Developer Fees Sit In The Bank Because Few Contractors Bid

The UGM fee system is the gift to Fresno that keeps on giving. Headaches, I mean.

Just ask the current City Council and the folks who drive Friant Road near the River Park shopping center in North Fresno.

Used-up City Hall reporters like me know that UGM stands for Urban Growth Management. The UGM system was created in the 1970s by City Manager Ralph Hanley to make sure developers paid their fair share of infrastructure improvements as the city grew outward.

We’re talking about things like sewer, water, curbs, streets … even parks and public safety.

The UGM fee system worked decently in the beginning. But by the late 20^th century, city officials had decided that reform was necessary. The UGM system had proved to be administratively cumbersome. Critics said it didn’t collect enough money to do what truly needed to be done. Developers said it was too complex.

City Hall has since moved to a system of developer impact fees. (Developers hated paying UGM fees; they hate paying impact fees.)

But unspent money from the UGM system is still sitting around in City Hall bank accounts. And that brings us to an interesting little item at the City Council’s July 26 meeting.

It was a consent calendar item involving the Friant Road Median Island Cap. What we’re talking about is a curving stretch of Friant Road between Fresno Street and Nees Avenue. It’s a busy, multi-lane stretch, bisected by Freeway 41 and its on-ramps/off-ramps.

The median island for this part of Friant Road is supposed to be pretty. City Hall collected UGM fees over the years to pay for the median island’s beautification. But the beautification never happened. The median island is a cap of asphalt.

This particular UGM account – Major Street Zone A – has about $500,000 in it. All the money is earmarked for the beautification of the Friant Road median island between Nees and Fresno Street. Last year’s city budget authorized the expenditure, but City Hall never got around to doing the work. This year’s city budget also authorizes the expenditure.

In the course of the several months earlier this year, the good folks in the Public Works Department tried to get the long-delayed project going. They asked for bids from private contractors to do the work.

As a staff report said:

“This project proposes to remove the existing median island cap, beautify the median islands with decorative stamped concrete, drought resistant trees, shrubs and ground cover, and install water-efficient irrigation. The existing median curb will not be disturbed and no changes to the roadway geometrics are proposed.”

The project area lies within council districts 2 and 6. The project area enters the Caltrans right of way (Freeway 41).

The staff report also noted that this stretch of Friant Road is a

“gateway into a prominent commercial area for the City….”

Public Works estimated the project cost at $400,000. Only one bid was submitted – $677,315 from Avison Construction in Madera. Public Works on July 26 recommended that the City Council reject the bid because the UGM Major Street Zone A account doesn’t have that kind of money.

District 2 Council Member Steve Brandau at last month’s meeting pulled the item from the consent calendar. Brandau asked Public Works Director Scott Mozier to come to the public microphone. Their exchange was short and sweet.

“Scott,” Brandau said, “can you tell us a little bit about this project and why we got only one bidder to do the work and why we’re rejecting that bid and where we go from here?”

Mozier replied:

“Council, this project is primarily funded with some old Urban Growth Management – that’s UGM – major street zone dollars. This is what’s called Zone A in Northeast Fresno. The Friant Road median island today between Nees Avenue, up around the curve past 41, is not to standard. It was never really finished. It is an asphalt median cap. It is very unlike the Friant median either to the east, which has concrete decorative island cap that has landscaping, or Blackstone Avenue to the south. So, these were some essentially dollars left in the fund – about $500,000 was left in that UGM fund. We had identified a project to complete that UGM service area to build, to complete, the median island. We only received one bid, I believe, for two reasons. One, it is more difficult from a traffic control perspective, working near the freeway. And, second, the economy is heating up. Less contractors are available.”

Mozier said the plan now is see where project expenses can be cut. He said beautification efforts might be limited to Friant Road west of 41.

Brandau said the project appears to be an expensive one.

“What’s going on there?” Brandau said. “Is it a Caltrans deal, as well?”

Mozier replied: “That is a very busy freeway interchange. With the Friant/41 corridor, work hours are fairly limited. That’s the No. 1 challenge of the area.”

Mozier said Public Works crews can’t do the work because they’re tied up with concrete repair projects throughout the city.

The council followed staff’s recommendation and rejected the Avison bid.

I have two quick thoughts.

First, this temporary setback to a small but important part of Fresno’s road system is a compliment to President Trump. It wasn’t all that long ago that City Hall thought it might have to file for bankruptcy. Now the economy is so strong that local contractors can’t be found in quantity to bid on a half-million-dollar project.

Second, I love these quirky stories about the UGM fee system. The system in its heyday was national trendsetter. Then time moved on. You’ve got to wonder how many other UGM accounts have “old” money still in them.

The unwinding of the UGM system from City of Fresno operations may never end. In that sense, the spirit of Ralph Hanley will live forever.

Mozier left the council with reason to be optimistic.

“Typically, the private sector provides far more than one bid,” Mozier said. “We’ll typically get four or five or six or seven bids on a project. We think that, with the repackaging , we can get back out and see a number of our private sector contractors with partners come in and do a great job.”