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HomeMy WebLinkAbout12017RESOLUTION NO. 12017 A RESOLUTION APPROVING A FUNDING PLAN FOR THE PROPOSED DILLON DRIVE INTERSTATE INTERCHANGE WHEREAS, the City of Pueblo has received funding from the Federal Highway Administration and the Colorado Department of Transportation towards the design and construction of an interchange at the proposed intersection of Dillon Drive and Interstate 25 (the “Project”) that currently totals $12.86 Million, and; WHEREAS, the City of Pueblo created by Resolution No. 7533 a North Pueblo Urban Renewal Area (NPURA) for the purpose of assisting with the financing for the construction of said Project, and; WHEREAS, the City of Pueblo’s consultant, Short, Elliot, Hendrickson (SEH), has estimated that the total Project cost is approximately $20 Million, and; WHEREAS, the City of Pueblo, through its consultant (SEH), has submitted an Environmental Assessment, an Interstate Access Request, and an Interstate System Level Study in order to receive CDOT and FHWA approvals. As a condition of approving said documents, both FHWA and CDOT require that a Funding Plan be approved by the City; BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Pueblo City Council, as the duly authorized governing body of the City of Pueblo, hereby formally adopts the Dillon Interchange Funding Plan as presented herein; however, the City acknowledges that the Funding Plan as presented is predicated upon certain development projections within the NPURA and the associated Tax Increment Financing (TIF) estimates. SECTION 2. The City of Pueblo intends to commit a portion of its Funding Advancements for Surface Transportation (FASTER) funds to support the annual bond payment for the gap in funding (approximately $9 Million), provided that those FASTER funds are repaid to the City by the Urban Renewal Authority of Pueblo plus an agreed upon rate of interest. SECTION 3. The City of Pueblo will enter into an agreement with the Urban Renewal Authority of Pueblo concerning the Project and detailing the terms and conditions of repayment of the FASTER funds. SECTION 4. The President of the City Council is hereby authorized to approve the Funding Plan on behalf of the City of Pueblo, A Municipal Corporation, and the City Clerk shall affix the seal of the City thereto and attest the same. INTRODUCED: November 8, 2010 BY: Steve Nawrocki COUNCILPERSON Background Paper for Proposed RESOLUTION DATE: NOVEMBER 8, 2010AGENDA ITEM # Q-2 DEPARTMENT: PUBLIC WORKS DIRECTOR – EARL WILKINSON, P.E. TITLE A RESOLUTION APPROVING A FUNDING PLAN FOR THE PROPOSED DILLON DRIVE INTERSTATE INTERCHANGE ISSUE Should the City Council approve a funding plan for the proposed Dillon Drive Interstate Interchange? RECOMMENDATION Approval of this Resolution. BACKGROUND The estimated cost of the proposed Dillon Drive Interchange is $20 Million. The City has received funding from the Federal Highway Administration (FHWA) and the Colorado Department of Transportation (CDOT) in the amount of $12.86 Million. As a condition of approval of the Environmental Assessment, the Interstate Access Request, and the Interstate System Level Study, FHWA and CDOT require a funding plan that details the mechanism to finance the entire project. FINANCIAL IMPACT The City intends to enter into a municipal bond contract for approximately $9 Million to fund the shortfall. FASTER funds will be used to support the annual bond payment initially until additional development occurs within the North Pueblo Urban Renewal Area. These funds will eventually be repaid to the City by Urban Renewal with Tax Increment Financing. Revised 11/02/10 FINAL DRAFT DILLON 125 INTERCHANGE FUNDING PLAN BACKGROUND Several years ago the City requested a Federal grant in the amount of $25 Million for the design and construction of a split- diamond interchange located at the proposed intersection of Platteville Road (recently renamed Dillon Drive) and Interstate 25 The actual combined total amount (Federal funds plus City's matching funds) of the grant ($5 45 Million) was considerably less than what was requested, but it was enough to begin the engineering design, the environmental approvals and the effort necessary for compliance with the Colorado Department of Transportation's Procedural Directive 1601 I It is estimated that the design, approval, and right -of -way acquisition process will expend approximately $2.45 Million and an additional $500,000 will be spent for consultant construction management services and CDOT project overview charges during the construction phase. The City was awarded an additional $7.5 Million in funding towards the project from CDOT's Regional Priorities Program (RPP) Funds and recently an additional $1 0 Million in HIRE funds were also committed from CDOT such that the total amount projected to be available for construction of the project is estimated at roughly $11 0 Million (see CURRENT FUNDING STATUS below) CURRENT FUNDING STATUS $5,450,000 Federal Earmark (- $1,071,000) NEPA/PD1601 /Etc. (- $1,179,000) Final Design /Contract Documents /Advertisement & Bidding ( -$ 200,000) Right -of -Way acquisition ( -$ 500.000) Construction Management / CDOT Oversight $2,500,000 Remaining in Earmark + $7,500,000 RPP Funds + $1.000.000 HIRE Funds $11,000,000 Current Projected Funding Balance PROJECT PHASING If necessary, the project has been divided into two major construction projects (Project No One and Project No Two), which have been further subdivided into minor phases. See attached graphic titled Exhibit D — "Dillon Drive Interchange Conceptual Construction Phasing — Revised November 2, 2010" Project No. One Phase 1— Earthwork, west bridge abutment, utilities, retaining walls, landscaping, paving, etc to construct the south half of Dillon Drive from Elizabeth to I -25 and the frontage road from Dillon to the north property line of Wagner Equipment. Phase 2A — East bridge abutment, south half of the bridge and tie -in to Dillon on west side Phase 2B — Earthwork and all work (landscaping, utilities, paving, etc ) associated with the northbound off -ramp and disconnecting the existing off -ramp Phase 3A — Earthwork and all work (landscaping, utilities, paving, etc ) associated with the southbound on -ramp, and disconnecting the existing on -ramp Phase 3B — Earthwork, grading and landscaping associated with the stormwater water quality /detention ponds Project No. Two Phase 4A — Construct north half of Dillon Drive from Elizabeth to the frontage road Phase 4B — Construct north half of bridge and construct one -way frontage road to tie to existing northbound off -ramp at Eden. At the conclusion of Phase 3B, the interchange will provide for full movement access to and from Interstate 25 and the project will then serve as the south half of a split diamond interstate interchange, using the modified Eden Interchange as the north half. PROJECT COST ESTIMATE Based upon current construction pricing (2010) the following is the engineer's estimate for the construction costs to complete each of the Projects. Project No. One (Phases 1, 2A & 2B, 3A & 3B) $15.0 Million Project No. Two (Phases 4A & 4B) $ 4.6 Million Combined Total Project Cost $19.6 Million SHORT/LONG TERM FUNDING SOURCES FASTER Bill (SB 09 - 108) REVENUES In November 2008, Colorado voters approved a transportation funding measure - Funding Advancements for Surface Transportation and Economic Recovery (FASTER). Revenue from this vehicle registration fee is apportioned to the City of Pueblo based upon a formula similar to the HUTF distribution. For FY 2009 the City received $295,480 in FASTER Bill revenues. Because the fees did not go into effect until July 1, 2009, the FY 2009 distribution was only for half of a year It is projected that the City will receive approximately $600,000 in FASTER Bill revenues for 2010 and similar amounts for subsequent years. URBAN RENEWAL AUTHORITY OF PUEBLO (URAP) By City Ordinance No 7533, passed and approved by City Council on November 13, 2006, the City created an Urban Renewal Area (URA) that allows for the use of Tax Increment Funds (TIF) to be spent for infrastructure within the URA. TIF collections are for a period of twenty -five (25) years following creation of the Urban Renewal Area and adoption of the Plan. Commercial development and the tax increment it generates to date based upon current revenue within the district are insufficient to finance any significant project shortfalls. For the purpose of preparing this project funding plan, the City has worked closely with the Urban Renewal Authority and the largest landowner /developer within the North Pueblo Urban Renewal Area (NPURA). Attached is a Resolution from URAP showing support for the project and approval of this Funding Plan. 2 PROJECT TIMELINE — PLAN A Project Construction/Bond Issue Environmental Decision Document February 2011 Final Design Completion September 2011 Advertisement For Construction (Entire Project) Nov — Dec 2011 Bond Issue December 2011 Start Construction March 2012 Finish Construction December 2013 Retire Bond Issue December 2031 PROJECT TIMELINE — PLAN B Project Construction/Bond Issue Environmental Decision Document February 2011 Final Design Completion September 2011 Advertisement For Construction (Project One) Nov - Dec 2011 Bond Issue (Initial) December 2011 Start Construction (Project One) March 2012 Finish Construction (Project One) March 2013 Advertisement For Construction (Project Two) Jan. — Feb 2013 Bond Issue (Second) March 2013 Start Construction (Project Two) April 2013 Finish Construction (Project Two) March 2014 Retire Initial / Second Bond Issue December 2031 SUMMARY The plan as presented above provides for a fiscally responsible method to finance the project budget shortfall — for both Plans (A & B) and within the 2035 time deadline This funding plan is based upon several assumptions involving project time, future interest rates, future estimated construction costs, and predictions of development. Regardless, the plan is financially conservative in the overall approach. The default scenario would be that no future development occur within the North Pueblo Urban Renewal Area for the next twenty years, which is highly unlikely In that case, the City must commit such FASTER/General Fund revenues to fully pay the bond issue(s) for either Plan. Attached to this Funding Plan is a Resolution approved by the Pueblo City Council, showing support for the project and approval of this Funding Plan. Attachments, Exhibit A Exhibit B Exhibit C Exhibit D Resolution from URAP Resolution from City Council C:/My DocumentsBeyer /Word/Misc/Dillon Interchange Funding Plan 110210 4 PLAN A — Projects One and Two (Entire Project) The preferred plan is to construct the entirety of the project with the current projected funding balance and a single bond issue. The cost to construct (Project No One and Two) is estimated at $19 6 Million. Since the estimate of current funding available is $11 0 Million, that leaves a deficit of roughly $8 6 Million. The City intends to enter into a municipal bond contract to fund the project shortfall. Since current TIF revenues are inadequate to cover the annual payments for the bond amount, the City proposes to utilize a portion of their annual FASTER Bill apportionment to pay for the payment shortfall (annual payment less TIF) until such time that the TIF exceeds the payment amount. At that time the TIF will take over the bond payments and the surplus TIF funds will then repay the City's FASTER Bill expenditures. The development predictions are given in Exhibit C and the bond issue financing assumptions and amortization are given on the attached Exhibit A. Note that assuming a 5% bond interest rate and a 12% total cost of issuance, the annual payment for a 18 -year bond issue is calculated at $823,981 The amount of FASTER Bill revenues required for the first annual payment is estimated at $576,282, which is less than the projected annual FASTER revenues. In subsequent years, the amount of FASTER funds required to support the gap between the Increment and the Annual Payment rapidly drops as future development occurs and associated TIF revenue is generated. It is estimated that under Plan A the FASTER funds will be repaid to the City (with an appropriate rate of return) in approximately eight (8) years from the date of bond issue. The TIF will be used to pay the remainder of the debt service. PLAN B — Proiect One / Proiect Two (Consecutive Projects) If the City is unwilling to commit FASTER funds to support the entire project, then the project will be constructed and financed in phases as described above ( "Project Phasing ") The cost to construct Project No One is estimated at $15 0 Million. Since the estimate of current funding is $11 0 Million, a deficit exists of roughly $4 0 Million. The City intends to enter into a municipal bond contract to fund the project shortfall Since current TIF revenues are inadequate to cover the annual payments for the bond amount, the City proposes to utilize a portion of their annual FASTER Bill apportionment to pay for the payment shortfall (annual payment less TIF) until such time that the TIF exceeds the payment amount. At that time the TIF will take over the bond payments and the surplus TIF funds will then repay the City's FASTER Bill expenditures. At some future point that it appears certain that those FASTER funds will be fully repaid, a second bond issue for Project Two will be issued, albeit for a shortened bond period that coincides with the termination date for the URA TIF The attached Plan B spreadsheet labeled Exhibit B present a possible scenario for development and the corresponding TIF /FASTER bond issue payments. The development predictions for the bond issue financing assumptions are stated in the captions on the exhibits. Note that the development projections for Plan A and Plan B are identical It is estimated for Project No. One of Plan B that the FASTER funds will be repaid to the City (with an appropriate rate of return) in approximately three (3) years from the date of bond issue. FASTER funds will be used to assist with the annual payments of the second bond issue until such time that additional development occurs and the FASTER funds are repaid to the City TIF funding will then be used to make the bond payments until the debt service is satisfied. 3 RESOLUTION NO ot() r `1 A RESOLUTION BY THE URBAN RENEWAL AUTHORITY OF PUEBLO SUPPORTING THE FINANCING STRUCTURE AND ASSOCIATED DEVELOPMENT COST PROJECTIONS FOR THE NORTH PUEBLO DILLON DRIVE EXTENSION PROJECT WHEREAS, in accordance with the North Pueblo Urban Renewal Project Area Plan (the Plan), adopted by ordinance on November 13 2006, by the Pueblo City Council, the Urban Renewal Authority of Pueblo (URAP) entered into a cooperation agreement with the City of Pueblo to further the goals of the Plan, and WHEREAS, such resolution is in furtherance of the Plan and its principal urban renewal project is the construction of the Dillon Drive Extension, which may consist of the Dillon /Eden split diamond interchange and other appurtenant Federal Highway Administration facilities approved by the Colorado Department of Transportation WHEREAS, the following resolution demonstrates the Authority's support of the financing structure and associated development cost projections to construct the Dillon Drive Extension NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE URBAN RENEWAL AUTHORITY OF PUEBLO, COLORADO THAT The financing structure and associated development cost projections for the North Dillon Drive Extension Project are hereby supported Adopted this 14th day of September, 2010 APPROVED r1 ( U hai�rppe�rso , f �'Rerewal Authoriity of Pueblo ATTEST S7arta ry .a. 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