Craig Brown, Charlottesville City Attorney

RE: Meadow Creek Parkway Interchange Programming Resolution and State Reimbursement

At the last City Council meeting Peter Kleeman recommended that Council not adopt the Project Programming Resolution for preliminary engineering work for the Meadow Creek Parkway Interchange project. In Mr. Kleeman’s opinion, the Resolution contains a reimbursement requirement that exceeds the applicable reimbursement requirement of state law. A copy of Mr. Kleeman’s email to you, wherein he sets forth his arguments, is attached.

agrees to pay its share of the total cost for preliminary engineering, of this project in accordance with Section 33.1-44 of the Code of Virginia, and that, if the City of Charlottesville subsequently elects to cancel this project, the City of Charlottesville hereby agrees to reimburse the Virginia Department of Transportation for the total amount of the costs expended by the Department through the date the Department is notified of such cancellation.

This is the standard Programming Resolution that VDOT requires before releasing funds for an urban system construction project.

The statute in question, Virginia Code § 33.1-44, authorizes the Commonwealth Transportation Board to contribute 98% of the costs of the construction or improvement of an urban system highway project. The phrase “construction or improvement” and the Commonwealth’s right to reimbursement are broadly defined in the statute:

The term “construction or improvement” means the supervising, inspecting, actual building, and all expenses incidental to the construction or reconstruction of a highway, including locating, surveying, design and mapping, costs of right-of-way, signs, signals and markings, elimination of hazards of railroad grade crossings and expenses incidental to the relocation of any utility or its facilities owned by a municipality or by a public utility district or public utility authority.

If any municipality requesting such Commonwealth Transportation Board contribution subsequently decides to cancel such construction or improvement after the Board has initiated the project at the request of the municipality, such municipality shall reimburse the Board the net amount of all funds expended by the Board for planning, engineering, right-of-way acquisition, demolition, relocation and construction between the date of initiation by the municipality and the date of cancellation. The Board shall have the authority to waive all or any portions of such reimbursement at its discretion.

The most logical interpretation of the statute is that once a locality initiates an approved urban project[1] by requesting state funding pursuant to § 33.1-44, the obligation to reimburse the state in the event of cancellation begins. There is nothing in the statute that suggests that the costs of post-resolution work for preliminary engineering should be excluded from the reimbursement requirement. To the contrary, the statute makes specific reference to costs incurred by the state for locating, surveying, design, mapping, planning and engineering.

Mr. Kleeman’s email suggests that preliminary engineering work is not subject to the reimbursement requirement if a “no build” option is selected, but reimbursement of those expenses would be required if the City selects one of the design options and subsequently cancels the project. There is nothing in the wording of the statute that supports that distinction. While the selection of a “no build” option may provide a strong argument that reimbursement should be waived, the statute vests the authority to waive reimbursement exclusively in the Commonwealth Transportation Board. The statute simply does not give the locality the ability to avoid the reimbursement requirement by unilaterally deciding on a “no build” option.

In one sense the argument is also self-defeating in terms of having the preliminary engineering work funded by the state: if “preliminary engineering” is not within the ambit of Virginia Code § 33.1-44 and its definition of “construction or improvement”, the statute would not authorize the CTB to provide 98% of the funding for the work.

A locality must adopt a programming resolution before the state will provide funding for an urban system project. According to VDOT, once that resolution is adopted project development entails three phases: preliminary engineering, right of way acquisition and construction, all of which are subject to the reimbursement requirement:

The resolution must include a provision whereby the municipality . . . agrees to pay its share of the total costs of preliminary engineering, right-of-way and construction. The resolution must also provide that, in the event the project is subsequently cancelled by the municipality, the municipality agrees to reimburse the Department for the total amount of all costs expended by the Department to date of cancellation.

. . . The project development process begins when preliminary engineering is authorized by the State Urban Engineer. The preliminary stages of the project development process includes such elements as corridor, traffic, right of way and environmental studies, early notification to regulatory agencies as to possible environmental concerns and project scoping, all leading toward a location public hearing and adoption of an approved corridor, when applicable.

VDOT representatives have informed the City, through the Department of Neighborhood Development Services, that their position is that preliminary engineering expenses are subject to reimbursement even if a “no build” option is selected, and that the Programming Resolution for preliminary engineering work must include the reimbursement language as proposed.[3] While VDOT’s interpretation of the statute would not be binding on a court, courts have frequently stated that the interpretation of a statute by the official or agency charged with its administration is entitled to “great deference” or “great weight”.

As additional background I have attached a previous memo I did on the reimbursement issue in 2002, and former City Attorney Clyde Gouldman’s memo dated January 19, 1999. Please let me know if there are any questions or if you need additional information.

[1] “Approved” in the sense that it has been included in both the Metropolitan Planning Organization’s Transportation Improvement Plan as an Urban System Project and in the Six Year Improvement Program of the CTB.

[2] A programming resolution to authorize preliminary engineering should be contrasted with a “feasibility study”, which VDOT describes as “conducted to determine the degree to which: (a) the design or location is economically justified, (b) an alternative is considered preferable from an environmental or social perspective, or (c) eventual construction and operation can be financed and managed”. It is my understanding that feasibility studies are financed with planning, rather than construction, funds, and the reimbursement requirement is inapplicable.

[3] I had suggested that the Programming Resolution include the sentence “If this project is eliminated due to factors beyond the control of the municipality this provision for reimbursement may be waived by the Commonwealth Transportation Board”, since this statement is found in VDOT’s Urban Division Manual. VDOT’s response was that it was unnecessary, since the CTB already had that authority.