Pebble Beach Drive looking toward Preston Island from the Brother Jonathan Lookout. City authorized a 20-year loan to help pay for a bluff stabilization project. Photo: Jessica Cejnar

Crescent City Councilors received a better idea of the possibility of U.S. Congress reimbursing the city for a project to fix storm erosion on Pebble Beach Drive.

Hoping to take advantage of a process called Advanced Construction, Councilors on Monday finalized a $651,738 loan from the city’s water fund to the general fund.

“If the city spends more than what is allocated, as Congress puts in more funding to the project — if they put in more funding for the project — the city is reimbursed for advanced construction,” City Manager Eric Wier told Councilors. “It takes some time.”

After finalizing the inter-fund loan transfer, Councilors awarded the full $1.1 million agreement with COWI North America Inc., which will spearhead the grant-funded preliminary engineering phase of the project that aims to halt bluff erosion caused by a December 2016 storm.

Councilors had initially approved a $458,000 agreement with COWI for the design phase. According to Wier, the project is “97 percent” paid for through disaster relief dollars from the California Office of Emergency Services, Local Transportation Commission and the Federal Highways Administration, Wier said.

At its June 1 meeting, the City Council authorized a 20-year inter-fund loan from the water fund to the general fund.

If Congress doesn’t reimburse the city, the city would pay interest-only — about $13,000 — annually for the first three years of the loan at the current LAIF interest rate of 2.03 percent, according to Wier. It would then pay the principal, roughly $45,716 annually through the remaining 17 years.

According to Wier, one of the stipulations for being able to borrow from the water fund is its ability to fund needed capital improvements to the water system despite the loan.

“Would making this loan with the repayment schedule of 20 years, would that inhibit any of those types of opportunities?” Wier asked rhetorically. “The answer was no to that.”

On Monday, Public Works Director Jon Olson told that staff have begun initiating the process of notifying Caltrans that it wants to take advantage of Advanced Construction.

“It typically takes two weeks to be authorized to actually spend those Advanced Construction funds,” Olson said. “At this point, we don’t anticipate spending Advanced Construction funds in the next two weeks.”

Olson said he has asked Caltrans about how long it takes Congress to reimburse agencies through the Advanced Construction process.

“The longest they’ve seen has been 10 months in recent history,” he said. “We are in unusual times and they’re not sure what the appetite will be or what’s going to happen.”

Meanwhile, the preliminary engineering phase of the project will be completed in February 2022, according to Olson. He said he expects the city to pay for much of the work in the first half of the project. A drill rig is expected to come into the area in a few weeks to conduct geotechnical studies while a drone was used recently to perform the Lidar survey of the area.

Crescent City Mayor Blake Inscore also promised that the water fund will be made whole regardless of what happens.

“The fact of the matter is, we’re entering a loan agreement with ourselves,” he said. “the water enterprise fund will be paid back 100 percent with interest. Yes, there is a risk that we will not receive the money back from Congress, but the water fund is not at risk of not being made whole.”

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