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HomeMy WebLinkAboutDirection - Utility Undrgrnding in Palm Desert ProcessCITY OF PALM DESERT STAFF REPORT REQUEST: PROVIDE DIRECTION TO STAFF REGARDING UTILITY UNDERGROUNDING IN PALM DESERT SUBMITTED BY: John M. Wohlmuth, City Manager DATE: August 22, 2013 Recommendation 1. Retain Palm Desert's existing process for the creation of utility undergrounding assessment districts with the following modifications; 2. Allow neighborhoods to determine their own feasible and cost effective district boundaries without regard to previous City -established districts; 3. Direct staff to include an additional step to the City's established district formation process that provides Southern California Edison with an opportunity to evaluate the technical feasibility and economic efficiency of a proposed district prior to a formal engineering study. Background City Council consideration of this item has been continued several times beginning in December 2012, and again in April and June of 2013. Reasons for the continuances included a desire for more time to determine if redevelopment bond proceeds might be available to assist newly utility undergrounding assessment districts with the cost of engineering and, potentially, with the cost of the public portion of improvements. Staff has since learned that these bond proceeds will not be available, at the earliest, until January 2014 following the state Department of Finance's approval of the City's next Recognized Obligation Payment Schedule (ROPS). In the interim, staff has been working to provide information and assistance to residents Merilee Colton and Lesley Miller, who have gone door-to-door collecting signatures from other homeowners in their south Palm Desert neighborhood on a petition in support of a utility undergrounding assessment district there. The petition was successful, with signatures collected from representatives of 65 of the 88 parcels in the proposed district. Of these signatures, 62 were certified by City staff as g:\rda\david hermann\word files\pio\undergrounding\utility undergrounding staff report update 08-22-2013.doc Staff Report Utility Undergrounding in Palm Desert August 22, 2013 Page 2 of 3 matching the property owner names on file with the Riverside County Assessor. This number meets the 70 percent (70%) threshold required for the process to move forward under the City's current policy. The City has received one communication in opposition to the proposed district. The most recent City Council continuance was requested so that staff could report to the Council on the outcome of a July 11 meeting with representatives of Southern California Edison and the aforementioned residents. The meeting was scheduled to allow Southern California Edison the opportunity to review the proposed utility undergrounding district to ensure that it was feasible. At the meeting, Edison representatives expressed no objections to the proposed district and confirmed that it appears to be feasible. Edison's preliminary review did identify some adjustments that could be made to make the district more coherent and cost effective, changes that residents said they planned to study. Staff believes the City's existing, democratic, citizen initiated process for forming utility undergrounding assessment districts can work well, 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. The significant progress that residents have made demonstrates the viability of the City's existing process for utility undergrounding as well as the advantages of allowing residents the flexibility to propose their own district boundaries rather than relying on district boundaries identified by the City. The inclusion of an additional step — a preliminary feasibility review by Southern California Edison — has also been demonstrated to be helpful to the process. There has been some confusion about City Council action on this item and its impact on the proposed utility undergrounding district in south Palm Desert. To be clear, approval of staff's recommendation would not approve or deny the proposed undergrounding district, which will come before the Council at a later date. Approval of this action would, however, represent an endorsement of the process that Ms. Colton and Ms. Miller have followed in an attempt to create a new utility undergrounding district in south Palm Desert, so far with great success. Fiscal Analysis While action on this item will have no direct fiscal impact on the City, endorsement of the existing undergrounding policy does preserve the possibility of municipal expenditures on utility undergrounding going forward. Through its former Redevelopment Agency, the City has provided financial assistance to neighborhoods that demonstrated a strong interest in utility undergrounding. g \rda\david hermann\word files\pio\undergrounding\utility undergrounding staff report update 08-22-2013 doc Staff Report Utility Undergrounding in Palm Desert August 22, 2013 Page 3 of 3 The criteria for City participation in residential undergrounding has been that it be initiated at the request and expense of area residents. Unfortunately, the elimination of redevelopment removed the financial tool that the City used to support such efforts. 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. 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. 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 to the additional tens of millions of dollars that would be required to pay the public portion of community -wide undergrounding. 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 property. There is a good possibility that redevelopment bond proceeds could be used, in lieu of Redevelopment Agency funds, to allow the City to provide financial assistance to resident initiated utility undergrounding districts to mitigate the engineering and public improvement costs of related undergrounding projects. The rules governing the dissolution of redevelopment require any expenditure of redevelopment bond proceeds to be listed on a Successor Agency's Recognized Obligation Payment Schedule (ROPS). The Palm Desert Successor Agency's next ROPS is scheduled to be submitted to the State Department of Finance in October of this year. The earliest that funds from these bonds would be available would be January 2014 following approval of the ROPS by the California Department of Finance. No money exists in the current budget for utility undergrounding. If the Council declines to wait for redevelopment bond proceeds to become available, it must appropriate money from General Fund reserves to pay for engineering and other utility undergrounding expenses related to the proposed undergrounding assessment district or other proposed districts that might come forward. CITY COUNCIL APPROVED , DENTED RECEIVED , OTHER MEET G D OeS:t AYES %► I/ 4 7- NOES: A a?' ABSENT: ABSTAIN: VERIFIED BY: Original on File with Citklerk's Office g:\rda\david hermann\word files\pio\undergrounding\utility undergrounding staff report update 08-22-2013 doc Submitted By: hn M. Wohlmuth, City Manager