STAFF REPORT
City of Lancaster
CC 13
9/8/2026
TN
Date: September 8, 2026
To: Mayor Parris and City Council Members
From: Marissa Diaz, Director – Public Works
Nicholas Godin, City Engineer – Public Works
Subject: Appropriation of Funds for Reimbursement Agreement with HD Development of Maryland, Inc. for Lancaster Health District
Recommendation:
Appropriate $2,200,000.00 to the Lancaster Health District Capital Improvement Project String CP15ST058.CONST, GL 10149900.8000, for reimbursement to HD Development of Maryland, Inc. for onsite improvements associated with the Avenue J-4 roadway easement at 20th Street West.
G.C. Section 84308: No
Fiscal Impact:
$2,200,000.00. Approval of this action will appropriate $2,200,000.00 to the Lancaster Health District Capital Improvement Project String CP15ST058.CONST, GL 101.49900.8000, to fund the City’s reimbursement obligations to HD Development of Maryland, Inc.
Background:
The Lancaster Health District (LHD) project proposes to develop the area bounded by 12th Street West to the east, Avenue J to the north, 20th Street West to the west, and SR-14 (Antelope Valley Freeway), and Avenue J-8 to the south; and is funded by the Los Angeles County Metropolitan Transportation Authority (LACMTA) 2015 Call for Projects. The City was awarded a total grant amount of $11,412,757.00, with a local matching fund requirement of $6,767,765.00.
In April 2022, the LHD project was divided into two phases, and in October 2022, the City Council approved the award of construction for Phase One. In February 2025, the LHD project was further divided into four phases. As part of the project, the City acquired approximately 36,102 square feet via roadway easement to construct Avenue J-5 at 20th Street West to provide access to existing 2 5
2 1
and proposed medical facilities within the Lancaster Health District. The acquisition and subsequent construction of Avenue J-5 necessitated certain onsite improvements to property owned by HD Development of Maryland, Inc.
In October 2025, City Council approved an Agreement for Acquisition of Roadway Easement and a Reimbursement Agreement with HD Development of Maryland, Inc. The Reimbursement Agreement became effective on December 22, 2025. Under the Reimbursement Agreement, HD Development of Maryland, Inc., through its general contractor, is responsible for constructing the onsite improvements in accordance with City-approved plans, soliciting bids from subcontractors, and selecting the lowest-cost responsive bids from responsible subcontractors. The Agreement obligates the City to reimburse HD Development of Maryland, Inc. for actual and reasonable costs incurred and paid in connection with the onsite work, including development and labor fees, planning and design costs, and hard and soft construction costs.
At the time the Reimbursement Agreement was approved, sufficient project funding was anticipated to be available to meet the City's reimbursement obligations. Since that time, bids received for Phase 3 of the Lancaster Health District project have exceeded previous estimates, requiring available project funding to be allocated toward those construction costs. As a result, an additional appropriation of $2,200,000.00 is necessary to fund the City's reimbursement obligations to HD Development of Maryland, Inc. The requested amount reflects the estimated costs of the onsite improvements, including a 10 percent contingency; however, the City will reimburse HD Development of Maryland, Inc., only for actual and reasonable costs incurred and paid in accordance with the Reimbursement Agreement.
NG/re
Attachment:
Vicinity Map