TO: ADAM PIRRIE, CITY MANAGER
FROM: BRAD JOHNSON, COMMUNITY DEVELOPMENT DIRECTOR
DATE: APRIL 8, 2025
Reviewed by:
City Manager: AP
SUBJECT:
Title
ASSIGNMENT AND ASSUMPTION AGREEMENT FOR COMPLETION OF PUBLIC IMPROVEMENTS FOR TRACT MAP NO. 62814 (FUNDING SOURCE: GENERAL FUND)
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SUMMARY
Final Tract Map No. 62814 (TR 62814) was approved by the City Council on April 8, 2014, for a twelve-unit residential development at 365 West San Jose Avenue. The developer, Neptune Investment Group, entered into an Agreement for the Completion of Public Improvements with the City of Claremont (Attachment A) as required by the map.
Subsequently, Neptune Investment Group sold the property to QCM Investment. The new ownership required that an assignment and assumption agreement for the completion of public improvements be processed with QCM Investment. The assignment and assumption agreement with QCM Investment was approved by the City Council on November 20, 2015, releasing Neptune Investment Group from the improvement agreement that was initially approved with TR 62814.
QCM Investment did not move forward with the development as intended and proceeded to sell the property. In 2018, a new developer, 365 Claremont, purchased the property from QCM Investment, to construct the approved housing project. The project did not move forward and in September 2024, 365 Claremont sold the property to 365Sanjose. The latest developer, 365Sanjose, has been working with staff, finalizing plans and permitting processes to begin construction. Due to new ownership, a new assignment and assumption agreement is required.
With City Council approval, a new Assignment and Assumption Agreement for Completion of Public Improvements for Tract Map No. 62814 (Attachment B), will release 365 Claremont from their obligations associated with the project. This new assignment and assumption agreement allows the new property owner, 365Sanjose, to enter into an agreement with the City of Claremont for the completion of the required public improvements associated with TR 62814. Once approved, the developer will be ready to obtain permits to begin construction of the project.
RECOMMENDATION
Recommended Action
Staff recommends the City Council enter into a new Assignment and Assumption Agreement for Completion of Public Improvements for Tract Map No. 62814 with 365Sanjose.
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ALTERNATIVE TO RECOMMENDATION
In addition to the recommendation, there is the following alternative:
• Request additional information from staff.
FINANCIAL REVIEW
The 365 West San Jose Avenue property has changed ownership several times since the property was subdivided in 2014. Over the years, a few developers have shown interest in developing the property, however, the construction of this housing project has not taken place.
With a change of ownership, new developers are required to assume responsibility for the completion of the public improvements required with TR 62814. The most recent developer who assumed the rights to develop the project, 365 Claremont, was required to post bonds and deposits for improvement security and to process an assignment and assumption agreement with the City. Although 365 Claremont failed to fully complete the process to secure an assignment and assumption agreement, they provided bonds for the completion of public improvements required by the map. The bond amounts provided are as follows:
Faithful Performance $ 26,700.00
Labor & Materials $ 26,700.00
Monument Placement $ 1,750.00
$ 55,150.00
The above-listed bonds will be released to 365 Claremont upon City Council consideration and approval of a new assignment and assumption agreement with 365Sanjose.
The new agreement with 365Sanjose requires updated bond amounts. The previous bonds collected were calculated using outdated estimates no longer supported by current construction costs. To reflect current costs, an updated cost estimate was prepared.
The engineer for 365Sanjose prepared a new estimate that reflects current construction costs for the completion of the required public improvements. 365Sanjose provided the updated bond amounts as follows:
Faithful Performance $ 55,300.00
Labor & Materials $ 55,300.00
Monument Placement $ 1,750.00
$ 112,350.00
The cost associated with the preparation of this agreement by the City Attorney is estimated at $1,397 and will be paid by the new owner. The staff cost to prepare this report is estimated at $1,184 and is included in the operating budget of the Community Development Department.
ANALYSIS
The property located at 365 West San Jose Avenue was initially owned by Neptune Investment Group. Neptune Investment Group filed TR 62814 for a twelve-unit residential condominium project and entered into an Agreement for the Completion of Public Improvements with the City of Claremont on April 8, 2014. At the time, surety bonds totaling $ 55,150 were submitted to the City by Neptune Investment Group to ensure completion of the required public improvements.
Neptune Investment Group did not move forward with the project, and in 2015, they sold the property to QCM Investment. Following the purchase of the property, the City, Neptune Investment Group, and QCM Investment entered into an assignment and assumption agreement for the completion of public improvements associated with TR 62814, where QCM assumed all rights, interests, duties, and obligations outlined in the original improvement agreement.
QCM Investment did not move forward with the project, and in 2018, sold the property to 365 Claremont. In 2022, 365 Claremont initiated the process of a new assignment and assumption agreement with the intent to move forward with the development and the completion of the public improvements required with TR 62814. Although 365 Claremont posted the required bonds, they did not fully complete the process for the transfer of the improvement agreement. While an assignment and assumption agreement did not get finalized, QCM Investment acknowledged that 365 Claremont assumed all of QCM’s rights, interests, duties, and obligations as they relate to the original Improvement Agreement relating to the Property.
365 Claremont did not move forward with the project and sold the property to 365Sanjose in 2024. For the past several months, the latest developer, 365Sanjose, has been working with City staff to finalize their plans and construction documents, as well as preparing for the permitting process to move forward with the construction of this housing project.
Since the improvement agreement put in place with TR 62814 has a provision to assign or transfer the agreement to a new party with written consent from the City, staff recommends the City Council approve a new assignment and assumption agreement to ensure the completion of public improvements associated and required with the tract map. The public improvements include undergrounding of new and existing utility lines, construction of new accessible drive approach, a streetlight, accessible sidewalk, curb and gutter, and the repaving of San Jose Avenue along the property the frontage to the center line. The developer has indicated that once an assignment and assumption agreement is approved by the City Council, they are ready to pay permit fees and obtain permits to commence the construction of the project.
This new assignment and assumption agreement requires the signatures of 365 Claremont, 365Sanjose, and the City, as well as replacement improvement bonds by 365Sanjose. This process also required providing updated bond amounts to reflect current construction cost estimates, as the original estimates were calculated in 2014. The developer worked with their engineer to calculate the updated costs and has posted the updated bonds with these current estimates.
Upon the approval of this agreement by the City Council, the City will release 365 Claremont from their rights, interests, duties, and obligations with the City and will return their bonds which are currently in place. Simultaneously, this approval will also transfer the rights, interests, duties, and obligations to 365Sanjose, who is ready to move forward with the development of this housing project.
LEGAL REVIEW
The Assignment and Assumption Agreement for Completion of Public Improvements for Tract Map No. 62814 was prepared and approved as to form by the City Attorney.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, Sustainability Plan, Economic Sustainability Plan, General Plan, and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by: Prepared by:
Brad Johnson Sarah Reagan, E.I.T.
Community Development Director Assistant Engineer
Jasmin Hurtado, P.E.
Associate Engineer
Reviewed by:
Maria B. Tipping, P.E.
City Engineer
Attachments:
A - Agreement for Completion of Public Improvements Tract Map No. 62814
B - Assignment and Assumption Agreement