SR-05-12-2009-5ACity Council and Redevelopment Agency Meeting: May 12, 2009
Agenda Item: 5'" ~
To: Mayor and City Council
Chairperson and Redevelopment Agency
From: Andy Agle, Director of Housing and Economic Development
Subject: Redevelopment Agency Capital Funding Priorities: Supplemental
Information
Recommended Action
Staff recommends that the City Council provide direction regarding long-term
redevelopment funding priorities for capital improvement projects.
Executive Summary
The Council directed staff to address specific questions discussed at its April 14, 2009
meeting. This report summarizes the supplemental information provided in response to
those questions, while clarifying certain project descriptions to provide more detail
regarding leveraging opportunities, project readiness and estimated operational and
maintenance costs.
Background
On April 14, 2009, staff presented information regarding the Redevelopment Agency's
ability to fund priority capital projects, including the need to establish Agency debt by
2014 (or preferably 2012 to bond at the best possible terms), the Agency's estimated
funding capacity of $283 million and the need to refine the Agency's funding. priorities
and commitments. Given the upcoming deadlines for establishing Agency debt, as well
as the pending FY 2009/2010 City budget and the need to adopt aFive-Year Agency
Implementation Plan by the end of 2009, staff presented preliminary funding allocation
recommendations for capital improvement projects identified as potentially eligible for
redevelopment funding.
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Following the staff presentation and public comment, Council requested additional
information to assist with its deliberations in refining priorities and funding commitments.
Discussion
Provided below is supplemental information in response to the Council's questions from
the April 14, 2009 meeting
EXPO Light Rail: Timing and Phasing
Opening of the EXPO Light Rail Transit (LRT) in Santa Monica is expected in year
2014-15. The design-build process is slated to commence next year,'starting in early-
to-mid 2010. The City will need to work closely with the Expo Authority to capitalize on
the opportunity provided by the coming light rail line and to ensure functional
connections for passengers accessing the transit system. Essentially, the City has two
years to plan and design the connecting and complementary projects and.three years to
construct the improvements, if they are to be completed prior to the opening of the line.
As a result; the City must move immediately if the CIP projects related to the LRT are to
be in place by the time the rail line comes to Santa Monica.
It is critical that the City coordinate station area planning with the Exposition Authority to
ensure appropriate transit connections, convenient and safe pedestrian access and
continuation of a functional bicycle path. The three Santa Monica stations (Downtown,
Mid-City and Bergamot) will require careful attention to address:
access issues generated by transit, private vehicles, bicycles and pedestrians;
• provision of station amenities; and
• development of a desirable station footprint in relation to any future development or
open space on or adjacent to the station site.
The City will be defining the improvements through a station area planning process that
will commence immediately. Station area improvements could include:
• Downtown Station: 1) a pedestrian plaza on the SE corner of 4th Street and
Colorado, 2) improved passenger interface with transit and passenger drop-off/pick-
up, and 3) streetscape improvements at intersections accessing the station.
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® Memorial Park Station: 1) streetscape improvements on Colorado,. 14tH and 17tH
Streets, 2) pedestrian and transit connections, 3) shared parking, and 4) a bike
transit facility.
• Bergamot Station: 1) reestablish the street grid for. vehicles, .bikes and pedestrians
(expected to be largely developer funded), 2) intersection improvements at 26th
Street and Olympic Boulevard to enhance pedestrian access, 3) landscaped
streetscape improvements with improved crossings, 4) ah enhanced Olympic
Boulevard median from Stewart Avenue to CloverField Boulevard, 5) shared parking,
and 6) a bike transit facility.
Debt Capacity Analysis
In response to Council's request for additional information regarding the Agency's debt
capacity, a study session was presented to the Council on April 28. 2009, to convey the
fundamentals of bonds and debt capacity including bond issuance, types of bonds, flow
and structure of bond funds, debt ratios, factors in calculating funding capacity, and the
leveraging of tax increment and financing projects.
Flexibility of Funding Commitments
Council requested additional information regarding the flexibility of funding and project
commitments. The debt capacity analysis provides a current snapshot of the Agency's
estimated financing capability, while the project cost estimates are based on current
information regarding projects and funding sources. In the coming years, these factors
may change if assessed valuation grows at a different rate than projected, construction
costs vary from estimates, borrowing costs change, outside grant funding is obtained for
certain projects, the .State take-away is adjusted or new state laws are adopted that
affect redevelopment financing. If changes in these factors indicate that additional
capacity will be available for projects, staff will return to CounciP for direction on
allocation of additional funds. Similarly, if changes in these factors indicate that the
redevelopment funding capacity will be reduced, staff will return to Council for guidance
and direction.
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Leveraging of RDA Funds
Council requested information regarding leveraging opportunities for the proposed
projects. Given limited resources and competing capital improvement needs, the City
actively pursues opportunities to leverage funding in order to maximize the ability of the
City to complete as many capital projects as possible. These leveraging opportunities
include competitive grants, formula grants and partnerships with public or private
agencies.
Currently, the City is awaiting decisions on the applications for MTA Call for Projects
(biannual opportunity to receive transit-related. funds) and a Proposition 1C Infill Grant,
while programming formula-based grants from Proposition A, Proposition. C and
Measure R for transit-related purposes., as well as from federal sources. The City has
applied for Federal Economic Stimulus funding and regularly seeks .federal allocations
for regionally or nationally significant projects. Attachment A summarizes the leveraging
opportunities for each proposed capital project.
Operational and Maintenance Costs
Council requested information regarding the expected operational and maintenance
costs and needs associated with the proposed capital projects. Attachment B
summarizes the estimated costs for operation and maintenance of each proposed
capital project. The costs estimates are based on assumptions ranging from whether or
not restroom facilities will be included in the projects to whether the City will contract
with third-party operators for facilities such as the Civic Auditorium, Early Childhood
Education Center and Bike Transit Center. Two pertinent assumptions include MTA
providing the operations and maintenance of the Expo LRT Stations and sharing the
operational and maintenance cost with the School District for the Joint-Use facilities.
Operational and maintenance costs are calculated per project as they relate to utilities,
facility maintenance, public landscaping, community forests, custodial services, and
community programs. The estimated annual operational and maintenance costs per
proposed capital project are summarized in Attachment B.
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Schoo/ District -Joint-Use Project
Council requested additional information regarding the proposed Civic Center Joint-Use
Project at Santa Monica High School. The School District's format response to the
Council's questions is provided in Attachment C-1. Since the Civic Center .Joint-Use
Project includes the development of new recreational facilities and it is being proposed
that these new facilities will be made available for public use during non-school hours,
the City must consider its ongoing costs associated with staffing, programming, and
supervising the classes and programs at the facilities, based on the maximum days and
hours offered in the Civic Center Joint-Use Proposal. Attachment C-2 summarizes the
estimated operational costs for public use and programming of Joint-Use recreational
facilities. The City's five year forecast does not. include any of these operating costs
impacts.
Pico Library
At the A rp it 28 study session on the Pico Library, Council was asked to consider two
options for creation of a new branch library: building in Virginia Avenue Park or
purchasing a property for library development on Pico Boulevard. The cost to construct
a library at Virginia Avenue Park is estimated to be approximately $12.8 million, while
constructing on a separate Pico Boulevard property is estimated to be approximately
$30 million. Council directed staff to continue efforts with respect to both options. The
recommended allocation in the previous staff report is expected to be sufficient to
finance the construction of the library at Virginia Avenue Park. If Council prefers the
Pico Boulevard option, allocation of additional funds is necessary.
Project Readiness
An important consideration with regard to refining priorities is project readiness and the
ability of projects to take advantage of the optimal window for issuing debt (2012) and
the final deadline for establishing Agency debt (2014.) Staff has completed a more
refined analysis of project readiness, which is reflected in Attachment E. Some of the
projects are infrastructure improvements that can move to construction quickly (e.g.
street light replacement, traffic signal master plan implementation, tree planting, .Pier
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improvements, etc.) Other projects are broader in scope, but have already completed
master planning and CEQA analysis and are expected to be able to proceed forward
within the optimal window (e.g. Civic Center Specific Plan projects, Downtown Parking
Strategic Plan Implementation.) Certain projects have not completed design or CEQA
review, but are of a discrete nature to allow their readiness for Agency funding (e.g. LRT
stations, Pico Library.) Three of the projects face significant hurdles with respect to
readiness according to the Agencydeadlines. The first is the Memorial Park expansion.
WHile the park expansion itself could be ready according to RDA funding timelines,
public landscape operations that currently occupy the former Fisher Lumber site must
be relocated before park expansion can occur. Finding a site and creating a facility for
public landscape operations is expected to be a lengthy process, with no funding yet
identified fora relocation project which is ineligible for redevelopment funding. In spite
of these challenges, Council may wish to consider allocating funds in the amount of
$2.3 million to supplement $1:1 million in budgeted FY 08-09 funding for the preparation
of the master plan including the identification and evaluation of sites for public
landscape operations, design of the Phase I park improvements to incorporate the
former Fisher Lumber site into the park block and associated environmental review as
necessary steps in realizing the Memorial Park expansion. The other two projects of
concern are corridor improvements for Pico and Lincoln Boulevards. Currently,
improvement strategies for the boulevards must be prepared, which would identify
specific projects that need to be designed and reviewed .for environmental impacts.
Staffs assessment is that it is unlikely that these steps. will be completed within the
timeline. In past years, funds were allocated for the development of the boulevard
strategies. To allow the process to continue forward, Council may wish to consider
providing funding of $560,000 to match a Metro Grant ($800,000) for pedestrian'
improvements on Lincoln Boulevard and $515,000 to assist with development of a
comprehensive strategy plan for Lincoln Boulevard. Council may also wish to provide
funding of $600,000 to support planning, design and construction of pedestrian
improvements on Pico Boulevard.
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Cost Estimate Revisions
Provided in Attachment D is an updated summary of recommended funding allocations
based on refinements to cost estimates and project readiness of the proposed capital
projects. The Civic Center Early Childhood Education Center is now estimated to have
a funding shortfall of $4.4 million, rather than the $3.4 million listed in the previous
report. The previous staff report erroneously listed the cost of completing streetlight
retrofitting and replacement in the Redevelopment Project Area as $300,000; the
correct figure is $4.5 million. The School District's Joint-Use project has been updated
to reflect cost estimates of $230 million, rather than'the $235 previously proposed. In
addition, the cost estimate allocations among the various Civic Center park and cultural
facilities have been updated to reflect the redevelopment project funding
recommendations. While staff has not revised the recommended funding levels for
these projects, the readiness of certain projects creates opportunities to re-allocate
funds.
Next Steps
The Agency funding priorities will be reflected in the City's Capital Improvement
Program for FY 2009-10 through 2013-14, the City's FY 2009-10 budget, and the
Agency's Implementation Plan to be considered later this year. Staff will continue to
explore debt instruments to maximize funding. If the Council approves funding for
Santa Monica High School joint-use improvements, staff will work with School District
representatives on requirements and agreements related to such funding.
Financial Impacts & Budget Actions
All budget actions resulting from these funding commitments will be included in the FY
2009-2010 Budget and any approved funding commitments beyond this fiscal year will
be appropriated each fiscal year thereafter. Funds for operating cost impacts will need
to be identified and appropriated as well
Prepared by: Tina Rodriguez, Redevelopment Administrator
Forwarded to Council:
Andy Agle; Director
Housing and Econo
Attachments:
Development
Attachment A: .Leveraging Opportunities
Attachment B: Operational and Maintenance Costs
Attachment C-1: School Districts Response Regarding Joint-Use Project
Attachment C-2: Operating Costs for Public Use and Programming of New Samohi
Recreational Facilities
Attachment D: Updated Summary of Recommended Funding Allocations
Attachment E: Project Readiness
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