Highway 76 price tag jumps to $371 million

By: MARK WALKER - Staff Writer | Monday, November 7, 2005 9:07 PM PST ∞

The widening of Highway 76 from Melrose Drive in Oceanside to Interstate 15 east of Bonsall will cost at least $71 million, 26 percent more than what was projected in 2002.

Because of escalating material, labor and property acquisition costs, the San Diego Association of Governments now says the long-awaited expansion will cost $342 million because of higher building and property costs as well as the need for a new bridge over the San Luis Rey River.

In 2002, the price tag to accomplish the widening between Melrose and I-15 and create a four-lane arterial linking coastal and inland North County was put at $271 million.

The association, the region's primary transportation planning and funding agency, established the new estimate as it readies a financing plan to pay for transportation projects countywide.

Fueling the need for that plan is the agency's vow to complete a list of 21 "early action" projects and deal with an annual increase in labor and material costs that has jumped from a historic rate of about 2.25 percent to 7.25 percent.

Along with the Highway 76 work, the association of governments last year laid out 46 other projects it said would be built if voters approved a 40-year extension of a half-cent sales tax. The extension of the tax known as TransNet won narrow approval.

Under its current revenue and expenditure scenario, the association forecasts it will have $11.8 billion of the estimated $12.1 billion needed for those projects.

The estimated $300 million shortfall should be easily absorbed by an estimated $3.6 billion the association expects to receive from state and federal sources in the years ahead.

By adopting a financing plan now, the agency says it can get a head start on all the work promised under TransNet and do so for the lowest possible costs, association Executive Director Gary Gallegos said Monday.

The plan, which includes a $300 million line of credit and securing another $600 million at a fixed interest rate, is subject to approval by the association's board of directors this month.

The plan worked out with the firm Public Financial Management addresses cash flow demands for 2006-08 and increases the association's income from bond and loan sources.

The ordinance that extended the life of TransNet included a provision for $500 million for financing costs associated with bonding, and the plan set for adoption falls within those guidelines.

The bottom line, Gallegos said, is the Highway 76 work and all the other highway widening and new construction, light-rail extensions and new rapid bus service promised under TranNet will get done.

"We are reaffirming our work schedule, and we still think we can get everything accomplished," Gallegos said. "Revenues are going up just like costs are, and as long as we don't get totally upside down with the economy, we can still build what we said we would build."

For Highway 76, its scheduled 2011 completion remains on track, he said.

Joe Kellejian, a Solana Beach city councilman who serves as chairman of the association's transportation committee, said Monday that he does not believe there is any cause for worry. That was reflected in the committee's unanimous recommendation to the full board that it adopt the financing plan, he said.

"We are very confident we will be able to fulfill our obligations and get these projects done," Kellejian said. "The financing plan allows us to take advantage of excellent interest rates now and fast-forward as much of the work promised under TransNet as possible."

Risk factors that could throw off the plan, according to an analysis prepared by the association, are higher-than-anticipated rises in project costs, sales tax revenues falling below projections, and a decline in expected federal and state matching dollars.

Updated costs and work schedules will be developed next year and the financing plan will be updated on a continuous basis with the association transportation committee advised of any major changes.

Contact staff writer Mark Walker at (760) 740-3529 or mlwalker@nctimes.com.