DATE:
March 4, 2025
TO:
Mayor and Council Members
FROM:
Rachel Molina, City Manager
BY:
Nathan R. Freman, Director of Development Services
Cassandra Sanchez, Director of Public Works/City Engineer Ryan Leonard, Principal Planner
SUBJECT:
Approval of Improvement and Reimbursement Agreement with CRP/Hesperia Owner, LLC (Newcastle)
RECOMMENDED ACTION
It is recommended that the City Council approve the attached Improvement and Reimbursement Agreement (Agreement) between the City and CRP/NC Hesperia Owner, LLC (Newcastle) for 1) the construction of a traffic signal at the intersection of U.S. Highway 395 and Poplar Street, to enhance public safety and support future development in the area, and which is related to Newcastle’s development and construction of an approximately 408,977 square-foot industrial building, located at the southwest corner of Mesa Linda Street and Sultana Avenue; and 2) allow Newcastle to utilize an interim truck route for access to and from their project site until such time that a traffic signal is completed at the intersection of Highway 395 and Poplar Street and require Newcastle to place a bond into an escrow account that is equal to the amount of the estimated traffic signal costs; and authorize the City Manager, or designee, to execute the Agreement.
BACKGROUND
The area surrounding U.S. Highway 395 and Poplar Street is being developed for industrial use by multiple developers. Currently, the intersection is unsignalized and controlled by a one-way stop sign on Poplar Street. Increased development and truck traffic will negatively impact traffic flow and circulation in the area. Therefore, as a condition of project approval, several developers are required to construct a traffic signal to convert the unsignalized intersection into a signalized one.
One of these developers is Newcastle, which, as noted above, is constructing a 408,977-square-foot industrial building at the southwest corner of Mesa Linda Street and Sultana Avenue. Additionally, since the traffic signal is located along Highway 395, CalTrans must approve the plans before construction can begin.
All surrounding developments are required to either construct the traffic signal or contribute a fair share of its cost if it is built by others. Since this requirement applies to all projects, the first development to proceed must fully construct the signal. However, the developer will be reimbursed by subsequent developers who pay their fair share. The City will collect these fair share contributions and reimburse a portion of the costs to the developer responsible for constructing the traffic signal.
ISSUES/ANALYSIS
Newcastle is required to construct the traffic signal, estimated to cost $800,000. Alternatively, if another developer builds the signal, Newcastle will contribute its fair share of the cost, estimated at $32,000. To secure this obligation, Newcastle will deposit the estimated construction costs into an escrow account with American Title Company for the City’s benefit. If CalTrans does not approve the traffic signal plans within two years, Newcastle’s obligation to construct the signal will end, and the escrow funds will be disbursed to the City and allocated to another developer responsible for construction. If another party completes the signal, Newcastle will contribute its fair share, and any remaining escrow funds will be returned.
The Agreement memorializes the arrangement, and its approval is essential for meeting Newcastle’s development conditions and ensuring the timely construction of public infrastructure that supports community growth. Specifically, the traffic signal will enhance public safety and traffic flow, support future developments near U.S. Highway 395 and Poplar Street, and ensure equitable cost-sharing among benefiting properties. Poplar Street will serve as the primary access to the Newcastle project site from Highway 395 once the traffic signal is completed. However, if the signal is not completed by the time a temporary certificate of occupancy is issued, the Agreement will authorize Newcastle to use Three Flags Avenue and Three Flags Street for site access from Highway 395 until the traffic signal is operational.
Since CalTrans is responsible for processing the traffic signal plans, the City acknowledges that the timing and completion are beyond both Newcastle’s and the City’s control. Therefore, the City will not withhold or delay issuing a Temporary Certificate of Occupancy as long as Newcastle secures the traffic signal costs by funding the escrow account or another City-approved method, and all other conditions are met. If CalTrans does not approve the plans within two years of the Agreement’s effective date, Newcastle’s obligation to construct the signal will end upon full payment of the estimated costs to the City. The City will then issue a final Certificate of Occupancy upon receipt of payment, and Newcastle will remain eligible for cost reimbursement as outlined in the Agreement.
Importantly, the Agreement does not obligate the City to construct the traffic signal. The responsibility remains with Newcastle and neighboring developers.
CITY GOAL SUPPORTED BY THIS ITEM
Future Development: Facilitate balanced growth to ensure cohesive community development and pursue economic development.
FISCAL IMPACT
There is no impact to the General Fund associated with this report.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
Improvement and Reimbursement Agreement with CRP/Hesperia Owner, LLC (Newcastle) Site Map
01071.0006/1054006.1
01071.0006/1054006.1
City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT
Staff Report to the Mayor and Council Members
Newcastle Improvement and Reimbursement Agreement