DATE: December 18, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Public Works Department
TITLE: AUTHORIZE PAYMENT TO THE U.S. ARMY CORPS OF ENGINEERS FOR THE NEXT PHASE OF THE SAN LUIS REY RIVER FLOOD PROTECTION PROJECT
RECOMMENDATION
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Staff recommends that the City Council authorize the payment of $2,333,333 to the U.S. Army Corps of Engineers (USACE) as the City’s first installment of the matching funds for the next phase of the San Luis Rey River (SLRR) Flood Protection Project; appropriate funds from the General Fund assigned SLRR 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 subsequently 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 also 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 is 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 the new authorization level of $202,200,000. This request was supported by the City and was approved by the Congress in 2020. As a result of this cost increase, the City’s required matching fund has also increased as explained hereinafter in this report.
More recently, the US Army Corps of Engineers, in compliance with its internal policy to perform a biennial review of the cost estimates for all its active projects, performed a project cost evaluation and review for the SLRR, and recommended a total project cost estimate increase to $230,579,000 from its previous value of $202,200,00. 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 any Congressional actions. The aforementioned respective total project cost estimates and the corresponding City’s share are shown on the attached three letters of annual financial summary dated February 5, 2020, March 22, 2022 and October 18, 2024.
The most recent project cost increase of $28,379,000 resulted in an increase of $7,094,750 to the City’s 25% share of the total project cost, bringing the City’s total estimated share to $57,644,750. This represents a substantial increase from the amount that staff reported as the City’s share of total project cost to the City Council on February 15, 2023 when the Council authorized the last payment of $1,479,078.
After cash contributions and other credits that the City has already made to the project, this leaves a remaining balance of approximately $29,743,603, with a pending credit ranging from $1.7 million to $2.1 million for the Bonsall mitigation site, for which the final credit amount is still being negotiated with the USACE right-of-way department.
The USACE is expected to complete its ongoing geotechnical subsurface investigations in March 2025, at which time it might need to make recommendations for design changes to the project scope which may consequently add to the estimated project cost. If that happens, it will also increase the City’s share of the total project cost.
Although the initial project had a goal of providing a 250-year flood protection, that goal cannot be achieved because of the subsequent environmental commitments, such as maintaining vegetation in the river channel needed as habitat area for endangered species, such as Bell’s Vireo. Currently, the USACE is in the process of evaluating what level of flood protection the existing conditions on SLRR provide, in light of the habitat protection measures. The revised hydrology/hydraulics studies, to be completed in early 2025, will aim to ensure that the completed project can convey 71,200 cubic feet per second (cfs), which would be slightly more than a 100-year flood protection, while maintaining a vegetation management protocol that meets required environmental commitments. The USACE has agreed to share all consulting contracts and scopes of services for the work that they will be completing, so the City can account for how its shared funding will be used.
Through the terms of the cost-share arrangements outlined in the existing Agreement, the City will receive credit for Land, Easements, Rights of Way and Disposal (LERRD) contributions and also for the consulting services that the City pays for in support of the project.
Currently, the USACE has received federal funds in the amount of $7,000,000; however, based the federal regulations and conditions imposed on the use of these federal funds, the USACE first must receive our local matching funds before it can start using any portion of the allocated $7,000,000. These funds will be used for the next steps in the project which will include sediment removal and design reviews, estimated to cost $9,333,333, 25% of which is the City’s share at $2,333,333. Therefore, the USACE has made a formal request that the City pay its $2,333,333 share of the next steps in the project.
FISCAL IMPACT
There is currently $15,000,000 available in a reserve account for the City’s matching funds for the SLRR project. The payment of $2,333,333 from this account will leave a balance of $12,666,667 available for the future matching funds payment. The $15,000,000 currently reserved for the SLRR is insufficient to pay for the City’s final share of the total project cost. The outstanding balance of the City’s share will stand at approximately $26,000,000 following the current requested payment. Therefore, further steps will be needed to increase the amount of reserves for this project through incremental allocation of funds to the SLRR reserve account in the future budget cycles, consideration of a fee program for properties located in the SLRR flood zone, or other potential funding mechanisms.
|
Description |
Request to Appropriate |
Account Number |
Funding Source |
Available Balance |
|
Payment to USACE |
$2,333,333 |
905831121501.5305.10300 SLRR Bio & Vegetation Mgmt |
101.3020.0231 General Fund Assigned-SLRR |
$15,000,000 |
To accommodate the current fair share payment, a transfer of $2,333,333 is required from account 1101.6900.0501 to account 905831121501.6800.0101.
COMMISSION OR COMMITTEE REPORT
Does not apply.
CITY ATTORNEY’S ANALYSIS
City Attorney analysis does not apply.
end
Prepared by: Hamid Bahadori, Public Works Director
Reviewed by: Rob O’Brien, Deputy City Manager
Submitted by: Jonathan Borrego, City Manager
ATTACHMENTS:
1. Staff Report
2. SLRR Annual Financial Letters
3. San Luis Rey QFSR Letter
4. ROV Letter
5. Memorandum