Grover Beach formally OKs sale of bonds to fund street repairs

The Grover Beach City Council on Tuesday took a major step forward in the process of implementing the city’s long-awaited street repair and rehabilitation program.

On Jan. 20, the council unanimously adopted a resolution allowing for the issuance of $5 million of $48 million in general obligation bonds approved by voters in November. The funds will be used to reconstruct the city’s roughly 29 miles of residential streets and some of its main roads.

The resolution authorizes the sale of the bonds and allows the city’s financial adviser to move ahead with the formal notice of sale.

“It was essentially the first formal action that the council was required to take to put the wheels in motion to actually issue the bonds,” City Manager Bob Perrault said Wednesday.

Once that process is complete, Alameda-based financial adviser A.M. Peché and Associates LLC will transmit the statement to Standard and Poor’s rating agency to schedule a rating conference call. City staff expects at least a BBB+ rating, just below an A rating.

Following the completion of that process, the bonds are expected to be issued in March, making the funds available to the city in April.

The city has long struggled to fix its crumbling roads. Currently, 71 percent of Grover Beach’s residential streets and 58 percent of its major roads are in poor or failing condition, according to an assessment from an engineering firm hired by the city.

In November, local voters strongly approved a $48 million bond measure, Measure K-14, with 68 percent of support.

After the $5 million in bonds are issued this year, the city plans to issue the remaining bonds every three years. According to the tentative schedule, $6 million will be issued in 2017; $7 million each year in 2020, 2023 and 2027; and $8 million each year in 2030 and 2033.

If all goes according to schedule, work could begin early this summer, Perrault said.

However, money for street repairs could be spent before the bonds are finalized, he said, due to a provision in the resolution that allows the city to be reimbursed for any funds spent on street repair before the bond revenue is in city coffers.

But before the city can do that, it first needs to decide which roads to tackle first.

The council received a staff report Tuesday outlining options for implementing the repairs.

The report suggested three options, including the “worst first program,” which would first repair roads ranked lowest on a pavement condition index and gradually move to those ranked highest; and a “blended program” that would apply the appropriate treatment to streets rated in fair condition at the optimal point in the pavement’s life cycle while also providing for streets in poor condition.

Over a 20-year period, staff reported, the blended program would leave a higher percentage of city streets in better condition; it’s thought to be the most cost-effective option.

The council also discussed a third option — altering the bond issuance schedule in order to accommodate other alternatives.

In discussion Tuesday, council members showed interest in the blended program, but took no action. Over the next two months, Grover Beach residents will have input on which option prevails through several upcoming public meetings and workshops.

The dates and locations of those meetings are expected to be set by the council at its next meeting on Feb. 2.

This story was originally published January 22, 2015 at 5:09 PM with the headline "Grover Beach formally OKs sale of bonds to fund street repairs."