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Home My WebLink About16 - 04BA-060 - Newport Coast Cost of Maintaining Certain Properties Along Public StreetsCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 16 May 11, 2004 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Managers Office Dave Kiff, Assistant City Manager 949/644 -3002 or dkiff @dty.newport- beach.ca.us SUBJECT: Budget Amendment for Newport Coast: Cost of Maintaining Certain Properties along Public Streets ISSUE: Should the City of Newport Beach appropriate and expend $600,000.00 to compensate the Newport Coast Community Association (NCCA) for properties the City intended to maintain following the January 1, 2002 annexation of the Newport Coast community? RECOMMENDATION: Adopt Budget Amendment # in the amount of $600,000.00 to the City Manager's Professional and Technical Services account (0310- 8080), with $100,000 coming from the General Services Department's 8080 account and $500,000.00 from unappropriated General Fund reserves. 2. Direct the City Manager to disperse funds in the amount of $600,000.00 to the Newport Coast Community Association (NCCA). DISCUSSION: The 7,700 -acre Newport Coast community at the eastern edge of the city is a combination of two planned communities (the San Joaquin Hills Planned Community [now known as Newport Ridge] and the Newport Coast Local Coastal Program, 2nd Amendment). In the 1980s and 1990s as the communities were developed, the major landowner (The Irvine Company) and the planning jurisdiction (the County of Orange) established a somewhat complex program of private ownership of lands like street medians, parkways, and slopes along public streets. In other regions, these same lands are more commonly held and maintained by public agencies. Assessment and Mello -Roos districts funded construction of the Newport Coast's major infrastructure -- like the parks, the Newport Coast Fire Station, Newport Coast Budget Amendment -- Newport Coast May 11, 2004 Page 2 Elementary School, sewers, water mains, streets, streetlights, stoplights, and the installation of the community's street landscaping. The assessment districts did not fund and cannot fund the ongoing maintenance of these public facilities or properties. When homeowners moved into the community, the development was set up such that homeowners' and community associations (HOAs /COAs) picked up both ownership and maintenance costs of certain properties -- specifically the landscaping along and adjacent to streets. A Community of Associations. Today, the Newport Coast contains six major community associations: • Newport Ridge Community Association; • Newport Ridge North Community Association; • Newport Coast Community Association; • Zia ni Community Association; • Pelican Point Community Association; and • Crystal Cove Community Association. These major community associations are charged with various activities, including operating private parks (like Newport Ridge Park and the Coastal Canyon Swim and Tennis Club) and, as noted, maintaining landscaping along medians, parkways and slopes. The community associations operate concurrently with about 24 smaller homeowners associations (HOAs) that manage different properties and facilities like streetscapes behind gates, fuel modification zones, gate guards to their specific neighborhoods, and more. For information about where these HOAs and COAs are located, look at the City's web site (www.city.newport- beach.ca.us) and click on our mapping applications. Annexation Discussions. In the 4 years leading up to Newport Beach's January 1, 2002 annexation of the Newport Coast, the City Council's negotiating team agreed to maintain "the medians and slopes" along public streets -- meaning to maintain the landscaping and hardscape of medians (the center of the street), parkways (the area between the street and the sidewalk), and certain slopes to the maintenance standards in place at the time of annexation. This offer by the City was included within a Pre - Annexation Agreement (PAA) that the City Council later adopted and entered into with a coalition of Newport Coast residents known as the Newport Coast Committee of 2000 (NCC2K). Today, the Newport Coast Advisory Committee (NCAC) helps oversee the implementation of the PAA. Thanks to annexation, today many of the public streets in the Newport Coast are controlled by the City via easement or fee ownership, but the land around them (medians, parkways, and slopes) is owned by community associations. These streets include: • Newport Coast Drive • Newport Ridge Drive Budget Amendment -- Newport Coast May 11, 2004 Page 3 • San Joaquin Hills Road • Vista Ridge Road • Ridge Park Road • Pelican Hill Road The Property Maintenance Agreement. Because of the PAA and the private ownership (via the community associations) of these lands adjacent to City- controlled streets, several months passed before City staff (including the City Attorney and myself) could implement the section of the PAA that would allow the City or its landscape maintenance contractor to maintain certain medians, parkways, and slopes as if they were public. In Fall 2003, we completed an agreement called a Property Maintenance Agreement (PMA) allowing us to work on the properties. The affected and eligible community associations (Newport Ridge and Newport Coast) agreed in late October 2003 to the terms and format of the PMA. The PMA describes certain eligible properties that the City or its landscape maintenance contractor will maintain - generally, these are certain: • Medians and parkways along public streets where the City owns and maintains the streets; • California native and evergreen slopes along public streets where the City owns and maintains the streets; Some areas are excluded from eligibility via the PAA -- these include landscaped areas that are: • Within gated communities and therefore not public; • Adjacent to or within parks that are not public; • Adjacent to schools, commercial areas, hotels /timeshares, or developer -owned property; and • Enhanced entryways or decorative corner statements. About 54 acres of land owned by the NCCA are eligible for City maintenance. In October 2002, the NCCA allowed the City's contractor -- Park West Landscape Maintenance - to maintain about 14.95 acres of the 54 acres of NCCA - controlled land (specifically the medians and parkways along portions of Newport Coast Drive and Pelican Hill Road) without an executed agreement. We still have not completed discussions about the remaining acreage that is our maintenance responsibility but is owned by the NCCA. This has not been done because of the complexity of the parcels themselves - some parcels have eligible characteristics and ineligible characteristics (they start along the street yet dip behind gates or contain entry statements, for example). Further, some eligible parcels have water meters that are attached to ineligible parcels - as a result, discussions have been long and detailed with the NCCA. Budget Amendment -- Newport Coast May 11, 2004 Page 4 City staff -- in discussions with the Newport Coast Advisory Committee - agreed that the slow development of the PMA denied the Newport Coast homeowners a benefit that we had promised them within the PAA. As such, staff agreed that the City -- once it started maintaining eligible properties under the PMA -- would provide a one -time reimbursement to the landowners (via the two COAs) as if we had maintained the properties since March 1, 2002. The Contractors. Park West Landscape Maintenance -- formerly Park Landscaping Maintenance -- was the contractor of choice by both the Newport Coast Community Association and the General Services Department. The General Services Department solicited competitive bids on that portion of NCCA -owned land that the City started maintaining in October 2002 and selected Park West's predecessor entity, Park Landscaping, as the qualified bidder. As noted, Park West started work on portions of NCCA -owned property in October 2002. Park West has agreed to add the PMA's eligible properties to its bid price. General Services Department staff believes this price is reasonable and service levels have met City staff expectations. GS staff will continue to supervise Park West's contract as the eligible properties are added. The General Services Department has expressed its intent to - sometime in the future (likely to be at the conclusion of the five -year PWLM Contract) -- re -bid all of the Newport Coast eligible properties under City control. As they did with PWLM, GS would do so using traditional Request for Proposals ( "RFP ") processes and nominate a selected contractor to the City Council for formal approval of a new contract. NCCA and NRCA -- Different Paths. Only the NCCA has agreed to place all of their additional eligible properties under the PMA and under City- directed and City -paid maintenance. The NRCA took a different path -- they preferred direct supervision over a different contractor -- O'Connell Landscaping -- for portions of their eligible lands and have requested that these portions (about 3.17 acres of the 13 NRCA acres eligible) remain under their control. They asked that the City provide them with an annual amount equivalent to what the City would have paid had the City's contractor maintained NRCA - eligible properties. City staff agreed that this relationship is acceptable for the 3.17 acres and consistent with the PAA. However, other NRCA -owned properties (about 9.83 acres -- specifically medians and parkways along San Joaquin Hills Road) were placed within a PMA and have been maintained by PWLM since February 1, 2004. Funding. Your Council has previously (December 9, 2003) approved the PMA and an action (including a FY 2003 -04 budget amendment) that authorized the General Services Department to begin work on the Newport Coast/Ridge's medians, slopes, and parkways. As noted, General Services did so on February 1, 2004 for about 9.83 acres in the Newport Ridge community. Your Council authorized a budget amendment on April 27, 2004 to pay back the Newport Ridge Community for funds (roughly $151,653) owed. At that time, we wrote that later Council action will be required for distribution of Budget Amendment -- Newport Coast May 11, 2004 Page 5 funds owed from March 1, 2002 to the "work start date" (yet to be determined) associated with the lands controlled by the Newport Coast Community Association. Because the Newport Coast Community Association is relying on a payment - and because the calculations are still extremely complex, I told the NCCA that I would ask the Council to approve a preliminary payment as soon as possible and continue to refine the final figure before the end of the fiscal year. The amount requested within this staff report ($600,000) is slightly less than what I believe we owe the NCCA. The $600,000 is part of a one -time payment. There will be a roughly $360,000 annual obligation within the General Services' Department's budget for this work on an ongoing basis. This has been included by the City Manager in the City's proposed budget for FY 2004 -05. Committee Action: The Newport Coast Advisory Committee has been kept apprised of these discussions and this payment. Environmental Review: The City Council's approval of this Agenda Item does not require environmental review. Public Notice: This agenda item may be noticed according to the Ralph M. Brown Act (72 hours in advance of the public meeting at which the City Council considers the item). Funding Availability: Funds are available in general fund reserves and funds unspent in General Services' 8080 account (for work on NCCA properties that the Council authorized but our contractor was never able to complete due to the delay in executing the PMA) forth is payment. Submitted by: DaW Kiff Assistant City Manager Attachment: Budget Amendment 2004 City Of Newport Beach NO. BA- D4BA -060 BUDGET AMENDMENT 2003 -04 AMOUNT: $soo,000.00 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates Increase in Budgetary Fund Balance NX Increase Expenditure Appropriations AND X Decrease in Budgetary Fund Balance Transfer Budget Appropriations No effect on Budgetary Fund Balance SOURCE: X from existing budget appropriations from additional estimated revenues X from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: To increase and transfer expenditure appropriations for the cost of maintaining certain properties along public streets in Newport Coast. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account 010 3605 REVENUE ESTIMATES (3601) Fund /Division Account EXPENDITURE APPROPRIATIONS (3603) Description General Fund Fund Balance Description Division Number Account Number Division Number Account Number Signed: Signed: Signed Administrative val: Administrativk Services Director City Manager City Council Approval: City Clerk Amount Debit $500,000.00 $100,000.00 Credit Date s� O .date Date Description Division Number 3170 General Services - Parks Account Number 8080 Services- Prof & Tech, NOC Division Number 0310 City Manager Account Number 8080 Services- Prof & Tech, NOC Division Number Account Number Division Number Account Number Signed: Signed: Signed Administrative val: Administrativk Services Director City Manager City Council Approval: City Clerk Amount Debit $500,000.00 $100,000.00 Credit Date s� O .date Date City of Newport Beach NO. BA- 04BA -060 BUDGET AMENDMENT 2003 -04 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates NX Increase Expenditure Appropriations AND Transfer Budget Appropriations SOURCE: X from existing budget appropriations from additional estimated revenues X from unappropriated fund balance EXPLANATION: This budget amendment is requested to provide for the following: AMOUNT: $soo,000.00 Increase in Budgetary Fund Balance X Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance To increase and transfer expenditure appropriations for the cost of maintaining certain properties along public streets in Newport Coast. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account 010 3605 REVENUE ESTIMATES (3601) Fund /Division Account EXPENDITURE APPROPRIATIONS (3603) Description General Fund Fund Balance Description Signed: Signed: Signed Administrative Appro6l: City Council Approval: City Clerk Services Director Amount Debit Credit $500,000.00 $100,000.00 $600,000.00 Date � date . Date Description Division Number 3170 General Services - Parks Account Number 8080 Services- Prof & Tech, NOC Division Number 0310 City Manager Account Number 8080 Services- Prof & Tech, NOC Division Number Account Number Division Number Account Number Signed: Signed: Signed Administrative Appro6l: City Council Approval: City Clerk Services Director Amount Debit Credit $500,000.00 $100,000.00 $600,000.00 Date � date . Date