Undergrounding price tag lower than expected

DEL MAR — The cost to underground all remaining utility poles and wires citywide is significantly less than what was previously estimated, council members learned at the June 6 meeting.

Despite the lower price tag, the project remains somewhat controversial because of additional out-of-pocket costs for property owners and equity issues for the approximately 450 people who previously paid for undergrounding as part of an assessment district.

The city paid Utility Specialists Southwest Inc. $25,000 to find out how much the project would cost. The consultants came up with an amount that is slightly more than $18 million, much less than the initial estimate of between $25 million and $30 million.

City officials have been discussing a 1 percent sales tax increase to fund the project. It is unclear if the city can pay for the laterals, which are the connections from the wires on the street to the connection boxes on individual houses.

According to an opinion rendered by the city attorney’s office, based on the lack of precedent and substantial benefits to private individuals, the city “paying for undergrounding private laterals is problematic and may constitute … an impermissible gift of public funds.”

The key with the gift of public funds is usually the public benefit analysis, the statement adds. The general rule is that public entities are prohibited from making gifts of public funds.

However, where an expenditure of public funds is for a public purpose, it may not be a “gift” of public funds. That distinction is “up to the public entity.”

Some in Del Mar said undergrounding will benefit the city as a whole when it comes to safety, aesthetics and increased property values.

The city attorney’s office also looked into the possibility of reimbursing residents who have already paid for undergrounding.

According to the statement, such payments “would exacerbate the gift of public funds concerns as the benefit to private individuals would be even more substantial.”

Resident Dan Quirk, who is leading a public outreach effort for the sales tax increase, said he is seeking a second legal opinion about the laterals.

He said so far overall the support for the tax hike has been “robust.”

But not everyone supports the project, which could take 10 years to complete.

People have already paid for undergrounding, former Mayor Brooke Eisenberg-Pike said. And now the city is going to pay for their neighbors. It looks like you’re trying to hoodwink the public. I think you’re setting yourself up for some strange problems.

KC Vafiadis called it “a total misuse of public funds.”

Councilman Don Mosier said he was all for undergrounding on public property, but he has concerns about the equity issue when using city money to pay for undergrounding on private property.

He also said the price tag could increase because when assessment districts were formed to underground, by the time it went to vote the cost doubled.

“So the original estimate is probably going to be right,” Mosier said.

Council members were scheduled to receive the presentation from Utility Specialists on June 6 and not take action.

Councilman Terry Sinnott said before moving forward he would prefer to hear the results of a poll to gauge public support for the sales tax increase.

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