projections; project inflation; financing terms (amortization); interest rates; and timing of program costs. Included as Attachment A is a technical memorandum from NHA that explains the details behind the methodology used to develop the model assumptions.
The analysis also took into consideration the City’s debt capacity. Traditionally, the City has maintained low debt and currently has only two governmental long-term debts. One of which is secured and paid for using the City’s annual TransNet revenue allocations and is held and managed by the San Diego Association of Governments (SANDAG) debt financing program. This loan does not have any impact on the City’s General Fund. The second loan was secured in 2017 to finance construction of the Civic Center, which is paid for with General Funds and has a remaining balance of $13.5 million. The loan will mature on August 1, 2045.
Potential Project Funding Approaches
In modeling potential funding strategies, NHA and staff looked at several scenarios including PayGo (no borrowing); issuing debt incrementally to fund district projects while keeping debt service within the Measure Q revenue flow; and a hybrid of the two. Pay-Go models utilize reserves and/or ongoing revenues and require ample cash reserves to fund projects. Issuing debt can accelerate phased projects and capture project cost savings by limiting inflation impacts but does result in additional administrative borrowing costs and interest.
Funding Scenarios
The model created by NHA allows the City to run an unlimited number of funding scenarios. Since the model is based on current assumptions, it was determined that a funding strategy could be decided by providing three funding scenarios, which are described in detail in the technical memo and summarized below. In all cases, the funding source for any costs related to the UP is Measure Q.
An Undergrounding Funding Analysis Summary showing each of the three scenarios side-by-side is included as Attachment D. An individual overview of each scenario is included as Attachment E, which provides a summary of the funding scenario, cash flow analysis, and project timeline.
The base assumptions are consistent across all three scenarios and are as follows:
• Base project cost estimate: $105.6 million
• Annual Measure Q Revenue Growth: 2.5%
• Annual Cost inflation: 3.5%
• Annual Earnings Rate on Reserves: 2.0%
• Financing assumptions
o 30-year term; 4.50% interest rate
o 15-year term; 4.15% interest rate
To determine the assumptions for inflation, revenue growth, and earnings on reserves, staff performed various analyses to determine the appropriate base assumptions, which are further described below.
Measure Q Revenue Growth
The model assumes annual Measure Q revenue growth of 2.5%. The 2.5% annual revenue growth assumption is supported by factors including: average annual growth of 4.13% since Measure Q’s inception (2017) and average sales tax annual revenue growth of 2.7% from 2004- 2023. Since there are only seven full years of Measure Q revenue data, of which two of those 11 November 18, 2024 Item 11 45 February 3, 2025 Item 08 City Council Agenda Report
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years were impacted by the pandemic, staff also evaluated annual average growth of sales tax revenue to determine the base assumption of 2.5%.
Project Cost Inflation
The model assumes an annual project cost inflation of 3.5%. CCCI average annual growth was
4.96% annually over the last 10-years and 4.41% for a 20-year period. This includes the high inflation period from 2019-2023 when inflation was approximately 11% on average. Excluding the outlier high inflation period, the rate changes to 3.06% for a 10-year period to 4.09% for a 20-year period.
Annual Interest Rate on Reserves
Since Measure Q reserves are liquid funds that should be available as soon as funds are needed, the base annual interest rate on reserves of 2% was based on Local Agency Investment Fund (LAIF) average annual yields. Although current LAIF rates are favorable, the 10-year average annual yield from 2015-2024 is 1.4% and 1.0% for a 20-year period. Based on the recent 3-year average annual yield of 2.2%, staff has included a 2% assumption for the initial model input.
Although an interest rate sensitivity analysis was not performed on all scenarios, staff ran the model with a 3% and 1% earnings rate, and inputs indicate that project timeline would shorten or extend by 1-2 years if the performance is better or worse than anticipated.
Financing Assumptions
Financing assumptions used in the model were based on offerings that were available at the time when the model was created. Since then, rates have slightly decreased, which may only have a positive impact to the timeline of the entire project. If Council decides to proceed with the initial borrowing, rates in the model will be updated with offerings that are available at that time.
District start and end dates included in the model are based on the base assumptions listed above.
Actual results of assumptions (i.e., cost inflation, revenue growth, interest earned on reserves) will impact project timelines with positive results shortening the project timeline and unfavorable results extending the project timeline. A sensitivity analysis was performed by NHA which is further described in their technical memorandum (Attachment A) and included for each individual scenario summary listed below.
Although the true total project cost is unknown, included in the analysis for each scenario is the estimated total project cost presuming all assumptions remain unchanged.
Scenario 1: Pay-Go/No Financing Strategy (35-Year Funding Program) This scenario does not include any borrowing and anticipates a project completion time of 35 years (2059) for all districts. This scenario indicates that sufficient funds will not be available in Measure Q reserves to construct UUD X1A until 2029, resulting in having to delay the project construction by three years. This delay will result in increased project costs related to redesign and cost inflation based on the current annual cost inflation assumption of 3.5%. It will also defer pole removal for a top priority fire hazard area. Since this scenario does not include any financing, there are no expenses related to cost of issuance and interest expense.
As reported in the cash flow analysis, based on an assumed earned interest on reserves of 2%, this scenario would generate more interest income in comparison to Scenario 3 described below.
However, the 35-year timeline of this scenario results in an increase in inflation cost adjustment 12 November 18, 2024 Item 11 46 February 3, 2025 Item 08 City Council Agenda Report
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November 18, 2024
when compared to the other two scenarios. The total project cost summary below assumes a
3.5% annual inflation cost adjustment.
Summary of Project Cost
Base Project Cost $105.6 million
Inflation Cost Adjustment 99.5 million
Total Project Cost (inflation-adjusted) $205.1 million
Net Present Value $105.5 million
Sensitivity Analysis
NHA Advisors completed a sensitivity analysis for each scenario. The sensitivity analysis is intended to “stress test” the model and provide “bookend” best-case and worst-case assumptions for revenue and inflation, to demonstrate how the project will be impacted by changes to these assumptions.
• Baseline: 2.50% revenue growth and 3.50% inflation – Total project completion 2059 • Negative Outcomes: 0.5% lower revenue and 0.5% higher inflation – Total project completion in 2069
• Positive Outcomes: 0.5% higher revenue and 0.5% lower inflation – Total project completion in 2052
Scenario 2: Minimal Financing Strategy (35-Year Funding Program) This scenario involves an initial borrowing of $17 million to finance UUDs X1A and 1B to maintain the existing project schedule beginning construction for UUD X1A in early 2025.
UUD X1A is nearing final design completion and almost all necessary easements for the project have been obtained. UUD X1A is identified as a high fire risk area for the City and was prioritized in the PDP for early completion.
UUD 1B is a small district with a lower overall cost compared to other districts and is already at 30% design completed. Financing the project would allow the City to take advantage of today’s cost and avoid inflation associated with delaying the project. All remaining projects would be funded through a Pay-Go model.
Scenario 2 is a 35-year project with an estimated completion date for all UP districts by 2059.
This scenario represents a minimal financing strategy that includes one 15-year term loan/bond with lower interest costs. Financing terms are not within the scope of this report; however, if this option is selected, the City Council may determine that a 30-year term bond is more beneficial as it will lower the debt payment and free up Measure Q revenue to begin UUD 2 as soon as sufficient Measure Q reserves are available.
Although the inflation cost adjustment for this scenario is slightly lower than Scenario 1, this scenario does not delay UUD X1A and UUD 1B, which will avoid redesign costs. The total project cost summary below assumes a 3.5% annual inflation cost adjustment and a 15-year term loan/bond at a 4.15% rate.
Summary of Project Cost
Base Project Cost $105.6 million
Inflation Cost Adjustment 97.7 million
13 November 18, 2024 Item 11 47 February 3, 2025 Item 08 City Council Agenda Report
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Financing Cost 6.6 million
Total Project Cost (inflation-adjusted)
Net Present Value
$209.8 million
$106.7 million
Sensitivity Analysis
• Baseline: 2.5% revenue growth and 3.5% inflation – Total project completion 2059 • Negative Outcomes: 0.5% lower revenue and 0.5% higher inflation – Total project completion in 2069
• Positive Outcomes: 0.5% higher revenue and 0.5% lower inflation – Total project completion in 2053
Scenario 3: Finance As You Go/Accelerated Financing Strategy (20-Year Funding Program)
This scenario involves an initial borrowing of $17 million to finance UUDs X1A and 1B with the intent to continue to borrow for the remaining districts over time to accelerate the project timeline.
The speed of the borrowings can be determined based on the actual results received.
Staff provides Council annual updates related to Measure Q revenue growth and reserves. If Scenario 3 is the selected funding strategy, following the initial borrowing, staff would return to Council in 2027 with updated financial information seeking direction on whether to proceed with designing UUD 2, which would occur in preparation for the next expected required borrowing in 2029 to cover district construction costs. At that time, the Council could decide to proceed or hold off on initiating design/financing for the District based on current finances and market conditions.
The City would continue to use this approach until all districts are completed.
Scenario 3 allows for a potentially 20-year project with an estimated completion date for all UP districts of 2044. This accelerated financing strategy requires all borrowing terms to be 30-years to keep annual debt service payments within the projected Measure Q revenues.
Accelerating the project timeline reduces inflation costs, but also increases financing costs. Based on current assumptions, this scenario is projected to have the highest total project cost but will allow the City to complete the total project 15 years earlier than Scenarios 1 and 2. The total project cost summary below assumes a 3.5% annual inflation cost adjustment and 30-year term bond at a 4.50% rate for all borrowings.
Summary of Project Cost
Base Project Cost $105.6 million
Inflation Cost Adjustment
Financing Cost
37.9 million
80.1 million
Total Project Cost (inflation-adjusted) $223.7 million
Net Present Value $115.2 million
Sensitivity Analysis
• Baseline: 2.5% revenue growth and 3.5% inflation – Total project completion 2044 • Negative Outcomes: 0.5% lower revenue and 0.5% higher inflation – Total project completion in 2061
• Positive Outcomes: 0.5% higher revenue and 0.5% lower inflation – Total project completion in 2039
14 November 18, 2024 Item 11 48 February 3, 2025 Item 08 City Council Agenda Report
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Included with this report as Attachment E is an Undergrounding Project Funding Summary, Cash Flow Analysis, and UP project timeline for all three scenarios.
If the Council decides to pursue a strategy that involves financing (Scenario 2 or 3) a Debt Policy can be created to place additional guardrails on Measure Q funds to ensure sufficient Measure Q revenues are available to pay current undergrounding debt, even during a recession or unforeseen economic crisis such as the COVID-19 pandemic. The recommended initial borrowing of $17 million to proceed with UUDs X1A and 1B will result in a debt service payment that utilizes no more than 45% of anticipated Measure Q revenue collected throughout the term of the loan.
UPAC Recommendation
On September 24, 2024, following a presentation and thorough discussion, UPAC recommended the City proceed with Scenario 3 (Accelerated Financing Strategy) to accelerate undergrounding to be completed in 20 years or as soon as feasible by borrowing funds to construct each district.
In addition, UPAC further recommended continued monitoring of cost variables for feasibility, particularly at each financing stage, continued efforts to assess cost efficiencies, and work with SDG&E to better understand and control costs.
Finance Committee Recommendation
On October 22, 2024, the Finance Committee received a presentation from staff and NHA Advisors and recommended the City Council authorize staff to further explore financing options, including 15-year, 20-year, and 30-year loan options, and return to the Finance Committee. The Finance Committee also requested the City Council direct staff to analyze the impact of separating the financing of UUDs X1A and 1B.
The Finance Committee raised the question of financing only UUD X1A for Scenario 2. As part of evaluating potential funding scenarios for consideration, staff already evaluated a scenario of financing only UUD X1A and not including 1B, which was not deemed favorable.
While financing only UUD X1A would reduce borrowing by $3 million from an initial borrowing of approximately $17 million to $14 million which would decrease interest cost for the life of the loan by $1.1 million. However, not including UUD 1B in the initial borrowing would delay the project by two years as well as delay UUD 2 by one year, resulting in an increase in inflation adjustment of $1.2 million.
Since the net cost of removing UUD 1B from the initial borrowing resulted in a higher total project cost and a delay in project construction, staff decided not to include financing only UUD X1A as an option for potential financing scenarios. Additionally, separating the financing for UUD 1B, which is expected to be 60% designed by year end, and delaying the project by two years will likely result in a partial re-design process with SDG&E, the cost of which is roughly estimated to range from $100,000 to $400,000.
Key Takeaways
The model will serve as a critical tool for the City Council and community when considering important future funding decisions over the life of the UP. Since the model includes completion of UP districts in a 20 to 35-year span, assumptions for future years above the initial borrowing are less reliable.
15 November 18, 2024 Item 11 49 February 3, 2025 Item 08 City Council Agenda Report
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The model variables including revenue growth, annual cost inflation, earnings on reserves, interest rate on the borrowing, and project costs will continue to be updated annually based on changing conditions. The model will also be updated when actual information, such as project costs for a given district or interest rates on borrowing, is known. The model can be reassessed in detail prior to each future borrowing decision by the City Council.
Financing $17 million is necessary to complete UUDs X1A and 1B to remain on the current schedule. Overall, a 20 to 35-year program funding plan for remaining districts is feasible assuming 3.5% annual inflation and 2.5% revenue growth. Higher inflation or lower revenue growth could extend project timelines, whereas lower inflation and higher revenue growth could expedite the project timeline.
Next Steps
If the City Council directs staff to proceed with further evaluating borrowing options to fund UUD X1A and 1B construction, staff will work with NHA to complete the necessary work and return to the Finance and Undergrounding Committees with more detailed information about borrowing options, timing, and cost in January 2025. A presentation to Council along with recommendations from the UPAC, Finance Committee and staff would occur shortly thereafter. In order to keep the existing schedule to begin UUD X1A construction in early 2025, the City will need to initiate the borrowing process as quickly as possible if that is how the Council decides to proceed.
FISCAL IMPACT:
Approval of the recommended action will result in an approved Task Order with NHA totaling up to $25,000, which requires amending the Fiscal Year 2024-2025 Operating and Capital Budget as follows:
ENVIRONMENTAL IMPACT:
The proposed City Council action does not constitute a “project” under the definition set forth in California Environmental Quality Act (CEQA) Guidelines Section 15378 because it will not have a potential to result in a direct or indirect physical change in the environment and is, therefore, not subject to CEQA. No further action under CEQA is required.
NEXUS TO CITY COUNCIL GOALS AND PRIORITIES:
Utility Undergrounding is listed as a Tier 1 City Council priority for FYs 2023-2024 and 2024-2025.
ATTACHMENTS:
Attachment A – NHA Advisors Technical Memo Debt Capacity Analysis and Financial Mode Attachment B – Task Order 2 NHA Advisor
Attachment C – Resolution 2018-63 Designating use of Measure Q Funds Attachment D – Undergrounding Project Summary (all scenarios) Attachment E – Funding Summary, Cash Flow Analysis, and Project Timeline for Proposed Scenarios 1-3
PROJECT FUND ACCOUNT AMOUNT
Undergrounding Project - General Measure Q 02.7000.7001 $25,000 Total $25,000
16 November 18, 2024 Item 11 50 February 3, 2025 Item 08 4040 Civic Center Drive, Suite 200
San Rafael, CA 94903
Office: 415.785.2025
www.NHAadvisors.com
MEMORANDUM
Date: October 16, 2024
To: City of Del Mar
From: NHA Advisors, LLC
RE: Del Mar Undergrounding Project – Debt Capacity Analysis and Financial Model Background and Overview
The City of Del Mar (the “City”) has embarked on the Del Mar Undergrounding Project to underground the City’s utilities. The City formed several undergrounding districts (the “Undergrounding Districts” or the “Projects”) which prioritized the Projects based on density and fire safety.
In 2016 the City approved Measure Q, a 1% local transaction and use tax (a general tax requiring a simple majority approval). Measure Q is considered a general fund revenue and is unrestricted (i.e., may be used for any City governmental purpose). The City Council has prioritized application of Measure Q revenues for funding the Utility Undergrounding Program. City staff estimates that Measure Q revenues for 2025 will be $3.5M.
The City has established the following Undergrounding Districts:
Project Tewa 1A X1A 1B 2 3 4 5 Total ($)
Total Project
Funding Costs 0.9M 10.0M 17.8M 5.5M 16.4M 28.6M 17.3M 9.1M 105.6M Projects completed to date
• Tewa Court (Funded through Measure Q Revenues)
Projects underway
• Project 1A (Funded through Measure Q Revenues)
• Project X1A (Funding Solution)
• Project 1B (Preliminary Design)
17 November 18, 2024 Item 11 51 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 2
Project Engagement
NHA Advisors, LLC was engaged by the City to evaluate and provide funding recommendations for the City’s Utility Undergrounding Program. Specifically, the City requested a debt capacity analysis and financial model to run various financing scenarios.
The primary approaches to funding the City’s projects are to use 1) Measure Q revenues; 2) debt proceeds; or 3) a combination of both Measure Q revenues and debt proceeds. The model restricts all funding options (and Project phasing) to solutions only requiring Measure Q revenues (for either Project expenditures, debt service or “banking” for future year needs). No general fund subsidy or other funding source is considered.
The model projects the cash flow and financial impact for various scenarios based on the following primary structures and assumptions:
• Pay-as-you-go vs. financing
• Reserve fund balance tracking
• Measure Q revenue growth
• Project Inflation
• Financing term (amortization) & debt interest rates
The concept of the model & analysis is to 1) maintain Measure Q revenues (fund balance) sufficient to either fund Project expenditures on a timely basis or 2) cover debt service payments when due. Where financing is included, a portion of the Project costs are covered by debt proceeds in addition to projected available Measure Q revenues (Measure Q revenues are always applied to each Project phase). In addition, debt service payments are constrained to available Measure Q revenues (net of allocated Project costs). The overall objective of the analysis is to estimate the impact on the timing of each Project phase under different funding strategies.
Financial Analysis
The model assumptions include:
• 2024 Measure Q Beginning Balance – $9,005,836
• 2024 Measure Q Revenues – $3.13M
• 2025 Projected Measure Q Revenues – $3.5M
• Measure Q Revenue Growth – 2.50%
• Project Cost Inflator – 3.50%
• Measure Q Revenue Earnings (Investment Return) – 2.00% • Debt Interest Rate (Tax-Exempt) – 4.50%
• Measure Q Revenue Allocation – $75K/year Street Project Expenditures, 100% of remaining revenues applied to the Projects
• Project Expenditure Timing based on available cash flow (per scenario) 18 November 18, 2024 Item 11 52 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 3
Based on the model assumptions and outputs, the assumptions impacting the overall Project implementation include (1) Measure Q Revenue growth and (2) Project Expenditure inflation. Sensitivity analyses were completed for all three scenarios.
The sensitivity analysis examines scenarios where both Measure Q revenues and Project Cost inflation are impacted by either 1) negative economic outcomes or 2) positive economic outcomes, as described below.
To establish parameters that materially impact timing for each scenario, growth rates were adjusted within a ±0.50% band.
• Negative economic outcomes:
o 0.50% lower revenue
o 0.50% higher inflation
• Positive economic outcomes:
o 0.50% higher revenue
o 0.50% lower inflation
Scenario 1: Pay-Go All Projects
The first scenario assumes all projects are funded with accumulated Measure Q revenues and does not incorporate any financing. To facilitate a pay-go program, the City will need to accumulate cash over time to pay for design and construction costs. Accumulated cash is assumed to earn interest to apply to project costs.
Under this scenario, and based on the inputs outlined in the previous section, the City projects to accumulate enough Measure Q revenues to fully fund Project X1A in 2029 with pre-construction design costs occurring prior to that date. Upon funding of Project X1A, the City then accumulates enough Measure Q revenues to fund Project 1B, which could be fully funded in 2031. If the model inputs were to materialize over the next 35 years, then Project 5 could be fully funded in 2059. The following table summarizes the base costs for all Projects. Also included is the estimated inflation cost, applying 3.50% annual inflation. There are no financing interest costs related to this scenario.
Project Tewa 1A X1A 1B 2 3 4 5 Total ($)
Total Base
Project Cost
(Design +
Construction)
0.9M 10.0M 17.8M 5.5M 16.4M 28.6M 17.3M 9.1M 105.6M
Total Inflation
Cost Adjustment 0.0M 0.0M 3.0M 1.4M 9.1M 34.0M 31.0M 21.0M 99.5M Total Bond/Loan
Interest Cost 0.0M 0.0M 0.0M 0.0M 0.0M 0.0M 0.0M 0.0M 0.0M Total Project
Funding Costs 0.9M 10.0M 20.7M 7.0M 25.5M 62.6M 48.3M 30.1M 205.1M Estimated
Funding
Timeline for
Project
Construction
2029 2031 2037 2047 2054 2059
19 November 18, 2024 Item 11 53 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 4
The following chart demonstrates graphically Measure Q annual revenues, increasing by 2.50% annually, against pay-go project expenditures. Scenario 1 includes no financing debt service.
The following chart below demonstrates graphically Measure Q accumulated balances. Cash balances peak and drop off periodically as projects are funded. Specifically, in each year where pay-go expenditures in the above chart are shown (navy bars), the Measure Q fund balance is reduced accordingly in the chart below. $-
$10
$20
$30
$40
$50
$60
$70
202420262028203020322034203620382040204220442046204820502052205420562058206020622064 Millions
Measure Q Revenues v. Pay-Go Expenditures
Total Bond Debt Service Total Pay-Go Expenditure Measure Q Revenues (Undergrounding) $-
$10
$20
$30
$40
$50
$60
$70
202420262028203020322034203620382040204220442046204820502052205420562058206020622064 Millions
Projected Measure Q Fund Balances
20 November 18, 2024 Item 11 54 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 5
Applying the sensitivity analysis to Scenario 1 impacts the projected outcome by several years. If negative economic outcomes occur (demonstrated by 0.50% lower revenue and 0.50% higher inflation), the project funding timeline could be 10 years longer. However, if positive economic outcomes materialize (demonstrated by 0.50% higher revenue and 0.50% lower inflation) the timeline could be 7 years shorter.
The sensitivity outcomes can be used to assess the magnitude of such impacts; actual timing will be determined over time as economic conditions shift.
Scenario
Positive
Outcomes Baseline
Negative
Outcomes
Total Program Funding Timeline (Year) 2052 2059 2069
Scenario 2
The second scenario assumes that the City finances $17 million to facilitate the completion of Project X1A and Project 1B. All remaining projects are cash funded on a pay-go basis. As with Scenario 1, the timing of future projects (Projects 2 – 5) is determined based on the accumulation of Measure Q annual revenues plus interest earned. Under this scenario, Project X1A is funded in the near-term and Project 1B is funded in 2026.
Upon the funding of Project X1A and 1B, the City then accumulates enough Measure Q revenues to fund Project 2, which could be fully funded in 2035. If the model inputs were to materialize over the next 35 years, then Project 5 could be fully funded in 2059. The following table summarizes the base costs for all Projects.
Also included is the estimated inflation cost, applying 3.50% annual inflation. The City would incur financing (interest) costs on the $17 million borrowing. Such costs are estimated to be approximately $6.6 million.
Project Tewa 1A X1A 1B 2 3 4 5 Total ($)
Total Base
Project Cost
(Design +
Construction)
0.9M 10.0M 17.8M 5.5M 16.4M 28.6M 17.3M 9.1M 105.6M
Total Inflation
Cost Adjustment 0.0M 0.0M 0.0M 0.4M 7.4M 36.2M 32.7M 21.0M 97.7M Total Bond/Loan
Interest Cost 0.0M 0.0M 6.6M 0.0M 0.0M 0.0M 0.0M 0.0M 6.6M Total Project
Funding Costs 0.9M 10.0M 24.3M 5.9M 23.8M 64.8M 49.9M 30.1M 209.8M Estimated
Funding
Timeline for
Project
Construction
2024 2026 2035 2048 2055 2059
21 November 18, 2024 Item 11 55 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 6
The following chart demonstrates graphically Measure Q annual revenues, increasing by 2.50% annually, against pay-go project expenditures. The light blue bars show estimated annual debt service payments for the funding of Project X1A and Project 1B.
The following chart below demonstrates graphically Measure Q accumulated balances. Cash balances peak and drop off periodically as projects are funded. Specifically, in each year where pay-go expenditures in the above chart are shown (navy bars), the Measure Q fund balance is reduced accordingly in the chart below. $-
$10
$20
$30
$40
$50
$60
$70
202420262028203020322034203620382040204220442046204820502052205420562058206020622064 Millions
Measure Q Revenues v. Bond & Pay-Go Expenditures
Total Bond Debt Service Total Pay-Go Expenditure Measure Q Revenues (Undergrounding) $-
$10
$20
$30
$40
$50
$60
$70
202420262028203020322034203620382040204220442046204820502052205420562058206020622064 Millions
Projected Measure Q Fund Balances
22 November 18, 2024 Item 11 56 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 7
Applying the sensitivity analysis to Scenario 2 impacts the outcome by 6-10 years. If negative economic outcomes occur (demonstrated by 0.50% lower revenue and 0.50% higher inflation), the timeline for project funding and completion could be 10 years longer. However, if positive economic outcomes materialize (demonstrated by 0.50% higher revenue and 0.50% lower inflation) the timeline could be 6 years shorter. As previously mentioned, the sensitivity analysis is used to demonstrate the magnitude of such impacts and actual results will vary.
Scenario
Positive
Outcomes Baseline
Negative
Outcomes
Total Program Funding Timeline (Year) 2053 2059 2069
Scenario 3: Finance all districts + cash reserves applied The third scenario assumes that the City finances $17 million to facilitate the completion of Project X1A and Project 1B. All remaining projects are funded with financing and accumulated cash is used to offset the amount financed. Under this scenario, Project X1A is funded in the near-term and Project 1B funded in 2026.
Upon completion and funding of Project X1A and 1B, the City then implements a pay-go and financing plan.
Over time, the City would borrow approximately $92 million and would fund the remaining project costs with accumulated Measure Q funds.
If the model inputs were to materialize over the next 20 years, then Project 5 could be fully funded in 2044.
Debt service payments would continue until 2074, unless the City were to apply accumulated cash after the projects are fully funded to pay off outstanding debt. The following table summarizes the base costs for all Projects. Also included is the estimated inflation cost, applying 3.50% annual inflation. The City would incur financing (interest) costs on the $92 million borrowing. Such costs are estimated to be approximately $80.1 million.
Project Tewa 1A X1A 1B 2 3 4 5 Total ($)
Total Base
Project Cost
(Design +
Construction)
0.9M 10.0M 17.8M 5.5M 16.4M 28.6M 17.3M 9.1M 105.6M
Total Inflation
Cost Adjustment 0.0M 0.0M 0.0M 0.4M 3.6M 11.5M 13.6M 8.9M 37.9M Total Bond/Loan
Interest Cost 0.0M 0.0M 14.8M 0.0M 8.0M 25.9M 19.9M 11.4M 80.1M Total Project
Funding Costs 0.9M 10.0M 32.6M 5.9M 28.1M 65.9M 50.8M 29.4M 223.7M Estimated
Funding
Timeline for
Project
Construction
2024 2026 2030 2034 2041 2044
23 November 18, 2024 Item 11 57 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 8
The following chart demonstrates graphically Measure Q annual revenues, increasing by 2.50% annually, against debt service (light blue bars) and pay-go project expenditures (navy bars). Annual debt service is structured to keep within annual Measure Q revenues.
The following chart below demonstrates graphically Measure Q accumulated balances. As the City would implement multiple financings with Scenario 3, Measure Q funds do not peak and drop as with prior scenarios since annual revenues are be applied to pay annual debt service payments. Upon completion of all projects, accumulated funds could be used to pay off debt, if desired by the City. $-
$2
$4
$6
$8
$10
$12
202420262028203020322034203620382040204220442046204820502052205420562058206020622064 Millions
Measure Q Revenues v. Bond & Pay-Go Expenditures
Total Bond Debt Service Total Pay-Go Expenditure Measure Q Revenues (Undergrounding) $-
$10
$20
$30
$40
$50
$60
202420262028203020322034203620382040204220442046204820502052205420562058206020622064 Millions
Projected Measure Q Fund Balances
24 November 18, 2024 Item 11 58 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 9
Applying the sensitivity analysis to Scenario 3 impacts the outcome by 5-15 years. If negative economic outcomes occur (demonstrated by 0.50% lower revenue and 0.50% higher inflation), the timeline for project funding and completion could be 15 years longer. However, if positive economic outcomes materialize (demonstrated by 0.50% higher revenue and 0.50% lower inflation) the timeline could be 5 years shorter. As previously mentioned, the sensitivity analysis is used to demonstrate the magnitude of such impacts and actual results will vary.
Scenario
Positive
Outcomes Baseline
Negative
Outcomes
Total Program Funding Timeline (Year) 2039 2044 2061
Remainder of Page Intentionally Left Blank
25 November 18, 2024 Item 11 59 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 10
Discounted Cashflow:
Detailed in the table
to the right is the net
present value of the
cashflow
expenditures from
each Scenario.
Scenario 1 Scenario 2 Scenario 3
Pay-Go Pay-Go + Financing Pay-Go + Financing
2024 8,681,048 8,681,048 8,681,048
2025 2,110,070 4,104,891 3,595,033
2026 0 5,676,338 5,166,479
2027 0 1,571,073 1,445,323
2028 0 1,571,073 1,458,767
2029 18,926,424 1,571,073 1,994,959
2030 335,520 1,571,073 10,936,833
2031 6,302,097 1,571,073 2,158,957
2032 0 2,027,273 2,513,048
2033 0 2,043,240 2,543,995
2034 488,694 2,548,460 8,704,569
2035 505,798 23,381,066 3,492,135
2036 1,047,002 1,571,073 3,492,135
2037 23,363,410 1,571,073 3,586,403
2038 0 1,571,073 4,065,368
2039 0 1,571,073 4,085,431
2040 0 0 4,824,774
2041 0 0 9,250,373
2042 173,304 0 5,329,722
2043 801,043 179,369 5,764,337
2044 829,079 829,079 8,146,803
2045 1,382,861 858,097 5,737,961
2046 1,431,262 1,431,262 5,737,961
2047 57,984,811 1,481,356 5,737,961
2048 0 60,014,279 5,737,961
2049 0 0 5,737,961
2050 147,430 0 5,737,961
2051 896,511 152,590 5,737,961
2052 927,889 927,889 5,737,961
2053 1,920,730 960,365 5,737,961
2054 44,362,852 1,987,955 5,737,961
2055 175,101 46,090,653 4,676,746
2056 657,484 657,484 4,676,746
2057 680,496 680,496 4,676,746
2058 1,408,627 1,408,627 4,676,746
2059 27,179,625 27,179,625 4,676,746
2060 0 0 4,676,746
2061 0 0 4,109,120
2062 0 0 4,109,120
2063 0 0 4,109,120
2064 0 0 4,109,120
2065 0 0 2,245,825
2066 0 0 2,245,825
2067 0 0 2,245,825
2068 0 0 2,245,825
2069 0 0 2,245,825
2070 0 0 2,245,825
2071 0 0 2,245,825
2072 0 0 814,420
2073 0 0 814,420
2074 0 0 814,420
Total Cashflow Expenditures 202,719,168 207,441,099 221,277,096 Discount Rate 3.5% 3.5% 3.5%
Discounted Cashflow 103,129,906 104,304,445 112,773,907 Prior Project Expenditures* 2,393,285 2,393,285 2,393,285 Total Estimated Costs** 105,523,191 106,697,730 115,167,192 *Prior project expenditures are expenditures that are not in the cashflow analysis because such expenditures occurred prior to 2024, however, are included in the City's total Project cost of $105.6 million.
Prior project expenditures are not discounted.
**Estimated costs based on the analysis inputs, which may differ significantly over time.
Total Cashflow Expenditures ($)
26 November 18, 2024 Item 11 60 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 11
Findings
Based on Project cost estimates and projected Measure Q Revenue growth, the City’s ability to implement all Project phases will be dependent on available funds (including Measure Q, debt proceeds and interest earnings). The three scenarios illustrate that Project completion between 2039 and 2069 can be feasible depending on (1) growth and cost inflation assumptions and (2) the funding strategy (scenario) that is selected. NHA makes no representation on the appropriate scenario to implement without the City’s weighting of benefit for undergrounding sooner rather than later (excluding Project cost estimates).
Based on the scenarios evaluated, a funding strategy to complete the Project phases by 2044 can be viable using a combination of Measure Q Revenues and debt to accelerate the Projects (minimizing inflation). 27 November 18, 2024 Item 11 61 February 3, 2025 Item 08 DEL MAR UNDERGROUNDING PROJECT – DEBT CAPACITY ANALYSIS AND FINANCIAL MODEL OCTOBER 16, 2024 PAGE 12
NHA Advisors, LLC is registered as a Municipal Advisor with the SEC and Municipal Securities Rulemaking Board (“MSRB”). As such, NHA Advisors, LLC has a Fiduciary duty to the public agency and must provide both a Duty of Care and a Duty of Loyalty that entails the following.
Duty of Care
a) exercise due care in performing its municipal advisory activities; b) possess the degree of knowledge and expertise needed to provide the public agency with informed advice; c) make a reasonable inquiry as to the facts that are relevant to the public agency’s determination as to whether to proceed with a course of action or that form the basis for any advice provided to the public agency; and d) undertake a reasonable investigation to determine that NHA Advisors, LLC is not forming any recommendation on materially inaccurate or incomplete information; NHA Advisors, LLC must have a reasonable basis for:
i. any advice provided to or on behalf of the public agency; ii. any representations made in a certificate that it signs that will be reasonably foreseeably relied upon by the public agency, any other party involved in the municipal securities transaction or municipal financial product, or investors in the public agency securities; and
iii. any information provided to the public agency or other parties involved in the municipal securities transaction in connection with the preparation of an official statement.
Duty of Loyalty
NHA Advisors, LLC must deal honestly and with the utmost good faith with the public agency and act in the public agency’s best interests without regard to the financial or other interests of NHA Advisors, LLC. NHA Advisors, LLC will eliminate or provide full and fair disclosure (included herein) to Issuer about each material conflict of interest (as applicable). NHA Advisors, LLC will not engage in municipal advisory activities with the public agency as a municipal entity, if it cannot manage or mitigate its conflicts in a manner that will permit it to act in the public agency’s best interests. 28 November 18, 2024 Item 11 62 February 3, 2025 Item 08 1050 Camino Del Mar, Del Mar, CA 92014 | 858.755.9313 | www.delmar.ca.us November 18, 2024
NHA Advisors, LLC SENT VIA EMAIL
Attn: Craig Hill, Managing Principal
4040 Civic Center Drive, Suite 200
San Rafael, CA 94903
[email protected]
RE: TASK ORDER 2 – UTILITY UNDERGROUNDING PROJECT FINANCING ANALYSIS – 02.7000.7001
Dear Mr. Hill,
This Task Order (TO) is issued pursuant to the terms and conditions contained in the as-needed Professional Services Agreement between the City of Del Mar and NHA Advisors, LLC (Consultant), the term for which is July 8, 2024, to July 7, 2027, and the initial Task Order for Task 1 Utility Undergrounding Project Financing Analysis, dated July 8, 2024.
Consultant shall execute tasks related to Task Order 2 of the Undergrounding Program financing analysis as described in the Consultant’s proposal and included in the Task Order as Exhibit A.
The project costs for this task order are on a time-and-materials basis not-to-exceed $20,000, unless a task order amendment is authorized by the City Manager for extended consulting services. The work for this Task Order shall be completed within forty (40) calendar days from the date of execution by both parties.
The primary contact for this Task Order and invoicing is Monica Molina, Finance Manager, who can be reached at [email protected] and (858) 704-3641. Please sign and return a copy of this Task Order electronically through OneSpan, the City’s electronic document routing program.
Please contact Management Analyst Kseniia Izgarskaia at [email protected] or (858) 375-9560 with any questions about executing this Task Order Amendment.
Approved by: Accepted by:
City of Del Mar NHA Advisors, LLC
______________________________ ___________________________________ Ashley Jones Date Craig Hill Date
City Manager Managing Partner
cc: Martin Boyd, Principal Engineer
Monica Molina, Finance Manager/Treasurer
29 November 18, 2024 Item 11 63 February 3, 2025 Item 08 Task Order 2– Task 1 – NHA Advisors
November 18, 2024
SCOPE OF WORK
TASK ORDER 2
Evaluation of Financing Options for Citywide Undergrounding Program The scope of work will include the following services:
• Evaluate and advise City on financing options and structure, including financing terms, debt service schedules, call provisions, covenants and method of sale (public or private) • Develop Financing 101 presentation materials describing debt structures, terminology, fiscal obligations and process
• Evaluate current market conditions for public offering and bank private placement and the impact to City’s potential debt payments (15, 20, and 30-years) • Assuming City consideration of a general fund secured financing structure, evaluate City real property assets for inclusion in financing
• As directed, prepare and present (2-3 in-person meetings) materials, including staff reports and presentations to City committee (Finance and Undergrounding) and City Council 30 November 18, 2024 Item 11 64 February 3, 2025 Item 08
EXHIBIT A
31 November 18, 2024 Item 11 65 February 3, 2025 Item 08 32 November 18, 2024 Item 11 66 February 3, 2025 Item 08 FY2019 FY2020
REVENUE
Dist Tax (Measure Q) $ 2,154,000 $ 2,154,000 Financing Proceeds 2,530,000 1,304,000
TOTAL REVENUE $ 4,684,000 $ 3,458,000
PROJECT EXPENSES
STREETSCAPE $ 7,100,000 $ ‐
Downtown Streetscape
UNDERGROUNDING 424,500 2,504,000
Utility Undergrounding 20A
SHORES PARK 268,000 300,000
Shores Park Master Plan
DEBT SERVICE $ 89,007 $ 223,889
Loan/Debt Principal 44,732 114,085 Loan/Debt Interest 44,275 109,804 TOTAL EXPENSES $ 7,881,507 $ 3,027,889
NET REVENUE/(EXPENSES) $ (3,197,507) $ 430,111 RESERVE 2,387,690 14,333
SET ASIDE RESERVE (500,000)
Streetscape CIP Carryover 1,324,150
FISCAL YEAR END FUND BALANCE $ 14,333 $ 444,444 CITY OF DEL MAR
MEASURE Q FUND FORECAST
SEPTEMBER, 2018
EXHIBIT 1
33 November 18, 2024 Item 11 67 February 3, 2025 Item 08 City of Del Mar
Undergrounding Project Summary
Scenario 1: Pay-Go Scenario 2: Finance X1A & 1B, Pay-Go Remaining Projects
Scenario 3: Financing All Projects to Accelerate
Development
PROJECT TIMELINE 35 Years
(Construction completed in 2059)
35 Years
(Construction completed in 2059)
20 Years
(Construction completed in 2044)
CONSTRUCTION YEAR & BORROWINGS
2024-2025: 1A
2028-2029: X1A
2030-2031: 1B
2036-2037: 2
2045-2047: 3
2053-2054: 4
2059: 5
2024-2025: 1A
2025-2026: X1A (Borrowing: $17.0M)
2027: 1B
2034-2035: 2
2046-2048: 3
2054-2055: 4
2059: 5
2024-2025: 1A
2025-2026: X1A (Borrowing #1: $17.0M)
2027:1B
2030-2031: 2 (Borrowing #2: $9.0M)
2034-2036: 3 (Borrowing #3 $30.0M)
2041-2042: 4 (Borrowing #4 $23.0M)
2044: 5 (Borrowing #5 $13.0M)
BASE PROJECT COST $105.6M $105.6M $105.6M
INFLATION COST ADJUSTMENT 99.5M $97.7M $37.9M
PROJECT FUNDING:
MEASURE Q RESERVES 205.1M $186.2M $51.6M
FINANCING:
Principal $17.0M $92.0M
Interest/Issuance cost $6.6M $80.1M
TOTAL FINANCING PAYOUT $0 $23.6M 172.1M
TOTAL PROJECT COST ESTIMATE $205.1M $209.8M $223.7M
NET PRESENT VALUE $105.5M $106.7M $115.2M
ANNUAL DEBT SERVICE PAYMENT
None 2025-2039: $1.6M 2025-2030: $1.1M
2031-2034: $1.6M
2035-2041: $3.5M
2042-2044: $4.9M
2045-2054: $5.7M
2055-2060: $4.7M
2061-2064: $4.1M
2065-2071: $2.2M
2072-2074: $0.8M
PROS
-No borrowing
-Lowest total project cost
-Minimal borrowing
-Debt service paid off in 2039
-Minimal interest expense
-Low total project cost
-Accelerated project timeline
-Lowest inflation cost adjustment
CONS
-Long project timeline
-Highest inflation cost adjustment
-Delay construction of X1A until 2028
-Delay construction of 1B until 2031
-Long project timeline
-High inflation cost adjustment
-Highest debt
-Highest loan interest expense
-Highest total project cost
-Debt service paid off in 2074
COST SUMMARY:
Base Project Cost $105.6M $105.6M $105.6M
Inflation Cost Adjustment $99.5M $97.7M $37.9M
Total $205.1M $203.3M $143.5M
Project paid with:
Measure Q Reserves $205.1M $186.2M $51.6M
Financing Payout* $0 $23.6M $172.1M
Total Project Cost $205.1M $209.8M $223.7M
*Includes Financing Cost
NOTE: Amounts on this Summary are based on current base project cost and assumptions. Project cost may change based on variable updates. 34 November 18, 2024 Item 11 68 February 3, 2025 Item 08 City of Del Mar
Undergrounding Project Funding Analysis: 35-Year Funding Program Scenario 1: Pay-Go, Delay Projects until Cash is Available Project Timeline TEWA 1A X1A 1B 2 3 4 5
Project Start Year 2021 2021 2021 2023 2033 2042 2050 2055 Project End Year 2023 2025 2029 2031 2037 2047 2054 2059 Financing Years N/A N/A N/A N/A N/A N/A N/A N/A
Project Area TEWA 1A X1A 1B 2 3 4 5
Base Model Assumptions
Base Year 2024
Measure Q Growth (Annual) 2.50%
Reserves Annual Earnings Rate 2.00%
Annual Cost Inflation 0.00% 0.00% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50% Project Cost Totals
Base Project Cost .9 M 10. M 17.8 M 5.5 M 16.4 M 28.6 M 17.3 M 9.1 M 105.6 M Inflation Cost Adjustment 0 0 3. M 1.4 M 9.1 M 34. M 31. M 21. M 99.5 M Total Project Cost .9M 10.M 20.7M 7.M 25.5M 62.6M 48.3M 30.1M 205.1M Project Financing Totals
Measure Q Reserves .9 M 10. M 20.7 M 7. M 25.5 M 62.6 M 48.3 M 30.1 M 205.1 M Outside Financing 0 0 0 0 0 0 0 0 -
Financing Cost 0 0 0 0 0 0 0 0 -
Total Project Cost .9 M 10. M 20.7M 7.M 25.5M 62.6M 48.3M 30.1M 205.1M Financing Assumptions
Bond Term (Years) 0 0 0 0 0 0 0 0
Interest Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Est. Annual Debt Service 0 0 0 0 0 0 0 0
Base Project Cost 105.6 M
Inflation Cost Adjustment 99.5 M
Total 205.1 M
Measure Q Reserves 205.1 M
Outside Financing -
Total Project Cost 205.1 M
Net Present Value 105.5 M
35 November 18, 2024 Item 11 69 February 3, 2025 Item 08 Scenario #1 - Pay Go
Revenue Growth 2.5%
Interest Earnings Rate 2.0%
Cost Inflation 3.5%
Projected
Measure Q
Revenue
NonUndergrounding
MQ Costs
Undergrounding
Costs
Debt
Financing
Annual Debt
Payment
Interest
Earned on
Reserves
Measure Q
Reserves
(Ending)
Beginning Bal .
2017-2023 18.46 -7.15 -2.39 . . .08 9.
2024 3.06 -.08 -8.68 . . .33 3.64
2025 3.5 -.08 -2.11 . . .09 5.04
2026 3.59 -.08 . . . .14 8.69
2027 3.68 -.08 . . . .21 12.5
2028 3.77 -.08 . . . .29 16.48
2029 3.86 -.08 -18.93 . . .18 1.52
2030 3.96 -.08 -.34 . . .07 5.14
2031 4.06 -.08 -6.3 . . .08 2.9
2032 4.16 -.08 . . . .1 7.08
2033 4.26 -.08 . . . .18 11.46
2034 4.37 -.08 -.49 . . .27 15.53
2035 4.48 -.08 -.51 . . .35 19.78
2036 4.59 -.08 -1.05 . . .43 23.68
2037 4.71 -.08 -23.36 . . .29 5.24
2038 4.82 -.08 . . . .15 10.14
2039 4.95 -.08 . . . .25 15.26
2040 5.07 -.08 . . . .36 20.61
2041 5.2 -.08 . . . .46 26.19
2042 5.33 -.08 -.17 . . .57 31.84
2043 5.46 -.08 -.8 . . .68 37.11
2044 5.6 -.08 -.83 . . .79 42.59
2045 5.74 -.08 -1.38 . . .89 47.76
2046 5.88 -.08 -1.43 . . 1. 53.13
2047 6.03 -.08 -57.98 . . .54 1.64
2048 6.18 -.08 . . . .09 7.84
2049 6.33 -.08 . . . .22 14.31
2050 6.49 -.08 -.15 . . .35 20.93
2051 6.65 -.08 -.9 . . .48 27.08
2052 6.82 -.08 -.93 . . .6 33.49
2053 6.99 -.08 -1.92 . . .72 39.21
2054 7.16 -.08 -44.36 . . .41 2.34
2055 7.34 -.08 -.18 . . .12 9.55
2056 7.53 -.08 -.66 . . .26 16.6
2057 7.71 -.08 -.68 . . .4 23.96
2058 7.91 -.08 -1.41 . . .54 30.93
2059 8.1 -.08 -27.18 . . .43 12.2
Totals -9.85 -205.11 . . 13.4
City of Del Mar
Undergrounding Financing
Cash Flow Analysis
(in millions)
36 November 18, 2024 Item 11 70 February 3, 2025 Item 08 ID Task Name
1 UUD 1A
2 1A SDGE Prelim Design
3 1A Utility & Civil Design
4 1A Bidding & Contracting
5 1A Construction
6 1A City Construction
7 1A Utility Construction
8 UUD X1A
9 X1A SDGE Prelim Design
10 X1A Utility & Civil Design
11 X1A Bidding & Contracting
12 X1A Construction
13 X1A City Construction
14 X1A Utility Construction
15 UUD 1B
16 1B District Formation
17 1B SDGE Prelim Design
18 1B Utility & Civil Design
19 1B Bidding & Contracting
20 1B Construction
21 1B City Construction
22 1B Utility Construction
23 UUD 2
24 2 District Formation
25 2 SDGE Prelim Design
26 2 Utility & Civil Design
27 2 Bidding & Contracting
28 2 Construction
29 2 City Construction
30 2 Utility Construction
31 UUD 3
32 3 District Formation
33 3 SDGE Prelim Design
34 3 Utility & Civil Design
35 3 Bidding & Contracting
36 3 Construction
37 3 City Construction
38 3 Utility Construction
39 UUD 4
40 4 District Formation
41 4 SDGE Prelim Design
42 4 Utility & Civil Design
43 4 Bidding & Contracting
44 4 Construction
45 4 City Construction
46 4 Utility Construction
47 UUD 5
48 5 District Formation
49 5 SDGE Prelim Design
50 5 Utility & Civil Design
51 5 Bidding & Contracting
52 5 Construction
53 5 City Construction
54 5 Utility Construction
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060
37 November 18, 2024 Item 11 71 February 3, 2025 Item 08 City of Del Mar
Undergrounding Project Funding Analysis: 35-Year Funding Program Scenario 2: Finance X1A & 1B, Pay-Go Remaining Projects Project Timeline TEWA 1A X1A 1B 2 3 4 5
Project Start Year 2021 2021 2021 2023 2031 2043 2051 2055 Project End Year 2023 2025 2026 2027 2035 2048 2055 2059 Financing Years N/A N/A 2025 2025 N/A N/A N/A N/A
Project Area TEWA 1A X1A 1B 2 3 4 5
Base Model Assumptions
Base Year 2024
Measure Q Growth (Annual) 2.50%
Reserves Annual Earnings Rate 2.00%
Annual Cost Inflation 0.00% 0.00% 0.00% 3.50% 3.50% 3.50% 3.50% 3.50% Project Cost Totals
Base Project Cost .9 M 10. M 17.8 M 5.5 M 16.4 M 28.6 M 17.3 M 9.1 M 105.6 M Inflation Cost Adjustment 0 0 0 .4 M 7.4 M 36.2 M 32.7 M 21. M 97.7 M Total Project Cost .9M 10.M 17.8M 5.9M 23.8M 64.8M 49.9M 30.1M 203.3M Project Financing Totals
Measure Q Reserves .9 M 10. M .8 M 5.9 M 23.8 M 64.8 M 49.9 M 30.1 M 186.2 M Outside Financing 0 0 17. M 0 0 0 0 0 17.M
Financing Cost 0 0 6.6 M 0 0 0 0 0 6.6M
Total Project Cost .9 M 10. M 24.3M 5.9M 23.8M 64.8M 49.9M 30.1M 209.8M Financing Assumptions
Bond Term (Years) 0 0 15 0 0 0 0 0
Interest Rate 0.00% 0.00% 4.15% 0.00% 0.00% 0.00% 0.00% 0.00% Est. Annual Debt Service 0 0 1.6M 0 0 0 0 0
Base Project Cost 105.6 M
Inflation Cost Adjustment 97.7 M
Total 203.3 M
Measure Q Reserves 186.2 M
Outside Financing 23.6 M
Total Project Cost 209.8 M
Net Present Value 106.7 M
38 November 18, 2024 Item 11 72 February 3, 2025 Item 08 Scenario #2 - Finance X1A & 1B - Pay Go Remaining Projects Revenue Growth 2.5%
Interest Earnings Rate 2.0%
Cost Inflation 3.5%
FY
Projected
Measure Q
Revenue
NonUndergrounding
MQ Costs
Undergrounding
Costs
Debt
Financing
Annual Debt
Payment
Interest
Earned on
Reserves
Measure Q
Reserves
(Ending)
Beginning Bal .
2017-2023 18.46 -7.15 -2.39 . . .08 9.
2024 3.06 -.08 -24.48 17. . .33 4.84
2025 3.5 -.08 -2.53 . -1.57 .09 4.25
2026 3.59 -.08 -5.31 . -1.57 .05 .94
2027 3.68 -.08 . . -1.57 .04 3.01
2028 3.77 -.08 . . -1.57 .08 5.21
2029 3.86 -.08 . . -1.57 .13 7.55
2030 3.96 -.08 . . -1.57 .17 10.04
2031 4.06 -.08 . . -1.57 .23 12.68
2032 4.16 -.08 -.46 . -1.57 .27 15.01
2033 4.26 -.08 -.47 . -1.57 .32 17.48
2034 4.37 -.08 -.98 . -1.57 .37 19.59
2035 4.48 -.08 -21.81 . -1.57 .2 .82
2036 4.59 -.08 . . -1.57 .05 3.81
2037 4.71 -.08 . . -1.57 .11 6.98
2038 4.82 -.08 . . -1.57 .17 10.33
2039 4.95 -.08 . . -1.57 .24 13.87
2040 5.07 -.08 . . . .33 19.19
2041 5.2 -.08 . . . .44 24.75
2042 5.33 -.08 . . . .55 30.55
2043 5.46 -.08 -.18 . . .66 36.41
2044 5.6 -.08 -.83 . . .78 41.88
2045 5.74 -.08 -.86 . . .89 47.57
2046 5.88 -.08 -1.43 . . 1. 52.93
2047 6.03 -.08 -1.48 . . 1.1 58.51
2048 6.18 -.08 -60.01 . . .63 5.22
2049 6.33 -.08 . . . .17 11.65
2050 6.49 -.08 . . . .3 18.36
2051 6.65 -.08 -.15 . . .43 25.21
2052 6.82 -.08 -.93 . . .56 31.59
2053 6.99 -.08 -.96 . . .69 38.23
2054 7.16 -.08 -1.99 . . .82 44.15
2055 7.34 -.08 -46.09 . . .49 5.82
2056 7.53 -.08 -.66 . . .18 12.8
2057 7.71 -.08 -.68 . . .33 20.08
2058 7.91 -.08 -1.41 . . .47 26.97
2059 8.1 -.08 -27.18 . . .35 8.16
Totals -9.85 -203.27 17. -23.57 14.08
City of Del Mar
Undergrounding Financing
Cash Flow Analysis
39 November 18, 2024 Item 11 73 February 3, 2025 Item 08 ID Task Name
1 UUD 1A
2 1A SDGE Prelim Design
3 1A Utility & Civil Design
4 1A Bidding & Contracting
5 1A Construction
6 1A City Construction
7 1A Utility Construction
8 UUD X1A
9 X1A SDGE Prelim Design
10 X1A Utility & Civil Design
11 X1A Bidding & Contracting
12 X1A Construction
13 X1A City Construction
14 X1A Utility Construction
15 UUD 1B
16 1B District Formation
17 1B SDGE Prelim Design
18 1B Utility & Civil Design
19 1B Bidding & Contracting
20 1B Construction
21 1B City Construction
22 1B Utility Construction
23 UUD 2
24 2 District Formation
25 2 SDGE Prelim Design
26 2 Utility & Civil Design
27 2 Bidding & Contracting
28 2 Construction
29 2 City Construction
30 2 Utility Construction
31 UUD 3
32 3 District Formation
33 3 SDGE Prelim Design
34 3 Utility & Civil Design
35 3 Bidding & Contracting
36 3 Construction
37 3 City Construction
38 3 Utility Construction
39 UUD 4
40 4 District Formation
41 4 SDGE Prelim Design
42 4 Utility & Civil Design
43 4 Bidding & Contracting
44 4 Construction
45 4 City Construction
46 4 Utility Construction
47 UUD 5
48 5 District Formation
49 5 SDGE Prelim Design
50 5 Utility & Civil Design
51 5 Bidding & Contracting
52 5 Construction
53 5 City Construction
54 5 Utility Construction
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060
40 November 18, 2024 Item 11 74 February 3, 2025 Item 08 City of Del Mar
Undergrounding Project Funding Analysis: 20-Year Funding Program Scenario 3: Finance All Projects to Accelerate Development Project Timeline TEWA 1A X1A 1B 2 3 4 5
Project Start Year 2021 2021 2021 2023 2027 2031 2038 2040 Project End Year 2022 2025 2026 2027 2031 2036 2042 2044 Financing Years N/A N/A 2025 2025 2030 2034 2041 2044
Project Area TEWA 1A X1A 1B 2 3 4 5
Base Model Assumptions
Base Year 2024
Measure Q Growth (Annual) 2.50%
Reserves Annual Earnings Rate 2.00%
Annual Cost Inflation 0.00% 0.00% 0.00% 3.50% 3.50% 3.50% 3.50% 3.50% Project Cost Totals
Base Project Cost .9 M 10. M 17.8 M 5.5 M 16.4 M 28.6 M 17.3 M 9.1 M 105.6 M Inflation Cost Adjustment 0 0 0 .4 M 3.6 M 11.5 M 13.6 M 8.9 M 37.9 M Total Project Cost .9M 10.M 17.8M 5.9M 20.M 40.M 30.9M 18.M 143.5M Project Financing Totals
Measure Q Reserves .9 M 10. M .8 M 5.9 M 11. M 10. M 7.9 M 5. M 51.5 M Outside Financing 0 0 17. M 0 9. M 30. M 23. M 13. M 92.M Financing Cost 0 0 14.8 M 0 8. M 25.9 M 19.9 M 11.4 M 80.1M Total Project Cost .9 M 10. M 32.6M 5.9M 28.1M 65.9M 50.8M 29.4M 223.7M Financing Assumptions
Bond Term (Years) 0 0 30 0 30 30 30 30
Interest Rate 0.00% 0.00% 4.50% 0.00% 4.50% 4.50% 4.50% 4.50% Est. Annual Debt Service 0 0 1.1M 0 .6M 1.9M 1.4M .8M
Base Project Cost 105.6 M
Inflation Cost Adjustment 37.9 M
Total 143.5 M
Measure Q Reserves 51.5 M
Outside Financing 172.1 M
Total Project Cost 223.7 M
Net Present Value 115.2 M
41 November 18, 2024 Item 11 75 February 3, 2025 Item 08 Scenario #3 - Finance all Remaining Districts
Revenue Growth 2.5%
Interest Earnings Rate 2.0%
Cost Inflation 3.5%
FY
Projected
Measure Q
Revenue
NonUndergrounding
MQ Costs
Undergrounding
Costs
Debt
Financing
Annual
Debt
Payment
Interest
Earned on
Reserves
Measure Q
Reserves
(Ending)
Beginning Bal .
2017-2023 18.46 -7.15 -2.39 . . .08 9.
2024 3.06 -.08 -24.48 17. . .33 4.84
2025 3.5 -.08 -2.53 . -1.06 .1 4.76
2026 3.59 -.08 -5.31 . -1.06 .07 1.98
2027 3.68 -.08 -.38 . -1.06 .06 4.19
2028 3.77 -.08 -.4 . -1.06 .11 6.53
2029 3.86 -.08 -.93 . -1.06 .15 8.48
2030 3.96 -.08 -18.88 9. -1.06 .1 1.52
2031 4.06 -.08 -.53 . -1.63 .05 3.4
2032 4.16 -.08 -.88 . -1.63 .08 5.05
2033 4.26 -.08 -.92 . -1.63 .12 6.82
2034 4.37 -.08 -37.08 30. -1.63 .09 2.5
2035 4.48 -.08 . . -3.49 .06 3.47
2036 4.59 -.08 . . -3.49 .08 4.58
2037 4.71 -.08 -.09 . -3.49 .1 5.73
2038 4.82 -.08 -.57 . -3.49 .12 6.53
2039 4.95 -.08 -.59 . -3.49 .14 7.45
2040 5.07 -.08 -1.33 . -3.49 .15 7.77
2041 5.2 -.08 -28.76 23. -3.49 .11 3.76
2042 5.33 -.08 -.41 . -4.92 .07 3.75
2043 5.46 -.08 -.84 . -4.92 .07 3.45
2044 5.6 -.08 -16.22 13. -4.92 .04 .86
2045 5.74 -.08 . . -5.74 .02 .8
2046 5.88 -.08 . . -5.74 .02 .88
2047 6.03 -.08 . . -5.74 .02 1.11
2048 6.18 -.08 . . -5.74 .03 1.5
2049 6.33 -.08 . . -5.74 .04 2.06
2050 6.49 -.08 . . -5.74 .05 2.78
2051 6.65 -.08 . . -5.74 .06 3.68
2052 6.82 -.08 . . -5.74 .08 4.77
2053 6.99 -.08 . . -5.74 .11 6.05
2054 7.16 -.08 . . -5.74 .13 7.54
2055 7.34 -.08 . . -4.68 .18 10.3
2056 7.53 -.08 . . -4.68 .23 13.31
2057 7.71 -.08 . . -4.68 .3 16.57
2058 7.91 -.08 . . -4.68 .36 20.08
2059 8.1 -.08 . . -4.68 .44 23.87
2060 8.31 -.08 . . -4.68 .51 27.94
2061 8.51 -.08 . . -4.11 .6 32.87
City of Del Mar
Undergrounding Financing
Cash Flow Analysis
42 November 18, 2024 Item 11 76 February 3, 2025 Item 08 FY
Projected
Measure Q
Revenue
NonUndergrounding
MQ Costs
Undergrounding
Costs
Debt
Financing
Annual
Debt
Payment
Interest
Earned on
Reserves
Measure Q
Reserves
(Ending)
2062 8.73 -.08 . . -4.11 .7 38.12
2063 8.94 -.08 . . -4.11 .81 43.69
2064 9.17 -.08 . . -4.11 .92 49.59
2065 9.4 -.08 . . -2.25 1.06 57.73
2066 9.63 -.08 . . -2.25 1.23 66.27
2067 9.87 -.08 . . -2.25 1.4 75.23
2068 10.12 -.08 . . -2.25 1.58 84.61
2069 10.37 -.08 . . -2.25 1.77 94.43
2070 10.63 -.08 . . -2.25 1.97 104.72
2071 10.9 -.08 . . -2.25 2.18 115.48
2072 11.17 -.08 . . -.81 2.41 128.17
2073 11.45 -.08 . . -.81 2.67 141.4
2074 11.74 -.08 . . -.81 2.94 155.18
Totals -10.97 -143.53 92. -172.14 27.11
43 November 18, 2024 Item 11 77 February 3, 2025 Item 08 ID Task Name 1 UUD 1A 2 1A SDGE Prelim Design 3 1A Utility & Civil Design 4 1A Bidding & Contracting 5 1A Construction 6 1A City Construction 7 1A Utility Construction 8 UUD X1A 9 X1A SDGE Prelim Design 10 X1A Utility & Civil Design
11 X1A Bidding & Contracting
12 X1A Construction
13 X1A City Construction
14 X1A Utility Construction
15 UUD 1B
16 1B District Formation
17 1B SDGE Prelim Design
18 1B Utility & Civil Design
19 1B Bidding & Contracting
20 1B Construction
21 1B City Construction
22 1B Utility Construction
23 UUD 2
24 2 District Formation
25 2 SDGE Prelim Design
26 2 Utility & Civil Design
27 2 Bidding & Contracting
28 2 Construction
29 2 City Construction
30 2 Utility Construction
31 UUD 3
32 3 District Formation
33 3 SDGE Prelim Design
34 3 Utility & Civil Design
35 3 Bidding & Contracting
36 3 Construction
37 3 City Construction
38 3 Utility Construction
39 UUD 4
40 4 District Formation
41 4 SDGE Prelim Design
42 4 Utility & Civil Design
43 4 Bidding & Contracting
44 4 Construction
45 4 City Construction
46 4 Utility Construction
47 UUD 5
48 5 District Formation
49 5 SDGE Prelim Design
50 5 Utility & Civil Design
51 5 Bidding & Contracting
52 5 Construction
53 5 City Construction
54 5 Utility Construction
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045
44 November 18, 2024 Item 11 78 February 3, 2025 Item 08 December 26, 2024
Martin Boyd
City of Del Mar
1050 Camino Del Mar
Del Mar, CA 92014
RE: City of Del Mar | Rule 20B | District X1A – Crest Canyon | Cost Estimate Thank you for your continued partnership with San Diego Gas & Electric (SDG&E) to underground our overhead electric power lines to help improve community aesthetics and meet our commitment to provide clean, safe and reliable energy to our customers. This responds to your request for a preliminary cost estimate for the City of Del Mar’s Rule 20B project, Crest Canyon.
Del Mar City Council has established Utility Underground District (UUD) No.X1A for its Rule 20B Crest Canyon Project. The City has elected to perform all work associated with the trenching, conduit placement, substructure installation, backfill, and paving (Muni-Trench) for this project.
The City will be responsible to select a qualified vendor to perform this work, and will compensate them directly. Since the City has opted to utilize Muni-Trench for Crest Canyon 20B, the City will also be responsible for Community Outreach efforts and will be responsible for the coordination of Joint Trench Offers (JTOs) and design work with the Communications Infrastructure Providers (CIPs) and the Permit to Enter (PTE) coordination with private property owners.
Crest Canyon (UUD X1A) Rule 20B project will utilize an Actual Cost Billing contract, whereby in advance of construction SDG&E will collect from the City an amount equal to the estimated cost of the conversion work computed in accordance with its Filed Rule on “Replacement of Overhead with Underground Facilities”, including engineering fees. The conversion work will be tracked and billed on an actual cost basis, meaning that all costs will be reconciled at completion of the work and SDG&E will bill or refund to the City any differences larger than $100.00.
Please note, SDG&E is providing the following cost estimates for reference purposes only and makes no representations, warranties or promises regarding the accuracy, timeliness, quality or completeness of the estimates. Estimates are based on known, current information and existing circumstances. SDG&E will not be liable for any damages, causes of action or losses arising or claimed to arise out of the use of these estimates.
79 February 3, 2025 Item 08
This preliminary cost estimate will be updated once SDG&E’s bid process is complete and the revised costs will be reflected in the contract to be stipulated between SDG&E and the City of Del Mar.
District X1A | Crest Canyon
SDG&E Electrical Contractor – Cable & Connections
SDG&E Electrical Contractor – Cable Poles
SDG&E Electrical Contractor – Service Cutovers
SDG&E Electrical Contractor – Overhead Removals
$ 4,288,704
$ 361,127
$ 238,521
$ 1,713,328
TOTAL $ 6,601,680
Overhead Removals (SDG&E Responsibility) $ - 1,713,328
Net BILLABLE to City $ 4,888,532
Sincerely,
Kelli Fitzgerald
Design & Project Management
Franchise Planning Manager
cc:
Michael McEachern – SDG&E | Design & Proj Mgmt | Project Manager II Damien Ramirez – SDG&E | Design & Proj Mgmt | Franchise Planning Supervisor Joe Gabaldon – SDG&E | Regional Public Affairs | Senior Public Affairs Manger Kate Loredo, PMP – SDG&E | Design & Proj Mgmt | Franchise Project Manager Ilario Romano, PMP – SDG&E | Design & Proj Mgmt | Franchise Project Manager 80 February 3, 2025 Item 08
CITY OF DEL MAK
January 30,2025
Subject: Fire Risk and Power Line Undergrounding Clarification Dear City Manager Jones:
I appreciate the opportunity to provide clarity regarding the role of undergrounding power lines as a fire mitigation strategy and how it relates to the Fire Department's ability to protect the City of Del Mar.There is no doubt that removing overhead power lines and transitioning to underground electrical infrastructure is a major step toward reducing fire risk. Electrical equipment has been identified as a contributing factor in wildfires across the state, and eliminating this potential ignition sourcesignificantly enhances overall fire safety. Undergrounding reduces the likelihood of power linessparking fires due to high winds, vegetation contact, or equipment failure, which are known risk factors in wildfire-prone areas like ours.
That said, while undergrounding is an essential component of fire risk reduction, it is not a singularsolution. Even with the removal of above-ground electrical infrastructure, Del Mar remains at risk due to other factors such as topography, prevailing weather conditions, and fuel availability,including dry vegetation. This underscores the need for a comprehensive approach to wildfiremitigation that includes defensible space initiatives, vegetation management, emergencypreparedness, and robust firefighting resources.I understand that some members of the community perceive the existence of above-ground powerlines as an imminent and singular threat. While their concerns are valid, it is important to communicate that fire risk is multifaceted. Undergrounding power lines is a highly effective riskreduction measure, but no single action alone can entirely eliminate wildfire risk. The Fire Department remains committed to protecting the city and has the necessary training, resources, and response capabilities to address fire threats regardless of infrastructure changes.
As fire experts, we strongly support undergrounding as part of a layered and strategic approachto wildfire prevention. We welcome continued discussions on fire mitigation efforts that will best serve the long-term safety and resilience of the Del Mar community. Please do not hesitate toreach out if further clarification or additional information is needed.Sincerel ^
foshua L. Gordon
Fire Chief
1050 Camino Del Mar, Del Mar, CA 92014 | 858.755.9313 | www.delmar.ca.us 81 February 3, 2025 Item 08
82 February 3, 2025 Item 08
83 February 3, 2025 Item 08
City of Del Mar
Agenda Report
________________________________________________________________________________________________________ City Council Action:
TO: Honorable Mayor and City Councilmembers
FROM: Deputy Mayor Tracy Martinez and Councilmember John Spelich DATE: February 3, 2025
SUBJECT: Reaffirm Final Investigative Report Concerning Councilmember Quirk REQUESTED ACTION/RECOMMENDATION:
It is recommended that the City Council adopt a statement reaffirming the final investigative report concerning Councilmember Dan Quirk dated February 16, 2024, and presented to the City Council on April 15, 2024.
BACKGROUND:
The City of Del Mar follows the Council-Manager form of government, in which the City Council's role is to set policy and not to engage in daily operational or administrative activities, including direction of City employees and/or consultants, while the City Manager’s role is to implement the policy set by the Council and to oversee daily operations of the City.
While each Councilmember brings their own points of view on policy subjects, ultimate decisions need to be discussed and decided by the whole Council at publicly noticed meetings. Individual Council Members do not have authority to make policy or direct the City Manager on how to carry out those policies or manage the affairs of the City. It remains critical for elected Councilmembers and the City Manager to adhere to these roles and boundaries.
Based on the final investigative report publicly presented to the City Council on April 15, 2024, it was determined that Councilmember Quirk failed to adhere to the policies and practices reflected in the City Manager’s contract, Del Mar Municipal Code, and Council adopted City Council and City Manager Guiding Principles resulting in an environment of harassment towards the City’s manager, staff, and consultants. As such, the Council on April 15, 2024, unanimously voted to censure Councilmember Quirk.
On December 7, 2024, Councilmember Quirk transmitted an email sent broadly to the Del Mar community claiming as “fact” that an initial investigation exonerated him from such conduct. As result, Councilmember Quirk seriously misrepresented the process and 1 February 3, 2025 Item 09
City Council Agenda Report
Reaffirm Final Investigative Report Concerning Councilmember Quirk February 3, 2025
outcome by alleging the Council “terminated” the first investigator, “buried his report,” and sought a second investigator who would “produce a ‘guilty’ verdict.” Councilmember Quirk’s representations in his communication on December 7, 2024, claiming that the initial investigation exonerated him from any wrongdoing concerning his conduct towards City staff was untrue. The initial investigation was never completed, but the Executive Summary of the report, which the entire Council including Councilmember Quirk and the City Manager reviewed, indicated the investigator found several areas of wrongdoing by Councilmember Quirk. Due to the initial investigator’s inability to complete the report, the City was not charged for this work; a new, independent investigation began and completed, and resulted in a final investigative report.
DISCUSSION/ANALYSIS:
The final investigative report was predicated on findings laid out in a 1,033-page report (with exhibits) by a former Los Angeles Police Department (“LAPD”) Commander, Betty P. Kelepecz, who was hired by an independent special counsel to investigate allegations of Councilmember Quirk’s inappropriate behavior, harassment of City staff, and his cause of additional wasteful expenditures. The independent investigator substantiated all nine (9) allegations against Councilmember Quirk with the following findings, and also said he was “credibility challenged.” (Pg. 28 of report.):
(1) Council Member Daniel Quirk interfered with City Manager Ashley Jones’ ability to implement policy set by the Council and oversee daily operations; (2) Council Member Daniel Quirk caused present City Manager Ashley Jones and prior City Manager Christa Johnson to incur additional City funds and resources beyond authorized expenditure limits;
(3) Council Member Daniel Quirk provided direction and feedback to City Manager Ashley Jones and City staff which was consistent with his own personal views, but directly conflicted with the position taken by the Council and the policy set by the Council;
(4) Council Member Daniel Quirk also failed to limit his direct contacts with City staff (other than City Manager Ashley Jones and City Attorney Leslie Devaney) regarding matters of City business to requests for information in violation of the City Manager’s Employment Agreement;
(5) Council Member Daniel Quirk coerced or otherwise pressured City Manager Ashley Jones, City staff, and outside consultants on how to complete their work;
(6) Council Member Daniel Quirk violated the confidentiality of the July 24, 2023, Closed Session of the Council by disclosing information and discussions 2 February 3, 2025 Item 09
City Council Agenda Report
Reaffirm Final Investigative Report Concerning Councilmember Quirk February 3, 2025
from this session to one or more members of the public, concerning San Dieguito Drive road improvements;
(7) Council Member Daniel Quirk made disparaging comments about other City officials, City staff and outside consultants, including City Manager Ashley Jones and City Attorney Leslie Devaney;
(8) Council Member Daniel Quirk violated the terms of City Manager Ashley Jones’s Employment Agreement; and
(9) Council Member Daniel Quirk violated Del Mar City Council Policies and/or Guiding Principles through various improprieties.
Based on the facts of the final, completed investigation described above and to reaffirm Council’s support for the findings in the final investigative report and as a showing of support for the City Manager and staff, it is recommended that the following statement be made publicly available and transmitted to the Del Mar community:
“A complete and impartial investigation of allegations involving Councilmember Quirk concluded on February 16, 2024, which was conducted by Betty P. Kelepecz and overseen by special counsel Irma Rodriguez-Moisa. We reaffirm the Council’s approval of the final investigative report. We denounce/dispraise any and all attempts by Councilmember Quirk to try to invalidate the final, complete and independent investigation that was publicly noticed and resulted in a censure of him by a unanimous Council vote on April 15, 2024. An initial investigative report was incomplete. Even so, Councilmember Quirk claimed that the initial, incomplete investigation exonerated him; that is untrue. The completed investigation found that the allegations against Councilmember Quirk were sustained, including finding that he violated the City Manager’s contract.” The final investigative report may be reviewed here:
https://www.delmar.ca.us/DocumentCenter/View/9265/InvReport. 3 February 3, 2025 Item 09
City of Del Mar
Council Liaison Report
To: Honorable Mayor, City Councilmembers and Residents
FROM: Tracy Martinez, Deputy Mayor
DATE: February 3, 2025
12/19/2024 NCTD Board meeting
1) Redevelopment of the Vista Civic Center SPRINTER Station: The North County Transit District (NCTD) Board of Directors (Board) approved the Chief Executive Officer to enter into an Exclusive Negotiation Agreement (ENA) with Tideline Partners, L.L.C., for the redevelopment of the 1.68-acre Vista Civic Center SPRINTER Station. The project proposal includes a 131-unit mixed use development with 38 transit dedicated parking stalls, community-focused amenities like a cyclist hub with repair stand, tools, lockers and storage, murals, outdoor terraces, and retail areas. The proposal also emphasized the inclusion of sustainable and innovative components, like solar carports, cool paving, drought tolerant/native landscaping, stormwater harvesting, and electric vehicle charging stations. Following the execution of the ENA with Tideline Partners, L.L.C., the developer will begin the due diligence period and NCTD will negotiate a development agreement, term sheet and draft lease. These draft agreements will then be presented to the Board for approval. 2) Marketing Overview for the Calendar Year 2024: The Board received an update on NCTD’s marketing and outreach efforts for Calendar Year 2024, which highlighted the two new services launched this year – the NCTD+ microtransit pilot in San Marcos and the Sorrento Valley COASTER Connection. Marketing campaigns throughout the year promoted taking transit to major special events, including San Diego Padres games, Comic-Con, the San Diego County Fair, and Del Mar races. The team conducted outreach to schools, actively enrolling students in the Youth Opportunity Pass Program, promoting transit services, and educating youth on how to take transit. NCTD expanded its outreach to communities it serves through participation in the Independence Day Parade in Oceanside and Veterans Day Parade in Escondido.
Additionally, in December, NCTD hosted the annual COASTER Holiday Express event which welcomed 9,700 guests onboard, providing the community with a positive experience with the COASTER. 3) Employee Service Recognition: The Board acknowledged the significant contributions of its employees with over 30 years of service to the community. The Board extended its gratitude to these employees, recognizing their dedication in supporting NCTD’s foundation of reliable, safe and convenient public transportation services. The five employees, all of which are BREEZE bus operators, are listed below: • Benjamin Rebua, hired full-time on October 5, 1993 • David Alcoser, hired full-time on December 26, 1993 • David Anderson, hired full-time on February 17, 1994 • Donna Jordan, hired full-time on February 17, 1994 • Mark Mangan, hired full-time on November 3, 1994
DATE: January 23,2025 NCTD Board Meeting Summary
1) Board Leadership and Committee Assignments: The North County Transit District (NCTD) Board of Directors (Board) elected Carlsbad Mayor Pro Tempore Priya Bhat-Patel to serve as Board Chair and by weighted vote called San Marcos Deputy Mayor Mike Sannella to serve as Vice-Chair. Bhat-Patel and Sannella will serve in these roles for Calendar Year 2025. In his role as Vice-Chair, Sannella will also serve as Chair of the Performance, Administration and Finance 1 February 3, 2025 Item XI - E
City Council Liaison Report
February 3, 2025
(PAF) Committee. Additional Committee assignments were approved by the Board and are detailed below. The Marketing, Service Planning and Business Development (MSPBD) and PAF Committees will choose their Chair and Vice-Chair at their first meeting. The Executive Committee is comprised of the Board Chair, Board Vice Chair, MSBPD Chair, and PAF Vice-Chair. PAF Committee Mike Sannella, PAF Chair Jewel Edson Priya Bhat-Patel Corinna Contreras MSPBD Committee Joe Garcia Jim O'Hara Tracy Martinez Eric Joyce 2) Fiscal Year 2024 Audit Results: The Board received the results of the Fiscal Year 2024 audit of NCTD’s financial statements, Single Audit, and Transportation Development Act (TDA) performed by independent certified public accountant, Eide Bailly. Eide Bailly issued an unmodified (clean) opinion on NCTD’s Annual Comprehensive Financial Report, Single Audit, and TDA reports and determined that no material weaknesses nor non-compliance were identified.
3) FY2026-FY2030 Capital Improvement Program: The Board approved the proposed FY2026- FY2030 Capital Improvement Program (CIP), which programs $80.4 million in capital investments for FY2026. These investments include $12.8 million for the SPRINTER Corridor Service Improvement Project, $10.6 million for signal modernization on the SPRINTER corridor, and $3.1 million for bridge replacement projects on the COASTER corridor. The FY2026 CIP also includes funding for rail safety projects, improvements at both rail and bus facilities, wayfinding and customer experience enhancements, and technology upgrades. Per federal requirements, in order to receive funding, a final list of capital projects must be submitted in January to the San Diego Association of Governments (SANDAG) for approval and incorporation into the Regional Transportation Improvement Plan. NCTD will have the opportunity to make adjustments to this proposed FY2026-FY2030 CIP during the FY2026 annual budget process that will take place in the coming months.
2 February 3, 2025 Item XI - E