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HomeMy WebLinkAbout05/04/2010, C5 - BROAD STREET UNDERGROUND DISTRICT - APPROVAL OF CITY/COUNTY MEMORANDUM OF AGREEMENT council May 4,2010 j acEnOA Report W.,N.,,A� cs� CITY O F SAN LU IS 0 B I S P 0 FROM: Jay D. Walter, Director of Public Works -70W Prepared By: Dan Van Beveren, Senior Civil Engineer SUBJECT: BROAD STREET UNDERGROUND DISTRICT — APPROVAL OF CITY/COUNTY MEMORANDUM OF AGREEMENT RECOMMENDATION 1. Approve the Memorandum of Agreement between the City of San Luis Obispo and the County of San Luis Obispo for the continued funding of the Broad Street Utilities Undergrounding project through the use of County funding allocations. 2. Authorize the Mayor to sign the agreement. DISCUSSION The Broad Street Underground District was adopted by the City Council on November 4, 2003 as a Rule 20A project which requires utility companies to transfer overhead wires into underground conduit. The district extends along Broad Street approximately from Orcutt Road southward to the City limits, and was established as a joint project between the City and the County. At the time that the district was established, the proportional responsibilities between the City and the County were determined to be 68% City and 32% County. As such, the City is responsible for 68% and the County is responsible for 32% of the underground funding allocation for the project. Rule 20A funds are monies which are managed by PG&E and are used to fund the PG&E cost of these Underground District construction projects. The money is collected through a small portion of the monthly PG&E billings paid for by PG&E customers. As these funds accrue, the various cities and counties within the PG&E service area are allocated a specific balance of Rule 20A funds available to be used for Underground District construction projects. Currently, the City has a reported balance of $1,183,193 of Rule 20A funds available, and accrues an additional $333,000 each year. PG&E has a policy of allowing cities and counties to borrow up to five years worth of future fund allocations for these projects, which effectively provides the City a current available balance of about $2,848,000. Typically in an underground district, PG&E will act as the lead utility company in assembling a construction contract for undergrounding of all of the utility lines within the project. The idea is that a single contractor performing work for several utility companies would result in lower costs for each of the utility companies. This type of activity is referred to as a "joint trench" project. In this particular project, PG&E procured a contractor to perform the work under the assumption that each of the utility companies would participate in the contract and contribute toward their prorated portion of the costs. Broad Street Underground District—City/County Memorandum of Agreement Page 2 Broad Street is a State Highway owned and operated by Caltrans. As work was being planned, Caltrans notified the County Underground District Coordination Committee of the scheduled paving of Broad Street from South Street to Tank Farm Road. This paving work was scheduled to occur during the summer of 2009; therefore, Caltrans mandated that the installation of the conduit be completed by May of 2009. In order to complete the conduit installation by May, the utility companies needed to expedite the work. The underground conduit was successfully installed by May 2009, however the accelerated construction schedule was a contributing factor resulting in higher costs. In addition to the accelerated construction schedule, the lack of other utility companies participating in the PG&E contract also resulted in higher costs. When PG&E obtained a contractor and provided the other utility companies with their costs to participate in the project, the other companies, which included AT&T, Charter Communications, and Unified Metropolitan Area Network (UMAN — owned by San Luis Coastal Unified School District), determined that the cost was too high. Those other companies then decided to hire a different contractor and to perforin their work separately from PG&E for their needed construction. These three utility companies participated in their own joint trench project, while PG&E contracted its work separately. Due to the accelerated construction, and without the benefit of all the utility companies contracting with PG&E, the PG&E costs were about 50%higher than originally estimated. Construction on the project began in early 2009 with the installation of underground conduit from Orcutt Road to Tank Farm Road. This first stretch has been referred to as "Phase 1" of the project. Installation of the underground conduits in Phase 1 was coordinated and completed prior to the paving of Broad Street by Caltrans. Due to the higher PG&E costs of the project, which are paid for out of the City's allocation, the City's responsibility for the project cost exceeds the amount currently available in its allocated balance. In order to complete the project, the County of San Luis Obispo must loan the City a portion of its Rule 20A allocation to cover the costs to complete the project.. As stated earlier in this report, the "costs" are not actual dollars in the City's budget, but rather are cost allocations which are budgeted and managed by PG&E. With limited City authorization on how PG&E manages these projects, cost overruns are not subject to prior City Council authorization. Broad Street Underground District-Breakdown of Proiect Costs Prior cost estimate $3,600,000 New Project Cost(estimated) $5,200,000 City's Current Allocation Balance $1,183,193 Total Amount Available(including 5-year borrow) $2,848,193 City's portion of cost responsibliby(68% of total) $3,536,000 The most recent estimate of total PG&E costs of the Broad Street Underground District project is about $5,200,000. As stated above, the project is set up to be funded by both the City's and the County's Rule 20A funds with 68% of the project cost to be funded by the City's allocation. With 68% of$5,200,000 calculating out to be about $3,536,000, the City's available allocation C�-a Broad Street Underground District—City/County Memorandum of Agreement Page 3 balance is $687,807 less than the amount needed to complete the project. Due to this shortfall of allocated City funds, PG&E has temporarily stopped construction of the project until such time that the City's allocation accrues to a balance sufficient for funding of the project, or until the County provides PG&E authorization to deduct necessary fund allocations from the County's balance in order to complete the project. The County Underground District Committee has discussed this issue and supports the concept of using County fund allocations to cover the shortfall with a condition that the City will reimburse the County its Rule 20A fund allocation as the City's allocation builds over the next three years. Upon Council approval of the recommended action, the issue will then be brought to the County Board of Supervisors for final approval of the Memorandum of Agreement. The attached Memorandum of Agreement outlines the terms of a City/County agreement and authorizes the City to borrow up to $900,000 of County fund allocations. The exact amount will be based on actual costs incurred, and as shown on the previous table, is estimated to be $687,807. The City will not be able to implement another Underground District until the County is reimbursed and the City balance accumulates. With the assumption that the project will be completed in its entirety, it is estimated that the City's balance, including the five-year borrow amount, will not be available to implement the next City Underground district until about 2014. No future underground district projects have been scheduled, however, the current adopted priority list shows the next underground district project to be Higuera Street from Marsh to High, followed by Monterey Street from Santa Rosa to US 101. CONCURRENCES The County's Underground District Coordination Committee has discussed the issue in recent meetings and is supportive of the agreement. This agreement is contingent upon the approval by the County Board of Supervisors. This issue is scheduled for the County Board of Supervisors action on June 8, 2010. FISCAL IMPACT There is no direct fiscal impact to the recommended action. As stated in this report, these projects are funded by PG&E. ALTERNATIVES Council could elect to complete only the first phase of the project. This option is not recommended because the project is based on a joint effort between the City and the County. The County is fully intent on completing the project, as evident in the proposed Memorandum of Agreement. Electing to only complete a portion of the project would be contrary to the intent of the prior City Council action adopting the resolution in 2003. Additionally, as these projects are 0-S-3 Broad Street Underground District-City/County Memorandum of Agreement Page 4 scheduled by PG&E, failing to fulfill the previous commitment would put into question any resolutions adopted by the City for future undergrounding districts. ATTACHMENT Memorandum of Agreement T:\Council Agenda Reports\Public Works CAR\2010\CIP\90945 Broad Street Underground District\90945 City-Council Funding Agreement.doc CS-� ATTACHMENT MEMORANDUM OF AGREEMENT BETWEEN THE CITY OF SAN LUIS OBISPO AND THE COUNTY OF SAN LUIS OBISPO FOR THE CITY TO BORROW UP TO $9009000 OF RULE 20A FUNDING ALLOCATIONS FROM THE COUNTY This Agreement entered into the day of 2010,between the County of San Luis Obispo (hereinafter referred to as "COUNTY") and the City of San Luis Obispo (hereinafter referred to as "CITY"); W I T N E S S E T H WHEREAS,the CITY and the COUNTY are currently participating in a joint utility underground project on Broad Street from approximately 150 feet north of Orcutt Road to the southern City limits at Farm House Lane(hereinafter referred to as "PROJECT"); and WHEREAS, the costs of the PROJECT are paid for out of CITY and COUNTY allocated Rule 20A funds at the established ratios of 68% CITY and 32% COUNTY; and WHEREAS, the total project cost has been estimated by PG&E at $5,200,000— thus obligating the CITY contribution of its Rule 20A allocated funds to be$3,536,000; and WHEREAS, the City's portion of project costs exceeds its current available allocation of Rule 20A funds; and WHEREAS, the County has excess Rule 20A funds available; and WHEREAS, the total project cost estimated by PG&E are subject to future adjustment based on actual costs incurred by PG&E; and WHEREAS, the San Luis Obispo County Underground Utility Coordinating Committee (UUCC) advises the COUNTY on the use of Tariff Rule 20A funds which PG&E allocates to various agencies for undergrounding of utilities that benefit the general public; and WHEREAS,the UUCC supports the proposed loan to the City of up to $900,000 of Rule 20A funds allocated to the County in order to meet the costs required to complete the PROJECT. NOW, THEREFORE, the City of San Luis Obispo and the County of San Luis Obispo, in consideration of the common objective of completing the PROJECT, agree as follows: A. The CITY shall maintain full responsibility for funding 68% of the cost of the PROJECT, and the COUNTY shall maintain full responsibility for funding 32% of the cost of the PROJECT, - ATTACHMENT B. The COUNTY shall loan to the CITY up to $900,000 of available COUNTY Rule 20A allocated funds, the exact amount to be determined by PG&E, C. The CITY shall fully repay the COUNTY the borrowed funding allocation through one or more adjustments to the CITY's Rule 20A allotment within the next three years. IN WITNESS WHEREOF CITY and COUNTY have executed this contract on the day and year first hereinabove set forth. CITY OF SAN LUIS OBISPO COUNTY OF SAN LUIS OBISPO By: By: David F. Romero Chairperson of The Board of Supervisors Mayor County of San Luis Obispo ATTEST: ATTEST: City Clerk Clerk of the Board of Supervisors City of San Luis Obispo County of San Luis Obispo By: By: Elaine Cano Deputy Clerk City Clerk APPROVED AS TO FORM APPROVED AS TO FORM AND LEGAL EFFECT: AND LEGAL EFFECT: 5 B By: 'stine Dietrick County Counsel City Attorney C 5=(:�::7