HomeMy WebLinkAboutAgenda Bill Item 8 R, •
CITY OF PETALUMA, CALIFORNIA
AGENDA BILL
•,Agenda Title: Payran Reach Flood Management Project Meeting Date:
Financial Alternatives Analysis January 16, 2001
Departments: Direcfors: - Contact Persons: Phone:Numbers:
City Manager& Paul Marangella Paul Marangella 778-4581
Water Resources Tom Hargis Tom Hargis 778-4304
Cost: Project Cost: $34.986 Million Amount Budgeted: $34.986
Project Revenue: ($34.986) Million Account Number: Various Funds+
Funding Gap:. $ 0 PCDC Fund 902
Attachments to Agenda Packet Item:
None
Summary Statement: With the:passage of the Water Resources Development Act.of 2000 (WRDA
2000), the City of Petaluma received a Federal authorization for the Payran Reach Flood Management
Project of$32.2 Million. This action fundamentally altered the Project Cooperation.Agreement between
the U.S. Army Corps of Engineers and the City. The question is no longer "if' the Federal.Government
will pay for 65% of the eligible project costs, but"when" the funds Will be received.
The purpose of this item is to provide the City Council with an,analysis,6f financial alternatives should
there be a delay in securing:
• • reprogrammed funds from the Corps of Engineers in FY 2000-01, and/or
•. a Congressional appropriation in FY 2001-02.
These alternatives include: -
Option I: Status Quo—No Additional City Financing/Pursue:Legislative Program
Option II: City-Provided Interim Financing
Option III: Establishment of Benefit Assessment District
Advantages and disadvantagesfor each option are discussed.
Council Priority: THIS.AGENDA ITEM IS CONSIDERED TOBE:.PART OF;,OR"NECESSARY To, ONE OR
MORE OF THE 1999-2000 PRIORITIES ESTABLISHED BY THE CITY COUNCIL ON JANUARY 30, 1999.
Priority: Establish Revenue Recapture and Regeneration Program
Recommended City Council Action: It is recommended that the City Council provide policy direction
as appropriate.
Reviewed by Finance Director: Reviewed by City Attorney:. Approved by City Manager:
Date: Date: Date:_ /
• Today's Date: Revision # and Date Revised: File Code:
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CITY OF PETALUMA, CALIFORNIA •
JANUARY 16,.2001
AGENDA'REPORT FOR
PAYRAN.REA CH FLOOD MANAGEMENT PROJECT FINANCIAL
' ALTERNATIVES'.ANALYSIS
1. EXECUTIVE SUMMARY:
With<the passage of the Water Resources Development Act of 2000 (WRDA 2000), the City
of Petaluma received'a Federal authorization for the Payran Reach Flood Management Project
of$32.2 Million. This action fundamentally altered,the Project.Cooperation Agreement
between the U.S'. Army Corps of,Engineers and the City. The question is no longer"if" the
Federal Government will pay for 65% of the eligible project costs, but "when"the funds will
be received.
The purpose' of this item is to provide the City Council with an analysis of financial
alternatives,shduld there be a,delay in securing:
• reprogrammed funds from the Corps of Engineers in FY 2000-01, and/or.
• a Congressional appropriation in FY 2001-02.
2. BACKGROUND: •.
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Escalating'Project.Costs; The cost of implementing the Payran Reach Flood Management,
Project has risen;from the $8.2'Million cost estimated by the US Army Corps of Engineers in .
1988 to $17:8 in 1.993 to $34.986 Million today.
Project Authorization Obtained:- Last February, the City of Petaluma began a legislative
advocac yP g ro ram to secure additional Federal funding for the project. City officials traveled
to Washington D.C. seven, times,to meet with the Deputy Assistant,Secretary of the Army
Congressional leaders and their Committee staffers in an effort to secure-additional Federal
funding for the-project .A total of-$32.2 Million was authorized,for the project under the
"Water Resources Development Actof 2000".
FY 2001-02 Project Appropriation: Last December, the City Council directed the City
Manager to pursue the second phase of a legislative advocacy strategy to secure an
appropriation in the FY 2001-02 Federal Budget. This will require gaining Pentagon, White
• House (OMB) and Congressional support. If'this second phase is successful, new project
funding will be available on,October 1,2001, with'construction to follow in the summers of
2002 and 2003. .
FY 2000-01 Reprogramming: The City Council also directed the City Manager to pursue
$2.8 million:in interim Federal funding for the project by requesting the U.S. Army Corps.of
Engineers reprogram funds for the completion of Contract II, the "Transition Channel", and •
the design'ofthe rail bridge's.
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Project Timeline
The reprogramming would allow several critical steps to happen as follows:
A. The Corps could complete its design of the Transition Channel by the end of
• February 2001.
B. The Corps could'thenseek_bids for both-the completion of Contract II (Flood Walls/Pump
Station) and the construction of Contract III (Transition Channel), awarding bids by the
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end of April2001'_
C. Construction couldibegiri when the "fish window"opens in July 2001 with completion by
October 2001.. •
D. Meanwhile, from January 2001 through January 2002 the design and engineering of the
railroad bridges could, be completed such that when "regular" Congressional
appropriations are approved for FY 2002, construction of the rail bridges could be
completed by October 2003.
3. ALTERNATIVES:
The City Council has asked for an analysis of options should either the reprogrammed funds
or a new appropriation be delayed.
Option I: Status Quo—No Additional City Financing/Pursue Legislative Program
Under this scenario, the City Council maintains its current position that no additional City
funds be provided for the;project The City would emphasize the following points in an •
intensified legislative advocacy program:.
• Under WRDA 2000, the,Federal•government,has.modified its relationship with the
City of Petaluma and acknowledged its increased responsibility for the project. The
project is not a:"new start"but a continuation projecf..,.Both Houses of Congress have
passed report language urging the Corps of Engineers to reprogram funds to continue
the project.
• Under WRDA 2000, the City has already exceeded its;share of cost-by approximately
$11.8 million.. In effect; the City is providing the cash-flow for a Federal flood
project at the expense of other City priorities. .
Advantages: This approach is consistent with everything`previously said to Congress, the -
Corps of Engineers,:OMB, and the community. Maintaining this position sends a clear
message that the City cannot assume any further financial responsibility for the project and
that the Federal;government must provide its fair share of financing to complete the project.
The approach,conserves'City resources for other priorities.
Disadvantages: Construction could be delayed thereby increasing project costs. Also,while
waiting for Federal funding to arrive, a 30-year flood event could exceed the project's current
• flood capacity;.dausing millions of dollars in damage-and human suffering:.
3.
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• Option IL City-Provided Interim"Financing,
Under this scenario, theCity would provide $2 million,ihfinancingto complete=the current •
Phase of the projecYand construct the "Transition Channel".
:Advantages: This approach"would ensurethattprogress•on the,project would-continue this
summer; after which'only the rail bridge's WOUld remain for construction. The current project
cost estimates could be maintained. :Residents,of therPayranneighborhood would be
reassured by the progress. - -
Disadvantages;- This approach'is>inconsistent with the City's message measage,:ter.COngfeSa.the
Corps of Engineers, 01V113-andthe,community: The changerin message undermine the
City's efforts to obtain both reprogrammed=fun'ding in the current year•and an FY 2001-02
Federal.appropriation by_introducing the notion.that the City could continue to provide the
cash=flow to-the project and receive reimbursement at the end. This`would;allow Federal
legislators to address other pressing Federal projects,,putting off'consideration of the City's
project until the future. Support and momentum.achieved with Congress±.and the.Corps would
be diminished. 'Finally, completing the "Transition Channel" provides;onlawnarginal -
irnprovementto the flood capacity ofthe5channel: Significant improvement:occurs only when
the railroad bridges"are constructed':.
• OptionIlT: Establishmenfof BeiiefttAssessment.District •
Undertthis scenario, the City would establish�a<benefit•assessment district:for properties,
• located.in;the flood'plain. .Funds from the assessment could'be used.to;finance:all o part
the City's'ishare:of the cost of the flood improvements. It is uncertain whether the assessment
could"offset/reimburse previous project expenditures incurred by the City: However; the
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assessment could finance prospective expenditures.
Advantages:, This approach.provides'ianothersource of financing for:;the food ,
'improvements. Property-owner's.who benefitwould share in,thecost of fixing the problem.
Disadvantages-t It would'take approximately 12 months to undertake•the assessment
engineering,financial analysis of relative benefit, and publk:hearings before the process
culminated in:a.vote by the effected property-owners. Cash-flow from a successful
assessment would be received.approximately two years from.;the.inception of the process._
• Effected property-owners would be•paying two'assessments: Zone 2-A;and'.thenew
assessment. There is•considerable,:uncertainty as5to the:likelihood of passing asecond voter-
approved assessment. This raisesthe questionras to whether using limited City resources on .
thisapproach is cost-effective.
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4. .FINANCIAL IMPACTS: •
• Under the new project.-;authorization recently approved in,September 2000 by Congress,, the
City's'share, adjusted on 11/22/00-to account for new cost increases,•isprojected:to be 35% of
$32 Million or$11:2'Million, asffollows:
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• Revised City Estimated Cost 11/2000:' $35:0--million
• • Ineligible,City Costs.Removed from
the Reimbursablew,Base: $ 3.0,million •
• Revised Reimbursement Base: $32:0 million
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• City's Share Of Project Cost: $11.2 million
( $32.0 Million x'35%)
• Estimated Cumulative City
Expenditures.Thru.FY 2000-01: $23.0 million
• Projected Reimbursement to City:' $11.8"million
As the City will 'have;exceeded the required match for the non-Federal share of the project,
approximately $11.8 million will ultimately be reimbursed to the City. This will allow the
City Council to determine which City Funds are to be reimbursed as follows:
-• Storm Drainage Mitigation Fees: - -$6.364 Million
• Sonoma Co. Water Agency'Zone 2A: $6.418 Million
• PCDC: $6.620'Million
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In addition, approximately'$3 million in project costs are ineligible for reimbursement by the
Corps., The City is currently seeking additional funding from the State Department of Water
Resources to offset this cost.
, 5. . CONCLUSION:
The City of Petaluma initiated a legislative advocacy program last year resulting in the receipt
of a project authorization for $32:2 Million. The City Manager was previously directed to
initiate the next step in pursuing a Federal appropriation for the project. In the event that
Federal funds are not reprogrammed in the near term or are•not included in the FY 2001-02
Federal Budget, several options:are available tbthe Council.
6. OUTCOMES OR PERFORMANCE MEASUREMENTS'THAT WILL IDENTIFY SUCCESS OR
COMPLETION:
A. The U.S. Army Corps of Engineers reprogramsTunds to continue the construction
of the project during FY 2001-02.
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B. An appropriation for the project'is included i'n•the FY 2001 Federal Budget.
• 7. RECOMMENDATION;
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It is'recommended.that the City Council provide policy direction as appropriate.
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No new materials were generated for
Agenda Item #9 :
Motion for Reconsideration of Council's Action Taken'.on December 21, 2000,
Adopting Resolution No 00.220•N':C.S'. Approving A Mitigated Negative Declaration for
the Ridgeview Heights Subdivision`and Resolution No 00-221 N.C.S. Approving the
Tentative Subdivision Map:and PUD Development Standards for the Ridgeview Heights
Subdivision.
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