Meeting_Body
FINANCE, BUDGET, AND AUDIT COMMITTEE
JUNE 16, 2021
Subject
SUBJECT: LOCAL RETURN PROPOSITION A, PROPOSITION C, MEASURE R AND MEASURE M CAPITAL RESERVE
Action
ACTION: AMEND EXISTING CAPITAL RESERVE PERIOD FOR ARCADIA, BELL, AND BEVERLY HILLS; AND ESTABLISH NEW ACCOUNTS FOR THE CITIES OF BEVERLY HILLS, BRADBURY, El SEGUNDO, LOMITA, NORWALK, POMONA, AND SAN MARINO
Heading
RECOMMENDATION
Title
AUTHORIZE the Chief Executive Officer to negotiate and execute all necessary agreements between Los Angeles County Metropolitan Transportation Authority (LACMTA) and the Cities for their Capital Reserve Account(s) as detailed in Attachment A by:
A. AMENDING the termination date of the Proposition A and Proposition C Local Return funded Capital Reserve Accounts for the City of Arcadia;
B. AMENDING the termination date of the Proposition C Local Return funded Capital Reserve Account for the City of Bell;
C. AMENDING the Proposition C Local Return funded Capital Reserve Account for the City of Beverly Hills by adding $750,000 to the already approved $2 million to a total of $2.75 million; and
D. ESTABLISHING new Local Return funded Capital Reserve Account for the Cities of Beverly Hills (Proposition A, Measure R), Bradbury (Measure M and Measure R), El Segundo (Proposition C and Measure R), Hermosa Beach (Proposition C), Lomita, (Proposition C), Norwalk (Proposition C), Pomona (Proposition C), and San Marino (Proposition C).
Issue
ISSUE
A local jurisdiction may need additional time to accumulate sufficient funding to implement a project, or to avoid lapsing of funds. This year in particular, many cities may require a lapsing extension due to the limited spending caused by project shut down during the Safer at Home Order.
Background
BACKGROUND
According to the Local Return Guidelines, Board approval is required if there is a need to extend beyond the normal lapsing deadline for Local Return funds. Typically, the local jurisdiction requests that funding be dedicated in a Capital Reserve Account. Once approved, a local jurisdiction may be allowed additional years to accumulate and expend its Local Return funds from the date that the funds are made available.
Discussion
DISCUSSION
Findings
Staff uses a First-In-First-Out (FIFO) calculation to determine if a city may be in jeopardy of losing their Local Return Funds. Proposition A and Proposition C utilizes a “three year plus current year” period for a total of four years for the timely use of funds. Measure R and Measure M utilizes a five-year period for the timely use of funds.
Considerations
Local Return Guidelines have a timely-use-of funds requirement with a lapsing deadline. However, Capital Reserve Accounts are permitted with approval from the Board of Directors. These accounts may be established so that Los Angeles County local jurisdictions may extend the life of their Local Return revenue to accommodate longer term financial and planning commitments for specific capital projects.
Should Local Return funds lapse due to time constraints, per Local Return Guidelines, those lapsed funds would then be returned to LACMTA so that the Board may redistribute the funds to jurisdictions for discretionary programs of county-wide significance or redistribute to each Los Angeles County local jurisdiction by formula on a per capita basis.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Approval of the new Capital Reserve Accounts will allow for projects such as, Transit Center, Intersection, and Street and Road improvements, that would provide for additional safety features with local communities. (See Attachment A for detailed list of projects.)
Financial_Impact
FINANCIAL IMPACT
Adoption of staff recommendations would have no impact on the LACMTA Budget, or on LACMTA’s Financial Statements. The Capital Reserve Account funds originate from Propositions A & C, Measure R and Measure M funds, as specified that are allocated to each Los Angeles County local jurisdiction by formula and are held by each City. Some of the city’s funds could lapse due to time constraints and other cities with small apportionments may need additional time to accumulate the needed funds for capital projects.
Impact to Budget
Adoption of staff recommendations would have no impact on the LACMTA Budget as these funds have been previously disbursed to the cities.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
Recommendation supports Metro’s Strategic Plan Goals #1 and #2 by improving mobility, ease of travel, and safety. These are the Local Jurisdictions’ apportionment of the funds as on Attachment A have determined the identified improvement projects assist in achieving those goals.
Alternatives_Considered
ALTERNATIVES CONSIDERED
Should the Board choose not to approve the recommendations above, which staff does not recommend, the Cities may not be able to accumulate sufficient funds necessary to implement the capital projects as described in Attachment A and the projects may not be constructed in a timely manner.
Next_Steps
NEXT STEPS
With Board approval of our recommendation, staff will negotiate and execute all necessary agreements between LACMTA and the listed cities for their Capital Reserve Accounts as approved. We will continue to monitor the accounts, including our annual Local Return audit, to ensure that the cities comply with the Local Return Guidelines and the terms of the agreement.
Attachments
ATTACHMENTS
Attachment A - Project Summary for Proposed Capital Reserve Accounts
Prepared_by
Prepared by: Susan Richan, Director, Budget, (213) 922-3017
Drew Phillips, Senior Director, Finance, (213) 922-2109
Reviewed_By
Reviewed by: Nalini Ahuja, Chief Financial Officer, (213) 922-3088
