Coal Creek Parkway Update

I need your feedback! The council, and in turn you, is faced with making the final decision on whether or not to continue with the construction of Coal Creek Parkway.

Let me briefly summarize the current state of the project:
Final construction bids were presented to the city last week. So counting construction cost, property acquisition, and project management, the current cost of the project (with a 10% addition for contingency) is roughly $44 million. Currently the city has secured funding in the amount of $33 million, of which $3 million is directly contributed from the city of Newcastle and the remainder is a mixture of funding from the state, federal government and county. So on the surface this looks like we are about $11 million short of the needs for the project. However several other funding sources totalling roughly $6 million have been identified and are being pursued but are not guaranteed. Included on that list is additional monies from the state, feds and the city itself, as well as approx $1 Million in possible project savings by cutting back on some areas on the project.

Here is a simpler chart of the figures:
$44 M - Project Cost
$33 M - Secured Funding
$6 M - Potential Funding
$5 M - Unfunded Balance

Options for Proceeding
The City required to act on the construction bids within 45 days of their having been opened. Therefore the City Council is facing several important decisions within the next few weeks. There are several options, and I am asking your input in helping to make the correct decision for this city long term.

1. Undertake Both Phases Now, Continue to Seek Additional Funding
If one assumes that infrastructure projects are not likely to become less expensive in the near term, the City could choose to begin both phases of the project now and simultaneously continue to seek additional funding.

The upside to beginning both phases now is that we would begin completion of a 13-year goal, we would protect our federal money by meeting our obligation deadlines, we would be on a similar time frame as is projected for the Renton and King County phases of the project, and we would be demonstrating a commitment to our funding partners by initiating the project we have been working to fund for so long.

Downside risks are, the Council would need to commit to debt financing the unfunded, but known, amount. We would continue to seek increased funding from our partners but if we were unsuccessful in gaining any additional funding, the City would be obligated to self-fund the balance.

2. Undertake Only Phase III (the bridge), Wait on Phase II
This option may lessen the city's risk in the near-term, but increases the risk in the long-term for phase II.

The upside to this option is that it allows us to proceed on the bridge (phase III) knowing that we have sufficient funds to complete it. It also allows us to begin spending our federal funds this year within the deadlines set on those funds. It would also be on a similar time frame as is projected for the Renton and King County phases of the project. And with the a signal at May Valley Road, would improve traffic flow at that intersection.

However the city could risk the funding agreements we have with the TIB (Transportation Improvement Board) and the State. TIB has been interested in providing funding to Newcastle because the project is “ready to go” from a design and construction standpoint. As such, the TIB could conclude the project is not ready and reprogram the money to another state project. In addition, a majority of the right-of-way along the corridor of Phase II has been acquired and was partially funded by TIB. If Phase II were not to be initiated in the near term, then the City may be obligated to repay TIB for that expense.

3. Do Not Initiate Either Phase At This Time
Another option would be to conclude that the city lacks sufficient secured funding and should not proceed until it does. Therefore both phases should not be initiated at this time.

The upside to this option is that the City would not embark on a major project without having all funding secured and would not put the city in any immediate financial risk.

Although there is no immediate financial risk, this option would have the largest risk in the long-term. The future construction costs are unknown but most likely much higher than they already are given historical trends. It also means losing the federal money we have secured to date, and it could mean losing the TIB grants to other state projects that are ready to go. And as with Option 2, the city may need to reimburse TIB for right-of-way that has been acquired.