RPVCCA_CC_SR_2012_07_17_04_San_Ramon_Canyon_Stabilization_ProjectCITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
DENNIS McLEAN,DIRECTOR OFYIflJANCE AND INFORMATION
TECHNOLOGY ~O ~DvY1 to.U>l--
JULY 17,2012
SAN RAMON CANYON STABILIZATION PROJECT-
FINANCING ALTERNATIVES (Supports City Council 2012 Goal
for Public Infrastructure)
Project Managers:Ron Dragoo,Senior Engineer
Andy Winje,Associate Engineer
Kathryn Downs,Deputy Director of Finance and Information
Technology
RECOMMENDATION
1.Receive and file this report;and
2.Provide feedback and/or direction.
BACKGROUND AND DISCUSSION
Project Status
Final design of the San Ramon Canyon Stabilization Project has been completed and
regulatory permits are expected to be approved in the near future.Staff expects that
advertising the project to obtain competitive construction bids is imminent,with construction
tentatively scheduled to begin in late 2012.The estimated construction cost of the Project
is $19.4 million.
The project has received a matching grant in an amount up to $9.46 Million from the State
Department of Water Resources Storm Water Flood Management Grant (Prop 1E)
program.The balance of about $10 million remains unfunded.
The City has received notification that it was not invited to submit a formal application for
the FEMA Hazard Mitigation Grant and the TIGER IV grant (anticipated $10 million
application).Staff,the City's advisors and the City Council are continuing their pursuit of
otherfederal funding opportunities as well as contributions from local agencies (City of Los
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SAN RAMON CANYON STABILIZATION PROJECT -FINANCING ALTERNATIVES
July 17,2012
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Angeles and County of Los Angeles)whose constituents will also receive benefits from the
project.Although elected officials for these agencies are supportive of the project,no
commitments from either agency have been received.
The current terms of the Prop 1E grant require that construction of the Project be
completed by October 3,2014.Staff estimates that the project has a construction
schedule of about 12 months;which means construction should begin no later than
January 2013 and preferably sooner to allow for unforeseen challenges and close out of
the project (e.g.confirmation that all required mitigation is met,and state audit of
construction records).Therefore,the Project is approaching a critical crossroad;whereby
the source of the $10 million unfunded balance must be established to enable the project
to proceed timely to avoid forfeiting the $9.46 million grant.
City's Reserves
It is a prudent practice to maintain a minimum level of reserves,and to refrain from
depleting them for a single project.Although the City currently maintains about $1 0 million
in the General Fund Reserve and expects to accumulate about $11.4 million in the
Reserve for CIP at the end of June 30,2013,the City's 2012 Capital Improvement Plan
identifies significant unfunded infrastructure needs,including:
~At least $5.9 million of roadway projects;
~At least $6.4 million of other storm drain projects (Altamira Canyon and various
systems along PVDE);
~Millions of dollars of updates and replacements for existing City buildings;and
~More than $5 million of park improvements.
Staff expects that the updates to the Storm Drain Master Plan and the Pavement
Management Plan will identify additional projects.Furthermore,mitigation of the City's
active landslide will likely require more drainage projects and dewatering wells.Although
the City has healthy reserves,the demands on those reserves (including the San Ramon
Canyon Stabilization Project)far exceed the amounts available.
San Ramon Subcommittee of the City Council
The San Ramon ad-hoc subcommittee of the City Council has recently met with staff and
the City's financial advisor,Tim Schaefer of Magis Advisors,to explore financing
alternatives for the Project.The Subcommittee recommended that Mr.Schaefer make a
presentation to the entire City Council.Mr.Schaefer has forty years of municipal finance
experience,having led more than $20 billion of project financing issuances.Mr.Schaefer's
clients include municipal and school districts,as well as the California State Controller's
Office.Mr.Schaefer will lead the City Council in a workshop discussion about the
financing alternatives to obtain the $10 million unfunded balance of the Project,including
the possible mix of:
v'Pay-as-you-go use of the City's Reserves (the Reserve for Capital Improvement
Projects and the General Fund Reserve);
v'Debt financing,private (e.g.bank or private investor)or public (e.g.financing lease);
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July 17,2012
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,/Advance funding from the Reserve for Capital Improvement Projects (CIP)pursuant
to a reimbursement resolution committing the WQFP Fund to repay the CIP Fund in
the event the City proceeds with the Project prior to obtaining debt financing;
,/Funding contribution from the City of Los Angeles and/or Los Angeles County;and
,/Other federal or state funding as it emerges in the near future.
The workshop discussion is intended to be a first step in exploring financing alternatives for
the Project,which mayor may not include debt financing.As the City has not previously
issued any debt,the presentation will include basic information about debt options that are
available to the City.Mr.Schaefer's presentation will be made available to the City Council
as late correspondence.
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