The URL can be used to link to this page

Home My WebLink AboutDrctn - Utility Undrgrnding PD �� /�- ��o/�. �__ .�.�.. C� t�� '�-��-��1? C� ��<s�� 2��t:r��c:;_n..�._�_____ ...__ CITY OF PALM DE - � � STAFF REPORT REQUEST: PROVIDE DIRECTION TO STAFF REGARDING UTILITY UNDERGROUNDING IN PALM D SUBMITTED BY: John M. Wohlmuth, City Manager M�3'IN6�14i"'��-�`�--�5-_`-�C)L.� ...,. ._ _ DATE: December 13, 2012 ��a��-��-,�/' ____, I ; ,�., ..i.�,..,,,4 a ,. _ . . .x.�::�..��;:� � � Recommendation :�.�.�-..�:�..,�L-Hd:r��..��.�.�:.«�-:�.aJ�, ��,' 1. Retain Palm DeserYs existing process for the creation of utility undergrounding assessment districts. 2. Allow neighborhoods to determine their own feasible and cost effective undergrounding utility district boundaries without regard to previous City- established districts. 3. Determine, in connection with AB1484, if bond proceeds can be used, in lieu of Redevelopment Agency funds, to allow the City to provide financial assistance to newly formed undergrounding utility districts to mitigate the public improvement and engineering costs of related undergrounding projects (based on priority of bond funded projects and California Department of Finance issued finding of completion discussed at the November 15, 2012 City Council Study Session). Back�round Palm Desert residents currently have access to an established, citizen-initiated, democratic process by which neighborhoods can pursue utility undergrounding through the formation of assessment districts. Following resident inquiries and at the request of Mayor Pro Tem Kroonen, staff has been investigating the feasibility of undergrounding the approximately 67 miles of remaining overhead utility lines in Palm Desert. The greatest obstacle to this significant undertaking is cost. Staff has calculated $234.5 million as a rough estimate of the potential cost to underground utilities throughout the community. This $3.5 million per mile cost is equal to an average of the estimated per mile costs of the proposed Palm Desert Country c:\users\mlacross\appdata\local\microsoft\windows\temporary internet files\content.outlook\Ojavxb1 n\utility undergrounding staff report 12-13-2012.doc Staff Report Utility Undergrounding in Palm Desert December 13, 2012 Page 2 of 4 Club Utility Undergrounding Assessment District project and estimates provided by Southern California Edison. Designated funding for utility undergrounding is extremely limited. Under California Public Utilities Commission Rule 20A, the City receives an annual allocation of funds collected from Edison ratepayers to support capital spending on undergrounding projects. In 2012, the City received $64,833 in Rule 20A funding bringing the available balance for Rule 20A undergrounding projects to $152,288. These funds are further limited by the fact that they must be spent on projects that provide a general benefit to all electric ratepayers in a service area and meet the following criteria: 1) heavy concentration of electric facilities; 2) heavy volume of pedestrian and vehicle traffic; 3) civic, recreation, and scenic areas; 4) arterial streets; and 5) major collector roads. The City has never unilaterally undergrounded utilities in any Palm Desert residential neighborhood. Every undergrounding project in Palm Desert has involved significant financial participation from the property owners in that area, either through the price they paid the developer for their home or through assessment district financing. Through its former Redevelopment Agency, the City provided financial assistance to neighborhoods that demonstrated a strong interest in undergrounding their utilities. The criteria for City participation in residential undergrounding has been that the project was initiated at the request and expense of the area's residents. Unfortunately, with the elimination of redevelopment, the financial tool that the City used to support such efforts is gone. The most recent utility undergrounding project took place at 125 homes in the Palm Desert Highlands area in south Palm Desert at the request of and with significant financial support from residents there. More recently, the City solicited community input from the Palm Desert Country Club neighborhood to see if residents there would be interested in taking the steps necessary to initiate undergrounding with assistance from Redevelopment Agency funds. The response from area residents was mixed and largely unenthusiastic. Any plans to move forward with an undergrounding project in the Palm Desert Country Club area were put on hold when the State eliminated redevelopment. Despite the successful formation of undergrounding utility districts under the City's existing process, some local proponents of utility undergrounding have criticized the current system as impractical and too costly. Rancho Mirage and San Diego have been cited as examples of communities to be emulated. c:lusersbnlacross�appdataVocalUnicrosoft\windows\temporary internet files\content.ouUookWjavxbin\utility undergrounding staff report 12-13-2012.doc Staff Report Utility Undergrounding in Palm Desert December 13, 2012 Page 3 of 4 The City of Rancho Mirage utilized Redevelopment Agency funds to pay for its community-wide undergrounding project at a cost of more than $25 million. That project was approved in 2003 and completed this year. Unfortunately, Redevelopment Agency funding is no longer available in Palm Desert. In San Diego, where the City Council approved a community-wide undergrounding program in 2001, all utility customers, including customers whose utilities are already underground, pay monthly surcharges on their electric and phone bills to fund the cost of putting utility lines underground. San Diego officials estimate that, at the current rate of progress, the undergrounding project will not be completed until 2066. Some residents have cited safety and reliability concerns with overhead utility lines. However, Southern California Edison, which is responsible for the maintenance and safety of its electrical utility infrastructure, has repeatedly and unequivocally stated that overheard utility lines are as safe and as reliable as underground lines. According to Southern California Edison representatives, overhead lines enjoy some advantages over underground infrastructure including the ability to locate problems and make repairs more quickly on overhead lines resulting in shorter power outages. There are valid issues with above ground utilities besides aesthetic concerns. As homeowners add more televisions, computers, and other connected devices, additional electric, telephone, and cable infrastructure ends up on above ground poles that, in some cases, were not designed for it. Southern California Edison representatives have acknowledged this issue. They say the utility is engaged in an active program to replace aging poles with new, larger poles capable of handling the greater load. The pole replacement program has raised concerns with some undergrounding proponents, who argue that the money that Southern California Edison is spending to install new power poles could be better spent undergrounding utilities. Edison representatives have responded that the costs of utility pole replacement are much less than the costs associated with undergrounding and that they must address safety issues with their infrastructure immediately as they become apparent. Proposed actions by local undergrounding advocates have included a suggestion that the City pass an ordinance mandating that "all utilities in Palm Desert will be underground." Details of how this ordinance would be enforced could be resolved later, they say, but the ordinance would be a beneficial first step and signal that the City views undergrounding as a priority. Others have suggested that the City place a combined special tax on utility customers and community-wide property assessment before voters, with revenue from both sources going to pay for undergrounding. Staff understands and sympathizes with the desire to eliminate unsightly above ground utility lines from the community. However, given the assurances from Southern c:\users4nlacrosslappdataVocal\microsoft\windows\temporary internet files\content.outlook�Ojavxbin\utility undergrounding staff report 12-13-2012.doc Staff Report Utility Undergrounding in Palm Desert December 13, 2012 Page4of4 California Edison regarding the safety and reliability of overhead utility lines, the City must evaluate whether it makes sense to spend public money that currently pays for police, fire, and other vital services benefitting the entire community to underground Southern California Edison-owned utilities to provide, what would appear to be, a primarily aesthetic improvement to individual neighborhoods. The City has limited funds and issues of fairness are at stake, especially as many homeowners in Palm Desert have already paid for the cost of undergrounding their utilities through assessments or through the purchase price of their home. In addition, legal issues are raised when public money is spent to improve private praperty. Staff believes the City's existing utility undergrounding assessment district system can succeed, especially if neighborhoods are given the freedom to establish the most feasible and cost efficient district boundaries rather than being forced to work within the confines of districts defined by the City 12 years ago as part of a pilot undergrounding program. Fiscal Analvsis Palm Desert contains approximately 67 miles of above ground utility lines that would cost approximately $234.5 million, $3.5 million per mile, to underground. If the City were to match the portion of the cost that its former Redevelopment Agency has covered, or offered to cover, for past undergrounding projects, it would pay roughly 54 percent of the total cost of undergrounding the community's remaining above ground utilities, approximately $126.6 million. Residents in areas to be undergrounded would be responsible for the remaining $107.9 million share of the total. It is estimated that engineering alone for a community-wide undergrounding project in Palm Desert would cost roughly $31.7 million. Barring the use of reserves, the City does not have access to this $31.7 million or the additional tens of millions of dollars that would be required to pay for a community-wide undergrounding project. There is a possibility that bond proceeds could be used, in lieu of Redevelopment Agency funds, to allow the City to provide some financial assistance to newly formed undergrounding utility districts to mitigate the public improvement and engineering costs of related undergrounding projects. Submitted By: ( ' J M. Wohlmuth, City Manager c:\userstrnlacrosslappdataVocal\microsoft\windows\temporary internet fileslcontent.outlookl0javxb1n\utility undergrounding staff repoet 12-13-2012.doc