To: Board of Supervisors
Department or Agency Name(s): Auditor-Controller-Treasurer-Tax Collector and Sonoma County Public Infrastructure
Staff Name and Phone Number: Johannes J. Hoevertsz, 707-565-2550
Vote Requirement: 4/5th
Supervisorial District(s): Countywide
Title:
Title
Sonoma Public Infrastructure - Road Division Capital Projects Financing and Accounting Approvals
End
Recommended Action:
Recommended action
A) Adopt a Resolution authorizing the Auditor-Controller-Treasurer-Tax Collector to establish a temporary transfer of funds from the County Pooled Investment Fund for the Sonoma Public Infrastructure - Roads Division in an amount not to exceed $25,000,000.
B) Approve Sonoma Public Infrastructure’s annual capital asset disposition for FY 2023-24.
end
Executive Summary:
The Sonoma County Department of Public Infrastructure (SPI) - Roads Division (Roads), in conjunction with the Auditor-Controller-Treasurer-Tax Collector (ACTTC), is requesting Board approval to establish a temporary transfer of funds from the County Pooled Investment Fund in an amount not to exceed $25,000,000 to provide working capital for the Roads Division to complete bridge replacement capital projects in advance of Federal Highway Administration (FHWA) reimbursement. In addition, SPI Roads is requesting approval of the SPI Roads annual capital asset disposition for FY 2023-24 pursuant to ACTTC Financial Policy FA-1: Accounting for Capital Assets.
Discussion:
The County of Sonoma has been impacted by eight federally declared disasters since January 1, 2017, including four fire events (Sonoma Complex Fires, Kincade Fire, LNU Complex Fires, and Glass Fire), as well as four major storm/flood events (January 2017, February 2017, February 2019, and January 2023). Permanent repairs associated with major disasters often require large-scale construction projects to rebuild or reinforce severely damaged sections of roads. These projects typically require engineering and design work, environmental permitting, right-of-way acquisition, and coordination of construction resources across multiple years. As a result, permanent road repairs associated with these events have required significant financial resources depleting working capital historically available for other Roads related construction projects.
In addition to disaster related capital projects and the annual Pavement Preservation Program (PPP), SPI Roads has three major bridge projects scheduled for FY 2024-25. The projects are approved for grant reimbursements from the Federal Highway Association (FHWA) and the California Department of Transportation (CalTrans). However, in order to have sufficient working capital for these bridge projects and other infrastructure improvements until grant reimbursements are received (the Road Fund-11051 currently has approximately $33 million in available cash and $68 million of capital projects budget for FY 2024-25), SPI Roads is working with ACTTC to establish a temporary transfer of funds with the County Treasury. If approved by the Board, this arrangement will allow the Roads Fund (11051) to carry a negative cash balance until April 28, 2025, which is the last Monday in April of Fiscal Year 24-25.
Construction season typically concludes by October 31st each year and reimbursements for funds expended in 2024 on the bridge projects associated with this line of credit should be received by March, 2025. In addition, SPI and ACTTC staff continue to work with the California Office of Emergency Services (CalOES) and the Federal Emergency Management Agency (FEMA) on reimbursements for repairs on flood damaged roads from 2017 and 2019. If all currently completed projects are approved, obligated, and reimbursed the Roads Division should receive an additional $25 million prior to the April 28, 2025, deadline.
California Constitution, Article XVI, § 6 allows the County Treasurer to make temporary transfers to any city, district, or political subdivision whose funds are in the custody of the County Treasury. Transfers can only be made from July 1 through the last Monday in April of the current fiscal year and must be repaid from revenues prior to any other obligation of the borrower. The amount of the advance may be up to 85% of anticipated revenues accruing within the current fiscal year. All transfers must have the prior approval by resolution of the local governing board of the borrowing entity. In addition to the repayment of principal, the borrowing entity must also pay the Treasury pooled rate of interest on the principal amount of outstanding indebtedness, up until the repayment date.
Three current bridge projects are obligated for an aggregate amount of $29,831,616 through FHWA/Caltrans. The following is an itemized breakdown of the aggregate amount per project:
1. $16,216,253 - Big Wohler Road Over Russian River Bridge Retrofit - Project C01136
2. $12,294,000 - Geysers Road Over Sulphur Creek Bridge Replacement - Project C09001
3. $1,321,363 - Bridge Preventive Maintenance Program - Project M18003
Based on the 85% borrowing threshold outlined in the California Constitution, SPI Roads is requesting the Board authorize the Treasury to facilitate temporary transfers of up to $25,000,000 at any one time to provide working capital for bridge projects in FY 2024-25. The Treasury is currently estimating interest earned on Pooled Cash for FY 2024-25 is 4.05%. SPI Roads is estimating interest charges of approximately $253,125 based on an average temporary transfer amount of $12,500,000 for six (6) months during FY 2024-25.
In addition to the financing request, SPI Roads is also requesting Board approval of its capital asset disposition. Per the requirements of Policy FA-1: Accounting for Capital Assets set forth in the Auditor-Controller-Treasurer-Tax Collector’s (ACTTC) Fiscal Policy Manual, each County Department is required to inform the Board of Supervisors (BOS) of any losses incurred related to the disposition or impairment of a capital asset over $100,000. SPI is requesting approval to dispose of the following “Construction in Progress” (CIP) assets initiated between 2001 and 2012, which are impaired due to changes in permitting requirements, lack of available funding for construction or amendments to project requirements. “Construction in Progress” is a type of capital asset defined as the accumulation of all costs incurred on uncompleted land improvements, buildings, building improvements, or infrastructure:
|
Asset ID |
Description |
Date Started / Acquired |
Acquired Value |
Disposition |
|
C01316 |
Forestville Bypass |
7/24/2001 |
$1,644,686 |
Impaired/Disposed |
|
C04000 |
Mirabel Road at Highway 116 Roundabout |
1/22/2004 |
$1,964,542 |
Impaired/Disposed |
|
C04002 |
Mirabel Road Shoulder |
1/22/2004 |
$296,703 |
Impaired/Disposed |
|
C12001 |
Jimtown Bridge Scour |
1/24/2012 |
$144,392 |
Impaired/Disposed |
Strategic Plan:
This item directly supports the County’s Five-year Strategic Plan and is aligned with the following pillar, goal, and objective.
Pillar: Resilient Infrastructure
Goal: Goal 3: Continue to invest in critical road, bridge, bicycle, and pedestrian infrastructure.
Objective: Objective 4: Identify and retrofit bridges in County that are at high risk for damage during earthquakes.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
July 7, 2024 - Bridge Preventive Maintenance Program, Project Number M18003 Construction Contract Award
April 30, 2024 - Geysers Road Bridge Replacement at Big Sulphur Creek, Project Number C09001, Construction Contract Award.
February 6, 2024 - Wohler Road Bridge Seismic Retrofit, Project Number C01136, Construction Contract Award.
Fiscal Summary
|
Expenditures |
FY24-25 Adopted |
FY25-26 Projected |
FY26-27 Projected |
|
Budgeted Expenses |
$253,125 |
|
|
|
Additional Appropriation Requested |
|
|
|
|
Total Expenditures |
$253,125 |
|
|
|
Funding Sources |
|
|
|
|
General Fund/WA GF |
|
|
|
|
State/Federal |
$253,125 |
|
|
|
Fees/Other |
|
|
|
|
Use of Fund Balance |
|
|
|
|
General Fund Contingencies |
|
|
|
|
Total Sources |
$253,125 |
|
|
Narrative Explanation of Fiscal Impacts:
$253,125 is the estimating interest charges to the Roads Fund in FY 2024-25 for the temporary transfer of funds. Appropriations for interest expenses associated with the temporary transfer of funds are available in the FY2024-25 Roads Administration (11051-34010101) Adopted Budget. The Roads Division will use annual allocations from traditional Road funding sources such as Highway User Tax Account (HUTA) or Road Maintenance and Rehabilitation Account (SB1) to pay for all interest expenses incurred.
The disposition of capital assets is a non-cash transaction and has no direct fiscal impact on the FY 2024-25 budget. If approved, cost incurred in prior years will be removed from the Capital Asset balance sheet.
Narrative Explanation of Staffing Impacts (If Required):
None.
Attachments:
Resolution
Related Items “On File” with the Clerk of the Board:
None.