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HomeMy WebLinkAbout11 APPROVAL OF SECOND AMENDMENT WITH TUSD - LEGACY MAGNET ACADEMY 6-12Agenda ItemRevi AGENDA REPORT CityMan. Cit Manager Finance Directr MEETING DATE: JANUARY 15, 2019 TO: JEFFREY C. PARKER, CITY MANAGER FROM: CITY ATTORNEY SUBJECT: APPROVAL OF SECOND AMENDMENT TO SCHOOL FACILITIES IMPLEMENTATION, FUNDING AND MITIGATION AGREEMENT WITH TUSTIN UNIFIED SCHOOL DISTRICT, AND APPROPRIATION OF $14,958,598 TO FUND CONSTRUCTION BY TUSD OF A PORTION OF THE LEGACY MAGNET ACADEMY 6-12 SCHOOL PROJECT AT TUSTIN LEGACY SUMMARY: This item would appropriate funding for the construction by the Tustin Unified School District (TUSD) of portions of the Legacy Magnet Academy 6-12 School Project at Tustin Legacy, and approve the Second Amendment to the School Facilities Implementation, Funding and Mitigation Agreement with TUSD relating to the project and its funding. RECOMMENDATION: Approve and authorize the Mayor to execute the Second Amendment to School Facilities Implementation, Funding And Mitigation Agreement Between Tustin Unified School District, Community Facilities District No. 06-1 Of Tustin Unified School District, The City Of Tustin And Community Facilities District No 2014-1 Of The City Of Tustin in the form attached hereto as Attachment A (the "Second Amendment to City School Funding Agreement"); and 2. Appropriate $14,958,598 from Fund 189 for the Base Phase I City Advance and City Administration Advance as defined in the Second Amendment to the School Funding Agreement. FISCAL IMPACT: The existing available sources of funding currently held by TUSD for the Legacy Magnet Academy 6-12 school project at Tustin Legacy total $45,475,954. Approval of the recommended action would appropriate additional revenues from Fund 189 to provide the remaining funds necessary to fund both: (a) the Legacy Magnet Academy classroom building for grades 6-9 along with associated parking and athletic fields (as described as 1327335.1 Agenda Report — Second Amendment to Funding Agreement for Legacy Magnet Academy January 15, 2019 Page 2 the Legacy Magnet Academy Base Bid in TUSD's request for bids), and (b) the Administration Building portion of the Legacy Magnet Academy 6-12 School Project. The total additional appropriation request ($14,958,598) includes: (a) $3,108,913 toward the cost of the classroom building, associated parking and athletic fields, and (b) $11,849,685 for the Administration Building portion of the project as described in TUSD's request for bids (Bid No. 04-116856). Those expenses are expected to be offset by a credit the City will receive from the TUSD in the amount of $11,849,685 which credit will be redeemable by the City against any future prepayment by the City of the special tax obligations within CFD 15-2. CORRELATION TO THE STRATEGIC PLAN: The requested actions correlate with the City's Strategic Plan Goal A: "Economic and Neighborhood Development", Strategy 1d: "Develop critical phases of Tustin Legacy — Coordinate development with other public agencies," and Goal D: "Strong Community and Regional Relationships" Strategy 2a: "Enhance collaborative efforts with agencies within and outside Tustin on issues of mutual interest and concern — Strengthen collaboration with the school district." BACKGROUND AND DISCUSSION: On August 25, 2015, the City Council approved the School Facilities Implementation, Funding and Mitigation Agreement Between Tustin Unified School District, Community Facilities District No. 06-1 of Tustin Unified School District, the City of Tustin ("City") and Community Facilities District No. 2014-1 of the City of Tustin ("City School Funding Agreement") and related agreements. On October 18, 2016, the District and the City entered into a First Amendment to the I/M Agreement ("First Amendment to the City School Funding Agreement"). The City School Funding Agreement and the First Amendment to the City School Funding Agreement provided, among other things, for the rough grading and transfer by the City to TUSD of an approximate 40 -acre site (the "40 -Acre Site") upon which TUSD agreed to construct the 6-12 School Project, subject to certain conditions. The City has since completed grading the 40 -Acre Site and has conveyed ownership to the TUSD. The City School Funding Agreement contemplates that the 6-12 School Project would be constructed by TUSD in two phases, with two possible Phase 1 alternatives dependent upon whether the 6-8 Project was Phase 1 or the 9-12 Project was Phase 1. The actual number and content of the 6-12 School Project phases are to be determined by TUSD. The City School Funding Agreement includes provisions for a City Advance by which the City would advance funding for the 6-12 School Project or some portion thereof, in the event the then -available Sources of Funding to TUSD were insufficient to fund the 6-12 1327335.1 Agenda Report — Second Amendment to Funding Agreement for Legacy Magnet Academy January 15, 2019 Page 3 School Project. As provided in the City School Funding Agreement and the proposed Second Amendment to the City School Funding Agreement, the City provided the preliminary written notice to TUSD of its interest in providing TUSD with the City Advance. The City and TUSD have discussed variations of the Phase 1 alternatives for which TUSD has received construction bids and for which the City would provide the City Advance on the condition that the City and TUSD reach an agreement on the amount of the City Advance and the Phase 1 alternative it would be used to fund. If the Council approves the Second Amendment to the City School Funding Agreement and the recommended appropriation for the advance funding in the amount of $14,958,598, the TUSD will award bids to construct both: (a) the Legacy Magnet Academy classroom building for grades 6-9 along with associated parking and athletic fields (as described as the Legacy Magnet Academy Base Bid in TUSD's request for bids), and (b) the Administration Building portion of the Legacy Magnet Academy 6-12 School Project. The Second Amendment also includes a provision that will give the City a valuable credit from the TUSD in the amount of $11,849,685 which will be redeemable by the City as a credit against future prepayment by the City of the special tax obligations within CFD 15- 2. Attachment: A. Second Amendment to School Facilities Implementation, Funding and Mitigation Agreement with Tustin Unified School District 1327335.1 STAFF REPORT - ATTACHMENT A SECOND AMENDMENT TO SCHOOL FACILITIES IMPLEMENTATION, FUNDING AND MITIGATION AGREEMENT BETWEEN TUSTIN UNIFIED SCHOOL DISTRICT, COMMUNITY FACILITIES DISTRICT NO. 06-1 OF TUSTIN UNIFIED SCHOOL DISTRICT, THE CITY OF TUSTIN AND COMMUNITY FACILITIES DISTRICT NO 2014-1 OF THE CITY OF TUSTIN. This Second Amendment ("I/M Second Amendment") to that School Facilities Implementation, Funding and Mitigation Agreement ("I/M Agreement") is made and entered into as of this — day of , 2019, between Tustin Unified School District ("TUSD"), Community Facilities District No. 06-1 of Tustin Unified School District ("CFD No. 06-1"), City of Tustin ("City"), and Community Facilities District No. 2014-1 of the City of Tustin ("City/CFD"). TUSD, CFD No. 06-1, City and City/CFD may hereinafter be referred to individually as "Party" and collectively as "Parties." RECITALS A. The Parties entered into the I/M Agreement on August 25, 2015. The Parties entered into a First Amendment to I/M Agreement on October 18, 2016 (the "I/M First Amendment"). B. The Parties entered into a Site Conveyance Agreement dated August 25, 2015, and a First Amendment to Site Conveyance Agreement dated October 18, 2016 (collectively, the "Site Conveyance Agreement"). C. The I/M Agreement and I/M First Amendment provide, among other things, for the transfer by the City to TUSD of an approximate 40 -acre site, referred to in the I/M First Amendment as Revised Site No. 2, upon which TUSD agreed to construct the 6-12 School Project, subject to certain conditions precedent. The Close of Escrow of Revised Site No. 2 has occurred. D. The I/M Agreement contemplates that the 6-12 School Project would be constructed in two phases, with two possible Phase 1 alternatives dependent upon whether the 6- 8 Project was Phase 1 or the 9-12 Project was Phase 1. The actual number and content of the 6- 12 School Project phases are to be determined by TUSD dependent upon available funding. E. The I/M Agreement includes provisions for a City Advance, by which the City would advance funding for the 6-12 School Project or some portion thereof, in the event the then available Sources of Funding to TUSD were insufficient to fund the 6-12 School Project. As provided in the I/M Agreement and this I/M Second Amendment, the City provided the PW/Notice, as defined hereafter, to TUSD of its interest in providing TUSD with the City Advance. F. The City and TUSD have discussed variations of the Phase 1 alternatives for which TUSD has received constructions bids and for which the City would provide the City 1375944.1 Advance on the condition that the City and TUSD reach an agreement on the amount of the City Advance and the Phase 1 alternative it would be used to fund. AGREEMENT 1. Incorporation of Recitals. All of the foregoing Recitals are correct and are incorporated in this UM Second Amendment by reference and made a part hereof. 2. Defined Terms. Unless as otherwise defined herein, all terms used herein shall have the same meanings as is set forth in the I/M Agreement and as applicable, the I/M First Amendment. 3. Section 16(e)i. of the I/M Agreement is deleted in its entirety and replaced with the following: "i. The City has provided a preliminary written notice ("PW/Notice") to TUSD in a form satisfactory to TUSD of the City's desire to provide advance funding for a portion of the 6- 12 School Project, referred to as the Legacy Magnet Academy Base Bid, for which TUSD has, as of the date of this I/M Second Amendment, received bids. The bids received are generally described as one classroom building for grades 6-9, associated parking, and athletic fields and are generally depicted in Exhibit "A", which is attached hereto, and are more particularly described as the Legacy Magnet Academy Base Bid in TUSD's request for bids, Bid No. 04-116856, which Bid No. 04-116856 is incorporated herein by reference (hereafter, "Base Phase 1"). The advance funding that the City is proposing to provide is the difference between the available Sources of Funding and Base Phase 1 Actual Project Cost, as Base Phase 1 Actual Project Cost is defined below (the "Base Phase 1 City Advance"). The Parties have met and reached an agreement as to the cost of Base Phase 1, which cost is agreed to be the bid amount for the construction, construction management, supervision, furnishings, equipment, and fees, as well as up to 4% of the bid amounts for contingencies for change orders or other unforeseen costs (collectively, "Base Phase 1 Actual Project Cost"). The Parties agree that the Base Phase 1 Actual Project Cost is forty-eight million, five hundred eighty-four thousand and eight hundred sixty-seven dollars ($48,584,867). The Available Sources of Funding currently held by TUSD (including project expenditures to date) is forty five million, four hundred seventy five thousand, and nine hundred fifty-four dollars ($45,475,954). The City agrees that it will pay the Base Phase 1 City Advance to TUSD upon approval of this I/M Second Amendment, and in no event, not later than January 21, 2019. The Base Phase 1 City Advance shall be in the amount of three million, one hundred eight thousand, and nine hundred thirteen dollars ($3,108,913). ii. The City has also provided a preliminary written notice ("PW/Notice") to TUSD in a form satisfactory to TUSD of the City's desire to provide advance funding for a portion of 2 1375944.1 the 6-12 School Project, referred to as Alternate 3 (Administration Building), for which TUSD has, as of the date of this FM Second Amendment, received bids. The Base Phase 1 and the Administration Phase 1 (as defined below) are collectively referred to as the "Phase 1 Facilities". The bids received are generally described as an administration building and are generally depicted in Exhibit "B", which is attached hereto, and are more particularly described in TUSD's request for bids, Bid No. 04-116856, as Alternate 3, Administration Building (hereafter, "Administration Phase 1 "). The advance funding that the City is proposing to provide is the difference between the available Sources of Funding and the Administration Actual Project Cost, as Administration Actual Project Cost is defined below (the "City Administration Advance"). The Parties have met and reached an agreement as to the cost of such Administration Phase 1, which cost is agreed to be the bid amounts for the construction, construction management, supervision, furnishings, equipment, and fees, as well as up to 4% of the bid amounts for contingencies for change orders or other unforeseen costs (collectively, "Administration Phase 1 Actual Project Cost"). The Parties agree that the Administration Phase 1 Actual Project Cost is eleven million, eight hundred forty-nine thousand, and six hundred eighty-five dollars ($11,849,685). The Available Sources of Funding currently held by TUSD (including project expenditures to date) for this portion of the 6-12 School Project is zero dollars ($0.00). The City agrees that it will pay the City Administration Advance upon approval of this FM Second Amendment, and in no event, not later than January 21, 2019. The City Administration Advance shall be in the amount of eleven million, eight hundred forty-nine thousand, and six hundred eighty-five dollars ($11,849,685). In the event the City provides the City Administration Advance as provided. herein, TUSD shall provide a credit to the City in the amount of the City Administration Advance to be solely redeemed against any future prepayment by the City of the special tax obligations within CFD 15-2 until such credit is exhausted. iii. If the Base 1 City Advance and City Administration Advance (collectively, "City Advance") are paid for the Phase 1 Facilities, TUSD will construct the Phase 1 Facilities and will use its best efforts to have the Phase 1 Facilities open and operating for the first school year that is thirty-six (36) months after TUSD's receipt of the City Advance. If only the Base 1 City Advance is paid, TUSD will construct Base Phase 1 and will use its best efforts to have the Base Phase 1 facilities open and operating for the first school year that is thirty-six months (36) after TUSD's receipt of the Base 1 City Advance. If neither the Base 1 City Advance or City Administrative Advance are received by TUSD as described herein, the 6-12 School Project or applicable portion of the 6-12 School Project shall be constructed and operated by TUSD as otherwise provided in this UM Agreement." 4. Entire Agreement. The I/M Agreement, the I/M First Amendment, this FM Second Amendment, and the Site Conveyance Agreement (collectively, the "Contract Documents") and all attachments and Exhibits to such Contract Documents, integrate all of the terms and conditions mentioned herein, and supersede all negotiations with respect hereto. This FM Second Amendment amends, as set forth herein, the Contract Documents and except as specifically amended hereby, the Contract Documents shall remain in full force and effect. To the extent that there is any conflict or inconsistency between the terms and provisions of this I/M Second 3 1375944.1 Amendment and the terms and provisions of the Contract Documents, the terms and provisions of this I/M Second Amendment shall control. IN WITNESS WHEREOF, this UM Second Amendment is agreed and entered into as of the date first written above. TUSTIN UNIFIED SCHOOL DISTRICT IM Anthony Soria, Chief Financial Officer APPROVED AS TO FORM: Atkinson, Andelson, Loya, Ruud & Romo Legal Counsel to the Tustin Unified School District and CFD No. 06-1 of the Tustin Unified School District Wendy Wiles COMMUNITY FACILITIES DISTRICT NO. 06-1 OF THE TUSTIN UNIFIED SCHOOL DISTRICT By: Authorized Officer CITY OF TUSTIN By: Charles Puckett, Mayor ATTEST: By: Erica Rabe, City Clerk COMMUNITY FACILITIES DISTRICT NO. 2014-1 OF THE CITY OF TUSTIN By: Authorized Officer AP VED AS TO FO gfBy:42 David Kendig, City Attorne 4 1375944.1