Staff Report (2)10wN F MEETING DATE: 03/17/15
ITEM NO:
ov os COUNCIL AGENDA REPORT I
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DATE: MARCH 6, 2015
TO: MAYOR AND TOWN COUNCIL
FROM: GREG LARSON, TOWN MANAGER
SUBJECT: CONSIDER APPROVING THE PROPOSED PROJECT BOUNDARIES FOR
UTILITY UNDERGROUNDING ALONG LOS GATOS BOULEVARD FOR
USE OF RULE 20A FUND CREDITS ALLOCATED TO THE TOWN AND
POTENTIAL EXPANSION OF THE BOUNDARY UTILIZING
ALTERNATIVE FUNDING
RECOMMENDATION:
Staff recommends that the Town Council consider approving the proposed project boundaries for
utility undergrounding along Los Gatos Boulevard for use of Rule 20A fund credits allocated to
the Town and potential expansion of the boundary utilizing alternative funding.
BACKGROUND:
The Public Utilities Commission requires Pacific Gas & Electric Company (PG &E) to collect
funds from ratepayers for use in undergrounding existing overhead utilities, known as Electric
Rule 20 (Rule 20A). These funds are held by PG &E and set aside as credits for the individual
city, town, county, or other municipal organization (local agency).
The Town received credits in 2014 totaling the equivalent of $122,490, although this amount
varies from year to year and accumulates over time. The Town has accumulated approximately
$33M. In addition, PG &E allows for the use of up to five years of anticipated future credits.
This adds approximately $650K to the available credits for a total of $3.98M, with the credits
driving the size and scope of potential projects. Note that, although credits are reflected as
dollars, the funds are held, programmed, and spent by PG &E. All other utility companies that
have aerial lines in the Rule 20A District are required to pay for the undergrounding of their
utilities at their own expense. Project coordination ensures that all utility work occurs at the same
time. Additional funding opportunities are discussed later in this report.
Projects performed under Rule 20A are nominated by the local agency, and planned and
constructed through PG &E and the other involved' utilities. Typically Rule 20A projects are
completed in five to seven years.
PREPARED BY: MATT MORLEY 71k.1 `pt Cs,
Director of Parks and Public Works ddO
Reviewed by: Assistant Town Manager Town Attomey- Finance
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: PROJECT BOUNDARIES FOR UTILITY UNDERGROUNDING
MARCH 6, 2015
BACKGROUND (cont'd):
Projects which qualify for use of Rule 20A funds must be in the general public interest and meet
one of the following requirements:
• Undergrounding will avoid or eliminate an unusually heavy concentration of overhead
electric facilities.
• The street, road or right of way is extensively used by the general public and carries a
heavy volume of pedestrian or vehicular traffic, such as major arterial or collector streets.
• The street, road or right of way adjoins or passes through a civic area or public recreation
area or an area of unusual scenic interest to the general public.
Rule 20B projects are used for undergrounding in areas that do not fit the Rule 20A criteria or
when fund credits are not available. The undergrounding cost in this program is borne by the
applicant. This requires the applicant to pay not only the cost of the PG &E work for
undergrounding, but also the cost of the work for all other utilities included in the undergrounding
project.
DISCUSSION:
The Town has approximately $3.98M in PG &E undergrounding credits available for a project
within the Town's right of way, as noted above. As identified in the background discussion,
there are limitations to the locations that qualify for the Rule 20A program. Staff recommends
the section of Los Gatos Boulevard from Lark Avenue south to Frank Avenue as a good potential
project (see Attachment 1). This area is a main entry into Los Gatos and the overhead utilities
along Los Gatos Boulevard north of Lark are already underground, creating a very good
continuation project. Undergrounding in this location would also allow for wheelchair access
along the sidewalk on the west side of Los Gatos Boulevard between the existing San Jose Water
Company facility and Garden Lane where utility poles currently restrict access.
PG &E has completed a preliminary review and confirmed that the available credits are sufficient
for the project which would underground all utilities along this stretch of roadway. Staff is
looking for Council consensus on this location for a Rule 20A project.
In addition to PG &E Rule 20A credits, the Town collects its own undergrounding funds through
developer fees and currently has $2.8M in the Town's Utility Undergrounding Fund. These
funds are not subject to the requirements of Rule 20A and the Town may program them for
undergrounding as the Town desires. Typical uses might include combining Town funded
undergrounding with a development or a Town capital improvement project to provide for
undergrounding in association with those projects where Rule 20A funds do not qualify.
Periodically the Town will receive requests from residents for undergrounding in a specific
neighborhood or limited area. The expense involved with small projects means these types of
requests are generally not cost effective.
Limitations on the Rule 20A program do not allow for the direct contribution of additional funds
to the project. However, there is a potential of adding some or all of these funds to the proposed
Rule 20A project by purchasing Rule 20A credits from jurisdictions that wish to sell their credits.
PAGE
MAYOR AND TOWN COUNCIL
SUBJECT: PROJECT BOUNDARIES FOR UTILITY UNDERGROUNDING
MARCH 6, 2015
DISCUSSION (cont'd):
If there are jurisdictions with available credits, a negotiation would occur to set the value.
Examples of such agreements include rates of from $0.05 to $0.55 on the dollar, but could go as
high as 1:1. PG &E can provide a list of local agencies with un- programmed funds, and leaves
the negotiations to the individual agencies. The purchase of credits could lead to an expanded
project.
Attachment 1 shows two opportunities for expansion of the project boundary in segments that
would require $1M in credits each. As noted, the potential may exist to purchase these credits at
a discount. The use of the Town Utility Undergrounding Fund for expansion of a Rule 20A
project would reduce or eliminate the capacity for the Town to take on its own undergrounding
projects until that fund regenerates. Staff is looking for Council direction to explore the use of
Town Undergrounding Funds to expand the scope of the Rule 20A project.
Staff has met with PG &E and is ready to set the project boundary based on Town Council input
on location and funding. Once the boundary is set, staff, PG &E and the other utilities will meet
to review the proposed project and set target dates. Staff has asked PG &E to set this meeting
and expects the meeting to occur in the next thirty days. This meeting will serve to solidify the
project and staff will bring the results of that meeting back to the Town Council with a resolution
setting the project boundary.
Once the resolution is approved by the Town Council, the project will be in PG &E's queue for
design. PG &E estimates the following times for the beginning of design, completion of design,
and construction from the date the resolution is passed:
Begin Design: 1.5 years
Design Complete: 2 years
Construction Complete: 3 years
Total 6.5 years
CONCLUSION:
Staff recommends that the Town Council consider the proposed project boundaries for utility
undergrounding along Los Gatos Boulevard for use of Rule 20A fund credits allocated to the
Town and potential expansion of the boundary utilizing alternative funding.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
There is no fiscal impact as a result of this action.
Attachment:
1. Proposed Rule 20A Boundary Map