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.
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DEAN C. AKNI� S l KUNU
Vice President
FR -ETCHER JONIES
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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
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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
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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
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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
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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
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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
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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
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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
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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;
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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.
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• 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.
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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
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• 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.
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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-
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• 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.
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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.
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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 .�
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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
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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
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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.
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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
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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
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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
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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
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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.
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. 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
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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
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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
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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.
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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
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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
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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
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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.
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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.
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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.
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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.
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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
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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
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