Agenda Item Wording:
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Developer Reimbursement Agreement - Authorize the City Manager to execute the reimbursement agreement with San Joaquin Valley Homes for the construction of the Shirk Street sanitary sewer trunkline from Walnut Avenue to Noble Avenue and the decommissioning of the existing force main and lift station, in the amount of $4,178,323.62 with modified payment terms.
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Agenda Date: 05/18/2026
Prepared by:
Estrella Velasquez, Associate Engineer, Estrella.Velasquez@visalia.gov, (559)713-4164
Chris Crawford, City Engineer, Chris.Crawford@visalia.gov, (559)713-4331
Jason Huckleberry, Engineering & Building Director, Jason.Huckleberry@visalia.gov, (559)713-4495
Department Recommendation: Staff recommends that City Council authorize the City Manager to execute a development reimbursement agreement with San Joaquin Valley Homes for the construction of the Shirk Street sanitary sewer trunkline from Walnut Avenue to Noble Avenue and the decommissioning of the existing force main and lift station, in the amount of $4,178,323.62 with modified payment terms.
Summary:
The Elliott Subdivision, a 59-acre residential development, was approved by Planning Commission on July 22, 2024, and is located between Shirk Street and Roeben Street, south of Tulare Avenue. Per the project conditions of approval, a 48” sanitary sewer trunkline was required to be installed from Walnut Avenue to Tulare Avenue to service the development’s Phase 2 and in accordance with the city’s adopted Sanitary Sewer Masterplan. Because the construction of the new gravity line will require a full road closure, the developer has agreed to extend the sewer main installation north to Noble Avenue. Doing so will allow for the decommissioning of the existing lift station at the Noble Avenue and Shirk Street intersection and the associated 6” force main along this alignment. Therefore, sewer capacity along this corridor will be increased to better accommodate further development north and south of HWY-198, while reducing costly maintenance and issues associated with the sewer lift station. During the first phase of the project, Shirk Street will be closed from Walnut Avenue to Tulare Avenue. Upon completion of this first phase, the contractor will initiate the second phase of the project, and the road closure will be extended north to Noble Avenue.
The total amount to be reimbursed for the Shirk Street Sanitary Sewer Improvements is $4,178,323.62. The reimbursement would be due in the form of cash payments to the developer for the eligible facilities as the work progresses until completion. The reimbursement agreement specifies monthly progress payments to be available to the developer for work completed. This is a deviation from standard procedures, as the reimbursement would typically be made after all work is completed and accepted by the city. This project is unique as it includes supplementary work being performed by a development project for improvements not fronting the project itself. The additional sewer trunkline extends approximately 1,800 feet north of Tulare Avenue to the existing lift station at Noble Avenue. A warranty bond to protect against defects for a year following the Notice of Completion will be required, which is standard policy for improvements installed by private development.
The Shirk Street sanitary sewer trunkline extension is an existing capital improvement project with funding carried over from prior years. The additional funding needed to complete the project is expected to be approved with the upcoming two-year budget. Those funds are expected to be available for this reimbursement agreement. Engineering staff is working closely with the developer to secure approval for construction of the sanitary sewer main, as completing the work now is expected to save the city approximately $2.5 million. These savings are primarily attributed to securing current pipe pricing before anticipated increases, as well as the immediate availability of the developer’s lowest bidding contractor.
Background Discussion:
As approved by the Planning Commission on July 22, 2024, the Elliott Subdivision is required to install a 48-inch sanitary sewer trunkline within Shirk Street from Walnut Avenue to Tulare Avenue. This initial scope was designed solely to serve the subdivision by connecting to the existing trunkline at Walnut Avenue, with early phases discharging to the existing main in Roeben and later phases utilizing the new Shirk trunkline.
While the approved limits were adequate to meet the needs of the subdivision, the city has worked with the developer to extend the trunkline approximately 1,800 feet further north to Noble Avenue. This additional work provides broader system-wide benefits beyond the project boundaries. Specifically, the extension will enable the decommissioning of the existing 6-inch force main and lift station in Shirk Street. The upgraded trunkline will also increase sewer conveyance capacity, thereby facilitating future development in areas north of the Elliott Subdivision and improving overall system performance.
The city would have ultimately constructed these sewer improvements to support planned growth and master planned infrastructure. By incorporating this work into the developer’s project, the city benefits from cost efficiencies, coordinated construction, and expedited delivery. The developer has demonstrated due diligence by soliciting multiple competitive bids and selecting the lowest responsible bidder, ensuring that the cost of $4,178,323.62 for the eligible improvements is reasonable and consistent with market conditions. The developer solicited three bids for the project. Two bids exceeded $6.5 million, while the third was consistent with the engineer’s estimate of approximately $4 million. Constructing the sewer trunkline extension at this time is expected to save the city approximately $2.5 million.
The reimbursement agreement includes provisions for monthly progress payments based on completed work, which differs from the City’s typical practice of issuing payment upon project completion and acceptance. This deviation is warranted due to the scale of the improvements, as well as the fact that the work extends beyond the frontage and direct impacts of the development. Allowing progress payments reduces the financial burden on the developer while maintaining appropriate safeguards, including verification of completed work and retention measures as applicable.
Additionally, the agreement requires the developer to provide a one-year warranty bond following the Notice of Completion, consistent with City standards for privately constructed public improvements. This ensures that the city is protected against defects and that the infrastructure will perform as intended. This reimbursement agreement enables the construction of critical backbone infrastructure that provides both immediate and long-term public benefit and benefits from private development to deliver improvements more efficiently.
Fiscal Impact:
The total reimbursement amount of $4,178,323.62 will be from the Shirk Street Sanitary Sewer Trunkline Capital Improvement Project (CP0567) that is funded by the Wastewater Trunkline Fund (231). A portion of the required funding for this sanitary sewer trunkline is currently programmed in the 25/26 fiscal year, with the remaining funding to be approved in the upcoming 2-year budget cycle. The current and anticipated funds are expected to be sufficient and appropriately timed for the modified payment terms. See below for a breakdown of the expected project costs.
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Table 1: Shirk Street Sanitary Sewer Trunkline Project Funding (CP0567) |
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Project Funding Source |
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Wastewater Trunkline (231) Current FY 25/26 Budget |
$3,185,000 |
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Wastewater Trunkline (231) (To be Appropriated in FY26/27) |
$2,000,000 |
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Total Project Funding |
$5,185,000 |
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Estimated Project Costs |
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Staff Time |
$45,000 |
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Design Services |
$99,560 |
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Construction Cost (Includes all developer costs, Geotech testing, and survey staking) |
$4,178,323.62 |
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Construction Contingency (~15% of Construction Cost) |
$627,000 |
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Construction Inspections |
$150,000 |
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Total Estimated Project Costs |
$5,099,883.62 |
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Surplus (Deficit) |
$85,116.38 |
Any funds remaining after project completion will be returned to the Wastewater Trunkline Fund 231.
Prior Council Action:
July 21, 2025 - City Council authorized the recordation of the final map for Elliott Subdivision Phase 1, located west of South Roeben Street, approximately 650 feet south of West Tulare Avenue, adopted Resolution No. 2025-54 initiating proceedings for the formation of Assessment District No. 25-07 "Elliott Subdivision" and adopted Resolution No. 2025-55 ordering the improvements and levying the annual assessments for Assessment District No. 25-07 "Elliott Subdivision".
Other:
May 13, 2026 - Development Reimbursement Review Committee reviewed and recommended for approval the reimbursement agreement for the construction of a sanitary sewer trunkline from Walnut Ave to Noble Avenue and the decommissioning of the existing force main and lift station.
Alternatives: None
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to authorize the City Manager to execute a reimbursement agreement with San Joaquin Valley Homes for the construction of the Shirk Street sanitary sewer trunkline from Walnut Avenue to Noble Avenue and the decommissioning of the existing force main and lift station, in the amount of $4,178,323.62 with modified payment terms.
Environmental Assessment Status: N/A
CEQA Review: N/A
Deadline for Action: 05/18/2026
Attachments:
1. Project Location
2. Draft Reimbursement Agreement
Strategic Goal: Indicates which City Strategic Goal(s) this item supports. Check all that apply.
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☐ Economic Vitality |
☐  Organizational Excellence |
☐ Fiscal Strength |
☒  Infrastructure & Growth |
☐  Quality of Life |