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Home My WebLink AboutAppropriation of $68,500 to acquire an Environmental Insuran 2) l GJ ZL. 9 Council/Agency Meeting Held: Deferred/Continued to: .Approved ❑ Conditionally Approved ❑ Denied C&,�City Cle 's S' nature Council Meeting Date: 1/20/2009 Departmen D umber: ED 09-06 CITY OF HUNTINGTON BEACH REQUEST FOR REDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE CHAIRMAN AND AGENC EMBERS SUBMITTED BY: FRED A. WILSON, EXECUTIVE DIRE ° PREPARED BY: STANLEY SMALEWITZ, DEPUTY EXECUTIVE DIRECTOR SUBJECT: AUTHORIZE THE APPROPRIATION OF $68,500 TO ACQUIRE AN ENVIRONMENTAL INSURANCE POLICY FOR PROPERTY LOCATED AT 7872 EDINGER AVENUE Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: Authorize the appropriation of $68,500 to acquire an Environmental Insurance Policy for property located at 7872 Edinger Avenue. The cost of the policy will be offset by a reduction in the purchase price and revenue generated from rent payments of approximately $211,200 annually. Funding Source: An appropriation of $68,500 from the Undesignated Fund Balance, Merged Redevelopment Agency Capital Projects Fund to the Redevelopment Agency business unit account (30580101.69300) is recommended. The Fiscal Impact Statement is attached (Attachment #1). This amount will be offset during fiscal year 2008-09 by additional revenue received not anticipated in the original budget described below. Recommended Action: Motion to: 1. Appropriate $68,500 from the Merged Redevelopment Agency Capital Projects Fund Balance into account 30580101.69300. Alternative Action(s): 1. Do not approve the appropriation; 2. Continue the item and direct staff accordingly. 770-1he REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: 1/20/2009 DEPARTMENT ID NUMBER: ED 09-06 Analysis: On December 15, 2008, the Redevelopment Agency Board approved the purchase of real property at 7872 Edinger Avenue. The Agency owns five (5) contiguous parcels of land that border the property. The acquisition of this property was necessary to complete Agency consolidation of the property for development. Prior to the purchase of the property the Agency's environmental consultant performed both a Phase I and Limited Phase II Environmental Study. The studies found hydraulic fluid in the soil under two of the service bays of the Big O Tire Store. Under the terms of the Purchase and Sale Agreement the Seller will fund the clean-up of the contamination up to $200,000 and provide a standby letter of credit in the amount of $50,000 for any unknown contamination. The City's environmental consultant, Phase 1 Inc., has estimated the cleanup costs will not exceed this amount. After the close of escrow, the Agency will purchase an Environmental Insurance Policy to further indemnify the Agency against unknown contamination that may be found when the building is eventually demolished. To this end, the Agency, working through an Insurance Broker recommended by the Risk Management Division, has received and reviewed three estimates for additional insurance. (Attachment #2) The policy will have a term of five years which can be extended on an annual basis. The premium is expected to cost the Agency approximately $68,500 for the additional policy. For this reason the purchase price for the property was reduced by $68,500. In addition, it should be noted that once escrow is closed, the Agency will receive monthly rent in the amount of $17,600 from the existing tenant. If development of the site is delayed beyond the five years term of the insurance policy, this revenue will fund the extension of the policy. Agency staff is requesting the Agency Board authorize the appropriation of $68,500 from the Agency's Merged Project Area to pay the premium for the additional insurance. Strategic Plan Goal: L-1 Establish the vision and create a land use plan for reuse of critical parcels so that the next phase of the community investment and improvement can begin. The proposed hotel development on the assembled site has the potential to increase property tax increment to the Agency, transient occupancy tax (TOT), and sales tax revenues to the city. Environmental Status: Not applicable to property purchase. Attachment(s): City Clerk's . - Number No. Description, 1. Fiscal Impact Statement 2. Environmental Impairment Liability Insurance Proposals -2- 1/7/2009 3:17 PM ATTACHMENT # 1 wo CITY OF HUNTINGTON BEACH o INTERDEPARTMENTAL COMMUNICATION FINANCE DEPARTMENT TO: FRED A. WILSON, CITY ADMINISTRATOR FROM: DAN T. VILLELLA, CPA SUBJECT: FIS 2008-09-05 Authorize the Appropriation of$68,500 to Acquire an Environmental Insurance Policy for Property Located at 7872 Edinger Avenue DATE: JANUARY 6, 2009 As required by Resolution 4832, this Fiscal Impact Statement has been prepared for"Authorize the Appropriation of$68,500 to Acquire an Environmental Insurance Policy for Property Located at 7872 Edinger Avenue." If the City Council approves this action (total appropriation $68,500), there will be no effect on any unappropriated fund balance since the new appropriation is fully offset by additional estimated revenue not anticipated in the adoption of the original budget. a 7V" an T. Villella, CPA DTV/rs ATTACHMENT #2 ENVIRONMENTALIMPAIRMENT LIA111LITY INSURANCE PROPOSAL CITY OF HUNTINGTON BEACH: Redevelopment . - 7872 Edinger Acquisition Jul; 25, 2008 Prepared By: Barbara doll-broker. Aon Environmental Services Group 707 Wilshire Boulevard#2600. Los Angeles,CA.90017 License#0530733 REDEVELOPMENT AGENCY OF HUNTINGTON BEACH SITE SPECIFIC POLLUTION INDICATION SUMMARY COVERAGE DESCRIPTION&PREMIUM QUOTATION AM.BEST RATING A+XV A.M.BEST RATING A+XV A.M.:BEST RATING A+XV S&P RATING AA+ S&P RATING A+ S&P RATING A+neg American International Specialty Lines Winois Union lnsurnace Company Indian Harbor Insurance Company/ CARRIER Insurance Company/Non-admitted Non-admitted Non-admitted POLLUTION LEGAL LIABILITY PREMISES,POLLUTION LIABILITY Il POLLUTION AND REM. E.DIATIO. N. SELECT POLICY(Form#76391 -Ed, (Form#PF-20275 Ed.06/06) LEGAL LIABILITY(Form#IHIC-PARL6 812004) Ed,01/08): COVERAGE ON SITE CLEANUP,OFF SITE ON SITE CLEANUP,OFF SITE ON SITE CLEANUP,OFF SITE CLEANUP(third party),THIRD CLEANUP(third party),THIRD CLEANUP.(third party),THIRD PARTY BODILY INJURY& PARTY BODILY INJURY& PARTY BODILY,INJURY PROPERTY DAMAGE PROPERTY DAMAGE PROPERTY DAMAGE NAMED INSURED Redevelopment Agency of Huntington Redevelopment Agency of Huntington Redevelopment'Agency of Huntington Beach Beach Beach ADDITIONAL must be scheduled must be scheduled must be scheduled INSURED(S) COVERED 7872 Edinger,Huntington Beach,CA 7872 Edinger,Huntington Beach,CA 7872 Edinger,Huntington Beach,CA LOCATION(S) OPTION I Term 5 years 5 years 5 years Limit per Loss $3,000,000 $5,000,000 $3 000'000 $5,000,000 $3001000 $5,000,000 Policy Aggregate $3,000,000 $5,000,000 $3,000,000 $5,000,000 $3,000,000 $5,000,000 Retention $50,000 $50,000 $50,000 $50,000 $50'000 $50,000 Mold Sublirnit Excluded Excluded Excluded Excluded Excluded Excluded Mold Retention Excluded Excluded Excluded Excluded Excluded Excluded Term Premium(Flat) $50,2681 $64,763 $46,5251 $59,153 $73,5861 Terrorism Coverage Available for Additional Premium Available for Additional 5%Premium Available for Additional 2%Premium Surplus Lines Tax Fee Mandatory Additional 3.125 Premium Mandatory Additional 3,125%Premium Mandatory Additional 3.125%Premium Quote Dated July 24,2008 Quote Dated July 25,2008 008 Quote Dated June 30,2008 from ECBM —pendin2 broker of record RETROACTIVE DATE None None None MAJOR Terrorism Exclusion *Terrorism Exclusion a Terrorism Exclusion t Con t ati 7.TKno!wn cli!tionsil7Documents End . Contamination War Exclusion Conditions Documents Endt e Contamination Exclusion POLICY FORM a Multiple coverage Aggregate olnsured Contract Endt a Mold Exclusion MODIFICATIONS 9 Disclosed Document Endt *Minimum Earned Premium o FineslPenalties.amencirnent a Insured Contracts Endt aFunoi Exclusion a Lead based Paint/Asbestos Endt e Broad Named Insured Endt *Broad Named Insured Endt 9 Additional named Insured * Additional InsuredEndt ol-irnited Coverage Asbestos&Lead e Broad Named insured * Microbial Matter Exclusion e5 Non Owned Disposal Sites(TBD) *Reverse Retrodate Endt e Asbestos&Lead Endt *Transportation a Primary Insurance * Known Conditions Exclusion -Coverage Limitation&Re-Opener a 3 Non Owned Disposal site(TBD) e Minimum Earned Premium Pollution Exclusion Applicable to all coverages: Known No coverage will be given for This policy does not apply to conditions arising from pollution "remediation costs"and associated remediation expense and related legal conditions due to or associated with "legal defense costs"of known expense based upon or arising firorn petroleum hydrocarbons or any conditions the,following constituents,including any- additives to or degradation by-products breakdown daughter or derivative thereof,on,under or migrating from the No coverage will be given for products of such constituents:total insured property. "remediation costs"and associated petroleum hydrocarbons at GP3 and "legal defense costs"of phantom GP4 and emanating from these areas However,this exclusion shall not apply Underground Storage Tank as or affecting the following mecI4 Soil to claims for Bodily Injury or Property referenced in submitted Phase I report Damag QUOTATION 9 Original signed AIG application a Receipt and satisfactory review or a Receipt and satisfactory review of: SUBJECTIVITIES: including all applicable attachments original signed application and m Facilities Pollution Application e Copy of final PSA completed TRIA agreement *Two Years Financial Statements, This indication is TRIA rejection/Acceptance - Lead&Asbestos management a Future use subject to the following protocols *TRIA rejection/acceptarice information,PRIOR TO a TRIA R6jection/Acceptance BINDING: * Copy of final PSA or merger contract s Satisfactory completion of ACE engineering review—may include phone survey Mo;dAiliicrobial Matter Excluded Excluded Excluded Sudden YES YES YES Gradual YES YES YES Unknown-Pre-existing YES YES YES Pollution.Conditions New Pollution Conditions YES YES Third.Party BIiPD (off YES YES YES site' _ Third Part BtIPD an site} YES YES YES First Party/On-Site See Known Conditions Exclusion See Known Conditions Exclusion See Known Conditions Exclusion Cleanup _ Third-Party/Off--Site See Known Conditions Exclusion See Known Conditions Exclusion See Known Conditions Exclusion Cleanup Legal Defense Expanses YES YES _... YES ContractDama es NO NO NO First Party Business NO NO NO interruption Contingent Transportation NO—can be quoted YES YES Coverage in form-C c-heduled Disposal Sites YES -3 sites TBD:and scheduled YES--d sites TBD and scheduled NO--can be quoted Claims Made and YES YES YES Deported =InsideYES YES YES YES Duty YES YES YES ide YES YES YES _. GCVERAETRICaC�EL�,;v.. Di r�('E lny suEed� YES YES - YES- ISGCtV� ... Color{b third part YES YES YES Government Mandate YES YES YES This insurance document is fumistied to you as a mailer ofinforawflon/oryour convenience,It only suaynarizes the policies)and is not intended to rehect&Y Me terms and conditions or excre s o s oP sttcta pc'icies. rh?s docurneni is r of an tnsozmce golicy and does not amend,alter or extend them rage ahrorded by the kited policies) 1-he insurance proposed s:ul a to all the terms,exclusions situ conditions of such policies. RCA ROUTING SHEET INITIATING DEPARTMENT: Economic Development SUBJECT: Authorize appropriation of$68,500 for Environmental Insurance Policy for property at 7872 Edinger Ave. COUNCIL MEETING DATE: January 20, 2009 RCA 'ATTACHMENTS STATUS Ordinance (w/exhibits &legislative draft if applicable) Attached ❑ Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Tract Map, Location Map and/or other Exhibits Attached ❑ Not Applicable Contract/Agreement (w/exhibits if applicable) Attached (Signed in full by the City Attorney) Not Applicable ❑ Subleases, Third Party Agreements, etc. Attached ❑ (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Attached ❑ Not Applicable ❑ Fiscal Impact Statement (Unbudgeted, over $5,000) Attached ❑ Not Applicable Bonds (If applicable) Attached t applicable Staff Report (If applicable) Notached t Applicable Commission, Board or Committee Report (If applicable) Attached ❑ Not Applicable Findings/Conditions for Approval and/or Denial Attached Not Applicable ❑ EXPLANATION FOR'MISSING ATTACHMENTS FIS will be turned in Tuesday January 6, 2009. REVIEWED RETPONED FOR A DED ' Administrative Staff Deputy City Administrator Initial ( ) City Administrator Initial) LIM ) City Clerk ( ) EXPLANATION FOR RETURN OF ITEM: `r^ 1 4 (Below Space For City Clerk's Use Only) RCA Author: Powell