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FROM: Fermin Preciado, Director of Development Services/City Engineerv.? Benjamin I Matlock, Planning Manager/City Planner 7;% F �O, a _V, 11 � I I ! ii 1" 1111170111 iliiimz�1,
SUBJECT: Memorandum of Understanding for the Yucaipa Gateway Center Project Development Agreement Amendment — Haddad (ACAA, LLP)
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At the regular meeting of November 19, 2014, the Planning Commission approved Case No. 14- 4 14, fir -a c*mi,-Aeroial tenter Oct) that irlclly'i 0'i && ree-stitl-y 12 rtwlm- hotel of approximately 54,870 square feet, a combination restaurant and office building of approximately 11,250 square feet, a drive -through restaurant of approximately 3,677 square feet, and a convenience store, car wash, and gas station of approximately 4,669 square feet. A draft Development Agreement was also reviewed as part of the proposed project, and approved by the CiV 06unc, I V
Partnership (Developer).
A development agreement is a contract between the City and a developer who has the ownership or control of property within the City and wishes to develop the property but desires a certain level of assurance that rules will not be changed during the development process. The agreement will specify the standards and conditions that will govern the development of the property. The agreement will provide assurance to the developer that they can proceed to develop the property subject to rules and regulations in effect at the time of approval. Development agreements also benefit' the City by including conditions (mitigation measures) that must be met to assure that a project performs, completes, and funds certain improvement the community feels is necessary for the project to have less than significant impacts to the neighborhood and surrounding community.
The agreement can also facilitate enforcement of requirements, since it is a contract that details the obligation of the developer and the City.
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City Council Meeting of February 27, 2023
Memorandum of Understanding for the Yucaipa Gateway Center Project Development Agreement Amendment— Haddad (ACAA, LLP)
Development agreements are designed to strengthen the public planning process by outlining in a formal and binding agreement the proposed activities, improvements, participation, and developer's commitments arising out of an anticipated development. As part of the approval, key responsibilities were established for both the City and for the developer that would need to occur through the development and operation of the development project.
Since 2015, the Yucaipa Gateway Project has resulted in the construction of the "Arco" fueling station and the "AMPM" convenience store, and the "La Quinta" hotel is currently under construction and expected to open later this year. Following the overall development of these initial phases, slight modifications to the City and Developer responsibilities have occurred with respect to utility pole undergrounding and the vacation of public right of way. To address those items, the City and Developer are currently preparing an amendment to the Development Agreement, which will be processed through the Planning Commission and City Council concurrently with the site plan and architectural review of the final phases of the project. However, due to the significant time delays associated with Southern California Edison's (SCE) work required to relocate existing utility lines and construct the next phase of the Yucaipa Gateway Center Project, a Memorandum of Understanding is being proposed to memorialize the key points of the amendment to the Development Agreement and to allow for the design and utility relocation process with SCE to begin.
The primary deal points established by the current Development Agreement include the following:
I Municipal Surcharge. In addition to the Transient Occupancy Tax (TOT), the owner of the Hotel, shall pay to the City, in perpetuity, a percentage of the Gross Room Revenue generated by the Hotel as follows:
Year 1: 1% of the Gross Room Revenue generated by the Hotel.
Year 2: 2% of the Gross Room Revenue generated by the Hotel.
Year 3: 3% of the Gross Room Revenue generated by the Hotel for as long as the Hotel exists.
2. Utility Fees. Developer shall pay all project -related utility connection fees, including but not limited to water connection fees and sewage treatment plant expansion fees.
3. Developer agrees to submit necessary entitlement applications, including but not limited to a conditional use permit, sign permit, and variance, for a freeway sign.
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City Council Meeting of February 27, 2023
Memorandum of Understanding for the Yucaipa Gateway Center Project Development Agreement Amendment — Haddad (ACAA, LLP)
City Commitments
1. City agrees to provide excess soil from City projects to the Project.
2. Pursuant to the City's Capital Improvement Program (CIP) , the City agrees to underground existing electrical distribution lines along Oak Glen Road between the Freeway westbound on/off-ramps and 14th Street.
3. Pursuant to the City's CIP the City agrees to undertake improvements to the Wilson Creek Flood Control Channel in the area adjacent to the property, including a retaining wall adjacent to the Wilson Creek Flood Control Channel.
The City agrees to consider and process a request to vacate the portion Dunlap Boulevard right-of-way. If vacated, dedication of an easement fl reciprocal access and parking will be required.
5. The City will utilize best efforts to complete Conditional Letter of Map Revision (CLOMR) and Letter of Map Revision (LOMR) process to remove the Property from the FEMA Flood Map designated "Floodway", such that grading and placement of imported soil will be permitted on the Property based on the Wilson Creek Flood Control Channel design or other improvements completed upstream on Wilson Creek.
6. The City shall process any entitlement applications as may be filed by Developer for freeway sign, but in no way shall the City be obligated to approve any such freeway sign.
The proposed MOU identifies the following key points of the amendment to the current Development Agreement that allows the Developer to move forward with SCE to complete the relocation of SCE utility lines and complete the next phase of the Yucaipa Gateway Center Project:
I Section 1 O(e) shall be amended to reflect the City's obligation to relocate the utility lines along Dunlap Boulevard pursuant to the City's Capital Improvement Program in lieu of undergrounding the electrical lines along Oak Glen Road, 14 th Street and Dunlap Boulevard. This includes the City's reimbursement to Developer in the amount of $207,000 if Developer initiates the effort to relocate said utility lines.
2. Developer agrees to offer a 15% discount for four (4) guestrooms for two (2) consecutive nights, four (4) times per year to the City for use by visitors, contractors and/or agents of the City during the various festivals and community events sponsored by the City of Yucaipa.
3. The City and Developer agree to undertake the extension of the retaining wall for an approximate additional 150 feet between the Wilson Creek Flood Control 103
City Council Meeting of February 27, 2023
Memorandum of Understanding for the Yucaipa Gateway Center Project Development Agreement Amendment — Haddad (ACAA, LLP)
Channel and the Developer's Gateway Project. The cost of this wall extension shall be shared in the same percentage by the City and Developer as shared for the original wall construction. The City's share of the cost is estimated to be in the The approval of the MOU and processing of the amendment to the Development Agreement will allow the Developer to continue to move forward with the construction of their project and will ultimately result in a reduced cost to the City to fulfill the City's commitments identified in the Development Agreement.
FISCAL IMPACT:
The adopted FY2022/2023 CIP includes funding in the amount of $6,025,000 for the Dunlap Boulevard at Wilson Creek Bridge Replacement Project. A portion of the costs of this overall flood control project will fulfill the City's commitments identified in the Development Agreement and will also benefit the overall community by reducing flood risk. The total estimated cost of the City's commitments as identified in the current Development Agreement that will benefit the Yucaipa Gateway Center Project directly, as well as the community, are in the estimated amount of $3,200,000. With the MOU and proposed amendments to the Development Agreement, the total estimated cost to fulfill the City's commitments is in the amount of $2,950,000, resulting in an approximate savings of $250,000.
The annual revenue to the City from property taxes, sales tax, TOT and TOT municipal surcharge generated by the completed Yucaipa Gateway Center Project is estimated to be approximately $750,000. Based on this estimated annual project related revenue, the City could recover the costs associated with the City's commitments in the amended Development Agreement in approximately four (4) years. However, the improvements also provide important public benefits through the reduction in the floodway/floodplain areas and facilitating economic development.
If approved, staff will return to Council at a later date with a recommendation regarding the amended Development Agreement and the associated revised fiscal impact.
Approved by:
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IMEMORANDUM OF UNDERSTANDING
Gateway Project
De-.0opment Agreement (Document No. 2015-0271338)
his Memorandum ofUnderstariding. f,MOU) is madeand entered into this -171h daly of Februar2(-123lvv AC.,`` A, it limited` NQAL- Partnership CDevelolvr-) and the City of Yucaipa. as California municipal corlsmawri
V%1111-*1 1','AS, the Develctper and City have entered into an qateement executed arid effecrive, on April 9, 2(d5l, and recorded as E)evelopment Agrcetnent L)oe.urnent No. 2015- 02 7113 38 0evOctpruent Agreement) attached .is AIJACHMENIT I to.- the Deveksper's Gatewa� Pro,icct; and
'WT[FRFAS� Dcx-Qlojvr platis To coniplele the development (if the ( rate lva�plv�jccl, which includes as fueling station, convemence store. car wash, hotel and restkwranls, NkIJERF,AS� Developer and City plant to eollaKmue and process an aincridinew to i. Atzreeinetu: and
WHERI-,'AS. the Developer and City N%itt nnnrlall� benefit #turn the, arriendirtent To the E)evelopritent Agreement.
N(Ak`, TMIZEFORE, in consideration of the mutual promises contained herein including recitals. it is agreed by the DeveloperandCits as folloiks, A, Both Parties agree to cooperate in as joint effort io facilitate the process e4 aarnendaras the Development Agreelliclu,
13. Both Ptartres agree illast the annentitnents to the Develolnnent Aarclemew v611 include, but tare not limited to, the follooing:
1. Section 10(c) shall 1-n- tnended to reflect the City's obligation to relocate the utility linos along, 1)unlap Bpule vard pursuant Lo the City's Capital Improvenwnt Program in licit of under rounding, the cleelrical lines along Oak Glen lZoad, 14' Street and Dwilap Boulevard, This includes the CitN`s, reimbursement to Develorcr in the amount of S207,(0) if Developer iminatess the effort to relocate said utility lines.
7 � Ll(w s lot wo ( Developer agrees to oiler a 15% disc�)unt for four (,-I) aucs )) n , ' , 2) consecutive ruglivs, four k4) times par year to the City for use by visitors, contractors andlor agents of tlie City during the various festivals and corturtunity evems sIxur-wred bthe City of Yueatpa.
The City and Dcveloper agrec to undertake the e\tenslon of tire rctaining wall for in ale pproximate additional 1-30 feet betwe n the Wilsion, Creek- f"lood Control Channet and the Developer's (-hnewa ' v Pro�jeet. The cost of tint -~ r% all extension shabc ll ,ahared in the 4une percentage by the City and Developer as shared for the original -,vall coastructron. The City's shar� of tilt: east is eininated to be ir the anunint (if *'� ,95�,,
105
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CITY OF YUCAIPA
Kimberly J. Metzler, City Clerk Date Mayor — Justin Beaver Date