Yuba County leveraged future SB1 dollars to perform four years of road fixes in a single summer with savings to repair 30 percent more roadways. Since 1994, Public Works has had to rely almost solely on Highway Users Tax (gas tax) revenues, a source that was inadequate even when it was established 25 years ago, and since that time it has never been adjusted for inflation. With the cost of construction climbing steadily, the purchasing power of gas tax revenues has been in a free-fall, and as a result Yuba County’s roadways continued to deteriorate. Finally, in 2017, the California Legislature passed SB1, establishing a reliable, ongoing source of gas tax revenues that adjusts for inflation. However, it would still take years to make meaningful progress in repairing our roads. Yuba County leaders decided to explore options to leverage the new gas tax dollars in ways that could make up for previous years lack of maintenance. A “light bulb” concept emerged: Advancing SB1 funds so that the county could complete future road repair work in a single construction season and then pay back the advance using future apportionments of SB1 revenues. We began by working with our lobbyists to fix state regulations that did not allow local agencies to advance fund road improvement work and then repay it using future year apportionments of SB1 revenues. The county was successful in changing regulations with the passage of SB848. Next, Yuba County approached another county agency that is part of the same county Treasurer-managed investment pool to discuss a loan. The Yuba Water Agency (YWA) has significant power generation revenue in that pool. The loan process was complicated and lengthy, and it required the use of special bond counsel and financial advisors. The end result of the agreement was an advance/loan of $9 million at a favorable interest rate of 2.25%, which for the YWA was slightly above its investment rate; win-win. Yuba County will use its general fund to pay off interest on the advanced funding, as benefits to residents far exceed the cost of the improvements. Prior to this concept, Yuba County had a 2019 schedule to repair 15 miles of roads using SB1 funds. However, by using advanced funds from the YWA, the county was able to finalize contracts to complete over 70 miles of road repairs in the summer of 2019, which represents 15% of the county’s entire network of paved roads. Amazingly, this approach resulted in savings that reached as much as $4 million. The savings were realized by a number of factors including doing two large contracts at once instead of multiple smaller ones, avoiding escalating construction costs expected over the next few years, avoiding ongoing maintenance on the roads to be repaired, and fewer trips to the repair shop for residents, who will enjoy smoother rides on the new roads. The economies of scale allowed us to realize outstanding unit prices, with the bids well under the engineer’s estimate.
City or County Responsible for Project:
Roads: Efficient and Sustainable Road Maintenance, Construction and Reconstruction Projects.
Narrative Description Of Your Entry:
Public Works Director
Yuba County Public Works
915 8th Street, Marysville, CA 95901