That the City Council:
A. Approve and adopt a Resolution authorizing the City Manager to execute Funding Agreement Number 46000xxxxx between the City of La Habra, as grantee, and the California Department of Water Resources (“DWR”) to receive $8.5 million in state funding to repair the damaged private underground storm channel located at the Coyote Village Homeowners Association; and,

B. Approve and authorize the City Manager to execute an agreement between the City of La Habra and the Coyote Village Homeowners Association, as sub-grantee, that authorizes the City to apply State grant funding to pay for authorized contractors, selected by the HOA, to design, construct and oversee repairs to the damaged private underground storm channel owned by the HOA.

Background:
The Coyote Village condominium development was built in 1979 and included a private covered storm channel that runs through common areas of the property. Significant portions of the concrete roof of this underground storm channel have failed twice over the past several years. The first occurred on January 23, 2019, and the second on March 15, 2023.

After the first collapse, the Coyote Village Homeowners Association (“HOA”) representatives indicated to the City that they did not have the necessary monetary resources to clear the debris and stabilize the channel, and requested assistance from the County of Orange and the City of La Habra to make the necessary repairs to the damaged channel. Due to safety concerns and heavy storm activity that was occurring at the time of the first collapse, the Orange County Public Works Department hired a contractor to perform emergency debris removal and bracing to the channel walls to keep it from further collapsing and to allow storm water to flow through the channel.

When the second channel roof failure occurred on March 16, 2023, City staff and emergency personnel responded to the location at the request of the HOA. The HOA again requested immediate assistance from the City to clear away debris from the collapsed channel to prevent flooding and further damage to the surrounding common areas and nearby condominiums. To protect the health and safety of the public, and with the written consent of the HOA, the City hired a contractor who immediately cleared the channel so that storm water could freely flow through the channel. The contractor also made additional repairs to help stabilize the channel and reduce the potential for future collapses. The cost to the City for this emergency work was approximately $375,686.
 
Permanent Repairs:
Shortly after the first collapse occurred in 2019, City staff began efforts to help the HOA secure emergency disaster relief funding so that they could make permanent repairs to their damaged channel. City staff reached out to Federal, State and Local agencies, including the Federal Emergency Management Agency (FEMA), California Office of Emergency Services (CalOES), and the County of Orange for assistance. Additionally, staff engaged with state and local elected officials to support the City and the HOA’s efforts to secure funding for the repairs.

In September 2019, City staff guided federal, state and local officials on a tour of the damaged flood control channel at the Coyote Village property. The purpose of the meeting was to have elected representatives see and assess the magnitude of the damage to the channel, provide information regarding the status of the channel, and provide an estimate of the cost to repair the damage. The goal of these meetings was to help secure support and assistance in identifying potential funding sources that could be used to help the HOA fund permanent repairs to their channel.

In March 2020, State Senator Ling Ling Chang sent a budget request letter to the Senate Budget Fiscal Review Committee requesting consideration of a proposal to appropriate $4.5 million from the State's General Fund in the FY 20-21 Budget to repair the damaged storm channel; however, this request was not approved. After being elected to the State Senate seat, Senator Josh Newman toured the site and, with his support and advocacy, he successfully secured State budget approval of $8.5 million for the Coyote Creek Imperial and Channel Improvement Project in June 2022. The City was contacted by the California Department of Water Resources (DWR) in January 2023, who advised that state funding had been approved for the project and that DWR representatives would be working with the City to understand the scope of the project and to draft the necessary funding agreements.

If approved by City Council, the agreement with DWR will allocate state grant funds to the City, acting as the grantee, for this project. The City will then enter into a separate agreement with the HOA, acting as the sub-grantee, so that they can retain a qualified engineering firm and contractor, or design-build firm, along with a separate construction management consultant, who collectively, would be qualified and capable of designing and constructing the necessary permanent repairs for this project. Although this project will be the responsibility of the HOA to undertake, the City will have the responsibility of ensuring the work is being done in accordance with the plans, specification and industry standards, and will assist the HOA with the development of the necessary documentation to help the HOA select qualified firms capable of undertaking a project of this scope and magnitude. The City will also be responsible to directly distribute grant funds to the firms retained by the HOA for work that has been completed and approved.

As this storm channel segment is completely private and located on private property, the City will have no involvement in the final design, construction and maintenance of the storm channel improvements. The HOA, as sub-grantee, will agree to contract directly with a prequalified contractor or design-build firm to design and construct the necessary repairs. The City’s only involvement will be to ensure that the work is being done in accordance with approved plans, and to allocate State grant funds directly to pay the contractor or design-build firm and other selected subcontractor(s) and/or consultants from the state funding allocation for costs approved by the HOA. The sub-grantee agreement will also require the HOA to indemnify the City for all claims arising from the design, construction and maintenance of the storm drain, and will allow the City to be reimbursed from the state funding for the cost the City incurred to make emergency repairs earlier this year.

Litigation:
The City is currently one of several named defendants in a lawsuit brought by the HOA stemming from the first channel failure in 2019. Legal counsel for the City is in the process of negotiating a potential tolling agreement and dismissal of the City in the lawsuit.

If approved by City Council, the project will be funded using State grant funds in the amount of $8.5 million. The City has incurred approximately $375,686.25 for the hiring of a contractor for the removal of soil and other material, along with nuisance abatement costs, fees and legal fees, remediation and site stabilization efforts, that were undertaken as a result of the failure of the drainage channel roof that occurred on or about March 15, 2023. The City's incurred costs are eligible for reimbursement from the approved State grant funding.

GOAL 2 -  MANAGEMENT OF PUBLIC REVENUES AND FISCAL ASSETS

Objective H – Pursue grant funding where and when possible to supplement and/or replace direct City funding.