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AUTHORIZE INTERIM FUNDING AGREEMENT WITH THE SAN JOAQUIN AREA FLOOD CONTROL AGENCY TO ADVANCE THE MOSSDALE PROJECT IN THE RECLAMATION DISTRICT 17 AREA
recommended action
RECOMMENDATION
It is recommended that the City Council approve a motion:
1. Authorizing an interim funding agreement with the San Joaquin Area Flood Control Agency to advance the Mossdale Project, a flood protection project in the Reclamation District 17 area; and
2. Authorizing the City Manager to take appropriate and necessary actions to carry out the purpose and intent of this motion.
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Summary
On November 16, 2017, San Joaquin Area Flood Control Agency (SJAFCA) unanimously approved the addition of the Cities of Lathrop and Manteca within the agency under an amended and restated Joint Exercise of Powers Agreement (JPA). The additions of Lathrop and Manteca moved SJAFCA towards becoming a regional flood agency rather than focusing solely on Stockton. A regional approach that includes the Cities of Lathrop, Manteca, Stockton, and San Joaquin County (Member Agencies) is appropriate given the need for regional flood management. In addition to the creation of a new JPA, a financing plan for the Reclamation District 17 - Mossdale Tract Area Project (Mossdale Project) flood protection project was developed. Given assumptions regarding project costs and future development, the financing plan demonstrated that identified revenue mechanisms could support future project costs.
The financing plan evaluated the potential effectiveness of various types of funding mechanisms that could include: a regional levee impact fee program, assessment district overlay and an enhanced infrastructure funding district. However, these mechanisms are contingent upon development, and the SJAFCA must complete additional tasks to enable future development. To complete the upfront work required to further the development of the Mossdale Project, an interim funding agreement (Agreement) was drafted between SJAFCA and its Member Agencies to temporarily supplement the Mossdale Project budget until these revenue mechanisms are realized. Funding under this Agreement is defined as a loan to SJAFCA with expected future reimbursement as the project moves forward.
If this Agreement is authorized, SJAFCA will receive sufficient funding by its Member Agencies through the end of Fiscal Years (FY) 2017-18 and FY 2018-19 to develop revenue mechanisms and advance the Mossdale Project within the Reclamation District (RD 17) area.
DISCUSSION
Background
SJAFCA is a Joint Powers Authority that was created in May 1995 between the City of Stockton, San Joaquin County, and the San Joaquin Flood Control and Water Conservation District to address flood protection projects for Stockton and the surrounding unincorporated County area. Within the past few years, California Senate Bill 5 (SB 5), also known as the Central Valley Flood Protection Act of 2008 (Chp.364, Stat. 2007), required cities and counties in the Central Valley to make “findings” on certain development decisions and achieve a 200-year level of flood protection to ensure reduced flood risk and continued economic growth. San Joaquin County and the Cities of Lathrop, Manteca, and Stockton all have areas within their jurisdictions that are either developed, under development or planned for future development growth that are located within the Reclamation District 17 area (RD 17). Each jurisdiction has independent land use authority and shares a common interest to enhance the flood protection system to provide increased public safety for the current and future residents of the RD 17 area. For Stockton, this predominantly consists of Weston Ranch and future residential and commercial development within the City’s General Plan urban service area boundary.
The RD-17 area currently meets the 100-year flood protection standard but does not have 200-year flood protection as defined by SB5. Since RD-17 contains land owned by multiple land use agencies, these agencies engaged in discussions and participated in feasibility studies to determine the necessary improvements and costs to upgrade the RD-17 levee protection system to the SB 5 200-year flood protection standard.
As a result, the Cities of Lathrop and Manteca requested that SJAFCA act to consider expanding its membership and take responsibility for the further development of the 200-year flood protection project known as the Mossdale Tract Area Project (Mossdale Project). In response, the SJAFCA Board in September 2017 unanimously approved the addition of the Cities of Lathrop and Manteca (Attachment A- SJAFCA Boundary Overview). Since that time, the Joint Powers Agreement for SJAFCA has been amended and restated to include Lathrop and Manteca and was approved by the SJAFCA Board on November 16, 2017 (Attachment B- RD-17 Vicinity Map).
With the development of a new JPA governance document, an initial Financing Plan (Plan) for the Mossdale Project was also developed. The Plan investigated the potential effectiveness of various types of funding mechanisms that could include a regional levee impact fee program, assessment district overlay and an enhanced infrastructure funding district (EIFD). The EIFD is a relatively new funding mechanism, authorized in 2014 under Senate Bill 628, where municipalities and counties can create EIFDs, which can fund infrastructure development and community revitalization.
Present Situation
It was anticipated by the Member Agencies that supplemental funding would be needed to initiate the transfer of project responsibilities for the Mossdale Project to SJAFCA. The SJAFCA currently has no other source for funding for this project in that it has not developed needed revenue mechanisms.
An Agreement was drafted between the SJAFCA, and it's Member Agencies to fund the transfer of these initial project responsibilities (Attachment C- Interim Funding Agreement). This Agreement is authorized under Section 24, which defines how the Member Agencies can fund and receive funding through Member Agencies.
Under the Agreement, all Member Agencies will provide funding beginning with equal loans of $65,000 per agency for the remainder of the FY 2017-18. In addition, for FY 2018-19, additional loans not to exceed $300,000 per agency may be needed, which could be offset by the collection and transfer of levee impact fees or other funds to SJAFCA.
Interim funding will allow SJAFCA agency staff and consultants to advance the Mossdale Project for the remainder of FY 2017-18 and through FY 2018-19. The Mossdale Project Scope of Work tasks as outlined will at least consist of the following activities:
1. Mossdale Project efforts that directly relate to maintaining and supporting Member Agency adequate progress findings, including preparation of an annual update to the Urban Level of Flood Protection Adequate Progress Report to be made publicly available and submitted to the Central Valley Flood Protection Board by SJAFCA; and
2. The development, establishment, and administration of funding crediting, and reimbursement programs for the long-term funding of Mossdale Project improvements, including:
• Regional Levee Impact Fee Program;
• Assessment District Overlay;
• Enhanced Infrastructure Financing District development efforts; and
• Support and coordination activities credited as local cost-share that advance State and Federal funding for the Project.
By the end of FY 2018-19, sufficient progress will be made so adequate funding will be available for SJAFCA to continue to develop the Mossdale Project through the further establishment of other planned revenue mechanisms, project tasks, and construction over the next several years.
FINANCIAL SUMMARY
The Agreement between SJAFCA and its Member Agencies will provide transitional funding in the form of a $65,000 loan for FY 2017-18 and an amount not to exceed $300,000 for FY 2018-19, for the Mossdale Project until other revenue mechanisms are established.
The funds raised by SJAFCA under this Agreement and other planned revenue mechanisms, along with potential funding from the State and Federal governments, should be sufficient to implement the Mossdale Project over the next several years and repay the Member Agencies for the loans made under this Agreement by June 30, 2029.
However, each Member Agency loan to SJAFCA shall be considered unsecured and will be automatically forgiven if SJAFCA is unable to secure permanent funding for the entirety of the Project with adequate excess funds for loan repayment. The SJAFCA Board will determine by December 31, 2023, if it is unable to repay the funds loaned by the Member Agencies.
The loan to SJAFCA will be provided using Community Development Department revenues collected for Community Rating System Admin Fee (accounts 048-1825-345 and 048-1830-345). Revenues collected from the Community Rating System Admin Fee over the last five years total just over $700,000. A portion of these revenues remain unspent as part of the Development Services 048 fund balance which is projected to be $10.3 million at the end of FY 2017-18.
Approval of this loan will create a restriction on the Development Services fund balance to accommodate any possible future forgiveness. The loan will be established in Development Services Fund receivable account number 048-0000-134 when funds are disbursed. This account does not require an appropriation since it is for a loan from the City and repayment from SJAFCA is expected. Should at a later time the loan be forgiven, it will convert to an expenditure and budget appropriation will be necessary.
There is no impact to the General Fund, or any other unrestricted fund, from this action.
Attachment A - SJAFCA Boundary Overview
Attachment B - RD 17 Vicinity Map
Attachment C - Interim Seed Money Funding Agreement