The Turlock City Council on Tuesday decided they need more time to commence the planned roads program initiative, forgoing a contract approval with consultants who had proposed exploring lease revenue bonds as a way to fund road repairs.
On the agenda for the Council to consider was a professional services agreement with PFIC, Michael Baker International and Ghirardelli Associates for the first phase of the companies’ roads plan, which was presented during a special meeting on Sept. 1. In their plan, PFIC aimed to streamline the road repair process with a project team comprised of PFIC as the program manager, MBI as the design engineer, Norton Rose Fulbright as the legal financing consultant, Raymond James as the underwriter and Ghirardelli as the construction manager.
Together, this team would explore lease revenue bonds which would use the City’s streets as collateral and be issued by the Turlock Public Financing Authority. Even though the streets would be a leased asset through this process, the bondholders wouldn’t have the right to interfere with the City’s use and possession of the streets, nor could they impose tolls or foreclose on the roads.
Under this approach, the number of street segments that could be repaired directly correlates to both the cost of the individual projects and the amount of bonds, or debt, the Council could elect to issue at a future date.
Phase one of this plan would include a $675,088.43 agreement with the three companies for the planning, programming and pre-engineering of the initiative, with an additional $393,000 for a special LIDAR vehicle to drive Turlock’s roads and collect data on their condition. In total, the first planning phase of the process would be funded by Measure A money, 50% of which the Council allocated to the roads program initiative.
Council also had the option to approve both phase one and phase two; the second phase would see the City enter into an agreement with Norton Rose Fulbright for bond counsel and the underwriting firm Raymond James so that the project team could start working on the financing portion as soon as possible, with costs to be determined at a later date.
The topic of bonds brought forth plenty of public comment during the Council meeting — and questions — although the Council wasn’t quite voting on bonds yet.
Turlock resident Ron Bridegroom balked at the idea of bonds, noting that the particular funding source was only selected by PFIC because it’s the quickest option and the company had excluded other financing options like grants and loans, which would take more time to implement.
“The finance game PFIC is proposing will heavily impact future City Councils by severely limiting their financial flexibility for the next 30 years,” Bridegroom said. “PFIC stated they do not owe a fiduciary duty to the City, so we need to do our own due diligence and consult with outside municipal, legal and financial experts before a decision is made.”
Former City Councilmember Becky Arellano said there were still too many questions about the agreements for the Council to move forward.
“Right now, we don’t have enough of these questions answered to move forward with these gentlemen, and I’m sure they can answer them for you but it’s not going to be tonight,” she said. “We need to make sure we’re doing what we’re supposed to be doing. My name is on that [Measure A] just like you guys...50% of those funds were for roads, and the rest of it is for public safety which we haven’t even got to yet.”
Without a permanent City Manager or Finance Director, Councilman Andrew Nosrati agreed with Bridegroom and called the plan “rushed.” Since Turlock is lacking a permanent City Manager and Dan Madden, who is the Acting City Manager, wasn’t in his new role yet during the Sept. 1 special meeting, Nosrati said he spoke to managers of other surrounding cities for advice on the item.
“They cautioned heavily about moving forward, especially in such a rushed manner,” Nosrati said, noting he was told the plan seemed like a scam. “These types of decisions only make sense when we don’t have leadership, when we don’t have a City Manager...Instead, we’re having politicians lead the way, and politicians make decisions based on four-year life cycles and mostly because they’re capitalizing off the short-term memory of voters.
“...I pray that we can collectively take a breath, not rush in and do what’s in the best interest of everyone and not fall for a scheme that literally bypasses the taxpayers’ rights.”
Vice Mayor Pam Franco said she came into the meeting thinking one way, but had to take into consideration the feelings of the public regarding the proposed plan. She originally believed that taking the project out to bond would be beneficial as costs rise and inflation takes hold.
“We’re leveraging today’s dollars...Dollars today are cheaper than dollars in the future. This isn’t a perfect solution for sure, but it does do a lot of roads and it gets them done in a timely manner,” Franco said. “...I think at the end of five years we will have done more roads than any time in the past and our roads are just getting worse.”
Mayor Amy Bublak said she’s hassled by constituents about getting roads done everywhere she goes, from picking up her prescription at Walgreen’s to speaking to the local Scouts of America troop. Although she’s a fiscal conservative, she noted that the City needs to leverage the money it has today in order to fix a problem she’s heard about from voters for years, lack of staff or not.
“We have done a phenomenally poor job, no disrespect, at getting our roads done. We just never get them done because we don’t have enough staff to do what we need to do,” Bublak said. “That’s the whole point of hiring outside, and bonding is the leveraging of our funds to get moving...I think there’s a misunderstanding about what it is the public wants.”
“I totally agree with you, Mayor,” Councilmember Nicole Larson said. “I think that when someone says to me that they want to get their road done, if I turned around to them and said, ‘Yeah, I’m going to incur you with debt for the next 30 years,’ I wonder what their response would be.”
Larson had previously appealed for City staff to prepare two presentations to be considered at this week’s meeting — one for PFIC’s plan and another for Project Finance Advisory Limited, which had presented other funding options during the Sept. 1 special meeting. It is worth noting, however, that representatives from PFIC said other funding options could be explored, and Tuesday’s vote would have simply approved the pre-engineering and planning process.
Larson motioned on Tuesday to table the roads program initiative until a future meeting where both companies’ plans could be considered.
Larson’s motion was seconded by Nosrati, though Bublak, Franco and Councilmember Rebecka Monez voted against the idea. Monez motioned to table the item and bring back the PFIC plan to a future meeting with more information and further engagement with PFIC so that the Council could better decide on the item, which received approval from herself, Franco and Bublak.