TITLE
Recommendation to authorize City Manager, or designee, to execute all documents necessary to enter into an agreement with The Boeing Company, to accept a one-time cash payment of $2,797,879.50 for the improvement of the Cherry Avenue and San Diego Freeway (I-405) intersection, to allow the City of Long Beach to construct improvements as required by the Douglas Park Development Agreement in lieu of the Boeing Company; and
Increase appropriations in the Capital Projects Fund Group in the Public Works Department by $2,797,879.50, offset by funds received from the Boeing Company for the Improvement of the Cherry Avenue/405 Intersection. (District 5)
DISCUSSION
City Council approval is requested to enter into an Agreement with the Boeing Company and increase appropriation in the Capital Project fund to allow the City of Long Beach (City) to construct improvements of the Cherry Avenue/405 intersection as required by the Douglas Park Development Agreement in lieu of the Boeing Company.
On December 14, 2004, the City Council approved Agreement 29232, the Development Agreement with McDonnell Douglas Corporation, for development of the former McDonnell Douglas manufacturing plant. McDonnell Douglas then expired as a legal entity, being purchased and subsumed by the Boeing Company. Subsequently, on May 4, 2010, the City Council approved the Amended & Restated Development Agreement 31625. Exhibit F under Agreement 31625 defined the improvements required of Boeing to ameliorate the increased traffic generated by the development. Condition of approval No. 140 requires compliance with the “Transportation Improvements and Phasing Program (TIPP)” (Attachment A). Pursuant to the TIPP (Exhibit F under Agreement 31625), The Boeing Company is required to make improvements to the intersection of Cherry Avenue and the San Diego Freeway (I-405) prior to exceeding a peak trip limit per item number MM-V.L-17. The PacifiCenter (Douglas Park) Program Environmental Impact Report (PEIR) was prepared to analyze the potential environmental impacts of the Douglas Park Planned Development District (PD-32). The PEIR found significant and unavoidable transportation impacts as a result of the project and identified improvements to the Cherry Avenue northbound on-ramp as one of the transportation mitigation measures. The TIPP requires that these improvements be completed before the trip generation threshold established under MM-V.L-17 are achieved.
Based on an analysis conducted by the City, it has been determined that trip generation resulting from development in the Douglas Park Planned Development District (PD-32) area is below the trip maximum established and the project can likely be delayed to 2030 without undue impact to traffic operations (Attachment B). As the build-out of the area nears completion, the Boeing Company proposes to satisfy this obligation by paying an in- lieu fee in an amount estimated to fund the cost of the improvement, in exchange for the City taking on the obligation and liability to complete these improvements. The Boeing Company has agreed to make a cash payment of $2,797,879.50 in lieu of constructing the required improvements. The agreed cash payment is based on a fair estimate of the required improvements, including design and construction management costs and future escalation of the cost of the improvement due to inflation (Attachment C). The cost estimate notes that by 2030, the projected cost of the project will be $2,600,000, depending on inflation rates. The improvements to the Cherry Ave/405 intersection must be completed before the traffic metrics laid out in Attachment A are achieved.
While the cash payment from Boeing for these improvements appears to be adequate to fully fund the current estimated improvement costs, it is an estimate based on a conceptual design without complete details considered or all design issues remedied or identified. As more time passes before the improvements are completed, there is an increasing likelihood that the actual cost of improvements in the future value of dollars may exceed today’s cash payment amount. The Department of Public Works is working collaboratively with other public agencies such as the California Department of Transportation for a more expanded scope of work than is currently mandated for the project and is actively exploring State and Federal grant funding alternatives to fund the expanded scope and any potential future cost overruns.
In accordance with the California Environmental Quality Act (CEQA) and the State CEQA Guidelines, a Program Environmental Impact Report (PEIR) was prepared to analyze the potential impacts of anticipated levels of development in the Douglas Park Planned Development District (PD-32) area, and a Mitigation Monitoring and Reporting Program (MMRP) identified mitigation measures that would mitigate to the extent feasible the identified environmental impacts associated with build-out of the area. Further analysis conducted by the City provides substantial evidence that neither the trip generation from development in the area nor traffic volumes on the on-ramp are near the allowable maximum and therefore the implementation of the improvement can be delayed. This analysis also concluded that the timing of the improvement can likely be deferred to 2030 or beyond before reaching the allowable trip maximum (Attachment B). The analysis further establishes that the payment of the in-lieu fee to the City so that the City, rather than Boeing, will construct the required improvements as required by the mitigation measure in the MMPR of the PEIR does not constitute “significant new information” that would require recirculation of the EIR, as no new impact would occur and no mitigation improvements are being rejected or replaced (State CEQA Guidelines Section 15088.5) (Attachment D). As such, the payment of the proposed in-lieu fee to the City for the City to construct the improvements instead of Boeing is in compliance with CEQA, all the requirements of CEQA have been met and no further environmental review is required.
This matter was reviewed by Deputy City Attorney Erin Weesner-McKinley and Budget Management Officer Nader Kaamoush on March 17, 2022.
TIMING CONSIDERATIONS
City Council action is requested on March 22, 2022, to execute an Agreement with The Boeing Company, to make a one-time cash payment of $2,797,879.50 for the improvement of the Cherry Avenue and San Diego Freeway (I-405) intersection.
FISCAL IMPACT
The projected cost of the project buildout in 2030 is estimated to be $2,600,000, inclusive of design, construction, construction management, labor compliance, project oversight, inspections, and accounting for estimated future escalation of the cost of the improvement due to inflation. While the cash payment of $2,797,879.50 from Boeing for these improvements appears to be adequate to fully fund the current estimated improvement costs, it is an estimate based on a conceptual design without complete details considered or all design issues remedied or identified. Staff anticipates upcoming federal funding opportunities to fund additional needed traffic improvements in the area, which can assist in offsetting any future cost increases that are not currently anticipated.
An appropriation increase in the amount of $2,797,879.50 is requested in the Capital Projects Fund Group in the Public Works Department, offset by a one-time cash payment from the Boeing Company.
This recommendation has no staffing impact beyond the normal budgeted scope of duties and is consistent with existing City Council priorities. The number of additional local jobs created by this project will not be known until the contractors have completed their hiring and construction has commenced.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
ERIC LOPEZ
DIRECTOR OF PUBLIC WORKS
APPROVED:
THOMAS B. MODICA
CITY MANAGER