HomeMy WebLinkAbout07/15/2014 09 North First Street Project Funding StrategyBUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 9.
For Meeting of: July 15, 2014
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ITEM TITLE: Consideration of Funding Strategy for North First Street
Project
SUBMITTED BY: Debbie Cook, Director of Engineering and Utilities
Cindy Epperson, Finance Director
Joan Davenport, Acting Director of Community Development
& Strategic Project Manager
SUMMARY EXPLANATION:
The City has recently been informed by YVCOG that the $2,718,000 STP grant for Phase 1 of
the North First Street Improvement Project will be delayed by one year and thus not be
available to the City until 2016. This memo presents several options for addressing the project
to avoid delay.
Resolution: Ordinance:
Other (Specify):
Contract: Contract Term:
Start Date: End Date:
Item Budgeted: NA Amount:
Funding Source/Fiscal
Impact:
Strategic Priority:
Insurance Required? No
Mail to:
Phone:
APPROVED FOR
SUBMITTAL:
RECOMMENDATION:
Improve the Built Environment
City Manager
Review report and provide staff direction
ATTACHMENTS:
Description
memo n first street improvement
Upload Date
"7/10/2014
Type
Cover Memo
MEMORAND UM
TO: Honorable Mayor Cawley and Members of the City Council
FROM: Joan Davenport, Acting Community Development Director &
Strategic Project Manager
Debbie Cook, Director of Engineering and Utilities
Cindy Epperson, Finance Director
DATE: July 15, 2014
SUBJECT: Funding Strategy for North First Street Improvement Project
On June 11, 2014, City staff presented a memo to Council regarding the potential
consolidation of Phases 2 and 3 of the North First Street Improvement Project (including
new sidewalks, street lighting, landscaping, selected utility line undergrounding, water
line replacement and other amenities) so that these phases could be funded by a City
General Obligation bond of approximately $8 million, while Phase 1 remained funded by
an Surface Transportation Program (STP) grant and City matching funds. This strategy
would allow the Project to be constructed in two simultaneous projects over
approximately 3 years versus 6 to 8 years if the City had to rely upon grant funding to
complete the North First Street project. City Council indicated they would like additional
information, but expressed strong support for the improvement project and its completion
in a timely manner. Funds received from the Lincoln Avenue Underpass legal settlement
of $500,000 could also be dedicated to the North First Street Improvement project.
Unfortunately, the City has recently been informed by YVCOG that the $2,718,000 STP
grant for Phase 1 will be delayed by one year and thus not be available to the City until
2016. Given the change in timing for the STP grant, Staff requests Council to consider
the following funding strategies:
• Short term interfund loan from City Reserves + General Obligation Bond + STP
Funds. This strategy would use a short term interfund loan of $2,718,000 from the
City Reserves (which is $8.9 million in General Fund Reserves) to fund Phase 1, and
a General Obligation debt issuance of approximately $8 million of councilmanic
bonds which could be used to fund Phases 2 and 3. When the STP funds become
available in 2016, they will be used to repay the short term loan. This strategy allows
all the current planning, design and proposed timing to remain in place, and protects
against comingling of City and STP funds. The $2.7 Million represents 27% of the
available General Fund Reserve — however the City has other investable reserve
funds.
• Use STP funds to complete the project instead of start it + General Obligation
Bond. This strategy would use the City's $8 million in General Obligation debt
issuance to fund the first $8 million of the project. The STP funds would be used to
complete the project when they become available in 2016. Given the STP funding
delay, Staff anticipates that YVCOG would be amenable to the scope revision so long
as the amount of funding ($2,718,000) remains the same. If the Council favors this
strategy, confirmation from YVCOG will be obtained. It is not anticipated that this
strategy would extend the total duration of the project, however, in order to protect
from comingling funds, final phase of the project (that covered by STP funds) would
be bid in 2016 instead of 2015.
Funding Background
In 2010, the City received a $25,000 Strategic Investment in Economic Diversity (SLED)
Grant to begin the planning of the revitalization of the North 1st Street corridor. In 2012,
the City was awarded a $250,000 Surface Transportation Program (STP) grant to design
the first phase of this project from 'N' Street to SR 12. STP funds are federal funds
allocated to Yakima County, then awarded to individual community projects on a
competitive basis through the Yakima Valley Conference of Government (YVCOG).
Since STP funds require a 13.5% match, the City is required to supply $39,017, making
$289,017 the total amount available for preliminary engineering. In January, 2013 the
City was awarded $2,718,000 of STP funds for construction of this first phase of the
North First Street Revitalization Project. However, as previously discussed, these funds
have been delayed and will not be available to the City until 2016. Including the City's
match of $424,200, the total amount available for construction of this phase is
$3,142,200. This amount is unaffected whether the Council prefers to use a short term
interfund loan from City reserves to fund Phase 1 or to pursue using the STP funds to
complete the project instead of funding Phase 1.
A City General Obligation debt issuance of approximately $8 million councilmanic
bonds could be used to meet the remaining funding requirement of reconstructing North
1st Street. The City has the capacity to issue $8 million in debt without any fee or tax
increases. Annual debt service for a 20 -year bond for $8 million would be approximately
$615,000.
Whatever scope of work that is funded by Federal money (STP) will have significant
administrative restrictions and requirements that are not present for City funds. Thus, we
recommend that the STP funded scope of work be designed and constructed separately
from the scope of work that will be funded by City funds.
Requested Action:
1. City Council consideration and direction to staff to pursue the Council's preferred
consolidation of Phase One; or
2. City Council may wish to discuss using City General Obligation debt issuance of
approximately $8 million to meet the remaining funding requirement of
reconstructing North 1st Street; or
3. City Council may wish to discuss using a short term interfund loan from the
City's reserves of $2,718,000 which would be reimbursed by STP funds in 2016
as well as debt issuance of approximately $8 Million.
The Council's preferred actions will be brought back by Resolution to the City Council at
a future City Council meeting.