Salinas officials move forward with $33.7m in planned roadwork, street projects – The Salinas Californian

Salinas officials will be moving forward with nine traffic projects focused on pedestrian and bicyclist safety — and they’re hoping to do so quickly by borrowing against their share of Measure X revenue. 

The city council voted Tuesday 5-1, with one member absent, to proceed with borrowing $33.7 million, at an estimated 4.13 percent interest rate, against the .38 percent sales tax.

The tax is expected to bring in about $3.4 million per year for road maintenance and projects over its 30-year lifespan.

Councilman Tony Barrera was the sole vote against it while Councilman Steve McShane wasn’t present.

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Salinas public works and finance staff asked the council to approve the deal in order to fund several projects initially, saying otherwise the projects would have to move forward as the dollars came in.

Borrowing would cost the city about $800,000 for every million because of interest, finance staff told councilmembers, who balked at the price tag.

Overall, a little more than a third of the $90 million expected to be raised over 30 years would go toward the roadwork, a little under a third would go toward interest on the loans and the remainder would be used for road maintenance, they said. 

But pay-as-you-go would mean decreasing road conditions, which leads higher costs in the long-run to fix, said Don Reynolds of Salinas Public Works. 

That and higher inflation could drive costs up to the point it’d be about as expensive as paying the interest, Matt Pressey, director of finance, told council members. If interest rates rise, that would also mean costlier loans in the future, he said.

“It’s a balance of policy. Pay as you go, slowly, and not get the projects done when you want them,” said City Manager Ray Corpuz. “Or get some major projects done now… and make (roadways) safer and healthier.” 

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Councilman John “Tony” Villegas compared it to mortgages and investing in the future, he said.

“You look at the house price some of the people are paying on their mortgages now, and you hear (some) pay $1,200, and you’re like, ‘Wow, that’s cheap,'” he said. “Nowadays, you’re looking at well over $2,000 if not $3,000 (for a mortgage). 

Councilman Tony Barrera cast the sole no vote based on the high-interest payments. 

“You’re telling me almost half of the money goes to interest?” he said. 

But without borrowing, the city would have to build up reserves from Measure X before building the projects, Corpuz said.

In addition, the city’s streets backlogs for maintenance would grow from $138 million to $246 million in five years, officials told the council.

Meanwhile, needed safety improvements would wait, Reynolds said. 

They include $15 million for the Boronda Road expansion, which includes two roundabouts near schools, he said. Another $7 million would go to creating a sidewalk and other pedestrian improvements along E. Laurel Drive between Natividad Medical Center.

“Right now we have people pushing children in strollers on a street that carries traffic at 40 to 50 mph,” Reynolds told the council.

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Those projects, ranging from $.5 million to $7 million, would be completed in the first three years and include additional state and regional matching grants.

In addition, the remaining third of the cash would go toward regular maintenance each year and act as a cushion should the tax bring in less than anticipated, officials said. 

The loan would be insured, so no general fund or city properties would be needed as collateral or at risk, Pressey said. 

Work is expected to start on some of the projects later this year. 

Both Councilman Scott Davis and Mayor Joe Gunter told city staff that they didn’t want delays in starting the projects before voting in favor of the proposal. 

“The public’s counting on it and they’ve waited long enough,” Gunter said.

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