Subject: APPROVAL OF CONSTRUCTION AGREEMENT WITH KB HOME SOUTH BAY, INC.

COUNCIL DISTRICT: 7

SNI AREA: N/A

RECOMMENDATION

Approval of an agreement between the City andwith KB Home South Bay, Inc. for construction of public improvements in connection with their development project on Communication Hill that includes provides for City reimbursement in an amount not to exceed $618,972 for construction of center-strip paving, a landscaped median island, and a new traffic signal. CEQA: Resolution No. 70194.

BACKGROUND

The Residential Construction Tax Contribution Fund (RCTCF) was established in 1974 as a means to equalize the costs to the developers for the construction of major streets. Every developer who constructs a residential dwelling unit pays taxes to the RCTCF. The City uses the RCTCF to reimburse residential developers who construct eligible improvements on streets 90 feet or more in width in connection with new residential development. The types of improvements eligible for reimbursement from this fund consist of grading, subbase and paving constructed on the center portion of a street from the centerline to a point thirty 30 feet from the owner’s property line as well as landscaped median islands. In addition, street improvements connected with but not required of the developments are eligible for reimbursement from this fund.

There are also occasions when the City reimburses developers for the costs of construction of a portion of public improvements, such as traffic signals or landscaped median islands, which are related only in part to their development. The City makes these reimbursements from contributions the City has collected in- lieu of construction from previously occurring developments. The City reimburses developers from the in- lieu contributions when their project has contributed to, but is not responsible for, all of the need for the improvement.

Under Section 14.04.410 of the San José Jose Municipal Code limits the Public Works Director’s authority to enter authority to enter into contracts contracts with private developers for the construction of public improvements connected with their project is limited to those that provide for reimbursement in an amount of $100,000 or less. Section 1217 of the City Charter and Section 14.04.170 of the San José Jose Municipal Code, authorize the City Council to contract with private developers for the construction of public improvements in an amount exceeding $100,000 without competitive bidding so long as the improvements are to be done in connection with the subdivision or development of real property.

ANALYSIS

KB Home is currently pursuing development of their Communications Hill site with multi-family residential units and was conditioned as part of their Planned Development Permit to construct landscaped median islands across their project frontages on Hillsdale Avenue and the future Communications Hill Boulevard. In addition, they were conditioned to construct a landscaped median island off-site, but contiguous to, their project frontage on Hillsdale Avenue, extending to Mountain Springs Drive. Because Hillsdale Avenue and Communications Hill Boulevard are both 106’ wide streets, the developer is eligible for reimbursement of the landscaped median island and center-strip paving from the RCTCF. KB Home was also conditioned to construct a traffic signal at the entrance to their project. However, the traffic impacts of their project alone are not sufficient to require KB Home to pay for the entire signal.

In accordance with Section 4.64.100 of the San José Jose Municipal Code, this project is eligible for reimbursement in the amount not to exceed $558,972 for construction of eligible improvements (landscaped median island and center-strip paving). In addition, $60,000 of developer in-lieu fees will be used to reimburse KB Home for a portion of the construction costs of a the new traffic signal at the project entrance. The total amount to be paid by the City to reimburse KB Home shall not exceed $618,972. Reimbursement not to exceed amounts are based upon engineer’s estimates. Actual reimbursement is based upon actual verified construction costs in an amount equal to or less than the reimbursement amount in the contract.

PUBLIC OUTREACH

Not applicable.

COORDINATION

The contract has been coordinated with the City Attorney and Risk Manager’s Offices.

BUDGET REFERENCE

Fund: 420

Amount: $558,972

Budget Document: 2000-2001 Capital Budget, page 114 and 115

Fund: 138

Amount: $60,000

Budget Document: Developer’s Fee Fund*

* This fund is not appropriated. Deposits are collected and refunded.

CEQA

CEQA: Resolution No. 70194.

RAJEEV BATRA

Acting Director, Public Works Department