REPORT TO THE CITY COUNCIL
March 23, 2017
FROM: THOMAS C. ESQUEDA, Director
Department of Public Utilities
SUBJECT
Title
Approve Amendment No. 1 to the Copper River Ranch Water Supply Implementation Agreement approved by Fresno City Council November 17, 2016
Body
RECOMMENDATION
The Administration recommends the City Council approve Amendment No. 1 to the Copper River Ranch Water Supply Implementation Agreement (Agreement) for the Developers of the Copper River Ranch Development (Copper River or the Project Area). Amendment No. 1 is provided for the convenience of the Developers to address default conditions caused by the Developer’s failure to timely fulfill the obligations required by the Agreement.
Amendment No. 1 to the Agreement has been approved as to form by the City Attorney.
EXECUTIVE SUMMARY
On November 17, 2017, the Fresno City Council approved a Water Supply Implementation Agreement (Agreement) with the Developers to provide 4,900 GPM of firm water supply capacity within the Copper River Ranch Development Area (Project Area) in accordance with a mutually-agreed upon project completion schedule. The Agreement also included a payment schedule for approximately $3.8 million to recover the Developers’ proportionate share of the cost of connecting to the City’s existing water system, including the Northeast Surface Water Treatment Facility (NESWTF). The signatory parties for the Developers are Mr. Darius Assemi and Mr. Gary McDonald. On March 1, 2017, the Developers defaulted on the Water Supply Implementation Agreement (Agreement) authorized by the Fresno City Council by failing to timely fulfill the obligations set forth in the Agreement.
The Administration recommends City Council approve Amendment No. 1 to the Copper River Ranch Water Supply Implementation Agreement (Agreement) for the Developers of the Project Area. Amendment No. 1 is provided for the convenience of the Developers to address default conditions caused by the Developers’ failure to timely fulfill the obligations required by the Agreement.
BACKGROUND
On March 1, 2017, the Developer defaulted on the Water Supply Implementation Agreement (Agreement) authorized by the Fresno City Council by failing to timely fulfill the obligations set forth in the Agreement. Specifically, the Developer failed to complete the required work for PS 330, PS 369, and the Manganese (Mn) Disposal Line. The City met in person with the Developer on March 3, 2017 to bring these default conditions to the attention of the Developer. Upon noticing the Developer that default conditions existed, the City was within its rights, as specified in the Agreement, to cease issuing certificates of occupancy within the Project Area.
After consulting with the Developer about the default conditions, the City has agreed to provide the Developer with a reasonable opportunity to cure the default by modifying the completion schedule for projects and payments (milestones) required by the Agreement. For the convenience of the Developer, the City agrees to modify the implementation schedule with Amendment No. 1 to the Water Supply Implementation Agreement as follows:
|
Milestone Requirement |
Originally Agreed Upon Completion Date |
Requested Completion Date |
|
Increase Capacity of PS 330 from 1,200 gpm to 1,800 gpm |
March 1, 2017 |
June 30, 2017 |
|
New PS 369 (minimum capacity 1,000 gpm) |
March 1, 2017 |
May 1, 2017 |
|
New PS 370 (minimum capacity 500 gpm) |
June 30, 2017 |
July 30, 2017 |
|
New PS 371 (minimum capacity 500 gpm) |
December 1, 2018 |
December 1, 2018 |
|
Mn Discharge Pipeline for PS 330, 369, 370, and 371 |
March 1, 2017 |
June 30, 2017 |
|
1st Payment Developer Fee Obligation |
December 17, 2017 |
December 17, 2017 |
|
2nd Payment Developer Fee Obligation |
June 30, 2017 |
April 3, 2017 |
|
3rd Payment Developer Fee Obligation |
December 1, 2018 |
December 1, 2018 |
While the Developers have been in material default of the WSI Agreement as a result of failing to timely fulfill the requirements of the Agreement, the City’s Administration has authorized the continued issuance of building permits and certificates of occupancy for lots within the Project Area until such time that the Fresno City Council approves Amendment No. 1 to the WSI Agreement, which is the subject of this Council Agenda item. Should the Fresno City Council not approve Amendment No. 1 to the Agreement, the Administration will discontinue issuing building permits and certificates of occupancy in the Project Area effective 8:00 am on Friday, March 24, 2017.
All other terms and conditions of the WSI Agreement shall remain in effect. However, by entering into Amendment No. 1, the Developer acknowledges and agrees that if the Developer again fails to timely fulfill the obligations as set forth in this Amendment No. 1, then the City will cease issuing building permits and certificates of occupancy for any lots within the Project Area until such time that the obligations are fulfilled as defined in Amendment No. 1. The City’s obligation for another default condition caused by the Developer will be to notify the Developer in writing that the City will cease issuing building permits and certificates of occupancy on the first working day after an obligation has not been fulfilled.
The Administration recommends City Council approve Amendment No. 1 to the Copper River Ranch Water Supply Implementation Agreement (Agreement) for the Developers of the Copper River Ranch Development (Copper River or the Development). Amendment No. 1 is provided for the convenience of the Developers to address default conditions caused by the Developer’s failure to timely fulfill the obligations required by the Agreement.
Amendment No. 1 to the Agreement has been approved as to form by the City Attorney.
ENVIRONMENTAL FINDINGS
Pursuant to CEQA Guidelines section 15378(b)(5), this is not a project for the purpose of CEQA, as this is an organizational or administrative action of the government to enforce an existing obligation, and will not result in a direct or indirect physical change in the environment.
LOCAL PREFERENCE
Local preference was not considered because this Agreement regarding water supply infrastructure development does not include a bid or award of a construction or services contract.
FISCAL IMPACT
There is no financial obligation for the General Fund for this Agreement. The payment of $4,291,300 to be made by the Developers will be received into the Water Division Enterprise Fund to benefit the expansion and upgrade of the City’s NESWTF, and to secure adequate water supply capacity, reliability, and redundancy for area served by the NESWTF.
Attachment:
Amendment No. 1 to the Copper River Ranch Water Supply Implementation Agreement