Title
South Central Extension/Downtown Hub Project Funding Agreement Amendment
Description
This report requests the Transportation, Infrastructure, and Innovation Subcommittee recommend City Council approval of an amendment to the current funding agreement for the South Central Extension/Downtown Hub (SCE/DH) Project with Valley Metro Rail (VMR) for an additional amount not-to-exceed $159 million to fund continued progress toward completion of professional design, construction services, and associated activities.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
The SCE/DH Project is a 5.5-mile light rail project extending south from Jefferson Street to Baseline Road along Central Avenue, and it includes the creation of a rail transfer hub in downtown Phoenix (see Attachment A). This Project will include nine new light rail stations and two park-and-rides: one at the existing Ed Pastor Transit Center along Central Avenue and Broadway Road, and one end-of-line facility at the northwest corner of Central Avenue and Broadway (see Attachment B).
In May 2014, the VMR Board of Directors approved Light Rail Transit on Central Avenue as the preferred transit mode and alignment for the South Central Corridor. In September 2014, the City of Phoenix was awarded a Transportation Investment Generating Economic Recovery (TIGER) Grant from the United States Department of Transportation (USDOT) to conduct environmental assessment and preliminary engineering for the project. In December 2015, VMR entered into an agreement with the City of Phoenix to fund activities associated with this effort. The agreement totaled $3.2 million, with the USDOT (by TIGER Grant) and the City of Phoenix (by T2050 Funds) each providing $1.6 million. In August 2015, Phoenix voters approved Proposition 104, moving the multi-modal Transportation 2050 Plan forward. In November 2015, the Federal Transit Administration (FTA) officially approved inclusion of the SCE/DH Project into the Project Development Phase under the Capital Investment Grant (CIG) New Starts Program.
In January 2016, following voter approval of Proposition 104, City Council took action to accelerate project completion and approved an amendment to the original funding agreement for an additional $1.5 million. This amendment was needed to complete several grant/project readiness items required by FTA to demonstrate the project’s technical, financial, and legal readiness for construction.
On Jan. 6, 2017, the FTA granted project environmental clearance with a Finding of No Significant Impact (FONSI) ruling, which made activities in the agreement eligible for FTA reimbursement. In February 2017, City Council approved an amendment to the funding agreement with VMR in the amount of $50 million to provide initial funding to implement professional design and construction services for the SCE/DH Project.
On April 15, 2019, the FTA granted project approval to enter the engineering phase of the CIG New Starts Program. A portion of the FTA grant is anticipated for the SCE/DH Project in late 2020, with annual grant funding allocations anticipated for the project over multiple years. To keep this Project on schedule in the meantime, the FTA has provided pre-award authority for design, land acquisition, utility relocations, long-lead procurement items (such as light rail vehicles and special track work), and construction activities. This pre-award authority allows VMR to utilize Phoenix's and VMR's funds to advance the project. The FTA will then reimburse its funding share (after the federal grant is approved) on an annual basis.
The additional funding needed at this time by VMR to advance the design, construction services, and associated activities is estimated at $159 million. This funding also covers: final design services (such as preparation of legal descriptions of right-of-way, permits, insurance, and other legal documentation) as required; archaeology data testing and recovery; plan reviews by third parties; community relations support through design; business assistance; and other surveys, testing, and inspections.
Upon receiving City Council authorization, the City of Phoenix will amend its agreement with VMR to provide an additional $159 million to advance the SCE/DH Project. And because the schedule for the disbursement of federal funding is based on a reimbursement process and is expected to exceed the project construction schedule, a future amendment to the agreement will be required to advance the necessary additional funding to VMR for project completion. The future amendment will be requested after the City receives authorization for the financing needed to cover costs that will be later reimbursed through federal CIG funding.
Financial Impact
The estimated total cost to advance the professional design, construction services, and associated activities at this time is $159 million. These activities will be funded with the City of Phoenix's T2050 revenues, which are eligible for federal reimbursement by the FTA.
Concurrence/Previous Council Action
This item is scheduled to be heard at the Oct. 1, 2019 Citizens Transportation Commission meeting.
Location
Central Avenue from Jefferson Street to Baseline Road (see Attachment A).
Council Districts: 7, 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Public Transit Department.