HomeMy WebLinkAbout02 Memo on I-10 Portola interchange funding 4-21-21r y'�i
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TO: Todd Hileman, City Manager, City of Palm Desert
FROM: Tom Kirk, Executive Director, Coachella Valley Association of Governments (CVAG)
DATE: April 21, 2021
RE: Future Interchange at Interstate 10 and Portola Avenue
Todd,
Welcome to the Coachella Valley, and thank you for investing some time in your initial weeks on
the job delving into regional transportation projects and how they are funded. I wanted to provide
some additional background on the proposed interchange at Interstate 10 and Portola Avenue. I
know you have had a chance to review a number of recent CVAG staff reports and presentations
related to how regional transportation projects are funded, as well as those related to my staff's
concerns with CVAG's projected cash flow. I am providing this memo to address the concerns
CVAG staff has related to this project's funding gap.
First, some history: CVAG's transportation funding program was set up in 1989, after Riverside
County voters passed the first Measure A sales tax measure. In addition to the responsibilities
outlined in Measure A, CVAG distributes the Transportation Uniform Mitigation Fees (TUMF), and
other funds to be used for transportation related projects in the Coachella Valley. The
Transportation Project Prioritization Study (TPPS) is developed and maintained by CVAG to serve
as an unbiased, methodological way to provide CVAG direction in determining funding for regional
arterials by prioritizing the eligible study segments. The TPPS includes a Regional Arterial Cost
Estimation (RACE), and the entire study is updated roughly every five years.
CVAG's program was designed to focus on the regional arterial system and state highways, such
as Highway 111, with CVAG-distributed regional funds covering about half of the cost and the
cities or County picking up the other 50% of the cost. The cost sharing policy was later changed
with, when factoring in outside funds, CVAG covering 75 percent of the remaining costs and locals
covering the final 25 percent. This system was not designed to pay for freeway improvements,
which are improvements that historically are funded by federal and state dollars.
Unfortunately, over the years, the amount and share of state and federal dollars available to pay
for freeway improvements has decreased. Yet needs persist. This has left CVAG, the cities and
Riverside County dollars making up the shortfall. The interchanges along Interstate 10 are a
perfect example of this:
CITY OF BLYTHE • CITY OF CATHEDRAL CITY � CITY OF COACNELLA • GTY OF DESERT NOT SPRINGS • CITY OF INDIAN WELLS
CITY OF INDIO • CITY OF LA QUINTA • CITY OF PALM DESERT • CITY OF PALM SPRINGS • CITY OF RANCNO MIRAGE • COUNTY OF RIVERSIDE
AGUA CALIENTE BAND OF CANUILLA INDIANS • CABAZON BAND OF MISSION INDIANS
� Q2s�ripUon
�Bob Hope/I-10
�Indian Canyonll-10
�Palm DrlGene Autry/I-10
Date Palmll-10
�Jefferson St/I-10
� Monte re yll-10
� Total:
Total
$52,000,000
$35,000,000
$35,000,000
$31,400,000
$71,300,000
$10,300,000
$235,000,000
Lo c al
$1,495,000
$9, 000, 000
$6,400,000
$4, 300, 000
$23, 300, 000
$7, 735, 097
$52, 230, 097
Federa��Staie
$50, 505, 000
$26, 000, 000
$28, 600, 000
$27,100, 000
$48, 000, 000
$2, 564, 903
$182,769,903
GtisCripGon
Monroell-10
Jackson/I-10
Portolall-10
Avenue 50ISR86
Avenue 50II10
DillonlSR86
Dillon I-10
DaVall/1-10
Toial Locai
$114, 000, 000
$105,000,000
$110,000,000
$40,000,000
$50,000,000
$65,000,000
$65,000,000
$145,000,000
Total: $694,000,000
$114,000,000
$105,000,000
$108,725,000
$39,200,000
$48,000,000
$65,000,000
$65,000,000
$145,000,000
$689, 925, 000
Federalr'S�ate
$0
$0
$1,275,000
$800,OOQ
�z,000,00a
$0
$0
$0
$4, 075, OOQ
The chart includes the funding breakdown of six, recently completed I-10 interchanges or
improvements to interchanges, such as the westbound on-ramp at Monterey Avenue. The
Coachella Valley's share of the funding — both CVAG and the member jurisdictions — for the first
five of those interchanges amounted to about 20% of the total cost. But the newest one — Jefferson
Interchange in Indio — saw the costs for CVAG and local jurisdictions rise substantially to nearly
33% of the project's total, and represented the region's (CVAG and the cities) largest contribution
to a single regional project at $23.3 million. This isn't a problem for just one city; all our cities have
contributed to the local share of these interchanges based on the traffic modeling that was done
for each interchange project.
Frankly, CVAG and its members — the cities and the County — cannot sustain this increased
emphasis on funding freeway improvements that had previously been covered by outside funding
sources. As proposed, the Coachella Valley's next eight interchanges will cost more than $694
million to complete — and less than 1% has been secured from federal and state sources.
Additional resources, on a very large scale, are required to make these projects a reality. CVAG
does not have the resources to cover the gap.
I-10 and Portola Avenue
The I-10/ Portola Interchange was added to the TPPS list of eligible projects in 2005. In 2010, the
TPPS update ranked the project 89t" out of 247 projects. And in the 2015 TPPS update, the
project was ranked 51 S' out of 227 projects.
In an ideal world, CVAG would work with its members to build all the projects in the TPPS. And
while there are many projects "ahead" of the I-10/ Portola interchange in the current TPPS, CVAG
has historically advanced "lower priority" projects when outside — state or federal — funding is
available. This has been the case of major bridges in the Coachella Valley, when funding from
the federal Highway Bridge Program has been secured to fund more than 88% of the funding,
which leaves 12 percent to be funded as a regional/ local match.
In 2008, the City of Palm Desert entered into a future reimbursement agreement with CVAG for
the I-10/ Portola interchange. The total project cost was $72 million, and CVAG's 75% share was
capped at $54 million. In 2014, Palm Desert deposited $15 million to CVAG in RDA bond proceeds
to cover a portion of the City's 25% share, and in April 2016, the agreement was amended to
designate Riverside County as the lead agency. Amendment One also set a"time trigger" which
required construction in five years and established that CVAG may decline, or delay, to pr��
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CVAG
regional funds for the project if such action was necessary to maintain a minimal ba/ance of
regional funds.
In June 2020, the CVAG Executive Committee approved Amendment Two, which provided a one-
year extension for pre-construction phases of work. However Riverside County's new estimated
project cost had increased the project's cost to $110 million, which meant the new CVAG share
was estimated to be more than $82 million. Given the cash flow projections and other regional
funding realities, CVAG could not commit to the additional $28 million of regional funding required
for construction, and therefore suspended construction funding until other funding sources could
be identified.
It is important to put this cost into perspective: The TUMF program started in 1988, and the
program has collected a total of approximately $130 million from Coachella Valley development
over the last 32 years. The $82 million for the Portola Interchange project represents over 63
percent of TUMF funding ever collected in those three decades, leaving little funding remaining
for the other 226 projects in the TPPS.
Next Steps
Moving forward, I have asked CVAG staff to lead an honest conversation of the funding realities
that the I-10/ Portola interchange, and other projects, face. CVAG staff has already started the
conversation with initial cash flow analysis in 2020, and will be asking elected officials to gauge
the region's appetite for infrastructure moving forward.
It may be prudent for the City to reexamine Portola, which has been accepted into the regional
program but remains a City project. Such a re-examination is timely, especially given the
proposed arena being discussed for the north side of Interstate 10. It is my understanding that
even with the high, albeit sporadic, traffic generated by the arena, Riverside County has initially
determined that no additional improvements to Varner Road, Cook Street or the I-10/ Cook Street
interchange are needed. CVAG also understand that the stadium traffic analysis indicates no
need, nor any reliance on, a new interchange at I-10/ Portola — which raises additional questions.
Portola Avenue and other future projects have secured little-to-no outside funding, so the next
stages of these projects will have a significant impact on regional and local resources. CVAG staff
has evaluated both five-year and 10-year cash flow projections for projects currently obligated in
CVAG's approved FY 2020/21 budget, as well anticipated projects included in the existing TPPS.
Based on estimated revenue versus expenditures, the five-year fund balance projection is
negative $29 million, and the 10-year fund balance projection is negative $370 million.
This is why CVAG is also open to creative solutions to many projects. In the western Coachella
Valley, where flooding and blowsand often result in roadway closures, we have been working with
cities on an approach of determining priorities and evaluating alternative approaches to far-too-
expensive projects. CVAG is now in the process of evaluating project expenditures from a regional
perspective and is working on a value-engineering study that will update project expenditure
estimates for projects within the TPPS. Value-engineering is a systematic, organized approach to
providing necessary functions in a project at the lowest cost. Value engineering promotes the
substitution of materials and methods with less expensive alternatives, without sacrificing
functionality.
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The proposed I-10/ Portola interchange is a City project, but CVAG staff is more than willing to
continue discussions about finding a realistic approach to the project. At the same time, CVAG
has been supportive of efforts to secure any outside funding for the project, including the City's
recent request to Rep. Raul Ruiz to secure an earmark that would cover the funding gap.
I look forward to working with you on this project and others in the City of Palm Desert.
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CVAG