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Report regarding Capital Improvement Projects (CIP) at Orange Memorial Park; the Sports Field Project and Aquatic Center Project, Bridges Replacement Project and Playground Replacement with recommended bond funding strategies. (Jacob Gilchrist, Director Capital Project, and Jason Wong, Acting Finance Director)
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RECOMMENDATION
It is recommended that the City Council Budget Standing Committee consider and provide direction regarding bond funding for Capital Improvement Program (CIP) projects at Orange Memorial Park. Projects include construction of a synthetic turf multi-use sports field, which has previously been approved as a CIP project and is starting construction in May 2022, replacement of Orange Pool with a New Aquatic Center for which conceptual design is underway, replacement of pedestrian bridges at Colma Creek and replacement of the existing playground with an all-abilities playground.
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BACKGROUND
The projects at Orange Memorial Park which are the subject of this Study Session - a synthetic turf sports field, a new aquatic center, replacement of pedestrian bridges at Colma Creek and replacement of the playground - are being considered together in this report with funding to come from a 2022 bond sale.
This report and presentation will discuss each project, including the following:
- Status of the Sports Field project;
- Budget update for the New Orange Memorial Park Aquatic Center;
- Need for replacement of the Orange Memorial Park pedestrian bridges spanning Colma Creek and proposed budget;
- Need for replacement of the main playground with an all-abilities playground and proposed budget;
- Updated estimated project costs and cash flow needs over the anticipated design/construction time frames;
- Forecast of anticipated Parks Impact Fees, which have traditionally been the primary funding source for park projects; and
- Recommended combined bond funding for these projects.
Orange Memorial Park Sports Field Project
The Sports Field project will conserve water, provide for year-round play, significantly expand the number of hours of play that can be scheduled, improve safety for players, and enhance the appearance and beauty of Orange Memorial Park. The project was approved in the FY 2018/19 Capital Improvement Program and includes: one adult / full size baseball field, one softball field, and two youth baseball fields; one adult soccer field, two junior soccer fields, and four youth soccer fields. Amenities include synthetic turf, lighting and electronic scoreboards, 30-foot chain link backstops with netting, aluminum bleachers, a restroom/concession building, bullpens, dugouts, batting cages, portable goals and fencing, and landscape enhancements.
In November 2021, the project was advertised for construction based on an engineering estimate of $11,725,000. The lowest qualified bid came in at $10,515,000, which included all five bid alternates. The construction contract was awarded to Interstate Grading and Paving in February 2022. Preconstruction efforts are underway with onsite construction scheduled to start in May 2022, following completion of the Storm Water Capture project. Based on this schedule, staff expects the sports fields to open in summer 2023. The project continues to track towards a total project budget of $14 million.
New Aquatic Center
Orange Pool is South San Francisco’s only indoor municipal swimming pool. Opened in 1970, it continues to serve as a community-wide destination for residents of all ages. Despite the City’s attentive custodianship of the building, overall, the building’s age and heavy use have resulted in very worn condition of the shell and interior. The facility is well beyond the point of meriting replacement.
In April 2021 staff presented to the Budget Standing Committee the Wong and Logan Feasibility Study with recommendation of the construction of a new two-pool facility. In May 2021 staff engaged Group4 Architects from the City’s on-call architecture firm list to explore alternative Aquatic Center locations within Orange Park and validate construction costs.
Working from the two-pool facility approach identified in the Wong and Logan study, Group4 refined the program to include an 8-lane/25-meter pool, separate teaching pool, swimmer’s lounge, rentable multi- use/party room, staff and pool director offices, locker rooms and support spaces for mechanical equipment within a 28,500 SF single-story facility.
Since the October 2021 presentation to Council, the construction industry has experienced historic cost escalation primarily due to the lingering impacts of the global pandemic and the war in Ukraine. Costs for everything from construction materials to furnishings are impacted by supply chain disruptions and increasing fuel costs. While the project budget in October 2021 was $34 million, the current budget is projected to be $49 million. This cost reflects broad industry projections of 15% annual cost increases from late 2021 through 2024. With such market volatility, it is possible that costs will be significantly lower by the time the project goes out to bid in early 2023. As Council may recall, this was the case with the Library | Parks and Recreation facility. Given the current project scope and market, staff believes the $49 million is very conservative and will allow us to adhere to the project schedule regardless of anticipated market conditions.
Community engagement for the Aquatic Center kicked-off early April 2022, with Workshop #1 a Gallery Walk. Workshop #2 is scheduled for Saturday, April 30th where community members will have the opportunity to provide input on design alternatives. The project continues to track to the following schedule:
Design April-December 2022
Bid January - March 2023
Construction April 2023 - September 2024
Close-Out October - December 2024
Orange Memorial Park Bridges
There are currently two pedestrian bridges that span Colma Creek, connecting the northern and southern halves of Orange Memorial Park. A third bridge once existed to the northwest, connecting the former Mazzanti properties. The existing bridges are estimated to be 50 years old and are in disrepair and uncompliant with current ADA standards. Wide gaps in the bridge decking also presents hazards for cyclists and wheelchair users, where wheels can get wedged in the openings between slats. Over the years, temporary plywood sheets have been installed over the decking to cover large gaps and mitigate these conditions. Due to their steep slopes, currently, the only accessible path of travel requires those with mobility disabilities to travel to the at-grade crossing on the sidewalk on Orange Avenue.
Staff recommends replacement of both pedestrian bridges. With a total project cost of $3 million, $1.5 million would come from bond funds and the remaining $1.5 million from Park Impact fees. The new bridges are projected to be operational in 2024.
Orange Memorial Park Playground
The existing playground, which serves children ages 2-5 and 5-12 years old was installed in 2012. The playground is heavily used throughout the year by the general public, and Parks and Recreation programs, such as summer camp. The typical lifespan for a playground is 10-15 years, depending on environmental conditions and use. Due to the high volume of use year-round, this playground is now due for replacement. Platforms, slides and other play elements are worn, and in need of constant maintenance. Metal posts and shade structures are showing signs of age and rust. A new playground would be likewise designed to serve 2-5- and 5-12-year-old age groups, an industry standard. New equipment is envisioned, however, to be more accessible to children and caretakers with disabilities and provide for improved large and small motor skill development and socialization skills.
With a total project budget of $6 million, $2.2 million would come from bond funds with the remaining $3.8 million from Park Impact fees. Staff recommends replacement of the playground to coincide with the final phase of construction of the Aquatic Center, directly adjacent to the playground. Reopening of the new all-abilities playground is projected for late 2025.
FUNDING STRATEGIES
The above project(s), if approved by Council, require a comprehensive funding plan.
Parks Impact Fees
Parks Impact Fees can provide partial funding for these projects. Authorized by the Mitigation Fee Act (Government Code 66000, et seq.), the City of South San Francisco imposes impact fees on new development projects in order to mitigate the impacts caused by new development on public services. While the City has a number of impact fees, the impact fees related to parks consists of two separate categories: Park Construction Fee and Parkland Acquisition Fee (together, the “Parks Impact Fee”).
The following table shows the projected Park Impact Fee revenues over the next five fiscal years (“FY”) based upon the development projects that are expected to be completed:
Table 1: Five Year Parks Impact Fee Projection through FY2025-26
|
FY |
Estimated Revenue* |
|
21-22 |
$ 4,278,364 |
|
22-23 |
$ 3,664,986 |
|
23-24 |
$ 3,640,800 |
|
24-25 |
$ 6,662,362 |
|
25-26 |
$ 12,206,383 |
*Estimated based on current forecast of development environment; subject to change.
However, there are three key considerations/risks to the use of the Parks Impact Fees:
1. Revenue Risk. Impact Fees, in general, are a notoriously unreliable revenue source as the timing of the collection is fully dependent upon the developer. If the development project is halted for any reason, there is real risk that the City may not realize the anticipated revenue. Relying on future Park Impact fees to fund a portion of the Bridges and Playground may risk the completion of the project itself if monies are not available.
2. Timing Considerations. The Bridges and Playground are slated to be completed in 2024 and 2025, respectively. Based upon the impact fee projections, $7.3 million is expected to be available in FY 2022-23 and FY 2023-24.
3. Other Parks Projects. By committing future Parks Impact Fees towards these two projects, capital work for other parks projects, like those identified under Parks 11, may need to be delayed.
Measure W Lease Revenue Bonds
Given the above, the sale of a third tranche of Measure W Lease Revenue Bonds may be the best option to guarantee that funding is fully in place to ensure the successful completion of the Aquatic Center and Sports Field. Lease Revenue Bonds will also be available to fund a portion of the Bridges and Playground projects.
As the Budget Subcommittee members are aware, the City issued the first tranche of Lease Revenue Bonds in March 2020 to finance the Police Station. The City issued the second tranche of Lease Revenue Bonds in June 2021 to finance the (a) Library, Parks and Recreation (LPR) Building; (b) Streets Program, and (c) solar roofs for LPR and the Corp Yard.
The chart below shows a projection of Measure W revenues against all known existing expenditure obligations.
Chart 1: Measure W Revenues vs. Current Debt Service
Through FY 2023-24, the difference between Measure W revenues and expenditures (represented by the striped, green bar) is reserved and will be used towards the Civic Campus project. However, after FY 2023-24, the City does have the financial capacity to absorb the debt service of a third bond financing. Given the $72 million cost for all Projects, the following is the current funding recommendation:
|
Projects |
Bonds |
Caltrain Grant |
Impact Fees |
Total |
|
Ballfield |
$12,300,000 |
$1,700,000 |
|
$14,000,000 |
|
Aquatic Center |
$49,000,000 |
|
|
$49,000,000 |
|
Bridges |
$1,500,000 |
|
$1,500,000 |
$3,000,000 |
|
Playground |
$2,200,000 |
|
$3,800,000 |
$6,000,000 |
|
|
$ 65,000,000 |
$1,700,000 |
$5,300,000 |
$72,000,000 |
The following chart shows the projection of Measure W revenues against all expenditures obligations, including the proposed third tranche of Lease Revenue Bonds:
Chart 2: Measure W Revenues vs. Current Debt Service and Proposed 3rd Tranche
As shown above, Measure W revenues are expected to exceed any debt service obligations, even with the issuance of another $65 million of debt, with enough of coverage (revenue to debt service) ratio. The following table shows the detailed numbers through the next 10 fiscal years:
Table 2: Measure W Revenues vs. Total Debt Service through FY 2030-31
1 Assumes no growth in sales tax receipts from FY 2022-24 and 3.00% growth rate thereafter.
2 Assumes all-in total interest cost of 3.73% with 1st amortization in FY 2024-25.
Staff would work to refine the numbers above to adjust to the capital markets conditions should the City Council decide to move forward with the discussed capital projects.
CONCLUSION
The park and recreation assets described in this report, the Orange Park baseball/softball field, Orange Pool, Colma Creek Bridges, and the playground have served the community extremely well, providing recreation, fitness, and wellness opportunities for thousands of residents for decades. Staff has conservatively assumed no growth in sales tax receipts from FY 2022-24 and 3.00% growth rate thereafter. The financing is structured with a minimum 1.10x debt service coverage ratio. Staff is confident that Measure W sales tax receipts will be available to service the debt.
Attachments:
1. Presentation for City Council Study Session
2. Staff Report: Budget Standing Committee, April 26, 2021; File #21-332
3. Staff Report: City Council Meeting, September 28, 2021; File #21-746