DATE: October 7, 2026
TO: Honorable Mayor and City Councilmembers
FROM: Public Works Department
TITLE: AUTHORIZE THE PAYMENT OF $8,666,666 TO THE U.S. ARMY CORPS OF ENGINEERS AS PARTIAL PAYMENT OF THE CITY’S SHARE FOR THE SAN LUIS REY RIVER FLOOD PROTECTION PROJECT
RECOMMENDATION
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Staff recommends that the City Council authorize the payment of $8,666,666 to the U.S. Army Corps of Engineers (USACE) as partial payment for the matching funds for the San Luis Rey River (SLRR) Flood Protection Project; and appropriate funds from the General Fund assigned SLRR reserves account; and authorize the Financial Services Director, or designee, to execute payment upon receipt of all supporting documents.
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BACKGROUND AND ANALYSIS
The SLRR Flood Protection Project was authorized by Congress in 1970 with the goal of providing a 250-year level of flood protection. The initial SLRR Flood Protection Project was completed in January 2000. The project was constructed subject to an Agreement between the City of Oceanside and the USACE executed on April 6, 1988, in which the City agreed to pay 25% of the project cost. Although the originally envisioned project was completed in January 2000, the project could not be turned over to the City for final operation and maintenance (O&M) upon completion of the construction because of environmental constraints that were identified at that time, including the listing of critical habitat and species that occupied the river bottom. Because the project was not turned over to the City, the USACE does not consider the project technically “complete.”
A Post Authorization Decision Document (PADD) was prepared by the USACE in July 2007, which identified “significant changes in environmental conditions” that were not addressed prior to completion of project construction; hence, requiring additional work. As a result, the USACE started a project re-evaluation process assessing new environmental mitigation needs and ensuring that the SLRR Flood Protection Project meets current engineering standards, namely those that became effective after Hurricane Katrina which occurred in August 2005. The full scope, findings and recommendations of this re-evaluation are documented in detail in the Post Authorization Change Report (PACR) for the SLRR Flood Protection Project, signed on June 5, 2020. This PACR resulted in the USACE asking the U.S. Congress to increase the project cost ceiling by $88,443,697, from its previous funding level of $113,756,303 to a new authorization level of $202,200,000. This request was supported by the City and was approved by Congress in 2020. As a result of this cost increase, the City’s required matching fund has also increased as explained later in this report.
Furthermore, the USACE, in compliance with its internal policies and requirements to perform a biennial review of cost estimates for all its active projects, performed a project cost evaluation and review for the SLRR in August of 2023, and recommended a total project cost estimate increase to $230,579,000 from its previous value of $202,200,000. The proposed cost adjustment was mostly to accommodate inflationary cost increases, and no new technical information was used to change the project’s technical scope. This updated project cost estimate is still under Congressional budgetary authorization for the SLRR project and does not require Congressional action. This $28,379,000 project cost increase resulted in a corresponding increase of $7,094,750 to the City’s share of the total project cost, which is at 25% of the total cost, brought the City’s total estimated share to $57,644,750.
In February 2023, the City made a payment to the USACE in the amount of $1,479,078 and made an additional payment of $2,333,333 in December 2024, resulting in a total payment for Phase II of the project of $3,812,411 to date. The City was also recently credited $1,766,135.99 by the USACE for the acquisition of the Rincon Mitigation Property in Bonsall. This amount will be counted as part of the City’s 25% contribution to the project cost.
Since the inception of the project in the 1980’s, the City has paid a total of $32,000,616 to the USACE of the $57,644,750 obligation.
|
City Obligation to USACE |
Amount Paid Thru June 30,2026 |
Payment this Council Item |
Balance due to USACE |
|
$57,644,750 |
$32,000,616 |
$8,666,666 |
$16,977,468 |
The Assigned SLRR fund balance has a current available balance of $28,216,667, after this council item is approved and payment of $8,666,666 is made, the fund balance will be reduced to $19,550,001. Once the project is completed and turned over to the City, the City will be responsible for the maintenance of the river channel and the levees. That maintenance is expected to cost the City in excess of $1.5M annually, including ongoing maintenance and set aside reserves for long-term projects such as sediment removal.
On-going Levee Assessment:
The USACE is currently in the process of completing a Levee Risk Assessment Report, expected to be completed and finalized by the end of 2026. It is also in the process of completing its review and analysis of the latest geotechnical subsurface investigations and hydrology/hydraulic modeling. That analysis is expected to be completed in the summer of 2027, at which time the ACOE is expected to make recommendations for design changes to the project scope which will consequently be added to the current project cost estimate. That adjustment will further increase the City’s share of the total project cost at that time. Staff will share that new project cost estimate and the revised City’s share of the project cost with the City Council once updated by the USACE next year.
Although there is currently enough funding to cover current estimated project costs, it’s anticipated that the total project cost ceiling will substantially increase upon completion of the current comprehensive levee assessment now underway. As previously mentioned, the on-going levee assessment will identify expected structural repairs and upgrades necessary to bring the levee system up to current standards. As a result, the amount the City owes as shown in the above table, is expected to substantially increase following release of the revised project cost estimate that the USACE is expected to finalize by the summer of 2027. It is important to note that there is currently no City funding set aside to cover this anticipated project cost increase, including the anticipated substantial future maintenance costs that will follow once the levee system is completed and turned over to the City. Therefore, it is imperative that the City begin to identify additional potential funding to meet this need in the near future.
To keep the SLRR flood protection project moving forward and implement certain channel improvements to increase its carrying capacity and reduce the risk of flooding in advance of the upcoming winter storm season, the USACE is planning to immediately initiate a sediment and vegetation removal project in collaboration with the City. To pay for these activities, the USACE needs to access the $26 million in project funding that was recently authorized by Congress thanks to the efforts of our local congressional delegation. According to the federal rules, the USACE must receive the City’s share of this part of the project, which is $8,666,666 (25% of the $34,666,666) before using any portion of the $26 million recently authorized by Congress.
FISCAL IMPACT
The SLRR Bio Vegetation Management account 905831121501.5305.10300 has an available balance of $148,955. Staff is requesting an appropriation in the amount of $8,666,666 from the General Fund Assigned SLRR reserves account 101.3020.0231. There is currently $28,216,667 available in General Fund Assigned SLRR account; therefore, sufficient funds are available. The payment of $8,666,666 from this account will leave a balance of $19,550,001 available for the future matching funds payment and other SLRR-related activities.
|
Description |
Requested Appropriation |
Funding Source |
Account |
Funding Source Balance |
|
Payment to USACE |
$8,666,666 |
101.3020.0231 Assigned-SLRR |
905831121501.5305.10300 SLRR Bio Vegetation Mgmt |
$28,216,667 |
A transfer of $8,666,666 is required from account 1101.6900.0501 to 905831121501.6800.0101.
COMMISSION OR COMMITTEE REPORT
Does not apply.
CITY ATTORNEY’S ANALYSIS
This staff report has been reviewed by the City Attorney and approved as to form.
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Prepared by: Hamid Bahadori, Public Works Director
Reviewed by: Rob O’Brien, Deputy City Manager
Submitted by: Jonathan Borrego, City Manager