CC 2016-03-08_09f Reimbursement Agreement_Waterline Installation
MEMORANDUM
TO: CITY COUNCIL
FROM: TERESA McCLISH, COMMUNITY DEVELOPMENT DIRECTOR
BY: MATTHEW DOWNING. ASSOCIATE PLANNER
SUBJECT: CONSIDERATION OF A REIMBURSEMENT AGREEMENT FOR
WATERLINE INSTALLATION; LOCATION – 251 EAST GRAND
AVENUE
DATE: MARCH 8, 2016
RECOMMENDATION:
It is recommended the City Council:
1. Approve a Reimbursement Agreement with PFG Arroyo Grande, Inc. for the
installation of a waterline and authorize the Mayor to execute the Agreement; and
2. Appropriate $45,000 from the Water Fund unallocated fund balance.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
Approval of the Reimbursement Agreement will result in an unplanned expenditure of
$45,000 from the Water Fund. As of the Mid-Year Budget Report, the Water Fund has
an estimated ending fund balance of approximately $2.3 million.
BACKGROUND:
On August 6, 2014, the Planning Commission approved Conditional Use Permit 14-007,
authorizing the façade modification and building expansion of the Chevron station at
251 East Grand Avenue. Following the Planning Commission’s approval, the applicant
submitted building plans indicating the entire structure would be demolished as part of
the remodel. While the resulting building is in substantial conformance with the
Planning Commission’s approval, this demolition was not part of the project’s original
scope of work and therefore necessitates the installation of fire sprinklers to the new
structure. In order to provide fire flow to the new structure, a four inch (4”) diameter
waterline is required to be bored from West Branch Street, under East Grand Avenue,
to the project boundary. Efforts have been made with the Chevron franchisee to install
a twelve inch (12”) diameter waterline in place of the four inch (4”) line in order to make
this eligible as a public facility (see Exhibit “A” of the Agreement).
ANALYSIS OF ISSUES:
The proposed Agreement reimburses the applicant for the cost difference of installing a
twelve inch (12") diameter water main from a four inch (4") diameter waterline. The
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CITY COUNCIL
CONSIDERATION OF A REIMBURSEMENT AGREEMENT FOR WATERLINE
INSTALLATION
MARCH 8, 2016
PAGE 2
City’s current water main runs at an angle from West Branch Street underneath the
parking lot at 200 West Branch Street, and connects to the water system at Traffic Way.
This existing water main is over fifty (50) years old. The installation of a waterline to
serve the Chevron site provides a unique opportunity to install a new water main,
providing a new public facility in existing right-of-way (ROW) and putting the City in a
position to remove an aging water main from the middle of private property in the future.
In general, placing City infrastructure in the ROW is far preferred over having this
infrastructure running under private property.
A second benefit of the upsizing results from the new water main being available for
connection by the undeveloped, freeway-fronting commercial parcel located behind the
Chevron station. Fees paid at the time of the undeveloped property's connection to the
new water main will help reimburse the City for the proposed expenditure; however, it is
unknown when these fees would be paid. Additionally, future development will not have
the need to install a parallel line across East Grand Avenue. If the City were to install a
twelve inch (12") water main separately, it would cost approximately $90,000, not
including design fees.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
• Approve the Reimbursement Agreement and authorize the Mayor to execute the
Agreement;
• Do not approve the Reimbursement Agreement and instead instruct staff to work
with the applicant to provide a water line appropriately sized only for the project’s
needs; or
• Provide direction to staff.
ADVANTAGES:
The proposed Reimbursement Agreement provides financial reimbursement for the
applicant to install an appropriately sized City water infrastructure, aids the City in
preparing for future infrastructure modifications, and will aid in the future development of
an undeveloped commercial property. These benefits will be achieved at significant
savings compared to the City installing the infrastructure in the future.
DISADVANTAGES:
The reimbursement will have an unanticipated financial impact to the Water Fund.
ENVIRONMENTAL REVIEW:
Staff has reviewed the project in accordance with the California Environmental Quality
Act (CEQA), the State CEQA Guidelines, and the Arroyo Grande Procedures for the
Implementation of CEQA and concluded that the project is Categorically Exempt per
Section 15304 (f) regarding minor trenching and backfilling where the surface is
restored.
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CITY COUNCIL
CONSIDERATION OF A REIMBURSEMENT AGREEMENT FOR WATERLINE
INSTALLATION
MARCH 8, 2016
PAGE 3
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall on Thursday, March 3, 2016. The Agenda and
staff report were posted on the City’s website on Friday, March 4, 2016.
Item 9.f. - Page 3
REIMBURSEMENT AGREEMENT
This Reimbursement Agreement is made this _____ day of _______________,
2016, by and between the City of Arroyo Grande, California, a California municipal
corporation (the “City”), and PFG Arroyo Grande, Inc. (“PFG”).
RECITALS
A. PFG operates a Chevron Station located at 251 East Grand Avenue in the
City of Arroyo Grande.
B. PFG has proposed a building replacement project for the Chevron Station.
As part of this project PFG is required to install a 4” diameter fire service water pipeline
to be located in the public right-of-way in West Branch Street and into the public right-of-
way in East Grand Avenue. This 4” diameter water pipeline will be located in the same
location as an identified future City 12” diameter water main pipeline. The location of
the 4” diameter line and identified future City 12” diameter water main pipeline are more
specifically described in Exhibit “A” attached hereto and incorporated herein.
C. City has determined that increasing the size of the 4” diameter line to
function as a 12” diameter water main pipeline would provide public benefits separate
and apart from the benefit to PFG’s Chevron building replacement project.
D. PFG is willing to pay for the costs of designing, constructing and installing
a 12” diameter water main pipeline (hereinafter referred to as “the Work”), subject to
being reimbursed from the City for the additional cost of installing a 12” diameter water
main pipeline instead of a 4” diameter fire service water pipeline, as described below
herein.
NOW, THEREFORE, it is hereby agreed by and between the parties as follows:
1. Design and Construction of lmprovements.
PFG shall be solely responsible for designing, constructing, installing and
providing for the inspection of the 12” diameter water main pipeline. City shall review
and approve the plans and specifications for the work prior to construction. Installation
of the 12” diameter water main pipeline shall be to the satisfaction of City in its sole and
reasonably exercised discretion.
2. Reimbursement for Installing 12” Diameter Water Main Pipeline
instead of 4” Diameter Fire Service Water Pipeline.
Provided PFG is not in default hereunder, PFG shall receive reimbursement in
the amount of $45,000 for the additional cost of installing a 12” diameter water main
pipeline instead of a 4” diameter fire service water pipeline associated with the pipeline
design, construction and installation.
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Reimbursement will be provided to PFG upon completion of the Work.
3. Inspection.
The City shall have the right at all times to inspect the construction of the Work to
assure compliance with plans and specifications.
4. Indemnification.
PFG agrees to indemnify, defend and hold harmless, and further agrees that any
of its contractors and/or agents that provide work or services in connection with PFG’s
obligations under this Agreement agree to indemnify, defend and hold harmless, the
City, the City Council and each member thereof, and every officer, commissioner, agent
and employee of the City, grantees and assigns from and against all claims, actions,
liabilities, damages, costs, expenses and judgments, including attorney’s fees, which
relate to, arise from, or are in way connected with PFG’s obligations under this
Agreement, on account of any injury to persons or damage to property, excluding
therefrom such injury or damage caused by the proven sole negligent acts of City. This
provision shall survive the expiration or termination of this Agreement.
5. Insurance.
PFG shall require all persons performing services on the Work, including its
contractors and subcontractors, to obtain and maintain insurance of the types and in the
amounts described below in a form and with carriers satisfactory to City.
a. Commercial General Liability Insurance. Occurrence version commercial general
liability insurance or equivalent form with a limit of not less than $1,000,000.00 (or
as otherwise approved, in writing, by the City) for each occurrence shall be
maintained. If such insurance contains a general aggregate limit, it shall apply
separately to this Agreement or be no less than two (2) times the occurrence
limit. Such insurance shall:
i. Name City, its officials, officers, employees and agents as insured by
endorsement with respect to performance of this Agreement. The coverage shall
contain no special limitations on the scope of its protection afforded to the above-listed
insured.
ii. Be primary with respect to any insurance or selfinsurance programs
covering City, its officials, officers, employees and agents.
iii. Contain standard separation of insured provisions.
b. Business Automobile Liability Insurance. Business automobile liability insurance
or equivalent form with a limit of not less than $1,000,000.00 for each accident
shall be maintained. Such insurance shall include coverage for owned, hired and
non-owned automobiles and shall contain the provisions set forth in subsections
(a) (i) - (iii) set forth directly above.
c. Workers Compensation Insurance. Workers compensation insurance with
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statutory limits and employer’s liability insurance with limits of not less than
$1,000,000.00 for each accident shall be maintained.
d. Other Insurance Requirements. PFG shall:
i. Prior to taking any actions under this Agreement, furnish City with properly
executed certificates of insurance which shall clearly evidence all insurance required in
this section arid provide that such insurance shall not be canceled, allowed to expire or
be materially reduced in coverage except on thirty (30) days prior written notice to City.
ii. Provide to City certified copies of endorsements and policies if requested
by City, and properly executed certificates of insurance evidencing the insurance
required herein.
iii. Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior to completion and
acceptance of the Improvements.
iv. Maintain all insurance required herein from the time of execution of this
Agreement until the acceptance of the Improvements.
v. Place all insurance required herein with insurers licensed to do business
in California
6. Commencement of Construction and Inspection.
PFG and its contractor or subcontractors shall not commence construction of the
Work until they have received written authorization from City to proceed. All work
performed on the 12” diameter water main pipeline shall be done in strict compliance
with City approved plans, specifications and the contract documents and in a good and
workmanlike manner. All work performed by PFG, its contractor or agents to construct
the Work shall be subject to inspection by City. All fees and costs to construct the Work
shall be borne solely by PFG, subject to reimbursement for the additional cost of
installing a 12” diameter water main pipeline instead of a 4” diameter fire service water
pipeline as provided herein. Inspection by City or its employees or agents shall not
relieve PFG of liability for design defects or improper or inadequate workmanship.
7. Compliance with Applicable Laws.
PFG shall insure that all work performed on the Work is performed in a manner
which complies with all applicable federal, state, county and local government laws,
regulations and rules, including all rules and regulations of City, as these rules and
regulations may be modified or changed from time to time.
PFG’s attention is directed to and PFG shall comply with Sections 1720 to 1780,
inclusive of the California Labor Code. All craftsman, mechanics, and laborers
employed or working upon the site of the Work will be paid unconditionally and without
subsequent deductions or rebate on any account the full amounts due at the time of
payment at wage rates not less than those contained in the wage determination which is
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referenced herein and made a part hereof, regardless of any contractual relationship
which may be alleged to exist between PFG, its Contractor and subcontractors and
such laborers and mechanics. In accordance with Section 1770 of the Labor Code, the
City has ascertained that the local prevailing wage rates shall be as determined by the
California Department of Industrial Relations. Said rates are accessible on the Internet
under the heading "General Prevailing Wage Determination made by the Director of
Industrial Relations pursuant to California Labor Code Part 7, Chapter 1, Article 2,
Section 1770, 1773 and 1773.1". The Internet address is http://www.dir.ca.gov/. The
wage determination shall be posted by PFG’s Contractor before start of work,
throughout the work, and at the site of work in a prominent place where it can easily be
seen by the workers. PFG, its Contractor, and subcontractors shall comply with Section
1775 of the California Labor Code concerning the payment of prevailing rate of per diem
wages. In accordance with this section, should PFG’s Contractor or its subcontractor fail
to pay prevailing rates, the Labor Commissioner may assess monetary forfeitures. PFG
will be responsible for payment of any penalties.
8. Contractor Licenses.
All work performed on the 12” diameter water main shall be done only by
contractors licensed in the State of California and qualified to perform the type of work
required and comply with the City’s Business License Ordinance.
9. Guarantee.
PFG shall guarantee all work and materials for the Work to be free from all
defects due to faulty materials or workmanship for a period of one (1) year after the date
of final inspection of the work by City. This section shall not, in any way, limit the liability
of PFG or any other party for any design or construction defects in the work.
10. No Employment Relationship.
PFG, its agents, servants, and employees are not agents or employees of City,
but are independent contractors, solely responsible for their own acts and omissions,
and this Agreement shall not be construed as an employment agreement between City
and PFG or between City and any contractor doing work for PFG.
11. Notice.
Any notices required or desired to be sent pursuant to this Agreement shall be
addressed as follows:
CITY: PFG:
City Manager Keith Slocum
City of Arroyo Grande PO Box 633
300 East Branch Street Avila Beach, CA 93424
Arroyo Grande, CA 93421
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12. Binding Effect.
This Agreement shall, at all times, be binding upon the City and PFG and their
agents, successors and assigns.
13. Governing Law and Venue.
This Agreement shall be construed and enforced in accordance with, and
governed by, the laws of the State of California. The Parties hereto agree that all
actions or proceedings in connection with this Agreement shall be tried and litigated in
the Superior Court located in the County of San Luis Obispo, State of California.
14. Attorneys' Fees.
In the event of legal action to enforce the terms and conditions of this
Agreement, the prevailing party shall be entitled to recover its costs, including
reasonable attorney fees and costs.
15. Amendments.
Amendments to this Agreement shall be in writing and shall be made only with
the mutual prior written approval of the parties to this Agreement.
16. Entire Agreement.
This Agreement constitutes the entire agreement and understanding of the
Parties hereto and contains all representations between the Parties with respect to the
subject matter hereof. Each Party has had the opportunity to consult independent
counsel of its own choosing. No Party in executing this Agreement has relied upon any
inducements, promises or representations made by any other Party or any
representative of any other Party except as set forth in this Agreement. This
Agreement can only be modified by a writing signed by all Parties to this Agreement.
17. Severability.
If any term or provision of this Agreement is determined to be illegal,
unenforceable, or invalid in whole or in part for any reason, such illegal, unenforceable,
or invalid provision or part thereof shall be stricken from this Agreement, and such
provision shall not affect the legality, enforceability, or validity of the remainder of the
Agreement. If any provision or part thereof of this Agreement is stricken in accordance
with the provisions of this section, then such stricken provision shall be replaced, to the
extent possible, with a legal, enforceable, and valid provision that is as similar in tenor
to the stricken provision as is legally possible.
18. Counterparts.
This Agreement may be executed in any number of counterparts each of which
shall be deemed an original, and all of which shall constitute one and the same
agreement.
19. Waiver.
No waiver by a Party of any provision of this Agreement shall be considered a
waiver of any other provision or any subsequent breach of the same of any other
provision.
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20. Assignment.
This Agreement shall not be assigned without the written consent of the parties
hereto, and any assignment without such written consent shall be void and ineffective.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
CITY OF ARROYO GRANDE (‘CITY”) PFG
________________________________ By:
Jim Hill, Mayor
Title: ___________________________
ATTEST: ____________________
________________________________ By:
Kelly Wetmore, City Clerk
Title: ___________________________
Approved as to form:
_______________________________
Heather Whitham, City Attorney
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EXHIBIT "A"Item 9.f. - Page 10