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RESOLUTION R-1718-56: A RESOLUTION OF THE COUNCIL OF THE CITY OF NORMAN, OKLAHOMA, APPROPRIATING $899,906.37 FROM THE CAPITAL FUND BALANCE AND TRANSFERRING $23,723.45 FROM A PROJECT ACCOUNT TO INCREASE THE BALANCE OF THE OKLAHOMA DEPARTMENT OF TRANSPORTATION (ODOT) AUDIT ADJUSTMENT PROJECT ACCOUNT FOR AUDITED PROJECTS, AUTHORIZING FINAL PAYMENT IN THE AMOUNT OF $605,246.31 TO ODOT FOR THE CITY’S 20% SHARE FOR MULTIPLE PROJECTS, AND REIMBURSEMENT IN THE AMOUNT OF $518,512.38 TO THE UNIVERSITY NORTH PARK TAX INCREMENT FINANCE (UNP TIF) FUND BALANCE FOR THE ROCK CREEK BRIDGE PROJECT.
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BACKGROUND: Many local transportation projects ranging from road widening to sidewalks are partially funded by grant programs through the Federal Highway Administration (FHWA). The funds are distributed through the Association of Central Oklahoma Governments (ACOG) and the projects are administered by the Oklahoma Department of Transportation (ODOT). The federal share of each project ranges from 80% to 100% of the construction costs of the project depending on the FHWA program. Prior to ODOT requesting bids on projects, the City of Norman is required to enter into an agreement with ODOT and place the funds for the City’s share of the project on deposit with ODOT. This amount is based on the Engineer’s estimated total construction cost of the project.
The actual construction costs can differ from the Engineer’s Estimate for many reasons, including bid costs not matching the original estimate and change orders required during construction. At the end of each project, the ODOT Comptroller’s office conducts an audit of each project. ODOT prepares a final invoice, based on the actual cost of construction of the project. The City is then required to pay any additional funds (construction costs exceeded the amount deposited by the City at the time of the engineer’s estimate) or receive a refund of unused funds (actual construction costs are less than the engineer’s estimate) that are on deposit with ODOT. This process can take years for completion.
DISCUSSION:
CITY PAYMENT RESPONSIBILITIES
On May 12, 2017, the City received an invoice from the ODOT Comptroller in the amount of $605,246.31. This invoice included the results of the audit on 19 previously-completed local projects. The original invoice and the ODOT list of projects are attached. The 19 projects represent $38,684,994.33 in transportation improvement costs for Norman, with $30,260,997.82 financed by others. The total City share of $8,423,996.51 is 21.78 percent of the total project construction costs. The 19 projects range from a small traffic signal installation at Jenkins Avenue and Stinson Street, completed in 2013, to the nearly $20 million Robinson Street Underpass project that completed in 2012. Several of the projects require additional payments to cover the City’s responsibility and other projects had refunds. The required payments and refunds are presented in the attached table, ODOT Audit Summary. For months, City staff has been working with ODOT staff to review project records and to confirm the City’s share of project costs.
The ODOT audit includes a refund for the Rock Creek Road Overpass Project in the amount of $518,383.51. The deposit for this project was paid from the University North Park Tax Increment Finance (UNP TIF) Fund. The City’s portion of the construction costs for the other 18 audited projects was paid from the Capital Fund. The Rock Creek Overpass refund needs to be reimbursed to the UNP TIF account. The combined total cost to the Capital Fund of the remaining projects covered in the ODOT Audit and the UNP TIF reimbursement is $1,123,629.82.
FUNDING OF CITY PAYMENTS
Staff has reviewed current project accounts in the Capital Fund for the funding of this invoice. The total amount of the ODOT audit invoice is $605,246.31. A partial payment can be made from the fiscal year 2017-2018 (FYE 2018) Capital Fund ODOT Audit Adjustments, Construction allocation (account 050-9535-431.61-01). The remaining amount will require appropriations from several accounts to aggregate the funding for this invoice. A summary of the fund amounts and accounts identified are shown on the attached table titled ODOT Audit Account Adjustments. The following is a brief summary of the accounts:
• The current account for the payment of ODOT audit amounts is funded annually, as a part of the City’s Capital Budget. This account has been established to have funds on hand for the payment of ODOT audit invoices. The ODOT audit account has a current balance of $248,178.73. $200,000 from this balance is proposed to be utilized to pay this invoice, leaving a balance of $48,178.73 in the account for future invoices. This may be necessary because ODOT is changing the process for local payments on change orders and is now issuing invoices to cities at the time the change order is approved rather than waiting for the final ODOT audit.
• There was $114,928.33 of remaining pay-as-you-go funds for the Duffy Street Crossing Realignment and Robinson Street RR Grade Separation projects. These projects have recently been closed out, allowing the funds to be transferred at Council’s discretion for the repayment of the ODOT Audit expenses. The funds have been liquidated into the FYE 2018 Capital Budget Fund Balance. With City Council approval of this item, these funds will be appropriated from the FYE 2018 Capital Budget Fund Balance account to the ODOT Audit Adjustment account.
• Bridge Maintenance funds of $23,723.45 in the FYE 2018 Capital Budget (account 050-9687-431.61-01) can be used at Council’s discretion to fund the audited amount remaining due on the I-35 and Indian Hills Overpass repair project.
• An additional appropriation of $266,594.53 from the Capital Fund Balance is needed to make up the remaining cost difference in the ODOT invoice.
The total of the four accounts listed above is $605,246.31, which fully funds the ODOT audit invoice.
The reimbursement to the UNP TIF will require an additional appropriation from the FYE 2018 Capital Budget Fund Balance of $518,383.51. When combined with the recommended Capital Fund balance appropriation of $266,594.53 for the payment of the ODOT Audit, there will be a total reduction of $784,978.04 in the balance of the City’s FYE 2018 Capital Fund. The attached ODOT Audit Account Summary table represents this total.
RECOMMENDATION NO. 1: Staff recommends an appropriation of funds and a project fund transfer from the accounts shown in the attached ODOT Account Adjustments in the total amount of $605,246.31 to the ODOT Audit Adjustment, Construction (account 050-9535-431.61-01; project TR0068) to complete the funding for the payment of the ODOT invoice dated May 12, 2017.
RECOMMENDATION NO. 2: Staff recommends payment to ODOT in the amount of $605,246.31 for the balance of the City’s share of the projects listed in the ODOT invoice dated May 12, 2017.
RECOMMENDATION NO. 3: Staff recommends an appropriation of $518,383.51 from FYE 2018 Capital Budget Fund Balance (050-0000-253.20-00) to the Transfer to UNP TIF Fund (050-5090-491.80-57) and Transfer from Capital Fund (057-0000-391.19-50).