CC SR 20251202 I - SB1 Appropriation for PVDS Pavement Project
CITY COUNCIL MEETING DATE: 12/02/2025
AGENDA REPORT AGENDA HEADING: Consent Calendar
AGENDA TITLE:
Consider appropriating SB1 Roadway Maintenance and Rehabilitation funds to the
Roadway Maintenance Program – Palos Verdes Drive South and West Project (CIP
Project No. 8855)
RECOMMENDED COUNCIL ACTION:
(1) Approve an additional appropriation of $175,000 in SB1 funds for engineering and
design services as well as grant administration and support services for the
Roadway Maintenance Program – Palos Verdes Drive South and West Project
(CIP Project No. 8855).
FISCAL IMPACT: Approval of this item will result in a fiscal impact of $175,000 from
the SB1 Fund, which is restricted to repairing roads, improving traffic
safety, and expanding public transit. The fund has an estimated
unallocated balance of approximately $750,000. If approved,
$175,000 will be appropriated for preparation of final engineered
plans, specifications, other needed construction documents, and
grant administration and reporting for Capital Improvement Program
(CIP) Project No. 8855: Roadway Maintenance Program – Palos
Verdes Drive South and West.
Funding has been included in the approved Fiscal Year (FY) 2025-
26 Adopted Budget for the construction phase, comprised of
$1.423M in federal Surface Transportation Program - Local (STP-L)
funds and $163,000 in State Toll Credits. VR
Amount Budgeted: $1,731,000 (FY 25-26 Adopted Budget)
Additional Appropriation: $175,000 (SB1 – Engineering & Grant Support)
Account Number(s): 204-400-8855-XXXX
(SB1-Roadway Maint Program PVDS- XXXX)
204-400-8855-XXXX $175,000
(SB1-Roadway Maint Program PVDS- XXXX) VR
ORIGINATED BY: Jeremiah Sunwoo, Associate Engineer
Lorna Cloke, Senior Administrative Analyst
REVIEWED BY: Ramzi Awwad, Public Works Director
APPROVED BY: Ara Mihranian, AICP, City Manager
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BACKGROUND:
The City Council typically funds arterial roadway rehabilitation projects on an annual basis
as part of the CIP. The goal of these projects is to rehabilitate, repair, and/or maintain
arterial roadways to provide roadways that meet community expectations while also
managing life-cycle costs. Projects typically include resurfacing, asphalt repair, sidewalk
and curb/gutter replacement, and restoration of pavement markings and sign s. When
approving roadway rehabilitation projects, the City Council considers Staff’s priority order
recommendations (based on the condition rating, among other factors) and funding
source recommendations.
As part of the FY 2025-26 CIP, the City Council funded Project 8855: Roadway
Maintenance Program – Palos Verdes Drive South and West Project (Project) over a
multi-year period. The 2022 and 2025 roadway condition assessment s indicated that
rehabilitation of this roadway will reduce lifecycle costs and preserve pavement quality.
Preliminary engineering was completed in October 2025 using a competitively procured
pre-qualified engineering consultant with competitively negotiated rates. The work
consisted of a field inspection of roadway conditions, pavement core sampling, refinement
of recommended pavement treatments, and the preparation of a concept plan. To
progress the project into construction, City staff now seek to prepare final engineered
plans, specifications, construction conditions, and construction agreements (Construction
Documents) to solicit a contractor to complete the Project. Additionally, because funding
includes a federal funding source, required grant administration and reporting work must
be completed.
The funding source plan approved by the City Council, based upon Staff
recommendations, consists of approximately $1.423 million in federal Surface
Transportation Program-Local (STP-L) funds. STP-L funds are part of a formula-based
federal program that allocates money to the states, wh ich in turn provide funding to local
jurisdictions for local roads and other transportation related projects. These projects
require the approval of both the California Department of Transportation (Caltrans), which
ensures compliance with the state’s transportation infrastructure standards, and the
California Transportation Commission (CTC), which oversees state and federal funding
for STP-L projects.
Unlike regional funding sources such as Proposition C or Measure R, the use of STP-L
funds requires a pre-approved project scope with additional specific administrative
approvals at each project phase. Modifying a project’s scope or limits often triggers
additional agency reviews and may result in significant project delays. Additionally, STP-
L funds have a local match requirement of 11.47%.
The City Council approved funding source plan for the Project also includes $163,000 in
Toll Credits, which are intended to be used as STP-L matching funds. Toll Credits are a
portion of State toll revenues from facilities like roads, bridges, and tunnels , which are
allocated to local jurisdictions to assist with their local match costs for federal funding of
STP-L and public transit program projects.
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DISCUSSION:
Based on very early estimates showing a total project cost of $2.038M, the Project’s
original limits were the entire length of Palos Verdes Drive South (PVDS) and Palos
Verdes Drive West (PVDW) excluding the landslide area. Table 1 below shows the
original funding source plan filed with Caltrans, making use of the City’s entire balance of
STP-L funds.
Table 1 – Palos Verdes Drive South and West Project Original FY 23-24 Funding Plan
Due to very a limited CIP Fund balance, as part of the FY 2025-26 CIP, the Project funding
source plan removed CIP funds, and the budget was reduced to $1.731M. Accordingly,
the Project limits were reduced to be from the PVDW City limit to Terranea Way at PVDS.
At that time, an error was made when updating the Budget book’s project sheet and the
project funding was listed as $97,965 lower than its actual estimated cost, as shown in
Table 2 below.
Table 2 – Palos Verdes Drive South and West Project FY 25-26 Funding Plan
After the FY 2025-26 CIP was adopted, the preliminary engineering was completed (for
the entire length of PVDS as originally planned in FY 2024-25). Completion of the
preliminary engineering, including testing of various existing pavement sections, revealed
more significant deterioration than anticipated in the 2022 and 2025 roadway condition
assessments, which were high level evaluations. This informed a revised Project cost
estimate. Therefore, to fit the Project within the STP-L and Toll Credits funding and avoid
the use of CIP funds, the project limits were further modified to address the highest need
segment, which is between PVDS at Hawthorne Boulevard and PVDS at Sea Cove Drive.
Additionally, Staff learned that the STP-L funds for the Project were programmed only for
construction activities and therefore cannot be used to develop the Construction
Documents or complete grant administration and reporting tasks, which is beyond the
capacity of Staff to perform in-house.
Therefore, to advance the Project to construction, an additional appropriation of
$175,000, including contingency, is needed. To avoid the use of very limited CIP funds,
As Erroneously Report in FY25-26 Budget Book
Funding
Committed as
of 4/17/2025 FY25/26 Total Funding
Committed as
of 4/17/2025 FY25/26 Total
330 - CIP Fund 18,035.00 330 - CIP Fund 23,616.00
332 - State Grants 120,000.00 1,332,000.00 332 - State Grants 121,384.00 1,423,000.00
332-Toll Credits - 163,000.00 332-Toll Credits - 163,000.00
138,035.00 1,495,000.00 1,633,035.00$ 145,000.00 1,586,000.00 1,731,000.00$
Corrected
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Staff recommend that the City Council appropriate $175,000 in SB1 funding to develop
Construction Documents and complete required grant administration and reporting work.
SB1, or the Road Repair and Accountability Act of 2017, is derived from the State Gas
Tax and is apportioned out to local jurisdictions. Its use is restricted to repairing roads,
improving traffic safety, and expanding public transit. The City receives about $1.1M per
year in SB1, which the City typically uses for roadway maintenance and street sweeping.
The proposed SB1 funding will come from the available SB1 fund balance of
approximately $750,000, which was held in the FY 25-26 CIP as an unallocated balance
for any emergent needs, such as this one. Therefore, appropriating these funds from the
SB1 balance will not impact any current or future planned CIP projects.
The recommended SB1 allocation exceeds the previously identified error of $97,965
because the earlier error reflected only the funding gap, not the full cost of completing
Construction Documents and grant administration. The total SB1 request therefore
represents the true cost to deliver Construction Documents and meet Caltrans/CTC
requirements.
This allocation preserves the full value of the $1.423 million Federal STP-L construction
grant, ensures delivery readiness of the Project for FY 2025-26, which ultimately
leverages the STP-L funding to reduce the life-cycle cost of the roadway. The proposed
revised funding source plan is shown in Table 3 below.
Table 3- Palos Verdes Drive South and West Proposed Revised Funding Plan
If approved this evening, staff will authorize consultants to proceed with preparation of
the Construction Documents. Completion of this work is expected from March to April
2026, followed by Caltrans review and authorization to proceed with construction in Q2
2026. Staff anticipates returning to the City Council with a request to award a construction
contract in Summer 2026 with start of construction shortly thereafter, subject to Caltrans
and CTC approvals.
8855 - Roadway Maintenance Program - PVDS/W
Project Budget Summary Fund Budget Notes
330 23,616.00 CRRSAA Local Match
332 121,384.00 CRRSAA Funds
332 1,423,000.00 STP-L
332 163,000.00 Toll Credits
204 175,000.00 SB-1 if approved by CC
1,906,000.00
Project Cost Summary Fund Budget
Actuals
(as of 11-18-2025)
Committed
(as of 11-18-2025)
Remaining
Balance
8001 Professional/Technical 204 49,500.00 - - 49,500.00 If approved by CC
8005 Engineering Design 204 91,350.00 - - 91,350.00 If approved by CC
8XXX Contingency 204 34,150.00 34,150.00 If approved by CC
8005 Engineering Design 330 23,616.00 18,035.00 2.50 5,578.50
8005 Engineering Design 332 121,384.00 98,839.50 22,544.50 -
8802 Other Improvements 332 1,423,000.00 - - 1,423,000.00
8802 Other Improvements 332 163,000.00 - - 163,000.00
Project Total 1,906,000.00$ 116,874.50$ 22,547.00$ 1,766,578.50$
Revised Budget FY24-25
Revised Budget FY24-25
Budget Total
Revised Budget FY25-26
Revised Budget FY25-26
Additional Appropriation Request
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CONCLUSION:
Staff recommend approving an additional appropriation of $175,000, including
contingency, in SB1 funding from the available SB1 balance to prepare Construction
Documents and complete required grant administration and reporting work for CIP Project
8855: Roadway Maintenance Program – Palos Verdes Drive South and West.
Appropriating SB1 funds (which are restricted to repairing roads, improving traffic safety,
and expanding public transit) closes the funding gap created by the federal programming
limitations, and ensures that the City maintains eligibility to use the full amount of $1.423
million in federal STP-L construction funding and remains on track to deliver critical
roadway rehabilitation improvements along PVDS and PVDW with minimal delay.
ALTERNATIVES:
In addition to Staff recommendation, the following alternative actions are available for
the City Council’s consideration:
1. Do not allocate SB1 funding and direct staff to defer development of Construction
Documents, thereby pausing the project.
2. Direct staff to explore alternative funding mechanisms, including non-restricted
funds.
3. Take other action or provide direction, as deemed appropriate .
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