HomeMy WebLinkAbout2018-02-22 Study Session - Utility Undergrounding Master Plan ..... ..... CITY OF PALM DESERT
73-510 FRED WARING DRIVE I
1 H PALM DESERT, CALIFORNIA 92260-2578
TEL: 760 346-0611
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NOTICE OF STUDY SESSION
OF THE
PALM DESERT CITY COUNCIL
NOTICE IS HEREBY GIVEN that the Palm Desert City Council will convene
Thursday, February 22, 2018, at 2:00 p.m. in the Administrative Conference Room of the
Palm Desert Civic Center, 73-510 Fred Waring Drive, Palm Desert, California 92260, for
the purpose of conducting a Study Session. Said Study Session will be held in order to
discuss the Utility Undergrounding Master Plan being developed for the City in consultation
with PENCO Engineering, Inc.
R CHELLE D. AS EN, CITY CLER
CITY OF PALM DESERT, CALIFORNIA
February 15, 2018
NO ACTIONS WILL BE TAKEN AT THE STUDY SESSION.
PURPOSE OF THE STUDY SESSION IS INFORMATION ONLY.
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LI TY UNDERGROUNDING - A STEP BY STEP GUIDE
CITY OF PALM DESERT
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PENCOENG
Client Success is Our axons
PALM DESERT
Utility Undergrounding - A Step by Step Guide
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Information:
City of Palm Desert
Public Works Department
760-776-6393
rgayler@cityofpalmdesert.org
City of Palm Desert
Utility Undergrounding-Step-By-Step Guide
PALM DESERT
Utility Undergrounding -A Step-by-Step Guide
History
Since shortly after Palm Desert's incorporation as a city in 1973, new
development here has been required to underground utilities. The
poles and wires that crisscross some of the community's older
neighborhoods illustrate that many homes, built prior to incorporation,
continue to be served by above ground utility lines.
` �or Residents in these areas have expressed concern about the safety,
aesthetics, and negative impact on property values caused by above
ground utility lines. In response to these concerns, Palm Desert's City
Council in March 2015 approved the formation of an ad hoc Committee
to study utility undergrounding in Palm Desert.
Composed of eight citizen representatives and two City Council
members and operating on the premise that underground utilities are
preferable to unsightly above ground lines and poles, the Committee
reached a consensus that the relocation of utility lines below ground
should be a municipal priority.
The Committee determined that an early and important step in the
process should be the preparation of an undergrounding master plan. In
April 2016, the City Council approved the Committee's
recommendations, adopting the undergrounding of all utility lines in
Palm Desert as a goal. The Council also authorized the hiring of a
Ilk consultant to create an undergrounding master plan.
The master plan lays out a number of ways that utility undergrounding
can occur in Palm Desert. For neighborhoods, however, the most
common way to accomplish utility undergrounding is for neighbors to
form an assessment district.
Two options for this multi-step, multi-year process are explained
below including the standard process and a fast track option designed
to speed the process when there is broad neighborhood support.
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III City of Palm Desert
Utility Undergrounding-Step-By-Step Guide
PALM DESERT
Option One—Fast Track
Assessment District Formation
1. The process is initiated by an interested property owner, who acts as a
liaison between the City, utility companies, and neighbors. The property
owners who support undergrounding submit a letter to the City's
Public Works Department expressing their interest in forming an
Underground Utility Assessment District. The letter should include a
description of the proposed boundaries of the area to be
undergrounded.
2. Based on the interest letter, City staff prepares a boundary map and
submits it to the appropriate utility companies who review the map to
ensure that the boundaries are logical and feasible. Once the district
imm00000_ boundaries are accepted by all parties, the utility companies provide
o■000000
ogoin000a, the City with a preliminary cost estimate for the design and
.0000000000iph construction of the undergrounding project.
4cooli a0000a
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iio°°g0000000 3. The City then prepares a petition to be circulated by proponents to
a all affected property owners within the proposed district boundaries.
11 11 ti I ;‘ The petition states the approximate amount that each property owner
II' would pay if the property owners vote to form the district to
o accomplish the undergrounding project. In order for the process to
��.ad continue, at least 70 percent of the property owners must sign and
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e Cots. express support. This petition is a "show of support" and nonbinding.
The City is neutral regarding City-owned parcels within the District.
4. Once the petition is certified by the Assessment Engineer, Public
Works will prepare a staff report requesting City Council approval to
move forward. With Council approval, the Assessment Engineer will
prepare an Engineer's Report. This report documents the assessment
that each property owner within the district would pay, should the
district be approved. This report uses the preliminary estimated
construction costs provided by the utility companies. If the district is
formed, funds expended by the City on costs related to formation of the
district will be recovered during the assessment process. If the district
fails, the City's funds will be lost.
5. The Engineer's Report and Resolution of Intention are submitted to
the City Council for approval and a public hearing is scheduled.
6. The Ballots are prepared with the assessment amount and sent to
each property owner within the proposed district boundaries. Each
property owner then votes for or against the formation of the district.
Each vote is weighted or valued based upon the dollar value of each
property owner's proposed assessment.
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City of Palm Desert
Utility Undergrounding-Step-By-Step Guide
PALM DESERT
7. All votes must be submitted to the City prior to the end of the
scheduled public hearing. The district passes if the district received
greater than 50% approval. If the district passes, all property owners
within the district will be responsible for the assessment amounts
regardless of a property owner's personal vote.
Following approval by the property owners, the detailed design process
begins. It usually involves the following steps:
a. Base mapping
b. Southern California Edison electrical design
c. Telephone and cable design
The duration of each step varies depending on the number of
underground districts in the queue, the size of the proposed district, and
the complexity of the design. This phase could take more than two years
to complete.
Once the project is fully designed, it will be bid with a contract awarded,
and then constructed.
Option Two—Traditional Method
1. The process is initiated by an interested property owner, who acts as a
liaison between the City, utility companies, and neighbors. The property
owners who support undergrounding submit a letter to the City's Public
Works Department expressing their interest in forming an Underground
Utility Assessment District. The letter should include a description of the
proposed boundaries of the area to be undergrounded.
2. Based on the interest letter, City staff prepares a boundary map and
submits it to the appropriate utility companies who review the map to
ensure that the boundaries are logical and feasible. Once the district
boundaries are accepted by all parties, the utility companies provide the
City with a preliminary cost estimate for the design and construction of
the undergrounding project.
3. The City then prepares a petition to be circulated by proponents to
all affected property owners within the proposed district boundaries.
The petition states the approximate amount that each property owner
would pay if the property owners vote to form the district to
accomplish the undergrounding project. In order for the process to
continue, at least 70 percent of the property owners must sign and
express support. This petition is a "show of support" and nonbinding.
The City is neutral regarding City-owned parcels within the District.
4. Once the petition is certified by the Assessment Engineer, Public
Works will prepare a staff report requesting City Council approval for
funds for design of the undergrounding project to be advanced from the
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City of Palm Desert
Utility Undergrounding-Step-By-Step Guide
PALM DESERT
City's General Fund. If the district is formed, the advanced funds will be
recovered during the assessment process. If the district fails, the funds
will be lost.
5. The design process begins once the utility companies receive the
design fee. The process usually involves the following steps:
a. Base mapping
b. Southern California Edison electrical design
c. Telephone and cable design
The duration of each step varies depending on the number of
underground districts in the queue, the size of the proposed district, and
the complexity of the design.
6. Once the design is complete and accepted by the City and utility
companies, the utility companies provide a "guaranteed cost of
construction." The Assessment Engineer will use this guaranteed cost and
all other costs incurred in the past and anticipated in the future to
generate the Engineer's Report. This report documents the assessment
amount that each property owner within the district would be
responsible for if the district is successful.
7. The completed design plans, Engineer's Report, and Resolution of
Intention are submitted to the City Council for approval and a public
hearing is scheduled. An informal property owner meeting is held prior to
the public hearing to explain the details of the proposed district.
8. Ballots are prepared with the assessment amount and sent to each
property owner within the proposed district's boundaries. Each owner
votes for or against forming the district. Each vote is weighted based on
the dollar value of each property owner's proposed assessment.
9. All votes must be submitted to the City prior to the end of the
scheduled public hearing. The district passes if the district received
greater than 50% approval. If the district passes, all property owners
within the district will be responsible for the assessment amounts
regardless of a property owner's personal vote.
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■� City of Palm Desert
Utility Undergrounding-Step-By-Step Guide
PALM DESERT
Paying the Assessment and Final Steps
Regardless of whether a neighborhood chooses the standard or fast track
method of assessment district formation, the property owners will have
two options to pay for the assessment.
1. 30-Day Cash Payment Period: Within 30 days after the close of the
public hearing, the property owner has the option to pay the full or a
portion of the assessment amount. The property owner will save
approximately 8% on the portion of the assessment paid in cash. This 8%
savings results from not selling bonds for the amount owed. Bonds will
be sold for any unpaid portion of the assessment and a lien will be placed
on the property until the bond is paid in full.
2. Bond: If the property owner elects to not pay during the 30-Day Cash
Payment Period, bonds will be sold. Assessments will be placed on the
property tax bill to be paid over a 20 to 25-year financing period. During
that time, a lien will be placed on the property until the bond amount is
paid in full. Bonds will incur a finance charge.
When construction of the main line underground infrastructure has been
completed, all property owners will be notified that it is time to perform
their private conversions.
Private conversions require property owners to hire a licensed electrician
to connect the property's existing overhead connection to the
underground infrastructure. The cost of the private conversion is not
covered in the assessment amount. The assessment amount only covers
work performed in the public right-of-way.
It is the property owner's responsibility to perform the conversion within
the designated time frame. Delays caused by one property owner's
private conversion, will cause delays to the whole district because
overhead structures cannot be removed until all properties have
completed their private conversions.
It is important to note that, from the initial letter to the last private
conversion, the average process takes approximately seven years,
depending on the size of district. The bond financing period information
provided above is based on an average of past assessment districts and
varies depending on current rates and the district's size.
For more information, please contact the City's Public Works Department
at 760-776-6393.
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Page 5
PENCOENG
Client Success is Our Success
PENCO Engineering, Inc.
255 Rincon Street, Suite 114
Corona, CA 92879
(951) 736-2040
www.pencoeng.com
Jeffrey M. Cooper, PE
Vice President
Penco Engineering
M: (949) 289-5414
jcooper@pencoeng.com
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- EXECUTIVE SUMMARY -
UTILIUTILITY UNDERGROUNDING MASTER PLAN
CITY OF PALM DESERT
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f3
CITY OF PALM DESERT
PALM DESERT
UTILITY UNDERGROUNDING MASTER PLAN
1 . EXECUTIVE SUMMARY
A. BACKGROUND
Since shortly after Palm Desert's incorporation as a city in 1973, new development here has been
required to underground utilities. The poles and wires that crisscross some of the community's older
neighborhoods illustrate that many homes, built prior to incorporation, continue to be served by above
ground utility lines.
Residents in these areas have expressed concern about the safety, aesthetics, and negative impact on
property values caused by above ground utility lines. In response to these concerns, Palm Desert's City
Council in March 2015 approved the formation of an ad hoc Committee to study utility undergrounding in
Palm Desert.
Composed of eight citizen representatives and two City Council members and operating on the premise
that underground utilities are preferable to unsightly above ground lines and poles, the Committee
reached a consensus that the relocation of utility lines below ground should be a municipal priority.
The Committee determined that an early and important step in the process should be the preparation
of an undergrounding master plan. In April 2016, the City Council approved the Committee's
recommendations, adopting the undergrounding of all utility lines in Palm Desert as a goal. The Council
also authorized the hiring of a consultant to create an undergrounding master plan.
The master plan lays out a number of ways that utility undergrounding can occur in Palm Desert. For
neighborhoods, however, the most common way to accomplish utility undergrounding is for neighbors to
form an assessment district.
B. SCOPE OF WORK
Create a utility undergrounding master plan for the City that includes the following elements:
3. A map identifying areas served by above ground utility infrastructure;
4. Identification and prioritization of locations eligible for Rule 20A funding;
5. An outline of potential boundaries for utility undergrounding assessment districts in residential
and commercial areas ineligible for Rule 20A funds that would be logistically and economically
feasible;
6. Research and analysis on a toolbox of funding mechanisms for undergrounding that include 20A
credits, but also addresses other approaches for 20B projects, such as Enhanced Infrastructure
Financing Districts, a utility tax with proceeds dedicated to utility undergrounding, purchasing
Rule 20A credits from other agencies, or other innovative funding methods;
7. Calculations and refined cost estimates for utility undergrounding including updated engineer
estimates to arrive at reliable construction costs for proposed projects;
8. Estimates for the mainline construction, and the costs anticipated for the construction from the
mainline to the panel.
9. Recommendations on ways to simplify and streamline the City's existing assessment district
formation process, including the creation of a Utility Undergrounding Guide to be available, at
City Hall and online, to property owners interested in learning more about the process.
10. Identification of a metric for measuring the City's annual investment in and progress toward the
goal of community-wide undergrounding.
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CITY OF PALM DESERT
PALM DESERT
UTILITY UNDERGROUNDING MASTER PLAN
C. OVERHEAD UTILITY MAPS
Maps were developed for the study area to show the existing above ground utilities and supporting
infrastructure (i.e. power poles), which are included in Section 3 of this report. The above ground utility
information shown on the maps were based on research of utility records and facilities inventory maps,
the City's Geographic Information System (GIS), field data collection via Global Position System (GPS)
survey and multiple site investigations to field-verify the existing above ground utility infrastructure.
D. 20A PROJECTS NA/I
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E. THE FOLLOWING ARE THE CITY'S POTENTIAL RULE 20A PROJECTS WITH SCE COMMENTS:
Country Club Drive This qualifies, but very expensive due to transmission circuit plus 2 distribution
circuits
Frank Sinatra 1 This qualifies, but is very expensive due to transmission voltage
Frank Sinatra 2 This qualifies and is a nice project due to only one distribution circuit
Gerald Ford Drive This qualifies as a Rule 20A, but due to transmission corridor it is typically 2X
as expensive as distribution
This qualifies as a Rule 20A, but due to transmission corridor it is typically
2X as expensive as distribution. Also, I don't see the value in including OH
Monterey Ave distribution crossing of the RR tracks on the north end of the project, but it
does qualify
This qualifies but is expensive, sections of it are double transmission circuited
plus a distribution circuit. Each transmission line requires its own ducts and
Portola Ave structures. This entire corridor would be 5X as expensive as a typical R20A.
Also, the section that goes off onto (possibly) private property between
Portola and Frank Sinatra may not qualify and might need to be excluded
Tamarisk Row This qualifies but very expensive due to transmission circuit
Chia Drive This qualifies, is a nice project and not too expensive
SCE recommends Frank Sinatra 2 to be our highest priority project, then Chia Drive.
For more detail, see pages 18-25. Page 2
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CITY OF PALM DESERT
PALM DESERT
UTILITY UNDERGROUNDING MASTER PLAN
F. 20B PROJECTS
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For more detail, see pages 27-48
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Page 3
173
CITY OF PALM DESERT
PALM DESERT
UTILITY UNDERGROUNDING MASTER PLAN
G. RULE 20A CREDITS
Palm Desert's Rule 20A balance is $785,312 with an annual allocation of$72,944. The following is the
criteria for determining Rule 20A funded projects:
1. The undergrounding will avoid or eliminate an unusually heavy concentration of overhead utility
facilities
2. The road or right-of-way occupied by the facilities is extensively used by the general public and
carries a heavy volume of pedestrian or vehicular traffic
3. The road or right-of-way adjoins or passes through a civic area, public recreation area, or an area
of unusual scenic interest
4. The street or road or right-of-way is considered an arterial street or major collector as defined in
the Governor's Office of Planning and Research General Guidelines
Cities can purchase credits outside their immediate area. As an example, Laguna Beach recently
purchased $300,000 in Rule 20A credits from Indian Wells for $165,000. We have seen a range of$.50/
dollar to $.55/dollar to purchase credits from other cities. Buying credits is a very viable approach to assist
in funding Rule 20A projects. It requires finding cities who are interested in selling their 20A credits.
Rule 20A projects can become Rule 20C projects if other funding is found.
Brian Kolka of SCE, told us the following on December 13, 2017, "Rule 20A allocation funding for each
agency is determined by Edison's R20A annual budget. And our budget was cut by 40% for the 2015 Rate
Case and we anticipated that it will be cut another 50%with the 2018 Rate Case."
For more detail, see page 55 and Appendix 1.
RULE 206 FUNDING APPROACHES
Projects that do not qualify for Rule 20A funds and were not completed through property development
are designated as Rule 20B projects. Rule 20B projects have traditionally been funded through the 1913
Act Assessment Districts.
Additional funding mechanisms reviewed include the following:
1. Enhanced Infrastructure Financing Districts (EIFD)
2. Utility User Tax
3. Mello-Roos CFD
4. Utility Surcharge
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CITY OF PALM DESERT
PALM DESERT
UTILITY UNDERGROUNDING MASTER PLAN
Several of these options are feasible, pros and cons are listed below:
This mechanism was really designed for undeveloped properties that want to
develop to pay for needed infrastructure to support development. Money is
borrowed against the tax increment that is developed from the undeveloped
EIFD property value to the developed property value. Since the proposed utility
undergrounding work is proposed primarily on already developed land, the
tax increment captured will be relatively small. This approach does not appear
practicable for undergrounding overhead utilities in Palm Desert.
This is a feasible mechanism to generate funds for undergrounding overhead
utilities. Concerns would be that these are typically enacted City wide and would
include a lot of properties that have their utilities already undergrounded if all
facilities are included. If it is placed on the ballot as a general services usage, it
Utility User Tax requires a 50 percent registered voter approval. If it is for a special purpose, like
an undergrounding overhead utilities program, it requires a two-thirds registered
voter approval. A two-thirds registered voter approval is difficult to achieve
particularly when half the City already has utilities that are undergrounded.
This could be a viable option for a City wide vote for 20A and 20C projects not
including 20B projects.
This is a feasible mechanism to generate funds for undergrounding overhead
utilities. A positive attribute is that the CFD could be prepared with 2 zones, one
Mello-Roos CFD City wide for non-Rule 20B projects and then another zone for all Rule 20B type
projects. The downside is that it requires a two-thirds voter approval to approve
the CFD. This seems to be a viable option for funding City wide projects, Rule 20A
and Rule 20C.
This may be a feasible mechanism to funding underground projects. It is
Utility Surcharge recommended that the City not consider proceeding in this manner until final
court rulings have been made for the Cities of Santa Barbara and San Diego.
The traditional 1913 Act assessment district is still a viable mechanism but it is often criticized for being a
slow process, costly and property owner drive. The following are suggestions on how to save costs to the
District and time:
1) Form the assessment district before preparing PS&E.
2) Consider having the City bid and manage their undergrounding projects themselves. SCE tacks on
a 42% management fee on all civil work included in the project. As an example, the City of Laguna
Beach has managed their own projects at a considerable savings for thirty (30) years. SCE has no
added management fee for just their work.
3) Consider having all civil work as a separate City project not included in the District.
4) Develop a fund for soft costs and not charge the assessment district such as: Assessment
Engineering, PS&E, Construction Management and Inspection for approved districts.
Currently, the largest amount of time is spent on preparing PS&E. SCE will only allow their staff and select
consultants to prepare PS&E, which usually takes 1.5 to 2.0 years.
Page 5
1)
CITY OF PALM DESERT
PALM DESERT
UTILITY UNDERGROUNDING MASTER PLAN
It is the author of this report's opinion that a really sound approach to funding the undergrounding of
the City's overhead utilities would be twofold as follows:
1) Put in place a utility user tax or property tax (such as a Mello-Roos CFD) to pay for Rule 20A (when
Rule 20A credits are not available) and Rule 20C projects. This would be a City wide tax requiring
two-third voter approval.
2) Continue with Rule 20B projects through assessment districts incorporating recommendations in
this report.
For more detail, see pages 55-61.
H. COST ESTIMATES FOR UNDERGROUNDING
The master planning process included the development of"planning-level" preliminary opinion of
probable costs for the undergrounding conversion program. A summary of the various Rule 20 projects is
provided below:
• Rule 20A total preliminary estimated cost = $ 147 million +/-
• Rule 20B total preliminary estimated cost = $ 433 million +/-
• Rule 20C total preliminary estimated cost = $ 34 million +/-
TOTAL PRELIMINARY ESTIMATE COST= $ 614 million +/-
The breakdown of each total preliminary estimate cost considered the following:
• Construction Cost for Underground Conversion (approximately $1,000 per linear foot for
distribution lines and approximately $1,500 per linear foot for transmission lines)
• General Construction Items of Work (includes, but not limited to, mobilization / demobilization,
traffic control, clearing and grubbing, shoring, trench safety, road trenching and resurfacing. Cost
is approximately 10% of the Construction Cost of Underground Conversion)
• Engineering (Design and/or Assessment) & Construction Management / Inspection fees (cost is
approximately 15% of the Construction Cost of Underground Conversion)
• 30% Contingency (planning level)
For more detail, see pages 62-66.
Costs variations are expected to occur as elements of the master plan transition from the planning
phase to the project phase. The variations are based on a number of factors such as market conditions,
fluctuations in construction costs related to labor, tools, materials and equipment, and the Contractor's
means and methods. The costs shown herein are based on the research performed by Penco during
the preparation of this master plan report. Penco does not guarantee that the preliminary opinion of
probable costs shown herein will not vary from construction bids or actual construction costs to perform
the undergrounding conversion.
Page 6
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CITY OF PALM DESERT
PALM DESERT
UTILITY UNDERGROUNDING MASTER PLAN
I. STREAMLINE ASSESSMENT DISTRICT FORMATION PROCESS -
UTILITY UNDERGROUNDING GUIDE
There are two basic approaches to forming Undergrounding Utility Assessment Districts. One is to prepare
complete plans and specifications and have construction bids in hand before forming the Assessment
District; the other is to form the Assessment District and then prepare plans and specification and then get
construction bids.
Both processes have pros and cons as described below:
Design: Before District Formation
Pro
• Advantage is costs are known before balloting and forming the District
Con
• Plans, specifications and bidding process must be paid for up front before forming the District
• After paying the up front costs, the District could fail to be formed
• It can take two years to have the plans and specifications prepared and construction bids received
and support for the District could change during this period
Design:After District Formation
Pro
• Once the petition is approved, the City can immediately order the Engineer's Report, go to ballot
and form the Assessment District
• Up front costs are significantly less and the time period to form the District is reduced to about 3-4
months
• It is known whether you have an Assessment District before preparing plans and specifications and
obtaining bids
Con
• Disadvantage is the bids could come in higher than the estimated cost in the Engineer's Report
causing a shortfall in assessment funds
For more detail, see pages 67-73.
J. METRIC FOR MEASURING THE CITY'S ANNUAL INVESTMENT AND PROGRESS FOR
COMMUNITY WIDE UNDERGROUNDING
For more detail, see pages 74-75.
Page 7
PENCOE-00 Client Success isNG
ur Success
PENCO Engineering, Inc.
255 Rincon Street, Suite 114
Corona, CA 92879
(951) 736-2040
www.pencoeng.com
Jeffrey M. Cooper, PE
Vice President
Penco Engineering
M: (949) 289-5414
jcooper@pencoeng.com