Financing Agreement for Albany-Shaker Road And Watervliet-Shaker Road Projects

 

 

Background

 

In response to growing development pressures in the early 1990s that included plans to reconstruct and expand the Albany International Airport, the Town of Colonie and Albany County initiated a planning effort called the Albany County Airport Area Generic Environmental Impact Study (GEIS) to develop a comprehensive plan for addressing the impacts of future growth in the area.  The GEIS recommended eleven transportation actions and a plan for financing the implementation of those improvements.  The plan called for careful strategy of managing development, demand management to reduce peak hour travel, and for a public/private partnership to advance several major roadway and transit projects.  The plan called for 1) placing Northway access improvements (Exit 3 or 4) entirely in the hands of the public sector for financing, 2) developer contributions, or mitigation fees, to fully cover the cost of several other projects largely precipitated by local development, and 3) a mix of public and private funds to share in the cost of improvements to Albany Shaker Road and Watervliet Shaker Road.

 

The plan calls for roughly $90 million in improvements to the Airport Area's transportation system.  Mitigation fees collected under the plan are expected to cover roughly 35% to 40% of the cost the recommended improvements.

 

 

TIP Programming of Albany Shaker Road and Watervliet Shaker Road Projects

 

Largely on the strength of the GEIS initiative, the Town and County's commitment to integrated transportation and community planning, and a financing plan that respected CDTC's adopted public/private financing policy, the CDTC Policy Board added the Albany Shaker Road and Watervliet Shaker Road projects to CDTC's Transportation Improvement Program in 1993.  The projects were added with the understanding that the standard funding splits (80% federal, 15% state, and 5% local) would cover half the cost of each project.  Based on GEIS development forecasts, it was assumed that a combination of mitigation fees and right-of-way donations would cover the balance of the total costs of the two projects.  At the time these projects were programmed, CDTC participants recognized the possibility that all the mitigation fees needed to cover 50% of project costs might not be "in the bank" prior to letting the project, and that it would be necessary for the County, as owner of the two roadways, to advance some of the project costs with County funds or bond proceeds.  If this were to happen, the County would be reimbursed by mitigation fees as development occurred.

 

For the projects in the corridor (A275, A294, and A372) the project costs totaled $24 million in the 1997-02 Transportation Improvement Program.  The TIP required that the public share would total no more than 50% of the project costs, or $12 million ($9 million federal; $1.8 million state; and $0.6 million county).  The TIP listed a private share of 50%, or $12 million.  The TIP noted that the private share would be covered by available mitigation fees and supplemented with public funds which would be reimbursed with mitigation funds as they are collected.

 

 

Exploration of Alternative Funding Methods

 

Concerns over the pace of mitigation fee receipts and Albany County's responsibilities for advancing funds to cover project costs while awaiting the collections led to exploration of alternative funding methods during the development of the 1999-04 TIP.  While the development plans in the airport area and the mitigation responsibilities assigned to specific projects seeking town approval were keeping pace with expectations at the time of GEIS adoption, the amount of mitigation fees collected, unspent and in escrow was modest.  This is partly because funds are not fully collected until the completion of individual development projects and partly because a good portion of the mitigation responsibilities are kept "on paper" until roadway designs are complete and right-of-way credit is determined.

 

 

The CDTC-NYSDOT-County-Town TIP Agreement

 

Under federal law, CDTC may finance projects at any federal participation level up to 80%.  Thus, no outside approval is needed for CDTC to use federal funds to cover up to 80% of the private share of the Albany Shaker and Watervliet Shaker Road projects at the time the funds are  obligated, and replenish these funds to the TIP as mitigation fees are collected.  With this in mind, CDTC adopted the following provisions in 1999 to govern the financing of these two projects:

 

1.      Albany County committed to full 20% non-federal share for remaining public share of the two projects, and would receive Marchiselli funds to offset 75% of this share.

 

2.      CDTC committed to cover up to 80% of the private half of projects and established procedures for mitigation fees to replenish these funds to the TIP.

 

3.      Mitigation fees “in hand” at the time of the loan would be applied against the requirement for a 20% match on the federal share for the private half.  Any additional mitigation fees in hand at the time of the loan would reduce the size of the federal commitment on the private half of the projects. 

 

4.      As further mitigation fees assigned to the corridor are received by the Town, these funds are to be held in escrow by the Town.  They would then be applied to other TIP projects in the GEIS area to reduce the public share of these other projects.  (For example, they could be applied through a "betterment" agreement between the Town and State to reduce the Federal cost of intersection improvements related to project A240 (Exit 3 or 4) or similar planned actions that are slated for Federal funding.)

 

5.      CDTC retains the liability to adjust future TIP commitments should mitigation fees prove insufficient over time.  Should mitigation fees prove insufficient, CDTC will end up having committed a greater amount of federal funds on these projects than initially intended, but will also end up having a facility with greater reserve capacity for through traffic than initially intended.  The final federal share would end up being a share that matches the CDTC public-private financing policy.

 

6.      When mitigation fees reach a total that covers the repayment installments, additional fees are to be kept in escrow to undertake future improvements in the corridor.

 

In addition to CDTC approval, NYSDOT, CDTC, Albany County, and the Town of Colonie agreed to jointly concur on financial responsibilities, mitigation fee transactions, and future betterments.  This practice does not require formal NYSDOT or Federal concurrence.

 

In the 2005-10 TIP, the five-year outlay of federal aid reflects an estimate of mitigation fees in hand at the time of obligation.  Actual outlay will be determined by actual mitigation proceeds and the availability of federal funding in accordance with the process described above.

 

 

Status of Airport Area FGEIS Mitigation Fees

 

Since the adoption of the 1997-02 TIP, costs for airport area projects have increased.  The projects in the Albany Shaker Road and Watervliet Shaker Road corridors (A275, A294 and A372) total about $43 million at the time of the adoption of  the 2005-10 TIP.  As of January 1, 2005 roughly $7.8 million in development mitigation funds have been collected for all Airport Final GEIS projects, of which $3.9 million has been allocated to the Albany Shaker Road project.  This value does not include about $3 million in credits awarded for right-of-way donations.  Another $7 million has been assessed but not collected for development projects that have been deferred or have not yet been completed.  CDTC has covered those local shares with federal-aid.  As mitigation fees are collected for those projects, they will be applied to other FGEIS recommended federal-aid projects, such as project A240 (I-87 Exit 3 or 4).