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City to explore purchase of undergrounding allocations

Edison financing for other cities' undergrounding projects could be used by Laguna Beach in return for compensation.

October 14, 2010|By Barbara Diamond, coastlinepilot@latimes.com

City Manager Ken Frank was tasked at the Oct. 5 council meeting with finding willing sellers of Edison financial allocations for undergrounding projects to pay for a district on a section of Laguna Canyon Road.

The council unanimously gave Frank a green light to determine boundaries for a state Rule 21A district in the vicinity of Big Bend, do the paperwork to establish such a district and find cities prepared to sell their allocations. Rule 21A allows a city to buy the annual Southern California Edison funding for undergrounding projects from other cities that are not in a position to start projects or have no need.

"Can we gobble up as many of these as possible?" asked Mayor Pro Tem Toni Iseman.

As of Jan. 1, the city has a Rule 21A reserve of $690,000, an accumulation of its annual $95,000 allocations.

"It would take three or four years to get the project started," Frank said. "By that time, the city would have roughly $1 million in Edison allotments."

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Edison also allows cities to mortgage five years in advance, which would provide another $450,000. These allocations could be added to the city's Street Lighting Fund, permissible because the project would involve lights.

However, Frank said, the lighting fund would not be cost effective because the telephone company would be able to assess the city for its expenses in undergrounding its poles.

Rule 21A allotments could be paid for from the Street Lighting Fund to ensure enough money for a proposed project. The money would be paid into the sellers' general fund.

"Pricey, sure," Frank said. "We won't get it for 35 cents on the dollar."

But several cities that he has looked into appear to be interested, he said.

"Edison says the process is legal and encourages it," Frank reported to the council.

The council has intermittently shown an interest in undergrounding utilities on Laguna Canyon Road, one of only three ways out of town in an emergency, concerned that downed poles could block the road. Fire from sparking poles and equipment is also a worry.

Undergrounding utilities along the entire road could cost as much as $20 million. City and Edison staff looked at taking a smaller bite of the apple and came up with Big Bend, from 3051 to 2645/2655 Laguna Canyon Road.

They call it Phase 1.

All Edison facilities are concentrated on the developed side of the road, while communication companies have large diameter lines on the Irvine Co. side, according to Frank.

The proposed project would include both sides of the road. Edison's allocation would pay its work. The communications carriers would be required to undertake undergrounding at the same time at their own cost under Rule 21A.

Cost estimate for the sampler is $1.5 million.

"We would get a lot more bang for the buck," Frank said.

The estimated cost takes into account inflation and is expressed in 2014 dollars, according to a letter to Edison representative Steve Nelson. However the estimate was made without engineering maps and has a plus or minus of 40% accuracy.

And the city does not have available allotments for a five year mortgage to complete the project based on 2014 dollars.

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