Subject: BAILEY EXTENSION OVER UNION
PACIFIC RAILROAD
Council
District: 2
a.
Adoption of
a resolution authorizing the Director of Public Works to execute an agreement
with Caltrans for reimbursement to the City from the State Grade Separation
Fund for the Bailey Avenue Extension over Union Pacific Railroad in an amount
not to exceed $5,000,000.
b.
Adoption of
the following appropriation ordinance amendments in the Building and Structure
Construction Tax Fund to:
1.
Establish
an appropriation to the Department of Transportation for the Bailey Avenue
Above-Grade Crossing at UPRR in the amount of $950,000.
2.
Reduce the
Reserve for the VTA: Bailey/101 Improvement Project by $950,000.
c.
Adoption of
a resolution authorizing the City Manager to negotiate and execute any
amendments to existing agreements as needed to implement the Bailey Avenue
Above-Grade Crossing at UPRR and any new agreements, as may be appropriate and
necessary to implement the proposal set forth in this memorandum.
BACKGROUND
On October
24, 2000, Council approved the rezoning for the properties of Coyote Valley
Research Park (CVRP) for the development of 6,600,000 square feet of campus
industrial uses on 688 acres of land that CVRP owns within the 1,444-acre North
Coyote Valley Campus Industrial Area.
One of the major improvements necessary for the development of North
Coyote Valley is the Bailey Extension Project.
1. Original Bailey Extension Project
The original
Bailey Extension Project involved extending Bailey Avenue from its current
terminus to the east across Route 101, where it would connect with Malech Road
in the County of Santa Clara. The
original project included a grade separation over the Union Pacific Railroad
tracks (UPRR) and Monterey Road including two connecting ramps at Monterey
Road, a bridge over Coyote Creek, and a full interchange at Route 101. The total project cost was estimated to be
$45 million, with the VTA contributing $4.5 million, the State contributing up
to $18 million, and CVRP contributing $22.5 million.
2. Revised Bailey Extension Project
Due to the
economic downturn, CVRP reduced its commitment to the project to $2
million. This, along with the need to
award the project by March 2003 in order to maintain State funding, resulted in
the City substantially modifying the project into 2 phases. On November 12, 2002, Council approved this
modified project and the necessary funding for it.
Phase 1 of
the modified project consists of two segments.
Segment A (Phase 1A) involves construction of a six-lane Bailey Avenue
bridge over Coyote Creek and a full interchange at Highway 101. Segment B (Phase 1B) involves an at-grade
connection ramp between the elevated Bailey Avenue and Monterey Road including
a traffic signal at Monterey Road.
Phase 2 of the modified project involves constructing a grade separation
over the UPRR tracks and Monterey Road, and an additional connecting ramp at
Monterey Road.
The VTA is
currently constructing Phase 1A of the modified project. As of the November 12, 2002 Council action,
the estimated cost of Phase 1 was approximately $30,065,600. It was anticipated that, with the VTA’s $4.5
contribution and the State’s contribution of up to $18 million, CVRP would need
to fund $7,565,600. On November 12,
2002, Council approved the following financing plan:
·
CVRP to provide funding of $2,000,000. Most of CVRP’s contribution will be in the
form of right-of-way and the mitigation land required for Phase 1 of the
modified project.
·
City to form a Community Facilities District (CFD) on
the site of CVRP’s proposed development and issue special tax bonds to provide
$1,515,000 for Phase 1 of the modified project.
·
City to provide a cash advance estimated at $4,050,000,
and a Reserve Fund in the amount of $950,000 to fund cost over-runs. The City’s cash advance and any needed
Reserve Fund is secured by liens against the properties in the CFD.
3. Bond Sale
On December
17, 2002, Council formed the CFD and authorized the issuance and sale of special
tax bonds in an amount not to exceed $15,000,000. On January 29, 2003, the City sold $13,560,000 worth of special
tax bonds of the CFD, $1,515,000 of which shall be applied towards Phase 1 of
the modified project. The remaining
bond proceeds shall be used to redeem existing bonds from a prior bond sale to
finance public infrastructure required from the properties in the CFD.
4. Bids For Phase 1A
VTA is
currently managing the bid, award and construction of Phase 1. The construction cost for Phase 1A was
originally estimated at $18,740,000.
The bid opening was held on February 6, 2003. The low bidder was Granite Construction Company/Meyers Joint
Venture with a contract amount of $14,850,000.
With this cost saving of $3,890,000 for Phase 1A, the State subsequently
reduced its $18 million contribution to $14.8 million. The balance of $690,000 in cost saving shall
be applied towards Phase 1.
2. Financing Strategy
The total cost of designing and constructing the 4-lane
above-grade crossing is approximately $7,954,000. Staff proposes to finance the above-grade crossing as follows:
a.
$400,000 Funds from UPRR
On
September 10, 2001, the City executed an agreement with UPRR to allow
construction of the Bailey Extension over UPRR and a not to exceed $400,000
UPRR contribution towards the over crossing.
b. Approximately
$1,604,000 Developer Contribution
CVRP
has agreed to contribute approximately $1,604,000 towards right-of-way
acquisition and grading of the above-grade crossing embankments. This would be in addition to CVRP’s
$2,000,000 commitment and the CFD liens placed on their property.
c. $5,000,000
from a State Grade Separation Funding Agreement
On
March 26, 2002, Council adopted a resolution providing for filing of an
application for funding from the State Grade Separation Program for the Bailey
Avenue Extension over UPRR, and stating that sufficient local funds will be
made available as the work of the project progresses.
On
June 27, 2002, the California Transportation Commission, acting by and through
the Director of Caltrans, allocated the amount of $5,000,000 from the Grade
Separation Fund for the 2002-2003 Fiscal Year, to be used as a contribution
towards the Bailey Avenue Extension over UPRR.
The funds would be reimbursed to the City at 80% of the direct costs of
the project up to the maximum of $5,000,000.
The State funding agreement
requires the City to award a contract for construction of the above-grade
crossing within one year after allocation of the $5,000,000 by the Director of
Caltrans. This means the City would
need to award the construction contract for the above-grade crossing work by
June 27, 2003. However, the City’s
current estimated award date for this work being awarded is April 2004.
Staff has requested Caltrans to
extend the June 27, 2003 date. Caltrans
has indicated that before it would consider extending the award deadline, the
proposed agreement must be executed first prior to June 5, 2003. Otherwise, the $5,000,000 allocation will be
reverted and reallocated to another city.
If Caltrans refuses to extend the award deadline after execution of the
funding agreement, the City would likely lose the $5,000,000 State grant.
The State funding agreement also
requires the City to certify that it has sufficient funds available to finance
its share of the project costs. As discussed
below, staff believes that the City can certify the availability of sufficient
local funds from those funds already allocated by the City to the modified
Bailey Extension Project.
d.
$950,000 of Local Funds.
Staff believes that the remaining $950,000
needed to construct the above-grade crossing can be obtained from City funding already appropriated for the modified
Bailey Extension Project. No additional
local funds are needed.
As part of the November 12, 2002
funding action, the City appropriated $950,000 as a reserve for Phase 1 of the
project. The $950,000 was originally
reserved for cost overruns on Phase 1.
However, now that there is already $690,000 of cost saving from the bid
result being applied towards Phase 1, staff recommends appropriating the
$950,000 from the reserve for Phase 1 established in November 12, 2002 to the
above-grade crossing. Staff believes
that with the recent favorable construction cost environment, the $690,000 of
cost saving should be sufficient to cover any cost over-runs for Phase 1.
Moreover, construction of the
above-grade crossing would not occur until approximately May 2004. By that time, Phase 1A should be
substantially completed. If at any time
prior to awarding the above-grade crossing project it looks like Phase 1 will
involve unanticipated cost overruns in excess of $690,000, the City can shift
some or all of $950,000 funds appropriated for the above-grade crossing project
back to Phase 1. If this were necessary,
the City could look for ways to reduce the scope of the above-grade crossing
project and/or seek additional funding sources. The worst case scenario is that unanticipated cost overruns would
result in the City not being able to proceed with construction of the
above-grade crossing, which would result in the City losing the $5,000,000 in
grant funding from the State.
The following is a summary of the Financing Strategy for the
above-grade crossing:
Funds from UPRR $ 400,000
Developer Contribution
1,604,000
Funds from State Grade
Separation Program 5,000,000
City Advance 950,000
Total $7,954,000
CONCLUSION
Based on all of the above, staff believes that it is prudent
for the City to proceed with efforts to construct the above-grade
crossing. Accordingly, staff recommends
that Council:
·
Approve the agreement with Caltrans for reimbursement
to the City in an amount not to exceed $5,000,000 for the Bailey Avenue
above-grade crossing at UPRR.
·
Reduce the $950,000 Bailey/101 Reserve Fund to zero, and
establish an appropriation for the Bailey Avenue above-grade crossing at UPRR
in the amount of $950,000.
Numerous
neighborhood and community meetings were held by CVRP’s consultant, the Morley
Hunter Group, informing the public about CVRP’s development and the public
infrastructure associated with its development.
Preparation
of this staff memo has been coordinated with the City Attorney’s Office and the
Department of Transportation.
1.
AMOUNT OF RECOMMENDATION:
$950,000
2.
COST OF PROJECT:
Construction $4,900,000
Design and Construction Management 1,079,000
Right-Of-Way Acquisition 1,370,000
Contingency 605,000
TOTAL $7,954,000
3. SOURCE
OF FUNDING:
Fund 429 – Building
and Structure Construction Tax Fund $ 950,000
Developer
Contribution
1,604,000
State
Contribution
5,000,000
UPRR
Contribution 400,000
TOTAL $7,954,000
4. FISCAL IMPACT: The total cost of recommendation is an amount not to exceed
$950,000 and is consistent with many of the principles outlined in the
Council-approved Budget Strategy. The
opportunity to implement the development of high-priority transportation
infrastructure needs with the development of the Bailey/101 Project will
provide significant public benefit related to cost effectiveness and reduced
construction impacts associated with the future development.
BUDGET REFERENCE
|
Fund # |
Appn. # |
Appn. Name |
RC # |
Total Appn. |
Amt. For Contract |
Adopted Budget Page |
Last Budget Action (Date, Ord. No.) |
|
429 |
7595 |
VTA: Bailey/101 Improvements Project Reserve |
|
950,000 |
|
|
11/12/02-Ord. No.
26747 |
|
|
|
TOTAL |
|
950,000 |
|
|
|
CEQA
Resolution No. 68705.
KATY ALLEN
Director, Public Works
Department
LARRY D. LISENBEE
Budget Director