SUBJECT: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIO VISTA AUTHORIZING THE CITY MANAGER TO EXECUTE THE SECOND AMENDMENT TO THE INFRASTRUCTURE SECURITY RELEASE AGREEMENT WITH SHEA HOMES LIMITED PARTNERSHIP CONCERNING THE LIBERTY (GIBBS RANCH) SUBDIVISION
MEETING
DATE:July 28, 2010
RECOMMENDATION
Staffrecommends that the City Council of the City of Rio Vista adopts Resolution No. ____ “A Resolution of the City Council of the City of Rio Vista Authorizing the City Manager to Execute the Amendment to the Infrastructure Security Release Agreement with Shea Homes Limited Partnership Concerning the Liberty (Gibbs Ranch) Subdivision.”
BACKGROUND
Shea Homes Limited Partnership is the subdivider of the Liberty (Gibbs Ranch) property in the City of Rio Vista. The Liberty subdivision consists of approximately 663 residential lots, which were subdivided pursuant to a vesting tentative map approved by the City in August of 2005. The City Council approved final maps for the Liberty subdivision in late 2006. To guarantee construction of the improvements in the Liberty subdivision, Shea Homes Limited Partnershipentered into subdivision agreementswith the City. The Subdivision Agreements required Shea Homes to construct certain improvements, which were secured by performance bonds in the amount of 100% of the estimated cost of construction and labor and materials bonds in an amount equal to 50% of the estimated cost. Shea Homes submitted both performance and labor and materials bonds in the amounts specified in the Subdivision Agreements.
In early 2009, Shea Homes’ representative informed City staff that it had completed all the improvements that were described in the Subdivision Agreements for Phases 1 and 2 of the Liberty subdivision. On July 15, 2009, Shea Homes wrote a letter to the City Manager stating the same thing and requesting the City accept the improvements and
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fully release all of the performance and labor and material bonds. Shea contended that all of the work associated with the bonds had been completed as described in the improvement plans and also that all of items on the City’s “punch list” had been completed. Shea Homes requested full release of the bonds pursuant to Government Code section 66499.7, which provides for a procedure for the release of subdivision security.
The City, however, was concerned about the quality of the improvements, in particular Province Path and one well. According to the City Engineer, a variance in the moisture entering the roads is causing them to crack. Because homes in the Liberty project are not being built, the soil underneath the roads is not receiving a constant flow of water, leading them to crack as the soil moves. City staff has, thus, been reluctant to accept these roads and take on the resulting maintenance of them due to their condition. The well (Well #15) also has arsenic levels that exceed the State Department of Health’s standards, but the well has not yet been treated to address this problem. Similarly, the City is reluctant to accept this improvement prior to its treatment for arsenic.
After corresponding for several months, the City and Shea agreed that the City would release some (but not all) of the security due to its concerns with Province Path and the arsenic treatment of Well 15. Shea agreed with the City that there were three items that had not yet been completed on the City’s punch list (Province Path repair, arsenic treatment, and the entry into a deferred maintenance agreement concerning Province Path). The City and Shea also agreed that the security could be released. City staff in December of 2009 recommended to the City Council approval of an agreement providing that the City would release 90% of the security and that the parties would enter into another agreement concerning the maintenance/repair of Province Path and arsenic treatment for Well #15.
At its December 18, 2009 meeting, the City Council approved the Infrastructure Security Release Agreement. That agreement provided that the face value of the bonds would be reduced and that the parties would begin to negotiate in good faith an additional agreement to address the City's concerns about Province Path repair and Well #15. Additionally, Shea wanted to discuss both a park fee credit and possibly modifications to the type of product offered within Liberty, and the City wanted to discuss the ongoing maintenance within Liberty and repair and maintenance of other improvements.
The agreement provided that the City and Shea hoped to both negotiate and enter into that further agreement by March 31, 2010. When that did not occur, the City and Shea amended the agreement and extended it out until July 30, 2010. However, the City and Shea still have not reached resolution on the outstanding matters and now desire to extend the agreement out until December 31, 2010.
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REVIEW AND ANALYSIS
Amending the existing agreement to extend the negotiation period out will provide both the City and Shea with additional time to negotiate and reach an agreement as to the outstanding items of concern to both the City and Shea. Those issues include, among others, the repair of Province Path to correct the cracking that is currently occurring between Rustic Oak Lane and McCormack Road and the repair or corrections to Well 15 in order to provide water within the State Department of Health thresholds for arsenic. City staff recommends that the negotiation period be extended for an additional five months, until December 31, 2010.
Once the agreement has been negotiated and finalized, it will bepresented to the City Council for approval. The future agreement will also require Shea to maintain the infrastructure until the City accepts it. Shea is also interested in discussing a park fee credit and/or a process for the City to consider a modification of the housing product offered. The City would like to discuss the maintenance and repair of existing improvements in the Liberty subdivision.
In the event, however, the Shea and the City are unable to reach an agreement on the future agreement, the existing agreement provides that the statute of limitations on the security being withheld (the 10%) will be tolled, meaning that it will not apply, during the negotiation period and for thirty days following the end of the negotiations period. Both the City and Shea, however, are hopeful that they will be able to reach an agreement on the repair of Province Path and arsenic treatment of Well 15.
The Amendment has been draftedand negotiated by the City Attorney and is acceptable to Shea Homes.
FINANCIAL CONSIDERATIONS
None at this time.
ALTERNATIVES
______
Finance Manager
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City Manager
Attachments:Resolution
Amendment to Infrastructure Security Release Agreement
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIO VISTA AUTHORIZING THE CITY MANAGER TO EXECUTE THE SECOND AMENDMENT TO THE INFRASTRUCTURE SECURITY RELEASEAGREEMENT WITH SHEA HOMES LIMITED PARTNERSHIP CONCERNING THE LIBERTY (GIBBS RANCH) SUBDIVISION
WHEREAS, the City Council of the City of Rio Vista approved the Infrastructure Security Release Agreement ("Agreement") with Shea Homes Limited Partnership ("Shea") on December 17, 2009; and
WHEREAS, in accordance with that Agreement, the City reduced the face amount of the labor and materials and performance bonds required for the Liberty subdivision in an amount satisfactory to both the City and Shea; and
WHEREAS, the Agreement provides that the City and Shea would in good faith negotiate a further agreement concerning the repair of Province Path and the treatment of Well 15 for arsenic, in addition to other areas of concern to both City and Shea; and
WHEREAS, the Agreement provided for a period between January 4 and March 31, 2010 for the parties to negotiate and enter into that further agreement, but the City and Shea need additional time to negotiate the further agreement and now need additional time beyond the extended July 30, 2010 extension date.
NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF RIO VISTA that the City Manager is hereby authorized to execute the Second Amendment to the Infrastructure Security Release Agreement with Shea Homes Limited Partnership, subject to any minor modifications that may be made by the City Attorney.
PASSED, ADOPTED AND APPROVED this 28th day of July, 2010, by the following roll call vote:
AYES:COUNCILMEMBERS
NOES:COUNCILMEMBERS
ABSENT:COUNCILMEMBERS
ABSTAIN:COUNCILMEMBERS
ATTEST:
Carolyn Parkinson, MMC
InterimCity Clerk
SECOND AMENDMENT TO INFRASTRUCTURE SECURITY RELEASE AGREEMENT
This Second Amendment ("Amendment") to the Infrastructure Security Release Agreement ("Agreement") is entered into as of July 30, 2010, by and between the City of Rio Vista, a California municipal corporation ("City") and Shea Homes Limited Partnership, a California limited partnership ("Shea"). The City and Shea are sometimes collectively referred to herein as the "Parties" and each individually as a "Party."
RECITALS
WHEREAS, the Agreement provided that on or before December 31, 2009, the face amount of certain performance and labor and materials bonds (collectively "Infrastructure Bonds") held by the City in connection with the "Liberty" or "Gibbs Ranch" project in the City ("Project") would be reduced, which was completed; and
WHEREAS, the Agreement also provided that the Parties would negotiate in good faith a further agreement (the "Future Subdivision Agreement"); and
WHEREAS, the Future Subdivision Agreement would set forth (i) terms concerning Shea's repairs or improvements to portions of the infrastructure improvements ("Infrastructure") as required by the conditions of approval to the approved tentative map for the Project; (ii) Shea's maintenance of the Infrastructure for a specified period of time beyond that required by the Subdivision Agreements entered into between the Parties covering Phases 1 and 2 of the Project; (iii) terms concerning the City's acceptance of the Infrastructure following the aforementioned maintenance period; and (iv) other actions to be taken by the Parties; and
WHEREAS, the Agreement also provides that the Parties would begin in good faith to negotiate the Future Subdivision Agreement and that the Parties would try to complete the negotiations, and enter into the Future Subdivision Agreement on or before March 31, 2010, but that the period may be extended by mutual agreement of the Parties; and
WHEREAS¸ the Parties desired to extend the time period for negotiation and entry into the Future Subdivision Agreement by an additional four (4) months and extended the Agreement out until July 30, 2010; and
WHEREAS, the Parties now desire the extend the time period for negotiation and entry into the Future Subdivision Agreement by an additional five (5) months and to extend the Agreement out until December 31, 2010.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and agreed, the Parties hereto hereby agree as follows:
Section 1. The date of "March 31, 2010" in Paragraph A of Article II of the Agreement, as it was amended by the First Amendment to the Agreement to read "July 30, 2010" is hereby amended to read "December 31, 2010."
Section 2. All other terms and conditions of the Agreement, except for the term of the negotiation period as specified in Section 1 of this Amendment, shall remain in full force and effect.
IN WITNESS WHEREOF,the Parties have executed this Amendment on the dates set forth below.
CITY OF RIO VISTA, a municipal corporation
By:
Hector De La Rosa, City Manager
Approved as to Form:
Kara K. Ueda, City Attorney
Shea Homes Limited Partnership,
a California limited partnership
By: