CC 2013-09-10_08.e. Resolution Modifying Underground Utility In Lieu FeeMEMORANDUM
TO: CITY COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER I
SUBJECT: CONSIDERATION OF RESOLUTION MODIFYING THE
UNDERGROUND UTILITY IN-LIEU FEE
DATE: SEPTEMBER 10, 2013
RECOMMENDATION:
It is recommended the Council adopt a Resolution modifying the underground utility
in-lieu fee ("in-lieu fee").
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
Increased revenues will depend upon future project approvals authorized to pay the
in-lieu fee. There is no cost or staffing impact from the recommendations.
BACKGROUND:
In July 13, 2004, the City Council approved an ordinance establishing the in-lieu fee
and a resolution setting the fee at $232 per linear foot. The recommended fee was
based upon a survey of other cities that had a fee in place. The in-lieu fee was
established primarily for smaller residential developments to allow an option for
developers in situations deemed appropriate by the City Council. At the December
11, 2012 meeting, the City Council directed staff to update the fee.
ANALYSIS OF ISSUES:
There were two significant challenges encountered when preparing the analysis to
update the in-lieu fee. First, a limited number of jurisdictions were found that utilize
the in-lieu fee. Second, costs for undergrounding vary dramatically by project.
The survey of cities that have in-lieu fees includes Grover Beach, Pismo Beach and
San Jose. Santa Barbara and Agoura Hills were also found to have programs, but
the fee was based on a complicated process involving lot size and project costs,
which is not recommended. Average cost estimates were also obtained from PG&E
and AT&T.
In gathering the data, a League of California Cities listserv request was sent to all
cities requesting a response from cities that have an underground utility in-lieu fee.
Other California cities were contacted that were known to have a fee. Oregon cities
Item 8.e. - Page 1
CITY COUNCIL
CONSIDERATION OF RESOLUTION MODIFYING THE UNDERGROUND UTILITY
IN-LIEU FEE
SEPTEMBER 10, 2013
PAGE2
were included in the original survey, but were excluded this time due to differences in
regional construction costs. A separate survey of only San Luis Obispo County cities
was then prepared through e-mail. Lastly, cities were then contacted randomly to
determine if other in-lieu fees existed that staff had not yet determined.
The City of Pismo Beach has· a separate fee depending upon whether the project
includes PG&E distribution lines, which staff believes is a good practice since this
has a dramatic impact on the cost of a project. Staff calculated an average of the city
fees, then determined an average of the city fees and utility costs, and then prepared
a breakdown of costs by whether or not PG&E distribution lines are included. The
breakdown by type of undergrounding was calculated by determining the proportion
for each type of undergrounding based upon an average of the fees charged by the
City of Pismo Beach and the costs provided by the utilities. All numbers were
rounded to the nearest $25.
As a result, it is recommended to change the fee from $232 per linear foot to $200
per linear foot for facilities except PG&E electric distribution facilities and $375 per
linear foot for PG&E electric distribution facilities. Therefore, if a project requires
undergrounding involving all utilities, it would result in a total fee increase from $232
per linear foot of $575 per linear foot.
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
Approve staff's recommendation;
Modify the Resolution to establish a fee based entirely on utility company
estimates;
Modify the Resolution to establish a fee based entirely on an average of other
City fees;
Direct staff to prepare additional research;
Do not modify the existing fee; or
Provide other direction to staff.
ADVANTAGES:
The increased fee will generate revenue closer to the actual cost of improvements,
which will enable the City to better utilize the fee to fund future undergrounding
improvements.
DISADVANTAGES:
The increased fee could make some projects financially infeasible to construct.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
Item 8.e. - Page 2
CITY COUNCIL
CONSIDERATION OF RESOLUTION MODIFYING THE UNDERGROUND UTILITY
IN-LIEU FEE
SEPTEMBER 10, 2013
PAGE3
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, September 5, 2013 and on
the City's website on Friday, September 6, 2013. No comments were received.
Attachments:
1. Underground Utility In-Lieu Fee Analysis
Item 8.e. - Page 3
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF ARROYO GRANDE MODIFYING THE AMOUNT OF
THE CITY OF ARROYO GRANDE'S UNDERGROUND
UTILITY IN-LIEU FEE
WHEREAS, the City Council adopted an Ordinance establishing an underground
utility in-lieu fee and providing for the setting of the in-lieu amount by resolution of
the City Council; and
WHEREAS, the amount of the undergrounding in-lieu fee was last established in
2004;and
WHEREAS, there has been a significant increase in construction costs for utility
undergrounding projects since that time; and
WHEREAS, the City has conducted a study to equitably establish an updated
amount of the underground utility in-lieu fee per linear feet
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Arroyo
Grande that the amount of the underground utility in-lieu fee for residentially
zoned subdivisions or developments shall be two hundred dollars ($200.00) per
linear foot for all facilities except PG&E distribution facilities and three hundred
and seventy-five dollars ($375.00) per linear foot for PG&E electric distribution
facilities.
On motion of Council Member , seconded by Council Member
, and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this
2013.
day of
Item 8.e. - Page 4
RESOLUTION NO.
PAGE2
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, CITY MANAGER
APPROVED TO AS FORM:
TIMOTHY J. CARMEL, CITY ATTORNEY
Item 8.e. - Page 5
Attachment 1
CITY OF ARROYO GRANDE
UNDERGROUND UTILITY IN-LIEU FEE ANALYSIS
Comparison Data
San Jose:
Pismo Beach:
Grover Beach:
Combined Average:
Utilities
PG&E:
AT&T:
Combined Total:
Combined Average Total:
$409 per linear foot
$100 per linear foot for facilities except PG&E electric
distribution facilities
$300 per linear foot for PG&E electric distribution
facilities
$300 per linear foot
$370 per linear foot
$4 75 per linear foot
$300 per linear foot
$775 per linear foot
$575 per linear foot
The aver~ge total for the fee was calculated by establishing the city survey list and the
utilities as two distinct categories. The combined average of the city list and the
combined total from the utility list were then averaged to arrive at the combined average
total, which represents the total recommended fee when all utilities would need to be
undergrounded. This amount was rounded to the nearest $25 to arrive at the final
amount.
Recommended Breakdown: $200 per linear foot for facilities except PG&E electric
distribution facilities
$375 per linear foot for PG&E electric distribution
facilities
The breakdown by type of undergrounding was then calculated by determining the
proportion fo'r each type of undergrounding based upon an average of the fees charged
by the City of Pismo Beach and the costs provided by the utilities. This arrived at a
proportional cost of 66% for PG&E distribution lines and 44% for other lines. Once
again, the numbers were rounded to the nearest $25 to arrive at the final amounts.
Item 8.e. - Page 6