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HomeMy WebLinkAbout08/30/2013 B A K E R S F I E L D /s/ Steve Teglia Committee Members: Staff: Steven Teglia Willie Rivera, Chair Assistant to the City Manager Ken Weir Terry Maxwell AGENDA SUMMARY REPORT SPECIAL MEETING OF THE BUDGET AND FINANCE COMMITTEE Friday, August 30, 2013 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue Bakersfield, CA 93301 The meeting was called to order at 12:02 p.m. 1. ROLL CALL Committee members present: Councilmember Willie Rivera, Chair Councilmember Ken Weir Councilmember Terry Maxwell Staff present: Alan Tandy, City Manager Virginia Gennaro, City Attorney Rhonda Smiley, Asst. to the City Manager Joshua Rudnick, Deputy City Attorney Steven Teglia, Asst. to the City Manager Andrew Heglund, Deputy City Attorney Chris Huot, Administrative Analyst Raul Rojas, Public Works Director Nick Fidler, Asst. Public Works Director Sandra Jimenez, Asst. Finance Director Don Anderson, Real Property Manager Ted Wright, TRIP Manager Tera Loveless Ortiz, TRIP Roberta Gafford, City Clerk Julie Drimakis, Asst. City Clerk Others present: Bill Knoetgen, Parsons Program Manager Greg Gharib, Parsons Sr. Contracts Officer Bob Scales, Parsons John and Randy Giumarra Theo Douglas, Bakersfield Californian AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 2 2. ADOPT JULY 29, 2012 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS None 4. DEFERRED BUSINESS A. Discussion regarding Funding for TRIP Projects City Manager Tandy introduced Bob Scales with Parsons, who provided an overview on the process of calculating traffic projections. Mr. Scales gave a detailed overview of the process for conducting traffic studies for State road projects. The Federal Highway Administration (FHWA) sets forth the rules and guidelines on a project that will require an environmental impact report or environmental impact study. Travel demand forecasts need to be based on regionally-adopted land use forecasts, and also a regionally-approved travel demand forecast model. The Kern Council of Governments (KernCOG) is responsible for these forecasts, and has prepared them for approximately 30 years. Land use forecasts are updated bi-yearly and the travel demand forecast model is updated every four to five years. Both reports were updated when the TRIP Program was initiated. These reports also provide the basis for the Metropolitan Transportation Impact Fee calculation, and for determining how large roads need to be. The FHWA will ensure that the land use forecasts are reasonably done and examined prior to them being used for analysis for specific projects. Mr. Scales distributed a handout that included maps showing where population, housing, and employment growth is expected to occur. The data reflects housing growth to take place primarily in the northeast, northwest and southwest part of the City, and employment growth, to the west. The travel forecast model for the 24th Street widening and Centennial Corridor passed an FHWA peer review. The data reflects that most eastbound and westbound traffic travels on 24th Street. It also shows that if 24th Street is not widened, the traffic volumes will become so burdened that drivers will find alternative arterials to use, and further burden those roadways. A similar circumstance will occur if the Centennial Corridor is not built. Committee member Maxwell asked about the housing expansion on the east side of the City. Mr. Scales said that there is a great deal of land in that area that is entitled. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 3 Committee member Maxwell noted that, according to the maps, most of the job growth will be taking place in the west; meaning that a lot of people do not live near where they work and have to transit across the City. Committee member Maxwell asked if there was an economist working on the team. Mr. Scales said that there is not; but he, as an engineer, successfully prepares forecasts. KernCOG engineers prepare the majority of forecasts in this area, and their reports are consistently accurate. Committee member Maxwell stated that his intent is to understand the process, and ensure that the information is accurate. Committee Chair Rivera called for a report on the Centennial Corridor. Mr. Scales provided a map of the Centennial Corridor that displayed the forecasted traffic patterns, and it showed a slightly increased volume on 24th Street, but significantly reduced volumes on Rosedale Highway and State Route 99. In the design year of 2038, 60,000 vehicles will be traveling in each direction per day between State Route 99 and Mohawk Street. In the same time frame, west of Mohawk Street, there will be 190,000 cars per day. Public Works Director Rojas stated that, as a frame of reference, State Route 99 between Olive Drive and White Lane currently carries about 100,000 vehicles both ways combined. City Manager Tandy said that when a road is built, there has to be justification based on a demand 20 years in the future. Funds can only be distributed by the FHWA if the model is used. Mr. Scales said that the daily forecast of traffic on 24th Street is 90,000 in the design year. The volume was less than 40,000 in 1986 and has increased to approximately 62,000 vehicles now. Now that the Westside Parkway has opened, the volumes are steadily increasing on 24th Street, as motorists use the roadway to connect to the Parkway. Committee member Maxwell indicated that the data appeared to show that the traffic volume on 24th Street had decreased, but Public Works Director Rojas clarified that there was a slight reduction on one segment only. Overall, the volume is increasing. Committee member Maxwell asked if staff was planning to perform another traffic study in the near future. Public Works Director Rojas said that the data has been finalized for the Environment Impact Report (EIR), and there are no plans to conduct another study. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 4 Committee member Maxwell asked how long it takes to do a traffic volume study. Mr. Scales said that a traffic count typically takes a couple of weeks. Public Works Director Rojas said that a full traffic study takes about six to nine months. Mr. Scales reported that he is confident in the accuracy of the current report. Committee Chair Rivera called for discussion on item number two. City Manager Tandy reported that this information reflects the cost of building a mile of freeway. Item number three contains data regarding the budget to determine the number of parcels on 24th Street that would need to be purchased, and then to purchase that right-of-way. Committee Chair Rivera called for discussion on item number five, City Manager Tandy stated that this item was initiated by Committee Chair Rivera, who wanted an assurance that rebuilding, construction and maintenance of local roads would not decrease as a result of the financial commitment to TRIP projects. As reported by Mr. Scales, if these projects are not built, the demands on the local roads will be greater and the deterioration of them will accelerate with the additional traffic. Staff suggests revising the current Council goal on the matter to indicate that “As the City continues to transition through the TRIP projects, the City Council has a strong desire to retain and see historic levels and support for street maintenance, resurfacing and road construction projects for all road related purposes.” Staff acknowledges that this is a priority, and interprets it as a directive to follow when preparing the budget. Committee Chair Rivera was supportive of the suggestion. City Manager Tandy suggested that this information be incorporated into the future report to Council. The motion by Committee member Weir was unanimously approved. Committee member Maxwell noted that the Gas Tax and Transportation Development Fees are delineated in the report; however, he did not see a figure for the Utility Fee, which will also be a source of funding. Assistant Finance Director Jimenez later reported that it is combined with other funds within the Budget and CAFR; however, the information contained within the meeting packet does list it separately. Public Works Director Rojas confirmed that it was instituted following the rejection of the one-half cent sales tax initiative, and it is dedicated to roads. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 5 Committee member Weir noted that it was initiated at a time when the City was considering increasing the Transportation Impact Fee from $7,000 to $12,000, and the Council believed the Utility Fee was a better alternative than expecting local builders to carry the entire burden. Committee member Maxwell asked if the City will get a credit from the State or Federal government for collecting those funds. Public Works Director Rojas said that there are no credits, but the City can use it to leverage over $800 million in road monies. City Manager Tandy added that it will also be used as part of the required local match. Committee member Maxwell asked if the amount of Gas Tax funds is decreasing. Public Works Director Rojas said that there are fewer revenues, but only as it compares to a repayment of Proposition 42 monies by the State a few years ago. Committee member Maxwell noted that the fund balance in Fiscal Year 2011/12 was higher than the current amount shown. He asked if the fund was stable, and how the monies are used. City Manager Tandy explained that staff has been incrementally transitioning personnel and operating costs away from Gas Tax funding, so that when bonds are issued, there is not a sudden increase in General Fund liabilities. Additionally, funds are allocated prior to the bid award for a capital outlay project, and are then slowly depleted as the projects progress. It is not unusual to see increases and decreases in capital outlay funds. Committee member Maxwell asked about the amount of $19.87 million that has been budgeted each year. City Manager Tandy responded each project has its own timeline for construction, and each is in various stages of the process. What is not spent this year will be carried over until next year. Public Works Director Rojas added that funds were saved for approximately three years prior to the Coffee Road Bridge being built. Committee member Maxwell asked if the process was at the stage where the Hoskings Road interchange could be bid. Public Works Director Rojas said that it is. Committee member Maxwell asked for a 33-year history of the different funds, and what the future projection might be for each. Staff did not have that information on hand. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 6 City Manager Tandy explained that in order to apply for and receive a TIFIA loan, the same thorough evaluation is performed by the rating agencies as would take place before issuing standard municipal bonds. It is an exhaustive review of current and projected revenue streams and whether or not municipalities are in complete control of their revenue streams. The information is then checked from multiple perspectives; and if there are any questions or insecurities, funds will not be loaned and bonds will not be issued. Committee member Maxwell noted the deferral of $2.4 million for the State Route 58 Gap Widening project, which is the local match that will be deferred for three years, as the City will use Federal grant funds during that time. He asked if $270 million would cover all projects. City Manager Tandy said that the $270 million is for all of the remaining projects, and it is a combination of the local match and any overage beyond the Federal grant. In this case, the bonds would generate the necessary cash to pay back toll credits. Ms. Budak reported that the amount of money available on the earmark stays the same, the cost of the project stays the same, and the local match requirement stays the same. Instead of using the Federal percentage, which is usually 88.11%, on this project up front, staff is using 100% of the Federal grant funds; so as it is time to fund the next project that is in line, the difference will be paid with local dollars. City Manager Tandy confirmed that the costs are not increasing. This method will effectively reduce the total interest costs. Committee member Maxwell reported that after driving in the area in question, that 7th Standard Road might be a better connector, based on distance and driving time. He asked if this option had been considered. Public Works Director Rojas said that it was considered in a systems study that was prepared by KernCOG in the early 2000’s. It was rejected because the results of the study reflected that this route would cost a great deal more than the route that was ultimately approved by Caltrans. Committee member Maxwell said that he had a conversation with the Caltrans District Director about the requirements for merging two freeways. Public Works Director Rojas replied that the option of redirecting traffic from State Route 58 to 7th Standard Road by way of State Route 99 would overload the traffic capacity for State Route 99. The option was studied, and it was rejected. In order to accomplish that, construction of six additional lanes would be required, and the cost is too great. Committee member Maxwell asked how $29 million had already been spent on the 24th Street Widening project. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 7 Public Works Director Rojas stated that the amount covers contracts signed and funds expended to date. Ms. Budak replied that this amount covers the environmental work, design and purchase of right-of-way. Committee member Maxwell noted that the Hoskings Road interchange and State Route 178 Widening will cost $92 million. City Manager Tandy said that the environmental work, design and property acquisition have already taken place. Public Works Director Rojas said that the environmental work and design cost approximately $4 million, but property acquisitions and donations are close to another $10 million on the Hoskings Road Interchange project. The environmental work and design on the Rosedale Highway Widening project will be more expensive than the physical construction. Committee member Maxwell asked that if a loan was not secured, would the funding from the three designated sources be enough to dedicate to the Hoskings Road Interchange project in the next year and a half to two years. City Manager Tandy replied that the widening of Highway 99, north and south, will be funded by a bond measure approved by a previous California State Legislature. Those and any other projects currently funded by those bond monies must be complete before new projects can be added to the list for funding. A request was made to KernCOG to assist the City to add the Hoskings Road Interchange project to a future list. Staff will monitor the situation. An application was also made for a Federal Tiger Grant. If neither method is successful, staff will apply for a TIFIA loan. Committee member Maxwell noted that funds have already been spent on the 24th Street Widening and Centennial Corridor projects, but the Environment Impact Reports are not yet finalized. He asked at what point a decision may be made to not expend additional funds on them, as the City may not be in a position to obligate a repayment of those funds over 33 years. City Manager Tandy said that there is a no-build alternative for each project. Under various circumstances, there may not be an obligation to repay the Federal government; however, if a decision is made by a political body to simply halt the project based on personal preference, for example, approximately $80 million would have to be repaid. This only applies to those projects funded by Federal earmarks. Committee member Maxwell asked about the possibility of a public vote, and the potential repercussions from a negative outcome. Randy Giumarra spoke in support of TRIP funding, and about some benefits to the Hoskings Road Interchange project. The retail establishment that has been proposed for that area is to be one million square feet, which will be anchored by Bass Pro Shops. All preliminary work has been done, and the project is ready for AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 8 construction. The owners of Bass Pro Shops are committed to building on the site; however, no construction will begin until a financial commitment is made for the Interchange to begin. Committee Chair Rivera called for the next agenda item. NEW BUSINESS A. Discussion regarding a Possible Ballot Measure Committee member Maxwell asked if the 24th Street Widening and Centennial Corridor projects could be separated from the other remaining TRIP projects for a validation action, and what the timeline would be for such an action. City Attorney Gennaro said that if the City Council was to authorize a validation action in the latter part of September or early October, the outcome should come by the early part of next year. Committee member Weir said that if there is opposition, then the process may take an entire year. City Manager Tandy gave the staff presentation. The TRIP money came in the form of four separate earmarks, two of which were dedicated to the Centennial Corridor and two were dedicated to other groups of projects. Earmark funding cannot be moved between projects. When the earmark funds have all been spent, the City is obligated to pay whatever amount may remain. The 24th Street Widening and the Rosedale Highway Widening projects are combined under one earmark. The TIFIA loan financing will cover some of the City’s financial obligation. The Centennial Corridor project is the largest project, has the largest earmark, and will incur the largest financial obligation from the City. In January, 2008, the City Council voted to support the TRIP projects through to completion, and accept $626 million in Federal funding. All decisions made by the City Council have been in support of the TRIP program. The cost estimates that were presented to the City Council were accurate. The bond issuance was estimated to be $246 million. In five and one half years, that amount has grown to $270 million. The earmark funds are time sensitive, and must all be committed by September, 2014. Anything that causes a delay puts more money at risk, both by the potential loss of the earmarks and the possibility of having to repay some of the funds already received and spent. It would also open the funds up to possible raids by other jurisdictions. Staff constantly asks Caltrans for prioritization of time, energy and effort to complete the remaining environmental documents. Should the issue be put to a vote at this point, staff would expect Caltrans to then set everything aside, which would cause serious delays. AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 9 Separating the projects might financially benefit the Hoskings Road Interchange project and the projects on State Route 178; however, all information regarding the projects, such as routes, timeline, costs, and funding has to be disclosed at the onset. This information is also necessary for the TIFIA program or a standard municipal bond issue, for rating purposes. Committee member Weir verified that if one project was separated out, and the validation process was successful with the remaining projects, the revenue funds would be pledged for other sources. City Manager Tandy added that there must be full disclosure of the City’s long-term plan to the rating agencies, TIFIA agents and City citizens. If anything even seemed to be inconsistent, it would give the appearance of impropriety. Committee member Weir confirmed that if there is an election and the remaining projects die, then what is left is a dysfunctional and ineffective system. City Manager Tandy added that when Mr. Scales prepares the models, the traffic carrying capacity for each of the planned projects is built in. When staff goes through the procedure to establish traffic development fees, everything is based on the model. An example is the requirements that were imposed upon the West Ming development assumed completion of the TRIP projects. Public Works Director Rojas said that the impact fees and traffic studies that were done for those developments become invalid without the data compiled for the TRIP projects. Committee member Weir asked if projects would be removed from the TIF list under those circumstances. City Manager Tandy said that staff would have to re-calculate the data and create a new model with the changed assumptions. Public Works Director Rojas agreed that the staff would have to go through the process again to create a new list. Some projects would be eliminated, while some might be added. It is a lengthy and intensive process. Committee member Weir stated that while he is not against putting issues up for a vote, the time would have been when the TRIP program was instituted. The City Council has voted on every aspect of the program from the beginning, and each time, the outcome was unanimously supportive. While citizens were inconvenienced for periods of time, they are happy with the results. Committee member Maxwell asked why there was no vote or bond issuance in 2008. City Manager Tandy replied that it was a once in a lifetime opportunity to obtain Federal money, and then leverage it for additional funding and grants. It was very controversial at the time, with several other jurisdictions voicing displeasure because they did not receive it. Had the issue gone to a vote, Bakersfield would have lost the funding. Attempts to raid the funds continue. Should there be any sign of AGENDA SUMMARY REPORT Budget and Finance Committee Meeting Friday, August 30, 2013 Page 10 uncertainty on the part of the City Council, the funds will be vulnerable to raid by those jurisdictions, and possibly other members of Congress. Staff has been advised to commit the funds and work diligently to complete the projects, which has been challenging in the face of continual delays by Caltrans and the FHWA. Committee member Maxwell asked why there was no validation process, as there has always been the possibility that the makeup of the City Council would change and there would be questions as to why the City would spend $600 million over a 33- year period when there are existing roads in need of repair. Public Works Director Rojas said that there is a very short timeframe in which bonds funds must be utilized. As those funds would need to be used first, the Federal funds would not be used initially, which would have subjected them to the aforementioned potential raids by other jurisdictions. City Manager Tandy reported that the municipal bond marketers will not provide bond funds to build a project for which the engineering work is not in an advanced stage. In 2008, most of the projects were not under design yet; so those issuing the funds would have had no assurances that the projects would come to fruition, and, therefore, would not have issued the funds. City Attorney Gennaro asked if a presentation would be made to the entire City Council on September 11th or on September 25th. The motion by Committee member Maxwell to bring the issue back to the full Council on September 25th was unanimously approved. 5. COMMITTEE COMMENTS None 6. ADJOURNMENT The meeting adjourned at 2:00 p.m.