Rainbow MWD approves Rice Canyon Pipeline financing changes

Joe Naiman

Village News Reporter

The agreement between the Rainbow Municipal Water District and Tri Pointe Homes for the Citro development has been amended.

Rainbow's board voted 5-0 April 26 to approve an amendment to the participation agreement for the Rice Canyon Pipeline facilities which increases the total cost from $5,100,000 to $5,502,373. Separate 5-0 votes that day approved a change order with Dexter Wilson for additional engineering support services for the Rice Canyon Pipeline project and approved an amendment to the acquisition agreement which describes the improvements which may be financed by the Citro community facilities district.

Tri Pointe Homes is the parent company of Pardee Homes and Citro was the Meadowood project in January 2012 when the San Diego County Board of Supervisors approved the 384-acre Meadowood development. The original approved map included 397 single-family homes, 447 multi-family homes, 13 acres for an elementary school which will be built by the Bonsall Unified School District, four acres of park land, 128 acres of biological open space, 47 acres of agricultural open space, 5.9 miles of trails, and a wastewater treatment plant.

In order to avoid impacts to sensitive environmental resources, a public park was relocated and the residential component is now expected to consist of 473 single-family and 352 multi-family homes while the public park size has increased to 9.1 acres with the trail length reduced to 5.6 acres.

When the Board of Supervisors approved Meadowood, the land was within the San Luis Rey Municipal Water District, which is not part of the San Diego County Water Authority. The Board of Supervisors' conditions included annexing the property into the SDCWA. Pardee Homes had entered into a pre-annexation agreement with the Rainbow Municipal Water District in 2004 but, in April 2005, the Rainbow board instructed the district's legal counsel to work with Pardee on terminating the agreement and in December 2008 Rainbow's board voted to terminate that agreement.

In January 2011, the Valley Center Municipal Water District board voted to support the annexation of Meadowood into that district, and San Diego County's Local Agency Formation Commission approved the annexation of Meadowood into the Valley Center district in 2014.

Meadowood is not adjacent to the rest of the Valley Center boundaries. The plan when the property was annexed was for Pardee to construct water and sewer lines to Meadowood at the developer's expense. The nearest Valley Center facility is across Couser Canyon multiple miles away from Meadowood and, over time, both the Valley Center district and Pardee realized that the lack of facilities in the area would make Meadowood difficult for the Valley Center district to serve. Meadowood is adjacent to Rainbow facilities.

In 2020, Pardee and the Valley Center and Rainbow districts approved an out-of-area service agreement for Rainbow to provide water and sewer service to Meadowood. The April 2020 Rainbow action also directed district staff to prepare an application to LAFCO to annex the Meadowood area into Rainbow and detach that area from the Valley Center district.

The May 2020 meeting authorized Rainbow General Manager Tom Kennedy to submit the application to LAFCO. In May 2021, the LAFCO board approved the detachment of the land from the Valley Center Municipal Water District and the annexation of the property into the Rainbow district. The reorganization was recorded in July 2021.

The annexation agreement also included provisions for the Rice Canyon Tank transmission main. That will be constructed by Tri Pointe Homes and given to the Rainbow district after it is completed and accepted as satisfactory, although Rainbow will reimburse Tri Pointe Homes for the cost of the water line.

The participation agreement which was initially approved in April 2021 covers the design, construction, and funding of the Rice Canyon Pipeline and related facilities. The 18-inch main will deliver water from the Rice Canyon Tank Zone and connect to the water main on Horse Ranch Creek Road, so it will also serve the Horse Creek Ridge development and existing customers.

Because a Metropolitan Water District of Southern California connection is used for the Rice Canyon Tank Zone and that line will still have capacity after the development projects are completed, additional customers can receive service using MWD water which costs less than CWA supply.

In September 2021, the Rainbow board approved an amendment to the annexation agreement which allows an additional 150 residential units to be built prior to the completion of the Phase 1 sewer improvements and increased the total cost from $3,700,000 to $5,100,000.

The Phase 1 sewer improvements include construction of the Thoroughbred Lift Station on Thoroughbred Lane, a gravity main from Olive Hill Road to the Thoroughbred Lift Station, a force main along Camino Del Rey and Old River Road, and upsizing the existing sewer line along Highway 76.

The original participation agreement cost was based on the engineer's estimate and increased after more accurate numbers were determined. Although the cost was increased, Rainbow and Tri Pointe representatives were able to negotiate a reduction in the administrative fee from 5% of all hard costs, soft costs, and contingency to 3% of the costs.

The original contingency was 15% of hard costs and 25% of soft costs, although a review of the bid package lowered the contingency to 5% of hard costs and 10% of soft costs. Rainbow also negotiated a payment agreement which eliminates interest payments which were referenced in the previous version of the agreement.

Cass Arrieta, which is headquartered in El Cajon, has the construction contract for the Rice Canyon Pipeline work. The transmission main is approximately 40% complete and is expected to be completed by fall 2022.

The $5,100,000 amount was a total maximum cost and included contingency. Unforeseen circumstances have included hard rock to be excavated and the presence of a California gnatcatcher. “The cost of the gnatcatcher has to do with the sound wall which you can see from the freeway,” Kennedy said.

Rainbow also issued a change order, which was within the contingency amount, to optimize the system’s capacity by upsizing the pipe diameter and valve sizes in each pressure reducing station. Rainbow will furnish two 10-inch and two 12-inch plug valves, which reduced the change order cost to $110,275 and also expedited material procurement.

The presence of hard rock has resulted in time and material extra work reports, and after Tri Pointe developed a projection of additional time to remove hard rock, the additional construction cost was estimated to be $140,598, not including $20,000 for construction administration and $80,000 for geotechnical monitoring.

The detection of a male California gnatcatcher in the 500-foot buffer zone required an additional $31,000 for noise barrier fencing and other mitigation measures along with $39,420 for additional biological and noise monitoring.

The additional authorized amount also includes $124,376 to restore a contingency budget.

Three previous change orders to the Dexter Wilson design contract totaling $16,170 had been approved administratively. The board approved an additional $12,600 change order to bring the total engineering support services contract amount to $219,650.

The community facilities district will allow bonds for the improvements to be repaid through property tax assessments. The original acquisition agreement stipulated on-site water distribution facilities, pressure reducing stations on two streets not yet named, and appurtenant facilities.

The amended agreement authorizes on-site water distribution facilities and three pressure reducing stations with one apiece being on Andalusian Place, Blue Breton Drive, and Meadowood Street. “This information wasn’t there at that phase of design,” Kennedy said of the change.