EXHIBIT B – DRAFT REIMBURSEMENT AGREEMENT
FOR
DESIGN OF SEWER IMPROVEMENTS
This Reimbursement Agreement for Design of Sewer Improvements (“Agreement”) is entered into by and between the City of South San Francisco, a municipal corporation organized under the laws of the State of California (the "City"), and KR Oyster Point II, LLC, a Delaware limited liability company (“Kilroy"), this _____ day of ____________, 2025 (“Effective Date”), with reference to the facts set forth in the Recitals below.
RECITALS
A. Kilroy is the owner of certain real property consisting of approximately 9.804 - acres in the City of South San Francisco, County of San Mateo, State of California, (“Property”); and B. On March 5, 2020, the Planning Commission of the City of South San Francisco approved Application P09-0085:PP19-0001 for the KOP Phase 2-4 Precise Plan (the “Project”) on the Property, subject to certain conditions of approval (“Conditions of Approval”) ; and C. Kilroy is currently under construction with the KOP Phase 2 improvements on the property consisting of three Office/R&D buildings and a Parking Garage and associated site improvements; and
D. The City’s Sanitary Sewer Master Plan has identified that the existing public sanitary sewer main on Oyster Point Boulevard from Gull Drive to the sanitary sewer pump station at Gateway Boulevard, as depicted more particularly in Exhibit A, is under capacity and must be upsized to an 18-inch HDPE SDR -17 pipeline in order to accommodate the sanitary sewer flows in said public sewer main as allowable per the latest General Plan Zoning Amendments including the Project; and
E. Said sewer main upsizing on Oyster Point Boulevard should be completed prior to the occupancy of the KOP Phase 2 improvements to eliminate the risk of sanitary sewer overflows during wet weather; and
F. The upsizing of the sewer main on Oyster Point Boulevard is not a Condition of Approval on the Project and is the responsibility of the City as part of its Capital Improvement Program; and G. Given that Kilroy was already doing work in the vicinity of the existing sewer line and is capable of performing the Sewer Improvements originally to be done by the City without needing additional mobilization that would otherwise be incurred by the City, the City Council, on May 11, 2022, adopted a Resolution approving a Reimbursement Agreement in an amount not to exceed $1,077,240 with Kilroy for upsizing the portion of the sanitary sewer main on Oyster Point Boulevard from Gull Drive to Eccles Drive to a 12 inch pipe; and
H. At the time the City Council approved the Reimbursement Agreement, it was believed that there would be significant cost savings to the City and to the public arising from the cost efficiencies generated by having Kilroy perform the Sewer Improvements, and thus any competitive bidding for the Sewer Improvements would not produce an advantage nor would competitive bidding be desirable; and
I. Also, at the time of approval, the City’s sanitary sewer model revealed that only a portion of the existing sewer pipes on Oyster Point Boulevard were considered deficient; and J. During the design phase of the sewer upsizing, additional sewer modeling was performed by the City which revealed that the entire sewer main on Oyster Point Boulevard from Gull Drive to Gateway Boulevard needs to be upsized to an 18” pipe; and K. To keep the project on schedule, Kilroy expanded the scope of the design services to include the upsizing of sewer main as recommended by the sewer model; and L. Given that the Engineer’s Estimate to construct the required sewer improvements is now in the order of $5M, staff believes that it is in the City’s best interest to have the City take the lead to construct the project by the normal public process with the Capital Improvement Program; and M. Given that Kilroy has paid for the design of these sanitary sewer improvements, which are the responsibility of the City, a new Reimbursement Agreement is necessary to reimburse Kilroy for their effort; and
N. City and Kilroy desire to enter into this Reimbursement Agreement to provide for Kilroy’s reimbursement for costs incurred to prepare plans and specifications, subject to Kilroy submitting the plans, specifications, cost estimates, and proof of payment for the design of the following (Improvements):
1. Upsize the sanitary sewer main to an 18-inch HDPE SDR-17 pipeline on Oyster Point Boulevard from Gull Drive to the sanitary sewer pump station at Gateway Boulevard.
2. Remove and replace sanitary sewer manholes within the limits of sewer main replacement.
3. Trench restoration, paving, and landscape repair.
4. Asphalt Overlay of the eastbound travel lanes on Oyster Point Boulevard.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows:
AGREEMENT
1. Design of Sewer Improvements. The City agrees that Kilroy shall design the Sewer Improvements as follows:
i. As authorized by this Agreement, Kilroy agrees to submit Sewer Improvement plans and specifications and cost estimate for the Improvements in a format that can be publicly bid per City Standards.
ii. Kilroy agrees to have Design Consultants available to the City while the City Manages the construction of the Improvements should any unforeseen revisions to the design be needed during construction.
2. Reimbursement for Sewer Design. City agrees to reimburse Kilroy the Reimbursement Amount for Sewer Design as follows:
i. City shall issue a payment for the Reimbursement to Kilroy, within sixty (60) calendar days of Kilroy’s delivery to the City of all substantiating invoices and receipts.
ii. The Reimbursement Amount, is estimated to be approximately $534,650. A summary of the costs are shown on the table below:
Hathaway Dinwidie $210,650
BKF $255,500
Langan $36,500
Radius $32,000
Approximate Reimbursement
Amount $534,650
3. Hold Harmless and Indemnification. To the fullest extent permitted by law, Kilroy agrees to indemnify, defend (with counsel reasonably acceptable to the City), and hold harmless the City of South San Francisco and its elected and appointed officers, employees, agents, contractors and consultants (collectively, the “City Indemnitees”) from and against any and all third party liability, loss, damage, claims, expenses and costs (including, without limitation, attorneys’ fees and costs of litigation) (collectively, “Liability”) of every nature to the extent arising out of or in connection with the activities performed by or on behalf of Kilroy as authorized by this Agreement, except such Liability caused by the negligence or willful misconduct of the City Indemnitees.
4. No Relief of Other Obligations. This Agreement does not relieve Kilroy from complying with all generally applicable laws and regulations in the performance of this Agreement and constructing the Sewer Improvements. This Agreement also does not relieve Kilroy from obtaining all required entitlements, permits, authorizations, or other approvals for any other work proposed at the Project Site.
5. Insurance. Kilroy shall maintain, or ensure that its contractors or subcontractors maintain, during the life of this Agreement the following policies of insurance:
i. Worker’s Compensation and Employers’ Liability Insurance in the statutory coverage.
ii. Commercial General Liability Insurance: In an amount not less than ONE MILLION DOLLARS ($1,000,000) for injuries including, but not limited to, death to any one person and subject to the same limit for each person; in an amount not less than TWO MILLION DOLLARS ($2,000,000) combined single limit per occurrence for bodily injury, personal injury and property damage.
iii. Automobile Liability (Code 1) Insurance: In an amount not less than ONE MILLION DOLLARS ($1,000,000) combined single limit per accident for bodily injury and property damage.
iv. It is agreed that the insurance required hereunder shall be in an aggregate amount of not less than Two Million Dollars ($2,000,000) and shall be extended to include as additional insureds the City of South San Francisco, its officials, employees and agents, with respect to operations performed by Kilroy as described herein.
Evidence of the insurance described above shall be provided to City upon execution of this Agreement.
6. Default. In the event of default by Kilroy hereunder, the costs and expenses of City for which Kilroy shall be liable shall include but not be limited to the City’s costs of suit and reasonable attorney’s fees.
7. Independent Contractor. Kilroy is an independent contractor and nothing contained in this Agreement shall be construed as creating an employer/employee, joint venture, or principal/agent relationship between City and Kilroy.
8. Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue to be in full force and effect.
9. Term. This Agreement is effective upon execution unless otherwise modified in writing by mutual agreement of the parties.
10. Execution in Counterparts. This Agreement may be executed in counterparts and/or by facsimile or other electronic means, and when each party has signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken together with other signed counterpart, shall constitute one Agreement, which shall be binding upon and effective as to all parties.
11. Entire Agreement. This Agreement represents the entire and integrated agreement between the parties. This Agreement may be modified or amended only by a subsequent written agreement signed by both parties.
12. Knowing and Voluntary Execution. Both parties to this Agreement have had the opportunity to be advised by and to have this Agreement reviewed by legal counsel of their choosing.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date written above.
CITY OF SOUTH SAN FRANCISCO
By: __________________________
Sharon Ranals, City Manager
Attest:
__________________________
City Clerk
Approved as to form:
__________________________
City Attorney
KR OYSTER POINT II, LLC,
a Delaware limited liability company
By: Kilroy Realty, L.P.,
a Delaware limited partnership,
its Sole Member
By: Kilroy Realty Corporation,
a Maryland Corporation,
its General Partner
By:
Name:
Title:
By:
Name:
Title: