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Three Rivers Levee Improvement Authority

April 21, 2006

Presentation to the

State Reclamation Board

Regarding Satisfaction of

Permit 17782 Special Condition 13

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Permit # 17782For Phases 2 and 3 work

At its December 17, 2004 meeting, the Board issued Permit No. 17782 with Special Condition 13 that stated:

This permit is not valid until the public safety issue regarding the continued increase in human habitation in an area with known flood risk has been resolved to the satisfaction of the Board.

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Step 1 – Address the KnownsPermit No. 17782 Requirement Satisfaction of Requirement

A total of 800 building permits would be issued by the County within the affected area during 2005.

No permits beyond this limit were issued in the affected area.

A total of 700 building permits would be issued by the County within the affected area during 2006 and no Certificates of Occupancy would be issued sooner than April 15, 2006

Approximately 130 of these permits have been issued and no Certificates of Occupancy have been issued.

The landowner community would purchase flood insurance for all new residents in the affected area until 2008.

Flood insurance has been purchased for all new residents.

TRLIA was to exercise best efforts to pursue a fast track construction program for the Bear River setback levee in an attempt to start construction in 2005 and have construction completed sooner than November 2006

The foundation of the setback levee was accelerated and completed in 2005.

Yuba County was to adopt an ordinance imposing upon all not yet approved tentative maps in the affected area a condition which will preclude the tentative maps from being final until all Phase 3 work is completed.

The ordinance was adopted and all new tentative maps have received the relevant condition.

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Step 2 – Plan for the UnknownsPermit No. 17782 Requirement Satisfaction of Requirement

TRLIA was to complete the problem identification study of the additional reach of the Yuba River that the Corps identified as a potential problem and promptly work to take any necessary action.

This study was completed in Sept. 2005 and the proposed Phase 4 financing plan will support construction of the needed work.

TRLIA was to take appropriate actions to fund a Problem Identification Study to examine the entire Feather River levee bounding RD 784 and any remaining unstudied sections of the Yuba River Levee bounding RD 784

This study was commissioned and completed, and design and environmental work is underway as a result. The cost of Phase 4 is estimated to be $100,000,000.

No further building permits would be issued in the affected area until Phase 2 and 3 work would be completed and an implementation plan (including elements for funding, scope of work, and timeline) for Phase 4 would be presented to the Reclamation Board.

All Phase 2 and 3 improvements have been contracted for and will be complete before 2006/07 flood season. Implementation plan for Phase 4 to be presented to Reclamation Board for action at April meeting.

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Issue before the Board

• Wait until Nov. 2006 (completion of Phases 2 and 3) to find satisfaction with final condition of Agreement, resulting in:– Inability to implement finance plan until 2007 because of limitation

on building permits– Delay of Yuba River work that will protect Linda and Olivehurst

from deep flooding– Completion of Phase 4 Feather Work in 2009 or later, instead of

2008

• Alternatively, make finding in April that condition 13 has been met because known flood risk has been substantially reduced, thus allowing:– Immediate implementation of finance plan– Acceleration of Phase 4 Yuba Work in 2006– Assure completion of Project (including Phase 4 Feather) in 2008

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Protection Afforded ByPhases 1 – 3 & Yuba Acceleration

Annual Exceedence Probability (AEP) – 1 in X Chance

Before Project Scheduled Dec. 2006

WPIC 33 Greater than 200

Yuba River (Downstream of Simpson Lane)

69 Greater than 200

Bear River 71 Greater than 200

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Upon completion of the Three Rivers 2006 construction program, the lowest level of performance for the RD 784 levees will be the Feather River levee, which while not yet certifiable by FEMA, has approximately 1/100 AEP.*

Once the Three Rivers program is complete, currently scheduled for 2008, the performance of all of the RD 784 levees will be greater 1/200 AEP.

*Army Corps of Engineers Yuba Basin F3 Report (Sept 2005)

Protection Afforded byRemainder Phase 4

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Process to date

• March 10 – Presentation to Subcommittee– Overview on project; key issues

• March 17 – Presentation to Reclamation Board– Overview on project; key issues

• March 27 – Presentation to Subcommittee– Focus on financing plan

• April 5 – Presentation to Subcommittee– Overview on County evacuation and hazard mitigation plan– Focus on key dates; remedies available to Reclamation Board– Discussion of draft resolution finding continuing satisfaction with

Special Condition 13 of Permit 17782.

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Overview of Financing Issues

• Goals of Financing Plan

• Estimated Costs and Timing of Construction

• Phase 4 Financing Plan

• Phase 4 Implementation

• Key Dates and Timeline

• Default, Notice, and Cure Process

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Goals of Financing Plan

• Secure financing needed to complete construction;

• Oblige landowners to provide all necessary financing;

• Secure TRLIA commitment to find 3rd party investment to supplement landowner obligation; and

• Identify remedies available to Reclamation Board if financing falls short to complete construction.

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Estimated costs

• EPS presented a Phases 1-3 financing overview December 19, 2005 demonstrating $111 million in costs and adequate revenues to cover costs.

• TRLIA Phase 4 Costs (Est. Feb. 2006) $ 90 MM – Construction Costs

$ 45 MM – Phases 1 – 4 Contingency

(Construction & Condemnation)

$135 MM – (Assumes Feather River Strengthen in Place)

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Phase 4 Timing of Costs & Construction

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Phase 4 Financing Plan Overview

• Capital Program– Consists of 2 Major Components

• Formation of a CFD and issuance of bonds– Various types of bonds and – Various targeted purchasers of bonds

• Development Impact Fee– Local purchase of bonds secured only by payment of

Development Impact Fee by non-participants in CFD

• Maintenance Program– Annual Assessment

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Phase 4 Financing Assumptions

• Bond sales will based on contract cash flow needs of project– TRLIA must have cash or cash guarantees in hand prior to

awarding design, construction or other contracts for levee improvements

• County will impose a development impact fee on all benefiting properties that do not participate in program– Impact fee revenue will used to reimburse amounts contributed

by participating projects above their fair share of levee costs.• Financing Plan is based upon no building permit

limitations– Provides assurance that when builders pay their obligation for

levee improvements, they will be able to complete the units they have satisfied (builders are still subject to external forces, FEMA etc…)

– Maximizes landowner participation in CFD

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Plan Accounts for Risk Factors

• Targeted sales of various types of bonds addresses the following risk factors;– Levee Design Risk– Levee Construction & Completion Risk– Levee Certification Risk– FEMA Re-mapping Risk

• It is understood that these risks will not be 100% mitigated prior to the issuance of bonds

• Therefore, the level of risk mitigation will determine the type of bond sold and the type of purchaser of that bond

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Implementation Strategy

• Phase 1 – 3 Implementation– Implementation Agreement

• Required payment of fees to fund project• Precluded home building without payment of fees• Enforceable by Reclamation Board

– Advance Funding Agreement• Specified detail for payment of fees

– Regular reporting to Reclamation Board

• Phase 4 Implementation– Propose similar structure

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Key Dates – Initial Funding• April 21, 2006 Reclamation Board approves resolution on Permit

No. 17782.• May 2, 2006 Yuba County BOS first reading on Impact Fee

Ordinance.• May 9, 2006 Yuba County BOS second reading on Impact Fee

Ordinance. Resolution of Intention to form ThreeRivers CFD 2006-1.

• May 19, 2006 Reclamation Board, Three Rivers and participatinglandowners execute implementing agreement forsatisfaction of Condition 13 of permit No. 17782.

• TBD The building permit limitation is lifted automaticallywhen both of these two conditions occur.

$20M in initial funding is available, and implementation agreements are executed.

• June 27, 2006 Three Rivers CFD 2006/bond sale approved.• July 13, 2006 Sale of approximately $20,000,000 in builder bonds.

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Timeline – Subsequent Funding

• 90 days prior Formal notice sent to each funding participant with the anticipated amount of the funding required.

• 45 days prior Participants make deposit to landowner escrow of required

funding amount.• 21 days prior Bond disclosure documents

finalized.• 14 days prior Pricing is completed.• 1 day prior Escrowed funds are transferred to

the bond sale account.

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Default, Notice and Cure Process• Within 14 days after identification of a default, Three

Rivers will provide written notice to the Reclamation Board. This notice will include a description of the default and an assessment of the potential impact of the issue, if not remedied, on the completion schedule for the levee improvement program.

• Three Rivers and the landowners will have 30 days thereafter to prepare a plan for corrective action and to present such plan to Reclamation Board staff and/or the Subcommittee.

• The Staff and/or Subcommittee shall consider the plan and forward the plan to the entire Reclamation Board at its next regularly scheduled meeting for consideration of 4 levels of action as follows:

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Default, Notice, and Cure Process(cont)

• Level 1. Continue to monitor and consider action at future date.

• Level 2. Request implementation of presented plan.

• Level 3. Notify Three Rivers and the County to stop recording new final maps and new tentative maps for residential development in the affected area.

• Level 4. Notify Three Rivers and the County to stop the issuance of new building permits in the affected area.

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County Evacuation Plan and Pre-hazard Mitigation Plan

• Lessons of 1986 and 1997 have informed need for refined plans.

• One of largest FEMA grants in state for funding investigation, assessment, and implementation of needed plans.

• Coordination occurring with federal, state, and local governments.

• Presentation to Subcommittee identified need for “time inundation maps” which County will develop before next flood season.

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Considerations• Phases 2 and 3 are near completion: All contracts have been

executed and all necessary monies have been committed.

• TRLIA will have raised the level of protection for RD 784 from less than 1/33 AEP to approximately 1/100 AEP by the end of this year.

• Yuba River Acceleration will complete the last increment of flood protection needed to protect Linda and most of Olivehurst from deep flooding.

• The Phase 4 financing plan contains assurances that all needed money can be raised.

• Landowners have provided flood insurance to all new homes in the affected area and will do so until the earlier of 2010 or Phase 4 completion

• Phase 4 financing plan will accommodate maintenance funding program; program is being pursued by RD 784 and Three Rivers.

• All RD 784 levees will have greater than 1/200 AEP at project completion.

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Population Risk Figures

Estimated Population when 200 year

protection achieved

Year in which 200 year protection

achieved

Current Reclamation Board Condition

47,973 2009

Three Rivers' Proposal

44,613 2008

With No Finance Plan for Phase 4

31,173 2021*

*Assumes 15 years for federal authorization,appropriation, and construction.

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Requested Action• For the Reclamation Board to find continuing satisfaction

with Condition 13 of Permit No. 17782 and agree to lift the building permit limitation upon presentation to the Board of implementation and funding agreements which contain the following six elements:

1. A commitment by Three Rivers to use its best efforts to complete the Yuba River levee acceleration work in 2006 and all elements of the program by 2008.

2. A commitment by the Landowners for a comprehensive financing plan to fund the phase 4 program (including phases 2, 3, and 4 construction and condemnation contingencies).

3. Remedies available to the Reclamation Board in the event that the committed funding is not available when needed.

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Requested Action• Continued:

4. A commitment by the Landowners to provide, at no cost to all new residents in the Affected Area, flood insurance through the completion of Phase 4 or 2010 (whichever occurs first).

5. A commitment by Three Rivers to continue to make reports, as requested, providing updates on the status of the Three Rivers project.

6. A commitment by Yuba County to continue to use reasonable diligence to inform residents within RD 784 of the risk of flooding and to further refine and improve the County's Evacuation Plan and Prehazard Mitigation Plan.

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Three Rivers Levee Improvement Authority

April 21, 2006

Presentation to the

State Reclamation Board

Regarding Satisfaction of

Permit 17782 Special Condition 13