RIVERSIDE COUNTY TRANSPORTATION COMMISSION

DATE: December 13, 2006 TO: Riverside County Transportation Commission Public/Private Financing and Delivery Plan Ad Hoc Committee FROM: Eric Haley, Executive Director Work Effort of 10-Year Delivery Plan for Western Riverside County SUBJECT: Measure A Freeway Program

PUBLIC/PRIVATE FINANCING AND DELIVERY PLAN AD HOC COMMITTEE AND STAFF RECOMMENDATION:

This item is for the Commission to:

1) Receive and file the results of the work effort to formulate the 10-Year Delivery Plan for the Western Riverside County Measure A program; 2) Approve the 10-Year Western priorities, which include the prioritization of freeway investments on projects along the I-215, I-15, SR-91 and I-10 corridors; 3) Authorize staff to utilize the 2006 forecast of Measure A revenues in developing projections for the 10-Year Western Riverside County Highway Delivery Plan; 4) Direct staff to return to the Commission in 90 days with detailed updates and reports regarding the Mid County (MCP) project, the realignment of SR-79, and the Bi-County I-215 project; and 5) Return to the Commission with quarterly updates and actions to facilitate and expedite the delivery of highway improvements in Western Riverside County.

BACKGROUND INFORMATION:

In mid-2005, the Commission directed staff to pursue a three-pronged strategy aimed at developing the necessary background information to implement the first 10 years of the 2009 Measure A program, approved by voters in 2002. The Commission has already taken action on some Measure A policy areas such as the acquisition of habitat areas for mitigation, ongoing planning on Community and Environmental Transportation Acceptability Process (CETAP) corridors and the implementation of a Transportation Uniform Mitigation Fund (TUMF) program for Western Riverside County.

Agenda Item 9 209 However, the one major policy area of the 2009 Measure A program that required a comprehensive background and data development effort is in the area of highway projects in Western Riverside County.

The Measure A expenditure plan approved by voters in November 2002 provides funding for a wide variety of local and projects, regional arterials, specialized transit and rail projects and commuter services. The voter approved plan originally allocated $1.02 billion for improvements to state highways in Western Riverside County, and specifically mentions that the Measure A dollars needed to cover the program would provide less than half of the needed money to complete the projects. The drafting of the 2009 Measure expected state and federal funding to be used with measure dollars to finance the ambitious plan. Attachment 1 provides the detail that was included in the Measure A plan.

A Changed Environment

The Measure A expenditure plan was approved in 2002 and was actually formulated by the Commission throughout that year and 2001. The projected costs for individual projects were estimated in close consultation with the state of California Department of Transportation (Caltrans) and represent an assessment of cost projections as they were known at that time.

Shortly after Measure A was approved, construction costs for major projects have skyrocketed along with the cost of real estate in Riverside County. After careful study and consideration, Commission staff believes that the true cost of implementing the state highway projects included in the Measure A program now exceeds $4.5 billion.

At the same time, Riverside County continues to lead most areas in terms of population and job growth, congestion levels and commute distances. While the growth in population is helpful in terms of sales tax revenue generation, growth does bring added strain on the transportation system and the results can be seen on freeway corridors throughout Western Riverside County. Riverside County’s residents and the overall economy are especially dependent on highways as the backbone of its transportation system.

“Moving Parts”

Given the dynamic transportation environment of Western Riverside County, the Commission directed staff to move forward on three subject areas in order to lay the groundwork for developing an implementation plan strategy for the Measure A state highway program and specifically the first 10 years of the program. The updated data would then be used to develop a 10-Year Delivery Plan which is the

Agenda Item 9 210 subject of this staff report. The three subject areas which were often colloquially referred to as “moving parts” have been completed by staff and include:

1. An updated Measure A revenue estimate; 2. The use of innovative financing techniques such as public/private partnerships and toll ; and 3. Updated scope, cost, and data for the Measure A state highway program.

An ad hoc committee appointed by Chair Marion Ashley guided the data development work that was conducted to advance these subject areas and the Committee’s membership was comprised of Commissioners Ashley, Terry Henderson, Bob Buster, Frank Hall, Barbara Hanna, Robin Lowe, Bob Magee, Jeff Miller, Ron Roberts, John Tavaglione, Frank West and Roy Wilson. Caltrans District 8 Director, Mike Perovich, also participated in the ad hoc meetings. The result of this ad hoc committee’s work guides the recommendations that are reflected in this staff report and was reviewed and unanimously forwarded to the Commission at its most recent meeting on November 27, 2006.

Revised Measure A Revenue Estimate

During the development of the extension of Measure A for the November 2002 ballot, the Commission used a forecast completed in May 2001 with the assistance of Ernst & Young LLP. As a result of the significant economic growth in Riverside County the past three fiscal years, that forecast was no longer useful for budgeting and strategic planning purposes. In mid-2006, the forecast of Measure A revenues through 2039 was completed by the UCLA Anderson Forecast. Attachment 2 provides more details on the forecasted amounts.

The new forecast of sales tax receipts for the 2009 Measure A, net of the 1.5% State Board of Equalization fee, is approximately $10.354 billion compared to the original forecast of $4.662 billion. These amounts are reflected in real dollars, which are adjusted for inflation and represent the purchasing power of future receipts in current year amounts. This represents a 122% increase in forecasted sales tax receipts. Based on the forecast, staff has distributed the annual amounts by geographic area based on the distribution used for Measure A allocations during FY 2005/06. The following is a comparison of the forecasts by geographic area:

Geographic Area 2001 Forecast 2006 Forecast Increase Western County $3,360,000,000 $7,675,300,000 128.4% Coachella Valley $1,255,000,000 $2,605,000,000 107.6% Palo Verde Valley $47,000,000 $73,300,000 56.0% Total Receipts $4,662,000,000 $10,353,600,000 122.1%

Agenda Item 9 211 Assuming proportionality for program allocations within each geographic area, the new forecast results in approximately $486.2 million available for the Western County highway program during the first ten years of the 2009 Measure A and $2.330 billion for the 30-year period.

While the new projections indicate a healthy, growing economy, Measure A will not be sufficient to fund priority projects in the first ten years of the 2009 Measure A (FY 2010-2019). As originally projected in the Measure A expenditure plan, state and federal funding will be needed and even then, revenues will likely fall short. One possibility to close future gaps could be a fee on new development to build freeway facilities and the Commission is beginning the second phase of evaluating that approach. Other options could be through the utilization of user fees such as tolls and securing one-time funding such as state bond dollars.

Innovative Financing Techniques Including Public/Private Partnerships and Tolls

At its February 8, 2006 meeting, the Commission approved a list of pre-qualified firms for On-Call Strategic Partnership Advisor Services. The assistance of experts, knowledgeable in the area of transportation economics, federal transportation funding tools and corporate equity investment evaluation, was critical in enabling staff to independently evaluate the feasibility of public/private partnerships to build additional transportation capacity or to speed the delivery of already planned projects.

The idea of considering toll facilities in Riverside County is consistent with actions that are taking place throughout the country. Indeed state and federal policy have been moving in this direction with the idea of seeking private sector participation for the funding of infrastructure projects that include hospitals, water facilities and schools in addition to highways. The federal Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA LU) legislation encourages the private sector funding of highway improvements and allowed the use of privately financed toll roads on interstate highways.

In California, the Legislature approved AB 1467 which allows for four privately financed transportation facilities throughout the state. Although the Governor and the Legislature trumpeted the bill as an example of innovative thinking, the provisions of the bill are so restrictive that it is believed that additional legislation will be needed in the next session to actually make implementation possible. Nevertheless, it demonstrated a willingness of the Legislature and the state to consider this type of approach.

Agenda Item 9 212 Finally, toll roads of various kinds have been constructed adjacent to Riverside County in both San Diego and Orange Counties. The facilities have all been unique in the way they were implemented but the success of the I-15 managed in San Diego County, the SR-241 and SR-261 toll roads operated by the Transportation Corridor Agencies (TCA) in Orange County and the 91 Express Lanes have all shown that there is a market and a demand for the public to pay for additional capacity through tolls if it provides an attractive alternative to the congestion on conventional highways.

All three of the above-mentioned toll facilities were implemented and are operated and managed in different ways. Furthermore, there is a wide variety of financing this type of development which is why consultants were retained to examine toll financing alternatives. The result was an exhaustive nine-month study of both publicly and privately financed delivery methods and then the application of these methods to actual corridors in Western Riverside County.

In a best case scenario, toll roads offer the promise of providing additional transportation capacity that can be financed through their own revenue stream. With the use of design-build contracting, the construction of this type of project could also be expedited resulting in benefits being delivered quicker. Also if demand is sufficient, excess revenue from the facility could be invested in additional projects in the same corridor. The allure of working with the private sector is that more of the risks of constructing this type of project can be borne by the private company because of the private sector’s need to generate profits as quickly as possible.

The best case scenario is predicated on strong user demand to entice the private sector to participate. Early on in the analysis of actual corridors, it became clear that toll roads and private sector participation would only pencil out on heavily- trafficked freeways such as SR-91 and I-15. That’s why these highways already have toll facilities on them in adjacent counties. It also means that toll facilities will not pencil out on corridors with lesser traffic volumes such as SR-79 and the proposed MCP.

Congestion is certainly a problem on SR-79 but the overall volume of traffic is not sufficient to finance a highway that is expected to more than a billion dollars. Also, while the need for a new east-west corridor as envisioned on the MCP is undeniable, the needed traffic demand to see anywhere near a break even revenue projection for a is decades into the future. If toll roads are to be considered as a near-term transportation strategy, the focus will have to be limited to improvements on SR-91 and I-15.

Agenda Item 9 213 Updated Scope, Cost, Traffic and Data for the Measure A State Highway Program

At its June 3, 2005 Commission workshop, staff was provided with general direction to develop the information necessary to assess the delivery status of the 1989 Measure A Western County Highway Program (including the MCP), as well as, develop an objective set of project measurements, including state recognized performance measures, to support the Commission in establishing priorities for the first 10 years of the 30-year Measure A program.

At its December 14, 2005 meeting, the Commission approved an amendment to the Bechtel Infrastructure program management contract to assist the Commission in determining the status and deliverability of the 1989 Measure A program and developing the initial 2009 Measure A program 10-Year Delivery Plan. The objectives of the effort were:

• An assessment of the status and challenges of completing the delivery of the Western County highway program for the 1989 Measure; • An objective based assessment of the Western County portion of the 2009 Measure A transportation program; • Prioritization of the Western County program of projects; and • Development of a delivery plan that will cover the first 10 years of the 30-year extension of Measure A.

Staff and the Bechtel team have completed this analysis, which involved updating project scopes, and developing quantitative and qualitative benefits of projects in the Measure A state highway program. This required updated modeling and traffic projections that used a horizon year of 2015.

The need to reevaluate the scopes of the various Measure A projects was necessary because of limited detail in the Measure and the continued growth of the county. Project scope, outlined on the ballot, in most cases only specified that an additional be added. The ballot did not specify if the additional lane would be a high occupancy vehicle (HOV) lane or a mixed flow (MF) lane. Also in most cases the Measure did not consider ancillary projects that are necessary to improve the effectiveness for certain improvements.

As an example, merely adding another lane to SR-91 will have limited benefit near the convergence of I-15 and Main Street in Corona. While the primary cause of congestion in the area is traffic volume, the impact is exacerbated through a variety of traffic movements that take place in a confined area. In less than a mile, vehicles are entering SR-91 from both directions of I-15 while others are attempting to either enter or exit the freeway from Main Street. All of these

Agenda Item 9 214 vehicle movements require lane changes and other traffic moves that further complicate an already-congested situation. A good way of addressing this area would be through the construction of a collector distributor road system that would add lanes alongside the freeway to allow for ingress, egress, lane changes and weaving off the mainline of the freeway which would improve traffic flow and provide safety benefits. The problem is this type of system is not specifically identified in the Measure A program. Similarly the connector between the eastbound SR-91 and northbound SR-71 was seen as a simple enhancement of the existing loop ramp that is already in place at that location. Given the congestion in the area, what is really needed is a much larger fly-over structure that would eliminate a hairpin turn and allow for more cars to transition between the two freeways.

Yet another work effort that plays a role in defining project scopes and definitions was the completion of project study reports (PSR) by Caltrans for the I-15, I-215 and SR-91 corridors. This effort began in 2004 and is required by the state before a project can move forward. This preliminary level of engineering and project assessment helps quantify project costs, needed right-of-way, assesses environmental issues and determines additional engineering or construction challenges.

Quantitative Analysis

By re-evaluating the scope of various projects, staff was able to model results for the quantitative measures of effectiveness that included:

• Facility Number of Trips Served -Average Daily Traffic (ADT); • Facility Daily Level of Service (LOS); • Travel Time Savings; • Vehicle Miles Traveled Savings; • Distance Savings per Vehicle; • Vehicle Hours Traveled; • Value of Time Savings ($); • Value of Distance Savings ($); • Energy Consumption Savings; • Air Pollutant Savings, and; • Accident Reduction.

These results were used to develop a cost-benefit ratio for each of the 2009 Measure projects and project segments after the delivery costs for each project were updated and compared to 2015 baseline data.

Agenda Item 9 215 Qualitative Analysis

In addition to the cost-benefit ratios, the projects were compared using a list of qualitative measures. These measures were used to attempt to assess issues that are not easy to provide a quantitative benefit. The qualitative measures focused on factors such as:

• Opportunistic Timing; • Environmental Challenges; • Need to Protect Right-of-Way; • External funding available that is project specific; • Time required to get the project ready to advertise, and; • Safety issues not addressed in the cost benefit analysis.

The details from the comprehensive analyses are voluminous to the point that it could require months of meetings to fully report all of the information. In fact, that did happen with the ad hoc committee that oversaw the effort. However, in sifting through all of the information, there are a number of conclusions or assumptions that can be gleaned that provide the basis for formulating a delivery plan. They include the following:

Increased Project Costs

This is a statewide, and even a national problem but the situation in Riverside County is especially acute given increases in property value and the need to expand the scope of some of the Measure A projects. A funding gap exists and there needs to be a realization that Measure A is a 30-year program. Priorities need to be established and some improvements will have to be made before others. The quantitative benefit-cost analysis provides helpful data to evaluate some of these decisions.

A Need to Act Quickly

While the renewed Measure A program does not officially begin until July 2009, Riverside County’s residents and its economy require immediate action to address current traffic conditions. Furthermore there are potential funding opportunities thanks to the approval of Proposition 1B. There are advantages to keying in on projects that can be delivered quickly. Usually these are projects that require less right-of-way or that can be cleared environmentally with little complication. Finally, Riverside County is home to a number of freeway corridors that are essentially failing.

Agenda Item 9 216 Using these parameters as a guide, four highway corridors are ideally situated as appropriate priorities for the first 10 years of investment for the first 10 years of the Measure A program. The corridors are:

• I-215 • I-15 • I-10 • SR-91

Staff recommends that a priority focus be placed on these highway corridors for the lion’s share of Measure A, and state and federal funding, as well as to pursue additional forms of funding including tolls. The details of these projects are outlined in the subsequent staff report.

Staff also recommends that while the majority of investment must continue on these corridors, work must still continue on longer-term priorities including the development of the MCP, the widening of I-215 to San Bernardino County and the realignment of SR-79 as well as improvements identified in the Riverside-Orange County Major Investment Study (MIS) that called for the construction of an elevated expressway facility along SR-91 and a new corridor between Corona and Irvine that could require a through the Cleveland National Forest. Unfortunately, these projects fail to meet the test of early implementation. Planning and studying future opportunities remains an important function of the Commission, but immediate construction of improvements on already impacted corridors must take precedence. For that reason, it is recommended that planning activities continue on these projects and that funds be allocated for ongoing environmental clearances and the protection of right-of-way, to allow future construction as funding becomes available.

Next Steps

The presentation of this report presents only the beginning of work that will come together to implement the first 10 years of the 2009 Measure A highway program. Through the use of innovative financing, and aggressive construction scheduling, the effort seeks to intensify investment in the areas that are most congested and need immediate relief.

During the next few months, staff will continue to return to the Commission with action items to implement the overall plan. This will include contracts for environmental clearance, engineering, right-of-way acquisition and construction. Riverside County’s transportation needs are significant and the current environment that sees construction crews working on various highways, and roads will continue and intensify with the implementation of this plan.

Agenda Item 9 217 Attachments: 1) State Highway Portion of 2009 Measure A Expenditure Plan 2) Taxable Sales Revenues for Riverside County – UCLA Report

Agenda Item 9 218 ATTACHMENT 1

STATE HIGHWAY PORTION OF 2009 MEASURE A EXPENDITURE PLAN

WESTERN RIVERSIDE COUNTY

The Expenditure Plan Map illustrates the Western and Coachella Valley areas. The Western County area includes the cities of Banning, Beaumont, Calimesa, Canyon Lake, Corona, Hemet, Lake Elsinore, Moreno Valley, Riverside, Murrieta, Norco, Perris, San Jacinto, and Temecula. It also includes the unincorporated communities of Jurupa, Mira Loma, Menifee, Wildomar, and Sun City and other more sparsely populated areas, and the reservations of the Pechanga Band of Mission Indians, the Soboba Band of Mission Indians, the Cahuilla Band of Mission Indians, the Ramona Band of Cahuilla Indians, and the Morongo Band of Indians.

1. STATE HIGHWAYS

Many more state highway improvement projects are needed to deal with congestion and safety problems than existing state and federal revenues can fund. Projected formula funds from these sources over the 30 years is estimated to be $640 million and will fund less than ½ of the improvements needed and identified in the Expenditure Plan, which are estimated to cost $1.66 billion in current dollars. Measure A funds will supplement those funding sources by an estimated $1.02 billion and will cover the remaining costs estimated to accomplish these improvements.

The highway projects to be implemented with funding returned to the Western County area by extending the Measure A program are as follows:

ROUTE LIMITS PROJECT EST. COST SR-91, SR-60, Reducing congestion on these See Section 2 I-15, & I-215 routes will require that new transportation corridors are constructed SR-91 Pierce Street to Orange County Add 1 lane each direction $ 161 million Line SR-91/I-15 Add new connector from I-15 $ 243 millon North to SR-91 West SR-91/SR-71 Interchange Improve Interchange $ 26 million SR-71 SR-91 to San Bernardino Widen to 3 lanes each direction $ 68 million County Line I-215 60/91/215 to San Bernardino Add 2 lanes each direction $ 231 million County Line ATTACHMENT 1

ROUTE LIMITS PROJECT EST. COST I-215 Eucalyptus Ave to I-15 Add 1 lane each direction $ 210 million I-15 SR-60 to San Diego County Add 1 lane each direction $ 359 million Line I-10 San Bernardino County Line to Add eastbound truck climbing $ 75 million Banning lane I-10/SR-60 Interchange Construct new interchange $ 129 million SR-60 Badlands area, east of Moreno Add truck $ 26 million Valley SR-79 Ramona Expressway to Realign highway $ 132 million Domenigoni Parkway SUBTOTAL Measure A Funding $1.02 billion State & Federal Formula Funds $0.64 billion TOTAL $1.66 billion

The Commission may add additional state highway projects, should additional Measure A revenue become available.

An estimated 5% of the total cost for these highway projects ($83 million) will be used for environmental purposes to mitigate the cumulative and indirect impacts associated with construction of these projects.

UCLA Anderson Forecast (May 2006)

FY Receipts, net of 1.5% SBOE Admin Fee FY Nominal % Change Real % Change

1989 Measure A Receipts: FY06/07 157,297,293 6.6% 155,656,422 4.1% FY07/08 165,479,599 5.2% 160,492,344 3.1% FY08/09 174,546,921 5.5% 166,055,764 3.5% Total for last 3 years-1989 Measure A$ 497,323,813 $ 482,204,530

2009 Measure A Receipts: FY09/10$ 185,614,649 6.3%$ 172,510,140 3.9% FY10/11 198,710,986 7.1% 180,168,169 4.4% FY11/12 213,296,313 7.3% 189,313,762 5.1% FY12/13 228,374,831 7.1% 198,299,310 4.7% FY13/14 245,644,229 7.6% 208,636,209 5.2% FY14/15 265,023,979 7.9% 219,842,256 5.4% FY15/16 285,283,438 7.6% 230,744,178 5.0% FY16/17 306,768,159 7.5% 241,794,458 4.8% FY17/18 329,748,058 7.5% 253,448,052 4.8% FY18/19 354,050,324 7.4% 265,626,465 4.8% Subtotal-first 10 years 2,612,514,966 2,160,382,998

FY19/20 379,597,087 7.2% 278,007,941 4.7% FY20/21 405,695,897 6.9% 290,226,330 4.4% FY21/22 433,317,296 6.8% 302,941,476 4.4% FY22/23 462,542,793 6.7% 315,435,378 4.1% FY23/24 493,506,894 6.7% 329,165,045 4.4% FY24/25 527,033,947 6.8% 343,756,320 4.4% FY25/26 561,231,905 6.5% 357,938,197 4.1% FY26/27 596,230,456 6.2% 371,434,114 3.8% FY27/28 633,722,346 6.3% 385,125,945 3.7% FY28/29 673,568,856 6.3% 398,960,486 3.6% Subtotal-second 10 years 5,166,447,478 3,372,991,233

FY29/30 715,437,009 6.2% 413,233,600 3.6% FY30/31 759,782,472 6.2% 428,286,115 3.6% FY31/32 806,135,871 6.1% 443,612,309 3.6% FY32/33 854,085,054 5.9% 458,744,105 3.4% FY33/34 904,564,977 5.9% 474,234,608 3.4% FY34/35 957,058,151 5.8% 489,765,032 3.3% FY35/36 1,011,080,788 5.6% 505,040,297 3.1% FY36/37 1,067,463,606 5.6% 520,453,646 3.1% FY37/38 1,126,189,734 5.5% 535,930,840 3.0% FY38/39 1,186,178,569 5.3% 550,970,026 2.8% Subtotal-last 10 years 9,387,976,230 4,820,270,576

Total 2009 Measure A Receipts$ 17,166,938,675 $ 10,353,644,808

Note: Nominal dollars reflect actual dollars (year of receipt). Real dollars are adjusted for inflation, representing the purchasing power of future receipts in current year amounts (2006 $). Amounts presented include deduction of State Board of Equalization fees (1.5%).