Acquisition Concept for Undergrounding Utilities

By Martha Andreani

The project to underground Districts 1, 3 & 5 has ground to a halt in a management and financial disaster. For the remaining five assessment districts, the Andreani campaign proposes a different approach that puts the city in control, not the utility companies Edison, Verizon and Adelphia. Read on.

To City Council Via Email, Martha Andreani, February 2, 2005

The city views utility undergrounding as contracts between assessment districts and the utilities, with the city acting as facilitator, rather than a participant. The first project, undergrounding Districts 1, 3, and 5, has ground to a halt in a management and financial disaster. Nobody knows who is in charge, but we all suspect the usual suspects: Edison, Verizon and Adelphia.

For future assessment districts other than the poor wretches in Districts 1, 3, and 5, who have paid their money and seen nothing for it, but fear the worst, the Andreani campaign proposes an alternative acquisition approach. This concept has the city acting as program manager for underground assessment districts and taking direct responsibility for infrastructure improvements in the right of way, such as the conduits and vaults that hold the utilities' equipment. Such a project is well within Public Works contracting and engineering capabilities, considering that the city owns, operates and maintains the water, sewer and storm drain systems, a much more complicated and higher maintenance infrastructure than required for electricity and telecommunications.

The assessment will fund city tasks for program management and infrastructure construction. Any city overruns will be covered by a contingency budget in the assessment and the Rule 20A funds contributed annually by Edison.

No city general funds will be expended in this undergrounding concept, unlike like the current project for Districts 1, 3 and 5, for which during the February 1 council meeting, the Edison spokesperson implied Public Works would perform some tasks.

The utilities will provide specifications for the infrastructure, which the city will build using a general contractor. If the utilities' specifications as implemented prove deficient in any manner, it will be the utilities' responsibility to correct the problems.

This concept has the advantage that the city will control cost and schedule for the most time-consuming and expensive element, the right of way infrastructure.

Effectively in subcontractor roles on fixed-price contracts, the utilities will purchase and install their equipment. Thereafter, they will operate and maintain their facilities independently. The city can charge a maintenance fee, because the utilities will not have that expense.

This concept sidesteps the issue of condemnation. The utilities' overhead assets are primarily the power and electronic equipment, wires, cables and fiber optics. The poles are simply ancillary. The utilities retain their rights to provide services, albeit using the city's underground improvements in the right of way.

In the long-term, this concept has advantages for Manhattan Beach. Eventually, perhaps within fifty years, most of the city utilities will go underground. By owning the infrastructure, purchased by assessments on property owners, the city will have a much more favorable position to negotiate franchises with telecom providers, such as cable TV and broadband data. Additional spare capacity should be included in the infrastructure for future development.

Contractors will recognize that the city will provide decades of projects as various assessment districts form. Consequently, they will be eager to bid on the first jobs.

Philosophically, this concept has great appeal. The infrastructure constitutes most of the undergrounding cost, paid for by property owners. As the council observed, the utilities have acted outrageously on this project. Why give these costly assets to them as a bonus?

Additionally, Manhattan Beach will establish a successful model for undergrounding that other cities will surely adopt.