HomeMy WebLinkAbout2026-07-07; City Council; 09; Reimbursement Agreement with 2502 & 2518 Jefferson LLC for sewer improvements on Jefferson StreetCA Review TL
Meeting Date:
To:
From:
Staff Contact:
markus.mohrle@carlsbadca.gov, 442-339-2322
Dave Padilla, Utilities Assistant Director
dave.padilla@carlsbadca.gov, 442-339-2356
Subject
improvements on Jefferson Street
District:
Recommended Action
Adopt a resolution approving a reimbursement agreement with 2502 & 2518 Jefferson, LLC for
the Jefferson Street Sewer Replacement Project to be constructed by Carlsbad Tract
No. 2024-0004.
Executive Summary
The existing sewer main in Jefferson Street from Buena Vista Way to just south of the Laguna
Drive intersection requires upsizing, from 8 inches to 10 to 12 inches, to provide additional
sewer capacity to serve the proposed and future developments.
A developer planning 12 new homes at the corner of Jefferson Street and Buena Vista Way
needs to enlarge about 1,200 feet of sewer main along Jefferson Street, from Buena Vista Way
south to just beyond the Laguna Drive intersection, to handle the added capacity.
The developer will enlarge the entire sewer main – both the portion fronting its property and
the off-site portion of the work, which will serve existing and future development.
Under city and state law, the developer may be eligible for reimbursement from the city for the
off-site portion of the work that exceeds the capacity required to serve its development,
subject to the requirements of a reimbursement agreement.
The portion of the sewer main fronting the developer's property is the developer's
responsibility and is not eligible for reimbursement. The off-site portion — which will serve
future development as well — is what the proposed reimbursement agreement would cover.
Staff recommend the City Council approve a reimbursement agreement with the developer,
2502 & 2518 Jefferson, LLC, for the off-site sewer improvements. The agreement is included as
Attachment A to Exhibit 1.
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Explanation & Analysis
The Planning Commission approved the residential project on May 21, 2025, contingent upon
the construction of adequate sewer facilities. The commission gave the developer, RREG
Investment Series LLC Series 1042, now operating as 2502 & 2528 Jefferson, LLC, the option to
wait for the city to construct the improvements or to increase the size of the existing eight-inch
diameter sewer main in Jefferson Street from Buena Vista Way southward to Laguna Drive,
about 1,200 feet, itself and become eligible for reimbursement for the off-site improvements.
This sewer main replacement, which will also serve future developments, is part of the city's
Jefferson Street Sewer Replacement Project, Capital Improvement Program Project No. 5558.
The portion of the sewer main along the property frontage of 2502 and 2518 Jefferson Street is
not eligible for reimbursement and is the developer’s responsibility to improve, in accordance
with Carlsbad’s Municipal Code and engineering standards.
•California Government Code Section 66486 requires a reimbursement agreement with
the developer for improvements that are more than needed to serve the proposed
development.
•Carlsbad Municipal Code Section 13.08.040 requires developers to extend sewer lines to
the outer boundary of their subdivision. Beyond that, the city can also require a
developer to install sewer improvements that are larger than the project needs, or that
extend beyond the development's property.
•Municipal Code Section 13.08.050 specifies that if the city requires those extensions or
oversizing under Section 13.08.040, the city may enter into a reimbursement agreement
to pay the developer back for the cost difference between what it would have cost to
serve just the development and the total cost.
The reimbursement agreement also requires the developer to comply with the public bidding
procedures set forth in California Public Contract Code Section 22037 and to pay prevailing
wages as required by the California Labor Code, as the city is required to do.
The reimbursement agreement would end on the date the city fully reimburses the developer,
five years after the date the project’s Notice of Completion is officially recorded, or seven years
after the effective date of the reimbursement agreement, whichever comes first.
Staff recommend that the City Council approve a reimbursement agreement with the developer
for construction of the off-site sewer improvements. The reimbursement agreement is
provided as Attachment A to Exhibit 1.
Fiscal Analysis
The total estimated cost to complete the off-site sewer improvements is $2,078,825. The
project’s cost estimate includes a 10% construction contingency and the items listed below:
•Environmental monitoring and professional engineering services, improvement plan
review, permits, and city staff management and administration
•The costs of the construction contract(s), including alternate bid items requested and
approved by the city prior to award of the construction contract by the developer,
construction surveying and staking, construction materials testing and inspection
services and city-approved construction change orders.
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•An allowance equal to 10% of the direct construction contract costs for construction
management and administrative expenses above the level of construction
superintendent
•An allowance equal to 1.5% of the direct construction contract costs for improvement
bonds and payment and performance bonds
•An allowance equal to 2% of the direct construction contract costs for insurance
coverage
This project is funded by the sewer replacement and sewer connection funds. Sufficient funds
are available to fund the reimbursable sewer work. A summary of the available funds and
estimated project costs, including a 10% construction contingency, are shown in the table
below:
Jefferson Street Sewer Replacement Project
Capital Improvement Program Project No. 5558
Reimbursement agreement with 2502 & 2518 Jefferson, LLC
Under the terms of the reimbursement agreement, reimbursement of costs to the developer is
subject to the availability of funding and completion of the sewer construction work in
accordance with the terms of the reimbursement agreement. Reimbursable costs would be
eligible for funding from the recently established Sewer Benefit Area N fund when revenue
from that fund accrues sufficiently. The Sewer Benefit Area N funding program collects fees
from developers for the construction of sewer capacity improvements to serve new
development.
Next Steps
Upon approval of the reimbursement agreement, the developer will advertise for bids, award a
construction contract to the lowest responsive, responsible bidder, and construct the off-site
portions of the Jefferson Street Sewer Replacement Project, in accordance with the plans and
specifications approved by the city. Upon construction completion, the developer will submit
expenses for city staff to review and audit to verify they are eligible for reimbursement, in
accordance with the agreement.
Staff will return to the City Council to request the Sewer Benefit Area N fund reimburse the
sewer replacement and sewer connection funds for the payment once there are adequate
funds from the fee revenue in Sewer Benefit Area N.
Total appropriation to date (sewer connection fund) $448,000
Total appropriation to date (sewer replacement fund) $1,792,000
Total available funding $2,240,000
Construction and related costs (estimated) -$2,028,825
Total estimated costs -$2,078,825
Remaining balance $161,175
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Environmental Evaluation
The proposed action is not a “project” as defined by California Environmental Quality Act, or
CEQA, Section 21065 and CEQA Guidelines Section 15378(a) and does not require
environmental review under CEQA Guidelines Section 15060(c)(2) because the action is limited
to the approval and execution of a reimbursement agreement. The action has no potential to
cause either a direct physical change in the environment or a reasonably foreseeable indirect
physical change in the environment. Furthermore, Capital Improvement Program Project No.
5558, Jefferson Street Sewer Replacement, is statutorily exempt from CEQA pursuant to
California Public Resources Code Section 21080.21. If the resolution is adopted, staff will file a
notice of exemption with the San Diego County Clerk in compliance with Section 21152(b) of
the California Public Resources Code.
Exhibits
1.City Council resolution
2.Location map
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Exhibit 1
RESOLUTION NO. 2026-146 .
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING A REIMBURSEMENT AGREEMENT WITH 2502 &
2518 JEFFERSON, LLC FOR THE JEFFERSON STREET SEWER REPLACEMENT
PROJECT TO BE CONSTRUCTED BY CARLSBAD TRACT NO. 2024-0004
WHEREAS, the City of Carlsbad, California has determined that it is necessary, desirable and in
the public interest to increase the capacity of the existing Jefferson Street sewer main to serve new
development; and
WHEREAS, on May 21, 2025, the Planning Commission adopted Resolution No. 7543 approving
Carlsbad Tract No. 2024-0004, contingent upon the construction of adequate sewer facilities, and
giving RREG Investment Series LLC Series 1042, now operating as 2502 & 2528 Jefferson, LLC, the option
to wait for the city to construct the improvements, or to upsize the existing eight-inch diameter sewer
main in Jefferson Street, from Buena Vista Way southward to Laguna Drive or approximately 1,192
feet, itself and become eligible for reimbursement for the off-site sewer improvements; and
WHEREAS, the sewer main upsizing must occur prior to or concurrently with the development
of Carlsbad Tract 2004-0004 and sewer connections for Carlsbad Tract 2004-0004 will not be available
until the sewer main upsizing is completed in accordance with city standards and to the satisfaction of
the City Engineer; and
WHEREAS, the developer shall pay sewer capacity fees in accordance with the Carlsbad
Municipal Code Section 13.10, such fees being necessary to prevent adverse impact of Carlsbad Tract
2004-0004 on public health and safety; and
WHEREAS, the conditions of approval for Carlsbad Tract 2024-0004 and Government Code
Section 66486 require a reimbursement agreement between the developer and the city to reimburse
the developer for more than the construction required to serve Carlsbad Tract 2024-0004; and
WHEREAS, Carlsbad Municipal Code Sections 13.08.040 and 13.08.050 provide for off-site
sewer extension and oversizing, respectively, and reimbursement of costs to the developer; and
WHEREAS, the developer agrees to construct the sewer extension and capacity increase
planned for Capital Improvement Program Project No. 5558, Jefferson Street Sewer Replacement, and
costs in excess of the construction required for Carlsbad Tract 2004-0004 may be eligible for
reimbursement, subject to review by the City Engineer and an audit by the city to determine eligibility
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for reimbursement in accordance with the reimbursement agreement and upon completion and
acceptance of the work by the city; and
WHEREAS, the total estimated cost of Project No. 5558 is $2,078,825, of which $2,028,825
would be eligible for reimbursement; and
WHEREAS, the sewer main upsizing along the property frontage of 2502 and 2518 Jefferson
Street is the developer’s responsibility and is not eligible for reimbursement; and
WHEREAS, sufficient funds are available in Project No. 5558, which is funded by the sewer
replacement and sewer connection funds to reimburse the developer per the reimbursement
agreement.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.That the proposed action is not a “project” as defined by California Environmental Quality
Act, or CEQA, Section 21065 and CEQA Guidelines Section 15378(a) and does not require
environmental review under CEQA Guidelines Section 15060(c)(2) because the action is
limited to the execution of a reimbursement agreement. The action has no potential to
cause either a direct physical change in the environment or a reasonably foreseeable
indirect physical change in the environment.
3.That the Capital Improvement Program Project No. 5558, Jefferson Street Sewer
Replacement, is statutorily exempt from the CEQA pursuant to California Public Resources
Code Section 21080.21.
4.That, pursuant to the requirements of the Carlsbad Tribal, Cultural, and Paleontological
Resources Guidelines dated September 2017, the developer shall comply with the cultural
resources monitoring and mitigation requirements and prepare a project-level Phase I
Cultural Resources Survey in accordance with the guidelines and record all resources
encountered using Department of Parks & Recreation 523 forms in accordance with all
applicable regulations. Resources shall be evaluated for significance and eligibility for
inclusion in applicable historic registers using methods such as, but not limited to,
subsurface testing and/or archival research by a qualified cultural resource professional. In
the event that such resources are found to be historical resources, potential adverse
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impacts must be analyzed as stated in California Public Resources Code, Sections 21084.1
and 21083.2(l). Suitable mitigation for significant effects on archaeological resources are
outlined in Section 15126.4(b)(3) and the 2017 guidelines. The developer, in consultation
with the City Planner, shall be responsible for implementing the methods for eliminating or
substantially reducing impacts on resources as recommended by the archaeologist and in
consultation with the Native American Tribe. Such methods could include, but are not
limited to, excavation (data recovery) of archaeological resources; and/or construction
monitoring by a qualified professional and appropriate Native American monitors as
identified through consultation with the Native American Heritage Commission or Native
American Tribe. In the event that such resources are found to be historical resources, the
developer shall enter into a pre-excavation agreement or cultural resource treatment and
monitoring agreement with the appropriate Native American Tribe prior to the
commencement of earthwork activities and consistent with the 2017 guidelines. The
qualified archaeologist and a Native American representative shall attend the pre-
construction meeting and shall be on site during earthwork activities to perform periodic
inspections of the investigations. If previously unidentified cultural resources are
discovered, either the archaeologist or the Native American representative shall have the
authority to divert or temporarily halt earthwork operations in the discovery area. The
archaeologist, in consultation with the City Planner, shall determine the significance of the
discovered resources. The City Planner must concur with the evaluation before construction
activities will be allowed to resume in the affected area. The results of the cultural resources
investigation shall be compiled into a technical report or memorandum documenting the
field conditions and any data recovery and analysis results and submitted to the City and
the South Coastal Information Center.
5.That the reimbursement agreement with 2502 & 2518 Jefferson, LLC, for construction of
Capital Improvement Program Project No. 5558, Attachment A, is approved and the Mayor
is hereby authorized and directed to execute said reimbursement agreement in an amount
not to exceed $2,028,825.
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6.That the City Manager or designee is authorized to sign all other documents necessary for
regulatory compliance or to otherwise implement the reimbursement agreement, subject
to review and approval as to form by the City Attorney’s office.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City
of Carlsbad on the 7th day of July, 2026, by the following vote, to wit:
AYES: Blackburn, Bhat-Patel, Acosta, Burkholder, Shin.
NAYS: None.
ABSTAIN: None.
ABSENT: None.
______________________________________
KEITH BLACKBURN, Mayor
______________________________________
SHERRY FREISINGER, City Clerk
(SEAL)
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Attachment A
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LOCATION MAP
PROJECT NAME:
SEWER REPLACEMENT
PROJECT NUMBER EXHIBIT
2REIMBURSEMENT AGREEMENT
PROJECT
SITE
CIP 5558/CT 2024-0004
BUEN
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LAGO
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CT 2024-0004
JEFFERSON STREET
Exhibit 2
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