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2023 Undergrounding Feasibility Study Project 2022-06 - Finance OptionsCity of taialigray CALIFOR NI \ Undergrounding Feasibility Study N 5 Funding Options Presented by Jeffrey M. Cooper, PE 746 Funding Options 6 Areas 1. The Cove 2. Downtown Commercial 3. Downtown Residential 4. Sagebrush 5. Highland Palms 6. Westward Ho fifii Underground Assessment Legend L. 0.1. Cr Lmlry P.apWswl 40..e.e...d F... NUM Alfa .. _. 1113 Core. Flea It I I Wanm,re cea .rn.1. P ea a2 gamin. Ree390.131, Pre. l3 F —I sapeenLen.Frea Yfy�.M Pam, Area iS HegeeN He Ai...NaaIe L Re. 1 Funding Options Local Funding Approaches Local projects have traditionally been funded through the 1913 Act Assessment Districts and occasionally by Mello -Roos CFDs. There are two basic approaches to forming Undergrounding Utility Assessment Districts. One is to form the Assessment District and then prepare the plans and specifications and then get construction bids; the other is to prepare complete plans and specifications and have construction bids in hand before forming the Assessment District. Included on the following slides are details on the different options available. Federal & State Grants There may be grants available, which are presented later in this presentation. Funding Options Examples of Successful Assessment Districts NV5 has assisted with the successful formation of several utility undergrounding assessment districts throughout Southern California. The table below includes a sampling of recently formed districts that are comparable in size and scope to the City's areas. District Name # of Parcels Total Cost Avg. Cost per Parcel % Approval (Weighted) UUAD No. 124 City of Newport Beach 966 $32,815,700 $33,970 65.29% UUAD No. 117 City of Newport Beach 268 $4,640,550 $17,315 52.20% UUAD No. 113 City of Newport Beach 215 $6,249,500 $29,067 71.54% UUAD No. 19-4 City of Manhattan Beach 170 $7,255,000 $42,676 75.38% UUAD No. 19-12 City of Manhattan Beach 231 $6,735,000 $29,155 62.27% UUAD No. 19-14 City of Manhattan Beach 244 $6,810,000 $27,909 64.19% Paseo de la Playa UUAD City of Torrance 20 $1,784,400 $89,220 94.31% Greenwich Village North UUAD City of Hermosa Beach 101 $4,031,600 $39,916 65.28% Funding Options Option One — Municipal Improvement Act of 1913 (Assessment District) 1. The process is initiated by an interested property owner, who acts as a liaison between the City, utility companies, and neighbors 2. Based on the interest letter, the City Consultant prepares a boundary map and submits it to the appropriate utility companies who review the map to ensure that the boundaries are logical and feasible 3. The City Consultant then prepares a petition to be circulated by proponents to all affected property owners within the proposed district boundaries 4. Once the petition is certified by the Assessment Engineer, the City Engineer and the City Consultant will prepare a staff report requesting City Council approval to move forward. With Council approval, the Assessment Engineer will prepare an Engineer's Report 5. The Engineer's Report and Resolution of Intention are submitted to the City Council for approval and a public hearing is scheduled 6. The Ballots are prepared with the assessment amount and sent to each property owner within the proposed district boundaries 7. All votes must be submitted to the City prior to the end of the scheduled public hearing. The district passes if the district received greater than 50% approval and is subsequently approved by the City Council. Following approval by the property owners, the detailed design process begins. It usually involves the following steps: Base mapping, IID electrical design, and telephone and cable design 8. Once the project is fully designed, it will be bid with a contract awarded, and then constructed Funding Options Option One — Municipal Improvement Act of 1913 (Assessment District) Design: After District Formation (Fast-track) Pros • Once the petition is approved, the City can immediately order the Engineer's Report, go to ballot and form the Assessment District • Up front costs are significantly less and the time period to form the District is reduced to about 3-4 months. The agency can pay the up front costs or request that the proponents pay the up front costs by depositing funds with the agency • It is known whether you have an Assessment District before preparing plans and specifications and obtaining bids Cons • Disadvantage is the bids could come in higher than the estimated cost in the Engineer's Report causing a shortfall in assessment funds. This can be counter balanced by placing a larger contingency in the Cost Estimate Funding Options Option Two 1. Steps 1-3 are the same as option 1 2. Once the petition is certified by the Assessment Engineer, the City Engineer and the City Consultant will prepare a staff report requesting City Council approval to begin the design process 3. The design process begins once the utility companies receive the design fee, which is the responsibility of the property owners. The process usually involves the following steps: Base mapping, IID electrical design, and telephone and cable design 4. Once the design is complete and accepted by the City and utility companies, the utility companies provide a "guaranteed cost of construction." 5. The completed design plans, Engineer's Report, and Resolution of Intention are submitted to the City Council for approval and a public hearing is scheduled 6. Ballots are prepared with the assessment amount and sent to each property owner within the proposed district's boundaries 7. All votes must be submitted to the City prior to the end of the scheduled public hearing. The district passes if the district received greater than 50% approval and is subsequently approved by City Council Funding Options Option Two Design: Before District Formation Pros • Advantage is costs are known before balloting and forming the District Cons • Plans, specifications (PS&E) and bidding process must be paid for up front before forming the District • After paying the up front costs, the District could fail to be formed. The agency could lose the funds for the PS&E unless the proponents of the District pay up front the costs, rather than the agency, by placing a fund deposit with the agency • It can take two years to have the plans and specifications prepared and construction bids received and support for the District could change during this period Funding Options Paying the Assessment & Final Steps Regardless of which of the two options is selected, property owners will have two options to pay for the assessment: 1. 30 -Day Cash Payment Period: Within 30 days after the close of the public hearing, the property owner has the option to pay the full or a portion of the assessment amount. The property owner will save approximately 8% on the portion of the assessment paid in cash. This 8% savings results from not selling bonds for the amount owed. Bonds will be sold for any unpaid portion of the assessment and a lien will be placed on the property until the bond is paid in full. 2. Bond: If the property owner elects to not pay during the 30 -Day Cash Payment Period, bonds will be sold. Assessments will be placed on the property tax bill to be paid over a 20 to 25 -year financing period. During that time, a lien will be placed on the property until the bond amount is paid in full. Bonds will incur a finance charge. Once construction of the main line underground infrastructure has been completed, property owners will be responsible for hiring a licensed electrician to connect the property's existing overhead connection to the underground infrastructure — this cost is not covered in the assessment amount and will need to be completed within the designated time frame by the property owners. Avg. Cost Per Parcel (Paying in Cash) ** Funding Options Cost Per Parcel Per Area (Paying in Cash) *** 1 Parcels in the Area * Cost of Undergrounding (On Street) ** 1 The Cove 5,046 $117,279,875 $23,242.15 2 Downtown Commercial 85 $4,564,999 $53,705.87 3 Downtown Residential 294 $11,967,959 $40,707.34 L 4 Sagebrush _-11.- 1,116 I. _ $2,692,109 $23,207.83 5 Highland Palms 92 $4,482,771 $48,725.78 MK Westward Ho ill Ilk $4,105,195 AM$33,927.23 11. * The cost estimate is based on IID maps and the count of services requiring conversion, which may differ from a simple parcel count. Occasionally, a single parcel may contain multiple homes or services, and conversely, a home or service may span multiple parcels. The most accurate option is to conduct an engineer's field study to obtain a true count of homes ** Includes 15% incidental costs (assessment engineer, CM and Inspection, city time, & bond counsel) *** It is estimated that private conversion costs will be in the $8,000-12,000 range per parcel. Property owners will be responsible for this amount, which is in addition to their assessment Funding Options Cost Per Parcel Per Area (With Bonds)** Area No. Area Name Avg. Cost Per Parcel (Paying in Cash) Avg. Financial Costs @ 10% Avg. Total Cost per Parcel (w/o interest over the life of the bond) * Avg. Total Cost per Parcel (w/4.5% interest over the 20 -yr life of the bond) * Avg. Annual Cost per Parcel (w/4.5% interest over the 20 -yr life of the bond) * 1 The Cove $23,242.15 $2,324.21 $25,566 $38,818 $1,940 2 Downtown Commercial $53,705.87 $5,370.59 $59,076 $89,699 • $4,484 3 Downtown Residential $40,707.34 $4,070.73 $44,778 $67,989 $3,399 4 Sagebrush $23,207.83 $2,320.78 $25,528 $38,761 $1,938 5 Highland Palms $48,725.78 $4,872.58 $53,598 $81,381 $4,069 6 Westward Ho $33,927.23 $3,392.72 $37,319 $56,664 $2,833 * Rounded to the nearest dollar ** It is estimated that private conversion costs will be in the $8,000-12,000 range per parcel. Property owners will be responsible for this amount, which is in addition to their assessment Funding Options Mello -Roos Community Facilities Act of 1982 In 1982, the Mello -Roos Community Facilities Act of 1982 (Government Code §53311-53368.3) was created to provide an alternate method of financing for needed improvements and services. • The Act allows any county, city, special district, school district or joint powers authority to establish a Mello -Roos Community Facilities District (a "CFD") which allows for financing of public improvements and services. The services and improvements that Mello -Roos CFDs can finance include streets, sewer systems and other basic infrastructure, police protection, fire protection, ambulance services, schools, parks, libraries, museums and other cultural facilities. • A CFD is created to finance public improvements and services when no other source of money is available. • A CFD is created by a sponsoring local government agency. The proposed district will include all properties that will benefit from the improvements to be constructed or the services to be provided. A CFD cannot be formed without a two-thirds majority vote of residents living within the proposed boundaries. Or, if there are fewer than 12 residents, the vote is instead conducted of current landowners. In many cases, that may be a single owner or developer. • Once approved, a Special Tax Lien is placed against each property in the CFD. Property owners then pay a Special Tax each year. If the project cost is high, municipal bonds will be sold by the CFD to provide the large amount of money initially needed to build the improvements or fund the services. Analysis of Equivalent Primary Overhead Distribution: Count and Cost Evaluation Equivalent Overhead Distribution System: A theoretical feeder and distribution extension designed as if the applicant were going to be served overhead by a new system. The line will follow the basic route of the existing overhead system. This evaluation involves estimating the costs associated with establishing a new equivalent overhead distribution system used for delivering electricity to the existing residents in the 6 study areas. It encompasses the costs linked to the new primary infrastructure elements, such as poles, arms, insulators, pins, anchors, stud poles, cable poles, guying and the associated labor, equipment and permitting related. The equivalent overhead distribution and feeder extension must originate from the same existing source. The equivalent study should follow the basic route of the existing overhead system but must also be based on sound engineering practices for overhead construction utilizing proper pole spacing, grade of pole construction, and loading engineering. The intent of this opinion of probable cost is to explore a credit option so Imperial Irrigation District can considerer an equivalent overhead credit for the length of the proposed conversions in the 6 different impacted areas in the City. Analysis of Equivalent Primary Overhead Distribution: Count and Cost Evaluation This table provides an estimated count of feeder distribution poles, overhead conductors, and other essential components required to construct a comparable overhead primary distribution feeder system. EQUIVALENT PRIMARY OH DISTRIBUTION COUNT ESTIMATE Area #1 Area #2 Area #3 Area #4 Area #5 Area #6 Distribution Poles 765 37 77 _MIN 37 38 Distribution Pin, Insulators 3550 172 357 172 176 Distribution Arms 887 43 89 W - 43 44 Primary Cable Poles 7 4 2 IIIIIM. 1 OH Feeder Conductor 4 wire 3 phase in Ft 24,868 1,719 OH Distribution Conductor 4 wire 3 phase in Ft 62,572 3,197 11,801 3,055 2,085 2,859 Anchors, Stub Poles and Other Guiding 77 4 3 4 4 4 5J MEM 85,569 101 This table illustrates the estimated costs involved in constructing a comparable overhead primary distribution and feeder system. EQUIVALENT PRIMARY OH DISTRIBUTION COST ESTIMATE Area #1 Area #2 Area #3 Area #4 Area #5 Area #6 *Total Distribution Feeder Poles $ 19,125,000 $ 925,000 $ 1,925,000 $ 1,000,000 5 925,000 5 *Total Distribution Primary Cable Poles $ 364,000 $ 208,000 $ 104,000 5 52,000 5 52,000 $ Total 397.5 AAC OH Feeder Conductor - 4 wire 3 phase $ 3,854,540 $ 761,980 Total OH Distribution Conductor - 4 wire 3 phase $ 3,253,744 $ 166,244 $ 613,652 $ 158,860 $ 108,420 $ 148,668 TOTAL $ 26,597,284 $ 2,061,224 $ 2,642,652 $ 1,210,860 $ 1,085,420 $ 1,358,668 TOTALS 950,000 260,000 • 24, 850,000 1,040,000 $ 4,616,520 $ 4,449,588 $ 34,956,108 *Total Distribution Feeder Poles includes ( Distribution Pins, Insulators, Distribution Arms and Anchors ). *Total Distribution Primary Cable Poles represent transitions from existing Underground system to Overhead system or vice versa. This cost estimate is based on whether a private or public entity, other than IID, was constructing a new infrastructure system. The calculations and costs associated with IID's utility may differ from those presented. Costs includes IID's Engineering, Materials, Labor and Permitting. Funding Options Other Funding Opportunities Federal Funding/Grants The Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law, has been labeled as a once -in -a -generation investment in infrastructure to support the nation's growth. While nearly 400 funding opportunities exist within IIJA, many of them were focused on either finding the most cost-effective route, directed at clean energy, designed for the state of California to be the applicant, or were focused on rural populations, However, several opportunities presented themselves for the City which may qualify and are presented as follows: • GRIP (Grid Resilience & Partnership): Department of Energy (DOE) program that supports activities that will modernize the electric grid to reduce impacts due to extreme weather and natural disasters. This program will fund comprehensive transformational transmission and distribution technology solutions that will mitigate multiple hazards across a region or within a community, including wildfires, floods, hurricanes, extreme heat, extreme cold, storms, and any other event that can cause a disruption to the power system. This program provides grants to electric grid operators, electricity storage operators, electricity generators, transmission owners or operators, distribution providers, and fuel suppliers. This program will provide up to $2.5B over 5 years. GD0 IMO Grid Resilience and Innovation Partnerships Program As parr of the Bipartisan infrastructure law, the Grid Deployment Ofrre (GOOF is administering the $10.5 billion Grid Resit hence and In no�atnn Partnerships ]GRIP] Program to enhance grid Re tihility and enprwe the resifence of th• nation's pewee grid against growing threats of extreme acether and climate change. Thou prngrams wi6 a,ekrakffte deploymenk of hansfnrmalive poiedsacrosaiIrt nndnn to- help envare the Fetal lily of the power secwrs 11f..13-whne. encoring. al I A,,,erran eornm,.nilss have access w arfnrdahle, reliabk� dean electricity anytime. anywhere. GRP includes three fundy mechar sons: GRID PESIIJ DICE UTILIPt AND INDUSTRY GRANTS 02.5 BIMNONy Grid ftesllier.. 1t114 and hlADltry Grants support ALUM.. that will rnodemlae the electric ere! to reduce impacts from estreme weather and natural disasters- Thr grant program will fund mmprahenslue transformational transmission and distribution technology sofutinns that will mitigate weather hazards across a region or within a community including wdenres, fbadr, hurricanes, extreme heat entreme cold, and extreme weather events the t can Castle r dluuptipn to the power system -l1,11 funding opporhmlty Is awda0let0 eleetrt IpId operators, eleetneht storage operators, electricity generators, transmission ownersw operators, dlstr8etlon providers, and Fuel suppliers. • Concept Paper Deadline: December 14 2022 • Anticipated Award Selection Date Summer 2623 • 289 Concept Papers rtceiyed • Next Round of funding Opens: Winter 2023 • Full Application deadline: April4 253 SMART GRID GRANTS 03 BILLION] Smart Grid Grants support acohnties that will Increase rhe flee1h@ty, efRmency, and reiablity oldie electric power system. These grants wiE and technology amused on increasing capacity of the transmission system, preventing faults that may lead torriklhres or other system disturbances, integrating renewable energy al the transmission and dIn10buPon levels, and facilitating the integration of irrreesiag electrified veh.dr E5ildings, and other grid -edge devices. Smart grid technologies fmWed and deployed at scale I11rder this program wil demonstrate a pathway to wider matte! adoplmn. Thagraatprogram nes brad ellgIbrity and Is awdabre to donrcsnc entities hrcludIng msriluvons ar hIgher eduniIon; for-profit endpes; nos-proAt enoael; ata stateand local governmen1N enti1es, and tribal nations • Concept Paper Deadline:December 142022 • Anticipated Award Selection Date: Summer 2023 • 326 Concept Papers received • Neal RaP'rdoffunsling Opens: Witter 2913 • Full Application deadline: Marsh 17, 2023 GRID INNOVATION PROGRAM {$5 BILLION] Grid hrnovavon Program provides financial assetarrce foo. or multiple states, Tubes, Local gwerrmenfs, and public utAity commissions to collaborate with steer ic mctvr 0ymers and operators to deploy projects that use innovative approaches to transmbsion, storage, anddstribution infrastructure to enhance grid rsrkeroe and reliability, Broad project applloabons are or interest including Interregional transmission projects, investments that accelerate Interoonnec00n of clean energy generation, utlllration of dlstrlbut in grid assets to provide backup power and reduce transmission repulrements, and more. Innovative approaches can range -from use of adyancedtechnologim to nnwaGve partnerships to the deployment or pnjecn itlendllei by Wnawtive pl.nnbrg em.tewes m marry 0E1109. • Concept Paper Deadline.January13, 2023 • Anticipated Award.5electwn Dale: Fall 2023 • 135 Concept Papers received • Nen Pe.nd., fording -Opens: Moue 2023 • Full App1100500 P.. ,Ane: May 19, 2023 Ppears2Ar 2ipa. 521'0.19 p\x{e.. 505 hripe a.e0.pa,�niarS•nekfinetend->,eorornn0emnern Funding Options Other Funding Opportunities Federal Funding/Grants (Continued) • Section 108 Loan Guarantee Program: As a community development block grant recipient, the City may apply for a Section 108 Loan Guarantee Program grant. This program would help provide low-cost, flexible financing to support infrastructure that benefits low- and moderate- income citizens for site improvements. A match is not required and actual funds are unspecified. The funds are distributed on a rolling basis from the U.S. Department of Housing and Urban Development. • Public Works & Economic Adjustment Assistance Grant: This grant assist communities implementing long-term economic development efforts. Through this program, projects that demonstrate climate change resiliency for decades to come are encouraged to apply. A match from the applicant is required via cash/in-kind, although actual funds are not specified, and proportions vary based on unemployment rate and per capita income. The original solicitation date was 03/14/2023, but funds are distributed on a rolling basis from the US Department of Commerce. Economic Development Administration Economk Adjustment Assistance Program EDA Economic Adjustment Assistance Program What doss the Economic Adjustment Anhwei SAA] program dol The EAA preemie proeidee a wide range of technical, plannwrg, and pubis w Ae end uhfmalydcture dB9latariCe Is regions experiencing adverse economic changes thet may occur suddenly a over tare Those adverse economic :npacte may rant Fran a steep decline m manufacturing employment feller/in a plant donee. changing trade patterns, catastrophic natural disaster. a military hese closure, or enakonmenral changes and regulations. Who may bollard from EAA and what will ouch fielding do to promote economic developnsent? The ENA program can assist date end local entities a responding to a wide range of economic challenges Miaow ▪ Strategy Gramm to suppod the deueloprnenl updating or tenement oFa Compnehentive Economic Developmehl Strategy (CEDS). • Implementetlon Gams to support the masculine of nctivlien identified n a CEFJS, such et efraehuclure improvementn. :miming Hite acquisition, tits preparation, eonabuetian, rehehugation end equipping of follies. Specific activities may he funded ea neonate investments at et multiple elements da singk investment Why's itadvarahagsrus to apply For EAA Fnndale The EAA program rs ED A's most flexible program. Under the EAA program, EDA can fund market and environmental studies, planning or construction grads, and capdal¢e or recapnbol¢e revoking loan funds {BLEs) to help provide small husnesses with the capial they need to grew. Met criteria we used in determining which projects receive EAA grants? • The ability of the proposed project to reatctically acheve the dented result and catalyse additional resources; • The ability of a project to clad quickly and create jabs faster. • The extent to which the project cul enable the comminityhegion to become more divereised and more economically prosperous: • The relation canon* &Ystres of the regeon; • The mph:ants performance under previous Federal financed assistance awards, including whether the grantee mbmilled required performance reports mad data. • The comparative feasibity of the apibcad to achieve the outcomes idedihed in the appicalion, What is an mmpie of a successful EAA praiser! Forexamples of successful EPAproJecls mee rillo:ftevriv edaiovtam4aliemortN Haw dv Isot mare infermatien an halite apply? The Federal Funding Opportunity (FFO) is available at htlnlaraw. eda. oovdurdina•opporhinitiesfndex.hbn. To discuss any project proposals in Further detail. cortatlyour EDA Regional Office. nNNWAtION. puuirarAL 40.0 0FArION. iIXlrP0eTlQn. wowe00M.n0o Faba:'les ort Th,mon 5er1.Y ri Vit Funding Options Other Funding Opportunities Federal Funding/Grants (Continued) • CWDG (Community Wildfire Defense Grant): With the adoption of a community wildfire protection plan (CWPP), the City could benefit from this program which is designed to help implement projects within the CWPP that are less than 10 years old related to becoming a fire -adapted community. The due date for this grant is on 11/03/2024 and a cash/in-king match is required. The actual funds from the US Department of Agriculture are unspecified. • RCPGP (Regional Catastrophic Preparedness Grant Program) FEMA Region 9: This grant covers severe damage or disruption to the infrastructure related to a catastrophic incident impacting the area, focusing on projects that are focused on equity and climate resilience. This grant can be used to build on existing regional preparedness efforts for local governments. Although the original due date of 7/24/2023 has passed, there are multiple due dates for these funds from the US Department of Homeland Security. No match is required for the $12M funds available, with individual projects grants covering up to $3M. • BRIC (Building Resilient Infrastructure & Communities) Direct Technical Assistance Grant: If the City of La Quinta is able to demonstrate that they have pockets within the community with a social vulnerability index (SVI) score greater than or equal to 0.6, this grant can be applied for. There is no known due date for the next round of funding, but a match is not required for this program funded through the US Department of Homeland Security. This grant is to be used as an additional research resource as the purposed of this program is to provide non-financial direct technical assistance to applicants. Funding Options Other Funding Opportunities State Funding/Grants • CPUC (California Public Utilities Commission) establishes funding mechanisms for undergrounding and upgrading the power grid through a variety of programs under Rules and Tariffs paid by users and the utility through work credits that accumulate annually in the municipality's account. The work credits are established by formula based on the equivalent overhead infrastructure improvement that would have been required if not for the construction of the underground facility. The challenge for agencies served by non -investor funded utilities, such as IID, is that the utility is not obligated to participate in these programs nor set aside work credits to fund future undergrounding as would be required for investor funded utilities, such as SCE. This is to the benefit to the rate payers in the short term but does not provide a funding source for future undergrounding our upgrades to the power grid. However, the CPUC does have requirements for undergrounding of secondary utilities, such as telecommunication lines, at the utility's expense along designated scenic highways and in areas where there is a public interest finding that justifies placing the lines underground. This would require these secondary services to participate, at their own cost, in any City sponsored undergrounding project to move the lines into the public right-of-way; however, the cost to reconnect service to individual properties may be borne by the property owner. • CERI (Community Resilience Investment) Program: This program will fund projects across California that increase community energy resilience and reliability, promote decarbonization of the electric system, improve energy justice and equity, and create good -paying jobs. Approximately $170 million in formula funds over the next five years will be distributed under the Infrastructure Investment and Jobs Act (IIJA), section 40101(d) — Preventing Outages and Enhancing the Resilience of the Electric Grid. Funding Options Summary & Conclusion Potential funding mechanisms include: • Local Funding • State Funding/Grants • Municipal Improvement Act of 1913 (Assessment District) • CPUC (California Public Utilities Commission) programs • Mello -Roos Community Facilities Act of 1982 • CERI (Community Resilience Investment) Program • Federal Funding/Grants • GRIP (Grid Resilience & Partnership) Program • Section 108 Loan Guarantee Program • Public Works & Economic Adjustment Assistance Grant • CWDG (Community Wildfire Defense Grant) • RCPGP (Regional Catastrophic Preparedness Grant Program) FEMA Region 9 • BRIC (Building Resilient Infrastructure & Communities) Direct Technical Assistance Grant