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County of Orange Animal Shelter Participation Agreement Payment <br />January 17, 2017 <br />Page 2 <br />On March 24, 2016, Orange County Community Resources (OC Community) notified the City <br />Manager's Office of the County's decision to move forward with the construction of a new Animal <br />Care Shelter. Given the conditions of the aging shelter, the County will be expediting the <br />construction of the new facility with an expected completion date of Fall 2017. The new facility <br />will be constructed over a 10 -acre parcel at the former Marine Corps Air Station Tustin Base for <br />an estimated $35 million. <br />The cost of the new facility will be shared amongst all participating cities. As such, on April 19, <br />2016, the City and County entered into a ten -year participation agreement to share the costs <br />associated with the construction of the new animal shelter. The ten -year participation agreement <br />covers the period of April 19, 2016 through July 1, 2026 and was estimated at a total cost of <br />$7,141,377 (principal only). The action brought forth for council consideration on April 19, 2016 <br />was an estimate of potential costs for each participating agency. <br />However, on December 19, 2016, the City received a letter from the County of Orange indicating <br />that the new cost to the City increased by $727,768. The following represents the City's pro -rata <br />share: <br />1. Total Shelter Cost <br />$27,300,000 <br />2. Pro -rata percentage <br />27.68% <br />3. Total Principal Owed <br />$ 7,555,497 <br />4. Total Projected Interest <br />$ 313,648 <br />5. Total Project Cost <br />$ 7,869,145 <br />The County informed the City that the growth in costs was largely a growth in costs related to the <br />construction of the Shelter as well as a lower than expected number of agencies (municipalities) <br />participating in the project. The total interest estimate recently provided by the County is also <br />included in this new total amount. <br />Within the fiscal impact of the approved April 19, 2016 Council action, staff highlighted that funds <br />for the FY 2016 -17 participation agreement payment would be allocated from the City's final <br />balances and brought before Council in December upon certification of the City's FY 15 -16 audit. <br />However the recent County invoice of December 19, 2016 increases the original payment <br />estimate from $535,603 to $814,454.26. The First payment invoice now includes the period of <br />July 1, 2016 through June 30, 2017. Prior to the Council Action dated, April 19, 2016, City Staff <br />was advised by the OC Community Resources that payment due in fiscal year 2016 -17 would <br />only be for the period October 1, 2016 through June 30, 2017. However, the City was notified on <br />December 19, 2016 (Exhibit 1 & 2) that period July 1, 2016 through September 30, 2016 is also <br />owed. Thus, the estimated amount owed for FY 2016 -17 increased $278,851.26 as a result of <br />inclusion of the 1st quarter of the fiscal year (July 1, 2016 through September 30, 2016) and <br />projected interest. The first installment in the amount of $377,774.86 is due and payable by <br />January 31, 2017 and is subject to a ten percent penalty. Exhibits 1 & 2 <br />20B -2 <br />