City committee members debated Friday using a transportation bond or a federal loan to raise $270 million for four highway projects -- and whether voters should be asked to decide whether to proceed with two of the four.
The money would enable the city to pay its share of road improvements in the federally funded Thomas Roads Improvement Program, including the generally well-received widening of Highway 178 in northeast Bakersfield and expansion of the Hosking Avenue-Highway 99 interchange, where property owners said Bass Pro Shops still is interested in locating.
It also would fund construction of the Centennial Corridor link between Highway 58 and Westside Parkway, and the widening of 24th Street, two projects that are controversial because the city would have to purchase and demolish homes and businesses in the way.
The Bakersfield City Council agreed in 2008 that the city would go into debt to match $630 million in federal funds secured for it by former U.S. Rep. Bill Thomas, R-Bakersfield.
Now they must determine what kind of debt.
City Manager Alan Tandy warned the Budget and Finance Committee Friday that putting TRIP projects on the June 2014 ballot would cost between $175,000 and $350,000, and would require two-thirds voter approval. If the city decides not to complete TRIP projects, it could be required to repay more than $80 million in federal money, Tandy said.
The committee, which comprises three members of the Bakersfield City Council, voted unanimously to bring the discussion to the full council Sept. 25.
Committee member Terry Maxwell, who is Ward 2 councilman, expressed skepticism that city gas and utility tax money, and development funds it would use to secure either a bond or a TIFIA loan from the federal Department of Transportation, will remain constant.
"We're committing ourselves to payment with three specific funds," Maxwell said, asking, "How stable are these funds? Do we have any examples of funds that existed 33 years ago, and what the projection would be on these funds?"
"They look at the revenue stream and at a projected history of the revenue stream," Tandy told the committee, characterizing the rating agencies' review of the city for a TIFIA loan as "exhaustive."
The city prefers a TIFIA loan over a bond, Tandy said, because a TIFIA loan has a 3.5 interest rate, which he believes is slightly lower than that of a bond. A TIFIA loan is also preferable because its term would be 30 years, compared to 35 years for the bond, and the city would not have to take all the money at once.
Maxwell also suggested the city proceed with widening Highway 178 and the Hosking Avenue-Highway 99 intersection -- which is not yet a TRIP project, and would have to be added -- but that it let voters decide whether to build Centennial Corridor and widen 24th Street.
"Anything that delays it puts more money at risk, at the potential of the loss of federal earmarks, or the possibility that we have a change of heart and have to do a repayment," Tandy said, cautioning that if the city doesn't use the TRIP money, it risks having it raided by other cities.