reference.
2.1. City shall reimburse Developer for costs of the Sewer Extension subject to the following terms:
2.2. City shall only be obligated to use funds existing in the Salt Creek Sewer Basin DIF Fund.
City shall have no obligation to pay funds to the extent the request exceeds the available funds. In other words, the City shall pay Reimbursable Costs associated with a Reimbursement Request under this Agreement only up to the amount of sufficient funds then available in the Salt Creek Sewer Basin DIF Fund on the Payment Date. 4 2.3. Reimbursable Costs for the Sewer Extension:
Within twenty (20) working days of the date hereof, City shall pay Developer two million twenty-two thousand eight hundred ninety-six dollars and two cents ($2,022,896.02) from the Salt Creek Sewer Basin DIF Fund established by Ordinance No. 2617. In addition to this cash reimbursement, City has previously granted Developer one million four hundred forty-two thousand eighty-three dollars and six cents ($1,442,083.06) in Salt Creek Sewer Basin DIF credits which have been applied to building permits.
Developer and City agree that Developer and its guest builders will pay Salt Creek Sewer Basin DIF fees for future permits remaining within EUC and that no additional Salt Creek Sewer Basin DIF credits exist after the payment of Reimbursable Costs identified above in this Section 2.3.
2.4. The amounts above shall be the maximum amount of Reimbursable Costs for the Sewer Extension, based on currently available monies in the subject fund.
ARTICLE III. DURATION OF AGREEMENT
3.1. Term of Agreement. This Agreement shall be effective on the Effective Date following City Council approval by resolution, and the term shall extend until such time as all executory terms have been completed.
ARTICLE IV. INDEMNITY AND DUTY TO DEFEND
4.1. Third Party Litigation Concerning the Agreement. Developer shall fully and timely defend, at its sole expense and with counsel approved by the City in writing , including attorneys’ fees, and fully and timely indemnify, reimburse, protect and hold harmless City, its agents, officers and employees from any claim, demand, liability damages, costs, expenses, fees, award, decree, judgement, action or proceeding against City, its agents, officers or employees to attack, set aside, void or annul the approval of this Agreement. City shall promptly notify such Owner of any such claim, action or proceeding, and City shall reasonably cooperate in the defense.
4.2 Indemnity. In addition to the provisions of Section 4. 1 above, Developer shall, at its sole cost and expenses, fully and timely indemnify, protect, defend (with counsel approved by the City in writing), pay, reimburse and hold City, its officers, agents, employees, subcontractors and independent contractors free and harmless from any liability, damages, costs, expenses, fees, award, cause of action, suit, proceeding, decree or judgement whatsoever, in law or in equity, based or asserted upon any act or omission of Developer, its officers, agents, employees, subcontractors and independent contractors, for property damage, bodily injury, or death (that of Developer’s employees included) or any other element of damage of any kind or nature, relating to or in any way connected with or arising from the activities contemplated by this Agreement, including, but not limited to, the study, design, engineering, construction, completion, failure and conveyance of private or public 5 improvements for Millenia, save and except for liability or claims arising through the gross negligence or willful misconduct of City only as determined in a final judgment issued in an applicable suit or proceeding..
4.3. Survival. Developer’s obligations under this Article IV shall survive the expiration and/or termination of this Agreement.
ARTICLE V. MISCELLANEOUS PROVISIONS
5.1. Notices. All notices and demands given pursuant to this Agreement shall be written. They shall be deemed served (i) immediately, upon personal delivery; (ii) the next Working Day, or sent prepaid by recognized overnight service such as FedEx for delivery the next Working Day ; or (iii) three (3) Working Days after deposit in the United States mail, certified or registered mail, return receipt requested, first -class postage p repaid. Until notice of a change of address is properly given, notice shall be given:
If to City: City of Chula Vista
Attn: City Manager
276 Fourth Avenue
Chula Vista, CA 91910
With a copy to: City Attorney
276 Fourth Avenue
Chula Vista, CA 91910
[email protected]
If to Developer: Todd Galarneau
Executive Vice President
Meridian Development
4455 Murphy Canyon Road, Suite 100
San Diego, CA 92123
[email protected]
With a copy to: Richard A. Schulman
Richard A. Schulman, A Professional Corporation
9834 Apple Tree Drive, Unit C
San Diego, CA 92124
[email protected]
5.2. Captions. Captions in this Agreement are inserted for conve nience of reference. They do not define, describe, or limit any term of this Agreement.
5.3. Entire Agreement . This Agreement embodies the entire agreement and understanding between the parties regarding the subject matter hereof. No prior or contemporaneous oral or written representations, agreements, understandings and/or statements regarding its 6 subject matter shall have any force or effect. This Agreement is not intended to supersede or amend any other agreement between the partie s unless expressly noted. However, all previous written agreements remain in full force and effect except to the extent they conflict with this Agreement.
5.4. Severability. If any provision of this Agreement or its particular application is held invalid or unenforceable, the remaining provisions of this Agreement, and their application, shall remain in full force and effect, unless a party's consideration materially fails as a result.
5.5. Preparation of Agreement. No inference, assumption or presumption shall be drawn from the fact that a party or its attorney drafted this Agreement. It shall be conclusively presumed that all parties participated equally in drafting this Agreement.
5.6. Authority. Each party warrants and represents that it has the necessary legal authority and capacity to enter into this Agreement, and that it has taken all necessary action to authorize its entry into this Agreement. Each individual signing this Agreement on behalf of an entity warrants that his/her principal has duly authorized him/her to sign this Agreement on its behalf so as to bind his/her principal.
5.7. Modification. This Agreement may not be modified, terminated, or rescinded, in whole or in part, except by written instrument duly executed and acknowledged by the parties hereto, their successors or assigns.
5.8. Governing Law and Venue . This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any action arising under or relating to this Agreement shall be brought only in the federal or state courts located in San Diego County, State of California, and if applicable, the City of Chula Vista, or as close thereto as possible. Venue for this Agreement and performance hereunder shall be the City of Chula Vista.
5.9. Administrative Claims. Requirements and Procedures. No suit or arbitration shall be brought arising out of this Agreement against the City unless a claim has first been presented in writing and filed with the City and acted upon by the City in accordance with the procedures set forth in Chapter 1.34 of the CVMC, as same may from time to time be amended (the provisions of which are incorporated by this reference as if fully set forth herein), and such policies and procedures used by City in the implementation of same.
5.10. Non-liability of City Officials and Employees. No member, official, employee or consultant of the City shall be personally liable to Developer in the event of any default or breach by City, or for any amount which may become due to Developer, or on any obligations under the terms of this Agreement.
5.11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be the original and all of which shall constitute one and the same document.
7 [End of page. Signature page follows this page.]
8 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first set forth above.
CITY
CITY OF CHULA VISTA, a California
charter city and municipal corporation
By:____________________________
John McCann, Mayor
ATTEST:
By:_____________________________
Kerry K Bigelow, MMC
City Clerk
APPROVED AS TO FORM:
By:_________________________________
Marco A. Verdugo
City Attorney
DEVELOPER
Millenia 2022, LLC
a Delaware limited liability company
By: Meridian Communities, LLC,
a Delaware limited liability company,
its sole member
By: ___________________
Guy Asaro
Its: Manager
9 EXHIBIT A
Approved Eligible Expenses and Reimbursable Costs
Salt Creek DIF – Hunte Parkway Sewer Extension Reimbursement
Eligible Expenses $ 3,464,979.08
Less Salt Creek DIF Credits previously
applied:
$(1,442,083.06)
Total Reimbursement: $2,022,896.02