TO: Board of Supervisors
FROM: Steven Lederer, Director, Public Works
REPORT BY: Steven Lederer, Director, Public Works
SUBJECT: Five Year Roads Plan, With Option to Bond Against Measure U Revenues
RECOMMENDATION
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Receive a presentation regarding anticipated future roads maintenance projects, including the possibility of bonding against future Measure U (formerly Measure T) revenues. (No Fiscal Impact)
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BACKGROUND
For decades, the primary source of funding for maintaining roads was the state and federal gas tax. Property taxes are primarily directed to schools and other governmental entities; they do not fix roads. Between 1993 and 2018, neither California nor Federal gas tax rates were changed. The Federal Government still has not raised its tax rate, and the future of the Highway Trust Fund and federal funding remains in a state of flux. The buying power of gas tax revenue steadily decreased due to inflation, and revenue generated was reduced due to improvements in vehicle fuel mileage and the advent of electric vehicles, resulting in fewer gallons of gas being sold/taxed.
As a result, Napa County and most other jurisdictions in the state all experienced decreased funding. In Napa County alone the deferred maintenance backlog is calculated to be over $400 million. The good news is the voters of Napa and the State of California have voted to change that funding situation. Measure T, a half-cent sales tax voted in by Napa County residents, started collecting funds for road maintenance in 2018. At roughly the same time, the state implemented SB1 which finally increased the gas tax levy. These two sources provide roughly $13 million per year locally for road repairs. Engineering calculations indicate the need is $28 million per year to maintain roads well. And most recently, Napa voters replaced Measure T with Measure U, which will extend the funding source and allow “bonding” against future revenues which will fix more roads faster.
To manage our program efficiently, we turn to the objective measurements of Pavement Condition Index (PCI) and a widely-used computer program called Streetsaver which guides staff to spending the revenue in the most efficient way. We use this to develop a multiple year plan, which is updated regularly, to guide our efforts. Prioritization of roads are based on “the best bang for the buck,” meaning smaller amounts of maintenance money on roads that aren’t in bad shape can sometimes be more effectively spent than a large amount of money on a road that has already failed. It is specifically not a “worst first” analysis, as this would be the most inefficient way to spend taxpayer dollars. See the Roads Deterioration Chart, attached.
We are pleased to report that Napa’s PCI increased from 45 (in 2020) to 56 this past year. This is the result of the voter-approved tax measures mentioned above, but also because of the Board of Supervisor’s strategic placement of $16 million (from a $33 million settlement with PG&E after the 2017 fires) and $20 million investment from the General Fund to supplement the paving budget. This resulted in increasing our paving miles as follows:
2020 4.3 miles
2021 32.9 miles
2022 23.1 miles
2023 42.2 miles
2024 42 miles
2025 25 miles
2026 24 miles (planned)
As compared to similar sized jurisdictions, Napa is in the 50th percentile, and the PCI is 2 points better than our peers on average. The planned paving mileage for 2026 is around 24 miles, so we are hopeful the PCI will improve further.
It took 25 years to get us into this deferred maintenance situation, and it will take more than a few years to get rectify. Some roads will inevitably be done “first”, while others will not. It’s a process.
Planned projects over the next five years (and some beyond) are as shown on the attached 5 Year Plan. This is a living document, which includes key data, such as:
--Project list per calendar (not fiscal) year because construction season is spring-fall.
--Sources of funding
--Cumulative expense calculations from year to year
--Tables at the bottom to better describe projects planned for a specific area or region
The Director will further explaining the spreadsheet during the presentation.
Measure U allows jurisdictions to leverage revenues through a bond issuance, which allows more streets to be fixed faster by borrowing against future revenues. Since it is less costly to maintain roads that are in good condition, it is actually less expensive in the long run to bond, fix the roads, and then maintain them (even while paying interest on the bonds) than it is to “pay as you go” (fix the roads slowly as the revenues occur).
NVTA staff will be present to describe one possible bonding scenario, based on borrowing $70M in late 2027. This is not the only scenario, and the bond amount recommended will ultimately be based on a number of factors, including Board goals, interest rates, the state of the municipal bond market, resources to deliver the projects, etc. However, this scenario will give the Board a sense of what could potentially be accomplished, including improvement to the PCI, and what spending then looks like in later years. We will also be able to compare this to a non-bonding strategy. Staff will return in mid-2027 with a recommended bonding proposal prepared in coordination with NVTA and County staff, financial advisors, and debt advisory committee input.
FISCAL IMPACT
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Is there a Fiscal Impact? |
No |
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Additional Information |
Build Healthy, Connected Communities |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: This presentation is for information only and is therefore not a project as defined by CEQA.