REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager to Execute the Second Amendment to the Agreement Between the City of Sunnyvale and the VTA for the SR 237/US 101/Mathilda Avenue Interchange Improvement Project to Extend the Term Until December 31, 2020, Increasing the Not to Exceed Amount of the City’s Financial Contribution From $8,000,000 to $25,000,000 and Other Minor Amendments and Approve Budget Modification No. 5
Report
BACKGROUND
In 2013, the City entered into a $4M agreement comprising of $2M grant funds and $2M of the city’s Traffic Impact Fee (TIF) with the Valley Transportation Authority (VTA) to complete the Project Initiation Document, Project Alternatives/Environmental Document and Plans, Specifications, and Estimates for SR 237/US 101/Mathilda Avenue Interchange project (Attachment 1). Subsequently, in 2017 the contract with VTA was amended to add $4M for additional design and environmental review, thus making the city’s total contribution amount $8M (Attachment 2). Project design and Right of Way certification has now been completed, and the project is approved for construction by the California Department of Transportation (Caltrans). The estimated construction cost is $34M.
The SR 237/US 101/Mathilda Avenue Interchange project has been identified as the City’s number one transportation priority, and as a priority project to receive funding as part of the recently passed Measure B bond measure. At the October 5, 2017 VTA Board meeting, the Board adopted Measure B Program Category Guidelines for the Highway Interchanges Program that included $34M for the City’s SR 237/US 101/Mathilda Avenue Interchange project. However, due to pending litigation these funds are not available and will not be available for construction of the project until a court renders a final non-appealable judgment that the Measure B tax is valid. The construction phase of the project was therefore put on hold until the Measure B funds become available or the City finds an alternate construction funding source. The original schedule identified construction to start in early 2018 with a completion date of early 2019.
EXISTING POLICY
General Plan-Land Use and Transportation Policy 30: Maintain a funding mechanism where new and existing land uses equitably participate in transportation system improvements.
General Plan-Land Use and Transportation Policy 32: Require roadway and signal improvements for development projects to improve multimodal transportation system efficiency.
General Plan-Land Use and Transportation Policy 36: Facilitate safe and orderly traffic flow and promote school pedestrian and bicycle safety.
General Plan-Land Use and Transportation Policy 42: Ensure effective and safe traffic flows for all modes of transport through physical and operational transportation improvements.
ENVIRONMENTAL REVIEW
The environmental impact report for the project was completed and certified in January 2017. No further environmental review is required.
DISCUSSION
The City’s original intent was to fund the project’s construction through Measure B funding. However, with the uncertain status of this funding source, the City took the opportunity to partner with VTA to apply for $17M in competitive grant funds from the Local Partnership Program (LPP) created under Senate Bill 1 (SB1). The award of this grant requires matching funds equivalent to the grant amount of $17M. These grant funds, plus the matching funds totals to the estimated construction cost of $34M.
On May 16, 2018, the California Transportation Commission (CTC) recommended the City’s project for award of $17M in grant funds. Due to the possibility of a ballot measure in November 2018 to overturn SB1, it is in the best interest of the City to request and obligate the $17M grant at the next CTC meeting in August 2018. Upon allocation of grant funds, a construction contract award for the project must occur within six months. To meet this deadline, the project will be advertised for construction bids in September 2018. Failing to meet these deadlines could potentially result in losing $17M in awarded grant funds.
Since Measure B is under active litigation, it is not a guaranteed funding source for the matching grant funds. Therefore, the City must advance the $17M in matching funds to secure the CTC grant. Staff has successfully negotiated a reimbursement provision for the City’s funds in the Second Amendment to the Agreement with VTA; VTA has agreed to reimburse the City in full from Measure B upon receiving a final non-appealable judgment from the court that the Measure B tax is valid. However, in case of an unfavorable final court judgement, the VTA will have no obligation to reimburse the City.
With this additional City contribution of $17M, the total obligation by the City in the agreement is brought to $25M.
If this Second Amendment is approved it is expected that the project would start construction in December 2018, and complete construction in November 2019. These timeframes will be updated as the construction phase progresses. The term of the agreement will be extended to December 2020 to cover any unforeseen schedule changes.
FISCAL IMPACT
Budget Modification No. 5 has been prepared to align the current City budget with the City’s share of the overall project. The overall project cost, including VTA’s contribution, was originally estimated to be $40 million but is now $42.25M. The project started with design, which was funded by a $2 million VTA Local Program Reserve grant, matched by $6.25 million from Transportation Impact Fee (TIF) revenue from the City.
The City’s share of the construction phase of this project (the other half of which is funded by the SB1 Grant funds), is funded by an $11 million developer contribution from the Moffett Towers II project and an additional $6 million in TIF funds.
The original budget (which is reflected in the FY 2018/19 Adopted Budget) assumed the City would receive $27.75 million in grants for construction in addition to the $2 million VTA grant and expend a total of $10.25 million in TIF Funding. Approximately $1 million of the $8.25 million in design funding is still remaining to be paid. As noted above, Budget Modification No. 5 aligns the project budget to reflect the appropriation of the community benefits and TIF funding to fund the City’s match on construction and provides sufficient funding to finish the design work.
VTA is leading construction on the project. The $17M in SB1 grant funds will be received and administered by VTA, who bills the City on a reimbursement basis for the City’s share of the project. Therefore, the grant funds do not need to be appropriated by the City.
Budget Modification No. 5
FY 2018/19
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Capital Projects Fund - Community Benefits Sub-Fund |
|
|
|
|
|
|
|
|
|
Transfers Out |
|
|
|
|
Transportation Impact Fee Sub-Fund |
$0 |
$11,000,000 |
$11,000,000 |
|
|
|
|
|
|
Reserves |
|
|
|
|
Capital Reserve |
$13,860,000 |
($11,000,000) |
$2,860,000 |
|
|
|
|
|
|
Capital Projects Fund - Transportation Impact Fee Sub-Fund |
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
Miscellaneous State Grants |
$27,750,000 |
($27,750,000) |
$0 |
|
|
|
|
|
|
Transfers in |
|
|
|
|
Community Benefits Sub-Fund |
$0 |
$11,000,000 |
$11,000,000 |
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|
|
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|
|
Expenditures: |
|
|
|
|
Project 826890 - Mathilda/237/101 Interchange Improvements |
$33,011,507* |
($14,750,000) |
$18,261,507 |
*Reflects remaining budget after majority of design funds expended.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board outside City Hall, at the Sunnyvale Senior Center, Community Center and Department of Public Safety; and by making the agenda and report available at the Sunnyvale Public Library, the Office of the City Clerk and on the City's website.
ALTERNATIVES
1. Authorize the City Manager to Execute the Second Amendment to the Agreement Between the City of Sunnyvale and the VTA for the SR237/US 101/Mathilda Avenue Interchange Improvement Project to extend the term until December 31, 2020, increasing the not to exceed amount of the City’s financial contribution from $8,000,000 to $25,000,000 and other minor amendments and Approve Budget Modification No. 5 in the amount of $18,261,507.
2. Do not Authorize the City Manager to Execute the Second Amendment to the Agreement Between the City of Sunnyvale and VTA for SR 237/US 101/Mathilda Avenue Interchange Improvement Project, and direct staff to return $17M awarded in state grant funds to the CTC.
STAFF RECOMMENDATION
Recommendation
Alternative 1: Authorize the City Manager to Execute the Second Amendment to the Agreement Between the City of Sunnyvale and the VTA for the SR237/US 101/Mathilda Avenue Interchange Improvement Project to extend the term until December 31, 2020, increasing the not to exceed amount of the City’s financial contribution from $8,000,000 to $25,000,000 and other minor amendments and Approve Budget Modification No. 5 in the amount of $18,261,507.
Staff
Prepared by: Shahid Abbas, Transportation and Traffic Manager
Reviewed by: Chip Taylor, Director, Public Works
Reviewed by: Teri Silva, Assistant City Manager
Approved by: Kent Steffens, City Manager
ATTACHMENTS
1. Funding Agreement with VTA for Mathilda Interchange
2. First Amendment to Funding Agreement with VTA for SR 237, US 101 and Mathilda
Interchange
3. Second Amendment to Funding Agreement with VTA for SR 237, US 101 and
Mathilda Avenue Interchange