HomeMy WebLinkAboutStaff Report 238-06City of Palo Alto
City Manager’s
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTM-ENT: UTILITIES
DATE:JUNE 19, 2006 CMR: 238:06
SUBJECT:ADOPTION OF AN ORDINANCE AMENDING SECTIONS 12.16.010
THRU 12.16.100 TO REVISE THE ADS~INISTRATIVE PROCEDURES
GOVERNING THE FORMATION OF UNDERGROUND UTILITY
DISTRICTS
RECOMMENDATION
Staff recommends that Council adopt the attached Ordinance (Attachment A) to amend sections
12.16.010, 12.16.030, 12.16.050, 12.16.070, 12.16.080, 12.16.090, !2.16.091, 12.16.092,
12.16.093, 12.16.094, 12.16.095, 12.16.096 and 12.16.100 of Chapter 12.16 of Title 12 oft he
Palo Alto Municipal Code (PAMC) to make administrative changes to the underground loan
program. Because it is not financially feasible, given legal limitations on loan term, staff is not
recommending an alternative loan program for financing property owners’ share of underground
costs.
BACKGROUND
At its meeting of September 19, 2005, the Council approved staff’s recommendation to return
with amendments to the Palo Alto Municipal Code to include a new loan program that would
allow deferring the repayment of underground utility district loans until the home is sold or
transferred to a new owner. This repayment could occur several decades in the furore. Various
other financing alternatives were presented and discussed during the Council meeting and, based
on the pros and cons of the various programs, Council voted to approve staff s recommendation.
As part of the review of the Municipal Code section on undergrounding, staff also revised
outdated sections of the code.
DISCUSSION
The propose of implementing a new loan program was to reduce the burden of the service
conversion cost to property owners in underground districts. The new loan with no ongoing
periodic repayment schedule was recommended as an alternate program to augment the current
10-year loan program. This loan would provide a means for the City to finance the cost of the
service conversion for property owners and secure repayment by placing a lien against the
property. This differs from the current 10-year program in that the property owners would not be
required to meet an annual repayment schedule. The lien would attach to the property collecting
interest until the property is sold, the owner changes, or the amount is repaid. It was staff’s
understanding when this program was recommended that this type of loan could provide the
most benefit to property owners without increasing administration costs nor causing any
significant out of pocket expense to the property owners.
CMR:238:06 Page 1 of 3
The City Attorney’s Office has advised staff that the term of loan offered in underground
districts must be limited to 10 years in order to comply with State laws on which the ordinance is
based. According to these laws, all loans offered for the pa3wnent of underground service
conversion cost would become a special assessment and full payment must be made within a
period of 10 years. There are no provisions for extending the time for repayment of the loan.
Staff asked the Attorney’ s Office to ascertain if there were any other feasible methods that could
be used to create a longer term loan program without undue risk to the City and residents. No
other feasible options were identified that would ensure City’s ability to enforce its lien interest.
In order to decide whether there would be any benefit, staff evaluated an alternative loan
program that would allow deferring repayment to no more than the mandated 10 year limitation.
The result of this deferral is receiving a bill at the end of ten years that will come due with
interest. For example a $5,000 loan at 5% interest rate will result in a payment of $8,235 at the
end of 10 years. Ifa homeowner is having difficulty paying the conversion cost today, it is likely
that he or she may have difficulty pa?dng at the end of 10 years. A loan with a ten-year term
would only provide limited benefit compared to the existing loan program. In addition it does not
meet the expectations of the property owners and the Council for a longer term loan payable
when the property is sold or the owner changes. Due to these reasons staff is not able to
recommend provisions being made in the Palo Alto Municipal Code to offer an alternate !oan
program.
During the review, staff also identified changes to sections of the Municipal Code to address
minor changes in the administrative procedures for forming underground utility districts and to
update the various authorized and designated positions referenced in the PAMC. Other changes
include revising the fine established in 1965 for the failure to remove poles from the
underground district from $500 to $1,000 in order to account for inflation, and extending the
filing period for the assessment from the time of district formation to the completion of the
undergrounding project. The second change will allow residents additional time to make a
decision on accepting a loan from the City. Staff recommends that these revisions be approved as
proposed in the ordinance.
RESOURCE IMPACT
The approval of the proposed changes to Municipal Code will not have any additional impact on
the funding budgeted for utility underground districts.
POLICY IMPLICATIONS
This recommendation is consistent with existing City policies.
ENVIRONMENTAL REVIEW
This project is categorically exempt tYom the California Environmental Quality Act under
Section 15302.
ATTACHMENTS
A: Ordinance
CMR:238:06 --Page 2 of 3
PREPARED BY:
CITY MANAGER APPROVAL:
PATRICK VALATH
Senior Electric Project Engineer
~ON
Assisthnt City Manager
CMR:238:06 Page 3 of 3
NOT YET APPROVED
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING VARIOUS SECTIONS OF CHAPTER 12.16
PERTAINING TO THE ADMINISTRATIVE PROCEDURES
GOVERNING THE FORMATION OF UNDERGROUND UTILITY
DISTRICTS
follows:
The Counci! of the City of Palo Alto does ORDAIN as
SECTION !. Section 12.16.010 of Chapter 12.16 of Title
12 of the Paio Alto Municipal Code is hereby amended to read, as
follows:
12.16.010 Underground installation required for new
construction.
The city council finds and determines that the
public interest requires that all ~7~ .... ~ ..~
poles, overhead lines and associated overhead structures
used in supplying electric, communication or similar
associated service to be constructed in the city of Palo
Alto after July i, 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. The managing
director of utilities, or his designee, may authorize
poles, overhead lines and associated overhead structures
for new construction when in his opinion underground
installation in any particular instance would not be
feasible or-practicable. His decision in such matters
shall be final.
SECTION 2. Section 12.16.030 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.030 Ovmrhmad wircsPoles, overhead lines and
associated overhead structures prohibited in underground districts.
Whenever any area of the city is declared to be an
underground utility district, it ~-sshall be unlawful for
any person or utility to erect, construct, use, or
maintain e~y---pole~, overhead line~ e~and associated
overhead structure~ within the district after the date
when the utilities are required to be removed.
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(b) ~ .... ~ ......... ~-~ ~k~-~ From and after the
effective date of the establishment of any underground
utility district, it 4:sshall be unlawful for any person
or utility to erect, construct, use or maintain ~
NOT YET APPROVED
pole~, overhead iine~ e~and associated overhead
structures within ....~ ,~ .................... ~ne utilityth___ge district.
.......... a ~sdcmcanor. Any pcrsonindividual
or utility who shall erect, construct,~c, kccp,use or
alntain, .........., ~-~ .............. ~ ~ ~ .....an>" such poles, e~
overhead line~ e~an~ associated overhead structure~
within any underground utility district or who shall
neglect to take down and remove e~y--such pole~, overhead
w~r-elines.~ e~and associated overhead structures within
the time designated in this chapter or who shall
otherwise fail to comply with the provisions of this
chapter shall be guilty of a misdemeanor and upon
conviction thereof shall be punishable by a fine not to
exceed fivc h’~ndrcdone thousand dollars. Each consecutive
fifteen-day period during which the failure to comply
with the provisions hereof shall constitute a separate
offense. Such violation is likewise hereby declared to be
a nuisance and may be abated by the city attorney in the
manner provided for the abatement of nuisances.
SECTION 3. Section 12.16.050 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.050 Exceptions.
(a) The provisions of this chapter shall not apply
to the fol!owing types of facilities:
(i) Poles used exclusively for police and fire
alarm boxes, traffic control facilities, or any similar
municipal equipment installed under the supervision and
to the satisfaction of the managing director of
utilities, or his designee;
(2) Poles used exclusively for street lighting;
(3) An electric distribution or transmission
system in excess of fifteen kilovolts= unless the
managing director of utilities, or his designee,
determines that underground installation of such
transmission system is feasible and practicable. His
decision in such matters shall be final;
(4) When authorized by the managing director of
utilities~ or his designee, po!es~ ee~L-overhead lines and
associated overhead structures crossing or entering any
portion of a district from which poles, overhead
wi-r-es!ines and associated overhead structures have been
prohibited and originating in an area in which poles~e~4
overhead lines and associated overhead structures are not
prohibited;
(5) Overhead lines attached to the exterior
surface of a building by means of a bracket or other
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NOT YET APPROVED
fixture and extending from one location on the building
to another location on the same building or to an
adjacent building without crossing any public street;
(6) Radio antenna and associated equipment and
supporting structures used for furnishing communications
services;
(7) Changes in or additions of aerial drop
"w~lines and anchors or the addition or replacement of
wi-meslines and cables on poles in place on July i, 1965;
or
(8) Service terminals, in pedestals, above
ground, used to distribute communication service in
underground systems.
(b)Alterations and extensions to Doles,
overhead facilitieslines and associated overhead
structures falling within the exceptions described in
this section shall be permitted provided no additional
poles are required for any such alteration or extension.
SECTION 4. Section 12.16.070 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.070 Time extensions.
In the event that any act hereby required by any
csperson or utility herein referred to cannot be
performed within the time herein provided on account of
shortage of materials, war, restraint by public
authorities, strikes, or by any circumstances beyond the
control of the ....~ ....csperson or utility or by unusual
hardships, then the time within which such acte shall be
accomplished may be extended by the ~,ana~=n~ director of
utilities, or his designee, for a period not exceeding
one year.
SECTION 5. Section 12.16.080 of Chapter 12.16 of Title
!2 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.080 Notification to affected property o~rners and
utilities.
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(a) Within thirty days after the establishment of
the underground utility district the managing director of
utilities, or his designee, shall so notify all affected
~ ~77 pcrsons~rooerty owners and utilities
owning real property within the affected area. The
¯ -~G=n~ director of utilities, or his designee, shall
further notify such affected property owners and
utilities that poles, overhead lines ee~an___~d associated
overhead structures are to be removed and that if the
NOT YET APPROVED
affected property owners7 and utilities or the tenants or
occupants of their property desire to continue to receive
"’~ .......~communication or similar...... ~ .....or electric,
associated services they shall make all necessary
facility changes on their premises so as to receive the
service~ from the utility at a new location subject to
the applicable rules, regulations and tariffs of the
respective utilities on file with the California public
utilities commission and the utility rules and
regulations of the city of Pa!o Alto.
(b) Notification shall be made by mailing a copy of
this chapter and the ordinance which designates the area
of an underground utility district to the affected
utility ~ ~ ~ ....~ ....................... s~s~ owners and utilities as
shown on the last equalized tax roll of the city.
Failure to give such notice by mai! or of the persons
affected owners or utilities addressed to receive the
notice~mme shall not affect the validity of such
ordinance nor the authority of the city to proceed under
Section 12.16.100.
SECTZON 6. Section 12.16.090 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
fol!ows:
12.16.090 Responsibility of property owner.
(a) All conduits, conductors and associated
equipment necessary to receive utilityelectric,
communication or similar associated service~ between
service conductors or underground pipe~ or conduit~ of
the supplying ~-- ’ " ’...... ~ut~l~t~es and the service facilities
to the building or structure being served shall be
provided by the person owning, operating, leasing or
renting ~i-~the affected property subject to applicable
rules, regulations and tariffs of the "’~’"
ee~respective utilities ........~........... on file with the
California public utilities commission and the Utility
Pcalcs and ~cjulationsutilit¥ rules and requlations of the
city of Palo Alto.
(b) ~The underground service connection
construction shall be accomplished within the time
specified in Section 12.16.020 or if the time is not
specified therein, within thirty days after the
installation of the utilities facilities pursuant to the
city’s Utility ~,ulcs and ~c~ulationsutilitv rules and
requlations of the city of Palo Alto.
SECTION 7. Section 12.16.091 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.091 Financin~ service connection conversions.
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(a) Whenever the conversion to underground
locations of all facilitics and ¢;irespoles, overhead
lines and associated overhead structures used in
supplying electric., communication or similar associated
service is, under established policies and procedures of
the city to be financed entirely by the city within the
area of the public rights of way within any proposed
underground utility district, the cost of conversion to
an underground locatione of the individual clcctric po~vcr
service connections on private property (hereinafter
referred to as "service connections") may be accomplished
in the manner hereinafter set forth in Sections 12.16.092
to 12.16.097, inclusive.
(b) Each affected residential or nonresidential
proDertv owner who elects to finance the cost of his
service connection shall execute a loan aqreement, which
may be recorded, and any other document to secure his
obliqation to Day the citv in accordance with this
chaDter. The affected owner shall Drove to the citv he
holds leqal title to the affected real proDertv.
SECTION 8. Section 12.16.092 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.092 Notice of intention.
(a) At the time of the call of the public hearing
on the formation of such an underground utility district,
as required by Section 12.16.040, the council may
authorize the city clerk, aided bv the director of
utilities, or his desiqnee, to include in the notice o__[f
hearinq to be mailed to all affected property owners,
pursuant to Section 12.16.040, a statement to the effect
that any affected owner has the option of paying the cost
of converting his service connection to an underground
locations over a period of ten ~years (~ ..... ~ .... ~
with interest to be determined as hcrcinafter provided bv
Section 12.16.096. The notice shall include the
information set forth in Section 12.16.091(b).
(b) The notice shall be accompanied by an
appropriate form by which the Davment option sDecified in
Section 12.16.096 may be exercised.
The notice shall also set forth:
(i) The estimated cost of accomplishing the
underground service connection construction work, as
determined by the ~’mana~ing director of utilities, or his
designee, herein called the "base cost";
(2) An additional fixed amount per parcel,
also to be determined by the .....~-~....... ~ director of
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NOT YET APPROVED
utilities, or his designee, representing the cost of
making the estimate, establishing the lien and other
incidental administrative, legal and engineering expense
involved in the proceedings, herein called "incidental
expens e" ;
(3) The total amount of subdivision (i) plus
subdivision (2), herein called the "special assessment";
and
(4 The fact that the city, upon exercise of
the payment option and the accomplishment of the
underground service connection construction work as
required by Section 12.16.090, will pay the base cost and
incidental expense to the affected owner who accomplishes
the underground service connection construction, subject
to the payment of the amount of the special assessment as
hereinafter provided.
SECTION 9. Section 12.16.093 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12 16 093 nub~c ~^--~-- - Filing assessment list
AtAfter the ~-- ~-~-; =-~ w--~ .... ~-
...... ~- ~ fcrminGformation of the underground utility
district but before the .accomplishment of the underqround
service connection construction, the council shall
determine the properties the affected owners of which
have exercised the optio_~_ to pay the cost over a period
of teh years and shall direct that the base cost and
incidental expense shall be paid by the city subject to
payment of the special assessment in the manner
hereinafter set forth.
.._; ........~ .~7~.. ;~-~-~mpl...... ~ ...........~ .........aA_ co ete assessment roll
or list of ~the affected properties subject to the
payments over a period of ten years, identifying them and
setting forth the respective amounts of the proposed
special assessments, shal! be prepared by the managinz
director of utilities, or his designee, and filed in the
offices of the c c ..................... ~
con ...... r, clerk and the director of utilities and
published and filed in the office of the county of Santa
Clara ~ ..... ~-~~assessor.
SECTION i0. Section 12.16.094 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.094 Payment of base cost - Establishment of special
assessment lien.
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NOT YET APPROVED
Upon completion (pursuant to Section 12.16.090) of
the underground service connection construction wet-k--on
any parcel as to which the payment option has been
exercised, the affected owner who accomplished ee-i~the
wee4econstruction may file with the ~
controllerdirector of utilities, or his desiqnee, a
verified claim for the base cost and incidental expense.
The claim shall be audited and paid in the manner
provided by law.
SECTION ii. Section 12.16.095 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
fol!ows:
12.16.095 Notice - Lien.
(a) Concurrently with such payment on which the
affected property owner will pay over a period of ten
years, the ~ ........~~= ........lerdirector of utilities, or his
desiqnee, consistent with Section 12.16.093(b) shall
publish and file the assessment roll or list in the
office of the county of Santa Clara assessor with respect
to the payments over a period of ten years or record a
notice of assessment in the office of the ...... ~ .... ~^-~
of strcctscount¥ of Santa Clara recorder in substantially
the following form:
NOTICE OF ASSESSMENT
Pursuant to the requirements of Sections
12.16.091 to 12.16.097, inclusive, of the Palo Alto
Municipal Code, the undersigned -~-~~ controllerdirector
of utilities, or his desiqnee, hereby gives notice of a
special assessment in the amount of $against
the following described property:
(Insert description)
Notice is further given that ~,mi4the special
assessment shall become a lien upon the property
described herein upon the filinq of the assessment roll
or list and the recording of this notice in the office of
th ...... ~ .... ~ ~ ~~ ~ -~ -~tycount¥ of Santa
Clara assessor.
Controllcr of t~he City of Paio Alto
By
Director of Utilities
Dated:
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pmrsuant .......
notice of assessment shall set forth the name of the
owner of record, the property address, the assessor’s
parcel number, the leqal description of the affected
property, and a certification by the director of
utilities that the service connection cost has been paid
by the city on behalf of the owner of the described
affected property aqainst which the lien is filed or
recorded. Such lien shall remain a lien until a full
release and discharqe is made pursuant to the provision
of this chapter.
(c) Upon the filinq of the assessment roll or the
recordation of the notice of assessment set forth in
Section 12.16.095 (a) and (b), the amount of the special
assessment shall constitute a lien on the parcel of
property described in the notice for the amount of such
assessment until paid, with the same priority as special
assessment liens established pursuant to Title 13 of this
Code. All remedies available for the enforcement and
collection of liens established under Title 13 shal!
ap~ly to liens established under this chamter.
SECTION 12. Section 12.16.096 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.096 Collection and payment.
The affected property owner shall Day the assessment
and interest to the city in accordance with paraqraph
(a) The principal amount of each of ee-i4the
assessments shall, upon filinq or recordation, become
payable in equal annual installments over the nu~cr
period of ten years as set forth in the notice
provided for in Section 12.16.092, with interest computed
at a rate equal to three-quarters of one percent in
excess of the rate shown in the New York Bond Buyer Index
of Municipal Bond Average Yields for twenty year bonds
for the week next preceding the day on which the
underground utility district is ordered formed. The
amounts of principal and interest payable on each
assessment shall be set forth on an auditor’sin the
records of the director of utilities and transmitted to
the ..............~ ^~...... = .................county of Santa Clara e~--e~
bcforc the first day of July of cach yearassessor. The
amounts shown on ~i4the auditordirector of utilities’s
record against the respective parcels of land shal! be
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entered on the next tax roll upon which general city
taxes are to be collected. Thereafter, such amounts shall
be collected at the same time, and in the same manner, as
general city taxes are collected, and shall be subject to
the same interest and penalties, and the same procedure
and sale in case of delinquencies. All laws applicable to
the levy, collection and enforcement of city taxes are
hereby made applicable to such assessment installments
and interest.
SECTION 13. Section 12.16.100 of Chapter 12.16 of Title
12 of the Palo Alto Municipal Code is hereby amended to read, as
follows:
12.16.100 Action on noncompliance.
(a) In the event the person owning, operating,
leasing or renting ee-i4 the affected property does not
comply with the provisions of Section 12.16.090 within
the time specified therein the chicf electrical
cnGinccrdirector of utilities, or his desiqnee, shall
have the authority to order the disconnection and removal
of any and all poles, overhead lines e~and associated
overhead structures supplying utility service to ea-id the
affected property and the utility shall not be thereafter
required to provide service to such premises until the
owner, tenant or occupant makes the necessary changes.
(b) Noncompliance by any person owning, operating,
leasing or renting ea-i4the affected property with the
provisions of Section 12.16.090 shall constitute a
misdemeanor. Unti! such time as notice is given pursuant
to the provisions of Section 12.16.080 the supplying
utility shall not be in violation of this chapter, or any
ordinance enacted pursuant to the provisions of Section
12.16.040 in continuing to maintain overhead facilities
necessary to serve such person during the period of such
noncompliance and such reasonable time thereafter as may
be necessary to remove thc samcthose facilities.
SECTION 14. The City Council hereby finds that the
passage of this ordinance is not a project under the California
Environmental Quality Act.
SECTION 15. This ordinance shall become effective upon
the commencement of the thirty-first day after the day of its
adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
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ABSENT:
ABSTENTIONS:
NOT YET APPROVED
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NOT YET APPROVED
ATTEST :APPROVED :
City Clerk Mayor
Director of Utilities
APPROVED AS TO FORM:
Assistant City Manager
Senior Asst. City Attorney
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