ENCINITAS — The Encinitas City Council has approved the submission of a loan application for $20 million to complete the final stage of the Leucadia Streetscape project scheduled to begin construction in 2023.
Council members previously requested city staff prepare a loan application for the California Infrastructure and Economic Development Bank, otherwise known as IBank, to complete Phase 3 of the ambitious project, which has grown from a projected cost of $30 million to between $37 million and $47 million, per city estimates.
The loan’s interest rate will be finalized once the IBank board has met and approved the city’s application but iBank has quoted an effective interest rate of 2.3%.
Both Encinitas City Hall and the city’s Community and Senior Center will be collateral for the loan, which is to be paid off over a period of 15 years.
Once the application has been submitted, IBank may take two or three months to review the application before bringing the application to its monthly board meeting.
Once approved, it will be at least seven months before the city manager signs the financing agreement and the loan begins to accrue interest.
City Treasurer Teresa McBroome noted rising interest rates and said it was important for the council to complete its application as soon as possible to ensure the best possible interest rate on the loan.
“As you’re aware, we’re experiencing inflation,” McBroome said. “And we have been told that rates will rise.”
McBroome also said submitting the application now will help reimburse the city’s general fund for costs incurred from the Streetscape project dating back to Aug. 27.
Annual payments for the loan are expected to be approximately $1.6 million.
Encinitas says its financial advisor, Fieldman and Rolapp, has reviewed the city’s credit criteria to confirm it has sufficient capacity for the loan and that taking on the debt financing will not affect the city’s AAA credit rating.
Annika Walden, executive director of Leucadia 101 Main Street Association, spoke on behalf of the organization’s board of directors in support of the IBank loan. Walden says the final segment of the project will provide Leucadai with vital road improvements.
“The reduced speed limit, the installation of roundabouts and the narrowing of traffic lanes will eliminate cut-through traffic and dangerous speeding,” Walden said. “The traffic calming will enhance not only the pedestrian and cycling experience but also create a more welcoming environment for our 101 businesses.
Construction of the project has been ongoing since summer. Segment C of Streetscape is the northernmost segment of the project, extending from Jupiter Street to La Costa Avenue.