Item 11.e.6 - 2023-05-02 — Santa Maria City Council, May 2, 2023

FOR THE COUNCIL MEETING OF MAY 2, 2023

COUNCIL AGENDA REPORT
TO: City Council
FROM: City Manager
Prepared by: Director of Public Works
SUBJECT: SCHOOL MILL INVESTORS, LLC REIMBURSEMENT AGREEMENT, AMENDMENT NO. 3
RECOMMENDATION:

That the City Council adopt a Resolution approving Amendment No. 3 to the Reimbursement Agreement with School Mill Investors, LLC for the construction upgrade of sanitary sewer segment D-13.

BACKGROUND:

On December 15, 2020, the City Council approved a Reimbursement Agreement between the City and School Mill Investors, LLC to improve a sanitary sewer system identified in the Growth Mitigation Capital Improvement Program.

On October 4, 2022, the City Council approved Amendment No. 1 to the Reimbursement Agreement to extend the project an additional 150 days.

On February 21, 2023, the City Council approved Amendment No. 2 to the Reimbursement Agreement to extend the project an additional 60 days to May 4, 2023.

The sanitary sewer upgrade project has experienced construction delays due to utility conflicts. School Mill Investors, LLC seeks the consideration of the City Council for the ability to amend the original Agreement with a third Amendment (Amendment No. 3) an additional 60 days with the provision for an additional 30 -day extension at the discretion of the City Manager, or designee.

DISCUSSION:

The project to complete the sanitary sewer improvements has initiated construction.

However, during construction, a utility gas line was encountered, creating a conflict. Gas Company representatives were apprised of the issue and proposed to relocate the utility line. As a result, School Mill Investor, LLC's contractor ceased construction activities until the completion of the Gas Company relocation project. During the course of the relocation, the Gas Company experienced construction conflicts which created delays. Said delays prompted School Mill Investors, LLC to seek the consideration of the City Council for the agreement extension via Amendment 3.

To complete the project, an additional 60 days beyond Amendment 2 with a provision for an additional 30 -day extension, is requested. Failure to complete the project will result in

forfeiture of the remaining funds of the agreement.

Environmental Determination:

The City of Santa Maria determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

Impact to the Community
The upgrade of the sanitary sewer line D-13 will increase the capacity of sanitary sewer flow for development in the Fester Basin and enhance development opportunities for future growth.

Fiscal Considerations
The developer will construct sanitary sewer improvement segment D-13 with reimbursement from Growth Mitigation and Wastewater funds.

DAVID BEAS, P.E.

Principal Civil Engineer

BRETT FULGONI
Director of Public Works
Attachments:

A. Reimbursement Agreement
B. Reimbursement Agreement Amendment 1
C. Reimbursement Agreement Amendment 2
D. Reimbursement Agreement Amendment 3
2 RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA
MARIA, CALIFORNIA, APPROVING AMENDMENT NO. 3 TO THE

REIMBURSEMENT AGREEMENT WITH SCHOOL MILL INVESTORS,

LLC FOR THE CONSTRUCTION UPGRADE OF SANITARY SEWER
SEGMENT D-13
WHEREAS, on December 15, 2020, the City Council approved a Reimbursement Agreement between the City and School Mill Investors, LLC to improve a sanitary sewer system identified in the Growth Mitigation Capital Improvement Program; and WHEREAS on October 4, 2022, the City Council approved Amendment No. 1 to the Reimbursement Agreement to extend the project an additional 150 days; and WHEREAS, on February 4, 2023, the City Council approved Amendment No. 2 to the Reimbursement Agreement to extend the project to May 4, 2023; and WHEREAS, it is in the best interest of the City to amend Reimbursement Agreement if deemed appropriate with developers for the construction of City infrastructure; and WHEREAS, a third Amendment to the original Agreement is requested to extend the agreement an additional 60 days with the provision for an additional 30 -day extension at the discretion of the City Manager, or designee.

NOW, THEREFORE, IT IS HEREBY RESOLVED that Amendment No. 3 to the Reimbursement Agreement established with School Mill Investors, LLC and the City of Santa Maria is approved by the City Council of the City of Santa Maria, California, shall be amended as follows:

1. The Mayor is hereby authorized and directed to execute for and on behalf of the City of Santa Maria, Amendment 3 to the Reimbursement Agreement with School Mill Investors, LLC; and

2. The Chief Deputy City Clerk is hereby authorized to make minor changes herein to address clerical errors, so long as substantial conformance of the intent of this document is maintained. In doing so, the Chief Deputy City Clerk shall consult with the City Manager and City Attorney concerning any changes deemed necessary.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Santa Maria held this 2nd day of May 2023.

Mayor
ATTEST:

Chief Deputy City Clerk
APPROVED AS FORM:

Attorney
APPROVED AS TO CONTENT:

Department 'rector
City M pager

ATTACHMENT A

REIMBURSEMENT AGREEMENT
(Construction of Master Planned Sanitary Sewer Facilities) This REIMBURSEMENT AGREEMENT (this "Agreement") is entered into this 6th day of October , 2020 by and between the CITY OF SANTA MARIA, a California charter city and municipal corporation (the "City") and school Mm Investors, LLC,, a Delaware LLC (the "Developer").

RECITALS
A. The purpose of this Agreement is to set forth the terms and conditions upon which the Developer will construct certain Master Planned Sanitary Sewer Facilities (the "Sanitary Sewer Facilities") for the benefit of the City and other property owners, and the terms and conditions upon which the City will reimburse the Developer for such construction; and B. City has adopted a policy, (the "Reimbursement Policy") that governs reimbursement to developers for the construction of Sanitary Sewer Facilities; and C. Developer's Conditional Use Permit U2019-0009 has been conditioned by the City to construct the Sanitary Sewer Facilities.

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration, the parties hereby agree as set forth below.

1. Incorporation of Recitals and Reimbursement Policy. The foregoing Recitals are hereby incorporated into and are a fully operative and effective part of this Agreement. The Reimbursement Policy, (Reimbursement Agreements, Section 8-15.08 of the Santa Maria Municipal Code) as may be amended from time to time, is hereby incorporated into and is a fully operative and effective part of this Agreement. In the event of a conflict between the terms and conditions of the Reimbursement Policy and this Agreement, the terms and conditions of the Reimbursement Policy shall control.

2. Developer's Obligation to Construct the Sanitary Sewer Facilities. Developer shall construct all segments and portions of Segment D l3 of the Sanitary Sewer Facilities located within the Master Sanitary Sewer Benefit Area ("Area"), which Area is the Sanitary Sewer drainage shed defined as follows: Fester Basin, D 13.

3. Issuance of Sanitary Sewer Contract. Developer, at its discretion, shall select all companies necessary to perform direct and indirect constructions services and determine the amounts payable for these services. Developer shall present the contract it has selected to the City for review and approval. The scope of work to be constructed and bid on shall be the work shown on the Public Improvement Plans (the "Plan") prepared by Engineering Design Professionals, 1 dated 6/25/2020, which has been approved by the City and is attached hereto as Exhibit "A" and incorporated herein by reference.

4. City's Reimbursement Obligation. The City shall reimburse the Developer the actual direct costs of constructing the Sanitary Sewer Facilities (which shall include, but shall not necessarily be limited to, design engineering. utility relocation. surveying, and geotechnical services), subject to the terms and conditions set forth in this Agreement and the maximum reimbursement allowable as set forth below.

4.1 Amount of Reimbursement. The Developer and City currently estimate the cost of constructing the Sanitary Sewer Facilities to be Four Hundred Forty Two Thousand Dollars (5442,000.00). The maximum amount allowed for reimbursement under this Agreement is Four Hundred Forty Two Thousand Dollars (5442,000.00). Upon completing construction of the Sanitary Sewer Facilities, the Developer shall submit to the City a written request for reimbursement, which request shall be accompanied by an itemized list of costs for which the Developer seeks reimbursement. The written request for reimbursement submitted by the Developer pursuant to this Section shall be accompanied by supporting documentary evidence (which may include, but is not necessarily limited to, receipts, invoices and/or other similar documents). The City shall review the written request for reimbursement submitted by the developer, If the Developer has provided sufficient detail and the work is approved by the City, the City will provide reimbursement, up to and not exceeding the maximum reimbursement amount. The City reserves the right to seek additional information as necessary to approve the work.

4.2 Reimbursement Payments. The City shall make reimbursement payments to the Developer as provided in this Section; provided, however, that the City shall have no obligation to make any reimbursement payment until and unless the Developer submits to the City a written request for reimbursement and the City has approved such written request and has determined the actual amount of reimbursement.

4.2.1 Initial Reimbursement Payments - Refund of Developer's Sanitary Sewer Impact Fees. The initial source of payment by the City to the Developer shall be a refund of the actual Sanitary Sewer Impact Fee paid by the Developer and collected by the City for any lot located within Conditional Use Permit U2019-0009.

5. Assignment by Developer. Except as provided below, the Developer shall be entitled to assign its rights under this Agreement with the City's written consent, which consent shall not be unreasonably withheld. City hereby consents to the assignment of Developer's rights hereunder (a) to a general or limited partnership to be formed, or a limited liability corporation, that is created to handle this construction project, or (b) to an entity that has purchased Developer's entitlements under Conditional Use Permit U2019-0009.

6. Conformity with State Labor and Work Safety Laws. The Developer shall carry on the design and construction of the improvements in a timely manner and in conformity with all 2 applicable laws, including but not limited to all applicable state labor and work safety laws and regulations, including the provisions of Labor Code Sections 1770, et seq. relating to prevailing wages, to the extent applicable to the improvements, as to which the City makes no representations.

The Developer agrees to hold the City harmless and to indemnify and defend the City from all claims arising under the provisions of Labor Code §§ 1720, et. seq., including, but not limited to the provisions of Labor Code Section 1726 and 1781.

7. Entire Agreement. This Agreement contains the entire agreement and understanding conceming reimbursement for the Developer's construction of the Sanitary Sewer Facilities, and this Agreement supersedes and replaces all prior negotiations and proposed agreements, written or oral, except as they are included in this Agreement. The Developer and City acknowledge that neither the other party nor its agents nor attorneys have made any promise, representation, or warranty whatsoever, express or implied, not contained herein to induce the execution of this Agreement and acknowledge that this Agreement has not been executed in reliance upon any promise, representation, or warranty not contained herein.

8. Amendment must be in Writing. This Agreement may not be modified except by a writing signed by the Developer and City.

9. Venue for Resolving Disputes. Any arbitration or litigation arising out of this Agreement shall be conducted only in the County of Santa Barbara, State of Califomia.

10. Interpretation Guides. In interpreting this Agreement, it shall be deemed to have been prepared by the Parties jointly and no ambiguity shall be resolved against either Party on the premise that it or its attorneys was responsible for drafting this Agreement or any provision hereof.

The captions or headings set forth in this Agreement are for convenience only and in no way define, limit, or describe the scope or intent or any Sections, Subsections, or other provisions of this Agreement. Any reference in the Agreement to a Section or to a Subsection, unless specified otherwise, shall be a reference to a Section or Subsection of this Agreement.

11. Due Authority of Signatures. Each individual signing this Agreement warrants and represents that he or she has been authorized by appropriate action of the Party which he or she represents to enter into this Agreement on behalf of the Party.

12. Notices. All notices, demands, and communications between the Developer and the City shall be duly addressed as indicated below and given by personal delivery, registered or certified mail (postage prepaid and return receipt requested), Federal Express or other reliable private express delivery, or by facsimile transmission. Such notices, demands, or communications shall be deemed received (1) upon deliver if personally served or set by facsimile, or (ii) after three business days if given or sent by any other approved manner specified above. Any Party to this Agreement may change its below -specified name, address, facsimile number, or person to whom attention should be directed by giving notice as specified in this Section. A copy of any notice, demand, or communication sent to City pursuant to this Agreement shall be sent to the City's legal counsel. Notices, demands, and communications shall be duly addressed and sent as follows:
3 To City:

City of Santa Maria
Atm: City Manager
110 E. Cook Avenue
Santa Maria CA 93534
To Developer:

School MIII Investors, LLC
Attn: Robert Stern
314 E. 41st St, Sulte 901-6
New York, NY 10017

13. California Law Governs. This Agreement and all rights and obligations arising out of it shall be construed in accordance with the laws of the State of California.

14. Counterparts. This Agreement may be signed in one or more counterparts; which, taken together, shall constitute one original document.

15. Exhibits. All Exhibits attached hereto or referenced herein are incorporated into this Agreement.

16. Effective Date. This Agreement shall be effective as of the date noted on page one (1) of this Agreement.

IN WITNESS WHEREOF, the undersigned execute this Agreement on behalf of the Parties.

CITY:

CITY OF SANTA MARIA, a California charter city and
municipal corporation
ATTEST:

City Clerk
Rhonda M. White, CMC
APPROVED AS TO FORM:

By:

Name.

Its:

Mayor Alice M. Patino
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Thomas Watson
DEVELOPER:

School Mill Investors, LLC
Delaware LLC
By: .-//G "-
Name: Robert Stern
Its: Manager
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ATTACHMENT B

AMENDMENT TO REIMBURSEMENT AGREEMENT
(Construction of Master Planned Sanitary Sewer Facilities) This Amendment to Reimbursement Agreement (this "Amendment") is entered into this 4th day of October, 2022 ("Effective Date"), by and between the City of Santa Maria, a California charter city and municipal corporation (the "City") and School Mill Investors, LLC, a Delaware LLC (the "Developer").

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration, the parties hereby agree as set forth below.

1. The above recitals are true and correct and incorporated herein.

2. Sections 4.1 and 4.2 of the Reimbursement Agreement are amended in their entirety to read as follows:
"4.1 Amount of Reimbursement. The Developer and City currently estimate the cost of constructing the Sanitary Sewer Facilities to be Four Hundred Forty - Two Thousand Dollars ($442,000). The maximum amount allowed for reimbursement under this Agreement is Four Hundred Forty -Two Thousand Dollars ($442,000). Upon completion of the first half of the construction of the Sanitary Sewer Facilities as determined by the City, Developer shall submit to the City a written request for reimbursement of an amount not to exceed Two Hundred Twenty -One Thousand Dollars ($221,000). Payment shall be issued as a joint check to the Developer and the Subcontractor Mainline Engineering Construction, Inc. Upon full completion of the construction of the Sanitary Sewer Facilities as defined and in accordance with Section 4.2 below, Developer shall submit to the City a written request for reimbursement in an amount not to exceed the remainder of the maximum reimbursement amount. Both requests for 1 reimbursement shall be accompanied by an itemized list of costs for which the Developer seeks reimbursement. The written requests for reimbursement submitted by the Developer pursuant to this Section shall be accompanied by supporting documentary evidence (which may include, but is not necessarily limited to, receipts, invoices and/or other similar documents). The City shall review the written requests for reimbursement submitted by the Developer. If the Developer has provided sufficient detail and the work is approved by the City, the City will provide reimbursement, up to and not exceeding the maximum reimbursement amount. Payment shall be issued as a joint check to the Developer and the Subcontractor Mainline Engineering Construction, Inc. The City reserves the right to seek additional information as necessary to approve the work.

4.2 Forfeiture of Reimbursement. Developer shall complete the construction of the Sanitary Sewer Facilities and receive confirmation from the City that the construction has been deemed complete and constructed to City standards ("Full Completion") within one hundred and fifty (150) days of the Effective Date ("Completion Deadline") of this Amendment. Should Developer fail to achieve Full Completion of the Sanitary Sewer Facilities by the Completion Deadline, Developer shall forfeit the second reimbursement installment in the sum of Two Hundred Twenty -One Thousand Dollars ($221,000) and the City shall have no obligation to pay Developer the remainder of the reimbursement amount.

3. All other terms and conditions of the Agreement remain in full force and effect.

IN WITNESS WHEREON, the undersigned execute this Amendment on behalf of the parties.

City of Santa Maria
By:

Alice M. Patino
Mayor
ATTEST:

City Clerk
Rhonda M. White, CMC
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2 School Mill Investors, LLC
By:

Manager
pfrFsp g FOR
O.ty Attorney

ATTACHMENT C

SECOND AMENDMENT TO REIMBURSEMENT AGREEMENT
(Construction of Master Planned Sanitary Sewer Facilities) This Second Amendment to Reimbursement Agreement (this "Second Amendment") is entered into this 21st day of February 2023 ("Effective Date"), by and between the City of Santa Maria, a Califomia charter city and municipal corporation (the "City") and School Mill Investors, LLC, a Delaware LLC (the "Developer").

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration, the parties hereby agree as set forth below.

1. The above recitals are true and correct and incorporated herein.

2. Section 4.2 of the Reimbursement Agreement is amended in its entirety to read as follows:

4.2 Forfeiture of Reimbursement. Developer shall complete the construction of the Sanitary Sewer Facilities and receive confirmation from the City that the construction has been deemed complete and constructed to City standards ("Full Completion") by April 4, 2023 ("Completion Deadline"). In addition, the Public Works Director is authorized to grant a one-time additional thirty days to achieve Full Completion at his sole discretion. Should Developer fail to achieve Full Completion of the Sanitary Sewer Facilities by the Completion Deadline, Developer shall forfeit the second reimbursement installment in the sum of Two Hundred Twenty -One Thousand Dollars ($221,000) and the City shall have no obligation to pay Developer the remainder of the reimbursement amount.

3. All other terms and conditions of the Agreement as amended by the first Amendment remain in full force and effect.

IN WITNESS WHEREON, the undersigned execute this Amendment on behalf of the parties.

School Mill Investors, LLC City of Santa Maria,
Robert Stern Alice Patino
Manager Mayor
ATTEST:

Rhonda M. White, CMC
Chief Deputy City Clerk
APPROVED AS TO FORM:

ATTACHMENT D

THIRD AMENDMENT TO REIMBURSEMENT AGREEMENT
(Construction of Master Planned Sanitary Sewer Facilities) This Third Amendment to Reimbursement Agreement (this "Third Amendment") is entered into this 2nd day of May 2023 ("Effective Date"), by and between the City of Santa Maria, a California charter city and municipal corporation (the "City") and School Mill Investors, LLC, a Delaware LLC (the "Developer").

RECITALS
A. On October 6, 2020, the parties entered into a Reimbursement Agreement wherein Developer will construct certain Master Planned Sanitary Sewer Facilities (the "Sanitary Sewer Facilities") for the benefit of the City and other property owners and the City will reimburse Developer for such construction up to a maximum reimbursement amount of $442,000 upon completion of the Sanitary Sewer Facilities; and
B. On October 4, 2022, the City Council approved an Amendment to the Reimbursement Agreement, which allowed the Developer to obtain a partial payment prior to the full completion of the Sanitary Sewer Facilities; and C. On October 13, 2022, the City paid Developer $221,000 as partial reimbursement for the partial completion of the Sanitary Sewer Facilities; and D. On February 21, 2023, the City Council approved a Second Amendment to the Reimbursement Agreement, which gave the Developer additional time to complete the Sanitary Sewer Facilities, setting a Completion Deadline of April 4, 2023, and authorizing the Public Works Director to grant a one-time additional thirty -day extension; and
E. The Director of Public Works granted the additional thirty -day extension, and the Completion Deadline is now May 4, 2023; and
F. The parties now desire to amend the Agreement a third time to allow Developer additional time to complete the Sanitary Sewer Facilities.

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration; the parties hereby agree as set forth below.

1. The above recitals are true and correct and incorporated herein.

2. Section 4.2 of the Reimbursement Agreement is amended in its entirety to read as follows:
1 4.2 Forfeiture of Reimbursement. Developer shall complete the construction of the Sanitary Sewer Facilities and receive confirmation from the City that the construction has been deemed complete and constructed to City standards ("Full Completion") by July 1, 2023 ("Completion Deadline"). In addition, the Director of Public Works is authorized to grant an additional thirty days to achieve Full Completion at his sole discretion. Should Developer fail to achieve Full Completion of the Sanitary Sewer Facilities by the Completion Deadline, Developer shall forfeit the second reimbursement installment in the sum of Two Hundred Twenty -One Thousand Dollars ($221,000) and the City shall have no obligation to pay Developer the remainder of the reimbursement amount.

3. All other terms and conditions of the Agreement as amended by the first and Second Amendment remain in full force and effect.

IN WITNESS WHEREON, the undersigned execute this Amendment on behalf of the parties.

City of Santa Maria School Mill Investors, LLC
By: By:

Alice M. Patino Robert Stem
Mayor Manager
ATTEST:

Rhonda M. White, CMC
Chief Deputy City Clerk
APPROVED AS TO FORM:

City Attorney

Santa Maria City CouncilMay 2, 2023

Santa Maria City Council
May 2, 2023