STAFF REPORT
Meeting Date:
October 28, 2025
BUSINESS
24 SUBJECT: CITY CONTRIBUTION, RESOLUTION OF INTENTION AND RESOLUTION
PRELIMINARILY APPROVING THE ENGINEER'S REPORT FOR PROPOSED UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-3 (FAIRVIEW/LA BREA)
RECOMMENDATION: It is recommended that the City Council:
1. Adopt the Resolution titled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LAGUNA BEACH, CALIFORNIA, DECLARING ITS INTENTION TO ORDER THE
CONSTRUCTION OF CERTAIN IMPROVEMENTS AND TO FORM UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-3 (FAIRVIEW/LA BREA) AND FINDING THE SAME EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT”;
2. Adopt the Resolution titled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LAGUNA BEACH, CALIFORNIA, PRELIMINARILY ADOPTING, CONFIRMING, AND APPROVING THE ENGINEER’S REPORT AND APPOINTING THE TIME AND PLACE FOR
HEARING PROTESTS TO IMPROVEMENTS IN PROPOSED UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-3 (FAIRVIEW/LA BREA) AND FINDING THE SAME EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT”;
3. Appoint the January 13, 2026, City Council Meeting for a public hearing regarding proposed Underground Utility Assessment District 2021-3;
4. Acknowledge the intent to contribute $474,580 for the General Benefit cost, if the district is approved, and prior to bonds being sold;
5. Consider the request from the Fairview/La Brea proponents for the additional City Contribution toward a public safety benefit of undergrounding the neighborhood located near open space;
6. Direct staff to return with a funding strategy if an additional contribution is approved above the General Benefit; and
7. Determine that the action is exempt from the California Environmental Quality Act pursuant to CEQA guidelines sections 15301(b), 15302(c) & (d), and 15303(d); and further that this action implements the December 4, 2024 Planning Commission action, wherein the City previously conducted environmental review of the proposed undergrounding project and determined that the project was exempt and there are no changes to the project, no changed circumstances, and no new information that could not previously have been known, that would trigger the need for subsequent CEQA review.
SUMMARY OF THE MATTER
CITY CONTRIBUTION, RESOLUTION OF INTENTION AND RESOLUTION
PRELIMINARILY APPROVING THE ENGINEER'S REPORT FOR PROPOSED UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-3 (FAIRVIEW/LA BREA) October 28, 2025
This report recommends that the City Council adopt two resolutions to initiate the formation of Underground Utility Assessment District 2021-3 (Fairview/La Brea), approve the Preliminary Engineer’s Report prepared by NV5, consider the request from district proponents for an additional City Contribution to the project, and schedule a public hearing for January 13, 2026. The estimated total assessment is approximately $4.8 million across 90 parcels, with individual assessments generally ranging from $22,000 to $75,000.
The project supports the City’s goals of enhancing public safety and infrastructure reliability by undergrounding overhead utilities. It is recommended that the City Council acknowledge the intent to contribute $474,580, or 10% of the project cost, as a General Benefit to the public at-large. The Fairview/La Brea proponents have made a special request to the City, requesting additional financial support to lessen the financial burden on property owners if the project is voted into formation. This report discusses the City’s funding obligation, analyzes the request of the district proponents, and seeks City Council’s direction regarding the funding request.
DISCUSSION
Project Costs
Petitions requesting the formation of an underground utility assessment district at Fairview Street, La Brea Street, and surrounding streets were submitted to the City Council on November 16, 2021. The City Council approved the Preliminary Boundary map, directed staff to forward the map to the utility companies to begin design work, and authorized staff to solicit proposals for assessment engineering services.
The utility designs were submitted for Design Review and were approved by the Planning Commission on December 4, 2024. Following the Planning Commission approval, construction bids were solicited in accordance with California Public Contract Code requirements. A Preliminary Engineer’s Report has been prepared by NV5 and is ready for City Council consideration. Staff recommends that City Council adopt the resolution of intent to form the district, and the resolution preliminarily adopting the Engineer’s Report to commence the process for a public hearing, and a final ballot by the affected property owners (Attachments 2 and 3), acknowledge the City’s intent to contribute funding for the General Benefit cost, if the district is approved, and consider the request from district proponents for an additional City Contribution toward a public safety benefit.
Preliminary Engineer’s Report
The Preliminary Engineer’s Report (Attachment 4) describes the methodology for determining the proportionate special benefit for each property within the proposed district, the general benefit to be funded by the City, and the resulting allocation of project costs.
Special Benefits
To equitably assess benefits, the Assessment Engineer related each property’s proportional special benefits to the special benefits of all other properties within the district. Apportionments established for districts formed under the “Municipal Improvement Act of 1913” and Article XIIID of the State Constitution, commonly utilize a weighted apportionment method using a defined unit of measurement to calculate a basic unit of assessment. Collectively, the three benefit categories reflect the proportional special benefit each property within the district will receive. The total cost of the district will be apportioned using the
CITY CONTRIBUTION, RESOLUTION OF INTENTION AND RESOLUTION
PRELIMINARILY APPROVING THE ENGINEER'S REPORT FOR PROPOSED UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-3 (FAIRVIEW/LA BREA) October 28, 2025
benefit categories below with assigned weighted percentages to each benefit category, based upon the engineer’s field review of the parcels within the district and public testimony. The weighted apportionment of the benefit categories for this proposed district are as follows:
CITY CONTRIBUTION, RESOLUTION OF INTENTION AND RESOLUTION
PRELIMINARILY APPROVING THE ENGINEER'S REPORT FOR PROPOSED UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-3 (FAIRVIEW/LA BREA) October 28, 2025
Benefit Category Percentage
Safety Benefit 33%
Aesthetics Benefit 33%
Reliability Benefit 33%
Safety Benefit
Undergrounding the overhead facilities eliminates the threat to structures or property, including any occupants within, from being damaged or harmed by downed utility lines and poles. The removal of overhead facilities would also mitigate the risks of blocked driveways and access to properties. The removal of the fixed obstructions (existing utility poles, guy wires, and related facilities), and the mitigation of the potential delay by emergency responders, who will neither cross a downed utility line, nor set up equipment if an overhead power line is in the way, has been determined to be a General Benefit.
All parcels within the district receive some level of a safety benefit from the undergrounding of poles and wires. Parcels with utility poles and overhead wires remaining adjacent to their properties will receive reduced safety benefits as detailed in the assessment report.
Aesthetics Benefit
Removing the overhead utilities will improve the overall neighborhood aesthetics for all properties within the district. The special benefit results from improved aesthetics of the streetscape and airspace directly surrounding each property. Each parcel within the district will receive an aesthetic benefit as determined by total parcel area. Parcels with utility poles and overhead wires remaining adjacent to their properties and parcels directly facing Coast Highway, which will be undergrounded by a separate Rule 20A utility undergrounding project, will receive reduced aesthetic benefits as detailed in the assessment report.
Reliability Benefit
Utility undergrounding provides enhanced reliability to parcels due to having new wires and equipment underground which reduces the threat of service interruptions or outages if poles and wires are downed. All properties that connect to the new underground system receive a reliability benefit. Parcels which were already connected to an existing underground system and parcels that will remain connected to the existing overhead system will not receive reliability benefits.
General Benefit
The General Benefit component is defined as a benefit to the public at-large because of improvements made by the underground utility district. Removing utility poles and overhead wires provides an indirect benefit to parcels located in proximity to the proposed district, and to the general public visiting or traversing the neighborhood. The Assessment District Formation Policy, recently revised and adopted by the City Council in July 2025, establishes this General Benefit to the community as 10% of the total construction and incidental district cost. Since this is a general benefit to the public that cannot be assessed to the parcels within the district; it is proposed that the City contribute $474,580 if the district is approved.
Additional Contribution
The Fairview/La Brea Proponents have requested additional financial support from the City to lessen the
CITY CONTRIBUTION, RESOLUTION OF INTENTION AND RESOLUTION
PRELIMINARILY APPROVING THE ENGINEER'S REPORT FOR PROPOSED UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-3 (FAIRVIEW/LA BREA) October 28, 2025
financial burden on property owners if the project is voted into formation (Attachment 5). They propose that the additional contribution is warranted because the proposed district benefits the City for several reasons, notably the neighborhood is not located far from heavily vegetated open space hillsides to the east which are prone to wildfires, the neighborhood has many narrow alleys with utility poles and overhead wires located extremely close to structures, and constructing this project will allow for one continuous utility undergrounded neighborhood from North Coast Highway up to the open space hillsides.
Staff seeks direction from the City Council regarding whether it would like to contribute additional nonassessment revenues to this district, and if so, to what amount (e.g., 10%). If City Council approves the request for an additional contribution, the Engineer’s Report will be amended to reflect the financial contribution thereby reducing individual property assessments. The lower property tax assessments will be reflected onto the Assessment Ballots to be mailed out to property owners.
Assessments and Costs
There are 90 assessable parcels in the proposed Fairview/La Brea assessment district. Proposed individual assessments generally range from approximately $22,000 to $75,000 with an average assessment of $53,000. The Hotel Joaquin parcel, which is the largest parcel in the district, is an outlier with an estimated assessment amount of $106,194 due to the unusually large size of the parcel. For this range of assessments, the annual assessments are projected to range from $1,727 to $5,886, assuming a maximum interest rate of 6% for 25 years. If bonds sell at a lower interest rate, the annual payments would be less.
The amount has not been included for the Income Tax Component of Contribution (ITCC). Since the project will be funded by tax exempt bonds, it is assumed that this tax will not be imposed for the improvements being funded. If the tax is imposed, a supplemental assessment would be needed. The ITCC tax could be up to 30% of the construction cost.
In addition to the assessments, each property owner who currently receives overhead utility service will be required to hire a contractor to underground the overhead services on their private property. Underground connection costs can vary from approximately $5,000 to $15,000 depending upon the terrain, landscaping, and hardscaping on the property. This amount is in addition to the assessment amounts.
Legal Process
NV5 prepared the attached Preliminary Engineer’s Report, and the City Attorney has reviewed the attached resolutions. All costs shown in the report represent estimated costs for engineering, utility charges, construction, bond financing, and other incidental expenses. To proceed with the formation proceedings outlined in the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915, the City Council is required to adopt the following resolutions:
• A Resolution of the City Council declaring its intention to order the construction of certain improvements, and to form Underground Utility Assessment District 2021-3 (Fairview/La Brea). • A Resolution of the City Council preliminarily adopting, confirming, and approving the Preliminary Engineer’s Report, and appointing the time and place for a public hearing and for hearing protests to improvements within the proposed Underground Utility Assessment District 2021-3 (Fairview/La Brea).
CITY CONTRIBUTION, RESOLUTION OF INTENTION AND RESOLUTION
PRELIMINARILY APPROVING THE ENGINEER'S REPORT FOR PROPOSED UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-3 (FAIRVIEW/LA BREA) October 28, 2025
Schedule
If the City Council adopts the recommendations, the Assessment Engineer will mail the Notice of Assessment accompanied by an Assessment Ballot in early November 2025 to each affected property owner informing them of their preliminary assessment amounts and the time and place for a public hearing to tally the votes. The ballot also indicates how, when, and to whom the ballots should be returned. The public hearing and final balloting are recommended at the January 13, 2026, City Council meeting.
FINANCIAL ANALYSIS
The recommended actions have no financial impact at this time. An appropriation of $474,580 (General Benefit) plus the amount for an additional City Contribution, if directed by City Council, will be required if the district is approved.
ENVIRONMENTAL ANALYSIS
The proposed undergrounding project is exempt from provisions of the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines Section 15301(b), which authorizes an exemption for “existing facilities providing electric power with no expansion of use”; Sections 15302(c) and (d) for the “replacement or reconstruction of existing utility systems involving negligible or no expansion of capacity, and conversion of overhead electric utility distribution system facilities to underground”; and Section 15303(d) involving “new construction of small utility facilities or structures.” On December 4, 2024, the Planning Commission approved Design Review 24-2286 finding the project categorically exempt from CEQA.
ATTACHMENTS
1. Boundary Map (Pg. 6)
2. Resolution of Intent (Pgs. 7-13)
3. Resolution Adopting Engineer’s Report (Pgs. 14-17)
4. Preliminary Engineer’s Report (Pgs. 18-47)
5. Fairview/La Brea Proponents Letter (Pg. 48)
Submitted By: Mark McAvoy Approved: .David A Kiff
Mark McAvoy, Director of Public
Works & Utilities
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Pierre Sawaya, Capital Program Manager Thomas Perez, City Engineer Patrick Donegan, Assistant City Attorney