Title
Department of Transportation recommending the Board authorize the Chair to sign the Reimbursement Agreement for the construction of the "Road Widening Improvement Plans for the Crossings at El Dorado Missouri Flat and Crossings Road" between the County and LLL & A, LLC (AGMT 22-55037), for improvements included in CIP Project 36105066 "Missouri Flat Widening from Plaza Drive to Headington Road." (District 3)
FUNDING: Missouri Flat Area Master Circulation & Funding Plan (MC&FP) Program.
Body
DISCUSSION / BACKGROUND
The Crossings at El Dorado, also known as the Crossings Planned Development, PD97-0011 (Project), is a commercial development project located on Missouri Flat Road in the unincorporated area of Placerville adjacent to the Target and Safeway shopping centers. The initial development was approved as the "Sundance Plaza" project on December 8, 1998. On May 8, 2014, the Planning Commission approved a Finding of Consistency on the Project, which updated the project phasing to its current structure and the project name to "The Crossings at El Dorado."
The Project requires access from Missouri Flat Road, which necessitates widening Missouri Flat Road, adding turn lanes, signalizing the existing Headington / Missouri Flat Road intersection, and adding an extension of Headington Road (referred to as Crossings Lane in Attachment E) as the fourth leg of the intersection and access to the development. These improvements are included in the Capital Improvement Program (CIP) as projects #36105066/71374, "Missouri Flat Widening from Plaza Drive to Headington Road," and #36105022/71375, "Headington Road Extension - Missouri Flat Road to El Dorado Road."
LLL& A, LLC (Developer) has prepared improvement plans for the intersection, which the Department of Transportation (Transportation) approved on May 9, 2022. On August 30, 2022 (Legistar# 22-1539, Item 17), the County and the Developer entered into Road Improvement Agreement (RIA) #21-54981 defining the Project's construction requirements.
Subsequent to the approval of the RIA, the Developer has publicly bid the Project for construction; Doug Veerkamp General Engineering was the sole bidder with a bid of $2,771,438.97. Of the total bid amount, a portion of the improvements are private, with the majority of the bid reflecting public improvements. The public portion of the bid was estimated at $1,981,321.34. This public portion of the Project is eligible for reimbursement under the Missouri Flat Master Circulation and Financing Plan (MC&FP) per the Project's Mitigation Measures and as part of CIP Project #36105066.
On December 15, 1998 (Item 80), the Board of Supervisors (Board) adopted the MC&FP, which was intended to implement the County's General Plan and to mitigate the impacts of proposed development in the area. The MC&FP is a funding source for several CIP projects which are needed to mitigate existing roadway capacity deficiencies in the MC&FP area, which may include new roadways, roadway widenings, roadway intersection improvements, interchange improvements, transit, etc. These improvements may include developer-driven projects, funded by developers in advance and reimbursed through the program under a reimbursement agreement.
This item seeks approval of a Reimbursement Agreement by which the Developer advances the Project, with reimbursement for the public portions under the MC&FP. The work being performed and reimbursed under this Agreement is consistent with CIP project #36105066, and includes the widening of Missouri Flat Road, the addition of turn lanes, bike lanes, and the signalization of the intersection of Headington Road and Missouri Flat Road. This work was identified in the MC&FP as an existing roadway network deficiency prior to the commercial development approved under the plan. Because the current limitations were identified as existing deficiencies, the majority of work is not funded under the Traffic Impact Fee (TIF) Program, which funds projects that are an impact of new development, not for existing deficiencies. The work will provide congestion relief to the Missouri Flat Road corridor as well as provide safety improvements to the Headington Road intersection. This work is also consistent with the future extension of Headington Road from Missouri Flat Road to El Dorado Road (CIP project #36105022) should the connection ultimately be made. The frontage improvements on Missouri Flat Road and the Headington Road extension (a.k.a. Crossings Lane) improvements, beyond those needed for the signalization and intersection work, are not being reimbursed under this Agreement as they are a function of the commercial development project and not eligible for reimbursement under the MC&FP. Should the Headington Road connection to El Dorado Road be constructed at a future date, portions of it may be determined to be eligible for reimbursement under the TIF Program at that time.
Currently, the proposed Reimbursement Agreement, Section 8. "MC&FP Reimbursement," provides for repayment to begin upon completion of the warranty period, which occurs one year after acceptance of the improvements by the Board as complete. The reimbursement will be made in six installments. Five annual payments shall be made in an amount equal to fifteen percent (15%) of the total reimbursable amount, with the sixth and final annual payment equal to the remaining balance of the project. This reimbursement schedule is consistent with other transportation funding reimbursement policies.
Additionally, Section 8 of the Reimbursement Agreement provides that reimbursement is "dependent upon the amount of funds available in the MC&FP Account(s), or its successor, and the available amount of Uncommitted MC&FP. Developer acknowledges and agrees that the sole source of funds the Developer shall look to for the reimbursement shall be the Uncommitted MC&FP." The Uncommitted MC&FP represents the account funds available after prioritizing prior set-asides and priority reimbursement commitments documented in agreements previously approved by the Board.
Based on initial Project cost estimates, the total reimbursable amount is estimated to be $2,195,444.44. The actual reimbursable costs will be determined upon project completion and after approval by County staff, including Transportation, Chief Administrative Office, County Counsel, and Auditor departments.
With an anticipated acceptance date of July 1, 2024 (subject to actual project timelines), the predicted reimbursement schedule in the Reimbursement Agreement is:
July 1, 2025 - Reimbursement = $329,316.67
July 1, 2026 - Reimbursement = $329,316.67
July 1, 2027 - Reimbursement = $329,316.67
July 1, 2028 - Reimbursement = $329,316.67
July 1, 2029 - Reimbursement = $329,316.67
July 1, 2030 - Reimbursement = $548,861.09
Total = $2,195,444.44
According to the current CIP funding schedule and given the funding available in the MC&FP account, the MC&FP would have sufficient funds to reimburse the Project under this reimbursement schedule. However, it should be noted that Transportation will be bringing an item to the Board in the next month to consider funding options for the Diamond Springs Parkway 1B (DSP 1B) project, including a loan from the Tribe Fund to be paid back by the MC&FP. The reimbursement agreement could potentially affect the projected payment schedule for this Tribe Fund loan. Currently, the MC&FP generates approximately $1,000,000 in tax increments annually that would be used for loan repayment and reimbursement payments for the Crossings improvements. The use of funds for both the DSP 1B project and the reimbursement would not impede any other planned projects or other efforts and would allow both projects to proceed, however, depending on the reimbursement schedule, it may cause the Tribe fund to be paid back from the MC&FP fund after the developer is reimbursed.
As an additional consideration, the Developer for the Crossings project has requested reimbursement be expedited more quickly than in the attached reimbursement agreement, with repayment made upon acceptance of the Project by the Board as complete (one year earlier than payment would normally begin under the usual Reimbursement Agreement terms, and before the completion of the warranty period) with a lump sum payment. Under the Developer's request, a lump sum payment reimbursement would be as follows:
July 1, 2024 - Reimbursement = $2,195,444.44
The MC&FP projections show that it will not have adequate funds to provide a lump sum payment if the other MC&FP projects and revenues continue as currently programmed. The 2023 Capital Improvement Program Cash Proforma for the MC&FP had an estimated balance of $5,020,629 at the beginning of FY 2023-24 , with a significant anticipated expenditure of $6,606,605 programmed for FY 2024-25 to fund construction of DSP 1B, in addition to other lesser items. The MC&FP has historically collected approximately $1,000,000 in revenue annually. Under the Developer's requested lump sum payment scenario, the MC&FP would have insufficient funds to pay for the DSP 1B project in FY 2024-25 and 2025-26. There are no other funding sources contemplated for reimbursement agreements in the Missouri Flat Area Master Circulation & Funding Plan Reimbursement Guidelines (Legistar #23-0101).
Transportation is requesting direction from the Board on priorities for uses of the current and projected available MC&FP funds, along with the Developer's request for expedited reimbursement. Staff has provided an alternative scenario, outlined below, should the Board choose not to approve the Reimbursement Agreement as attached.
Alternative Reimbursement Scenario: Accelerate repayment while holding a reserve amount in the MC&FP accounts of approximately $200,000. Based upon an anticipated acceptance date of July 1, 2024 (subject to actual project timelines), the estimated repayment schedule would be as follows:
July 1, 2025 - Reimbursement = $1,153,937
July 1, 2026 - Reimbursement = $1,000,000
July 1, 2027 - Reimbursement = $41,507
Total = $2,195,444.44
As mentioned above, Transportation will be bringing an additional item to the Board for consideration, which will affect the MC&FP Fund balance, should it be approved. Consideration of that item's impacts on this Project and Reimbursement Agreement will be presented at that time, including the potential impacts to the projected payment schedule(s).
ALTERNATIVES
1. The Board could choose not to approve the Reimbursement Agreement as attached and instead approve the alternative scenario described above. Staff would revise the Reimbursement Agreement as directed and send it to the Board for signature.
2. The Board could choose to approve either of the Reimbursement Agreement options presented, but reserve the right to commit MC&FP funds to other projects and/or funding obligations before payment is made to the Developer.
3. The Board could choose to continue this item to be considered concurrently with the future MC&FP funding item, to more accurately discuss the impacts on the Reimbursement Agreements payment schedule.
4. The Board could choose not to approve the Reimbursement Agreement in any of the forms presented, and direct staff to return with new options. Staff would return to the Board at a later date.
PRIOR BOARD ACTION
See Discussion / Background section above.
OTHER DEPARTMENT / AGENCY INVOLVEMENT
County Counsel
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
There is no change to Net County Cost associated with this agenda item.
CLERK OF THE BOARD FOLLOW UP ACTIONS
1) Obtain Chair's signature on two (2) original copies of the Reimbursement Agreement.
2) Return one (1) fully executed original Reimbursement Agreement to the Department of Transportation, attn: Lindsay Tallman, for additional processing.
STRATEGIC PLAN COMPONENT
The MC&FP is a significant funding source for the CIP, which is a vital part of the Infrastructure component of the County Strategic Plan. Adequate infrastructure is necessary for the Economic Development component and is a requirement of the County General Plan. Safe roads are a crucial factor in the Public Safety component of the County's Strategic Plan.
CONTACT
Rafael Martinez, Director
Department of Transportation