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July 28, 2026
ITEM TITLE
Agreement Amendment: Approve an Amendment to Consultant Services Agreement with I-GSD Management Inc. for Project Management/City Representative Services Report Number: 26-0235
Location: 1775 Millenia Avenue
Department: City Manager
G.C. § 84308 Regulations Apply: Yes
Environmental Notice : The Project is adequately covered in a previously certified Final Second Tier Environmental Impact Report (EIR-07-01; SCH #2007041074, Millenia/Eastern Urban Center, dated September 15, 2009), and incorporated by reference in Resolution No. 2009-223 on September 15, 2009.
Recommended Action
Adopt a resolution approving an amendment to a consultant services agreement with I-GSD Management Inc. for project management/city representative services that 1) increases the initial contract (through September 30, 2026) amount by $53,400; and 2) exercises the one-year extension option through September 30, 2027 at $300,000, for a total not-to-exceed amount of $703,400.
SUMMARY
The Millenia Library Building, a 168,000 square foot Class “A” office building which will house a 60,000 square foot City library and other tenants, is currently under construction. Tenant improvements for the City library are expected to be completed in November 2026.
Management of construction activities is provided through a contract with I-GSD Management Inc., approved by City Council in February 2025. To support the timely build -out of tenant improvements for tenants such as San Diego State University and Sweetwater Union High School District, construction of the City library was delayed. As a result of this schedule adjustment, along with the need for expanded project management services during construction, staff recommends amending the agreement with I -GSD Management Inc. to increase the contract’s not-to-exceed amount and expand the scope of services.
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The additional costs will be partially offset through reimbursement of projec t management fees associated with non-City-funded tenant improvement projects, including Sweetwater’s Launch Virtual Academy and future tenant improvements within the café space and currently vacant upper-level spaces.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (“CEQA”) and has determined that the Project is adequately covered in a previously certified Final Second Tier Environmental Impact Report (EIR-07-01; SCH #2007041074, Millenia/Eastern Urban Center, dated September 15, 2009), and incorporated by reference in Resolution No. 2009-223. Therefore, no further environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
On December 6, 2022, the City Council adopted Resolution Nos. 2022 -273 through 2022-275, approving a Purchase and Sale Agreement with LMC-Millenia Investment Company (“Chesnut”) to acquire 7.06 acres of undeveloped land on Lot 7 of M illenia located at 1775 Millenia Avenue (APN 643 -060-57-00); approving a Project Development Agreement with Chesnut to construct a 168,000 square foot class “A” library and office building, a 6,100 square foot amenity building, a parking structure, related site work and improvements (the “Project”).
In conjunction with this action, the City Council authorized entering into a Purchase and Sale Agreement (“PSA”) with LMC -Millenia Investment Company, L.P. (Seller) and the City of Chula Vista (Buyer). The PSA obligated the City to purchase a 7.06-acre parcel (“Lot 7”) and all associated plans and construction drawings.
Chesnut, the owner and developer of Lot 7, was obligated to complete improvements to the City’s specifications and provide a turnkey building to the City upon close of escrow. In exchange, the City agreed to reimburse Chesnut for certain pre-development and soft costs (approx. $3.1 million) and to pay Chesnut $11 million to acquire Lot 7. In addition, the City committed to paying Chesnut a Develo per Fee of 4% of Reimbursable Costs, excluding Land Acquisition, and a Construction Supervision Fee of 3.5% of Hard Construction Costs (capitalized terms are as defined in the PSA). To date, the City has paid Chesnut in excess of $3 million in combined Developer and Construction Supervision Fees.
Due to significant budgetary shortfalls, on December 10, 2024, the City Council took action to appropriate additional funds necessary to complete buildout of the Project. This action also identified project savings that would be generated by exercising the City’s option to close escrow on Lot 7 early, to coincide with the completion of the site work, core and shell. This option is projected to generate net savings of just under $1.2 million in Developer and Construction Supervision Fees that would otherwise be payable to Chesnut for the construction of tenant improvements (TIs).
Following the completion of the site work, core and shell, the City required project management/City representative services to complete construction of the Project, including construction of TIs for library, San Diego State University (SDSU), Sweetwater Union High School District (SUHSD), lower-level common areas and other tenant improvements as needed within the Project. In February 2025, the City Council approved P a g e | 3
an agreement with I-GSD Management Inc. through September 30, 2026 for professional project management and City representative services with a not-to-exceed contract amount of $350,000.
Prior to commencement TIs, several activities required management beyond what was contemplated in the initial agreement including pre-construction planning and coordination activities, project closeout and coordination of site work/core and shell -related work, onboarding and coordination of the property management company, and an increased level of involvement in all major construction bidding components.
Construction of tenant improvement spaces began in March 2026 with priority given to SUHSD and SDSU to accommodate the start of their aca demic years in July and August, respectively. This schedule adjustment delayed the construction of library TIs which are now scheduled to be completed in November 2026. In addition, the project will require support related to the café tenant, expanded SUHSD scope related to storage needs as well as coordination with upper-level tenants.
For these reasons, staff recommends amending the agreement with I -GSD Management Inc. to expand the scope of services to reflect actual work performed and increase contract amount by $53,400 through September 30, 2026. This increase is expected to be fully offset by reimbursement of project management fees from SUHSD, estimated at $58,164.
In addition, the current agreement includes an option to extend the contract term by on e year, through September 30, 2027, which will be necessary to complete the library and other TI projects. Accordingly, this amendment also establishes a not -to-exceed contract amount of $300,000 for the extension term of the agreement. With the exception of the library and other City -funded TI projects, project management fees incurred during the extension term are expected to be reimbursed by the respective tenants.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council membe rs 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 Co de 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 Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
Approval of the amendment will increase the contract amount by $53,400 through September 30, 2026. The increase is expected to be fully offset by reimbursement of project management fees from SUHSD estimated at $58,164.
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Initial Term
(2/25/25 –
9/30/26)
Extension No. 1
(10/1/26 –
9/30/27)
Not-to-Exceed
Original Agreement $350,000 - $350,000
First Amendment $53,400 - $53,400
Option to Extend - $300,000 $300,000
Total $703,400
Due to anticipated cost savings within the Project budget (GGV0267), no additional appropriation is needed.
ONGOING FISCAL IMPACT
The ongoing fiscal impact is anticipated to be limited to project management costs associated with close out of library TIs. The majority of costs in the extension term are expected to be offset by tenant reimbursements.
ATTACHMENTS
1. First Amendment to I-GSD Management Inc. Agreement
Staff Contact: Tiffany Allen, City Manager
Adrianna Relph, Special Projects & Legislative Manager