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HomeMy Public PortalAbout12) 10C Road Repair and Accountability Act of 2017 (SB 1)AGENDA ITEM 10.C. COMMUNITY DEVELOPMENT D EPARTMEN T MEMORANDUM DATE: September 19 , 2017 TO: The Honorable City Council FROM: Bryan Cook, City Manager By : Michael D. Forbes , Community Development Director SUBJECT: PROJECT LIST AND BUDGET AMENDMENT FOR THE ROAD REPAIR AND ACCOUNTABILITY ACT OF 2017 (SB 1) RECOMMENDATION: The City Council is requested to: 1. Approve the resurfacing of Rosemead Boulevard as Temple City's des ignated project for Road Maintenance and Rehabilitation Account (RMRA) funds for Fiscal Year (FY) 2017-18 pursuant to Senate Bill 1, the Road Repair and Accountability Act of 2017 (SB 1 ); 2 . Approve a budget amendment to allocate $105 ,143 from unreserved General Fund balance for the required maintenance of effort allocation for FY 2017-18 ; 3 . Approve a budget amendment to add Rosemead Boulevard Resurfacing as a new Capital Improvement Project (CIP) in the FY 201 7-18 City Budg et (Street Construction/Maintenance Account No . 60-980 -75-48 10 , CIP No . P18-06) with a total allocation of $311 ,564 including $206,421 in RMRA funds and $105 ,143 from the General Fund; and 4 . Authorize the City Manager to submit the required documents to the California Transportation Commission (CTC) for the City to receive RMRA funds . BACKGROUND: 1. On April 28, 2017, the Governor signed SB 1. SB 1 creates the new RMRA , the purpose of which is to p rovide funding to address basic road maintenance , rehabilitation , and safety needs on both state highways and local streets . To generate this funding , SB 1 mandates adjustments and i ncre ases in fuel ta xes , diesel fuel taxes, and vehicle registration fees, and provides fo r adjustments in future years to adjust for inflation . SB 1 includes funding for maintenance and rehabilitation of local streets from the RMRA through the Local Streets and Roads Program . City Council September 19, 2017 Page 2 of 3 2. On August 16, 2017, the CTC adopted the 2017 Local Streets and Roads Funding Annual Reporting Guidelines. To be eligible to receive RMRA funds in FY 2017-18, the Guidelines require that cities submit a list of projects that will utilize RMRA funds to the CTC no later than October 16, 2017. ANALYSIS: Beginning November 1, 2017, the State Controller will begin depositing portions of the new revenue from fuel taxes and vehicle registration fees into the RMRA as prescribed by SB 1. A percentage of this funding will be apportioned by statutory formula to cities and counties for road maintenance, rehabilitation, and safety projects on local streets. While the State does not provide revenue estimates, projections from the League of California Cities show that Temple City will receive an estimated $206,421 from the RMRA in FY 2017-18 and an estimated $619,225 in FY 2018-19. These funds are in addition to the fuel tax and vehicle license fee revenues that the City already receives from the Highway Users Tax Account (HUTA). A detailed discussion of RMRA and HUTA funds is provided in Attachment "A". SB 1 emphasizes the importance of accountability and transparency in how the new funds are spent. As such, cities are required to provide annual reports to the CTC regarding the projects on which the funds are spent. Prior to receiving RMRA funds each year, cities must submit to the CTC a list of all projects proposed to be funded with RMRA funds. The list must include a description and location of each project, the project schedule, and the estimated useful life of the improvements. In addition to being on the submitted list, the projects must be included in an adopted budget. Cities must also submit annual documentation regarding all completed or in-progress projects using RMRA funds. SB1 also includes a maintenance of effort requirement. To be eligible for RMRA funds, cities must demonstrate a sustained maintenance of effort by spending General Fund money on street maintenance and rehabilitation. The maintenance of effort funding amount is determined by the State Controller and based on General Fund expenditures for street maintenance in FYs 2009-10, 2010-11, and 2011-12. Temple City will be required to allocate an estimated $105,143 annually for maintenance of effort. It is important to note that while other transportation funds including Measure R, Measure M, and HUTA may be used for street maintenance and rehabilitation, such funds may not be used for the maintenance of effort requirement; only the General Fund may be used. The State Controller will audit cities to ensure compliance with this requirement. The FY 2017-18 City Budget includes $1.75 million for street resurfacing using a combination of Measure R, Measure M, and Proposition C funds. No General Fund money is allocated to street resurfacing. Therefore, a budget amendment is required to allocate $105,143 from unreserved General Fund balance for the required maintenance of effort expenditure. Combined with the $206,421 in RMRA funds, the City will need to allocate an additional $311,564 for street maintenance and rehabilitation in FY 2017-18 to receive the RMRA funds. City Council September 19, 2017 Page 3 of 3 At the direction of the Facilities, Public Works, and Infrastructure Standing Committee, staff is preparing to issue a Request for Proposals for a consultant to update the Pavement Management Plan report. Any further prioritization of streets to be resurfaced should wait until the report has been updated. However, staff has identified an upcoming need to resurface Rosemead Boulevard, and originally intended to include the project in the proposed FY 2018-19 City Budget. The preliminary conservative estimate for the resurfacing is $350,000, and recent bids have been coming in well below estimates. As such, the project could likely be completed for the $311,564 to be allocated. Rosemead Boulevard is a major corridor through the San Gabriel Valley and is the most heavily traveled street in the City. It was most recently resurfaced with cold mill and overlay in 2014 as part of the Rosemead Boulevard Safety Enhancement and Beautification Project. An effective maintenance program to prolong the life of the pavement would be to slurry seal the street by 2019, five years after resurfacing. The street is also in need of crack sealing in several locations. Using the RMRA funds to seal the cracks and slurry seal the street will extend the service life of the pavement. CITY STRATEGIC GOALS: Using RMRA funds to resurface Rosemead Boulevard is related to the City Strategic Goals of Public Health and Safety, Quality of Life, and Sustainable Infrastructure. FISCAL IMPACT: The fiscal impacts of SB 1 were not known at the time the FY 2017-18 budget was prepared, so there are no budget allocations related to RMRA funds or the required General Fund maintenance of effort. The City Council is requested to approve a budget amendment to allocate $105,143 from unreserved General Fund balance and add the resurfacing of Rosemead Boulevard as a new CIP with a total funding allocation of $311,564 including $206,421 in RMRA funds and $105,143 from the General Fund. The General Fund maintenance of effort allocation of $105,143 will be required in FY 2018-19 and future years for Temple City to be eligible to receive an estimated $619,225 in RMRA funds. This will be addressed in the FY 2018-19 City Budget and future budgets. ATTACHMENT: A. Overview of HUTA and RMRA funds ATTACHMENT A Overview of Highway Users Tax Account (HUTA) and Road Maintenance and Rehabilitation Account (RMRA) Highway Users Tax Account (HUTA) Revenue Allocations-Streets & Highways Code Sec 2103-2108 Cities and counties receive revenue from the motor vehicle fuel taxes imposed pursuant to Revenue and Taxation Code Sections 7360(a) and (b) through the HUTA under the following formulas outlined in the Streets and Highways Code. Section 2104. Section 2104 allocates funds to counties with designated allotments for engineering and administration, snow removal, heavy rainfall I storm damage as well as county streets, roads, and public mass transit guideways and facilities. Section 2105. Section 2105(a) allocates 11.5 percent of the tax revenues in excess of 9 cents per gallon (i.e. the Proposition 111 rate) monthly among counties based on population. Section 21 05(b) allocates 11.5 percent of the tax revenues in excess of 9 cents per gallon (i.e. the Proposition 111 rate) monthly among cities based on population. The current combined rate as of July 1, 2017 is 29.7 cents. Section 2106. Revenues equal to 1.04 cents per gallon are allocated as follows: a. $7.2 million per year to the State Bicycle Transportation Account b. $400 per month to each city (about $2.3 million per year) c. $800 per month to each county ($556,800 per year) d. The residual amount is allocated to each county and the cities in that county based on the number of registered vehicles. In each county, from this amount, the county receives an allotment based on the share of assessed value of the county that is in the unincorporated area. The remainder is allocated to the cities within the county based on population. Section 2107. This section provides monthly allocations to cities of 1.315 cents per gallon of gasoline, 1.8 cents per gallon of diesel, and 2.59 cents per gallon of liquefied petroleum gas (LPG), as follows. a. Each city with snow removal costs in excess of $5,000 is allocated 50 percent of the cost exceeding $5,000. b. The remainder is allocated to cities based on population. Page 2 Section 2107.5. These funds (about $2.6 million per year) are allocated to cities annually in July based on population as follows: Streets & Highway Code §2107.5 City Population ~nnual Allocation over 500, ooo $ 20,000 100,000 to 500,000 $ 10,000 50,000 to 99.999 $ 7,500 25,000 to 49,999 $ 6,000 20,000 to 24,999 $ 5,000 15,000 to 19,999 $ 4,000 10,000 to 14,999 $ 3,000 5,000 to 9,999 $ 2,000 less than 5,000 $ 1,000 Section 2107.5 funds must be used for engineering costs and administrative expenses related to city streets. Cities with populations under 10,000 may also expend the moneys for street construction or acquisition of street rights-of-way. Changes to HUTA Allocated Rates, Including the Variable Rate, by the Road Repair and Accountability Act of 2017 (SB 1) In addition to increasing various fuel and motor vehicle registration taxes, SB 1 will reset the price-based gasoline excise tax on July 1, 2019, to its original 2010 rate of 17.3 cent per gallon and eliminate the price-based rate adjustment procedure implemented annually by the Board of Equalization (BOE). There will be one more price-based rate adjustment by the BOE to the rate effective July 1, 2018 for FY 2018-19. For diesel fuel taxes, SB 1 eliminates the price-based adjustment mechanism applied to the diesel fuel tax rate. The diesel fuel tax rate will remain at its current 16 cents per gallon until July 1, 2020. On July 1, 2020, and every July 1 thereafter, the gasoline and diesel fuel excise tax rates will be increased based on the California Consumer Price Index. State General Fund Loan Repayment Funds SB 1 stipulates the repayment of $706 million from the State General Fund to transportation funds over the next three fiscal years: 2017-18, 2018-19, and 2019-20. The Governor and Legislature have been repaying transportation funds for previous borrowings for several years. Thus far the repayments have gone to other transportation programs that were owed. Under SB 1, $75 million will be allocated to local streets and roads from these loan repayments in each of the next three years. These funds will be allocated half to cities and half to counties with the city funds allocated among cities on a per capita basis, the county funds allocated among counties based on the number of registered vehicles and county road mileage. These revenues will be treated the same as HUTA funds. Page 3 Use of Funds: HUTA The use of local Motor Vehicle Fuel Tax funds is restricted by Article XIX of the California State Constitution and by Streets and Highways Code Section 2101. All Motor Vehicle Fuel Tax funds allocated from the HUTA must be expended for the following: a. The research, planning, construction, improvement, maintenance, and operation of public streets and highways (and their related public facilities for nonmotorized traffic), including the mitigation of their environmental effects, the payment for property taken or damaged for such purposes, and the administrative costs necessarily incurred in the foregoing purposes. b. The research and planning for exclusive public mass transit guideways (and their related fixed facilities), the payment for property taken or damaged for such purposes, and the administrative costs necessarily incurred in the foregoing purposes. c. The construction and improvement of exclusive public mass transit guideways (and their related fixed facilities), including the mitigation of their environmental effects, the payment for property taken or damaged for such purposes, the administrative costs necessarily incurred in the foregoing purposes, and the maintenance of the structures and the immediate right-of-way for the public mass transit guideways. d. The payment of principal and interest on voter-approved bonds issued for the purposes specified above. Road Maintenance and Rehabilitation Account IRMRAl The Road Repair and Accountability Act of 2017 (SB 1) SB 1 includes a substantial increase in Local Streets and Roads Funding over the HUTA allocations that cities and counties have been receiving. SB 1 establishes the new RMRA in the State treasury and allocates amounts to cities and counties from that account based on statutory formulas. Revenue Allocations-Streets & Highways Code Sec 2031 SB 1 is a significant new investment in California's transportation systems of about $5.2 billion per year. SB 1 increases per gallon fuel taxes, diesel fuel taxes, and vehicle registration fees; stabilizes the price-based fuel tax rates and provides for inflationary adjustments to rates in future years. SB 1 more than doubles local streets and road funds by allocating funds from the RMRA in addition to the funds already allocated through the HUT A. Page 4 Use of Funds: RMRA The use of RMRA local streets and roads funds is similar, but not identical, to HUTA use rules. Pursuant to Streets and Highways Code Section 2030, RMRA local streets and roads allocations must be used for projects "that include, but are not limited to," the following: • Road maintenance and rehabilitation; • Safety projects; • Railroad grade separations; • Traffic control devices; and • Complete street components, "including active transportation purposes, pedestrian and bicycle safety projects, transit facilities, and drainage and storm- water capture projects in conjunction with any other allowable project." RMRA funds may also be used to satisfy a match requirement to obtain State or federal funds for eligible projects. If a city or county has an average Pavement Condition Index of 80 or higher, the city or county may spend its RMRA funds on transportation priorities other than these (Streets and Highways Code Section 2037). SB 1 also contains non-obligatory intent language regarding the use of funds. "To the extent possible and cost effective," cities and counties are to use: • advanced recycling techniques that reduce greenhouse gas emissions; • automotive technologies, Zero Emissions Vehicle fueling, infrastructure-to-vehicle communications, and autonomous vehicle systems; • resiliency to climate change, fires, floods, and sea level rise; and • complete street elements including access for bicycles and pedestrians.