The City of Gonzales has requested that the Transportation Agency provide a loan to the City for their Alta Street Rehabilitation project. This $4.275 million project consists of grinding the existing pavement of Alta Street between Gonzales River Road and Gloria Road down to the base layer, and reusing the ground pavement to reestablish the base and repave the roadway. This is an area that receives a high portion of truck traffic and is the City's top priority Measure X project.
The City is ready to bid the project out for construction in August, award the contract in September, and finish the construction by March 2018. However, the City requires an additional $2.5 million in funding to complete the project. As such, the Agency is responding to the request from the City to provide that gap funding in the form of an interest-bearing loan to be repaid from the City's share of Measure X revenues.
The Agency is proposing the following for the terms of the loan:
- The City will be required to fund the project using their local funding first, prior to accessing the loan;
- The loan will be paid out on a reimbursement basis, with the City submitting monthly invoices and progress reports; and
- The interest on the loan will be fixed at 2.5%, switching to variable based on the Monterey County Pool Quarterly Rate plus 50 basis points, if the Monterey County Pool Quarterly Rate rises above 2.0%.
Considering that Measure X revenues will fluctuate over time, the City is expected to pay back the loan in 10 to 15 years.