Funding for Holland Road Overpass remains in question

By Doug Spoon, Editor

The Holland Road Overpass project is not fully funded, as City of Menifee officials claim. In fact, moving forward with the project requires the City to pay millions of dollars up front prior to reimbursement from a regional agency, and City funds for that purpose have not been identified.

This was confirmed as part of a Menifee 24/7 investigation involving fact-checking with City officials, Riverside County officials and officials with the Western Riverside Council of Governments (WRCOG) -- an agency formed through an agreement between cities in Western Riverside County and the County itself.

The Holland Road bridge over the 215 Freeway has been discussed for more than 10 years. City officials say start of construction is still about a year away.

In a Menifee 24/7 interview with city manager Armando Villa and finance director Rochelle Clayton on May 20, Villa said the $31.2 million project is fully funded. Questioned about a $7.7 million line item that lists proposed Transportation Uniform Mitigation Fee (TUMF) funds – funding WRCOG collects from developers and contributes to such projects – both Villa and Clayton described the expected approval of that allocation as merely a formality. Clayton said the $7.7 million was scheduled to be approved by WRCOG officials this month, thus not costing the City any portion of those funds.

However, a check of the WRCOG five-year Transportation Improvement Program revealed that only $2.1 million in TUMF funding – not $7.7 million -- was designated for the Holland Road Overpass in 2021-22, according to documents on the WRCOG website. There is no WRCOG meeting agenda for this month that is scheduled to address an adjustment in that funding, either.

On Tuesday, a day after Menifee 24/7 again questioned Villa about the discrepancy, he responded in an email that he had met that morning with WRCOG Deputy Executive Director Chris Gray and that the additional allocation “will be going to the Executive Committee in July."

"In addition, the City has a reimbursement agreement that would allow us (if needed) to front the funds in anticipation of getting the TUMF reimbursement at a later date,” Villa continued.

Thus the additional allocation will not be voted on this month, and approval by the WRCOG Executive Committee in July is expected, but not guaranteed. Moreover, Gray told Menifee 24/7 that while he expects the additional TUMF funding to be approved, the reimbursement agreement requires up-front payment by the City. It isn’t an “as needed” situation.

“All TUMF funding is provided on a reimbursement basis and has been since the inception of the program in 2003,” Gray said in an email to Menifee 24/7. “The City and WRCOG enter into a legally binding contract called a reimbursement agreement that commits WRCOG to pay the City for work done on the project. The City does the work and sends us invoices for reimbursement, which is very common in transportation funding programs.

“WRCOG verifies the invoices and then sends the City funds equal to the amount of the reimbursement request that was approved. That process usually takes 60-90 days. While I can't predict the future (none of us can), I can say based on past performance that I would expect the reimbursement process would go smoothly based on their [Menifee’s] past performance.”

So the question remains, where will City funds come from to pay up front for the work on the project? Even though reimbursement would be guaranteed if the agreement with WRCOG is approved in July, the City must already have the funds available in some budget account to pay in advance. That would require reallocation from other areas of the budget -- accounts that could be without those funds for several months before getting them back through reimbursement.

"I will defer to the City on whether they have to budget the funds," Gray said. "We always pay one of our members back as quickly as possible, so they really are 'fronting' the money more so than having to pay it and not get paid back. Every City approaches that issue differently in terms of how they budget for it."

Asked where that money would come from, Villa responded to Menifee 24/7, “We are not there yet.”

This funding arrangement is different from the City of Menifee’s previous involvement in major infrastructure projects such as the Newport Road freeway interchange and the Scott Road freeway interchange.

In June of 2012, the City entered into a cooperative agreement with Riverside County in which the County – not the City – paid costs up front on the Newport Road interchange project, according to records found on the County website. The County then invoiced WRCOG for reimbursement.

The same arrangement was made regarding the Scott Road interchange project when, in 2017, an amended agreement designated the County again as lead agent. The County paid up-front costs and invoiced WRCOG for reimbursement.

This time, according to Gray and County documents, it’s up to the City to pay first. So in essence, the Holland Road Overpass project remains nearly $8 million short of funding necessary to get the project moving.

At the June 2 City Council meeting. council members approved a $454,000 allocation for design of an amphitheater in Menifee Town Center’s Central Park. During that discussion, City officials dismissed suggestions stated in a Menifee 24/7 editorial and on social media sites that the City should use some of the funds allocated to the amphitheater project to help fund the Holland Road Overpass or other road projects.

City Council member Robert Karwin argued that the Overpass is fully funded and asked for confirmation from Villa, who said that it is. Karwin then stated that even if it wasn’t fully funded, a $2 million fee paid to the City by Waste Management as part of a renegotiated service contract -- money currently allocated to the amphitheater project -- could not be transferred over to a road project, as some suggested.

“It’s in the contract,” Karwin said. And Villa said the Waste Management funds were designated to be used for "community benefit" as part of the agreement. Whether road improvements quality as "community benefit" is unclear.

Menifee 24/7 has submitted a public records request for a copy of that agreement and what the restrictions are on use of those funds. We will continue to follow this story and other aspects of the City of Menifee budget in our reporting.