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HomeMy WebLinkAbout1997-03-17 City Council (18)City of Polo Alto C ty Manager’s Report 6 TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: UTILITIES AGENDA DATE: SUBJECT: MARCH 17, 1997 CMR:170:97 .Adoption of Ordinance Establishing Underground Utility District No. 37 - Embarcadero/Middlefield Roads REQUEST This report provides additional information requested by the City Council at their January 13, 1997 meeting and requests Council to adopt an Ordinance Establishing Underground Utility District No. 37 in the area shown on the attached district boundary map. RECOMMENDATIONS Staff recommends that Council: I)Adopt the attached Ordinance to create Underground Utility District No. 37 and amend Section 12.16.02, of Chapter 12.16 of Title 12, of the Palo Alto Municipal Code. POLICY IMPLICATIONS This project does not represent any change to existing policies. EXECUTIVE SUMMARY On January 13, 1997, Council requested that staff provide additional information on the City’s Overhead to Underground Conversion Program and on Underground Utility District No. 37, before making a decision on whether to create the new underground district and to amend Section 12.16.02 of Chapter 12.16 of Title 12 of the Palo Alto Municipal Code. Per Council direction, this report addresses the following issues from the January 13, 1997 council meeting: [] [] [] [] [] History and reasons for establishing the overhead to underground conversion program. Methodology of City generated service conversion estimates. Comparison of service conversion estimates between Underground Utility District No. 37 and previous underground districts. Comparison of City generated vs. Contractor generated service conversion estimates. Loan Options CMR:170:97 Page 1 of 6 []Cable TVPedestals []Results of a second survey ELECTRIC UNDERGROUND PROGRAM In the early 1960’s undergrounding began receiving widespread acceptance due to new c~ble and equipment technology that reduced the cost of installing underground facilities. During this time period, the public also became more aware of the issue of power line aesthetics and began demanding that overhead lines be placed underground. In response to these changes, the City Council incorporated Chapter 12.16 "Underground Facilities" into the Municipal Code. This code states that "The city council finds and determines that the public interest requires that all facilities and wires used in supplying electric, communication or similar associated service to be constructed in the City of Palo Alto after July 1, 1965, shall be placed underground in order to promote and preserve the health, safety and general welfare of the public and to assure the orderly development of the City of Palo Alto." This chapter also establishes Underground Utility Districts where overhead facilities are to be converted to underground and the overhead facilities removed within a specified period of time. ¯In addition to Chapter 12.16 of the Municipal Code, the City Council established Utility Rule and Regulation 18 to set policy and establish priorities for overhead to underground conversion within the City. This rule also outlines the criteria for qualifying for an underground district. These guidelines are similar to those established for investor owned utilities under the California Public Utilities Commission’s Rule 20. The City’s Rule 18 divides the qualifications of underground districts into three categories: areas of general public interest and benefit, areas of local public.benefit, and other areas. Underground ordinance projects have primarily been done under the general public interest and benefit provision. Historically, the electric utility has set aside 2 percent of the yearly gross revenue (approximately $1,200,000) to underground overhead facilities. This capital load has minimal impact on electric rates in the City. Again, the allocation percentage is similar to the amount allocated to the cities by investor owned utilities in the state. According to the City’s Rule 18, underground conversion in areas of general and local public benefit will be considered in accordance with the following order of priorities and classification of areas according to "Four Classes of Need for Underground Utilities Distribution." First priority will be given to overhead utility lines along streets, roads, or rights-of-way on which major new roadway construction or realignment will take place. Second priority will be given to overhead utility lines along rights-of-way through the interior of blocks which have heavy tree foliage where poles have deteriorated to the point where replacement is necessary and undergrounding is an economic alternative to CMR: 170:97 Page 2 of 6 pole replacement. Third priority will be given to overhead utility lines along streets, roads or rights-of-way in areas zoned commercial, light industrial, and limited manufacturing where load growth requires major overhead reconstruction and undergrounding is an economical alternative. Fourth priority will be given to overhead utility lines which are hidden or partially hidden by surrounding tree foliage along streets, roads, or rights-of-way where poles have deteriorated to the point where replacement is necessary and undergrounding is an economic alternative to pole replacement. Fifth priority will be given to overhead utility lines which are constructed along major arterials where poles have deteriorated to the point where replacement is necessary and undergrounding is an economic alternative to pole replacement. Sixth priority will be given to overhead utility lines which are constructed along streets, roads, or rights-of-way in areas zoned residential. The priority schedule should not be construed to be inflexible. Overhead utility lines located in streets, roads, or rights-of-way in areas classified as areas of less need of pole replacement may be included for engineering and operating reasons in an underground utility district. One of the reasons that the City and the CPUC established allocations of underground funds was to provide a vehicle for older established areas to acquire underground facilities. Cities ¯ constructed before the early 1960’s would have been constructed almost entirely with overhead electric facilities. Without this allocation, these cities would have been unable to improve the visual appearance by eliminating overhead facilities. \ One of the draft Comprehensive Plan Goals and Policies is to continue a citywide plan to underground utility wires in an orderly manner. Inaddition to the City’s recognition in its Comprehensive Plan of the need to underground, there are several reasons for utility and public acceptance of underground electric facilities in new construction and in rebuilding of existing facilities. The public has supported underground .electric facilities because they are aesthetically appealing. Most new subdivisions and commercial centers are underground for this reason. Utilities also receive benefits in both service reliability and public safety from undergrounding. Improved service reliability from undergrounding occurs due to the isolation of the electrical system from weather events and damage from foreignobjects such as motor vehicles and trees. The improved reliability is most evident during storm situations where large sections of the overhead facilities can be out of service while the underground facilities continue to serve customers. CMR: 170:97 Page 3 of 6 Public safety is also improved with the installation of underground facilities. When the electrical cables are placed underground, there is little chance of the public coming into contact with "live" wires. On overhead systems, the risk of someone contacting energized conductors is much greater. UNDERGROUND UTILITY DISTRICT NO. 37 Underground Utility District No. 37 will underground the existing overhead distribution system in the area roughly bounded by Middlefield Road, Scale Avenue, Embarcadero Road, and OregonExpressway. Undergrounding will be completed in 1998-99 with the removal of the overhead system. This.project involves creating an underground utilities district and performing the work on a general benefit basis under the provisions of Utility Rule 18, which requires the Utilities to bear the cost of undergrounding the distribution system and property owners to bear the cost of undergrounding the services to their individual buildings. The total cost of the proposed project is estimated at $2,400,000. The cost of the required service conversions on private property is the responsibility of the individual owners in accordance with Utility Rule and Regulation No. 18. The total cost for the property owners requiring service conversion from overhead to underground was estimated by the City at $916,000. The average service conversion cost per customer was estimated at $4,035. In determining the service conversion estimates, the City utilized two Electric Utility Operations employees. Each estimate allocated the costs into the following categories: [] [] [] Trenching and backfilling for conduit placement. Material costs: service cables, conduits, new main switch and meter socket (if required). Labor to install the new service cables, conduits, etc. and make all necessary changes and connections inside the house. In addition to the above costs, a 10 percent contingency was added to each estimate. The estimates were provided by the City for the following reasons: [] [] [] To inform the property owners of the cost of converting their service. To aid property owners in deciding whether to borrow from the City. To determine how much money the City might have to loan. It should be noted that the intent of the City generated estimate was to establish a conservative upper bound cost estimate. The most recently completed underground conversion project was in the Southgate area CMR:170:97 Page 4 of 6 (Underground Utility District No. 35). A sample of 12 estimates from the Southgate area were chosen for the purpose of comparing costs estimated between Districts 35 and 37. As was mentioned earlier in this report, the initial estimates of the average service conversion cost for property owners in Underground Utility District No. 37 was $4,035. A typical service conversion installation in District 37 was estimated to require approximately 24 person-hours of labor with an associated trench distance of approximately 45 feet; For the 12 estimates from District 35, the average service conversion cost was estimated to be $2,800. The average labor requirement for the 12 properties was approximately 16 person-hours. In response to the apparent disparity between estimates in Underground Utility District No. 37 and previous underground districts, the Electric Utility utilized the services of an electrical contractor to provide service conversion estimates on a random sample of 25 properties. The City generated estimates on the 25 properties ranged from $2,600 to $6,500 with an average of $4,400. The estimates for the same properties prepared by the private contractor averaged $2,600. Similar reductions in service conversion costs for the properties not surveyed could be expected. Property owners may also reduce their costs if several utilize the services of the same contractor. Staff will provide a list of local contractors who do underground conversion work.. LOAN OPTIONS Presently, the City offers each affected property owner the option of borrowing money at a favorable interest rate and spreading the payments over a ten year period.. The interest is computed at a rate equal to three-quarters of one percent in excess of the rate shownin the New York Bond Buyer Index of Municipal Bond Average Yields for twenty bonds for the week next preceding the day on which the underground utility district is ordered formed. A lien in the amount of the principal plus interest and handling fee will be established against the property, which will remain in effect until the loan is paid off. In Underground Utility Districts Nos. 34 and 35, the interest rate was 7.26 percent and 7.14 percent, respectively. At the present time, there are no other City sponsored loan options available to the property owners of underground utility, districts. Property owners also have the option of obtaining financing from private lenders. CABLE TV PEDESTALS Cable Co-op was contacted again by staff on the issue of cable TV pedestals. According to Cable Co-op, the cable TV pedestals which they presently use are an industry standard. The size is considered to be optimally minimized with consideration to aesthetics and maintenance. Cable Co-op has recently changed the color of the pedestals to a dark green color. Cable Co-op is no longer offering subsurface installation of its equipment for many .of the same reasons as mentioned in the City’s Padmount Equipment Resolution (CMR182:96). Installation of CMR: 170:97 Page 5 of 6 equipment in subsurface environments accelerates the degradation of equipment and increases maintenance costs. Equipment placed in padmount installations has a proven record of higher reliability and lower maintenance costs. SURVEY On February 12, 1997, a second survey notice was mailed to all the property owners and tenants of Underground Utility District No. 37. The second survey was initiated in order to give owners and tenants the opportunity to reevaluate their votes. As of February 28, 1997, the survey results are as follows: []Number of surveys mailed 232 []Number of completed surveys received 139 []Participation rate 60 percent []Property owners in favor of the project 76 (55 percent) ¯ []Property owners opposed to the project 63 (45 percent) Based on the level of support reflected in the surveys, staff recommends pro.ceeding with the underground conversion project. ATTACHMENTS Ordinance Underground Utility District No. 37 Boundary Map CMR:113:97 Prepared by:Jim Thompson, Senior Power Engineer Department Head Approval: City Manager Approval: Manager CMR: 170:97 Page 6 of 6 ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO .AMENDING SECTION 12.16.020 OF CHAPTER 12.16OF TITLE 12 OF THE PALO ALTO MUNICIPAL CODEBY ESTABLISHING UNDERGROUND UTILITY DISTRICT NO.37 WHEREAS, this Council, on December 2, 1996, adopted Resolution No. 7637, declaring its intention to amend Section 12.16.020 of Chapter 12.16 of Title 12 of the Palo Alto Municipal Code by establishing Underground Utility District No. 37 in the City and by such Resolution appointed Monday, January 13, 1997, at the hour of 7:00 p.m., in the Council Chambers, City Hall, at 250 Hamilton Avenue, Palo Alto, California, as the time and place of hearing protests and receiving evidence for and against the proposed action and notice of direction; and WHEREAS, notice was given of the time and place therein stated in the manner provided by law, as appears from.the affida- vits on file in the office of the City Clerk; and WHEREAS, this matter came on regularly for hearing at the time therein fixed; and WHEREAS, all written protests and other written communica- tions were publicly read at this meeting and evidence duly taken and all persons desiring to be heard were fully heard; NOW, THEREFORE, .the Council of the City of Palo Alto does ORDAIN as follows: SECTION i. The public necessity, health and safety require the removal of poles and overhead lines and associated overhead structures from that certain area described in Resolution No. 7637. SECTION 2 Section 12.16.020 of Chapter 12.16 of Title 12 of the Palo Alto Municipal Code is hereby amended by adding Subsection (37). thereto to read as follows: "(37) District No. 37. All of the~area in the County of Santa Clara, City of Palo Alto, encompassing the areas contiguous with portions of Embarcadero Road, Middlefield Road, Seale Avenue, Byron Street, Bret Harte Street, Mark Twain Street, Newell Road, Guinda Street, Fulton Street and Tennyson Avenue, all as more.particularly described on that certain map entitled "Embarcadero/Middlefield Road Under- ground Utility District Number 37," on file in the office of the City Clerk." SECTION 2. The. "Underground Utility District Maps" referred to in Section 12.16.020 shall be amended to add to the areas shown on the map those referred to in Resolution No. 7637. 970107 ~ya 0071105 SECTION 41 The City Council hereby finds that the adoption of this ordinance constitutes the approval of a project that is categorically exempt from environmental review under the California Environmental Quality Act. SECTION 5. This ordinance shall become effective upon the expiration of thirty (30) days from its passage. INTRODUCED: PASSED: AYES : NOES : ABSTENTIONS : ABSENT: ATTEST:APPROVED: City Clerk Mayor APPR0V~.D AS TO FORM: Senior Asst. City Attorney City Manager Director of Utilities 970107 syn 0071105 2 City City of Palo Alto Manager’s Report TO: FROM: AGENDA DATE: SUBJECT: HONORABLE CITY COUNCIL CITY MANAGER JANUARY 13, 1997 DEPARTMENT: UTILITIES CMR:113:97 Public Hearing and Adoption of Ordinance Establishing Underground District No. 37 Embarcadero/Middlefield Roads. REOUEST This is a request for Council to adopt an Ordinance Establishing Underground Utility District No, 37 in the area shown on the attached district boundary map. RECOMMENDATIONS Staff recommends that Council: 1)Adopt the attached Ordinance to create Underground Utility District No. 37 and amend Section 12.16.02, of Chapter 12.16 of Title 12, of the Palo Alto Municipal Code. ~.. pOLICY IMPLICATIONS This project does not represent any change to existing policies. EXECUTIVE SUMMARy At its meeting of December 2, 1996, the Council passed a Resolution of Intent to establish Underground Utility District No, 37. The Council meeting of January 13, 1997 has been set as the date of the Public Hearing onthe matter. Notices announcing the meeting with a description of the project and a copy of the resolution were mailed to all property owners inthe proposed district on December 6, 1996 The Electric Utility’s undergrounding projectareas are selected and recommended to Pacific Bell and Cable Co-op based on the age and maintainability of the existing .... overhead electric system. Pacific Bell and Cable Co-op determine whether the recommended area meets their criteria for undergrounding based on guidelines established by the California Public Utility Commission (CPUC). The area now being CMR:113:97 Page 1 of 4 proposed as the next underground district meets the City’s, Pacific Bell’s and Cable Co-op’s guidelines for undergrounding overhead utility lines. This underground project will result in the removal of 97 poles and provide underground service to 227 residential properties. The majority of the poles in the area are a~ong rear lot easements with limited access. Completion of this project will improve service reliability, increase safety and improve aesthetics, due to the elimination of poles in the rear of properties. If an underground utility district is created, the Utilities Department will prepare bids for installation of the underground substructure (conduits, vaults and boxes) as a joint construction project. Upon completion of substructure installation, the Utility will install the distribution cables, transformers and switches. After the cables are tested and energized, all affected property owners will be notified that they have 60 days to prepare their buildings .for connection to the new system. As soon as the new connections are completed, Utility crews will remove the overhead power lines from the poles, following which the telephone company will remove the remaining overhead facilities and poles. Financing The estimated cost of converting the overhead distribution system to underground in the project area is $2,400,000, of which an estimated $800,000 will be for the installation of telephone and CATV conduit and boxes. The City will be reimbursed by Pacific Bell and Cable Co-op for this expenditure in accordance with an agreement between these parties. Total cost of this project.is included in the fiscal year 1996-97 and proposed 1997-98 Capital Improvement Programs. The cost of the required service conversions on private property is to be borne by the individual owners in accordance with Utility Rule and Regulation No. 18. The total cost for the property owners requiring service conversion from overhead to underground has been estimated at $916,000. The average service conversion cost per customer is $4,035. The property owners have been offered the option of financing their service conversion costs over a period often years in accordance with the procedure given in Sections 12.16.090 through 12.16.096 of the Palo Alto Municipal Code. Proposed Procedure_ It is proposed that: 1.Underground conversionin the proposed project area be initiated by the creation of CMP,.: 113:97 Page 2 of 4 o t Underground Utility District No. 37 as shown on the accompanying map. A contractor be retained to install power, telephone, communications, and CATV substructures in a jointly occupied trench. Upon award of contract by the Council, an agreement for joint participation between the City, Pacific Bell and Cable Co- op wilt be executed. In order to properly distribute all of the costs of the project, separate agreements will specify that Pacific.Bell and Cable Co-op pay for their respective conduit and boxes and for their share of the trench and backfill, based upon the trench area required by each utility. The Council finds undergrounding the project area to be of general public interest and benefit. The construction work on the distribution system, therefore, will be done at the expense of the utilities involved, and no part of the distribution cost will be assessed to the affected property owners. The only cost to the property owners will be that of replacing the overhead service equipment on their buildings with underground services. Property owners’will be offered the option of fmancing their service conversions under Section 12.16.091 of the Palo Alto Municipal Code and, in effect, borrowing from the City and having their repayment costs added to their tax bills over a period of ten years at an interest rate specified by the Council. Council Action and Tentative Schedule Introduction and first reading of Ordinance Establishing Project Area as Underground Utility District No. 37. January 13, 1997 Second reading and adoption of ordinance January 27, 1997 Resolution determining property owners electing to pay service-conversion cost. over a period often years. October 27, 1997 CMR:113:97 Page 3 of 4 Award of Contract to install substructure (conduit, vault, etc.) and Joint Construction Agreement with Pacific Bell and Cable Co-op. August 4, 1997 Installation of underground facilities (cable, switches, etc.) Service Conversion work by property owner. October 1997 through April 1998 May 1998 through July .1998 Pole removal and project completion.August 1998 through September 1998 ENVIRONMENTAL ASSESSMENT This project was considered categorically exempt as part of the Council approval of the 1994-1999 CIP and no further environmental review is necessary. ATTACHMENTS Ordinance Underground Utility District No. 37 Boundary Map Prepared by:Jim Thompson, Senior Power Engineer Department Head Approval: City Manager Approval: Manager CMR: 113:97 Page 4 of 4