Report Prepared by: Samuel J. Rashe, Planning Manager, Development Services Department
Title
SUBJECT: Approval of a Professional Services Agreement with Precision Civil Engineering, Inc. in the Amount of $246,587.65, and a Deposit and Reimbursement Agreement with Tavares 2015 Trust in the Amount of $271,245.82, for the Preparation of an Environmental Report to Facilitate the Annexation (Annexation-25-0003) of 37 Parcels, Approximately 366 Acres
REPORT IN BRIEF
Considers approving a Professional Services Agreement with Precision Civil Engineering, Inc., along with a Reimbursement Agreement with Tavares 2015 Trust, for the preparation of an environmental document to annex 366 acres into the City of Merced for future development. The subject site is located on the northeast corner of East Mission Avenue and Tyler Road.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Deposit and Reimbursement Agreement with Tavares 2015 Trust, a California Limited Partnership, in the amount of $271,245.82 to cover the cost of the consultant contract ($246,587.65) and staff time ($24,658.17) for the administration of the environmental review process; and,
B. Approving the Professional Services Agreement with Precision Civil Engineering in the amount of $246,587.65 for preparation of an environmental document for the annexation of approximately 366 acres into the City of Merced; and,
C. Approving an increase of revenue in the amount of $246,588 to Fund 3000-Development Services, Developer Capital Fee and appropriating the same to Professional Services for payment to Precision Civil Engineering; and,
D. Approving an increase of revenue in the amount of $24,659 to account Fund 3000-Development Services, Cost Recovery; and,
E. Authorizing the City Manager to execute any necessary documents.
Body
ALTERNATIVES
1. Approve the agreements, as recommended by staff; or,
2. Approve the agreements, subject to modifications by City Council (identify specific items to be amended in the motion); or,
3. Deny; or,
4. Refer to staff for reconsideration of specific items (to be addressed in the motion); or,
5. Continue to a future City Council meeting (date and time to be specified in the motion).
AUTHORITY
The Cortese-Knox-Hertzberg Act of 2000 establishes procedures for city annexations and other local government changes in organization. Merced Municipal Code Title 19 spells out environmental review procedures for the City.
DISCUSSION
Proposed Project
On November 17, 2025, Preliminary Annexation Application No. 25-0001 was presented to the City Council to seek Council support. During the hearing, City Manager Scott McBride discussed the need for the development in relation to housing demand and the benefits it would provide to Districts 1 and 2. A motion to support the proposed project was made by Council Member Dupont and seconded by Council Member Harris. The motion passed on a five-to-one vote.
The proposed annexation encompasses approximately 366 acres and is designed to support a balanced mix of housing, employment opportunities, and commercial services.
The development plan includes approximately 119 acres designated for Regional Community Commercial uses and 55 acres for Business Park uses. The Business Park area is strategically located in the northeast corner of the site to serve as a transition between the proposed development and existing industrial operations. Commercial designations, primarily along the frontage of East Mission Avenue and Tyler Road, are intended to accommodate retail, dining, recreation, personal services, and employment-generating uses. Both land use areas would also permit multifamily residential development, further expanding housing opportunities within the project area.
In addition to commercial development, the proposal includes approximately 62 acres of Low-Medium Density Residential and 108 acres of Low-Density Residential uses. Consistent with City policy, housing developed as part of an annexation is subject to the City’s affordable housing requirements in effect at the time of annexation. The City Council currently requires that at least five percent of housing units developed through annexation be designated as affordable housing or that an in-lieu fee be paid, helping to ensure that a portion of new housing remains accessible to a broader range of residents.
Beyond expanding housing and commercial opportunities, the project is expected to provide significant economic benefits. At full buildout, the annexation is anticipated to generate approximately 1,500 permanent jobs and approximately 2,500 construction jobs.
Overall, the project is intended to support orderly growth, expand housing choices, strengthen the local economy, and provide new services and employment opportunities for the community.
As part of the review process, environmental analysis in compliance with the California Environmental Quality Act (CEQA) is required. Due to the complexity and duration of this process, City staff and the applicant have agreed to retain a third-party consultant to prepare the environmental document. Precision Civil Engineering was chosen as the environmental consultant based on the firm’s experience with similar projects and its demonstrated understanding of the project issues. Precision Civil Engineering and its proposed team possess the qualifications and expertise necessary to complete the required environmental work.
Terms of the Agreements
Attachment 3 contains the recommended agreement for professional services which includes a scope of services, budget, and the anticipated project schedule. The scope of work will include the preparation of an Environmental Impact Report, and technical studies. These studies include biological resources, air quality, greenhouse gas analysis, water supply assessment, cultural resources, noise, and traffic. All the work would be performed by Precision Civil Engineering and sub-consultants.
As indicated in the reimbursement agreement (Attachment 4), the applicant would pay for the entire consultant cost ($246,587.65). The applicants would also reimburse the City for staff time spent on administering the environmental process, based on services and materials. An additional ten percent of the cost of the environmental review ($24,658.17) is required upon execution of the agreement.
The applicant also acknowledges in Section 2 of the reimbursement agreement (Attachment 1) that "the contract with the Consultant is being entered into by the City as an accommodation to the Developer to facilitate the evaluation of the project and does not guarantee any particular result or outcome. The Developer further acknowledges and agrees that it shall have no control over the work product of the Consultant, and that the payment of the costs is not dependent thereon."
IMPACT ON CITY RESOURCES
The entire cost for preparing the environmental document ($246,587.65) will be reimbursed to the City by the Developer as well as the costs ($24,658.17) to cover City staff management of the consultant contract and environmental process.
This item requires 5 affirmative votes for approval.
ATTACHMENTS
1. Location Map
2. Proposed Land Use Map
3. Professional Services Agreement with Precision Civil Engineering
4. Deposit and Reimbursement Agreement with Tavares 2015 Trust