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APPROVE MEASURE K RENEWAL FINANCING AGREEMENT BETWEEN CITY OF STOCKTON AND SAN JOAQUIN COUNCIL OF GOVERNMENTS, AND APPROVE AMENDMENT TO PROFESSIONAL SERVICES MASTER CONTRACT WITH MARK THOMAS & COMPANY, INC. FOR THE HAMMER LANE WIDENING PHASE 3B PROJECT (PW1427)
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution authorizing the City Manager to execute a Measure K Renewal Financing Agreement in the amount of $9,500,000 with the San Joaquin Council of Governments (SJCOG) for the Hammer Lane Widening Phase 3B project (PW1427).
It is also recommended that the City Council approve a motion authorizing the City Manager to execute an Amendment to Professional Services Master Contract with Mark Thomas & Company, Inc., of Sacramento, CA, in the amount of $285,051, to prepare plans and specifications, and provide survey services for the Hammer Lane Widening Phase 3B project (PW1427).
It is further recommended that the resolution and motion authorize the City Manager to take appropriate actions to carry out the purpose and intent of this resolution and motion.
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Summary
The City is the lead agency for delivering the Hammer Lane Widening Phase 3B (PW1427) regional arterial improvement project. The adopted Hammer Lane Specific Plan identified Hammer Lane to be widened to six lanes from Interstate 5 to Thornton Road, and to eight lanes from Thornton Road to State Route 99 (SR99). The Hammer Lane Widening Phase 3B project is the final project segment remaining. Funding is now available for the project from SJCOG’s sale of Measure K Renewal bonds. The California Environmental Quality Act (CEQA) documents for the project are eight years old and need to be updated and recertified. Additionally, some design work is necessary to update the plans, and permits will need to be verified, updated or acquired. Staff has negotiated an Amendment to the Professional Services Master Contract with Mark Thomas & Company, Inc., the original project consultant, in the amount of $285,051 to complete the final design and update the CEQA documents.
The project will be funded by SJCOG’s Measure K Renewal bond sale proceeds backed by the Measure K Renewal program. Per the Measure K Renewal Financing Agreement, the current proposed annual interest rate is 3.365 percent, plus a 0.0045 percent administrative fee. Interest accrual will begin after the date of the Notice to Proceed and based on actual reimbursements for project costs. Payment of principal and interest will be made from future Measure K Regional Arterial revenue, and will not affect any other funding sources or programs. Payments will begin after the project is completed, and are amortized over a 10-year period. In order to secure the funding, a Measure K Renewal Cooperative Agreement and a Financing Agreement with SJCOG are required. The accompanying funding estimate was approved by Council as part of the FY 2014-15 Annual Budget and CIP and was amended on March 10, 2015, by Council approval of the Measure K Renewal Cooperative Agreement with SJCOG.
Staff recommends Council adopt a resolution authorizing the City Manager to execute a Measure K Renewal Financing Agreement with SJCOG, in the amount of $9,500,000, and approve a motion authorizing the City Manager to execute an Amendment to Professional Services Master Contract with the initial project consultant, Mark Thomas & Company, Inc., of Sacramento, CA, in the amount of $285,051, to prepare plans and specifications, and provide survey services for the Hammer Lane Widening Phase 3B project (PW1427).
DISCUSSION
Background
Hammer Lane is an important arterial within the City of Stockton providing east-west access between Interstate 5 and SR99. The City is the lead agency for delivering the Hammer Lane Widening Phase 3B project (PW1427).
In 1991, the City initiated the Stockton Streets Improvement Project to study nine major street corridors throughout the City. The goal was to determine viable roadway improvement alternatives to accommodate future traffic volumes and maintain acceptable traffic operations along nine critical street corridors. As a result of this process, Council certified a Programmatic Environmental Impact Report, and adopted nine specific plans in October 1994. The Hammer Lane Specific Plan was one of the nine adopted specific plans.
The specific plan for the Hammer Lane corridor identified the roadway to be widened to six lanes from Interstate 5 to Thornton Road, and to eight lanes from Thornton Road to SR99. Due to the magnitude of the overall project, the widening of Hammer Lane was divided into multiple phases as follows: Thornton Road to the Union Pacific Railroad crossing (Phase 1), Union Pacific Railroad underpass to the formerly Southern Pacific Railroad crossing (Phase 2), and Kelley Drive to Thornton Road (Phase 3). Phases 1 and 2 were completed in 2003 and 2004, respectively.
On March 8, 2005, Council adopted Resolution No. 05-0080, which authorized an Amendment to the Professional Services Master Contract with Mark Thomas & Company, Inc. for final design of the Hammer Lane Widening Phase 3 project from Kelley Drive to Thornton Road. Phase 3 was further split into Phase 3A (Kelley Drive to Alexandria Place) and Phase 3B (Alexandria Place to Thornton Road) (Attachment A).
In 2007, design, right of way, and utility work was finalized on the project. Phase 3A construction was completed in 2008. Phase 3B was originally anticipated to receive Measure K Congestion Relief Regional Arterial funding for construction in 2011. However, as construction approached, the economy went into recession, which severely impacted Measure K sales tax projections, available funding, and the Measure K program as a whole. As a result, funds for construction were not available. As an alternate delivery strategy, SJCOG and the City obligated federal Regional Surface Transportation Program funds to the project to amend the environmental documents to obtain federal environmental clearance, in order to make the project eligible for federal grants. However, before any substantial work was done in this federalization process, SJCOG proposed the sale of bonds backed by the Measure K program as a funding mechanism to deliver the project. This proposal would restore Measure K Regional Arterial Congestion Relief funding to the project, eliminating the need for federal funding and a federal environmental clearance and thereby avoiding the associated increased costs.
Without the bond funds, SJCOG projects the soonest Measure K funding would be available for this project would be sometime after 2021. Given that the construction cost in 2021 dollars for the Hammer Lane project are projected to be significantly higher, SJCOG and City staff concur that utilizing current bond funding to expedite delivery will result in a lower overall cost to the Measure K program.
On March 10, 2015, by Resolution No. 2015-03-10-1201, Council adopted the City/SJCOG Cooperative Agreement for the Hammer Lane Widening Phase 3B project (PW1427), which provided up to $9,500,000 in Measure K Renewal funding. At the same time, federal funds were de-obligated from the project.
Present Situation
Staff reviewed the project plans, specifications, environmental/permitting documentation that was completed in 2007 by the original project designer (Mark Thomas & Company, Inc.) to determine if updates or revisions were necessary. The CEQA documents for the project are nearly eight years old and need to be updated and recertified. Additionally, some design work will be necessary to update the plans, and permits will need to be verified, updated or acquired. As the original engineer of record, Mark Thomas & Company, Inc. has the background, surveys, technical data, AutoCAD drawings, and specifications for the project. Mark Thomas & Company, Inc. is therefore, able to complete the updates in a more timely and cost effective manner than a consultant that is not familiar with the project details. Staff has negotiated an Amendment to the Professional Services Master Contract with Mark Thomas & Company, Inc., in the amount of $285,051, to complete the final design and update the CEQA documents.
The project will be funded by SJCOG’s Measure K Renewal bond sale proceeds backed by the Measure K Renewal program. The current proposed annual interest rate is 3.365 percent, plus a 0.0045 percent administrative fee. Under the current expenditure and interest assumptions, interest accrual will begin after the date of the Notice to Proceed based upon the actual reimbursements for project costs. Payment of principal and interest will be made from future Measure K Congestion Relief Regional Arterial (RA) revenue receipts. Payments will begin after the project is completed and will be amortized over a 10-year period. Should RA receipts not be sufficient to fund all principal and interest costs within this period, the amortization term will be extended. In order to secure the funding, a Measure K Renewal Cooperative Agreement and a Financing Agreement with SJCOG are required. On March 10, 2015, Council approved the Measure K Renewal Cooperative Agreement with SJCOG.
SJCOG has prepared a Measure K Renewal Financing Agreement (Attachment B), which provides further details to the terms as summarized above. Staff recommends Council adopt a resolution authorizing the City Manager to execute a Measure K Renewal Financing Agreement with SJCOG, in the amount of $9,500,000, and approve a motion authorizing the City Manager to execute an Amendment to Professional Services Master Contract with Mark Thomas & Company, Inc., of Sacramento, CA, in the amount of $285,051, to prepare plans and specifications, and provide survey services for the Hammer Lane Widening Phase 3B project (PW1427) (Attachment C).
FINANCIAL SUMMARY
The budget for these Measure K Renewal projects was estimated and approved by Council as part of the FY 2014-15 Annual Budget and CIP. The budget was amended on March 10, 2015, by Council approval of the Measure K Renewal Cooperative Agreement with SJCOG. Sufficient funding for the Hammer Lane Widening Phase 3B project (PW1427) is available through this budget in the capital portion of the Measure K Renewal Fund 080.
The interest cost and repayment will be allocated from Measure K Congestion Relief Regional Arterial directly by SJCOG to the loan repayment. This project is listed in the Measure K Congestion Relief Regional Arterial program, and will not affect any other funding sources or programs.
There is no impact to the City’s General Fund or to any other unrestricted fund as a result of taking the recommended actions.
Attachment A - Vicinity Map - Hammer Lane Widening Phase 3B
Attachment B - Measure K Renewal Financing Agreement
Attachment C - Amendment to Professional Services Master Contract with Mark Thomas & Company, Inc.