ATTACHMENT 5
SAN CL Agenda Item 9B
EMEN Approvals:
AGENDA REPORT City Manager
Dept. Head
CALIFORNIA SAN CLEMENTE CITY COUNCIL MEETING Attorney
Meeting Date: May 2, 2017
Finance
Department: Public Works / Engineering
Prepared By: Tom Bonigut, Deputy Public Works Director B Subject: UPDATE ON UNDERGROUNDING OF OVERHEAD UTILITIES.
Fiscal Impact: None with this update.
Summary: This report is to provide the City Council with an update on undergrounding of overhead utilities and seek direction for further action.
Background: With the completion of the most recent overhead utility undergrounding project in the Los Molinos area, the City Council requested an update concerning undergrounding of remaining overhead utility lines within the City. The update also serves to support General Plan Implementation Measure #NR-8 to develop and implement a utilities undergrounding plan and Implementation Measure #PFSU-48 to update priorities for the undergrounding of overhead utility lines. Both of these measures are listed as a medium priority per the City Council's March 2017 update of the General Plan Strategic Implementation Plan. This report is organized into the following sections which are discussed below:
• Overhead utilities within San Clemente
• Utility undergrounding approaches
• Completed and planned projects
• Other potential projects
• Funding options
• Next steps
Discussion: Overhead Utilities within San Clemente
Generally, San Diego Gas & Electric (SDG&E) owns, operates and maintains most of the poles and overhead electricity lines within the City. There are two main types of overhead electric facilities, namely transmission and distribution lines. The transmission line system provides high voltage service to a large regional area, while the distribution line system receives power from the transmission system and makes electricity available at a usable voltage to smaller local service areas. The only transmission lines in the City are the set of lines that run generally along the Avenida La Pata corridor. Most of the local overhead distribution lines are concentrated on the west side of Interstate 5 from North Beach to about West Avenida Junipero Serra as shown in the map provided in Attachment 1. This coincides with the older parts of town, as relatively newer areas east of Interstate 5 were constructed with underground utility lines. Note that many of the overhead lines are located along the rear property lines of adjoining properties and not along the street. AT&T and Cox Cable also have overhead lines which typically take the same route as the SDG&E overhead Public Works Agenda Report
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distribution lines because they share and use the same support poles. It is these existing local overhead utility lines that are the focus of undergrounding efforts.
Utility Undergrounding Approaches
The California Public Utilities Commission (CPUC) has established a set of policies and procedures known as "Rule 20" to regulate the conversion of overhead electric equipment to underground facilities. Rule 20 determines the level of utility ratepayer funding for the following three undergrounding arrangements.
Rule 20A
This approach provides for City-directed projects which are paid for by SDG&E using fees collected from all ratepayers, not just those in the area to be undergrounded..
Since ratepayer funding is used, the projects must provide a benefit to the general public by satisfying one or more of the following criteria:
• The undergrounding will eliminate an unusually heavy concentration of overhead facilities;
• The undergrounding will restore wheelchair access that is limited or impeded by the facilities;
• The public street carries a heavy volume of pedestrian or vehicular traffic; • The public street is considered an arterial or major collector road; or • The public street is within or passing through a civic, public recreational, or area of unusual scenic interest to the general public:
For Rule 20A projects, SDG&E typically funds all undergrounding costs for the facilities within the public right-of-way (including removal of overhead facilities and installation of new underground facilities), with customers responsible for service trenches and meter panel modifications on private property. However, upon request by the City (via inclusion in the required Underground Utility District Resolution), SDG&E can use Rule 20A allocations to install customer service laterals up to 100 feet and modify customer meter panels.
Rule 20B
This approach facilitates undergrounding when Rule 20A doesn't apply. Generally, projects must include at least 600 feet of overhead line and be located on public streets. Property owners pay for the installation cost of the new underground system, while SDG&E pays for the removal of the overhead system. Ratepayer funds may be used to fund the engineering and design of the project, with the remaining cost provided by property owners.
Rule 20C
This approach enables property owners to privately fund 100% of the undergrounding costs if neither of the above situations applies.
Rule 20D
This approach is specific to the SDG&E service territory and facilitates undergrounding of overhead lines within designated fire threat zones. However, this approach is not applicable to San Clemente due to the limited fire threat areas and very low number of overhead utilities within those areas. 5-2-17 / 9B-2
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When an underground conversion of overhead electric facilities occurs, any overhead telephone lines are also converted following a similar set of CPUC tariff rules.
Conversion of any overhead cable facilities is required at no cost by the City's Municipal Code and cable franchise agreement.
Completed and Planned Undergrounding Projects
Some examples of completed Rule 20A undergrounding projects in the City include Avenida Pico (from Los Molinos to Frontera/Presidio), Avenida de la Estrella (Presidio to Palizada), and El Camino Real (Palizada to Canada). The Calle Valle/Los Molinos project was the most recent completed Rule 20A project. The Calle de Los Alamos neighborhood undergrounding was a Rule 20B project completed in the early 2000's and involved an assessment district to fund the project.
Currently there are two planned projects for which formal underground utility districts have been established. These include the following:
• Del Mar/Downtown Area Phase I Underground Utility District No. 02-01 (refer to Attachment 2 for boundary map)
• Del Mar/Downtown Area Phase Ii Underground Utility District No. 02-02 (refer to Attachment 3 for boundary map).
development.
The preliminary design has been completed for the Del Mar Phase I project. However, the project cost estimate greatly exceeds (by $2.8 million) the City's current Rule 20A allocation balance. Based on the current allocation balance and estimates of future annual allocations, sufficient Rule 20A allocations to construct the project would not be available until the Year 2030 (refer to Attachment 4 for summary of the City's Rule 20A allocation balance). No work has begun on the Del Mar Phase II project.
Other Potential Projects
There are several other potential undergrounding projects remaining from a priority list set by the City Council in 1992. These include the following in priority order:
1. Avenida Del Presidente from Avenida Valencia to Avenida Calafia;
2. Avenida Calafia from Avenida Presidente to Calafia State Beach entrance;
3. Alley west of El Camino Real from ECR from Trafalgar Lane to West El Portal (note that the alley segment from Avenida Mateo to Avenida Cabrillo is part of Del Mar Phase 1 district);
4. Los Molinos commercial area north of Pico (note the segment on Los Molinos north of Avenida Pico will occur by 2018 as noted above);
5.. Avenida De La Estrella from East Avenida Marquita to East El Portal; and
6. East El Portal from Avenida De La Estrella to North El Camino Real.
Staff has also received a request for residents along a portion of Avenida Florencia in the North Beach area for undergrounding, however that potential project does not appear to meet Rule 20A criteria and thus would need to be property owner funded under Rule 20B or 20C unless the City provided funding. 5-2-17 / 9B-3
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Funding Options
Conversion of overhead utilities to an underground system is costly, with total costs ranging from about $1,000 to $1,500 per linear foot of overhead line to be undergrounded. Potential options to fund undergrounding efforts are summarized below.
Rely on Rule 20A Allocations
Under the Rule 20A program described above, SDG&E allocates funds for undergrounding efforts according to a CPUC formula. Annual allocations can be accumulated and up to five years of future allocations can be borrowed against if needed. The City could continue to rely solely on Rule 20A allocations to fund public benefit undergrounding projects. However, the high cost of undergrounding coupled with relatively low allocations for the City mean that few projects will be accomplished by solely relying on Rule 20A. For example, the current cost estimate for the Del Mar Phase I undergrounding project is nearly $4 million (and could rise with subsequent updates). As previously noted about $2.8 million is needed to complete that project based on current estimates, and the project would not occur until 2030 at the earliest based on current and projected allocations (refer to Attachment 4). Unlike other areas, SDG&E does not allow municipalities to buy or sell excess Rule 20A allocations, So,. to advance the schedule of the Del Mar Phase I project or to accomplish more undergrounding than what Rule 20A provides, other sources of funding would be needed.
City General Funds
The City could allocate general (unrestricted) funds toward undergrounding projects.
However the potential for such funding would need to considered and weighed against other competing priorities.
Assessment District
An assessment district could be formed to accomplish undergrounding in a defined project area. The assessment on properties within the district then supports issuance of a bond to fund the undergrounding work. Significant effort is required to establish 'an assessment district and identify the "special" benefit that may be assessed in accordance with Proposition 218 requirements. An assessment district requires approval by a simple majority of property owners within the proposed district boundary. (where ballots are weighted by assessment amount).
Community Facilities District (CFD)
A CFD, also known as a Melio-Roos district, could be formed to accomplish undergrounding in a defined project area. The special tax placed on properties within the district then supports issuance of a bond to fund the undergrounding work. Since a CFD imposes a special tax and not an assessment, the special benefit requirement of Proposition 218 does not apply. However, the special tax requires approval by two- thirds of voters within the proposed district (but the approved tax is paid by property owners).
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Taxes
The City could pursue approval of tax measure that would secure issuance of bonds to fund undergrounding efforts. A general tax not solely dedicated for utility undergrounding could be approved by a simple majority of voters, while a tax specifically for undergrounding would be considered a "special tax" requiring two-third voter approval. There are several forms of tax measures including sales, parcel, property and utility user taxes.
City of San Diego Electric Bill Surcharge Approach
Per City Council direction, the City Attorney's office researched the City of San Diego's approach to undergrounding and its potential applicability to San Clemente. The City of San Diego's undergrounding program follows the Rule 20A approach to convert overhead lines along major city streets, but also addresses other areas not covered by Rule 20A using funds generated from an electricity bill surcharge authorized by the CPUC. Unfortunately, the likelihood to do this in San Clemente is very small because:
1) San Diego used its charter authority to accomplish this; 2) it requires approval of the CUC, which is rare; and 3) CPUC approval of the San Diego program was based in part on the fact that the program was created to settle litigation between the City of San Diego and AT&T.
San Diego finances its program through a franchise fee surcharge on SDG&E and a rate surcharge on AT&T. Unlike San Diego, San Clemente lacks charter authority to impose or negotiate a franchise fee surcharge. Whether even a city charter grants this authority was the subject of a major dispute between the City of San Diego and AT&T. That case was resolved, in part, with the program in question. Even then, the resolution required CPUC approval.
This rate surcharge is very uncommon, and the City Attorney's office is unaware of any similar program in the state. In fact, when adopting this surcharge, the CPUC noted that "extraordinary and unique events" led to its decision to approve the surcharge, and the CPUC then directed its staff to "advise any utilities seeking such measures, either surcharges or increases in franchise fees, that the statewide plan (i.e. Rule 20) controls utility undergrounding."
While San Clemente could request that the CPUC impose a surcharge on SDG&E, AT&T and other affected utility customers to fund undergrounding projects, the City should be aware that the CPUC has expressed a strong policy preference against it.
Given this, the most likely source of funding for non-Rule 20A projects is otherwise unrestricted City funds or the creation of an assessment district or CFD as noted above:
Next Steps
Since there is an established undergrounding district and a preliminary design for the Del Mar Phase | area, staff recommends developing more detail on funding options to help complete that project sooner than the Rule 20A-only approach would allow. If the City Council is interested in pursuing other possible downtown improvement projects such as alley upgrades, it would be best to complete utility undergrounding construction before starting other improvement projects in the Del Mar area. If the City 5-2-17 / 9B-5
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Council still desires to complete the Del Mar Phase I project, and possibly also the Phase Il project, staff would focus efforts on those projects. In this case there would not be a need at this time to identify additional potential undergrounding projects unless a funding mechanism is also identified. Establishing assessment or community facilities districts involves considerable time and effort that is beyond staff's current capacity to handle unless new work priorities are updated. Consultant services will also be required to establish districts or pursue tax measures.
Recommended
Action: STAFF RECOMMENDS THAT the City Council receive this update on overhead utility wire undergrounding, and provide direction to staff regarding future undergrounding plans.
Attachment: 1. Map of overhead electric distribution lines.
2. Del Mar Phase I undergrounding boundary map.
3. Del Mar Phase Il undergrounding boundary map.
4. SDG&E Rule 20A allocation summary.
Notification: George Gregory, Lyn Harris Hicks.
s:ladlengineering)secureladmin12017 admins 4-18-1714-18-17-2r.doax 5-2-17/9B-6
Attachment 1
Legend
Overhead Distribution Line
City of San Clemente
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ATTACHMENT 2
EL CAMINO REAL
AVE SERRA AVE MATEO AVE ALGODON
OLA VISTA
- UNDERGROUNDUTILIT
DISTRICT BOUNDARY AVE MONTEREY
AVÉ SANTA BARBARA
AVE MRAMAR AVE SERRA AVEIDE AVE GRANADAI AVE ROSA
AVE CABRILLO/
COMM.
CENTER
AVE SEVILLE
QUITA ENCINO LN/ AVE DEL MAR ACEBO LN
AVE
VA WEST -BAR
BOUNDARY MAP
Chet City of San Clemente
Del Mar / Downtown
910 Calle Hegodo, Sulte 10
Seo Cremeate, CA 8207. Underground Utility District
Tel (849) 301-8100
Pax (840) 361-8316
(Phase I)
FO
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ATTACHMENT #3
EL CAMINO REAL
AVE SERRA AVE CABRILLO AVE ROSA AVE MATEO
vo,.
AVE DEL MAR AVE GRANADA
ViSTA
LOMA
UNDERGROUND U
AVE SANTA BARBARA
AVE MIRAMAR AVE SERRA AVÉ DEL
AVE CABRILLO
COMM.
CENTER
AVE SEVILLE
ITA®
ENDINO CEBOLN
PALOMA
BOUNDARY MAP
City of San Clemente
Del Mar / Downtown
910 Calle Negocdo, Suito 100
Sen Chessente, CA 9267.
Underground Utility District
Tel (949) 361-6100
Ix: (849) 361-8316
CAL (Phase lI)
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ATTACHMENT #4
City of San Clemente
Rule 20A Allocation and Balance Summary
Rule 20A
Allocation Balance
Current
2017 allocation balance $1,208,967
Del Mar Phase 1 estimate ($3,980,829)
Current balance ($2,771,862)
Projected
2017: Annual allocation (+154k) ($2,617,862)
2018: Annual allocation (+154k) ($2,463,862).
2019: Annual allocation (+154k) ($2,309,862)
2020: Annual allocation (+154k) ($2,155,862)
2021: Annual allocation (+154k) ($2,001,862)
2022: Annual allocation (+154k) ($1,847,862)
2023: Annual allocation (+154k) ($1,693,862)
2024: Annual allocation (+154k) ($1,539,862)
2025: Annual allocation (+154k) ($1,385,862)
2026: Annual allocation (+154k) ($1,231,862)
2027: Annual allocation (+154k) ($1,077,862)
2028: Annual allocation (+154k) ($923,862)
2029: Annual allocation (+154k) ($769,862)
2030: Five-ycar allocation advance (+770,000k) $138
Notes:
1. Project costs are estimates, and actual project costs will be deducted from the allocation balance when cach project is completed.
2. Projected annual allocations are estimates based on the 2017 allocation, and may vary.
3. Allocations do not represent actual funding, but instead are a planning tool for the City. The allocations represent a qualified right to direct/assign a portion of SDGE's anticipated capital budget to qualified Rule 20A projects. Per the CPUC, half of the allocation is based on the ratio of the City's overhead meters to total system overhead meters, and half based on the City's total meters to total system meters. 5-2-17 / 98-10