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Home My WebLink About2006-09-12; City Council; 18721; AUTHORIZING APPROPRIATION OF FUNDS AND PROCESSING A REIMBURSEMENT PAYMENT FOR RANCHO SANTA FE ROAD SOUTH IMPROVEMENTS - CT 90-03CITY OF CARLSBAD - AGENDA BILL AB# 18,721 MTG. 9/12/06 DEPT. ENG AUTHORIZING APPRORIATION OF FUNDS AND PROCESSING A REIMBURSEMENT PAYMENT FOR RANCHO SANTA FE ROAD SOUTH IMPROVEMENTS (CT 90-03) DEPT. HEAD <2//" CITY ATTY. ^J: CITY MGR. ""IT^N S»»fc4=il RECOMMENDED ACTION: Adopt Resolution No. 2006-268 authorizing the appropriation of funds and processing a reimbursement payment for Rancho Santa Fe Road South improvements (CT 90-03). ITEM EXPLANATION: On February 20, 2001, a reimbursement agreement was approved for execution with Continental Residential, Inc., pursuant to City Council Resolution 2001-52 (Agreement). The Agreement addresses payment terms to Continental Residential, Inc., (Developer) for costs associated with street widening improvements for Rancho Santa Fe Road along the frontage of the Shelley Subdivision known as CT 90-03 (Improvements). In 2001, the estimated costs for the Improvements were $3,570,000. Per the Agreement, the Developer is responsible to pay for Rancho Santa Road improvement fees in the amount of $2,234,500 (218 dwelling units x $10,250). This fee was used as a credit and subtracted from the total project cost as audits of eligible costs were performed. After applying this credit ($3,570,000 - $2,234,500), this results in $1,335,500 the Developer was estimated to receive for reimbursement. Improvements for this portion of Rancho Santa Fe Road widening project were completed by the Developer. In accordance with the Agreement, the Developer submitted audit materials for review by the City. During construction, the Developer submitted change orders that occurred which resulted in a higher total project cost. After an audit of eligible costs was performed (see Exhibit 3) the total project cost is $4,219,898.71. With a revised project cost of $4,219,898.71, and subtracting the Rancho Santa Road improvement credit of $2,234,500, this results in a revised eligible reimbursement payment of $1,985,398.71. The Developer provided a letter acknowledging they have no further reimbursement requests and that this represents the final reimbursable payment (see Exhibit 4). Based on the audit of costs for the Improvements, staff approves this reimbursement payment. ENVIRONMENTAL IMPACT: On December 15, 1998, City Council adopted Resolution No. 98-417 certifying the Environmental Impact Report for the Shelley Development Project finding the project in compliance with the environmental regulations and policies of the City of Carlsbad. FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED DENIED CONTINUED WITHDRAWN AMENDED B^Dn D D CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHER -SEE MINUTES D D D D Page 2 FISCAL IMPACT: Based on the final audit for the Rancho Santa Fe Road South improvements, the Developer is eligible for a reimbursement payment of $1,985,398.71. This exceeds the appropriation of $1,350,000 to Project No. 38801. In order to pay the total reimbursement amount, an additional appropriation of $635,398.71 is being requested. Additional appropriation may be paid from the Rancho Santa Fe Road fund. Based on the anticipated development contributions and prepayment agreements, there are sufficient funds available for this additional appropriation. EXHIBITS: 1. Location Map. 2. Resolution No. 2006-268 authorizing appropriation of funds and processing a reimbursement payment for Rancho Santa Fe Road South improvements (CT 90-03). 3. Audit of eligible costs for Rancho Santa Fe Road South performed by Helming Engineering, dated February 26, 2006. 4. Letter from Continental Residential, Inc., agreeing to final payment for reimbursement with attached invoice, dated September 5, 2006. DEPARTMENT CONTACT: Jeremy Riddle, (760) 602-2737, iridd(S).ci.carlsbad.ca.us LOCATION MAP CITY OF OCEANSIDE HIGHWAY i—?« VICINITY MAP NOT TO SCALE SITE NOT TO SCALE PROJECT NAME RANCHO SANTA FE RD. REIMBURSEMENT AGREEMENT PROJECT NUMBER CT90-03 EXHIBIT RAWN BY: SCOTT EVANS. CARLSBAD ENGINEERING DEPT.\DEVELOPUENT PROJKTS\CJ90-03UNm.DWG 1 RESOLUTION NO. 2006-268 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF 3 CARLSBAD, CALIFORNIA, AUTHORIZING APPROPRIATION OF FUNDS AND PROCESSING A REIMBURSEMENT PAYMENT FOR 4 RANCHO SANTA FE ROAD SOUTH IMPROVEMENTS (CT 90-03). 5 WHEREAS, Continental Residential, Inc. (Developer), has submitted a request for a 6 reimbursement payment in accordance with the Reimbursement Agreement for Rancho Santa Fe 7 Road South Improvements associated with Carlsbad Tract CT 90-03 approved per City Council 8 Resolution 2001-52; and WHEREAS, the Developer completed road widening improvement to Rancho Santa Fey Road South along the frontage of the development project known as Shelley Subdivision, 10 CT 90-03 as shown on City drawing 380-1K; and 11 WHEREAS, in accordance with the Reimbursement Agreement the Developer 12 submitted, to the City, audit materials documenting eligible project costs; and 13 WHEREAS, the City performed an audit of the materials and has determined a total 14 eligible project cost of $4,219,898.71; and 15 WHEREAS, per the Agreement subtracting the Rancho Santa Road improvement credit 16 $2,234,500 from the total project costs results in a reimbursement payment of $1,985,398.71; and 17 WHEREAS, the City Engineer approves the audit and reimbursement payment of 18 $1,985,398; and WHEREAS, this payment represents the final reimbursement payment satisfying thei y terms of the Reimbursement Agreement, and20 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, 21 California, as follows: 22 1. That the above recitations are true and correct. 23 2. That an appropriation of $635,398.71 from the Rancho Santa Fe Road fund is O/l approved. 25 3. That the Finance Director is hereby authorized to process a reimbursement 26 payment of $1,985,398.71 made to Continental Residential, Inc. 27 /// 28 /// 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 12th day of September, 2006, by the following vote: AYES: Council Members Lewis, Hall, Kulchin, Packard, Sigafoose NOES: None ABSENT: None CLAUDE A LEWIS, Mayor ATTEST: (SEAL) E M. WOOD, City Clerk AUDIT ENGINEER'S REPORT FOR RANCHO SANTA FE ROAD SOUTH Request for Reimbursement No. 3 Initial Report - September 10,2004 Updated Dec. 2, 2004 Updated Feb. 28, 2006 SUMMARY: Requested Reimbursement - Reimb. No. 3 $ 1,806,752.00 Approved Reimbursement - Reimb. No. 3 $1,664,030.61 Fair Share Agreement: Start Balance (218 SFDx $10,250) $2,234,500.00 Approved reimbursable amount - Reimb. No. 1 Adjusted $ 1,498,403.00 Approved reimbursable amount - Reimb. No. 2 Adjusted $ 1,057,465.10 Prior Balance to Continental Homes (R #1 + R #2- Fair Share) $ 321.368.10 Approved reimbursable amount - Reimb. No. 3 Adjusted $1,.664,030.61 Total Approved Reimbursement Amount to date $4,219,898.71 Reimbursable Amount Due to Continental for R #3 $1,985,398.71 Comments by Audit Engineer: Reimbursement Requested No. 3 as submitted was for $1,806,752. Cancelled checks were not submitted with the original submittal. In October 2004, Continental submitted copies of cancelled checks for most of the requested reimbursements After review of the cancelled checks submitted against the invoices and agreements it was determined that $1,404,396.63 of the requested reimbursements are eligible for reimbursement under the reimbursement agreement. In February 2006, D.R. Horton/Continental Homes submitted additional documentation with cancelled checks in support of Reimbursement Request No. 3. After review of this additional documentation it was determined that $259,633.98 was eligible for reimbursement in addition to the $1,404,393.63 previously deemed eligible. This brings the total amount eligible for reimbursement, from Reimbursement Requested No. 3, to $1,664,030.61. During the course of construction Horton-Continental has entered into contracts with, or issued purchase orders to, contractors without following the bidding procedures stipulated in the reimbursement agreement. The contractors involved are GG Landscaping and Gary's Construction. The reimbursement requests for work performed by these contractors are denied Feb. 28,2006 RSF'Rd. South Reimbursement Request No. 3 because Horton.-Continen.tal did not abide by the reimbursement agreement requirement to obtain at least three competitive bids for the work. There were a number of items where reimbursement was requested but the amount, either fully or in part, could not be verified as being paid in those invoices for which cancelled .checks were provided. We have made notation'of this in the "Comments" column of the audit spreadsheet attached. Horton-Continental is incorrectly calculating the performance bond premiums. The performance bond premiums should be computed on the Direct Costs Subtotal minus the subtotals for Right- of-Way Acquisitions (A) and Environmental (B). Horton-Continental has been computing the performance bond premiums based on the Project Total, which includes the Indirect Costs Subtotal as well as Right-of-Way Acquisitions (A) and Environmental (B). CONTINENTAL RESIDENTIAL INC. 5790 Fleet Street, Suite 210 Carlsbad, CA 92008 September 5,2006 Conrad Hammond City Engineer City of Carlsbad 1635 Faraday Avenue Carlsbad, CA 92008 Re: Rancho Santa Fe South Improvements Project CT 90-03, Invoice #3 Dear Conrad: This revised letter serves to confirm that Reimbursement Request #3 submitted by Continental Residential Inc. and approved by Helming Engineering Inc. in the amount of $1,664,030.61 together with an unpaid balance on a prior request in the amount of $321,368.10 for a grand total of $1,985,398.71 represents the final reimbursement request pursuant to the Agreement for Reimbursement of Costs For the Construction of Rancho Santa Fe Road From Calle Acervo to Northern Boundary of Shelley Property- Project CT 90-03. Payment should be made by check payable to Continental Residential Inc. and mailed to the above address (Attention: John Massey, CFO). Feel free to call Kevin Kasai at (760) 930-6892 if you require additional information. Thank you for your assistance. Sincerely, Eric Ruby Vice President CONTINENTAL RESIDENTIAL INC. 5790 Fleet Street, Suite 210 Carlsbad, CA 92130 INVOICE TO: City of Carlsbad 1635 Faraday Avenue Carlsbad, CA 92008 DATE: 9/5/06 INVOICE #: Reimbursement Request 3 (Revised) PROJECT: Rancho Santa Fe Road South Improvements CT 90-03 Payment is requested for final balance due in the amount of $1,985,398.71. Payable to Continental Residential Inc.