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Page 1 of 2 CITY OF MISSOULA PUBLIC WORKS 435 Ryman Street, Missoula, Montana 59802-4297 M E M O R A N D U M E-2010-0093 TO: Public Works Committee FROM: Steve King, Public Works Director DATE: March 1, 2010 RE: Miller Creek Road Funding Agreement Update The existing December 17, 2009 agreement between the City, Twite and Maloney identifies several events and alternatives depending on the construction bid amount received. Construction bids have now been received and it is recommended that the agreement be updated to clarify terms and conditions of project funding. The agreement contained a total project cost estimate of $3,121,000, which included $250,000 in contingency funding, resulting in a net project cost estimate of $2,871,000. The agreement also identifies financial obligations for project funding in the amount of $2,647,012. Major project funding included $1,500,000 from Twite and Maloney. $400,000 of this funding is subject to developer credits or repayment which includes repayment multiplied by a factor of 2.129 by the Transportation Impact Fee fund. This 2.129 factor approximates an interest rate of 6.5 percent for 12 years. In summary: December 17, 2009 total project cost estimate: $3,121,000 Project contingency: 250,000 Net estimate to complete: $2,871,000 December 17, 2009 financial obligations: $2,647,012 Net estimate to complete: $2,871,000 Estimated Unfunded balance: $ 223,998 There were several alternatives for resolving the unfunded balance. Alternatives include: Waiting until additional Miller Creek Transportation Mitigation Funding becomes available; ---PAGE BREAK--- Page 2 of 2 Substantially modifying the project scope to reduce costs; Provide City forces to construct major portions of the project; Increase Sewer Development Fee funding for portions of the street reconstruction; Provide additional project funding with Transportation Impact Fee funds. Discussion of these alternatives and conditions of project savings were inadvertently left out of the November 18, 2009 Public Works Committee staff presentation. Problematically, in the current agreement is a provision that any project cost savings below $3,121,000 had to be equally shared between the City, Twite, and Maloney. Even though the received bid lowers the total project cost by near $600,000, this savings is split equally three ways. This savings provision was recently renegotiated with the developers and is stated in this amendment which lowers their savings portion to $150,000 each rather than $200,000 per the original agreement. As of this time the City has finalized all project cost estimates based on actual costs for right-of- way, engineering services, and construction bids. The total project estimated cost as of February 26, 2010 is $2,567,342. Staff recommends reducing the portion of developer funding obligation subject to the 2.129 repayment factor from $400,000 to $100,000, and providing additional project funding with current Transportation Impact Fee fund balance of $220,330. February 26, 2009 total project cost estimate: $2,567,342 Revised funding obligations: -$2,347,012 Transportation Impact Fee funds: 220,330 Unfunded balance 0 Please note that due to the Miller Creek area developer credits and repayment obligations Transportation Impact Fees from the Miller Creek area will be committed to this project for the foreseeable future. The recommended expenditure of $220,330 in Transportation Impact Fee funds would come from the current fund balance of approximately $965,000. RSK/jsm cc: File 05-033 Kevin Slovarp Monte Sipe