Rancho Palos Verdes City Council
   

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PUBLIC WORKS

DATE: DECEMBER 16, 2003

SUBJECT: A RESIDENTIAL UNDERGROUNDING PROGRAM

RECOMMENDATIONS

  1. Request staff to prepare guidelines and enabling resolutions to establish a residential undergrounding program with the following characteristics:
  2. Seed money is provided by the City for engineering services for the design, and the preparation of an assessment report

    A refundable fee of $100 from each property must accompany a signature on the initial petition of interest

    An approval percentage of 85% of property owners must be met at each step of the petition process

  3. Request staff to include $20,000 in the adopted budget for neighborhood undergrounding activities
  4. Approve the form of the attached petition of initial interest to allow neighborhoods interested in the program to move forward.

BACKGROUND

Few improvements enhance the appearance of a neighborhood as much as removing overhead wires and utility poles. The General Plan recognizes this when it states that "overhead wires are an unsightly vestige of a necessary infrastructure component, and cause considerable disturbance to views". Current city standards require utility lines to be constructed underground. Many of our older neighborhoods still have overhead utility lines.

The process of undercounting utilities is costly. Staff estimates an average cost of approximately $20,000 - $30,000 per property. If a neighborhood votes to underground their utilities lines all property owners within the district must pay an assessment. The assessment, for what essentially is a neighborhood beautification expense, could be a hardship for some property owners.

It was with this background that the City Council began to discuss a Residential Undergrounding Program in mid 2001. It was brought to the City Council after several neighborhoods came to the City asking for assistance. By the end of 2001 the City Council gave its preliminary approval to program guidelines with the following characteristics:

  • The city will budget $20,000 for neighborhood undergrounding activities
  • The city will assist neighborhoods by providing seed monies for engineering services to design the improvements, and to prepare an engineer’s assessment report. The seed monies would be paid back if the district was formed.
  • A refundable payment of $100 from each property owner must accompany a signature on the initial petition in support of district formation.
  • Each of the three petitions in the process must be signed by 65% of property owners for district formation to proceed.

The approved program included a state program for the deferral of property assessments. A copy of the state deferral program is attached. The City Council requested staff to recommend a city deferral program that would be less restrictive than the state program.

With this direction staff from both the Public Works and the Finance departments worked with the Financial Advisory Committee, to investigate possible deferral programs. After much effort, however, it was determined that a meaningful city program would be too costly. On October 7, 2003 the City Council directed staff to proceed with an undergrounding program that did not include a city deferral program.

Because of the amount of time that has elapsed since an underground program was discussed, the absence of a city deferral program, and a new composition of the City Council, staff thought it would be productive to revisit some of the fundamental issues of an undergrounding program. Once the City Council gives staff direction on several policy items, a final program and enabling resolutions can be prepared and brought back to the City Council for approval.

DISCUSSION

The City Council has expressed a willingness to support neighborhood undergrounding projects, however, it has limited funds to do so. The city does receive annual funds for undergrounding from the ratepayers of Southern California Edison. These funds, generally referred to as Rule 20a funds, are pledged for the next several years to a project completed several years ago along Hawthorne Boulevard. Moreover the City of Rancho Palos Verdes, like many communities, has historically used its Rule 20a funds for projects along arterial roadways, not neighborhood projects.

Because of the high cost of undergrounding neighborhoods wishing to establish an underground program typically finance construction with an assessment district. The Municipal Improvement Act of 1913 (California Streets and Highways Code Section 10000) is the funding mechanism available to cites. The proposed guidelines for the Undergrounding Program include the steps necessary to establish a post Prop 218 assessment district.

Prior to the formation of an assessment district certain technical and financial studies, including the preparation of engineered plans, and a detailed engineer’s report, must be completed. Under the proposed guidelines these up front activities will be paid by the City as seed monies to the neighborhood. These monies would be repaid once the district is formed.

The various steps called out in the guidelines is attached. A draft of the full guidelines is also attached.

To complete the preparation of the guidelines, staff requests input from the City Council on the following policy matters:

Item One: What level of support should a project have before the City Council will consider providing seed money or imposing assessments?

This is perhaps the most important aspect of an undergrounding program. Typically not all residents are in favor of undergrounding. Therefore if the assessment district is formed some property owners will have an assessment placed on their property against their will. This could pose an economic hardship. The most successful undergrounding districts are those that receive a high degree of neighborhood support.

Staff recommends that a project must have the support of 85% of impacted property owners at each step of the petition process. This threshold is higher than the guidelines in other cities that have undergrounding programs.

Staff recommends this high level of support for the following reasons:

  1. Given the high cost of undergrounding, and the fact that undergrounding utilities it is a neighborhood beautification program and not a health or safety issue, the number of property owners who have assessments imposed upon them against their wishes should be minimized.
  2. The state deferral program is very restrictive. To be eligible a property owner must:
  • Be over 62 years of age, or blind, or disabled, and
  • Own and occupy their home, and
  • Have a total household income less than $24,000, and
  • Have a 20% equity stake in their home
  1. It is likely that the support for a project will diminish as time passes. This is because in the early stages costs are unknown, and property owners who sign a petition are not making a significant financial commitment.
  2. It is unproductive for property owners or the City to be involved in a project that does not have a high probability of being completed.
  3. The seed money advanced by the City will only be paid back if the district is successful.

It is noted that if a project does receive the 85% support from the community the engineering will not automatically be funded. The item will be brought to the City Council for consideration of funding.

The cost for design engineering will vary with project size and project details, however, staff estimates the cost for design engineering at $40,000 and assessment district engineering at $15,000 per district.

Item Two: How much money should be budgeted for residential undergrounding?

Staff recommends that $ 20,000 should be budgeted for undergrounding activities. This funding provides for engineering services to assist property owners on the initial stages of the undergrounding process. Costs for design engineering and assessment district engineering will be funded on a project-by-project basis at the time the project is brought before the City Council.

Item Three: Should property owners signing the first petition be required to submit a refundable payment of $100?

The proposed procedures call for a fee to be paid by any property owner signing the initial petition of support. The purpose of the fee is to partially cover city administrative costs, associated with formation of the district, and to discourage property owners not serious about undergrounding to signing a petition. The will be kept in a segregated City account to be used exclusively for district formation costs. If the City Council does not certify a petition, fees would be returned.

Item Four: Is the format of the attached petition acceptable?

Staff has been contacted by two neighborhoods that are interested in moving forward with the undergrounding process at this time. Representatives of the neighborhoods have requested that they be provided with petitions, approved by the City Council, so that they may be circulated at this time.

 

What have other cities done?

 

 

Hermosa Beach

Manhattan Beach

Laguna Beach

Newport Beach

How many projects have been completed?

2

0

10

20+

Does the City advance funding for design engineering?

 

Yes

 

Yes

 

Yes

 

Yes

Does the City advance funding for assessment district engineering?

 

Yes

 

Yes

 

Yes

 

Yes

What percent of the neighborhood must sign the petition before the City advances funding?

 

 

Unknown

 

60%

 

60%

 

65%

CONCLUSION

Adopting the staff recommendation gives staff the necessary direction to move forward and finalize guidelines for the formation of undergrounding districts. The guidelines will be brought back to the City Council for final approval.

Submitted by,

 

 

Dean Allison,

Director of Public Works

 

Reviewed by,

 

Les Evans, City Manager

Attachments:

Steps in the proposed guidelines

State deferral program

Minutes from past City Council Meetings on undergrounding

Draft of proposed guidelines

Handouts from a power point presentation

Proposed petition of initial support

 

W:\Dean\Data\Undergrounding\December16Report.doc