ISSUE

The Metro is required by federal (Title 23 U.S.C. 134 (g) & (h)) and state (P.U.C. 130303) statutes to prepare a Transportation Improvement Program (TIP) for Los Angeles County.  The TIP allocates revenues across all transportation modes based on the planning requirements of the Transportation Equity Act of the 21^st Century (TEA 21).  The Metro accomplishes this mandate, in part, by programming revenues through the Call for Projects.  The Call for Projects programs funds over several years. 

Under federal law, SCAG is responsible for adopting a Regional TIP as part of the statewide strategy to implement the federal Clean Air Act.  Under state law, the Metro is responsible for the Los Angeles County TIP.  In meeting these mandates Metro is required by the Southern the Southern California Association of Governments (SCAG) to certify that Los Angeles County has the resources to fund the projects in the FY 2003 –2008 Transportation Improvement Program (TIP) and affirms its commitment to implement all of the projects in the program.

POLICY IMPLICATIONS

The 2002 Call for Projects Recertification and Deobligation implements the Metro’s multi-modal programming responsibilities for Los Angeles County and the Metro Board adopted Long Range Transportation Plan (LRTP).  The recommendations are consistent with Metro policies concerning the annual authorization and timely use of funds. 

The annual Call for Projects Recertification and Deobligation allows the Board to take a look at previous funding commitments and to take appropriate action(s).  In addition, Board policy calls for the Metro to deobligate funding from project sponsors who have not met lapsing deadlines or who have not used the entire grant amount to complete the project (project savings).  The recommended deobligations implement this policy.

OPTIONS

The Metro Board could cancel all or some of the FY 2002-03 funding commitments rather than authorize their expenditures.  This would disregard previous Call for Projects funding commitments and could also disrupt on-going projects that received multi-year Metro funding in the past.  With respect to deobligations, the Metro Board could choose not to deobligate funds from one or more sponsors.  This is not recommended however, since the deobligations represent project savings, projects canceled at the sponsor’s request or projects that are not moving forward in a timely manner.

FINANCIAL IMPACT

Projects approved through the Call for Projects are funded through a variety of federal, state and local grant sources.   Funds for the 2002 Call for Projects Recertification are included in the FY 2002-03 Metro Subsidies to Others (Cost Center 0441) Budget.  Since these are multi-year funding commitments, the Cost Center Manager and Executive Officer will be responsible for future year budgeting. 

BACKGROUND

Recertification

The $358.8 million in existing FY 2002-03 commitments (Attachment A) was Metro Board approved and programmed in previous Calls for Projects.  The current action is required to insure that funding continues in FY 2002-03 for those on-going projects for which Metro previously committed funding.

Funding Deobligations

Attachment B shows Metro staff’s recommendation to deobligate $12.5 million of previously approved Call for Projects funding.  This includes roughly $248,000 in cancelled projects, $7.2 million in savings, $3.2 million in program adjustments, and $1.8 million in projects that were beyond the lapsing date.  All project sponsors have been notified of Metro staff’s intent to deobligate funds.  For those project sponsors who were not in compliance with Metro’s lapsing policy, an opportunity was given to appeal to Metro’s Technical Advisory Committee (TAC) on May 8, 2002.  

TAC Appeals

On May 8, 2002, the Metro TAC met to hear sponsor appeals on four projects.  The following represents TAC’s recommendations and Metro staff responses to these recommendations.

State Highway Program Claims Reserve

Staff recommends reserving $3.0 million of the deobligated dollars to fund the State Highway Program Claims Reserve Account.  This Metro Board approved account was created as part of the 2000 Call for Projects Recertification to settle claims for completed State Highway Construction projects funded through the Call for Projects.  Currently, approximately $14.0 million in potential claims are being processed through Caltrans formal claims review and arbitration process, which takes as much as 40 months to complete.  Of this amount, historical

data indicates that approximately 40% to 45% is needed to fulfill probable claim expenses. The $3.0 million, when added to the current reserve amount of $6.0 million, will bring the new reserve amount up to the desired level. This allows approximately $4.0 million in previously held project retention to be deobligated. 

Capacity Enhancement/3R Projects Modal Category

With the adoption of the LRTP, the Board directed staff to conduct an assessment of Capacity Enhancing and System Preservation Projects needs and report back to the Board during FY 2002 with findings and recommendations for addressing such needs and issues.  In November 2001, the Board approved a $5.0 million reserve and consideration of up to $10.0 million in additional funds deobligated during the 2002 Recertification process.  Further, staff was directed to develop the criteria and process for projects to compete for these funds.  A Steering Committee composed of representatives of each of the subregions and the City and County of Los Angeles has been formed. Staff is currently analyzing data from a countywide needs assessment survey and revenues currently available to local jurisdictions for these types of projects.  The Steering Committee and the Metro TAC’s Streets and Freeways Subcommittee voted that the process and criteria for selecting projects be deferred to the 2003 Call for Projects; and that a separate modal category be established in the Call for Capacity Enhancement/3R.  Staff also recommends reserving the balance of the deobligations of $9.5 million for all modes including this newly created category.

Time Extensions

During the 2001 Call for Projects Recertification and Deobligation, the Metro Board authorized staff to administratively extend the lapsing deadline for projects that met the criteria listed below.  Additionally, the Board requested that it receive the list of projects that staff administratively extended.

• Project delay due to an unforeseen and extraordinary circumstance beyond the control of the project sponsor (federal or state delay, legal challenge, Act of God, etc.);

• Project delay due to an Metro action that results in a change in project scope, schedule, or sponsorship that is mutually agreed upon by Metro and project sponsor prior to the extension request; and

• Project is contractually obligated, however, a time extension is needed to complete construction that is already underway  (capital projects only).

Based on the above, staff is granting administrative extensions totaling $218.6 million for projects listed in Attachment C.  

NEXT STEPS

After the Metro Board adopts the 2002 Call for Projects Recertification and Deobligation, Metro staff will begin executing Memoranda Of Understanding (MOUs) and Letters of Agreement (LOAs) with sponsors who have received recertified funds and will amend those existing agreements with sponsors granted time extensions.  Staff will begin preparing for the 2003 Call for Projects and the deobligated funds described herein will be reprogrammed at that time.

ATTACHMENTS

A.    Existing FY 2002-03 Call for Projects Commitments

B.    Deobligation Recommendations

C.    Project Time Extensions

D.    Resolution certifying to SCAG that LACMetro has the resources to fund projects in the FY2002/03 – 2007/08 Transportation Improvement Program (TIP)

Prepared by:

Wanda Knight and Renee Berlin - Countywide Planning and Development

James L. de la Loza     

Executive Officer                                             

Countywide Planning

and Development                                 

_______________________________

Roger Snoble

Chief Executive Officer