Good news for Coal Creek Parkway!

This was a very exciting week for Coal Creek Parkway.

First - In a 7-0 vote on Tuesday evening, the city council awarded the contract to CA Carey for construction of Phase 3 of CCP. In all likelihood you will begin to see work on the May Creek Bridge before the end of the year. Many thanks to all of the people who worked to make this project a reality over the past 10 years or more.

Second -The Mayor and City Manger made a presentation to the Transportation Improvement Board (TIB) on Thursday in a request for additional funding for Coal Creek Parkway. During the TIB board meeting on Friday the board voted to award an additional $2 million to the project. Making the total in secured funds for the project $35 million (of which the city's contribution is $3 million). There is still additional funding needed but with this vote of support from TIB (the largest financial contributor) we stand a very good chance of securing additional funds from our other partners.

Lastly - I also wanted to respond to comments that were left regarding my last post. Hopefully more of you who read will feel welcome to contribute thoughts.

An anonymous commenter made the following remark:

The fourth option is that we do nothing until and unless the state and county step up to pay an appropriate share of the total cost. Non-Newcastle vehicles account for 90% of the traffic. The amounts under discussion are well within the budgets of larger entities. We few Newcastle residents should not be picking up so much of the tab for what is actually a regional thoroughfare.

I appreciate the thinking that we find a fourth alternative, but this comment just doesn't make sense. First the state and county have indeed been stepping up on this project. For phases 2 and 3 the city currently has only committed $3 million which amounts to less than 10% of the total project cost of $44 million (accounting for contingency). If the city were to contribute a 15% share the total would be $6 million (that's twice what we have already have invested). If necessary, I don't think a contribution of 15% in a project of this nature is out of line. Especially if you consider the soft costs we all experience in livability when traffic is backed up (irregardless of where those cars are going). Additionally, there is no "just wait" in the political game. The state, county, feds, and TIB have all said they want the project completed. We will always be chasing inflation if we play the waiting game, and its a game we will never win.

Send me your thoughts.

Running the Numbers

Last weekend the entire council spent a little more than a day at the Westin in Bellevue for our annual planning retreat. As would be expected a good portion of our meeting was regarding Coal Creek Parkway (CCP). A few things came to light during our conversation that I want to share.

In my last post I wrote that I felt that options 2 and 3 for CCP reduced the financial risk to the city. After running the numbers during our weekend meeting I actually don't believe that to be true. Lets explore:

Option 1 - Complete both phases.

• The city has currently committed $3 Million in Cash
• We continue to solicit money from the State and Feds to cover the remaining $11 million
• Best case we only put in the $3 mil - worst case we must borrow an additional $8 Million
• But the road is complete

Option 2- Complete only Phase 3

• The city has currently committed $3 Million in Cash
• The City must reimburse the state (TIB) for the property and engineering costs for phase 2 ($6 Million)
• Because the road is not widened we would need to do about $2-3 million in improvements to the existing 2 lane road (repave, signal at 89th)
• In this case the city would be out $3 mil cash + need to borrow at least another $5 million
• And only the bridge is complete

Option 3 - Do nothing

• The city must reimburse TIB nearly $6 million for property and 3 mil for engineering
• Because the road is not widened we would need to do about $2-3 million in improvements to the existing 2 lane road (repave, signal at 89th)
• So end result would be the City paying $3 million in cash and needing to finance $8-9 million
• And in this option we would have no new road or bridge

In all three options the city has some level of financial obligation and in fact the one that has the apparent least amount of risk is option 1. This is because by continuing with the project it enables the city to continue to seek additional funding from outside sources like the State. The moment we say that we are not going to complete the project we not only give up our ability to ask for more money, we would also have to repay the money we have already been given.

I should also mention that according to a preliminary and conservative estimate of the financials, it appears the city could afford an $8 million line of credit. I would mean possibly restructuring some of our capital priorities but it is within the reasonable financial health of the city to take on that amount of debt if necessary.

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.