1 REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT (“Agreement”) is made and entered into this _ _ _ _ _ day of _________, 2021 (the “Effective Date"), by and between the CITY OF SALINAS, a California charter city and municipal corporation ("City"), and SALINAS 101 LLC, a California limited liability company, and/or ASSIGNEE (“Owner”).
RECITALS
A. O wner represents it has acquired lawful title to property currently located within the unincorporated area of Monterey County which is located near the intersection of Sala Road and Harrison Road and which is identified by Monterey County Assessor's Parcel Number 113-091- 017-000 consisting of approximately 17.5 acres of land as more specifically described in the Legal Description attached hereto as Exhibit A and shown in the map attached hereto as Exhibit B (the "Property").
B. The Property is adjacent to that area identified in the City’s Economic Development Element as Target Area K (“Target Area K”) and is within that area identified in the City’s Economic Development Element as Economic Development Reserve Area K (“Reserve Area K”), and is south of a proposed farmworker housing project (“Housing Project”), all of which are shown in Exhibit B.
C. Owner is proposing to develop a commercial project under the County of Monterey’s General Plan on the Property (“Project”) and has submitted a project application to the County of Monterey (“County”).
D. The City owns and operates a wastewater collection system which collects wastewater discharge originating within the City’s limits and conveys such wastewater discharge through the City disposal system. This wastewater collection and disposal system includes a ten (10)-inch sewer main currently terminating at the intersection of Russell Road and North Main Street (“Connection Point”). The City's wastewater collection and disposal system is referred to herein as the "Disposal System”.
E. The County has indicated to the City and the Owner that it will not deem Owner’s project application complete without a wastewater treatment plan. Since neither the County nor any other public agency c urrently provides wastewater service to the Property, Owner has requested a “Will Serve Letter” from the City to connect to its Disposal System.
2 F. The City has reviewed studies prepared by the Owner, at Owner’s cost, t o c a l c u l a t e the anticipated wastewater generation from the proposed Project, and has determined the disposal line size of 10 inches is required to serve the Property and potential other development in Target Area K and the Housing Project, all of which are projected to impact the City’s downstream Disposal System capacity.
G. City and Owner entered into an Extraterritorial Wastewater Service Agreement on ________ __, 2021 in which Owner agreed to construct, at Owner's cost, a new ten (10)-inch wastewater sewer line (the ''New Sewer Line") within the right of way of Harrison Road from the Connection Point to a point on Harrison Road adjacent to the Property.
H. The New Sewer Line will then be connected to the Property via a lateral connection, to be installed by the Owner to City standards, including all road cuts, patching, permits, and inspections to connect the Property to the Disposal System. Owner will obtain and pay fees for County and City encroachment permits and building permits to construct the New Sewer Line and connect to the Disposal System.
I. The City desires that future development and users (collectively referred to as “users” herein) in Target Area K and the Housing Project be allowed to use the New Sewer Line, and requests that the Owner’s New Sewer Line accommodate Owner’s Project as well as such other existing or future potential uses in that area.
J. This Agreement establishes a mechanism for future users to reimburse the Owner for their proportionate share of the costs incurred by Owner installing the New Sewer Line from the Project to the Connection Point. Such proportionate share shall be based on the estimated wastewater generation of future users of lands located within Target Area K and the Housing Project. This Agreement provides for the users in Target Area K, the Housing Project and any other areas to pay to City such users’ proportionate share of Owner’s costs for installing the New Sewer Line, and City to then remit such payments to Owner.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and understandings hereinafter set forth, the City and the Owner hereby set forth their agreement a follows:
AGREEMENT
1. Recitals. The recitals set forth above are true and correct and are made a part of this Agreement.
3 2. Project. The Project includes the construction of a ten (10)-inch municipal sewer line extension from the Project to the Connection Point as approved by the City Engineer (the New Sewer Line). Owner will design, fund, and construct the New Sewer Line in conformance with City standards.
3. Reimbursement. Owner shall be entitled to proportional reimbursement as described in this section:
a. The Owner must complete construction of the New Sewer Line. Upon completion, the Owner is eligible to be reimbursed for a portion of its “Actual Costs”, which includes but is not limited to, the expenses of design, engineering, construction, installation, inspection, supervision, insurance, encroachment, construction permit fees, and other costs that can be ascertained and agreed to by Owner and City.
Owner shall pay encroachment and construction permit fees to the County and connection, service and impact fees to the City, but shall not be required to pay the same fee to both the City and County. Actual Costs shall not include connection, service and impact fees exclusively associated with Owner’s Project, the $64,600 downstream improvement contribution required by the City, and costs attributable to Owner’s projected pro rata share of use of the New Sewer Line, as specified in Exhibit C, to be attached hereto after installation of the New Sewer Line is complete. b. The Owner shall have a right to reimbursement of its Actual Costs. The City shall provide written notice to Owner of (i) a request from each Sharing Party (defined below) to hook up to the New Sewer Line, and (ii) each Sharing Party connecting to the New Sewer Line. Additionally, at least annually after the Effective Date, the City will provide to Owner an accounting certified by the City as true and correct reflecting all reimbursement fees received by City from Sharing Parties, and all such fees paid by City to Owner. Owner shall have a right to audit, at its expense, the books and records of City concerning Sharing Parties’ payments of fees associated with building permits, sewer connections and other fees related to development within Target Area K and the Housing Project benefiting from the New Sewer Line. Upon fourteen (14) days’ notice, City shall either provide to Owner copies of all such books and records, or make such books and records available for inspection by Owner and/or its advisors.
c. The City will collect reimbursement from users located within Target Area K and the Housing Project that benefit from the New Sewer Line, including upstream users accessing the New Sewer Line indirectly through an upstream connection point, all located in the parcels (or a portion thereof) as shown and listed in Exhibit
4 D (each a “Sharing Party” or collectively “Sharing Parties”). The Sharing Parties will be responsible for their share of the Actual Costs of the New Sewer Line based on the formula described in Exhibit E attached hereto. The fees shall be collected by the City from each Sharing Party prior to the City’s issuance of any building permit for connecting to the New Sewer Line for such Sharing Party. Payment of such fees by the Sharing Parties shall be a condition to their receiving a building permit from the City. The City will not allow any Sharing Parties to hook up to the New Sewer Line without their first paying their share of the Actual Costs. d. The actual amounts to be paid to the Owner shall be based upon the final Actual Costs of the New Sewer Line, which shall be evidenced by invoices or other evidence of such costs provided by the Owner, and as verified by the City’s Public Works Director. The Owner shall provide the City with documentation of the scope of work and the invoices showing the amounts actually paid by the Owner for the Actual Costs of the New Sewer Line. Exhibit C will then be updated to reflect final Actual Costs. As stated above, Owner’s Actual Costs to be reimbursed shall be reduced by costs attributable to Owner’s projected pro rata use of the New Sewer Line.
e. The City shall pursue reimbursement from the Sharing Parties, with the costs of pursuing reimbursement borne solely by the City in the following two instances:
The City shall pay (i) all clerical and administrative costs of notifying and billing users, collecting payments, disbursing payments to Owner, providing the annual accounting described above, working with users and Owner to generally facilitate the reimbursement process described in this Agreement, and otherwise performing normal and customary City functions (including inspections, permit issuance, etc.), and (ii) all costs of pursuing payment from a user that obtains a building permit from the City and/or connects to the New Sewer Line without first paying its proportionate reimbursement amount as described herein. All reimbursements due under this Agreement shall be promptly paid by the City to the Owner as the City obtains the funds from the Sharing Parties after completion of the New Sewer Line, as certified by the Owner’s contractor to the City’s Public Works Director. The City shall notify each user of the reimbursement amount it owes hereunder (“City’s Notice”). Under Government Code Section 66020(d)(1), a user has ninety (90) days from the date of the City’s Notice to indicate that it is paying the fees under protest.
Under Government Code Section 66020(d)(2), if the user pays the fees under protest, the user has one hundred eighty (180) days from the date of the City’s Notice to file a legal action seeking to recover the fees. City shall pay the reimbursement fees to Owner within thirty (30) days after the 90-day or 180-day deadline above, whichever is applicable. If, however, an action has been instituted,
5 the City shall pay such funds to the Owner within thirty (30) days after the action has been completed and the authority of the City to collect such charges is sustained. The parties shall be bound by any statutes amending or succeeding the statutes cited above.
f. Notwithstanding any terms to the contrary contained herein, the City may allow property owners in Reserve Area K to hook up to the New Sewer Line, provided:
(i) the City determines that the New Sewer Line has sufficient capacity, (ii) such owners in Reserve Area K are treated the same as “users” and “Sharing Parties” herein, and (iii) both the City and such owners in Reserve Area K are bound by all the terms of this Agreement, including such owners being required to pay the reimbursement fees at the same rate described herein prior to hooking up to the New Sewer Line. At such point that Owner has been reimbursed one hundred percent (100%) of its Actual Costs (as defined in Section 3.a above), the City may cease paying Owner any further reimbursement fees hereunder.
4. City’s Best Efforts. The City agrees to use its best efforts, and to take all reasonable and necessary actions, to provide to Owner the reimbursement fees from the Sharing Parties as mentioned in this Agreement. Upon Owner’s request, City will assign to Owner the right to collect the reimbursement fees (and any attorney fees and legal costs) from the Sharing Parties.
5. Term. This Agreement shall become effective, and the obligations herein, commencing on the date first set forth above. This Agreement may be terminated at any time upon the mutual written consent of the parties but shall otherwise remain in force and effect until the Owner is fully reimbursed as provided herein.
6. Non-Recourse Reimbursement Agreement. It is agreed and understood that the City shall levy and use commercially reasonable efforts to collect the fees from the Sharing Parties in accordance with this Agreement with all such fees going to the Owner for reimbursement of the Actual Costs, as provided herein. The costs of levying and collecting fees from the Sharing Parties, including, but not limited to, staff time and administrative expenses, shall be at the City’s cost and expense, as provided in Section 3.e above, and the Owner shall have no recourse against the City for failure to pursue collection of such fees if Sharing Parties refuse to pay and City has not issued a building permit to such Sharing Parties or otherwise allowed Sharing Parties to connect to the New Sewer Line without paying the reimbursement, other than to obtain an assignment of the City’s rights of collection against such Sharing Parties. Notwithstanding the foregoing, the City shall be liable to Owner for the reimbursement fees owed by any user the City permits to hook up to the New Sewer Line without paying its reimbursement fees as provided herein.
6 7. Counterparts. This Agreement may be executed in one or more counterparts, including electronically, each of which is deemed to be an original.
8. Successors and Assigns. The covenants and agreements contained in this Agreement shall be binding upon and shall inure to the benefit of the heirs, successors and assigns of the parties hereto. Owner’s successor or assignee may install the New Sewer Line or receive reimbursement fees of the Actual Costs under the terms and conditions herein.
9. Entire Agreement. This Agreement constitutes the entire Agreement between the parties hereto and supersedes any and all prior agreements, whether oral or written, relating to the subject matter thereof. Any modification of the Agreement will be effective only if it is in writing signed by both parties hereto.
10. Validity. If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions will continue in full force without being impaired or invalidated in any way.
11. Laws. Owner agrees that in the performance of this Agreement it will comply with all applicable State, Federal and local laws and regulations. This Agreement shall be governed by and construed in accordance with the laws of the State of California, County of Monterey, and City of Salinas.
12. Notices. Any notice required or intended to be given to either party under the terms of this Agreement shall be in writing and shall be deemed to be duly given if delivered personally, transmitted by facsimile or email followed by telephone or electronic confirmation of receipt, or sent by United States registered or certified mail, with postage prepaid, return receipt requested, addressed to the party to which notice is to be given at the party's address set forth on the signature page of this Agreement or at such other address as the parties may from time to time designate by written notice. Notices served by United States mail in the manner above described shall be deemed sufficiently served or given two (2) days after the mailing thereof. All notices regarding any new or increased fee or rate increases affecting the applicable fees and rates in this Agreement shall be provided in the same manner provided to all customers subject to the new or increased fees and charges.
13. Time of Essence. Time is of the essence in the fulfillment by the parties hereto of their obligations under this Agreement.
(signatures are on the following page)
7 IN WITNESS WHEREOF, the undersigned, as authorized representatives of the City and of the Owner have entered into this Agreement as of the Effective Date.
CITY OF SALINAS, a California charter city and municipal corporation ____________________________________
Kimbley Craig, Mayor
200 Lincoln Avenue
Salinas, CA 93901
APPROVED AS TO FORM:
____________________________________
Christopher A. Callihan, City Attorney
ATTEST:
_____________________________________
Patricia M. Barajas, City Clerk
OWNER
SALINAS 101 LLC, a California
limited liability company, and/or ASSIGNEE
By: The Sobel Company, Inc.
Managing Member
_____________________________________
Bradley A. Sobel, President
The Sobel Company, Inc.
9454 Wilshire Boulevard
Suite 210
Beverly Hills, CA 90212
Attn: Bradley Sobel
Phone: 310-277-4697
Email: [email protected]
8 Exhibits
Exhibit A – Legal Description of Property
Exhibit B – Map of Property, Housing Project, Target Area K, Reserve Area K, Salinas City Boundary and Surrounding Area
Exhibit C – Actual Costs (to be attached later)
Exhibit D – Parcels with Sharing Parties
Exhibit E – Reimbursement by Sharing Parties
9 EXHIBIT “A”
LEGAL DESCRIPTION OF THE PROPERTY
The land referred to is situated in the unincorporated area of the County of Monterey, State of California, and is described as follows:
Certain real property situate in the Rancho Bolsa De Las Escarpinas in the County of Monterey, State of California, being a part of Lots 1 and 2 of “Parcel Two” shown on map entitled, “Partition Map Accompanying Report of Referees Showing Subdivisions, Espinosa Portion of the Rancho Bolsa De La Escarpinas”, filed July 10, 1925 in Volume 2 of Surveys at Page 28, Records of said County, and being also a part of that certain 35.16 acre tract of land described in Deed from A.D. Martins to Frank D. Martines et al, dated February 10, 1948, and recorded in Volume 1039 of Official Records at Page 201, records of said County, said part being particularly described as follows:
Beginning at a 1-1/2” diameter iron pipe standing in the Westerly boundary of said 35.16 acre tract of land from which the most Northerly corner thereof bears along said boundary N. 10° 51’ 56” E., 589.87 feet distant and running thence from said place of beginning parallel with the Northeasterly boundary of said 35.16 acre tract of land
(1) S. 63° 03’ 27” E., 1,178.39 feet to a 1-1/2” diameter iron pipe standing in the line common to said 35.16 acre tract of land and Harrison Road (a county road 60 feet wide) from which a 6” x 6” granite monument standing at the corner common to said lots 1 and 2 in said Westerly line of Harrison Road bears along said common line N. 4° 05’ 25” W., 157.78 feet distant; thence along said common line
(2) S. 4° 05’ 25” E., 706.17 feet to a 6” x 6” granite monument standing at the most Southerly corner of said Lot 2 and said 35.16 acre tract of land; thence leave said common line and running along the Southwesterly boundary of said Lot 2 and said
35.16 acre tract of land
(3) N. 70° 45’ 55” W., 1,168.21 feet to a 1-1/2” diameter iron pipe standing at the Southwest corner of said 35.16 acre tract of land in the Easterly line of California State Highway U.S. 101; thence along the line common to said State Highway and said 35.16 acre tract of land
(4) N. 17° 06’ 14” W., 122.0 feet to a 1-1/2” diameter iron pipe standing at the Southwest corner of that certain 1.017 acre tract of land designated as “Parcel 2” in deed from Frank Dutra Martins et al., to Adeline Anderson dated January 19, 1951, and recorded in Volume 1275 of Official Records at Page 46, records of said county; thence leave said common line and running along the Southwesterly boundary of said 1.017 acre tract of land
(5) S. 70° 45’ 55” E., 149.02 feet to a 1-1/2” diameter iron pipe standing at the most Easterly corner of said 1.017 acre tract of land; thence along the Northeasterly boundary thereof
10 (6) N. 17° 06’ 14” W., 415.87 feet to a 1-1/2” diameter iron pipe standing at the most Northerly corner of said 1.017 acre tract of land at the Southeast corner of that certain
0.9837 acre tract of land designated as “Parcel 1” in said deed recorded in Volume 1275 of Official Records at Page 46, records of said county; thence along the Easterly boundary of said 0.9837 acre tract of land
(7) N. 28° 51’ W., 49.15 feet to a 1-1/2” diameter iron pipe; thence
(8) N. 9° 42’ W., 64.09 feet to a 1-1/2” diameter iron pipe standing in the boundary common to said 0.9837 acre tract of land and said 35.16 acre tract of land; thence along the Westerly boundary of said 35.16 acre tract of land
(9) N. 10° 51’ 56” E., 287.43 feet to the place of beginning.
EXCEPTING THEREFROM, the Lands as set forth in the Final Order of Condemnation recorded April 20, 2011 as Document No. 2011022876 of Official Records.
APN: 113-091-017
11 EXHIBIT “B”
MAP OF
PROPERTY, HOUSING PROJECT, TARGET AREA K, RESERVE AREA K,
SALINAS CITY BOUNDARY AND SURROUNDING AREA
12 EXHIBIT “C”
ACTUAL COSTS
(The final version of this Exhibit shall replace this version and be inserted here once construction is completed, per Section 3(a) of this Agreement.
Actual Costs, including but not limited to, the expenses of design, engineering, construction, installation, inspection, supervision, insurance, encroachment & construction permit fees, and other costs associated with the New Sewer Line.
Actual Costs shall not include connection, service and impact fees exclusively associated with Owner’s Project and the $64,600 downstream improvement contribution required by the City.
The Actual Costs are estimated to be $2,000,000. The parties do not know whether the Actual Costs will be higher, lower or substantially different than such non-binding estimated amount.
Once the Actual Costs are determined, based on Section 3(a) of this Agreement, such estimated amount shall be removed from this Exhibit and replaced with the Actual Costs approved by the City and Owner.
13 EXHIBIT “D”
PARCELS WITH SHARING PARTIES
14 EXHIBIT “E”
REIMBURSEMENT BY SHARING PARTIES
Using the projected Peak Wet Weather Flows from our study and as an assumption, the New Sewer Line construction cost of $2,000,000*, the unit cost for PWWF is as follows:
Unit Cost (in $ per gallon/day) = Total Cost (in $) / Total PWWF (in gpd) Unit Cost (in $ per gallon/day) = $2,000,000 / 332,740 gpd Unit Cost = $6.01 per gallon/day (or $6.01/gpd)
For example, a builder intends to develop a portion of the Light Industrial area east of Harrison Road. Their facility is projected to generate a Peak Wet Weather Flow of 50,000 gallons/day. Using the unit cost of $6.01/gpd, the builder’s pro rata share of the Harrison Road sewer system will be $300,500 and that would be the amount reimbursed to the Owner.
*The $2,000,000 figure used above for the New Sewer Line Construction Cost is only an assumption and is only being used as an example to explain how the formula for reimbursement works. Only after the construction of the New Sewer Line is completed will the final New Sewer Line Construction Cost be determined and then that final number will be used to calculate reimbursements per Section 3(a) of this Agreement.