City Council and Redevelopment Agency Supplemental Staff Report



City Council and Redevelopment Agency Meeting: May 12, 2009

Agenda Item: 5-A


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.



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 a Five-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.

Following the staff presentation and public comment, Council requested additional information to assist with its deliberations in refining priorities and funding commitments. 



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.

·        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) an 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 Council 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.





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.

School 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 formal 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 April 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 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 Agency deadlines.  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 for a 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. Staff’s 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. 



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 Economic Development


P. Lamont Ewell

City Manager





Attachment A:            Leveraging Opportunities

Attachment B:            Operational and Maintenance Costs

Attachment C-1:        School District’s 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