CITY OF
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AGENDA REPORT
DATE: May 12, 2025
TO: Honorable Mayor and City Council
Item No. 16
FROM: Fermin Preciado, Director of Development Services/City Engineer Landon Kern, Assistant City Engineer Lim
SUBJECT: Upper Wildwood Creek Basin Project Funding Options RECOMMENDATION:
That the City Council:
1) Receive a report on potential project funding options; and 2) Direct staff to delay the construction of the Upper Wildwood Creek Basin Project and incorporate the Project into the strategic planning effort to develop a sustainable and long- term funding strategy for the City's public infrastructure projects; and 3) Direct staff to request reallocation of grant funding toward other eligible City drainage infrastructure project(s).
BACKGROUND/DISCUSSION:
The Upper Wildwood Creek Basin Project (Project) is identified in the City's Master Plan of Drainage (MPD) Update, adopted by the City Council in 2012, for a local flood control and detention basin facility for the Wildwood Creek drainage system. The Project is intended to provide multiple benefits including flood protection, groundwater recharge opportunities and erosion/sediment control within Wildwood Creek. The Project is proposed to be a flow -through retention/detention basin with an estimated storm water capacity of 25 acre-feet. In addition, the Project will reduce erosion, sedimentation and downstream flooding along Wildwood Creek thus providing additional protection for the existing native habitat (specifically oak trees) along Wildwood Canyon Road, Wildwood Canyon City Park, and other private and public properties.
The funding sources for this Project include Drainage Development Impact Fee Funds, ARPA Grant Funds, WaterSMART Grant Funds, and Congressional Community Project Spending Funds. Of the approved funding allocated to the project, approximately $2,680,000 is currently available for the construction, and the environmental permitting, monitoring and mitigation that will be required as a result of the environmental permits obtained for the construction of the project.
On Jan 27, 2025, Council approved the extension of the ARPA Grant funding, allowing the City to award a contract for construction up until June 30, 2025. The City requested the time extension to
complete the environmental review, permitting and environmental mitigation strategy that was initiated in 2019 and required to be completed prior to bidding for construction. It is important to note that the ARPA Grant funding must be expended prior to 2027. After going through the public bid process late last year, and upon the review of the construction bids, the following table summarizes the revised estimated costs to construct the Project:
Description
Cost
Construction Budget
$4,200,000
Environmental Permitting and Biological/Tribal Monitoring $250,000
Environmental Mitigation
$2,500,000
Total Estimate Cost to Complete Project
$6,950,000
Total available funding to complete the Project
$2,680,000
Additional Funding Needed
$4,270,000
Based on the estimated costs to complete the project, and the available funding, there is an estimated $4.3 million funding gap. Additionally, the WaterSMART grant requires the project to be completed by June of 2025, a deadline that realistic construction timelines suggest is not achievable unless the US Department of the Interior Bureau of Reclamation grants an extension upon the City's request.
Considering the size of the funding gap, the available reserve balance, and the grant construction timelines, staff is recommending that the City Council direct staff to delay the construction of the Project and incorporate the Project into the strategic planning effort to develop a sustainable and long-term funding strategy for the Project as well as other public infrastructure projects.
Should the City Council prefer to move forward with construction, several funding options are presented for consideration. While the need for this drainage project is clear, the decision to fund this Project must be weighed against potential financial risks and other capital improvement projects that address similar, more urgent public safety and infrastructure vulnerabilities. Therefore, many of the funding options are presented, but not recommended.
Funding Options
If the City chooses to complete the Project now, it must find $4.3 million in additional funding to construct the Project. There are three ways to close this funding gap: 1) allocate additional funds, 2) borrow, or 3) a combination of the two. Below are potential funding options, along with their strengths, weaknesses, and risks.
Funding
Strengths
Weaknesses
Risk
Viability Under
Option
Level
Current
Constraints
State
Low -interest rates;
Still requires debt
Medium
Possible, but
Infrastructure
structured repayment;
repayment; adds long-
adds debt
Bank Loan
government -backed
term obligations;
contributes to structural
deficit
Funding
Strengths
Weaknesses
Risk
Viability Under
Option
Level
Current
Constraints
General
Voter -approved;
Requires public vote;
High
Unlikely due to
Obligation
spreads cost over
lengthy process;
timing
Bond
time; potential
uncertain approval
community buy -in
Internal Fund
Immediate access to
Strains general fund;
High
Risky,
Borrowing
funds; avoids external
contributes to structural
considering past
debt
deficit
financial strain
Use City
Immediate funding
Drains reserves; weakens
Very
Not
Reserves
without borrowing
financial stability
High
recommended
due to fiscal
danger
Additional
Non -repayable
Limited availability;
Medium
Limited impact;
Grants
funding; reduces
highly competitive
may not close
Limited
financial burden
the gap
Relinquish
Avoids financial risk;
Delays project; requires
Medium
Most responsible
Grant &
allows time for
alternative funding
choice given
Reassess
sustainable funding
strategy
constraints
plan. Consideration
can be included in the
Strategic Plan
Using reserves to fund the Project would be financially dangerous. It would drain a significant amount of the City's general fund reserves to a level that could result in significant challenges to protect the City from unexpected emergencies, economic downturns, or urgent infrastructure needs.
Borrowing funds through loans spreads the cost over time, but it still adds debt service payments that could further strain the City's already tight budget. General obligation bonds require voter approval and take time to implement, making them an unlikely solution for the current funding gap.
Seeking more grants is an ongoing effort, but securing an additional $4.3 million is highly unlikely in a short timeframe, considering the City has already been awarded multiple grants for this project.
If the City funds the Project now, it must do so at the expense of other critical infrastructure projects.
The financial risks of prioritizing the Project over other capital projects must be carefully weighed.
If no additional funding is secured, the most responsible option is to delay the Project.
Approximately $250,000 in grant funded expenditures have been incurred for the Project development. Delaying the Project and allowing for a reassessment to occur would also allow for consideration in the strategic plan, resulting in a more sustainable and long-term funding strategy.
Upper Wildwood Creek Basin Project and Capital Improvement Program The City maintains a long list of approved but partially unfunded capital projects, including other flood control improvements to protect critical infrastructure from storm damage, road repairs and expansions to improve traffic flow and public safety, and other publicly demanded public park and
recreation uses.. These projects are not just wish list items; many are essential to prevent costly damage from flooding and improve public safety.
By approving and funding the Project, the City would elevate it above all other pending projects — regardless of urgency or direct impact on public safety.
If the City does not move forward with the Project, there would be no direct damages or immediate safety risks. If the City delays other flood control projects that represent more significant community benefits, Yucaipa remains vulnerable in other areas more subject to damages from storm flow damage, which could result in costly emergency repairs to public and private properties.
Additionally, other traffic infrastructure projects that incorporate roadway capacity and/or traffic safety enhancements would have a direct impact on public safety. The prioritization of these projects should also be carefully considered along with the City Council adopted goal for calendar year 2025 focused on enhancing emergency preparedness/management capabilities.
Below is a list of other Council -approved but unfunded capital infrastructure projects included in the adopted FY25 Capital Improvement Program (CIP).
Project Description
Estimated
Authorized
Additional
Project
Funding
Funding
Cost
Needed
Wilson III Basin
$33,006,425
$17,006,425
$16,000,000
Intersections along Avenue E
$16,090,000
$10,090,000
$6,000,000
Yucaipa Boulevard Improvements - 151h Street
$24,193,000
$15,693,000
$8,500,000
to I-10 Freeway
Oak Glen Road Widening — Colorado Street to
$2,238,889
$1,293,889
$945,000
Outer Highway 10 South
Avenue E Sidewalks — 131h Street to Dunlap
$1,348,000
$598,000
$750,000
Channel
Pendleton Road Low Water Crossing at Oak
$10,865,000
$2,865,000
$8,000,000
Glen Creek
Total Additional Funding Needed
$40,195,000
In addition to the above CIP projects, the City has approximately $2.6 million in deferred maintenance projects at various parks and public facilities.
Summary
This Project represents community benefits that have been identified in the City's Master Plan of drainage, but the decision to move forward must be made in the context of broader capital improvement needs. Approving and funding the Project now would require an estimated $4.3 million commitment, which could come from reserves, loans, or debt. It would move the Project ahead of all other unfunded capital projects, including flood control, road repairs, and park improvements. It would leave the City financially vulnerable by draining reserves or taking on risky financing.
If the City Council directs staff to delay the construction of the Project, staff is also requesting that the City Council incorporate the Project, along with other public infrastructure projects, into the strategic plan. This approach would help to address one of the five goals the City Council adopted for calendar year 2025. It is important to note that there may be an opportunity to re -program the current grant funding for this Project, to other CIP projects with similar benefits.
FISCAL IMPACT:
The fiscal impact is the deauthorization of the Project. Delaying the Project and allowing for a reassessment to occur would also allow for consideration in the strategic plan, resulting in a more sustainable and long-term funding strategy.
Approved by: