• What is utility under-grounding?

  Existing overhead utilities (phone, cable TV and electric) are replaced by a system that is essentially underground, in our case mostly in our alleys. Wires for these utilities are run through conduits in streets and alleys. Utility poles are eliminated. Cable and phone company fiber optic and other lines are also installed under-ground. Service wires from homes and businesses in an underground district must also be placed underground.

• What is the status of Balboa Island utility under-grounding?

  Little Balboa Island property owners approved an underground project approximately 17 years ago. This was one of the first underground projects in Newport Beach. Cost to property owners was $9,800. In 2008 the residents of the entire Big Island voted on underground the entire Island. By a very narrow margin (three votes) this initiative failed. The estimate at that time was $16,700 per lot and had it passed would have been paid off by the 2023. In recent 2018 vote, the west end of the Big Island approved an underground assessment from Agate to Emerald. The poles and wires in the west end are scheduled to be removed by Summer 2023.

• What are the advantages to utility under-grounding?

  Removing overhead utilities eliminates the visual blight of utility poles with cross-arms, wires, transformers and associated hardware. Besides the aesthetic improvement to the general neighborhood, some properties will realize view enhancements and some properties will increase access to their garages or parking areas. Some alleys will have improved turning movements and clearances. The below ground system also provides higher safety by eliminating above ground facilities that could come into contact with homes during high wind events.

• I use my property as a rental so what are the advantages to me?

  The overall look of the Island will be improved and long term could result in higher rents and value of your property.

• I own a property on Marine Avenue what are the advantages to me?

  The success of a business that rent is related to the overall draw and beauty of Balboa Island. Most of the commercial properties are an investment and the value of the property is a key to your investment. Also, the delivery and access to Marine businesses through the alleys would be improved.

• What are the disadvantages of under-grounding?

  Property owners incur expenses for under-grounding facilities through a special assessment district. Disruption during construction of the project which can be scheduled off peak periods. There are usually less outages, but outages can be slightly longer. Shorting causing a vault issue, and even an explosion, are rare but have occurred.

• Will the under-grounding of the utilities Increase property values?

  While there are no hard data most local Balboa Island realtors feel that the cost of under-grounding will be more than offset by increased property values. Looking forward when compared to the Little Island and the West End of the Island, the property values on the remainder of the Island will be disadvantaged if the utility lines remain overhead.

• Will the under-grounding of utilities improve electric service reliability?

  There is no service reliability data supporting either overhead or underground utilities. In general, due to wind and other factors, overhead utility lines are subject to more frequent interruptions. Electric crews are normally able to restore service fairly quickly. Underground electric systems are subject to less frequent interruptions, however in the event of an underground interruption it takes longer to restore service. By all utility standards the reliability of overhead and underground electric systems is essentially equal.

• Will the installation of underground utilities reduce the risk of fire on the Island?

  Yes. There are inherent fire risks from overhead utility systems, though. SCE has provided a reliable and safe overhead system to date. As more and more utilities are under-grounded, the reliability of these services improves. Without protection from storms, wind and earthquakes, poles and wires can fall causing personal injury and damage. They can also block roads at a time when emergency vehicles need neighborhood access.

• Is there any truth to the claimed that due to the high-water table, underground utilities on Balboa Island would be susceptible to failure due to corrosion problems?

  SCE designs its system to be compatible with their Island’s high-water table. Lido Island, the Little Island and various parts of the Peninsula have been served by underground facilities similar to those planned Balboa Island for many years.

• Why have underground utility costs increased so much?

  Cost to construct the underground facilities has gone up dramatically. So much so the City has taken over construction of the underground facilities to allow a more competitive public bidding process.

• Who pays for utility under-grounding?

  Under-grounding is a property driven requested project and is paid for by the property owners who want that. SCE will continue to provide the overhead service we currently have if the property owners are not in support of paying for the under-grounding.

• How do you establish an underground project in Newport Beach?

  A full discussion of the procedures for initiating a UG assessment district is included in the attached City UG Guide. In general, the first step is for 60% the property owners signing a petition asking the City to proceed with an assessment district. Following a successful petition effort, the City will prepare the Preliminary Engineer’s Report that will show the distribution of cost to property owners included in the district. Once that report is completed the City Council will review and approve the document and schedule a public hearing. Ballots will be mailed out ahead of that public hearing where property owners can vote YES or NO on the proposed assessments. At the public hearing the district can be approved if more than 50% vote in favor of the project.

• Who decides how much each property is assessed?

  As noted above, an Engineering Report is prepared by an Assessment Engineer hired by the City. The Assessment Engineer is charged by State regulations with the task of fairly allocating the total cost of a district among the properties within a district boundary. The method of assessment is not fixed by law, and the process, by virtue of the physical diversity of Balboa Island properties, is not simple. Various Benefit factors such as lot size, improved safety, etc. will may be considered. The City has refined the benefit process and it is now greatly different than the prior vote eleven years ago. If the City follows prior projects, large lots will pay somewhat proportional assessments based on their size of lots.

• Why don’t the utility companies pay for under-grounding?

  There is no legal requirement for utilities to pay for under-grounding and they are happy to continue above ground service. The California Public Utility Commission regulations and franchise agreements have created different obligations. The costs to design and conversion to a new construct the new underground infrastructure is the responsibility of the property owners. In an assessment district the property owners pay to transfer their system from overhead-to-underground. The specific allocation of costs is established in what is call PUC Rule 20B.

• What is the cost of the Balboa Island underground project to me?

  City estimate is $29,900 for a typical 100X85 lot. Larger lots will pay somewhat more and smaller lots will pay proportionately less.

• What is the petition process that is currently underway?

  During the formation of the Special Assessment District, every property title holder in the district is asked to submit a signature in support of further investigating an underground project based on the average cost per lot of $29,900. Minimum of 60% of properties must sign the Petition in support of the undergrounding efforts for the City Council to authorize the Engineer’s Report to be prepared.

• Can my assessment be added to my property taxes?

  Yes, the assessment would be placed on your tax bill in the form of a special assessment bond. The bond term is planned to be 20 years. Upon sale of the property, the assessment can either be paid off or transferred, and is negotiable between buyer and seller.

• What if I don't want to be part of the program or cannot afford the cost?

  Unfortunately, if the project is approved every property will be responsible for their proportionate cost. There are private financing options available however the City’s financing cost of bonds is very low and it is unlikely you could obtain better financing options. The most recent bond sale had an overall rate less than 2.5% for the 20-year term.

• Is the entire alley going to be repaved as a part of this project?

  The amount of City repaving associated with the project has not been determined. The City will determine if trenches and trench repair or full alley replacement will be necessary.

• How long is the project and how long will the contractor be in front of my property?

  The City will schedule the project during a non-peak period of the year on the Island. It is estimated that the project will be completed in 24 months. The trenching along your property will typically take one to two weeks. Access to garages during the construction will be limited.

• How much will it cost to convert my own individual service?

  Individual property owners are responsible for the cost of making the electrical connection of the new underground system to their home. The complexity and cost associated with connection is primarily a function of the age of the home. Newer homes which were built the last 10 years are presently served from an underground service connection and there will be no service conversion costs. A second group of homes which were built prior to about 1970 are presently served by what is called an “overhead /underground” electric service panel. These panels were designed to accommodate a future underground conversion. At the time of construction, a conduit was “stubbed” out to the property line to accommodate such a conversion. The conversion cost for these homes typically will be in the range of about $800. A third group of older homes built prior to about 1970 will generally require the installation of a new service panel and the cutting of a trench from the existing electrical meter panel to the property line at the rear alley. Each of these properties will need to be evaluated on a case by case basis. The cost of these conversions will typically run between $2,500 and $4,000.

• How do I pay the assessment?

  The assessment can be paid in cash or through bond financing. Once the Assessment District has been approved by the City Council, property owners have a 30-Day Cash Payment Period to pay their assessment. After the 30-Day Cash Payment Period, any unpaid portion of the assessment will be financed through bond sales. If the property owner elects to finance the costs, annual installments of principal, interest and administrative fees will be collected with the property tax bill.

• Given the density and limited access on the Island what are the chances of fire from the overhead system?

  As you all know, utility-caused fires in California have caused billions of dollars in property damage and the tragic loss of many lives. Utility-caused fires are often a result of winds blowing tree limbs into utility lines, causing sparks that start fires. On Balboa Island we have very few trees that could blow into our lines so that risk is reduced. However, heavy winds can also can cause high voltage lines to “swing” together, resulting in arcing wires that can produce fires. You can only imagine what would happen in the case of a SCE-caused fire on Balboa Island during a Santa Ana wind condition. The whole Island could burn down in minutes, just like the city of Paradise California did in 1998.

• Who pays?

  Basically, property owners pay for the cost of underground conversion. However, under SCE Tariff Rule 20B, approved by the California Public Utilities Commission, the utilities absorb about 25% of the total cost of the underground conversion. Recent proposals have recommended that this 25% subsidy be eliminated. It is therefore quite likely that underground conversion costs will be significantly increased within the next few years.

Please visit the City of Newport Beach Official Website for more information on this topic.