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HomeMy WebLinkAboutMINUTES - 09221987 - 2.2 TO.. "BOARD OF SUPERVISORS FROM: Contra Harvey E. Bragdon Director, Community Development Dept. Costa DATE: September 22, 1987 to CIDAY . SUBJECT: Westbound Lane Interim Project on State Route 4 over Willow Pass SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION: 1 . Conceptually approve the plan for financing the addition of a westbound lane to Highway 4 over Willow Pass. 2 . Direct staff to work jointly with the cities of Antioch and Pittsburg to prepare the appropriate contracts and validation proceedings for consideration by the Board. FINANCIAL IMPACT: Approval of this Board Order does not financially impact the County. It will cause the preparation of contractual agreements that, if executed by separate action, will have the following impacts. The net debt service for the project will amount to $3 , 493 ,600. The financing documents will obligate the .County to pay 39. 50 of this debt service, or $1, 390,000, to be made in 10 payments over a five year period. The balance of the debt service payments will be assigned to the cities of Antioch and Pittsburg. The first year ' s debt service, to be deposited prior to bond closing, would require a $305, 000 payment from the County. The County and the cities propose to reallocate the net debt service pursuant to a separate agreement, revising the County' s cost for this project to ultimately reflect its prorata share of housing construction activity in Eastern Contra Costa County. Based on projected housing permit activity over the next five years, the County would pay an estimated 34 percent of the debt service, or $1,188 ,000. (Orig.Dept. -CDD,T/P) ( 9. 14 . 87 )dp9:fundBO.t09 CONTINUED ON ATTACHMENT; � YES SIGNA RECOMMENDATION OF COUNTY ADMINISTRATOR RECOM AT10 B EE j♦ . APPROVE OTHER a SIGNATURE(S): ACTION OF BOARD ON September 22, 1987 APPROVED AS RECOMMENDED X OTHER X Also, DIRECTED staff to address issues raised by the Board relative to repayment schedules and the impact of incorporation of Oakley; and REFERRED the matter to the Transportation Committee for monitoring. VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS (ABSENT I AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. CC: Community Development ATTESTED _ Transportation Committee PHIL BATCHELOR, CLERK OF THE BOARD OF County Administrator SUPERVISORS AND COUNTY ADMINISTRATOR County Counsel M382/7-83 BY Public Works - R. Faraone � ,DEPUTY The difference between the County' s commitment percentage to the bond holders and the estimated cost sharing percentage via the cost reallocation agreement ( 39. 5% vs 340 of total loan costs) , represents funds advanced by the County that would ultimately be paid by Pittsburg or Antioch. The cost reallocation agreement obligates these cities to reimburse the County for any monies advanced after every scheduled payment to the bondholders. Preparation of the financing documents and legal procedures will incur costs prior to the issuance of bonds. The cost to the County or the cities to terminate the transaction prior to issuance to bonds would amount to an estimated $75,000. This cost would be shared equally by the County and three cities, therefore the cost to the County would be an estimated $25,000. REASONS FOR RECOMMENDATIONS/BACKGROUND: On April 22, 1986, the Board of Supervisors: 1) approved the concept of constructing an interim capacity improvement to Highway 4 that will add a westbound lane over Willow Pass; 2) advanced $25,000 to be used to help fund preparation of construction plans for the project that would be repaid through road fees; and 3 ) directed staff to develop jointly with the cities of Antioch, Brentwood, and Pittsburg, a financing plan to fund construction. On September 9, 1986, the Board adopted a road fee to fund the County' s portion of the project. On September 30, 1986, the Board approved a Consulting Services Agreement to prepare the construction plans for the project. The County and the cities of Antioch, Brentwood, and Pittsburg executed a separate agreement to share the cost of these plans. The County' s maximum obligation was $26,000. The construction plans are complete, and following review by Caltrans, the project will be ready for construction bids early next year. At that time, Caltrans will request from the local agencies the funds to pay for construction, which will be put in escrow for the project. For several months, County staff has negotiated with the cities of Pittsburg and Antioch to prepare a proposal for funding construction. The attached report from Sutro & Company, Inc. , an investment banking firm, describes the proposal. Essential elements of the proposal are as follows: 1. Provides $2 . 8 million at bond closing for capital improvements to State Route 4 over Willow Pass; 2. No pledge of any city/county real property or other collateral is required as direct security for the bonds; 3 . Takes full advantage of the lower borrowing costs offered by tax-exempt financing; 4 . Formation of a Joint Exercise of Powers Agreement by the County and two cities (one representative each) , to provide for joint issuance of bonds with each participant assuming a portion of the debt service payments; 5. Approval of the financing by no less than a four-fifth' s vote of the governing board or council of each of the participant' s issuers; 6 . Deposit of the first year' s debt service prior to bond closing, and approval subject to appropriation, to deposit subsequent debt service payments six months prior to due date with the Trustee; 7 . Term of maturity not to exceed five years; 8. Pledges the General Fund and Road Fund as the source of funds for the first year' s debt service; and 9. Each participant establishes a development fee system for new development that is planned to reimburse the participants for debt service costs on the financing. Although the financial documents may indicate that the County intends to use General Fund and Road Fund revenues, road fees from the East/Central County Corridor Area of Benefit will be used to fund the County' s debt service. The balance for the Area of Benefit is at $125, 000. To meet the $305,000 first year debt service payment, $60,000 will be borrowed from each of the following area of benefits - West Pittsburg, Oakley, and Discovery Bay. These area of benefits can make such a loan without delaying or adversely affecting any other road project. The funds will be reimbursed with interest from the East/Central County Travel Corridor Area of Benefit. The financial transaction will be structured to avoid State constitutional limitations of local government assuming long term debt. Bond Counsel recommends that the financial documents fully disclose that payment of debt service is subject to annual appropriations, and that no guarantee would be provided that the public agency will appropriate the necessary debt service payments. However, the public agency would acknowledge in the bond disclosure documents that it fully intends at the time of bond sale, to make the necessary annual appropriations. The cost reallocation agreement, which redistributes debt service payments according to each participant' s prorata share of housing construction activity, is also subject to the State constitutional limitation on long term debt. Consequently, any reimbursements entitled to' a jurisdiction pursuant to the cost reallocation agreement must also be subject to annual appropriations. Because of the unique nature of the transaction, bond counsel recommends that the financial documents be validated in Superior Court. It is not clear at this time if the cost reallocation agreement can be validated. The cost reallocation agreement would not be legally enforceable without the validation procedure. The validation procedure would take at least six weeks and will. commence following approval of the Joint Exercise of Powers Agreement and related financial documents by the County and the cities. Execution of the JEPA could occur as early as October 6 , 1987. Validation could then be completed by December 1, 1987. Sale of the bonds could occur one week after a favorable court decision is received. If the documents are declared invalid by the court, the agencies would have to examine a more traditional financing package that requires the agencies to pledge some form of collateral. CONSEQUENCES OF NEGATIVE ACTION: Withholding approval of these actions will cause a delay in construction of this project. Rejecting these actions will require preparation of a new financial plan acceptable to the County and the cities, and delay construction of this project indefinitely. Without this project, traffic congestion will get worse. (Orig.Dept. -CDD,T/P) ( 9. 14 . 87)dp9 :fundBO.t09 3/3