Agreement/Santa Ana River Project Area

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F Council Staff Report —Agency Construction Management Agreement March 20, 2001 Page 3 of 4 Under the Agreement, the City shall be responsible for the management and supervision of all aspects of the design and installation of these public improvements, including securing all necessary right of way, easements and pay for any additional costs in excess of the $1.6 million in Agency funds to complete these projects. Each of the aforementioned projects have certain contingencies built into the cost estimates and Agency staff anticipates that there should be sufficient funds to complete the list of projects without requiring any additional City funding. If additional City funding is required, it is proposed that traffic impact fee funds be applied to the eligible projects but only after any value engineering is completed. Pursuant to the Agreement, any bond funds remaining after completion of the project list can be used for other bond eligible projects. There is $840,000 remaining in the escrow account for the Santa Ana River Tax Allocation Bonds. These funds are programmed for any funding shortfalls in the $1.669 million project list plus the two remaining Santa Ana River projects: (1) Reche Canyon Sidewalk Project ($367,000) and (2) the Reche Canyon Realignment ($403,000). Under the current bond indenture, the Agency has until August 1, 2001 to satisfy the escrow release test and withdraw these funds. Based upon current assessed values in the project area, it does not appear that the Agency will be able to withdraw the entire balance prior to August 1, 2001. We have asked bond counsel to review our options with respect to extending the deadline for withdrawing these funds. If we cannot satisfy the test or extend the deadline then any remaining funds would be used to redeem bonds under a mandatory redemption. While this lowers the Agency's annual debt service obligations, it would also mean that the remaining projects could not be funded. We will update the City Council on these developments. Financial Impact The Santa Ana River Bond Proceeds are the primary source to fund all of the described projects. The Agreement is basically a tool for encumbering the bond funds for projects currently budgeted and in progress. This will allow the Agency to retain the bond funds rather than reduce outstanding debt as provided for in the bond indentures. As explained earlier, the Agency does not foresee any additional costs being borne by the City given certain contingency amounts built into the cost estimates. At a later date, if necessary, the City may opt to contribute additional funding, value engineer the projects to reduce costs, or eliminate the project altogether. Al Hollimahr9nance Director bb Steel, Redevelopment Director Legal Review The staff report, resolution and agreement have been reviewed and approved by the City Attorney. City Atto ney Agency Special Counsel