ITEM 4. 12
CITY MANAGER' SREPORT
OCTOBER 14, 2024, CITY COUNCIL REGULAR MEETING
ITEM: APPROVE REIMBURSEMENT AGREEMENT FOR THE
MURPHY PARKWAY EXTENSION IMPROVEMENTS
WITHIN THE CROSSROADS AREA AND ADJUSTMENT
TO THE GASB 34 REPORT ASSOCIATED WITH EP NO.
2020- 41
RECOMMENDATION: Adopt a Resolution Approving a Reimbursement Agreement for Design and Construction of the
Murphy Parkway Extension within the Crossroads
Area with Prologis, Inc. and an Adjustment to the
GASB 34 Report Associated with Encroachment
Permit No. 2020- 41
SUMMARY:
Duke Realty, the developer for the warehouse located at 16825 Murphy Parkway, was required to design and construct the Murphy Parkway extension to provide additional access to the site and future access to neighboring parcels. The work was completed under Encroachment Permit No. 2020- 41 (EP 2020- 41). City Council accepted the improvements associated with EP 2020- 41 and a GASB 34 Report was adopted to represent the value of the improvements at that time. Prologis, Inc.
Prologis) notified the City that they acquired all rights and obligations of Duke Realty pertaining to this property.
There are a number of parcels that benefit from the improvements designed and constructed by Duke Realty. Consequently, Prologis is eligible for reimbursement from these benefiting property owners. The proposed reimbursement agreement allows the City to collect a proportionate share of the reimbursement amount from each benefiting property owner upon the future development of the benefiting properties.
After Council acceptance of improvements, the developer recognized additional costs associated with the improvements not included in the original GASB 34 Report. These costs include engineering, design, change orders, permitting, and other soft costs.
To ensure the City' s asset records are accurate, staff is requesting City Council approve the adjusted GASB 34 Report value.
Staff recommends that City Council adopt a resolution approving the proposed reimbursement agreement with Prologis, Inc. and the adjustment to the GASB 34 Report associated with EP 2020- 41.
BACKGROUND:
On June 15, 2016, the City of Lathrop Community Development Department approved Development Plan No. 16- 49 (DP 16- 49) for the construction of a 382, 72 CITY MANAGER' S REPORT PAGE 2
OCTOBER 14, 2024 CITY COUNCIL REGULAR MEETING
APPROVE REIMBURSEMENT AGREEMENT FOR THE MURPHY PARKWAY
EXTENSION IMPROVEMENTS WITHIN THE CROSSROADS AREA AND
ADJUSTMENT TO THE GASB 34 REPORT ASSOCIATED WITH EP NO. 2020- 41 square foot building in the Commercial Highway Zone, which included approximately 32, 000 square feet of retail commercial on site supported by onsite warehousing, on an 18. 70 -acre site located within the Crossroads Commerce Center.
On June 12, 2020, the City of Lathrop Community Development Department approved the Minor Site Plan Review No. 20- 57 (MSPR 20- 57) to authorize the construction of a new 346, 80 square foot warehouse building on an approximately 20 - acre site. The MSPR 20- 57 modified the existing approval for DP 16- 49 (LBA North).
The Conditions of Approval associated with MSPR 20- 57 required the installation of frontage improvements along Murphy Parkway and Harlan Road, including paving, landscaping, fencing, lighting, curb, gutter, and sidewalk. On August 8, 2022, City Council accepted the frontage improvements, including the Murphy Parkway extension from Duke Realty, and authorized staff to release the performance bond.
Prologis notified the City that they acquired all rights and obligations of Duke Realty pertaining to this property.
The Murphy Parkway extension is eligible for partial reimbursement from the parcels that benefit from the improvements. The total cost for the design and construction of the Murphy Parkway extension was $ 934, 453, which was paid by the developer, as shown in Attachment " B". These costs are to be shared by the benefiting property owners as shown in Attachment " C". Prologis' sfair share is $ 282, 608 (non - reimbursable costs), while the remaining $ 651, 485 is reimbursable as the fair share of the properties listed in Attachment " D" as determined by the City Engineer pursuant to Lathrop Municipal Code 3. 22. 060. Benefiting property owners are to pay their fair share as a condition of future development and prior to permit issuance.
After acceptance, the developer, recognized additional costs associated with the improvements that were not included in the original GASB 34 Report. These costs include engineering, design, change orders, permitting, and other soft costs. Council is provided this opportunity to approve the adjusted GASB 34 Report value to ensure that the City' s asset records are accurate.
REASON FOR RECOMMENDATION:
Staff recommends that City Council approve the adjusted GASB 34 Report and the reimbursement agreement ( 2710-01- 1543) between Prologis and the City to begin the process of establishing a mechanism for Prologis to be reimbursed by other benefitting property owners.
FISCAL IMPACT:
None.
CITY MANAGER' S REPORT PAGE 3
OCTOBER 14, 2024 CITY COUNCIL REGULAR MEETING
APPROVE REIMBURSEMENT AGREEMENT FOR THE MURPHY PARKWAY
EXTENSION IMPROVEMENTS WITHIN THE CROSSROADS AREA AND
ADJUSTMENT TO THE GASB 34 REPORT ASSOCIATED WITH EP NO. 2020- 41 ATTACHMENT:
A. Resolution of the City Council of the City of Lathrop Approving a Reimbursement Agreement for Design and Construction of the Murphy Parkway Extension within the Crossroads Area with Prologis, Inc. and an Adjustment to the GASB 34 Report Associated with Encroachment Permit No. 2020- 41
B. Adjusted GASB 34 Report Amount
C. Area Depiction of Benefitting Properties
D. Proportionate Share Breakdown of Benefitting Properties E. Public Infrastructure Reimbursement Agreement with Prologis, Inc. for Murphy Parkway Extension
CITY MANAGER' S REPORT PAGE 4
OCTOBER 14, 2024 CITY COUNCIL REGULAR MEETING
APPROVE REIMBURSEMENT AGREEMENT FOR THE MURPHY PARKWAY
EXTENSION IMPROVEMENTS WITHIN THE CROSSROADS AREA AND
ADJUSTMENT TO THE GASB 34 REPORT ASSOCIATED WITH EP NO. 2020- 41 APPROVALS:
o) I /Z 4.
Bellal Nabizadah Date
Assistant Engineer
Brad jf/ aylor
City Engineer
Cari Ja s
Directo of Finance
is/ /702i4
Date
o/ i/acosi
Date
Michael King Date
Assistant City Manager
Salvador Navarrete Date
City Attorney
t o • 3 • zoz7
Stephen J. Salvatore Date
City Manager
RESOLUTION NO. 24-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LATHROP
APPROVING A REIMBURSEMENT AGREEMENT FOR DESIGN AND
CONSTRUCTION OF THE MURPHY PARKWAY EXTENSION WITHIN THE CROSSROADS AREA WITH PROLOGIS, INC. AND AN ADJUSTMENT TO THE GASB 34 REPORT ASSOCIATED WITH ENCROACHMENT PERMIT NO. 2020- 41 WHEREAS, on June 15, 2016, the City of Lathrop Community Development Department approved Development Plan No. 16- 49 (DP 16- 49) for the construction of a 382, 72 square foot building in the Commercial Highway Zone, which included approximately 32, 000 square feet of retail commercial on site supported by onsite warehousing, on an 18. 70 -acre site located within the Crossroads Commerce Center; and
WHEREAS, on June 12, 2020, the City of Lathrop Community Development Department approved the Minor Site Plan Review No. 20- 57 (MSPR 20- 57) to authorize the construction of a new 346, 80 square foot warehouse building on an approximately 20 -acre site. The MSPR 20- 57 modified the existing approval for DP 16- 49 (LBA North); and
WHEREAS, the Conditions of Approval associated with MSPR 20- 57 required the installation of frontage improvements along Murphy Parkway and Harlan Road, including paving, landscaping, fencing, lighting, curb, gutter, and sidewalk; and WHEREAS, on August 8, 2022, City Council accepted the frontage improvements associated with Encroachment Permit No. 2020- 41 (EP 2020- 41), including the Murphy Parkway extension from the developer, and authorized staff to release the performance bond. Prologis, Inc. (Prologis) notified the City that they acquired all rights and obligations of Duke Realty; and WHEREAS, the Murphy Parkway extension is eligible for reimbursement from the parcels that benefit from the improvements. The total cost for the design and construction of the Murphy Parkway extension, $934, 453, was paid by the developer, as shown in Attachment " B" to the City Manager' s Report that accompanied this Resolution; and
WHEREAS, these costs are to be shared by the benefiting property owners as shown in Attachment " C" to the City Manager' s Report that accompanied this Resolution. Prologis' sfair share is $ 282, 608 (non - reimbursable costs), while the remaining $ 651, 845 is reimbursable as the fair share of the properties listed in Attachment " D" to the City Manager' sReport that accompanied this Resolution as determined by the City Engineer pursuant to Lathrop Municipal Code 3. 22. 060.
Benefiting property owners are to pay their fair share as a condition of future development and prior to permit issuance; and
WHEREAS, after acceptance, the developer recognized additional costs associated with the improvements that were not included in the original GASB 34 Report. These costs include engineering, design, change orders, permitting, and other soft costs. Council is provided this opportunity to approve the adjusted GASB 34 Report value to ensure that the City' s asset records are accurate; and WHEREAS, staff recommends that City Council approve the adjusted GASB 34 Report and the reimbursement agreement between Prologis and the City to begin the process of establishing a mechanism for Prologis to be reimbursed by other benefitting property owners.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Lathrop does hereby approve the reimbursement agreement ( 2710-01- 1543) with Prologis, Inc., substantially in the form included as Attachment " C" to the City Manager' sreport that accompanied this resolution, for the Murphy Parkway Extension within the crossroads area and the adjusted GASB 34 Report included as Attachment B" to the City Manager' s Report that accompanied this Resolution associated with Encroachment Permit No. 2020- 41.
PASSED AND ADOPTED by the City Council of the City of Lathrop this 14th day of October 2024 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Sonny Dhaliwal, Mayor
ATTEST: APPROVED AS TO FORM:
Teresa Vargas, City Clerk Salvador Navarrete, City Attorney GASB
34 REPORT
ADJUSTMENT
Resolution
Resol
utio
n
Adoption Date Impr
nt Descripti eme ov AppronedGASB 34ov Report
Final
C
Val ue
ontract Cost
GASB
34Report Adj ent ustm
22- 518
8 -
Aug -
22 9
Murphy
Parkway
Extension
and
Harlan
Road
frontage
impro
vements 732, 888. 40
981, 32 .
90 248, 433 .
50 Murphy
what
was
ATTACHMENT
p ..
Proportionate share of Murphy Parkway
APN Property Owner Acreage
10. 01
Percent Share
Total Cost of Improvement for Murphy Parkway Extension:
934, 453
Total acreage of all properties benefitting from Murphy Parkway Extension:
63. 75
Amount to be reimbursed to Prologis 651, 845
15. 70%
Proportionate share
146, 727
ATTACHMENT
N
a
41 CITY OF LATHROP
PUBLIC INFRASTRUCTURE REIMBURSEMENT AGREEMENT
BETWEEN THE CITY OF LATHROP AND PROLOGIS, INC. RELATING
TO MURPHY PARKWAY EXTENSION
This Public Infrastructure Reimbursement Agreement Relating to the Murphy Parkway Extension, Lathrop, CA ("Agreement") is made and entered into this 14th day of October 2024 Effective Date") by and between the City of Lathrop, a municipal corporation of the State of California (" City"), and Prologis, Inc. ("Developer"). City and Developer may be collectively referred to herein as the " Parties" or individually as a " Party".
RECITALS
A. On June 15, 2016, the City of Lathrop Community Development Department approved Development Plan No. DP -16- 49 for the construction of a 382, 72 square foot building in the Commercial Highway Zone, which included approximately 32, 000 square feet of retail commercial on site supported by onsite warehousing, on an 18. 70 -acre site located within the Crossroads Commerce Center.
B. On June 12, 2020, the City of Lathrop Community Development Department approved the Minor Site Plan Review No. MSPR- 20- 57 (MSPR) to authorize the construction of a new 346, 80 square foot warehouse building on an approximately 20 -acre site. The MSPR modified the existing approval for Development Plan No. DP -16- 49 (LBA North).
C. The Conditions of Approval associated with MSPR- 20- 57required the installation of frontage improvements along Murphy Parkway, including paving, landscaping, lighting, curb, gutter, sidewalk, and utilities (" Improvements"). Developer has completed said Improvements and City accepted the Improvements on August 8, 2022.
D. There are a number of parcels that benefit from the Improvements (" Benefitting Properties", depicted in Exhibit A) designed and constructed by Developer, and therefore, Developer is eligible for reimbursement from these benefiting property owners.
E. The purpose of this Agreement is to detail the mechanisms for the payment of Reimbursement to Developer as detailed in Exhibit B to this Agreement. Lathrop Municipal Code LMC) 3. 22 provides a mechanism to reimburse developers for certain public improvements as detailed therein and Improvements meet criteria set for in LMC 3. 22.
NOW, THEREFORE, for good and valuable consideration, City and Developer agree as follows:
1 AGREEMENT
1. Recitals. The recitals set forth above are true and correct and made a part of this Agreement.
2. City and Developer Obligations.
a) City Obligations:
i) City shall condition Benefitting Properties to pay their proportionate share of the Reimburse amount as determined by the City Engineer pursuant to Lathrop Municipal Code 3. 22. 060, included in Exhibit B, following Developer' ssatisfaction of all obligations as listed in Section 2(b) of this Agreement.
ii) To the extent permitted by law, City shall collect reimbursement amount from Benefitting Properties prior to issuance of any permits. ii) Subject to the limitation herein, City shall reimburse Developer from any sums collected pursuant to (a)( i) and ( a)( ii) for the Improvements with Reimbursement not to exceed $ 651, 845.
b) Developer Obligations:
i) Developer has submitted as -built plans to the City pursuant to LMC
3. 22. 010E.
ii) Developer has provided reasonable documentation of the actual costs incurred for Project ( which may include, among others, unconditional lien releases, invoices, proof of payment, confirmation on letterhead from relevant contractor( s)/ubcontractor( s) of payment, and/ or any other reasonable documentation similar in detail and content as has been previously provided to City); City shall then have the right, but not the obligation, to reasonably review and audit said documentation, to the extent it determines reasonably appropriate, with any such audit being completed within thirty ( 30) days. No later than thirty ( 30) days of either ( a) the receipt of said documentation, or (b) the completion of any audit.
3. Reimbursement.
a) Timing of Reimbursement.
i) Timing of Reimbursement to Developer shall occur within 30 days after City has received funds from Benefiting Properties. City shall 2 deliver such Reimbursement to the address set forth in Section 10 below.
4. Term of Agreement; Termination.
a) This Agreement shall commence on the Effective Date and shall terminate when Developer has received total Reimbursement amount.
5. Indemnification. Developer agrees to protect, defend, indemnify and hold City, its City Council members, officers, employees, engineer, and construction manager harmless from and against any and all claims, demands, liabilities, losses, damages, costs, expenses, liens, penalties, suits, or judgments, arising in whole or in part, directly or indirectly, at any time from any injury to or death of persons or damage to property as a result of the willful or negligent act or omission of Developer or its Contractors, or which results from Developer' snoncompliance with any Law respecting the condition, use, occupation or safety of the Project site, or any part thereof, or which arises from conduct in the performance of or failure to perform the terms and conditions of this Agreement, except as may arise from the sole willful or negligent act or omission of City or any of its City Council members, officers, employees. This indemnification shall extend to any and all claims, demands, or liens made or filed by reason of any construction, renovation, or remodeling work performed by Developer under this Agreement at any time during the term of this Agreement, or arising thereafter.
6. Governing Law. This Agreement shall be governed by the laws of the State of California.
7. Binding Effect. This Agreement is for the benefit of and shall be binding upon both Parties and their respective successors, heirs, executors, administrators, permitted assigns and successors in interest.
8. Assignment. Not Applicable.
9. Notices. For purposes of this Agreement, " notice" means any notice, demand, request, or other communication to be provided under this Agreement. All notices shall be in writing and shall be sent to the below addresses or at such other addresses as either Party may later specify for that purpose. All notices required or permitted under this Agreement shall be personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid or by a nationally recognized overnight courier, such as FedEx or UPS, with charges prepaid for next business day delivery, addressed to the Parties as follows:
If to City: City of Lathrop
390 Towne Centre Drive
Lathrop, CA 95330
Attn: City Clerk
With a concurrent copy to: City of Lathrop
3 390 Towne Centre Drive
Lathrop, CA 95330
Attn: Salvador Navarrete, City Attorney
Email: snavarrete@ci. lathrop. ca. us
If to Developer: Prologis, Inc.
3353 Gateway Boulevard
Fremont, CA 94538
Attn: Ryan Marshall
Email: rmarshall@prologis. com
The date of any notice shall be the date of receipt, provided that rejection or other refusal to accept or the inability to deliver because of a change in address of which no notice was given shall be deemed to constitute receipt of the notice sent. Either Party may change its address for notice by giving notice to the other Party in accordance with this Section 9.
10. Payments to Developer. All reimbursement payments due to Developer hereunder shall be sent to the following address or at such other address ( or wiring instructions) as Developer shall from time to time specify in writing to City:
Prologis, Inc.
3353 Gateway Boulevard
Fremont, CA 94538
Attn: Ryan Marshall
11. Amendments. Any modifications to this Agreement shall be in writing and signed by authorized representatives of both Parties.
12. Attorney' sFees and Venue. In the event of a dispute arising under this Agreement between the Parties, the prevailing Party shall be entitled to an award against the other Party of reasonable and actual attorney' sfees and costs incurred in connection with the dispute. The venue for any litigation shall be in San Joaquin County, California.
13. Cumulative Rights; Waiver. The failure by either Party to exercise, or delay in exercising any rights under this Agreement, shall not be construed or deemed a waiver thereof, nor shall any single or partial exercise by either Party preclude any other or future exercise thereof or the exercise of any other right. Any waiver of any provision or any waiver of any breach of any provision of this Agreement must be in writing, and any waiver by either Party of any breach of any provision of this Agreement shall not operate as or be construed as a waiver of any other breach of that provision or of any breach of any other provision of this Agreement.
14. Severability. If any provision ofthis Agreement is deemed by a court of competent jurisdiction to be invalid, illegal or unenforceable, such provision shall be deemed to be severed or deleted from this Agreement and the balance of this Agreement shall remain in full force and effect notwithstanding such invalidity, illegality or unenforceability. 4 15. Headings. All headings herein are inserted only for convenience and ease of reference and are not considered in the construction or interpretation of any provision of this Agreement.
16. Signing Authority. The individuals signing this Agreement represent and agree that they have full and actual authority to bind their respective Parties to this Agreement.
17. Entire Agreement. This Agreement constitutes the entire agreement between the Parties regarding its subject. This Agreement supersede all proposals, oral and written, and all negotiations, conversations or discussions heretofore and between the Parties related to the subject matter of this Agreement.
18. No Third -Party Beneficiaries. There are no intended third -party beneficiaries of any right or obligation assumed by the Parties. In particular, and without limitation, no merchant builder or other purchaser of land from Developer shall have any right to enforce this Agreement.
19. Minor Modifications. Not applicable.
20. Counterparts; Electronic Signatures. This Agreement may be signed in counterparts, each of which shall constitute an original and which collectively shall constitute one instrument. Signatures may be given by facsimile, emailed PDF, or other electronic means with the same force and effect as signed, wet originals.
Signatures to follow on next page]
5 IN WITNESS WHEREOF, City and Developer have executed this Agreement as of the Effective Date.
CITY:
CITY OF LATHROP,
A California municipal corporation
By:
Stephen J. Salvatore
City Manager
ATTEST:
City Clerk of and for the City
of Lathrop, State of California
By:
Teresa Vargas, City Clerk
APPROVED AS TO FORM BY THE CITY OF LATHROP CITY ATTORNEY:
By:
Salvador Navarrete
City Attorney
DEVELOPER:
Prologis, Inc.,
A Delaware limited liability company
By:
Ryan Marshall
Director of Development
6 EXHIBIT A
DEPICTION OF BENEFITTING PROPERTIES
7 EXHIBIT B
PROPORTIONATE SHARE OF REIMBURSEMENT AMOUNT
8 Proportionate share of Murphy Parkway
APN
198-20- 05
Property Owner
Beowulf Energy
Acreage
1©. 01
Total Cost of Improvement for Murphy Parkway Extension:
934, 453
Total acreage of all properties benefitting from Murphy Parkway Extension:
63. 75
Amount to be reimbursed to Prologis 651, 845
Percent Share
15. 70%
Proportionate share
146, 727