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HomeMy WebLinkAbout1988-06-21; Housing & Redevelopment Commission; 109; Redevelopment Bond Project Funding PrioritiesI . . . j HOUSING AND-‘.EDEVELOPYENT COYMI&N - AGENDA BILL 0 -& AB#109 TITLE: DEPT. HD. (‘- ‘* MT& 6/21/88 REDEVELOPMENT BOND PROJECT FUNDING PRIORITIES CITY ArrVvm DEPT. RED CITY MGR%i&- I RECOMMENDED ACTION: Staff recommends that the Housing and Redevelopment Commission establish a basic project priority time-frame as proposed and direct staff to implement programs. I ITEM EXPLANATION: On February 2, 1988, the Housing and Redevelopment Commission authorized the issuance of Redevelopment Tax Allocation Bonds. These bonds were proposed to fund the following projects: PRIORITY PROJECT ESTIMATED COST . :: : ‘r) E a 2 u 4-1 0 1. Carlsbad Senior Center $3.5 million 2. Parking Facilities 1.5 3. Elm/Carlsbad Blvd. Streetscape 5.4 - 6.0+ 4. Blufftop Walkway .6 PROJECT STATUS: Senior Center - Design approved, scheduled for construction in Fall 1988 Parking Facilities - Four sites proposed, first lease (54 spaces) to Commission in June, others in negotiations. Streetscape - Design approved, in plan check, ready for construction in Fall 1988. Blufftop Sidewalk- Bids opened. Ready for award in June, construction time: five (5) months. Each capital project will be considered by the Housing and Redevelopment Commission under separate action with individual fiscal reports. However, the funds available will not cover all projects. Some projects may have to be delayed due to the release of funds schedule. Staff is proposing the above list of projects as the order of priority. Additionally, staff feels that the actual cost for the streetscape project could far exceed the allotted funds. Staff suggests that the Blufftop Walkway be deleted from this project list or an alternate source of funds be allocated for this project. A loan from the bond program could be considered. AGENDA BILL NO. 109 PAGE 2 FISCAL IMPACT: The Redevelopment Agency has $10.4 million in construction funds available from the recent Tax Allocation Bond Issue. In addition, an estimated $400,000 in interest will be earned during the next 2 l/2 to 3 years while capital projects are being constructed. The Agency will therefore have a total of about $10.8 million available to spend on capital projects by the end of the third year. The Agency currently has plans to spend approximately $11.0 million on capital projects and this total could rise to as much as $13.0 million to $14.0 million should any of the projects experience major complications during construction. In order to establish appropriate use of bond funds, it will be necessary for the Redevelopment Commission to establish priorities on the various projects to be funded. If these projects are funded on a first come, first served basis, the Agency will find that certain high priority projects cannot be completed due to lack of funding. EXHIBITS: l- Redevelopment Bond Program 2- Drawdown Schedule 3- Memo dated 6/10/88 from Finance Director to City Manager regarding use of Redevelopment Bond Proceeds. EXHIBIT 1 REDEVELOPMENT AGENCY BOND PROGRAM MILLION DOLLARS FUNDS AVAILABLE DEMAND FOR FUNDS m SIDEWALK m SENIOR CENTER m PARKING - STREETSCAPE w CONTINGENCY 0 BOND PROCEEDS b Y xl R EXHIBIT 2 . : June 10, 1988 TO: CITY MANAGER FROM: FINANCE DIRECTOR USE OF REDEVELOPMENT BOND PROCEEDS Summary Staff is recommending that the City Council review the funding priority of the projects to be constructed with tax allocation bond proceeds. Due to the limited amount of money available, Council cannot construct all projects previously considered as candidates for the Bond Program. Bond funds will fall anywhere from $300,000 to $3 million short of providing all the resources necessary for the construction of these projects. Background A few months ago the City of Car&bad sold $12 million of Tax Allocation Bonds creating a pool of useable funds of approximately $10.8 million (proceeds of $10.4 million plus $400,000 in interest to be earned over the next three years). These funds were to be used for the construction of projects benefiting the Redevelopment area. At the time of the sale the City had plans for four major projects that total more than the amount of funds available through the Bond Issue * These projects are shown below: 1. Carlsbad Senior Center $3.5 million 2. Parking Facilities Along Elm Ave. $1.5 million 3. Elm/Carlsbad Blvd. Streetscape $5.4 million 4. Bluff Top Walkway $0.6 million PROJECT FUNDING TAX ALLOCATION BOND ISSUE STREETSCAPE 0 1 2 6 6 7 TOTAL FUNDS MAILABLE - ABOUT $103 MIL TOTAL PROJECT REQ - $11 MIL Ts) $13 MIL - City Manager June 10, 1988 Page 2 These four projects, totaling more than $11.0 million, represent the major improvements within and around the Redevelopment area that could be funded through the Bond Issue. Unfortunately, the Bond Issue did not supply sufficient funds for the construction of all four projects. As the Redevelopment Agency considers spending Tax Allocation Bond funds, it is important to consider which projects shall be funded first and which projects may have to wait or search fol funding through another source. The estimated $11 million construction cost does not include any allowance for the expansion in scope, change orders, complications discovered during the engineering phase or other unforeseen conditions. This is most evident in the Elm and Carlsbad Blvd. Streetscape Project where the $5.4 million estimate could grow by as much as $2 million if complications are discovered during corlstructioll. This mealis that the City could find itself facing the need to construct projects totaling $13 million while holding only $10.8 million in bond funds . The chart below provides a picture oE what the City is facing if all proposed projects were funded from the Tax Allocation Bond Issue. In producing this chart it is assumed that the Senior Citizens Center and the parking along Elm Avenue are the primary projects that must be completed first. It is also assumed that the Streetscape Project, which is terltatively scheduled to begin ia early fi seal. year 1988-89, wc,uld be funded third. If we furtller assume tliat tile Streetscape Project can be constructed for the estimated $5.4 million, the chart shows that by the end of the Streetscape construction. No funding will be available for the Sidewalk Project. If on the other hand we assume a worst case scenario for the Streetscape Project, we can see that not only do we not have funds available for the Sidewalk Program, but we also fall as much as $2 milli.on short of being able to complete the Streetscape Program from the Tax Allocation Bond Issue. FUNDS AVAILABLE TAX ALLOCATION BOND ISSUE . S Million 12 , I SENIOR CCNTER MAKINO 8lRCl!TflCAPE BALANCE IN ACCOUNT AFTER EACH PROJECT INCLUDINQ INTEREST - $10.8 MIL RAILMLE TOIAL PAOJECT REQ - $11 MIL TO $13 MIL City Manager June 10, 1988 Page 3 This ana1ysi.s points out the necessity to prioritize the use of Tax Allocation Bond funds carefully before work is started on various projects. If the City Council wishes to fund the Senior Center and the parking improvements as high priority projects from the Bond Issue, $5.0 million of the available $10.8 million will be obligated immediately. This leaves approximately $5.8 million available for the Streetscape and Sidewalk Projects. During the next few years the highest priority projects may not be the first projects to come before the City Council for consideration. Should the Council authorize staff to proceed with a lower priority project in advance of one of the higher priority projects , we will find that funding priorities have been changed inadvertently. Although the decision to delay a project that may be ready to go to construction may not be an easy one, it is necessary to Laarantee that funds are available for the higher priority projects when they are needed. AS the City considers the construction of these projects, it may be important to consider alternative funding sources where available. For example, if the Council were to decide that it is important to proceed with the Sidewalk Project and did not wish to interfere with the priority of the Senior Citizens Project or the Parking and Streetscape Projects, it will require the use of General Funds or the search for additional grant money to fund this particular project. The General Fund has sufficient funds available in the unobligated fund balance to either, a) loan $600,000 to the Redevelopment Agency or, b) directly fund the construction of the Sidewalk Project at this time. Tllis would, however, reduce the amount of funds within the General Fund to cover possible deficits or revenue shortfalls in future years. Advancing these funds to the Redevelopment Agency provides the possibility of repayment in future years with interest. The City will. also be searching for alternative sources of funding for the Streetscape Project should we experience significant change orders or unforeseen complications during the construction of the project. At this time no obvious sources of alternative funding is available. It will be important for the City to be aware of this during the construction phase of the Streetscape Project and to constantly be conscious of the limited resources available for the project. Staff has assumed that the Senior Center and the Parking Facilities are the highest priority projects, followed by the Streetscape and the Bluff Top Sidewalk Project. It would be appropriate to raise this issue with the City Council to confirm the priority of the various projects and to alert the Council to the funding issues that need to be addressed as the various projects are approve:. Chris Salomone Marty Orenyak