Encinitas may borrow up to $20 million for Streetscape project
Leucadia’s Coast Highway 101 renovation plan was split into phases when pandemic hit
Encinitas should pursue borrowing up to $20 million now and finish what it can of the Coast Highway 101 Streetscape project, even if that’s not enough money to do all that was originally proposed, a majority of the City Council agreed Monday, May 3.
Because the council indicated it could support the idea, city finance employees now will put together a financing proposal as well as options for scaling back the size of the construction project, City Manager Pamela Antil said. Both the financing plan and the revised construction plans will later need to be approved by the council. Monday’s informal thumbs-up simply assists city employees as they put together a draft version of the city’s spending plan for the new fiscal year, which begins July 1.
Encinitas was poised to start work on the entire Streetscape project — a complete overhaul of a 2.5-mile section of Coast Highway 101 from La Costa Avenue south to A Street — just before the coronavirus pandemic began last spring. Concerned about launching such a costly construction project as the nation’s economy was taking a steep dive, the council agreed last May to break the project into phases. Work on the first phase — the stretch from Marcheta Street to Basil Street, plus a storm drain system at El Portal and three parking pod areas — has since begun.
Now would be an ideal time to borrow money for the rest of the Streetscape construction plans because interest rates are so low, city finance employees said Monday, May 3. However, construction costs are soaring nationally and that means some difficult choices may need to be made, the city manager said.
Last spring, the entire Streetscape project was estimated to cost $30 million. Now, that figure is likely $37 million to $47 million, according to city estimates. And, Encinitas would be best served by borrowing no more than $20 million right now given its current debt load for previous projects and its need to keep some borrowing capability on hand in case of an emergency situation, city finance director Teresa McBroome said.
McBroome said she’s recommending that Encinitas borrow money from the California Infrastructure and Economic Development Bank, rather than seeking voter approval for a bond measure. Known as IBank, it was founded by the state legislature in 1994 and finances public infrastructure projects. Encinitas would likely be able to obtain a 15-year loan with a total interest rate of 3 percent from IBank, she said.
The mayor and the four council members all said that they supported the IBank proposal, but they split over whether to downsize the construction plans to fit the city’s borrowing ability.
Councilman Tony Kranz, who represents the Leucadia region, said the city should consider the $20 million in financing as the next phase of the project and then look for additional sources of money to finish what was originally proposed, “instead of saying this is the end of the project.” He noted that Encinitas has spent upwards of 15 years planning for the Coast Highway renovation and said the city should provide what it promised the area.
Councilman Joe Mosca, who represents the city’s Olivenhain and New Encinitas district area, said he thought the city should “value-engineer” the project downward, building what it can for $20 million and then declare the job done.
“I absolutely believe in Streetscape, but the times have changed,” he said. “We’ve just been through a pandemic ... the project cannot be completed as designed right now.”
Mayor Catherine Blakespear said she supported Mosca’s position that the city ought to borrow the money now, do what it can and then declare the job complete. However, she said, if city staff find out that $20 million will only cover “half a roundabout,” she’ll have to rethink her support for the proposal.
Councilwoman Joy Lyndes, a landscape design business owner, said she hoped the landscaping wouldn’t be eliminated from the Streetscape plans as a cost-cutting measure.
Councilwoman Kellie Shay Hinze, a former executive director of the Leucadia 101 Main Street Association, said she hoped the city could find other sources of money for any “park-like” Streetscape elements, such as landscaping, that might be eliminated under the new financing proposal.
— Barbara Henry is a freelance writer for The San Diego Union-Tribune
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