2023-12-19 CC Staff Report & Minutes - Undergrounding Feasibility StudySTUDY SESSION ITEM NO. 1
City of La Quinta
CITY COUNCIL MEETING: December 19, 2023
STAFF REPORT
AGENDA TITLE: DISCUSS FINANCIAL OPTIONS FOR THE VILLAGE
UNDERGROUNDING FEASIBILITY STUDY PROJECT NO. 2022-06
RECOMMEN
Discuss financial options for the Village Undergrounding Feasibility Study Project No.
2022-06.
EXECUTIVE SUMMARY
• In 2010 a feasibility study was prepared to assess the undergrounding of utilities
citywide.
• Undergrounding of utilities in the Village was identified as a priority at the 2021 and
2022 annual Community Workshops and funding was appropriated to update the
feasibility study in fiscal year (FY) 2022/23 Capital Improvement Program (CIP).
• On September 19, 2023, Council provided feedback on the draft of the Village
Undergrounding Feasibility Study (Undergrounding Study).
• The financial analysis and funding options for the Undergrounding Study have been
prepared (Undergrounding Finance Options) and include both local funding
mechanisms and federal/state grant opportunities. (Attachment 1)
FISCAL IMPACT
There is no fiscal impact to the City at this time. The Undergrounding Study provides
estimated costs and financial options for undergrounding utilities in the various study
areas.
BACKGROUND/ANALYSIS
In 2010 a citywide Undergrounding Feasibility Study was prepared, which included the
assessment of costs to underground overhead utilities within six areas in the city. The
costs prepared for this Study were out of date and needed to be reassessed. A phasing
plan was also needed to prioritize the undergrounding of the Village's commercial area
and Francis Hack Lane.
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During the 2021 and 2022 annual Community Workshops, undergrounding utilities in the
La Quinta Village was identified as a community priority. Subsequently, funding was
included in FY 2022/23 CIP to update the Undergrounding Study, and Council approved
an agreement with NV5, Inc. in December 2022 to provide these services.
The draft Undergrounding Study was presented to Council for discussion on September
19, 2023. The study evaluated the technical and economic feasibility of undergrounding
the existing overhead utilities in La Quinta. Specifically, the Undergrounding Study
identified areas for the undergrounding of utilities, estimated the potential overall costs
for undergrounding the utilities, and provided a planning -level cost estimate for each study
area based on Imperial Irrigation District (IID) utility standards and recommendations in
the following six areas:
o Area 1: The Cove
o Area 2: Downtown Commercial Area
o Area 3: Downtown Residential Area
o Area 4: Sagebrush
o Area 5: Highland Palms
o Area 6: Westward Ho
The financial analysis and funding options for undergrounding the existing overhead
utilities within the Village have been developed. The Undergrounding Finance Options
include both local funding approaches and federal and state grant opportunities detailed
in Attachment 1. The potential funding mechanisms include:
Local Funding:
o Municipal Improvement Act of 1913 (Assessment District)
o Mello -Roos Community Facilities Act of 1982
o Funding share with utility partners - Equivalent Overhead Distribution System
Federal Funding/Grants:
o Grid Resilience and Partnership (GRIP) Program
o Section 108 Loan Guarantee Program
o Public Works and Economic Adjustment Assistance Grant
o Community Wildfire Defense Grant (CWDG)
o Regional Catastrophic Preparedness Grant Program (RCPGP) FEMA Region 9
o Building Resilient Infrastructure and Communities (BRIC) Direct Technical
Assistance Grant
State Funding/Grants
o California Public Utilities Commission (CPUC) programs
o Community Resilience Investment (CERI) Program
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Local projects have traditionally been funded through the 1913 Act Assessment Districts
and occasionally by Mello -Roos Community Facilities Districts (CFD). There are two
approaches to forming Undergrounding Utility Assessment Districts:
1) Form the Assessment District and then prepare the plans and specifications and
then get construction bids; or
2) Prepare complete plans and specifications and have construction bids in hand
before forming the Assessment District.
The pros and cons of each option is identified in the draft Undergrounding Finance
Options. An additional local funding mechanism includes a cost share with the utility
partners, specifically Imperial Irrigation District (IID). The funding share could include the
cost of an equivalent overhead distribution system.
Prepared by:
Approved by:
Attachment:
Julie Mignogna, Management Analyst
Bryan McKinney, Public Works Director/City Engineer
1. Draft Village Undergrounding Feasibility Study Financial Options
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beverage carts to California; and if a gas -powered beverage cart is purchased prior to
January 1, 2024, the City will be grandfathered in.
MOTION — A motion was made and seconded by Councilmembers Fitzpatrick/Pena to
appropriate $866,000 from General Fund reserves and transfer to Enterprise Fund,
approve purchase of golf carts for SilverRock golf course, approve associated budget
adjustments, and authorize the City Manager to execute any documents necessary to
complete the purchase. Motion passed unanimously.
STUDY SESSION
1. DISCUSS FINANCIAL OPTIONS FOR THE VILLAGE UNDERGROUNDING
FEASIBILITY STUDY PROJECT NO. 2022-06
Management Analyst Mignogna introduced City Consultant Jeff Cooper, PE, Senior Vice
President with NV5, Inc. who presented the staff report, which is on file in the Clerk's
Office.
Council discussed the pros and cons of following the traditional ballot measure approach
for creating assessment districts versus "fast -tracking" the project; stability of the project
estimates as time elapses; the consultant's experience working with public utility
companies; who does the engineering on undergrounding projects — the public utilities
which often hire consulting engineers; the benefit of hiring a firm to oversee the
engineering; the ballot and assessment process, and the impact of new homeowners
entering a district; the role of the "proponents committee" to get 60-70% support, followed
by a 30 -day cash -payment period or bond issuance; bonds will be issued and sold based
on the engineer's estimate for the project design, which will be prepared after the ballot
measure is approved under the "fast-track" process; it is a vote -by -mail ballot process,
each vote is weighted based on their assessment, and is approved by minimum of 50%
of the votes casted only; the assessment district will only cover undergrounding costs in
the public right-of-way; property owners are responsible to connect their property to the
public utility, which requires a building permit and an inspection by the City; the assistance
many cities provide in finding electricians, and the property owners within the district can
use the same electrician; estimate cost to reconnect is $8,000 to $10,000, which includes
trenching for the line on private property; enacting an ordinance requiring reconnection;
possible loan program to assist homeowners with reconnection costs; average cost per
parcel for each area for undergrounding utilities per one-time cash payment versus 20 -
year bond -issuance; voting requirements for a Mello -Roos Community Facilities District;
requesting the utility company to make a financial contribution to the project because it
will eventually own and maintain the undergrounded system; transfer of improvements if
a new utility agency takes over the district; primary reason for undergrounding is
aesthetics, followed by safety and increased system reliability; ability to tie the project to
climate change to be eligible for grants and loans; efficiency of underground lines versus
overhead lines is the same; next steps are Imperial Irrigation District (IID) discussions,
community outreach and education, public forums, workshops, etc.; researching financial
assistance options for utility reconnection costs is too early at this time; investigate
programs similar to the PACE program for solar; information packets must include graphs
and pictures; fast timeline would be 5 to 6 years; current system's lifespan has about 10
CITY COUNCIL MINUTES
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to 15 years remaining; overhead lines are easier to service; residential and business
tenants will absorb the assessment in their rents; City's relationship with IID must be
clarified first; ownership of existing and new replaced equipment must be established;
meter locations on homes may increase costs; microgrids; City as a facilitator of the
process, not a proponent; implication on homeowners taxes, insurance, etc. after
undergrounding; and the bond cost cannot include the utility reconnection costs because
it is a private property improvement .
CONSULTANT: Greg Butsko, Vice President of Distribution Services with NV5, Inc. —
said his company did the 2010 project analysis; explained the extent of his 35 years of
experience with IID; responsibilities of IID and the City; and there is no difference in
delivery of utilities between underground versus overhead lines.
MAYOR EVANS CALLED FOR A BRIEF RECESS AT 6:23 P.M.
MAYOR EVANS RECONVENED THE COUNCIL MEETING AT 6:50 P.M. WITH
ALL MEMBERS PRESENT
PUBLIC HEARINGS
1. CONTINUED FROM SEPTEMBER 19, 2023: ADOPT RESOLUTIONS TO: 1)
ADOPT MITIGATED NEGATIVE DECLARATION (EA 2021-0006 ), AND 2)
APPROVE GENERAL PLAN AMENDMENT 2021-0001, ZONE CHANGE 2021-
0001, CONDITIONAL USE PERMIT 2021-0002 (PLANNED UNIT
DEVELOPMENT) FOR AN 80 -UNIT SINGLE-FAMILY RESIDENTIAL PROJECT
AND TENTATIVE TRACT MAP 2021-0004 (TTM 37950); CEQA: DESIGN AND
DEVELOPMENT DEPARTMENT PREPARED A MITIGATED NEGATIVE
DECLARATION CONSISTENT WITH THE CALIFORNIA ENVIRONMENTAL
QUALITY ACT; PROJECT NAME: LA VILLETTA AT AVENUE 58; LOCATION:
SOUTH OF AVENUE 58 BETWEEN MADISON STREET AND MONROE
STREET [RESOLUTION NOS. 2023-045 AND 2023-046]
MAYOR EVANS DECLARED THAT THIS IS A CONTINUED PUBLIC HEARING LEFT
OPEN FROM THE SEPTEMBER 19, 2023, MEETING
Associate Planner Fernandez presented the staff report, which is on file in the Clerk's
Office.
APPLICANT REPRESENTATIVE: Kris Pinero, Project Manager with Rodeo Credit
Enterprises, LLC — provided a brief overview of the project; the Applicant's neighborhood
outreach; the benefits the project would bring to the La Quinta community, including
housing diversity, affordability, energy infrastructure improvements, and increased
electrical capacity.
Council discussed there are no: 2 -story homes in the developments surrounding the
project, close by employment or no public transportation near the project; questioned the
affordability of the proposed homes; density concerns; guest parking; setting a precedent
for high-density housing; lot lines/setbacks being only 8 feet translates as high-density;
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