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HomeMy WebLinkAboutC-3026(F) - Development of San Diego Creek North, Memorandum of Understanding• August 14, 1995 CITY COUNCIL AGENDA ITEM NO. /,-a, TO: MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: PUBLIC WORKS DEPARTMENT SUBJECT: DEVELOPMENT OF SAN DIEGO CREEK NORTH PROPERTY (C- 3026)(j) (Fletcher Jones Motor Cars) RECOMMENDATION: Approve Amendment No. 1 to the Memorandum of Understanding between the City of Newport Beach and Fletcher Jones Motorcars. DISCUSSION: is On February 13, 1995, the City Council approved a Memorandum of Understanding (M.O.U.) among the City of Newport Beach, Fletcher Jones Motorcars (FJM) and The Irvine Company for the development of the San Diego Creek North property as a new automobile dealership for Fletcher Jones Jr. Exhibit "B" to the M.O.U. (copy attached) outlined certain tasks to be performed and itemized cost sharing for those tasks between the City and FJM. Since the M.O.U. was approved, it became necessary to perform certain additional tasks, which were not specifically included in Exhibit "B ". These tasks were: 1. Feasibility Study for an on -site private sewage disposal system (septic tank and leechfield). 2. Excavation (potholing) of the two large water transmission mains traversing the site to verify their vertical and horizontal locations. 3. Additional reproduction and printing costs. • These items and the proposed cost sharing therefore were given initial authorization by the City Manager and Fletcher Jones Jr. It is recommended the City Council give formal approval to the Amendment. - -T ,J SUBJECT: DEVELOPMENT OF SAN DIEGO C NORTH PROPERTY (C -3026) August 14, 1995 Page 2 The additional Land associated costs are as follows: Account No. 7251- C5100262 (Fletcher Jones) 7261- C5100262 (City) Back -up information and correspondence copies are included. Respectfully submitted, PUBLIC WORKS DEPARTMENT Don Webb, Director By AttC Vl 1111G1ILO Amoun $8,802.00 $2,310.00 • • • FLETCHER JONES • M• O• T• O• R• C• A•R - S July 14, 1995 Mr. Kevin Murphy City Manager City of Newport Beach P. O. Box 1768 Newport Beach, CA 92659 -1768 Dear Kevin: • In accordance with your letter dated July 7, 1995, please find attached the executed Amendment No. 1, Memorandum of Understanding, City of Newport Beach and Fletcher Jones Motorcars, which you requested I sign and return to you. Sincerely, Fletcher Jones, Jr. President FJ /bf enc. 1301 Quail Street Newport Beach. California 92660 Tel 714.833.9300 213.623.5000 Fax 714.833.2978 3 • • AMENDMENT NO. 1 MEMORANDUM OF UNDERSTANDING CITY OF NEWPORT BEACH AND FLETCHER JONES MOTORCARS Exhibit B is hereby amended to include the following items: SITE SHARE TASK DESCRIPTION ( FLETCHER JONES) Excavation for M.W.D. $ 1,810.00 and M.C.W.D. mains Percolation Feasibility $ 6,492.00 Study Reproduction $ 500.00 Previous Total New Total APPROVED: Fletcher Jones City f New or each $165,000.00 $173,802.00 BAYVIEW WAY SHARE (C.N.B.) TOTAL $ 1,810.00 $ 3,620.00 -0- $ 6,492.00 $ 500.00 $ 1,000.00 $142,000.00 $307,000.00 $144,310.00 $318,112.00 • C • July 7, 1995 0 0 CITY OF NEWPORT BEACH PUBLIC WORKS DEPAPTMENT P.O. BOX 1768, NEWPORT BEACH, CA 92659 -1768 (714) 644 -3311 Mr. Fletcher Jones, Jr. President Fletcher Jones Motorcars 1301 Quail Street Newport Beach, CA 92660 Dear Ted: The project is moving forward and it appears good progress is being made by City staff and consultants and by Jim Harris. The Draft EIR is complete and out for the statutory 45 day • review period (June 19 to August 2) and Jim Harris has submitted the plans for the Conditional Use Permit. The schedule for public hearings is currently set up for the following dates: Planning Commission August 24 City Council September 11 Coastal Commission Submittal September 25 Coastal Commission Bearing November 14 - 17 The Coastal Commission hearing date is tentative. Since the Coastal Commission staff will not accept an application until after City Council approval, the November Commission hearing is the earliest we can make. This meeting will be held in Los Angeles on the dates indicated. All these hearing dates are in conformance with our original project schedule. Since the M.O.U. was approved, two issues have come up which were not specifically addressed therein: Cost for excavating (potholing) M.W.D. and M.C.W.D, water mains 2. Percolation Feasibility Study for on -site sewage disposal, • We have received a proposal from Kennedy Pipeline in the amount of $3,620.00 for the first item and a proposal from Pacific Soils Engineering in the amount of $6,492.00 for the second item. The Kennedy Pipeline cost would be split equally between the City and Fletcher Jones since it falls under the category of topographic mapping, while the Pacific Soils proposal would be a 100% F.J.M. cost since it falls under the category of site utilities. It is my understanding Fletcher Jones, Jr. July 3, 1995 3300 Newport Boulevard, Newport Beach 0 Page Two 0 Emmet Berkery discussed these proposals with you at your last meeting with the Irvine Company and you verbally approved them. Consequently, the City has issued purchase orders for this work (copies enclosed), and has directed both contractors to proceed. Since these items were not specifically included in our M.O.U., I have prepared a short letter amendment to be signed by each of us. The amendment also includes a $1000.00 allowance for reproduction, since we have found it necessary to order additional copies of the geotechnical report and the environmental site analysis, and may have to order even more copies in the future. I hope this is acceptable. If you have any questions, please do not hesitate to call on me or any member of my staff. Sincerely, Kcvin Murl by City Manager :hJJ cc: Don Webb John Wolter t--Emmet Berkery Wes Taylor Enclosure 40 40 0 0 • AMENDMENT NO. 1 MEMORANDUM OF UNDERSTANDING CITY OF NEWPORT BEACH AND FLETCIIER JONES MOTORCARS is • Exhibit B is hereby amended to include the following items: TASK DESCRIPTION Excavation for M.W.D and M.C.W.D. mains Percolation Feasibility Study Reproduction Previous Total New Total APPROVED: Pletcher Jones Motorcars City& 'N ew or each SITE SIiARE BAYVIEW WAY (FLETCHER JONES) SHARE (C.N.B.) TOTAL $ 1,810.00 $ 1,810.00 $ 3,620.00 $ 6,492.00 $ 500.00 $165,000.00 $173,802.00 -0- $ 6,492.00 $ 500.00 $ 1,000.00 $142,000.00 $144,310.00 $307,000.00 $318,112.00 [I FOP•P PURCI- .z; EUHUtH CITY OF NEVVPORThBEACH 3300 NEWPORT BOULEVARD P.O. BOX 1760 NEWPORT BEACH, CALIFORNIA 92656 -8915 PHONE: (714 }644 -3110 rnoE PURCHASE ORDER NUMBER 15315 nCHORDER DATE!4 \;DAT[;nGGUInED +'f''�', nEGUISffION NO:; i.'- , {- VGNDOft NO -I, l; l;�,��t,, -:, �' . «•t,,,,;�'DESCfIIF�TION;1 06/20/95 NO =9V .. 70'24 POTHOL WATER MAINS /ENOOn KENNEDY PIPELINE,:COMPANY G1.ARCONAUT CIRCLE' P.O. BOX 3460 ALISO VIEJO, CA 92656. "714- 119A_ QA11A Sl uP 10 CITY OF NEWPORT BEACH PUBLIC WORKS 3300 NEWPORT BOULEVARD NEWPORT BEACH, CALIF. 92GG3 -3804 ATTN: ENTMETT 11ERKERY )NFIRM: DL'ANKET "'' FINAL-?,,. ::: '. `. PAYMENT TERMS r U NO =9V NIiT 30 DAYS T! _•� `r "t UNIT,OF MEASURE'rL `. CofWODITY. CODE A ATTN: MIKE TRUMBULL POT HOLE IN=EXPOSE '1'OPIOI'�.t.,�'I'GR' LOCATIONS,.FOR SAN -DI ±O"" MOTOR CAR Sy NJ A 'PER- ,YOUIt-.[y OPU"SO 7251 13012102A TZG1 P30102A TOTAL PURCHASE ORDER MAIN AT POUR TIL(PLETCUEll JONES [;` DATED 5 /05 /6.5. TOTAL 23.G20 0.2 uu II (. I 1 SUBTOTAL PRE jcHT TAX oV 3.620.00 3,G'20.00 0.00 • (1,00 1.810.00 1,810.00 3.G20.00 AcccrvANCe.au.a..oma. e.e. rev.. n. rro. mo,. rinwtr v.nnon.eo.^`.nm,ereai..nln.,nm. o, In v.n o�mar.m...n.e wr n.,..m... ^--�`l // Sy •R. %MO NI•W.r, N. wrl.•MnGw K\ novel• Jp.• In. In. M• r. W• M• Or• .•1n•r11.rm.uW[oMillan•Irc1uEInO rMw WM1•G On In. r.vv OY �A id.aml•coar.axwm...ad . r . m.oay,.rm•.m mndmon.m.n.luw•aano.el . mmdnr . rw.unon of mi. coar.mr. mo,a.•...dwm• CITY OF NEWPORT EACH ' I M P O R T A N T GENERAL TERMS AND CONDfTIONS ON THE REVERSE SIDE ARE INCORPORATED HEREIN. Tn.. e01.. .....,,..w 1 —.m. 1 ... - Ca1 '0S14A Sravtard5 nn,V.,.1mr amnorni.t. Lws, rorptlations, mlos, and code of Fodnml Govcrronont and tM Stala a Caulornia. SLo % r U1 1.00 E ' JGS =9V WORKMS;:DESCRIBED ;\60,1'1:. ' '.✓. •� � yr. i 7251 13012102A TZG1 P30102A TOTAL PURCHASE ORDER MAIN AT POUR TIL(PLETCUEll JONES [;` DATED 5 /05 /6.5. TOTAL 23.G20 0.2 uu II (. I 1 SUBTOTAL PRE jcHT TAX oV 3.620.00 3,G'20.00 0.00 • (1,00 1.810.00 1,810.00 3.G20.00 AcccrvANCe.au.a..oma. e.e. rev.. n. rro. mo,. rinwtr v.nnon.eo.^`.nm,ereai..nln.,nm. o, In v.n o�mar.m...n.e wr n.,..m... ^--�`l // Sy •R. %MO NI•W.r, N. wrl.•MnGw K\ novel• Jp.• In. In. M• r. W• M• Or• .•1n•r11.rm.uW[oMillan•Irc1uEInO rMw WM1•G On In. r.vv OY �A id.aml•coar.axwm...ad . r . m.oay,.rm•.m mndmon.m.n.luw•aano.el . mmdnr . rw.unon of mi. coar.mr. mo,a.•...dwm• CITY OF NEWPORT EACH ' I M P O R T A N T GENERAL TERMS AND CONDfTIONS ON THE REVERSE SIDE ARE INCORPORATED HEREIN. Tn.. e01.. .....,,..w 1 —.m. 1 ... - Ca1 '0S14A Sravtard5 nn,V.,.1mr amnorni.t. Lws, rorptlations, mlos, and code of Fodnml Govcrronont and tM Stala a Caulornia. SLo • N:u Isis -' PHONE (714) 380 -836:3 MAY 5, 1995 KEMM, EBY PRPELUMIE COMPAMY 61 ARGONAUT • POST OFFICE BOX 34GO ALISO VIEJO, CALIFORNIA 92656 CITY OF NEWPORT BEACH PUBLIC WORKS DEPARTMENT P.O. BOX 1769, NEWPORT BEACH, CA 92659-1768 Attention: Emmet Berkcty Re: Fletcher Jones Mercedes Benz Dear Emmet. We arc pleased to submit our bid as follc'.vs. Pct hole and expose top of water main at four locations on each line. All holes to be bickf fled aed compacted same day. All work to be clone in non - traffic areas. All engineering, permits and inspections by oihers. 4 ea. potholes on :6" M.W.D. MAINLNE 460.00 i °40.00 4 ea. potholes on 42" M.C.W.D. MAINLINE 445.00 17SQ.o0 TOTAL 620.00 Job estimate is for two scparMe move -ons. If it can be arranged for both lilies to be poi holed a'-d inspected in the same day this worl: can be done for 1,745.00 total. Thant: you for the opportunity to submit this proposal. If Nye can be of further assistance, please do not hesitate to call. Respectfully, KENNEDY PIPELINE COMPANY Michael L. Tnunble President' RECEIVED MAY 1 0 1995 6Fn ^v rA,.- . VUHI. iJr- Unvcn 4 CITY OF NEWPORT EACH 3300 NEWPORT BOULEVARD OI }y r P.O. BOX 1768 "o r NEWPORT BEACH, CALIFORNIA 92658 -8915 PHONE: (714)644-.3118 PAGE I I PURCHASE ORDER NUMBER 15344 URCHiORDEn.DATC ': °.;DATE REOUIIIED" ; r., nEOUISITION NO.',j - ,; .,VENDOR NO.:,,, n ,..`fREIGHTa,; 06/20/95 NO 131c PrRCOL.IrioN STUDY VENDon PACIFIC SOILS P.O. 2249 CYPRESS ENGINEERING. INC. to CITY Or NEWPORT BEACH PUBLIC WORKS CA 90030 3300 NEW'POR'T BOULEVARD NEWPORT BEACH. CALIF. 92663 -3884 ATTN: FlIMP'T BPIIKEIIY ONfIRM:. .OLi\NKET ' PAYMENTM . . n ,..`fREIGHTa,; NO NO NET 30 DAYS ' 2i;OUAN rITY: - �'1UNIT.OfMUSURE :: `;COMMODITY CODE UNIT PRICEP.i . b, ";; ".Is:EXTENSION ;;'. "., "f ATTN: DEAN ARMSTRONG PROF I Dr A PERcoLAT ION ;TEAS 1 B I L I TY,,nSTUDY FOR THE • SAN DI rGO..CREEK''11OkTfC (F[.G'fCIIER 'JONrS t,1uroit CARS) SITE PrR`YOUR - PROPOSAL._No.;'95 =:i- 042: D:I'frD 5/18/95. r :. NOT, TO_EXC17ED SG. 492.00 01 1.00 :c1 -0 :1 -i G.�I`i'L:00 G.•I92.00 STUDY. AS DISCRIBrD:ACOI'Li`' ' I o SUB'TO'TAL 0.492.00 FREIGHT 0.0 TAX 0.0� I'URCIIASL•' ORDER TOTAL G,a92.00 - i.:;�':OfiGIANIZATION CAC E, PROJECT'A . ;AMO_U_NT 7251 P301262A 6.492.00 TOTAL PURCHASE ORDrR G.492.00 ACCEPTANCE.I[..p1. of this old,, 0Y..11, rh.MOi-i1. the Is nno,vl.dV.n..nI or 4Yd.11v.ry In nnol.w i ...... ••I ln......., a D..I Iw n.....D.r. e .'nnna mi. o.u..n n..e.wo..an— I.oa.s .n.. Ind son... . n.m.d m.o..... . ... .. BY .w. of .COnu.e 1116.» Old,, T. only ....... s— ,ho... mn w.na vvliewb to m. mLry,mUOn f dd. Cn....... n mo.. bw.d 4r m. ci ♦ of N..,. eon. CITY OF NEWPORT BEACH IMPORTANT GENERAL TERMS AND CONDITIONS ON THE REVERSE SIDE ARE INCORPORATED HEREIN. Tho Adidoi dovomd W INS Pumluse OMOr o, COneact must c fll m b aPPecaElo CM OSI IA SlaMardS, anNW olhor BMIO Mti) lows. reWhllOnz, rullf, , a.W code of Fodo,w Govarrmwnl ar i Iho SIDI. of ColllOmix. SLO . • .; Sa'kJOhh Jillifld� PACIFIC SOILS ENGINEERING, INC. I 3002 DOW AVENUE, SUITE 514, TUSTIN. CALIFORNIA 92680 1 C�.: °'.' - . TELEPHONE: (714) 730 -2122, FAX: (714) 730-5191 CITY Or NEWPORT BEACH - PUBLIC WORKS 3300 Newport Boulevard May 18, 1995 Newport Beach, CA 92659 -8915 WorIc Order 500322 Proposal No. 95 -5 -012 Attention: Mr. Emmet Berkery Subject: Proposal for Percolation Feasibility Study, San Diego Creek North Site, City of Newport Beach, California Reference: Geotechnical Considerations, Onsite Sewage Disposal, San Diego Creek North, City of Newport Beach, California, dated May 9, 1995 • Gentlemen: Pursuant to your request, presented herein is this firms proposal to provide a percolation feasibility study for the San Diego Creek North (SDCN) site in the City of Newport Beach, California. The purpose of this study would be to evaluate the feasibility of onsite sewage disposal at four different locations. A cursory assessment of the four sites, based upon available information, was presented in the referenced report. As a result of the depth of existing fill, as well as proposed cuts and the need to work at proposed leach field elevation, a drill rig will be used rather than a backhoe. Due to the importance of the groundwater elevation relative to the siting of an onsite sewage system, a boring will be drilled at each location to a depth of approximately six feet • below proposed grade or to the fill /native contact, whichever is deeper. If groundwater is encountered in this zone, the location will be assumed infeasible and percolation testing will not be conducted at the location. The scope of this firm's services are as follows: * Drill four borings, one in each proposed area, to a depth of six feet below proposed grade or six feet into native material, whichever is deeper. CORPORATE HEADQUARTERS LOS ANGELES COUNTY RIVERSIDE COUNTY SAN DIEGO COUNTY TEL: (714) 220 -0770 TEL: (213) 325 -7272 w 775 -6771 TEL' (714) 358 -0154 TEL: (619) 560.1717 FAX: (7141220-9589 FAX: (213) 325-8854 FAX: (714) 358.0592 FAX: (619) 5600380 •, City of Newport Beach Work Order 500322 May 18, 1995 �I Page 2 • * Log the borings and collect samples for classification. * At sites where groundwater is not encountered, drill an additional boring to a depth of approximate leach field elevation. * Perform percolation testing, one in each boring. * Preparation and submittal of six copies of a percolation feasibility report. This study will provide opinions regarding the feasibility of using an onsite sewage disposal system at each of four locations . It should be anticipated that additional testing will be required at the specific locations, once selected, to comply with County oh Orange, Health Care Agency requirements. In addition to the outlined services, we may be required to participate in conferences or meetings called by you or other participant consultants. Due to the unknown nature of such involvement, an estimate of S hours is provided for those services. If additional conference time is required, it will be billed separately in accordance with the attached FEE SCHEDULE. The fees for providing the above services are estimated to be $6,492 and are based on a time and materials basis utilizing the attached FFF, SCITEDULE as shown on the attached cost breakdown. The total charges will not exceed the above amount unless the scope of the project changes and it is preauthorized by you. We anticipate that following your authorization to commence this investigation and after • receiving access permission, we could proceed with the field portions within approximately 3 working days and a period of approximately 10 working days would be required to complete the analyses and the formal report. Preliminary information, if required, could be provided as it is generated during that period. PACIFIC SOILS ENGINEERING, INC. • 4r City of Newport Beach Work Order 500322 May 18, 1995 Page 3 The opportunity to present this proposal is appreciated. If you have any questions or require additional information, please contact the undersigned at this office. Respectfully submitted, PACIFIC SOILS ENGINEERING, INC N. KROLL, cal Engineer • SNK:DCA/rd -05 r � �J s� DEAN C. ARNISTRONG, Vice President nARIFIC Coll C rml f, NFF_RING. INC. W PERCOLATION FEASIBILITY STUDY FIELD Lead In and Preparation Ilollow -stem Auger Drilt Rig Engineer Materials (pipe, gravel, water tank, etc.) Vehicle LABORATORY Moisture- Density Sieve OFFICE Geotechnical Review /Percolation Calculation Report Preparation Engineering Review Conferences Drafting Typing/Reproduction Gcotechnieal Considerations Letter 0) Proposal No. 95 -5 -042 4 Hrs. a S 65.00 per hour 10 Hrs. @ S 150.00 per hour 18 Hrs. ril S 65.00 per hour 18 Hrs. a $ 5.00 per hour FIELD SUB -TOTAL S 260.00 S 1,500.00 S 1,170.00 S 500.00 S 90.00 S 3,260.00 8 tests n $ 11.50 per test S 92.00 4 tests CL) S 46.00 per test S 184.00 LABORATORY SUB -TOTAL S 276.00 4 Hrs. @1 S 65.00 per Hour 8 Mrs. @ S 75.00 per hour 4 1lrs. rn $ 80.00 per hour 8 Mrs. n. $ 75.00 per hour 4 Ilrs. n $ 44.00 per hour OFFICE SUB =TOTAL CRAND TOTAL S 260.00 $ 600.00 S 320.00 S 600.00 $ 176.00 S 400.00 S 600.00 S 2,956.00 S 6,492.00 • • 0 STANDARD FEE SCHEDULE PRINCIPALS (CONSULTATIONS) PROJECT ENGINEERS AND GEOLOGISTS (PRINCIPALS) CIVIL ENGINEERS AND ENGR. GEOLOGIST (REGISTERED) CIVIL ENGINEERING AND ENGR. GEOLOGY ASSOCIATES CIVIL ENGINEERING AND ENGR. GEOLOGY ASSISTANTS SENIOR SOIL TECHNICIAN SOIL TECHNICIANS LABORATORY TECHNICIANS • DRAFTING PERSONNEL XEROX RATE TYPING BLUEPRINTS L_J ADDITIONAL CHARGES WHEN APPLICABLE FIELD VEHICLE NUCLEAR GAUGE EQUIPMENT (IF USED) EQUIPMENT RENTAL OVERTIME PACIFIC SOILS ENGINEERING, INC. $ 90.00/1-IR. $ S0.00 /1-IR. $ 75.00 /HR. $ 65.00 /I-IR. S 55.00/I-IR. $ 50.00 /11R. $ 46.00 /1 {R. $ 46.00 1IIR. $ 44.00/1 -IR. $ .25 /COPY (SHEET) $ 5.00 /SHEET $ .40 /SQ]F'i. $ 5.00 /1-IR. 5.00 /1 -IR. PACIFIC SOILS ENGINEERING, INC. 3002 DOW AVENUE, SUITE 514, TUSTIN. CALIFORNIA 92680 TELEPHONE: (714) 730-2122, FAX: (714)730 -5191 CITY Or NEWPORT BEACH - PUBLIC WORKS • 3300 Newport Boulevard Newport Beach, California 92659 -8915 May 9, 1995 Work Order 500322 Attention: Mr. Emmet Berkery Subject: Geotechnical Considerations, Onsite Sewage Disposal, San Diego Creek North, City of Newport Beach, California Reference: Preliminary Geotechnical Report for Rough Grading, San Diego Creek North Site, Newport Beach, County of Orange, California dated May 5, 1995 by Pacific Soils Engineering, Inc. (W.O. 500327) Gentlemen: At your request, Lve have reviewed information contained in our files with respect to four • potential sites for onsite sewage disposal at the San Diego Creek North (SDCN) Site. The SDCN site is located in the City of Newport Beach on the northeast corner of the extension of Bayview Way and Jamboree Road. The four sites to be considered for onsite seLCage disposal are described below. It is understood that the required disposal area will be based on four restrooms and a recycling car wash. Site A: Located at the proposed corner of Jamboree Road and Bayview Way Site B: Located along Jamboree Road south of the proposed driveway Site C: Located along the extension of Bayview Way between the two driveways Site D: Located along Bayview Way near the San Joaquin Hills Transportation Corridor Consideration should be given to the percolation characteristics of the material at proposed grade • of the sewage system and the depth of groundwater. For this exercise, the Back Bay Deposits are considered impermeable. In general, leach fields must be in native materials, not fill, and at least 10 feet above groundwater. Table l presents pertinent data. CORPORATE HEADQUARTERS LOS ANGELES COUNTY RIVERSIDE COUNTY SAN DIEGO COUNTY TEL: (714) 220.0770 TEL: (213) 3257272 o, 7756771 TEL' (714) 353-3154 TEL (6191560-1713 cnv rnn, ,on,. n+ c.v n, +. »cmc.l c4v , -1m 355A5a? F:': (61915E00383 r' Work Order 500322 Page 2 May 9, 1995 • TABLE 1 • SITE :EXISTING .GPLIWE ELEVATION 1'120I'OSED GRADE ELEVATION. MATERIAL AT PROPOSED GRADE ELEVATION OFNATIVE MATERIAL APPROXIMATE GROUNDWATER ELEVATION '. APPROXIMATE ELEVATION or BACK BAY . -. DEPOSITS A 26+ 24+ Fill 19+ 14 14 B 56± 35± Qhn 56+ 13 23 C 30+ 25+ Fill 12+ 6 2 D 23+ 30+ Fill 20+ 9 0 Groundwater depth should be confirmed at sites A, C and D as the proximity maV preclude these sitings. Also, sites C and D are adjacent to existing wetlands: therefore it is unikely that sewage disposal will be permitted. If however, the wetlands does not interfere with the siting. and groundwater does not preclude the use of these sites. it is liken- that a seepage pit rather than a leach Field would be constructed due to the depth to native material, estimated at 10 to 13 feet. Site B requires further exploration to evaluate the native materials and their percolation characteristics. Due to the amount of proposed cut this would be performed with a drill rig and subject to further confirmation once proposed grade was achieved. In conclusion, site B is the most likely candidate for an onsite sewage disposal system. A proposal to drill these sites to verify groundwater depth and /or the materials percolation characteristics will be provided under separate cover. Respectfully submitted, PACIFIC SOILS ENGINEERING, INC. PpFESS10N� • Oe yL N. ky FAi SHERYL'N. KROL w No.GE2288 p Up 3 0 q 7 s Geotechnical Engine � Sl CFO rEwl'' qTf OF C P&\ O Dist: (2) Addressee SN K: DCA /rd -03 DEAN C. AKNI� S l KUNU Vice President FR -ETCHER JONIES "A,R'S ri C- 30 Z6 60) AMENDMENT NO. 1 MEMORANDUM OF UNDERSTANDING CITY OF NEWPORT BEACH AND FLETCHER JONES MOTORCARS Exhibit B is hereby amended to include the following items: SITE SHARE BAYVIEW WAY TASK DESCRIPTION ( FLETCHER JONES) SHARE (C.N.B.) TOTAL Excavation for M.W.D. $ 1,810.00 $ 1,810.00 $ 3,620.00 and M.C.W.D. mains Percolation Feasibility $ 6,492.00 -0- $ 6,492.00 Study Reproduction $ 500.00 $ 500.00 $ 1,000.00 Previous Total $165,000.00 $142,000.00 $307,000.00 New Total $173,802.00 $144,310.00 $318,112.00 APPROVED: Fletcher Jones o rcars li City f New or each • CITY OF NEWPORT BEACH C - 3()26 (F) OFFICE OF THE CITY ATTORNEY MEMORANDUM March 15, 1995 TO: Mayor John Hedges Members of City Council FROM: Robert H. Burnham SUBJ: Fletcher Jones MOU I have attached a copy of a N. ly executed MOU between the City, Fletcher Jones and TIC. As you.know, this MOU establishes a framework for more detailed agreements between the City and TIC and the City and Jones. This office will begin drafting those agreements in the next few days. We have also talked to TIC about some minor amendments to CIOSA (pertaining to the financing of the advance and similar issues) that would be processed through the Coastal Commission Staff by way of an administrative permit prior to the submittal of the zone change for San Diego Creek North - a substantive land use change that will require Coastal Commission approval. Please call if you have any questions. Robert H. Bur City Attorney RHB:gjb gjb \MC040U.f I /w // L. Sl�n/rf?� is E MEMORANDUM OF UNDERSTANDING: INTRODUCTION: This memorandum expresses an understanding between and among the City of Newport Beach ( "CITY ") , The Irvine Company ( "TIC ") , and Fletcher Jones Motor Cars ( "JONES ") regarding a series of transfers and actions designed to facilitate the development of an auto dealership on property commonly known as San Diego Creek North (the "PROPERTY "). The understanding of the parties is premised on the following: A. JONES currently owns and operates an automobile dealership on real property located at 1301 Quail Street in CITY. The dealership has been successful but is hampered, to some extent, by the absence of any significant frontage on a major arterial. Moreover, JONES existing lease expires in December, 1996 and JONES has received offers to relocate his business outside of Newport Beach. CITY would experience significant long term reductions in total tax revenues of approximately $500,000 per year in the event JONES relocates the dealership to another jurisdiction. B. CITY and JONES have determined that the PROPERTY is the only large vacant parcel in the CITY to which the automobile dealership could be relocated. However, the parcel is an extremely difficult one to develop because of the topography, lack of access, the need to accommodate major water and electrical utilities, the need to adapt the site plan for a roadway flyover easement, and the 1 0 0 need to acquire adjacent property from at least one other public agency. CITY is in a unique position to work with public agencies and utilities to resolve these constraints and has a strong and unique financial incentive to do so. C. Development of the PROPERTY as an automobile dealership will require amendments to the Circulation Improvement and Open Space Agreement ( "CIOSA ") - a development agreement between TIC and CITY. The key provisions of CIOSA contemplate a vesting of development entitlement on all vacant parcels owned by TIC, the dedication of all or a portion of many of those parcels for open space or public facility purposes and a loan from TIC (the CIOSA Advance) to the CITY for improvements related to traffic circulation. TIC is obligated to dedicate the PROPERTY pursuant to CIOSA but only for open space or public facility purposes with the dedication deferred until building permits have been issued for all CIOSA parcels. The development of an auto dealership on the PROPERTY, and certain other commitments of the CITY relative to that project, will require 'amendments of CIOSA. CITY has determined these amendments will work to the long term advantage of the residents of Newport Beach by preserving approximately $500,000 in annual sales tax revenue (which funds police, fire, and other essential services) without imposing fees or charges on current residents and businesses. D. The transfers of the PROPERTY from TIC to CITY and from CITY to JONES will be supported by consideration other than cash payments. The CITY is committing to administer the construction • and improvement of the E1 Paseo Storm Drain system - a project that must be completed before TIC is permitted to develop certain entitlement in Newport Center /Fashion Island. The E1 Paseo Storm Drain system improvements, which would be funded by CIOSA Financing District bonds with assessments or special taxes paid by TIC, its tenants, or successors, are necessary to accommodate flows generated by development in its service area and failure to increase the size of the system could result in closing or damage to streets and highways in the area. The transfer from the CITY to JONES is accompanied by the latter's commitment to incur development costs substantially in excess of those normally associated with the development of an automobile dealership (due to the difficult nature of the PROPERTY and the high quality construction required by CITY and Mercedes Benz) and to accept the assessments specified in this Agreement (Section II. D.) which will be used to fund major public improvements related to the project. E. Development of the PROPERTY is a complex process during which each of the parties wili' invest substantial time, effort and money. This memorandum serves as blueprint for more detailed and binding documentation necessary to ultimately implement the transfer of the PROPERTY and to ensure that the parties are aware of the significant commitments that each is undertaking to accomplish their mutual objective. In light of the foregoing, the parties wish to express their understanding of the responsibilities of each prior to, and the probable terms and conditions of, the ultimate transfer of the site to JONES. 3 i I. GENERAL CONDITIONS 0 A. This Memorandum of Understanding (MOU) shall be in effect for 120 days to permit the parties to negotiate formal agreements and may be extended upon the mutual consent of the parties. B. The parties agree to use their best efforts to quickly and completely implement the terms of this MOU. II. CONDITIONS TO TIC /CITY TRANSFER: A. TIC will dedicate the PROPERTY to CITY at such time as the conditions specified in subparagraphs B through F are satisfied. B. The documents implementing the transfer of the parcel from TIC to CITY shall designate an automobile dealership as a permitted use but TIC may impose special land use restrictions commonly incorporated into TIC's other property transzers, including architectural review of the site and development plans. The documents conveying title shall also authorize JONES to convert the PROPERTY from an automobile "dealership to specific land uses to which the parties agree in the event JONES is prohibited from using the PROPERTY as an automobile dealership by any public agency having jurisdiction of this site or JONES is unable to receive or sell enough Mercedes Benz automobiles to successfully support operation of the dealership and JONES is unable, with diligent efforts, to economically operate the dealership with other vehicle lines, provided, however, CITY shall not have the right to convert the PROPERTY to a use other than automobile dealership until 4 • • twenty -four (24) months (which may be reduced with agreement by the parties) after JONES ceased using the PROPERTY as an automobile dealership. The land uses to which the property may be converted shall be at densities and intensities consistent with the Land Use Element of the Newport Beach General Plan. TIC shall retain the right of architectural review and approval of the site and development plans in the event of any conversion. Provisions relative to the conversion of the PROPERTY to a use other than an automobile dealership shall take into account the following: 1. The costs incurred by JONES in the initial development of the site as an automobile dealership, the costs of redeveloping the site for another use, and any outstanding indebtedness secured by any interest in the PROPERTY ox improvements. 2. TIC's concerns relative to the physical and /or economic impact of conversion on any PROPERTY owned by TIC or any agreement relating to real PROPERTY and to which TIC is a party as well as TIC's entitlement to consideration in the event the conversion increases the value of the PROPERTY. 3. The need for CITY to preserve its sales tax base as a primary vehicle for providing essential services to residents and businesses in Newport Beach. C. TIC shall convey the parcel as raw land in its current condition. Documents transferring title from TIC to CITY shall contain provisions consistent with other TIC transfers of property regarding TIC's representation that no toxic or hazardous material 5 0 0 has been used, stored or disposed of on the PROPERTY. TIC will cooperate with CITY and JONES, at no direct cost to TIC, in the preparation, filing and processing of documentation necessary to secure land use entitlements and the plans to construct all on -site and off -site improvements necessary to prepare the site as an automobile dealership. D. In consideration of TIC's agreement to modify permitted uses of the PROPERTY and to transfer the PROPERTY to CITY with no direct cash consideration to TIC, CITY will form a CIOSA Financing District. The PROPERTY shall be excluded from the CIOSA Financing District, but shall pay an annual assessment to the CITY of $80,000 per year for five (5) years, totaling $400,000. Further, the CITY shall reduce the total CIOSA District funding obligation by $400,000, and agree to construct the extension of Bayview Drive along the frontage of the PROPERTY without CIOSA District funds. This annual assessment on the PROPERTY shall not become effective until ninety days subsequent to the date on which PROPERTY is first used as an automobile dealership. In addition, 50% of the Fair Share Fees (one time payment) shall be used to reimburse TIC pursuant to the reimbursement provisions of CIOSA. E. The proposed improvements to the E1 Paseo Storm Drain System should, in light of the potential circulation system impacts that would result from failure of the system, be funded through the CIOSA Financing District or through a CIOSA cash advance by TIC. The cost of the E1 Paseo Storm Drain Improvements shall be applied to reduce the amount of the CIOSA advance and shall be subject to 3 0 0 the reimbursement provisions of CIOSA. Construction of the storm drain improvements shall commence with issuance of the first TIC property building permit causing an incremental increase in flows to the storm drain system. CITY shall not deny entitlement or permits on any of TIC property, the development of which is conditioned, in whole or in part, on the construction of some or all of the El Paseo Storm Drain System Improvement Project. F. CITY shall initiate, and approve if appropriate, amendments to the planned community text for block 500 in Newport Center which declare that the current parking supply satisfies the zoning code requirements for the existing office development on site. G. TIC shall cooperate with CITY, at no direct cost to TIC, in the CITY's efforts to obtain ownership or constructive use of property adjacent to Jamboree that TIC dedicated in fee to the Transportation Corridor Agency (TCA). In the event CITY is unable to obtain constructive use of the PROPERTY adjacent to Jamboree and the TCA agrees to reconvey the PROPERTY to TIC, TIC shall convey the property to CITY and CITY shall grant an easement to the TCA necessary to accommodate the FLYOVER, with the remainder of the property leased to JONES for one dollar per year and for a term of fifty years for use in conjunction with the automobile dealership. H. TIC, CITY and JONES shall attempt to reach agreement relative to granting TIC a right of first refusal to purchase the PROPERTY in the event of any transfer from CITY or JONES to a successor, provided, however, TIC shall have no right of first 7 0 0 refusal with respect to the transfers described in Section III (K). I. TIC, CITY and JONES shall attempt to reach agreement regarding a reservation of TIC's right to preserve the off -site directional sign currently located at the corner of Jamboree and Bristol. III. CITY /JONES COMMITMENTS A. CITY shall acquire the PROPERTY from TIC subject to the land use restrictions and conditions specified above, and other non - monetary conditions, restrictions, and exceptions that would not preclude use of the site as an automobile dealership or significantly increase the cost of public or private improvements depicted in the preliminary site plan submitted to TIC and the CITY by JONES (and attached as "Exhibit A "). CITY shall transfer the PROPERTY to JONES subject to agreement regarding the payment of the annual assessment and the one time payment of Fair Share Fees pursuant to Section II. D.. B. CITY will initiate General Plan and Zoning amendments consistent with the preliminary site plan and the public improvements described in this MOU (to the extent those improvements are owned or controlled by CITY). C. CITY and JONES will cooperate with one another in the processing of permits and licenses necessary to entitle the PROPERTY and /or construct the improvements necessary to complete the development plan. JONES and CITY shall each use their respective best efforts to promptly file and diligently pursue to approval, all necessary applications for permits or licenses from 0 0 other governmental entities required to implement the development plan. JONES and CITY have identified certain tasks necessary to entitle the PROPERTY, have estimated the costs associated with completion of each task and have agreed to share costs on a equitable basis as specified in Exhibit B to this MOU, provided, however, CITY shall not incur any expense in excess of the estimated costs without prior City Council approval. Subject to the consultant contracts to be approved by the City Council on February 13, 1995, JONES shall have the right to seek other bids for the performance of the tasks identified in Exhibit B. JONES shall have the right to review and comment on all documents prepared by the CITY or its consultants relative to bids, cost estimates and scopes of work and CITY and JONES shall cooperate with one another in minimizing the costs incurred in performing the task identified in Exhibit B and other tasks related to development of the project. Other entitlement costs associated with tasks not identified on Exhibit B shall be divided equally between CITY and JONES unless the parties agr20 otherwise. CITY and JONES shall agree on the terms and conditions pursuant to which some or all of CITY's costs in this section are to be reimbursed by JONES if, within five years after the automobile dealership commences operation, JONES has failed to generate gross annual sales of at least eighty million dollars from the operation of the dealership. JONES shall have no obligation to reimburse the CITY for any of the costs identified in Exhibit B if the failure to achieve the required tax revenue threshold results from JONES' inability to E 0 0 obtain Mercedes Benz automobiles due to strike, plant closure, alterations in the formula for distribution or calculation of sales tax revenues or any other reason beyond JONES' control. D. JONES shall pay the entire cost of designing and constructing all on -site and off -site improvements normally associated with an automobile dealership including water, sewer, electrical, gas, telephone and internal access. JONES acknowledges that the site is encumbered with major public utility facilities that will or may have to be relocated at significant cost to JONES. CITY shall assist in obtaining the approvals from all public utilities necessary to relocate existing, or construct new, facilities. E. CITY shall fund and construct an extension of Bayview Drive from Jamboree Road to a point approximately 600 feet easterly of Jamboree Road. The Bayview Drive improvements will be funded through the annual assessment to be paid by JONES pursuant to Section II. D. F. JONES and CITY acknowledge that the Transportation Corridor Agency (TCA) proposes to construct a transition road ( "FLYOVER") from northbound Jamboree Road to access the northbound lanes of State Route 73. JONES and CITY also acknowledge that the TCA may be unable to fund the entire cost of, or complete, the FLYOVER prior to the date on which JONES is prepared to commence construction or operations and that construction of the FLYOVER subsequent to that date will impair access to, and operation of, the automobile dealership. CITY will use its best efforts to seek 10 funding from the TCA, OCTA or other public agencies to construct the flyover. JONES shall not be responsible for any costs associated with the construction of the FLYOVER above, rather than at, grade on the PROPERTY. G. CITY and JONES shall use their best efforts to acquire the 1.1 acre parcel of surplus right of way owned by Caltrans and located on the north side of the PROPERTY. CITY shall transfer the PROPERTY acquired from Caltrans to JONES upon payment by JONES of all costs CITY has incurred in acquiring the PROPERTY from Caltrans. H. CITY shall prepare and process an EIR evaluating development of the site and the construction of all related off - site improvements and mitigation measures required by various resource agencies. JONES shall cooperate in the preparation of the EIR. JONES will pay all fees charged by governmental agencies for processing permit and license applications, and that portion of the EIR, directly related to the development of the automobile dealership (see Exhibit B).' CITY shall waive all planning, building, water, sewer and other processing fees CITY normally charges applicants for licenses, permits or entitlements. CITY shall also pay the costs of the EIR related to analysis of off -site improvements. I. JONES shall pay all required TCA fees, the one time Fair Share Fee, and the annual assessment specified in Section II. D.. J. CITY shall convey the PROPERTY to JONES with restrictions that require development as a Mercedes Benz automobile dealership 11 • • owned and operated personally by Fletcher Jones, Jr. or a successor approved by the CITY and Mercedes Benz. The PROPERTY, including any liens and improvements shall revert to the CITY if JONES fails to operate a Mercedes Benz dealership on the PROPERTY for at least 20 years provided, however, should JONES be unable to receive and sell enough Mercedes Benz automobiles to successfully support operation of the dealership, JONES shall have the right to continue the operation of the dealership with any other vehicle line available and, provided further, JONES shall have the right to convert the PROPERTY to any other uses subject to the terms and conditions specified in Section II (B). K. In the event of any transfer from JONES to a successor within 20 years after the dealership commences operation, CITY and JONES shall each receive 50 °1 of the net profit of the sale price, provided, however, the provisions of this section shall not apply to any transfer of title to the land from JONES to any member of his family by sale, inheritance, gift or otherwise, or to any transfer of title to any firm,' corporation, partnership, trust or entity at least 510 of which is owned by JONES. Net profit on the sale shall be defined to mean the sale price less all of JONES' land development cost including, the expenses incurred in obtaining entitlements, grading cost, the cost of relocating utilities, Fair Share Fees and assessments, and the cost of constructing any on site improvement, and all costs associated with the transfer of the PROPERTY. L. JONES shall diligently pursue construction of, all "on 12 • 0 site" improvements necessary to commence operation as an automobile dealership unless JONES is prevented or delayed due to acts of God, strikes, labor or material shortages, or for any other reason beyond JONES control. Documents conveying title from CITY to JONES shall contain provisions which require the PROPERTY to revert to the CITY if JONES fails to promptly commence construction or fails to diligently pursue construction to completion. M. The obligation of JONES to acquire the PROPERTY and construct the automobile dealership shall be contingent upon the ability of JONES to obtain suitable financing. JONES shall diligently apply for financing upon execution of this Agreement. N. CITY and JONES shall use their best efforts to ensure that the design and construction of the Jamboree Road Fly -over does not adversely impact the aesthetics of the PROPERTY or JONES ability to use excess right of way in conjunction with the operation of the dealership. O. JONES shall not be required to accept title to the property unless City and TCA have agreed, in writing, to a bridge structure soffet profile of the Jamboree Road flyover (JR5) for the area between Bayview Way and Bristol Street which provides a minimum 18 foot clearance above grade at the centerline of Bayview. This soffet profile will also provide for a minimum 20 foot clearance above the easterly top of curb elevation on Jamboree Road northerly of Bayview way to Bristol Street. The profile will be provided to JONES and will allow their designers to provide site grades to maximize the views of the automobile dealership from 13 • 0 Jamboree Road. Thomas O. Redwi z The Irvine Com Fletcher Jones, Fletcher Jones M cars ev Murj t City Manager City of Newport Beach cnbticfj.13 3 -9 -95 14 I \ i I ti I I -- U L c cu U a L p ++ Q) Q) O U) r v/ N ai c a o E Ex W LL e iLLrjS - t.: ®._. o v i J i I I I I 1 \\ - I r; i t: 4� A I( � a d N 0 \\ x C. LL I......... Chi i t \ �3 1 B i ' I i I I 1 �1 1 l` 1� 11 i 1 fA • U A d❑ v cl doh: = o d. a 0 • L d V � � Q +�+ O O M N � C t C ._ O W .0 a. V io a �a t-, '�1 %. - 4 • EXHIBIT B COST SHARING FLETCHER JONES /CITY OF NEWPORT BEACH TASK DESCRIPTION SITE SHARE BAYVIEW WAY TOTAL (Fletcher Jones) SHARE (CNB) Composite Site Plan $1,500.00 $1,500.00 $3,000.00 Graphics EIR for Bayview Way $47,000.00 $47,000.00 $94,000.00 (Jamboree to MacArthur) and Auto Dealership Site Topographical $12,000.00 $12,000.00 $24,000.00 Mapping and Boundary Surveying Engineering for Street $35,000.00 $35,000.00 $70,000.00 10 and Site Grading; Street Improvements & Utility Infrastructure Geotechnical Field $6,750.00 $6,750.00 $13,500.00 Investigation and Written Report Level 1 $1,750.00 $1,750.00 $3,500.00 Environmental Analysis for Hazardous Materials Permit Processing with $8,000.00 Federal & State Agencies $16,000.00 Project Management $30,000.00 $30.000.00 $60.000.00 10 SUBTOTALS $142,000.00 $142,000.00 $284,000.00 Real Estate Appraisal $21,000.00 0 $21,000.00 (Caltrans Appraisal) Title Report $2.000.00 0 $2.000.00 TOTAL $165,000.00 $142,000.00 $307,000.00 217/95 n 1pl �► Pk) Agenda Item. No. 15 • CITY OF NEWPORT BEACH OFFICE OF THE CITY MANAGER February 13, 1995 TO: Honorable Mayor and Members of the City Council FROM: Kevin J. Murphy, City Manager FFR ( 31995 SUBJECT: CITY OF NEWPORT BEACH /FLETCHER JONES MOTORCARS (FJM) /THE IRVINE COMPANY (TIC) - MEMORANDUM OF - UNDERSTANDING AND APPROVAL OF PROFESSIONAL SERVICES AGREEMENTS TO IMPLEMENT THE MOU PURPOSE • To present to the City Council for approval a Memorandum of Understanding (MOU) that has been negotiated between the City, Fletcher Jones Motorcars and The Irvine Company to relocate Fletcher Jones Motorcars from its present Quail Street location to the San Diego Creek North property, and three professional services agreements implementing the MOU. BACKGROUND Last spring former Mayor Turner was contacted by the broker representing Fletcher Jones Motorcars on their intention to relocate to the City of Irvine. The broker, Wesley Taylor, indicated that the Mercedes Benz dealership was desirous of locating to a permanent fee -owned site on a major thoroughfare near its current location. Soon thereafter, the entire City Council requested that City staff work with Fletcher Jones Motorcars to retain the business, taxes, and jobs within the City. City staff, consistent with one of the City's stated economic development goals of retaining businesses within the community, has been meeting with Fletcher Jones, Jr. and Wesley Taylor to work on a site and terms which would retain this business in the City. FJM is the City's #1 sales tax producer and a loss of the • dealership would create a major loss of sales tax dollars to the City's General Fund on an on -going basis. THE SITE In order to retain FJM, City staff reviewed a number of possible sites of sufficient size and in the preferred locations with Fletcher Jones, Jr. and representatives of CURRENT BUSINESS 15. Report from City Manager UNDERSTANDING WITH CITY JONES MOTORCARS AND THE concerning MEMORANDUM OF OF NEWPORT BEACH, FLETCHER IRVINE COMPANY, and approval of three Professional Services Agreements for Environmental, Planning and Engineering Services related to implementation of the MOU. [Attached] UP- 3Qb(F) ( C -3o2-6 (B) Action: Approve the MOU and contracts with: SA Associates to erform Environmental Services for a fee not to exceed $94,000; _ jp &S.L.Consulting Engineers to perform Civil Engineering and Surveying Services for a fee not to exceed $94,000; and Pacifii`�) Soils Engineering, Inc., to perform Geotechnical Engineering anA ite Assessment Services for a fee not to exceed $17,000. 0 a -2- TIC who own several parcels of land which could accommodate the needs of the • dealership. After extensive discussions of alternatives, all parties concluded that the only location that would work within the City of Newport Beach was the San Diego Creek North site, located on Jamboree Road and Route 73. The site (see Attachment 1) is approximately 9 acres and is presently owned by TIC (7.93 acres) and the State of California/Caltrans (1.12 acres). In addition, a portion of TIC's 7.93 acres has been previously conveyed to the Transportation Corridor Agency (TCA) for use in a 73 flyover roadway. The property owned by TIC is currently entitled for fire station, open space, or park and ride land uses under the City's General Plan and Zoning Ordinance. The property is a part of the Circulation, Transportation Improvement and Open Space Agreement (CIOSA) between the City and TIC, and notwithstanding this MOU, would be conveyed to the City for the above stated uses upon TIC's receipt of building permits on all developable parcels within the CIOSA. The land owned by the State of California will be Caltrans surplus right -of -way upon the completion of the San Joaquin Hills Transportation Corridor. The land owned by the TCA, under the terms of the MOU and consistent with discussions with the Transportation Corridor Agency staff, will be reconveyed to TIC or conveyed to the City with an air rights easement for a future flyover. • There are numerous challenges to the relocation of FJM to the San Diego Creek North property. One of the major challenges is the fact that the property is constrained by numerous easements which crisscross the property. Attachment 2 identifies in map form these various easements which have been obtained by the Metropolitan Water District, the Southern California Gas Company, Caltrans, and the Southern California Edison Company. Each of these agencies have major facilities which cross the property which must be either relocated or accommodated in a creative site plan with the help and cooperation of the utility agency. The staff beginning last summer estimated the off -site improvement costs and a portion of the on -site costs to develop the property as a car dealership. In addition, FJM retained an architectural firm experienced in designing car facilities on constrained sites to determine the feasibility of the site. A copy of the cost estimates are attached as Attachment 3 and an explanation of the various costs and issues associated with the site are attached as Attachment 4. Attachment 4 also provides an overview of the various agencies and processes • that must be undertaken by the City and FJM to entitle the site as a car agency after obtaining title from TIC permitting automobile uses on the site. These steps are formidable ones, but can be achieved with aggressive action by staff and FJM in a time frame that will permit FJM to relocate to the site before their current lease expires in December 1996. If the City is to complete the relocation of the dealership by December 1996 it is essential that work begin as soon as possible 0 • -3- • on the entitlement processing, including the planning, environmental and engineering work to be able to submit applications to the appropriate governmental and utility agencies. To begin this process staff has attached a report from the Public Works Director on three Professional Services Agreements to begin immediate work on the environmental and engineering tasks (Attachment 8). The next key hurdle in the relocation and retention of FJM is the approval of a MOU which will require the City, FJM and TIC to use their best efforts to complete a binding Disposition and Development Agreement between the parties for presentation to the City Council in March or April. In the interim, with the approval of a MOU the parties can begin to formally work towards and begin to expend environmental planning monies to expedite the relocation of the dealership and the entitlement processes. MEMORANDUM OF UNDERSTANDING Attached for your review is a copy of the proposed MOU (Attachment 5) between the parties. The MOU is a fairly short agreement with the key deal points • outlined for placement in a future binding Development Agreement. Below is a summary of the key MOU provisions: • Term: 120 days to negotiate formal binding Development Agreements between City and TIC and City and FJM. • TIC will dedicate the San Diego Creek Property permitting use of the site as an automobile dealership and cooperate with the City and Fletcher Jones Motorcars to establish the automobile dealership at this location. • TIC will convey the San Diego Creek North Property with provisions confirming TIC's representation that no toxic or hazardous materials have been used, stored or disposed of on the site. • In exchange for TIC's conveyance of the site for no cash consideration, City agrees to: a. take the steps necessary to permit the formation of the CIOSA Financing District; • b. incorporate the property into the District; C. administer the El Paseo Storm Drain Project with proceeds ($2.8 million) obtained through the CIOSA Financing District; I 0 0 d. reduce TIC's CIOSA $14.3 advance for circulation improvements by • the cost of the storm drain project (not to exceed $2.8 million); and initiate, and approve if appropriate, a P.C. Text Amendment for Block 500 in Newport Center declaring that the current parking supply satisfies current parking requirements. • City agrees to initiate General Plan and Zoning Amendments to permit the establishment of an automobile dealership on the site. Fletcher Jones Motorcars will have primary responsibility to file and diligently pursue all governmental entitlements with City financial assistance and cooperation (Exhibit B to MOU depicts tasks and cost sharing). • City's estimated costs to assist in entitlement process ($155,000) will be reimbursed to City, if within five (5) years of dealership opening, the dealership has failed to generate $2.0 million in sales tax revenues to City, unless actions outside Fletcher Jones Motorcars' control prevents that sales tax production (plant closure /strikes /natural disaster). • City transfers title to Jones for no cost due to the extremely high costs of • developing the site and the constraints imposed on the site by various easements (see further explanation of this issue in Analysis /Discussion Section of this memorandum). • Fletcher Jones Motorcars agrees to pay all on -site and off -site construction costs associated with the dealership, except that City will fund and construct a 600 foot extension of Bayview Drive easterly from Jamboree Road, with funding from the TIC CIOSA advance for circulation system improvements. • City and Fletcher Jones Motorcars agree to work cooperatively to acquire the State /Caltrans surplus right -of -way (1.1 acres) with Jones paying all costs of acquisition. • City agrees to waive all planning, building, water, sewer and other City processing fees (estimated to be $80,000). Fletcher Jones Motorcars will pay Fair Share Fees (estimated to be $157,000) and TCA fees (estimated to be $210,000). (Other costs are split per Exhibit B). • City conveys site to Jones with restrictions that it be used as a Mercedes • Benz automobile dealership, operated personally by Fletcher Jones, Jr. or a successor approved by City and Mercedes Benz. The property reverts to the City if Jones fails to operate the site as a Mercedes Benz dealership for twenty (20) years. -5- • City receives 50% of any sales proceeds attributable to the land only, if Jones sells the site within twenty (20) years of commencing operation on the site. Transfers to family members or another corporation is permitted provided that Fletcher Jones Jr. owns or controls at least 51% of the corporation. ANALYSIS /DISCUSSION There are several questions that the City Council Members have raised on this proposed MOU and it is anticipated that members of the public may have the same questions. I've attempted to summarize these below and address them one at a time. QUESTION #1: WHAT IS THE LAND REALLY WORTH AFTER THE RESTRICTIONS ON FUTURE USE AND THE CONSTRAINTS IMPOSED BY EASEMENTS? After listening to the questions of the City Council on the terms of the transaction • and how it will be perceived within the community, both residents and businesses, City staff retained consultant assistance to review the proposed site, the site plan prepared by the architect for the auto dealer, the estimated costs of constructing on this site and the restrictions as to use and operation to determine the residual land value for the site, what other auto dealer sites have purchased sites for in the region, and what, if anything, the City should charge the auto dealer for the site in a sale or lease. I've attached the report prepared by Keyser Marston Associates discussing these questions as Attachment 6. In summary, the report indicates that there is an estimated benchmark property value of $15 per square foot. The report then reviews what adjustments must be made to determine the residual value of the land after considering the unusual nature of this site and the permanent conditions proposed for the future property owner which constrain the benchmark value of the land. The report concludes that the residual value of the land is approximately $30,000. While the City staff had reviewed the cost information and reached the same conclusion, I believe it is helpful to have an experienced economic /real estate consultant actually put numbers to the question and conclude that there is little or no residual land value. In addition, the City consulted with George Hamilton Jones, Inc. who has • provided the City with appraisal consulting services for many years. A full appraisal of the property has not been completed; however, the appraiser has indicated that the general range of value for an automobile dealership site, before taking into consideration the unique character of a particular site, would range between $11.00 and $19.40 per square foot, confirming Keyser Marston's analysis. 0 in 0 QUESTION #2: WHY SHOULD THE CITY ASSIST THE DEALERSHIP TO RELOCATE IN NEWPORT BEACH? As to the question of why we should assist the dealership at all or why it is in our interest to do so, I've tried to list a few reasons below: Fletcher Jones Motorcars is the City's #1 sales tax producer with annual taxable sales approaching $500,000 and a loss of this magnitude to another City would be extremely significant to our City's General Fund over many years. Fletcher Jones has a lease which expires in December 1996 and after extensive discussion by his broker is unable to acquire the current leased property from a lender at a reasonable price. (It has been reported to staff that the price for the land and buildings is $12 million, while the banks have appraised the site at no more than $6 million.) 3. The current site, while in use for many years as a successful car agency site, is not located on a major thoroughfare and is separated by other property ownership and streets making it a less than a highly desired property. If Fletcher Jones were to leave the site and move to another City it is unlikely that the City could easily attract another dealer to the site at the high cost for the site which sits on no major thoroughfare. A case in point is the Saab site on Jamboree with limited visibility that has been vacant for months. It is more likely that the City will have to work diligently with the property owner to put the site to another reuse, most likely office or retail type uses, although in today's market there is limited demand for these type of uses in this location at the price that the property owner is demanding. (Ironically Tokai Credit, the owner of the Newport Imports property in bankruptcy also owns the Mercedes Benz site.) The City has proclaimed its Economic Development Policy as important and integral to the City's success, and within the policy directed staff to work to retain local businesses. An effort to retain our #1 sales tax producer is consistent with this message and will reinforce this in the residential and business community. I've mentioned previously that Costa Mesa was roundly criticized, fairly or unfairly, for the failure to know about or actively work to retain Mary Kay Cosmetics which produced over $1 million annually in sales tax revenue. 5. While many cities with redevelopment agencies actively attract car dealerships through incentive programs which reduce on -site and off -site costs to these dealerships, we have negotiated a deal which costs the City very little. Our costs are limited to consultants to assist us in the entitlement processing through the City, Coastal Commission, resource agencies, and utility easement owners. We are not absorbing all of these • • F1 9 0 -7- • costs as might be the case in other jurisdictions, but rather have negotiated a split of these costs with Fletcher Jones with a cost to each of $155,000 and $165,000. In addition, we have agreed to waive our Planning and Building Department fees estimated at $80,000; however, Fletcher Jones is paying Fair Share Fees, Corridor Agency Fees, and will be paying for thirty (30) years a capped assessment into the CIOSA Financing District of $80,000 to repay the costs of roadway improvements. The one significant cost item is the City's assumption of the contract administration of the El Paseo Storm Drain project which is estimated to cost between $2.5 and $2.8 million. The cost to administer the contract, the actual costs of which will be paid for through assessment district financing, will certainly take staff time on the part of our engineering staff to review the plans (which they would do in any event), bid the project, present a staff report to Council for award of contract, and then utilize one of three Public Works Inspectors to monitor construction. There are little additional out of pocket expenses for this contract administration. However, we will have the cost of this project deducted from our $14.3 million advance from the CIOSA deal with TIC as their consideration for • transferring the property and permitting an auto agency. The City still receives an upfront payment of Fair Share Fees and frontage improvement costs which total approximately $6 million. The City will use a small amount of the reduced advanced amount of $11.8 million to build the extension of Bayview Drive at a cost of $340,000. As to the effect that the reduction of the CIOSA advance will have on the City's ability to build all the circulation improvements, Public Works Director, Don Webb, has reviewed this effect and believes it will have no effect on constructing these projects. Attachment #7 is the Public Works Director's spreadsheet analysis of the City's buildout of our Circulation Element over the next twenty (20) years which indicates that even with a reduced loan from TIC through CIOSA, the City through all sources of revenues can complete the buildout of the Circulation System. 6. The new site is very likely to produce better sales over the long term due to its enhanced location on Jamboree and the San Joaquin Transportation Corridor. The daily trips by this site are estimated at over 150,000 between the two major thoroughfares. • 0 n 0 QUESTION #3: WHAT DO WE SAY TO OTHER BUSINESSES IN • NEWPORT BEACH WHO ASK FOR OUR FINANCIAL ASSISTANCE AFTER WE PUBLICLY DISCLOSE THE TERMS OF OUR ASSISTANCE TO FLETCHER JONES? During our discussions with Fletcher Jones I've spoken to Lee West (former Newport Imports), Mike Malamut (potential Newport Imports owner), the owner of Sterling BMW and other interested auto dealers about coming to Newport Beach. After describing the volume of sales, the proposed support to Fletcher Jones Motorcars with the high cost of site improvements and the difficult entitlement process, it is understood that the "incentive" package we've put together for Fletcher Jones is not out of line with our desire to retain him in town. When asked by each what we can do for them, I've told them to project their annual sales and put together a package that makes economic sense to the City. Each of the other auto agencies' sales volume pale in comparison to Fletcher Jones Motorcars. In the Newport Pier area the City several years ago invested over $1.4 million in public improvements, with the property owners contributing $600,000 in an assessment district. The area produces approximately $180,000 in sales taxes • $70,000 in property taxes, and $14,295 in business license taxes, while demanding high level of services due to the tourist activities and beach. It is highly likely that the City will need to continue our high level of service, perhaps even enhance it to preserve and improve this significant area of town. My reason for mentioning this area is not to detract in any way from the peninsula area, but simply to indicate that the City has or will contribute significant dollars to preserve or enhance what we have in this and other areas. This is precisely what we're doing with Fletcher Jones, with a high probability that sales volumes will grow in the new location. QUESTION #4: COULD WE DO AN ASSESSMENT DISTRICT APPROACH WITH FLETCHER JONES AS OPPOSED TO CONTRIBUTING DOLLARS IN THE ENTITLEMENT PROCESS? As the City has negotiated this proposed transaction with Fletcher Jones, with periodic City Council direction in closed session, it has been stressed that we • don't have a redevelopment agency or any easy mechanism to assist the dealership which most other Orange County cities have had for many years. Therefore, any assistance must come in the form of facilitation in obtaining a site at no or little cost, entitling it with staff time and expertise, with all actual on -site improvements paid for by the future owner. As stated above our total costs are estimated to be $155,000, deferral of building and planning fees, and reduction in the advance /loan by TIC. If we were to structure an assessment district to re- ►. 0 me 0 • cover the expenses associated with the entitlement processing and fees it would cost Fletcher Jones approximately $20,000 per year. This would be in addition to the CIOSA Financing District he is committed to participate in which totals a maximum of $80,000 per year. City staff has negotiated a proposal which to the maximum extent possible minimizes City costs, but it is not believed possible to obtain this from Fletcher Jones Motorcars. Instead a provision of the MOU requires repayment of certain costs ($155,000) if sales tax receipts in five (5) years are less than $2.0 million. QUESTION #5: WHAT IF FLETCHER JONES DECIDES AFTER WE APPROVE THE MOU AND DEVELOPMENT AGREEMENT THAT HE WON'T PURCHASE THE SITE AND WILL MOVE TO IRVINE OR ANOTHER NEARBY CITY? This is certainly a possibility, but if it were to occur the City would be in a position with TIC, Caltrans, and Coastal Commission to enter into an agreement with another auto dealer to construct a dealership on the site. I'm confident that other local auto dealers would be interested immediately, as would other bigger volume • dealers in the region. I believe it is also possible that other dealers would look for more assistance from the City when they realize the high costs of developing the site due to its topography and the water lines crossing the site. Fletcher Jones believes he can make the site work economically due to his volume of sales, leases and maintenance work (1994 volume estimated at $90 million). Under this scenario, our costs into the project would have been the entitlement processing ($155,000) and the waiver of building and planning fees. QUESTION #6: WHAT IF FLETCHER JONES BEGINS CONSTRUCTION AND WALKS AWAY FROM THE DEAL OR CLOSES THE FACILITY AFTER A FEW SHORT MONTHS OR YEARS? While this would be unfortunate, it is certainly possible, although the Fletcher Jones Motorcar business is a long standing one with Fletcher Jones Sr. beginning the business over forty years ago with multiple dealerships under the group's control. The City has built into the MOU a provision that will require, in a final negotiated Disposition and Development Agreement, that Fletcher Jones Jr. • agrees to personally operate the Mercedes Benz dealership unless a successor is requested and approved by the City. Further, the MOU requires that property will be deed restricted so if Fletcher Jones Jr. or his approved successor fail to operate the dealership for at least twenty (20) years the site will revert back to the City. Finally, the MOU provides that upon any sale within the first twenty years the City will receive 50% of any profit attributable to the land only. I believe at the end of twenty years the City will have recouped its investment in the site several times over. 0 0 0 -10- QUESTION #7: SHOULD THE CITY SELL OR LEASE THE SITE TO • FLETCHERJONES? Fletcher Jones has from the first meeting with City staff made it clear he prefers to own a site and that it is a high priority with him. Fletcher Jones has understood from the outset that a portion of the site under the flyover will likely have to be leased to him by the City, TCA or Caltrans in order to satisfy Caltrans requirements on the flyover and future maintenance. We have indicated that this property would be leased at nominal value since there will be a large flyover over the property and a requirement for periodic maintenance activity requiring the movement of cars and vehicles to accommodate the maintenance activities. On the larger portion of the property owned now by TIC and Caltrans, Fletcher Jones desires to own the site. I've indicated that if it were leased, the City would want it non - subordinated or with provisions so that if it goes dark the City or a lender could easily remarket the property without extensive battles with a lender. Since the residual land value is low the site will be sold or leased on a cost nominal basis, the question comes down to the reversionary value of the land over the long term. I've tried to break down the pros and cons below of sale and lease: SALE: 9M The City is able to package the site with the attendant risks and pass them on to the developer. The risks may include soil contamination on the site, ruptures in water lines or other utilities from subsequent earthquakes or natural disaster (although rather remote). Other risks may include the changing market situation for automobiles and with a single purpose building constructed on the site the Mercedes Benz property owner would have the risks with his lender of reusing the property if market conditions change. The dealer will be able to obtain financing more easily with fee • ownership. In any subsequent resale the financing will be simplified as opposed to a lease situation with potentially unknown rental adjustments or other terms. 10 0 0 -11- CON: • The City would pass up the opportunity to obtain another income property, albeit with little or no income for 50 or more years. Other cons are described below in pro lease arguments. LEASE: 9 The City would own a site with reversionary value at the termination of the lease. Upon the termination of the lease the property may have significant or little value depending upon the condition of the improvements. • The City could subsequently sell its leasehold interest with improvements in place to another party with the restrictions on the property for automobile sales, fire station, park and ride lot, or open • space. CON: The City may assume liabilities associated with the site, should the project be abandoned mid - construction, after construction, or after operation without any significant return. In an after operation condition, there will be fuel tanks and maintenance facilities that may have been in operation for years that may need remediation. It will increase the complexity of the transaction, particularly in terms of the project's financing and legal expenses associated with the negotiations. If the projects improvements are not financed this is no problem. The upheaval in the real estate market over the last ten years has made a non - subordinated lease a difficult thing to finance, although with Fletcher Jones Motorcars value it may not be a problem. (An alternative could be the negotiation of a long term ground lease with payment all up front to alleviate a lender's concerns about changing terms over the years). • RECOMMENDATION The City Council approve the Memorandum of Understanding (MOU) between the City, Fletcher Jones Motorcars and The Irvine Company; and, approve three Professional Services Agreements to implement the MOU. 41 .� !ti iv r J � �, r + / /�« .,`'.� s i' +�T/' .`.+�lL,� � Imo• +, yJ1 i R Yjy31 • ai+�!1� ^ �l ,� � +, ii, J'fjy��,� /j' «, t s:,t� � 1/• ! ar -! �aJ < � ?t �' � , « �.{ ``,> a P � �• "1 s �t «�• : '01 - � i. "'„ti.,.t 1. �' , f M -•+, .2 I E � • 11 .. ��.i' / { {�•i.. .,4` ` • ',...ern.:. t1• x �; ! / 16A Af k 4* Alt At VItA ► , C � ` S s'{1: tali //: I� � -. a '. 'y; ,s•�'�` � I ~s'+ I�., 1r1 1�'nr. t,'�t'.1��. , t'f 'y P:� t is �� '' •. 1. 0 C J `.J • • • • H z w x U 6 H H 6 C r� t• J • SAN DIEGO CREEK NORTH • SITE DEVELOPMENT COST ESTIMATE • 2!7/95 Item Quantity Unit Estimated Description I I Price I Cost BAYVIEW EXTENSION. Jamboree Road to 600 ft. easterly Bayview Roadway Costs In Newport Beach ( 600) AC Pavement, 6 "AC /12 "AB 50400 SF $2.90 /SF $146,000 Curb & Gutter 1200 LF $15.00 /LF $18,000 Sidewalk 12000 SF $3.00 /SF $36,000 Traffic Signal modifications@ Jamboree 1 LS $20,000.00 /LS $20,000 Traffic Signal @ Ramp 1 LS $80,000.00 /LS $60,000 Signing and Striping 1 LS $8,000.00 /LS $8,000 Storm Drain improvements 1 LS $6,000.00 /LS $6,000 Construction Contingency and Administration, 15 %, = $46,000 Bayview Extension Subtotal = $340,000 UTILITIES Water Service to Site ( 12") 1900 LF $125.00 /LF $247,000 Sewer Service to Site 1 LS $250,000.00 /LS $250,000 Relocate SCE 66kv Power Lines 4 EA $75,000.00 /EA $300,000 Gas Service to Site 500 LF $15.00 /LF $8,000 Telephone/ Electrical Service to Site 500 LF $50.00 /LF $25,000 Total Utilities cost = $830,000 SITE Grading Excavation - Below Ramp JR -5 40,000 CY Site Preparation 80,000 CY Transportation Related Fees Fairshare Fees 1291 trips SJHTC Fees 75000 SF Miscellaneous Building Related Fees Building Excise Tax Fee Building, Planning, EIR, School Dist., Etc. SITE DEVELOPMENT COST ESTIMATE WITHOUT CONNECTION TO MACARTHUR Unknown Cost is 1.1 Acre Caltrans Surplus R/W Parcel ATTACHMENT 3 $7.50 /CY $300,000 $7.50 /CY $600,000 Grading total = $900,000 $121.14 /trip $157,000 $2.80 /SF $210,000 Fee total = $367,000 $16,000 $80,000 PROJECT TOTAL = $2,533,000 Page 1 of 2 �a SAN DIEGO CREEK NORTH* • SITE DEVELOPMENT COST ESTIMATE ( Cont.) FUTURE COSTS TO COMPLETE ARTERIAL NETWORK AROUND SAN DIEGO CREEK NORTH SITE BAYVIEW EXTENSION. from 600 ft. easterly of Jamboree Rd, to MacArthur Blvd. Bayview Extension Bridge Costs 2/7/95 Bridge Stricture (350'x 84) 29,400 SF $100.00 /SF $2,940,000 Construction Contingency and Administration, 15 %, _ $440,000 Bridge Total $3,380,000 Bayview Roadwork in Invine. (800 ±) Pavement Overlay 67200 SF $1.50 /SF $101,000 Curb & Gutter 1600 SF $15.00 /SF $24,000 Sidewalk 16000 SF $3.00 /SF $48,000 Traffic Signal Installation @ MacArthur 1 LS $100,000.00 /LS $100,000 Signing 8 Striping 1 LS $5,000.00 /LS $5,000 Constriction Contingency and Administration, 15 %, _ $42,000 $320,000 Bayview Extension Total = $3,700,000 JAMBOREE ROAD FLYOVER TO ROUTE 73 (JRS) City's differential cost to construct ramp entirely on structure instead of partially on fill across the San Diego Creek North Site JRS RAMP TO ROUTE 73 Additional Bridge Structure, 400' 16000 SF $110.00 /SF $1,760,000 Ramp pavement Credit -16000 SF $5.00 /SF ($80,000) Embankment Credit -34700 CY $5.00 /CY ($173,500) Excavation Credit -8000 CY $2.00 /CY ($16,000) Subtotal = $1,490,500 Construction Contingency and Administration, 15 %, _ $223,575 Ramp Structure Cost= $1,714,000 Page 2 of 2 r �J • • February 6,1995 SAN DIEGO CREEK NORTH • SITE REVIEW PROCESS STA'T'US 1. Schedule and Costs A. Preliminary time line is attached showing items to be accomplished to allow the project to be completed and showrooms opened by December 1996. B. Range of preliminary costs for infrastructure is shown in section G. of this report Included in the estimate are costs to construct the initial extension of Bayview from Jamboree Road to 600 ft easterly, costs to provide utilities to the site, rough grading of the site and estimated fees. Future costs to complte the arerial system around the site are shown and included in the completion of Bayview to MacArthur and the differential costs to modify the future Route 73 on -ramp (JR -5) from Jamboree Road. 2. Discussion of Items to be considered • A. Utilities - see attached base map for plot of utilities. 1. Metropolitan Water District 36" line and Mesa Consolidated Water District 42" line Preliminary review of the Metropolitan Water District as built plans shows that the cover over the existing line ranges from 3' to 5' deep. The Mesa Consolidated line is at the same depth. It is unlikely that the site grade over those lines can change from the existing grades without lowering or relocating the lines. The cost to relocate the existing lines is estimated to range between $1.5 to $2 million. The amount of time required to design and construct a relocated or lowered pipe may cause the project to exceed the December 1996 deadline. MWD and MCWD has indicated that they will permit parking lot use over their combined 45' easement with certain access provisions. • 2. 12" high pressure gas The line shown on the utility plot has been abandoned but remains in place. Gas Co. lines are now located in University Drive and ATTACHMENT 4 ;a 0 C. 0 0 Jamboree Road. The abandoned gas line is located between the two water lines and would have no impact on development if the water lines are left in place. 3. Edison lines - The estimated cost to relocate the 66 kv power • poles is roughly $75,000 per pole. Restrictions for use under the lines needs to be determined. Utilities to serve site: 1. Water - In order to properly service the site, the construction of a "looped" 12 -inch water line may be required. The new line could connect the existing system at Jamboree Road/ Bristol Street and follow the northerly property line ( bike trail) along Route 73 to the extension of Bayview where it would follow the street alignment to connect to existing lines at Jamboree Road/ Bayview. 2. Sewer - Sewer service at this site will require the construction of a sewer line to connect to the existing IRWD system on Bayview Way, options to this concept are being evaluated. 3. Southern California Edison - Existing underground electrical • facilities exist within Jamboree Road. 4. TeleRhone - Existing underground telephone facilities exist within Jamboree Road. 5. Gas - Existing local 4" supply lines exist within Jamboree Road. Drainage 1. Corridor ramp (JR -5 ramp) drainage needs will be determined with the right of way transaction. Existing plans show a detention basin to satisfy NPDES requirements within the proposed site. It is anticipated that this requirement will be waived and the basin eliminated, since a major portion of the ramp drainage has been previously exempted from this requirement. 2. The proposed development site drainage must incorporate design • features to conform with the requirements of the federally mandated National Pollutant Discharge Elimination System ( NPDES) program. See NPDES permit requirements below. 3. There is an existing Caltrans 78" storm drain within the surplus right of way adjacent to the future Route 73 alignment. 2 tit 0 D. Bike Trail 0 • The incorporation of the trail along the Route 73 ramps is desirable in providing maintenance access to Caltrans facilities. The available options for the trail may include moving it closer to the tollway ramps or detouring bicycle and pedestrian traffic along Jamboree Road and the extended Bayview Way. E. Right -of -way issues 1. -5 Ram a. A permanent structure easement will be required to provide access to the ramp structure for maintenance purposes. The approximate width of this easement is estimated to be 100'. b. A temporary construction easement will be required when the ramp structure is built It is anticipated that the area between the proposed ramp structure and Jamboree Road • would be required for construction. The approximate average width of the easement is estimated to be 120'. C. Caltrans conditions for use under structure will be determined within the right of way transaction. It is assumed that conditions for use would include hold harmless provisions, emergency and maintenance access provisions, and restrictions on various permanent improvements. No structures will be allowed in the area below the JR -5 ramp. 2. Caltrans Surplus Right of Way Relinquishment of Caltrans surplus right -of -way adjacent to ramps will require that an easement be reserved for the existing 78" storm drain. It is anticipated that the width of the easement would be a minimum of 30'. Before the right of way can be purchased from Caltrans it must be declared surplus. It would then be appraised • and offered for sale. Caltrans staff has indicated that the City will be able to negotiate directly with Caltrans for the purchase. 3. Site The existing San Diego Creek North parcel is approximately 7.93 3 1`f.. F. is 0 acres. The Caltrans surplus parcel is approximately 1.12 acres bringing the total acreage to 9.05 acres. The existing wetlands encroaches approximately 0.41 acres into the site to bring the net area to 8.64 acres. The existing water utility easements encumber 0.95 acres of the site, the JR -5 ramp easement encumbers 1.38 acres of the site, and the Caltrans storm drain easement encumbers 0.15 acres of the proposed site leaving 6.16 acres unencumbered within the 8.64 acre site. Permits and Approvals 1. CIOSA Implementation MOU 2. Bayyiew Way Extension An environmental impact review (EIR) document will need to be prepared which will include the identification of required wetlands and habitat mitigation as a result of the bridge construction over the wetlands area. It is anticipated that replacement of wetlands and habitat can occur with the Irvine Company's Small Area Mitigation II (SAM 11) site at a cost that will be determined upon completion of the EIR mitigation requirements. 3. Upon the development of the conceptual site plan and conceptual approval by the City, the following items will require preparation and submittal to the City for approval: a. Site Environmental Documentation - The proposed site has been initially addressed within the context of the CIOSA EIR. A revised document addressing the development of this site will be required. The CIOSA EIR identified a highly disturbed archeological site which will require an initial study and possibility monitoring during site grading and excavation. b. Planning Permit Process - This process requires approvals by Planning Commission and City Council regarding the following: 1. Zoning Amendment - An amendment to the Planned Community Text will be required. 2. Traffic Study - A traffic study must be performed to determine compliance with the traffic phasing 4 • • • 0 0 ordinance, Sec. 15.40. NBMC. Also see section I. below for traffic generation concerns. • 3. Use Permit - A use permit is required which includes site specific operational characteristics and related issues such as signage and hours of operation. C. Building & Grading Permits d. Right of way acquisition agreement - An agreement is required to establish the time frame, financial obligations, and assurances as to the continued use as an auto dealership. 4. Coastal Development Permit - A permit from the California Coastal commission must be obtained for the development upon receiving all final approvals from the City. A separate and concurrent permit will need to be processed by the City to construct the roadway improvements. • 5. Fish and Game 1601 Permit - This stream bed alteration permit is required in order to construct the bridge improvements over the wetlands area. 6. Corps of Engineers 404 - This permit is also required in order to construct the bridge over the wetlands area. Concurrence from the U.S. Fish and Wildlife Service is a part of this permit 7. Utility permits - Permits from the various utility owners will be required which specify allowable uses within their easements. 8. NPDES /SARWQCB Permit - A County NPDES permit is required for all new development within the County. In addition to the County permit, a General Construction Permit is required from the State Water Quality Control Board for all development sites that exceed 5 acres. To satisfy the conditions of the County NPDES permit for the proposed site, a Drainage Area Management Plan • (DAMP) which includes the implementation of Best Management Practices (BMPs) in accordance with the NPDES program for the minimization of pollutants in storm water runoff will be required. Typical elements required by the plan include self contained wash bays and covered work areas to prevent storm water from flushing pollutants from these areas and structural improvements such as retention basins, traps, and filters to contain "first flush" storm A lA G. 0 0 water runoff. The County NPDES program is being administered by the City. Upon approval by the City, the plan would then be submitted to the State for approval. 10. MWD and MCWD permit - Permits from MWD and MCWCD will required to build Bayview bridge over facilities and to allow the construction of parking facilities and other amenities over their easements. 11. City of Irvine and Caltrans encroachment permits - Encroachment permits will be required to build the portion of Bayview Way which is outside of the City's boundary. The City of Irvine will require a permit for the construction of the roadway from the Route 73 ramps to MacArthur Boulevard since the work is within their City boundary. Caltrans will also require a permit for the construction since this area is State highway right of way. Cost Estimate - See attached summary. 1. Bayview Extension - Construction between Jamboree Road and the wetlands 600 feet easterly of Jamboree Road. A 600 foot long roadway extension that includes the construction of four lanes with curb, gutters and sidewalks within an 84 foot wide right of way and modifications to the Jamboree Road traffic signal is estimated at $340,000. 2. Utilities - The estimated cost to provide water service to the site would be $250,000 and sewer service to the site is estimated at $250,000. Gas, electrical, and telephone services to the site is estimated to be approximately $ 30,000. Relocating Southern California Edison lines is estimated at $300,000. 3. Rough Site Grading - It is estimated that the grading to level and terrace the site would cost approximately $ 900,000. 4. Future Arterial Improvements Around the Site a. Bayview bridge in City of Newport Beach is estimated at $3,700,000. This includes the construction of a four lane bridge spanning the existing utility easements and wetland area, and the installation of a new signal at the Route 73 ramps. b. Bayview in City of Irvine is estimated at $ 320,000. This cost includes the rehabilitation of the existing roadway surface 6 • • • C 0 • between the Route 73 ramps and MacArthur Boulevard, construction of curb, gutter, and sidewalk, and the installation of a traffic signal at MacArthur Boulevard. C. JR -5 Ramp - Differential cost for structure over proposed fill for JR -5 ramp is estimated at $1,714,000. This includes the additional structure cost and the credited cost for the deletion of ramp pavement, embankment, and excavation which the additional structure replaces. H. Scheduling issues - The San Joaquin Hills Transportation Corridor (SJHTC) originally scheduled opening date was March 1997. Due to the court injunction and Orange County bankruptcy which has delayed a portion of the work, it is unclear whether or not the schedule can be upheld. Of concern to this project would be the timing of the construction of the following: a. JR -5, Flyover - The ramp was not originally scheduled to be completed with the entire SJHTC project and now definitely will not be constructed for 3 -6 years after the SJHTC. b. Off ramp from SR 73 to University Drive (on schedule) C. Jamboree/ Bristol on -ramp (on schedule) d. Salt marsh construction including retaining wall along south side of Bayview Extension - This item of work is required as a first order of work before the Route 73 bridges can be constructed over the San Diego Creek. It is anticipated that this work will be completed in 1995. I. Traffic Generation - The standard trip generation rate is 150 trips /acre, or for 8.64 acre, 1291 trips /day. AM peak hour is 16 trips/ acre, or 138 trips PM peak hour is 12.5 trips /acre, or 108 trips J. Transportation Related Fees 1. Fairshare Fee, $121.14 /trip x 1291 trips = $156,392 2. SJHTC Fee, $2.80 /square foot of building area. Assuming 75,000 SF of building yields a fee of $210,000. ,r Z 1! it L. ILL cl, 7Z < U-) r--� I } 'I I C LL —1 L kt; 4 13 cm Ile �It J'3 W w sbu 'het' I Y {j It r v;s C2 A 1 u j I jZ 1: 0 . D R A F T MEMORANDUM OF UNDERSTANDING: INTRODUCTION: • This memorandum expresses an understanding between and among the City of Newport Beach ( "CITY ") , The Irvine Company ( "TIC ") , and Fletcher Jones Motor Cars ( "JONES ") regarding a series of transfers and actions designed to facilitate the development of an auto dealership on property commonly known as San Diego Creek North (the "PROPERTY "). The understanding of the parties is premised on the following: A. JONES currently owns and operates an automobile dealership on real property located at 1301 Quail Street in CITY. The dealership has been successful but is hampered, to some extent, • by the absence of any significant frontage on a major arterial. Moreover, JONES existing lease expires in December, 1996 and JONES has received offers to relocate his business outside of Newport Beach. CITY would experience significant long term reductions in total tax revenues of approximately $500,000 per year in the event JONES relocates the dealership to another jurisdiction. B. CITY and JONES have determined that the PROPERTY is the only large vacant parcel in the CITY to which the automobile dealership could be relocated. However, the parcel is an extremely difficult one to develop because of the topography, lack of access, the need to accommodate major water and electrical utilities, the • need to adapt the site plan for a roadway flyover easement, and the need to acquire adjacent property from at least one other public agency. CITY is in a unique position to work with public agencies Ei ATTACHMENT 5 JA and utilities to resolve these constraints and has a strong and unique financial incentive to do so. C. Development of the PROPERTY as an automobile dealership • will require amendments to the Circulation Improvement and Open Space Agreement ( "CIOSA ") - a development agreement between TIC and CITY. The key provisions of CIOSA contemplate a vesting of development entitlement on all vacant parcels owned by TIC, the dedication of all or a portion of many of those parcels for open space or public facility purposes and a loan from TIC (the CIOSA Advance) to the CITY for improvements related to traffic circulation. TIC is obligated to dedicate the PROPERTY pursuant to CIOSA but only for open space or public facility purposes with the dedication deferred until building permits have been issued for all CIOSA parcels. The development of an auto dealership on the PROPERTY, and certain other commitments of the CITY relative to that project, will require amendments of CIOSA. TIC and CITY have tentatively determined that these amendments will work to the long term advantage of the parties and the residents of the CITY by preserving a substantial source of municipal revenue and using assessments on currently vacant property to fund roadway and storm drain improvements, which would otherwise be funded with CITY revenue which is now largely earmarked to provide police, fire and other essential services. from TIC to CITY and from • D. The transfers of the PROPERTY CITY to JONES will be supported by consideration other than cash payments. The CITY is committing to administer the construction ON v� 0 0 and improvement of the E1 Paseo Storm Drain system - a project that must be completed before TIC is permitted to develop entitlement in isNewport Center /Fashion Island and elsewhere. The El Paseo Storm Drain system improvements, which would be funded by CIOSA Financing District bonds with assessments paid by TIC, its tenants, or successors, are necessary to accommodate additional flows generated by development in its service area and failure to increase the size of the system could result in closing or damage to streets and highways in the area. The transfer from the CITY to JONES is accompanied by the latter's commitment to incur development costs substantially in excess of those normally associated with the development of an automobile dealership (due to the difficult • nature of the PROPERTY and the high quality construction required by CITY and Mercedes Benz) and to accept a long term assessment used to fund major public improvements related to the project. E. Development of the parcel is a complex process during which each of the parties will invest substantial time, effort and money. This memorandum serves as blueprint for more detailed and binding documentation necessary to ultimately implement the transfer of the PROPERTY and to ensure that the parties are aware of the significant commitments that each is undertaking to accomplish their mutual objective. In light of the foregoing, the parties wish to express their understanding of the responsibilities • of each prior to, and the probable terms and conditions of, the ultimate transfer of the site to JONES. 3 14: I. GENERAL CONDITIONS A. This Memorandum of Understanding (MOU) shall be in effect for 120 days to permit the parties to negotiate formal agreements • and may be extended upon the mutual consent of the parties. B. The parties agree to use their best efforts to quickly and completely implement the terms of this MOU. II. CONDITIONS TO TIC /CITY TRANSFER: A. TIC will dedicate the PROPERTY to CITY at such time as the conditions specified in subparagraphs B through F are satisfied. B. The documents implementing the transfer of the parcel from TIC to CITY shall designate an automobile dealership as a • permitted use but TIC may impose special land use restrictions commonly incorporated into TIC's other property transfers, including architectural review of the site and development plans. The documents conveying title shall also authorize JONES to convert the PROPERTY from an automobile dealership to any other legal use if, at any time, JONES is restricted from selling automobiles at the PROPERTY by any public entity having the authority to do so. These documents shall also authorize general commercial use of the PROPERTY by CITY or its successor if JONES ceases operation and CITY is, for a period of 24 months or more, unable to secure a new automobile dealership as a tenant. • C. TIC shall convey the parcel as raw land in its current condition. Documents transferring title from TIC to CITY shall 4 0 0 contain provisions confirming TIC's representation, that no toxic or hazardous material has been used, stored or disposed of on the • PROPERTY. TIC will cooperate with CITY and JONES, at no direct cost to TIC, in the preparation and processing of documentation necessary to secure land use entitlements and the plans to construct all on -site and off -site improvements necessary to prepare the site as an automobile dealership. D. In consideration of TIC's agreement to modify permitted uses of the PROPERTY and to transfer the PROPERTY to CITY with no cash consideration to TIC, CITY will take all steps necessary to permit formation of the CIOSA Financing District and to incorporate the PROPERTY into the District upon transfer to JONES, provided, • however, annual CIOSA assessments on the PROPERTY shall not exceed $80,000 per year and, provided further, the assessments shall not commence until the first fiscal year during which JONES commences construction of improvements on the PROPERTY but in no event subsequent to March 1, 1996. In addition, 500 of the Fair Share Fees paid by JONES will be used to reimburse that portion of the CIOSA advance funded through bonds secured by assessments on the other CIOSA properties. E. The proposed improvements to the E1 Paseo Storm Drain System should, in light of the potential circulation system impacts that would result from failure of the system, be funded through the • CIOSA Financing District or through a cash advance by TIC. The cost of the E1 Paseo Storm Drain Improvements shall be applied to reduce the amount of the CIOSA advance and shall be subject to the 61 I 0 reimbursement provisions of CIOSA, provided, however, the reduction in the CIOSA advance attributable to the E1 Paseo Storm Drain improvements shall not exceed $2.8 million. CITY shall complete • plan review of the El Paseo Storm Drain Improvements upon execution of this MOU and bids for the project will be solicited within one - hundred and eighty (180) days after TIC conveys the PROPERTY to CITY and the CIOSA Financing District is formed or CITY receives a cash advance from TIC. CITY shall not deny entitlement or permits on any of TIC's properties the development of which are conditioned, in whole or in part, on the construction of some or all of the E1 Paseo Storm Drain System Improvement Project. F. CITY shall initiate, and approve if appropriate, amendments to the planned community text for block 500 in Newport • Center which declare that the current parking supply satisfies the zoning code requirements for the existing office development on site. G. TIC shall cooperate with CITY, at no direct cost to TIC, in the CITY's efforts to obtain ownership or constructive use of property adjacent to Jamboree that TIC dedicated in fee to the Transportation Corridor Agency (TCA) . In the event CITY is unable to obtain constructive use of the PROPERTY adjacent to Jamboree and the TCA agrees to reconvey the PROPERTY to TIC, TIC shall convey the property to CITY and CITY shall grant an easement to the TCA necessary to accommodate the FLYOVER, with the remainder of the • property leased to JONES for use in conjunction with the automobile dealership. P • • 0 0 III. CITY /JONES COMMITMENTS A. CITY shall acquire the PROPERTY from TIC subject to the land use restrictions and conditions specified above, and other non - monetary conditions, restrictions, and exceptions that would not preclude use of the site as an automobile dealership or significantly increase the cost of public or private improvements depicted in the preliminary site plan submitted to TIC and the CITY by JONES (and attached as "Exhibit A"). B. CITY will initiate General Plan and Zoning amendments consistent with the preliminary site plan and the public improvements described in this MOU (to the extent those improvements are owned or controlled by CITY). C. CITY and JONES will cooperate with one another in the processing of permits and licenses necessary to entitle the PROPERTY and /or construct the improvements necessary to complete the development plan. JONES shall have the primary responsibility to file, and diligently pursue to approval, all necessary applications for permits or licenses from other governmental entities required to implement the development plan. JONES and CITY have identified certain tasks necessary to entitle the PROPERTY, have estimated the costs associated with completion of each task and have agreed to share costs on a equitable basis as specified in Exhibit B to this MOU, provided, however, CITY shall not incur any expense in excess of the estimated costs without prior City Council approval. Other entitlement costs associated with tasks not identified on Exhibit B shall be divided equally 7 0 0 between CITY and JONES unless the parties agree otherwise. The CITY's costs identified on Exhibit B shall be reimbursed to CITY by JONES if, within five years of the opening of the dealership the CITY has failed to receive $2.0 million in sales tax revenues generated by the operation of the dealership, unless the failure to achieve the sales tax goal results from JONES' inability to obtain Mercedes Benz automobiles due to strike, plant closure or other reasons beyond JONES' control. D. JONES shall pay the entire cost of designing and constructing all on -site and off -site improvements normally associated with an automobile dealership including water, sewer, electrical, gas, telephone and internal access. JONES acknowledges that the site is encumbered with major public utility facilities that will or may have to be relocated at significant cost to JONES. CITY shall assist in obtaining the approvals from all public utilities necessary to relocate existing, or construct new, facilities. E. CITY shall fund and construct an extension of Bayview Drive from Jamboree Road to a point approximately 600 feet easterly of Jamboree Road. The Bayview Drive improvements will be funded through the CIOSA Financing District, the cost of the improvement shall be applied to reduce the amount of the CIOSA advance and the cost shall be subject to the reimbursement provisions of the CIOSA. F. JONES and CITY acknowledge that the Transportation Corridor Agency (TCA) proposes to construct a transition road ( "FLYOVER") from northbound Jamboree Road to access the northbound [3 • r� A • • n L lanes of State Route 73. JONES and CITY also acknowledge that the TCA may be unable to fund the entire cost of, or complete, the FLYOVER prior to the date on which JONES is prepared to commence construction or operations and that construction of the FLYOVER subsequent to that date will impair access to, and operation of, the automobile dealership. CITY will use its best efforts to seek funding from the TCA, OCTA or other public agencies to construct the flyover. JONES shall not be responsible for any costs associated with the construction of the FLYOVER above, rather than at, grade on the PROPERTY. G. CITY and JONES shall use their best efforts to acquire the 1.1 acre parcel of surplus right of way owned by Caltrans and located on the north side of the PROPERTY. JONES shall pay the costs incurred in acquiring the surplus right -of -way owned by Caltrans. H. CITY shall prepare and process an EIR evaluating development of the site and the construction of all related off - site improvements and mitigation measures required by various resource agencies. JONES shall cooperate in the preparation of the EIR. JONES will pay all fees charged by governmental agencies for processing permit and license applications, and that portion of the EIR, directly related to the development of the automobile dealership (see Exhibit B) . CITY shall waive all planning, building, water, sewer and other processing fees CITY normally charges applicants for licenses, permits or entitlements. CITY shall also pay the costs of the EIR related to analysis of off -site E • • improvements. I. JONES shall pay all appropriate TCA fees, Fair Share Fees, and participate in the CIOSA Financing District. • J. CITY shall convey the PROPERTY to JONES with restrictions that require development as a Mercedes Benz automobile dealership owned and operated personally by Fletcher Jones, Jr. or a successor approved by the CITY and Mercedes Benz. The PROPERTY shall revert to the CITY if JONES fails to operate a Mercedes Benz dealership on the PROPERTY for at least 20 years provided, however, should JONES be unable to receive and sell enough Mercedes Benz automobiles to successfully support operation of the dealership, JONES shall have the right to continue the operation of the dealership with any other vehicle line available and, provided further, JONES shall • have the right to convert the PROPERTY to any other use permitted by the Newport Beach Municipal Code if, at any time, JONES is prohibited or restricted from selling automobiles from all or a portion of the PROPERTY by any public entity having jurisdiction over the PROPERTY. K. In the event of any transfer from JONES to a successor within 20 years after the dealership commences operation, CITY and JONES shall each receive 50 °s of that portion of the sale price attributable to land value, provided, however, the provisions of this section shall not apply to any transfer of title to the land from JONES to any member of his family by sale, inheritance, gift • or otherwise, or to any transfer of title to any firm, corporation, partnership, trust or entity at least 51% of which is owned by 0 0 JONES. L. JONES shall diligently pursue to completion all on site • improvements necessary to commence operation as an automobile dealership. Documents conveying title from CITY to JONES shall contain provisions which require the PROPERTY to revert to the CITY if JONES fails to promptly commence construction or fails to diligently pursue construction to completion. cnbticfj.4 • • 11 J\ MIN mmm mm �Mwl W. 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V tJ.. 0 • s • EXHIBIT B COST SHARING • FLETCHER JONES /CITY OF NEWPORT BEACH TASK DESCRIPTION SITE SHARE BAYVIEW WAY TOTAL (Fletcher Jones) SHARE (CNB) Composite Site Plan $1,500.00 $1,500.00 $3,000.00 Graphics EIR for Bayview Way $47,000.00 $47,000.00 $94,000.00 (Jamboree to MacArthur) and Auto Dealership Site Topographical $12,000.00 $12,000.00 $24,000.00 Mapping and Boundary Surveying • Engineering for Street $35,000.00 $35,000.00 $70,000.00 and Site Grading; Street Improvements & Utility Infrastructure Geotechnical Field $6,750.00 $6,750.00 $13,500.00 Investigation and Written Report Level 1 $1,750.00 $1,750.00 $3,500.00 Environmental Analysis for Hazardous Materials Permit Processing with $8,000.00 $8,000.00 $16,000.00 Federal & State Agencies Project Management $30,000.00 $30.000.00 $60.000.00 • SUBTOTALS $142,000.00 $142,000.00 $284,000.00 Real Estate Appraisal $21,000.00 0 $21,000.00 (Caltrans Appraisal) Title Report $2,000.00 0 $2,000.00 TOTAL $165,000.00 $142,000.00 $307,000.00 217195 • a K E Y S E R M A R S T O N A S S O C I A T E S I N C. 500 SOCT11 GRAND AVENUE, SUITE 1480 LOS ANGELES, CALIFORNIA 90071 213/622 -8095 FAx 213/622 -5204 M E M O R A N D U M TO: Mr. Kevin Murphy, City Manager City of Newport Beach FROM: Keyser Marston Associates, Inc. SUBJECT: Preliminary Estimate of Reuse Land Value Fletcher Jones Motor Cars Relocation Site DATE: January 18, 1995 ADVISORS 1.4: REAL ESTATE REDEVELOPMENT ECONOMIC DE\ ELOP.MENT FISCAL POLICY LOS ANGELES RICHARD L. BO CALVIN E. HOLDS, KATHLEEN H. HEAD SAN DIEGO GERALD M. TRIMBLE ROBERT J. WETMORE SAN FRANCISCO A. JERRY KEYSER TIMOTHY C. KELLY KATE EARLE FUNK DENISE E. CONLEY • Pursuant to your request, Keyser Marston Associates, Inc. (KMA) has reviewed the proposed sale by the City of Newport Beach (City) of the 7.5 -acre site located at Jamboree Road and Bayview Way for the construction of a Mercedes Benz dealership. This property will be assembled with property purchased from Cal Trans to create a 9.0 acre parcel. As you are aware, development of the subject site is far from straightforward. Thus, the assessment of the reasonableness of the proposed land sale transaction must take into account the unusual site constraints that limit the development of the site and add significantly to the cost of development. The significant site factors are: ■ The subject property is triangular in shape. Triangular (or odd shaped) sites are historically less efficient than rectangular sites. ■ There is a ±25 foot grade differential from front to • rear. This grade differential will require expensive retaining walls as well as multi -level improvements that significantly add to the cost of the dealership improve- ments. ATTACHMENT 6 � J� Page 2 • ■ The subject property is subject to an $80,000 per year assessment to partially offset the loss of constructing Bayview and other improvements. ■ The existence of two water lines (a 36" and a 42" diameter lines) seriously restricts the placement of structures on the site further adding to the construction cost and reducing site efficiency. ■ The future construction of the transportation corridor fly -over will also restrict the use of the site (placement of buildings) as well as affect the image of the dealership. The construction of the fly -over will also create short -term disruptions that will affect the operation of the dealership. The combination of these factors has resulted in a concept consisting of service bays on two levels, multi -level parking, construction of substantial retaining walls and in general a facility program that is substantially more costly to construct when compared to construction of a dealership on a flat, • rectangular site. Traditional appraisal principles would suggest that the extraordinary construction cost must be reflected as a deduction from the value of the land. To the extent that the final plans vary from the preliminary site plans, KMA's opinion as expressed herein may not be valid. LAND VALUE It is somewhat difficult to determine the value of land for new car dealerships today given: ■ There have been few land sales for new car dealers in recent years. KMA's records indicate for example, that there has been only one land sale at the Irvine or Tustin Auto Centers since 1989. ■ Numerous cities have offered financial incentives to attract new car dealers, thereby distorting land values. ■ Land values in general have fallen substantially in recent years, given both the general state of the economy • as well as. Table A attached herewith presents seven land sales at the Tustin and Irvine Auto Center. The sales are somewhat dated now (occurring for the most part in the late 1980s) . KMA is also aware of other sales that have occurred for new car dealerships. These sales, shown in Table B, show a value range from $6.56 to $23.29 per square foot. It is important to note that no development has K E Y S E R M A R S T O N A SSOCI ATES INC. yv 0 0 Page 3 yet to occur on sale No. 1 (the sale indicating the highest per square foot value), which would suggest that the price is too aggressive for the construction of a new car facility. In addition, there are reported sales of smaller parcels of land purchased by existing dealerships to round out or expand landholdings. The values, which range as high as $60 per square foot are, in our opinion, not good indicators for the value of a 9.0 acre parcel of land. Based on a review of the most recent sales of land for the development of new car dealerships at both the Tustin and Irvine Auto Centers, the general price range paid by dealers and upward adjustment for a Newport Beach location, would suggest a value today for a well - located, rectangular, ready to develop site in Newport Beach, if restricted to new auto dealership use, of ±$15 per square foot of land area. Taking this value as the benchmark, adjustments need to be made for: 1) the triangular shape of the site; 2) the pre - development/ entitlement /EIR costs associated with creating the site ($150,000) ; 3) the need for substantial cost to bring utilities to the site as compared to improved auto center sites ($830,000); 4) unusual transportation fees ($210,000), and (5) the annual assessments, would suggest an adjusted benchmark land value of ±$8.16 per square foot, as follows: Benchmark value for flat Newport Beach auto site @ $15.00 per square foot for 9.0 acres $5,880,000 Less: Site efficiency @ 10% (590,000)' EIR /Entitlement /Survey (150,000) utility Costs (830,000) Transportation Fees (460,000 Off -site Assessments 650.000 Adjusted Benchmark value $3,200,000 ($8.16 per square foot) ADJUSTMENT TO BENCHMARK LAND VALUE • • Starting with $3,200,000 as the adjusted benchmark value of the assembled site where the dealer is responsible for EIR, utility and other entitlement costs, the unusual site and building development • costs must also be taken into account in arriving at a value of the subject property. They include: 'Reflects both triangular inefficiencies as well as inefficiencies created by topographic changes. 2P.V. of payments of $80,000 per year for 30 years. K E Y S E R M A R S T O N ASSOCIATES I NC. • Page 4 0 • Cal Trans It is assumed that the Cal Trans property has a fair market value of $260,000. Grading It is estimated that rough grading the site will cost $900,000. This clearly represents an unusual cost when compared to sites in the Tustin and Irvine Auto Centers where the sites there are require no substantial grading cost. Retaining Walls The unusual topographic characteristics of the subject property will require the construction of retaining walls totaling over 1,100 lineal feet ( ±20,000 square feet). The cost of these retaining walls, including indirect costs such as architectural, engineering, etc. is estimated at $600,000 ( ±$30 per square foot) including indirect costs. Structured & Rooftop Parking In most new car dealerships, parking is on • grade which is relatively inexpensive compared to the proposed development, which combines both rooftop parking as well as interior structured parking. The incremental cost of this parking is estimated at $750,000, as follows: 25,000 sf of structured parking @ $24/sf3 $ 600,000 25,000 sf of rooftop parking @ $5 /sf4 150.000 $ 750,000 Interior & Two Level Service Bays The site requires that the service bays, totaling ±55,000 square feet, be constructed on two levels as well as fully enclosed. Typically the service bays are constructed on one level and quite often are not enclosed. Allowing for a $10.00 per square foot increase in direct cost ($12.00 per square foot after • indirect costs) , would result in incremental costs of.$630,000. 1$23 per square foot less surface parking cost of $3.00 per square foot, plus indirect costs of 20 %. 1$8 per square foot structural upgrade less surface parking cost of $3.00 per square foot, plus indirect costs of 20 %. KEYS ER M A RSTON ASSOCIATES INC. •�1 0 Page 5 0 As indicated below, these extraordinary costs total over $3.2 million, as follows: Cal Trans $ 260,000 Grading 900,000 Retaining walls 600,000 Structured /rooftop parking 750,000 Interior & Two -level service bays 660,000 Total $3,170,000 When the unusual development costs are treated as a deduction to the adjusted benchmark land value, the adjusted value of the land is minimal at under ±$50,000, as follows: Benchmark land value $3,200,000 Less: Land acq. & unusual development cost (3,170,000) Residual Value $ 30,000 It should also be noted that in addition to this estimate of incremental costs, the developer (dealer) will: (1) incur substantial increase in construction risks and exposure for cost overruns when compared to a more traditional (flat) site; and (2) the proposed agreement will contain an anti - speculation clause by which the City may benefit from increased value of the land upon sale. Taking these factors into consideration, would suggest that the subject site, if restricted to a major new car dealership and developed as proposed, has minimal value. This conclusion is based largely upon the extraordinary costs associated with this project. To the extent the final project design results in significant cost savings, the residual land value would increase. ALB. *p 95017.NP8 1609 1. 0004 • • • K E Y S E R M A R S T O N A S S O C I A T E S I N C. a'� TABLE A AUTO CENTER LAND SALE COMPARABLES •TUSTIN AND IRVINE AUTO CENTERS DEALERSHIP ANALYSIS NEWPORT BEACH, CALIFORNIA SALES NO. LOCATION DATE ACRES TUSTIN PRICE PRICE PER SF 1 Auto Ctr Dr, SW of 7/89 4.69 $992,000 $4.86 Tustin Ranch Rd 2 Auto Ctr Dr, E of 7/89 5.11 $2,281,000 $10.25 Jamboree 3 SEC El Camino 9/87 3.45 $1,172,200 $7.80 Real & Auto Ctr Dr 4 Auto Ctr Dr, W of 7/87 3.09 $1,094,301 $8.13 El Camino Real • 5 Auto Ctr Dr, W of 5/87 4.84 $1,286,065 $6.10 El Camino Real 6 Auto Center Dr. 6/86 2.82 $1,318,065 $10.73 IRVINE 7 14 Auto Ctr Dr 3/93 5.00 $2,200,000 $10.10 • Prepared By Keyser Marston Associates, Inc Filename: AUTOCTR.XLS: 1/18/95: EJH as I 9 0 TABLE B AUTO CENTER LAND SALE COMPARABLES TUSTIN AND IRVINE AUTO CENTERS DEALERSHIP ANALYSIS • NEWPORT BEACH, CALIFORNIA SALES PRICE NO. LOCATION DATE ACRES PRICE PER SF 1 6826 Federal Blvd. 8/93 2.96 $1,375,000 $10.66 Lemon Grove 2 19550 Nordhoff St. 12/92 5.89 $6,000,000 $23.39 Northridge 3 Poway Rd, W of Evanston Dr 9/89 3.56 $1,625,176 $10.48 Poway 4 Carlsbad Country Dr, S of Cannon Or 12/88 5.84 $3,231,312 $12.70 Carlsbad 5 Carlsbad Country Dr, S of Cannon Dr 12/88 8.91 $5,152,494 $13.28 Carlsbad • 6 Federal Blvd, N of Central Ave 10/88 516 $1,474,491 $6.56 Lemon Grove 7 N of Broadway, S of Lincoln 6/88 10.79 $5,118,300 $10.89 Escondido 8 1 -8, E of Baltimore 6/88 6.69 $3,875,833 $13.30 La Mesa Prepared By Keyser Marston Associates, Inc Filename: AUTOCTR.XLS: 1116/95: EJH • a� 0 0 �� ■� -###K � �• # §# #■# ■ #§ ` • ■Got | # ■k |#! |! §2s# 2 � ■�� | | | ■! # | | | | #■ §E ! 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