Borrowing may be the choice to fund Yuba levees

Yuba County officials are looking to borrow $23.3 million - the county’s largest debt - as the local match for Proposition 1E levee improvements funds.

“This is the largest borrowing the county has ever done,” County Administrator Robert Bendorf told supervisors Tuesday. “We do have the capacity to issue this debt if necessary. Your board has an obligation to provide services and public safety. It is important to mitigate risk as best we can through our general fund.”

In August, the county learned it is eligible to receive $138.5 million in state bond funds to help construct about six miles of a setback levee along the Feather River.

The entire setback levee project is estimated to cost $191.8 million. According to Bendorf, the county is responsible for the remaining $53.3 million.

Officials hope to guarantee $30 million from landowners or developers in the southern part of the county, leaving $23.3 million as the county’s share.

Bendorf, Paul Brunner, executive director of the Three Rivers Levee Improvement Authority, and members of the county’s financial team briefed supervisors about their options.

County staff estimated the total annual payment over a 40-year period to be $2.1 million. Without an alternate funding source available, that money would need to come out of the county’s general fund.

Supervisor Mary Jane Griego, whose constituents are largely affected by the levee work, said it is a risk worth taking if it guarantees public safety.

“I think we have some tough decisions, but I think it’s doable. I think what we have been presented had very strong consideration and thought. The risk of the general fund has been taken in to consideration and not taken lightly,” she said.

Griego added that the suggestion to begin repaying the debt three years from now allows time for the project to be completed and for the county to create solutions to repay the debt.

“That’s smart,” Griego said.

Although supervisors agreed to direct staff to move forward with the loan, some were concerned over the preservation of the general fund.

Supervisors Dan Logue and Don Schrader agreed that public safety is a concern, but neither would support the financing if the $30 million from landowners could not be secured.

“I feel it is the state’s responsibility, and I’m being asked to chain myself to a tree in the name of public safety,” said Supervisor John Nicoletti.

Nicoletti questioned the ability to finish the project on schedule by the end of 2008 and who may be responsible for any cost overrun.

“We’ve looked at these scenarios,” Brunner said. “If it is a dry winter, yes, we can finish on time.”

Bendorf said cost overruns will be the county’s responsibility.

Supervisor Hall Stocker said the project is worth it.

“I think it is our obligation to protect those people,” Stocker said. “My motivation is the obligation to those folks who’ve been flooded before.”

Attorney Seth Merewitz said landowners are “committed to seeing the process through.” The group hopes to have an agreement on the $30 million next week.

If that money is guaranteed, Bendorf and Brunner suggested the remaining $23.3 million could be raised through impact fees from future construction, or by creating an assessment district or community facilities district, which TRLIA is already working on.

“The assessment is one of the layering techniques (used for paying back the debt before using general funds),” Brunner said. “If the county accepts the (funding) proposition, we will have a better idea where we stand on an assessment district.”

The time line:

• Amount from Proposition 1E: $138.5 million

• Local Match: $23.3 million; $30 million from participating landowners

• Repayment strategy: Future landowner fees or creation of assessment and community facility fund.

• What’s next: Submit to state a plan of repaying borrowed money by Oct. 3. Prepare documents to borrow $23.3 million.

Appeal-Democrat reporter Andrea Koskey can be reached at 749-4709 or at akoskey@appealdemocrat.com