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Pleasanton: Council approves plans to continue Costco development project

Also: LPFD labor contract is finalized, mental health crisis program could begin in September
PLS Costco Site
The Johnson Drive Economic Development Zone is proposed to be located southeast of the I-580/I-680 interchange in Pleasanton. Costco and a hotel developer are aiming to build on the 20-acre vacant portion (in yellow oval) near the top right of this aerial photo.

The Pleasanton City Council approved the revised traffic mitigation plans and proceedings to carry out the construction of a Costco in Pleasanton during its July 19 council meeting.

Jenifer Murillo, director of real estate at Costco Wholesale, told the council that off-site improvements are the leading factor in determining when residents will finally see the Costco store with gas station in Pleasanton. But now that the company is proceeding with the current construction bids, Murillo said residents can expect roadwork to begin within the next few months.

"We need to get a little bit of a head start for the off-site improvements, but we have started the design for the warehouse," she said, adding that construction will be ordered to begin during dry season because of restrictions due to the creek next to Johnson Drive.

Pleasanton's first-ever Costco store would be part of the city's Johnson Drive Economic Development Zone, a project aiming to redevelop approximately 40 acres of land fronting Johnson Drive, near Stoneridge Drive and Interstate 680.

Costco is a landowner within the project area and is looking to construct a new store on the property. The project has been in the wings for nearly a decade in a public process that included an opposition measure that lost at the ballot box, two lawsuits and years worth of city review and council hearings.

Costco and the city received a favorable ruling from the state appellate court over the final lawsuit earlier this year.

The project includes public street improvements to reduce the impact of traffic from the new land-uses. In 2018, the city agreed to reimburse a portion of the design and construction costs with traffic impact fees and a portion of the sales tax revenues generated by the proposed Costco store, with Costco fronting a portion of the overall roadwork costs -- in addition to its own share.

The council decided to continue moving forward with construction at a higher cost and acquiring the right-of-way needed to construct the traffic mitigation measures. The overall estimated costs have increased from $21.47 million to about $33.5 million since 2017 "due to the time elapsed since the agreement was executed," according to a city staff report.

The report states that the bids received in April were significantly higher than the planning level estimate prepared in 2017 and discussed within the 2018 agreement.

Because of the increase to the original cost estimate, city staff included cost overruns -- which occur when unexpected change in the project budget ends up increasing the total project cost -- in their update to the council last week.

Those cost overruns led to changes to the city's agreement with Costco including an amendment that will "modify the cost overrun provisions of the 2018 Agreement so that instead of being required to make direct reimbursement of the Cost Overruns within 60 days of approving the final Cost Certification, a portion of the Cost Overruns will be included in the loan amount."

The loans will be included in the reimbursement agreement between the city and Costco for design and construction of the roadwork

City engineer Steve Kirkpatrick told the council that when the project is complete, city staff will review a final cost certification that he says is projected to be lower.

"We have a 10% construction contingency, which is almost $2 million," Kirkpatrick said. "A lot has gone into these plans so we expect the final cost estimate to be or the final cost certification to be a little bit less than you see."

Vice Mayor Valerie Arkin did express some level of concern about any possible additional costs that could come from construction, but Kirkpatrick assured her that splitting the cost overruns with Costco will help cover any additional costs.

In other business

* Councilmembers approved the updated labor contract between the Livermore-Pleasanton Fire Department and the local firefighters union.

The proposed tentative agreement between the department and the union includes 13% worth of general wage increases spread over 3-1/2 years, a paramedic premium increase pay from 8% to 10%, short-term staffing policies and a comprehensive drug- and alcohol-testing policy.

"I hope that this will be the start of a positive productive partnership so that they'll continue to provide excellent services to our community, especially now as we enter into the fire season," Councilmember Kathy Narum said.

The council unanimously supported the proposed contract during a special meeting last month, which was meant to introduce the new agreement publicly so that councilmembers can take a final vote at the July 19 regular meeting.

The Livermore City Council approved the agreement during its June 27 regular council meeting and the International Association of Fire Fighters Local 1974 membership ratified the contract on June 18.

In the new agreement, set to run until June 30, 2025, LPFD employees will see a 5.5% increase in their salary starting the first full pay period after the contract is approved. In 2023, the increase will be 3.5%, followed by a 3% increase the next year and a 1% increase in 2025 -- to get to the full 13%.

The average pay will go up to a maximum of $121,680, according to the Pleasanton city staff report. By the end of 2025, that number would go up to $131,019. Employees would advance one salary step in their respective jobs until they reach the top step of the applicable salary range.

The three-year financial impact to the LPFD budget is approximately $6.57 million through June 2025 and will be shared between Livermore and Pleasanton, according to the city staff report.

Negotiations have been underway between LPFD and Local 1974 since July 2021 when the prior contract term ended that December.

Other pay-related changes in the contract are the bilingual and education incentive pay. Those who are fluent in multiple languages will receive $45 per pay period and employees who complete courses to get degrees will get an incentive pay monthly ranging from $100 to $175 depending on which degrees they obtain.

* The council approved a second reading of specific language on how the department will use the armored vehicle and robots during community events.

Councilmembers first endorsed an ordinance last month that will continue allowing the city's police department to use military or specialized equipment for regular and promotional use.

The ordinance is part of Assembly Bill 481, which was signed by Gov. Gavin Newsom last September, requiring police departments in California to keep a running list of what is defined as military equipment for oversight by local governing bodies, which now have to approve or reject the use of such equipment by local law enforcement.

Military equipment, as defined by AB 481, does not necessarily indicate equipment used by the military. Items deemed by the bill to be "military equipment" include robotic vehicles, armored rescue vehicles, tear gas, less-than-lethal weapons such as beanbag shotguns, 40-millimeter projectiles and noise/flash diversionary devices.

During the second reading of the ordinance on June 21, most of the conversation revolved around the armored rescue vehicle. Arkin was the main dissenter on using the vehicle in ways like bringing it to parades and other community events saying it does not belong around kids.

That led to city staff preparing a separate ordinance amendment specifying that the vehicle, along with bomb diffusing robots, may be authorized to use at community events and city- sponsored events by the chief of police.

* Pleasanton will be entering into an almost $779,000 agreement with the Bonita House so the organization can provide clinician services for the "Alternate Response to Mental Health" pilot program.

The program first started in the summer of 2020 after Pleasanton residents expressed support to strengthen the response to those in mental health crisis by sending mental health clinicians to police calls regarding people suffering from mental health issues.

The Bonita House, which is a private nonprofit mental health agency that offers services for adults diagnosed with co-occurring psychiatric disabilities and substance use disorders, was the only place that responded to the city's requests for a partnership. The agreement states that the organization will provide two mental health clinicians to join the Alternate Response to Mental Health program.

Councilmember Julie Testa said she is familiar with the Bonita House and has a lot of faith that they will best serve the Pleasanton community.

"I'm excited to have this program coming forward and finally going to be serving our residents in need and crisis," Testa said.

Narum added by saying she is particularly excited on how the program will also serve students in need of mental health at school.

The council previously appropriated $800,000 to the Alternate Response to Mental Health program. The next steps will be recruiting the clinicians in August so they can begin work in September.

* Pleasanton will see an increase in costs for burying their loved ones following the council's decision to approve the master fee schedule for the Pleasanton Pioneer Cemetery.

Purchase prices have been set for burial plots and service fees in the cemetery by the council after the city purchased the cemetery in 2006.

According to the report, the prices for casket burial plots will increase by $125 and the cremation burial plots will increase by $67. Single caskets or cremation will increase by $50.

"The proposed updates to the fee schedule off-set direct fee increases from the contractors who provide burial services, dig the graves and maintain the cemetery grounds," according to the staff report.

* The City Council approved the purchase of three new fire engines for the LPFD to replace the ones currently being used.

According to the city staff report, the three current engines are, "experiencing compromised reliability issues, which has led to costly maintenance requirements and excessive down-time."

"From January 1, 2017 to June 17, 2022, the city's mechanic shop has spent a combined total of 705.5 staff hours and $89,320 in maintenance costs on these fire engines," the report reads.

The city will be using money from its 2022-23 fire repair and replacement budget to cover the total cost of almost $830,000. Staff are recommending a 10% contingency in case of unforeseen circumstances bringing the total to almost $913,000.