Responses To Frequently Asked Questions
For Undergrounding Of Overhead Utilities
And Assessment District Formation

May 14, 2010

Background

Approximately five years ago in 2005, the Association’s Planning Committee began researching how to underground overhead utility lines, which are prevalent throughout much of the Covenant area. As a result of their research, the Planning Committee discovered that a special district, in our case the Rancho Santa Fe Community Services District (CSD), had the ability to form assessment districts in order to help finance the costs associated with utility undergrounding. However, the Local Agency Formation Commission (LAFCO) would first have to activate the CSD’s power to provide such a service.

Then in 2006, the Board approved funding in the amount of $21,000, for an engineering study to evaluate the use of assessment districts as a financing mechanism. The Rancho Santa Fe Association Undergrounding Assessment Districts Evaluation Report was completed near the end of 2006 and presented to the Board in 2007.

Since that time, the Association has worked cooperatively with the CSD to prepare additional engineering studies and other documents, which were required by LAFCO, in order to file an application to activate the CSD’s latent powers for utility undergrounding. Very recently, on April 5, 2010, LAFCO approved the CSD’s application and activated their power to form assessment districts to finance the undergrounding of overhead utilities and the extension of natural gas lines within the Covenant boundary.

Association staff has developed the following list of answers to Frequently Asked Questions, in order to assist Covenant members with their understanding of assessment districts and utility undergrounding:

1. What has the Association done to facilitate the undergrounding of overhead utilities?

As described above, over the last five years the Association has researched undergrounding mechanisms, paid for an engineering study on the feasibility of using assessment districts, and worked cooperatively with the CSD to prepare and submit an application to LAFCO. These efforts led to the activation of the CSD’s power to finance utility undergrounding projects through the formation of assessment districts.     

2. What is an assessment district?

An assessment district is a financing mechanism; used in this case to pay for the costs of utility undergrounding.  Once an assessment district is formed, the assessment can be collected from individual property owners over time as a part of their property tax bill, or paid in a lump sum up-front. Typically, an agency or jurisdiction would issue bonds to complete the work, with the proceeds from the assessment district being used to repay the bondholders. Please refer to the Utility Undergrounding Districts Map to see the proposed assessment district boundaries.

3. Wouldn’t it be easier to use one large assessment district for the entire Covenant instead of 39 smaller districts?

No, because the odds of a successful weighted vote to form the district decrease significantly as the number of disparate properties increase. Consider the following hypothetical example:

The CSD receives petitions to form 10 assessment districts.  In five of the districts, a majority of the residents vote in support of formation and in the other five districts the majority opposes formation. At the end of the process, five districts could be formed. Conversely, if all 10 districts were considered in one application, the vote may very likely fall short of the required majority.  In that case, the district would not be formed.

Recently, in the City of Del Mar, a large, proposed assessment district failed to gain a majority of votes, even though the percentage of weighted votes in favor and in opposition was very close. In that case, as in the hypothetical scenario described above, utilizing smaller districts may have resulted in some properties being able to proceed with forming smaller assessment districts.

In addition, preparation of an engineering assessment report for the entire Covenant area would very likely cost in excess of $1.5 million.  This up-front cost cannot be recovered in the event that a Covenant-wide assessment does not have majority support. Again, utilizing smaller districts help reduce the overall risk.

For additional information regarding sewer lines, please contact the CSD directly…

4. What is the process to request formation of an assessment district?

The Rancho Santa Fe Association is the first homeowner’s association in the state to get involved with undergrounding of overhead utilities!  

Staff is currently working with an engineering firm and SDG&E to develop a handout entitled Steps to Form an Assessment District to Underground Overhead Utilities. Once we develop a complete picture of what is required and revise or modify the process to best suit the needs of our members, we will post the handout on the Association’s website and it will be available for pick up at the Association office.

These FAQ’s will be updated periodically as we develop additional information from the engineering firm and SDG&E.

5. Is there a cost for the Assessment Engineer’s Report?

Yes, if the property owners in a proposed assessment district choose to submit a petition to the CSD, each property owner within the proposed district will need to pay for a portion of the Assessment Engineer’s Report. Although the actual cost of an engineer’s report will vary and has yet to be determined for the proposed assessment districts within the Covenant, in other jurisdictions the cost has been around $1,000 per property.

6. Will the Association pay for a portion of the up-front design costs?

The Association Board has yet to determine whether establishment of a revolving fund to help pay for up-front design and engineering costs is appropriate. Any such contribution would be at-risk, since funds would only be repaid if an assessment district is actually formed.

7. Can the boundaries of the proposed assessment districts be modified?

Yes, to some extent. For example, a proposed assessment district boundary could probably be modified to include some additional properties located on the opposite side of a particular street or to correspond with the location of a specific set of overhead utilities.  Conversely, some properties could potentially be removed from a proposed assessment district if it would be more appropriate to include them in an adjacent district or if no overhead utilities are present or within their viewshed.

However, adjusting a proposed assessment district boundary may make it more difficult to obtain majority approval for undergrounding and could potentially result in ‘isolated pockets’ where overhead utilities would remain in place indefinitely.

8. My property is located in an assessment district shown in Phase C.  Do I have to wait for Phases A and B to be completed to underground our overhead utilities? 

No.  The phasing shown in the Utility Undergrounding Districts Map only applies to the extension of natural gas service. There is no phasing requirement for undergrounding overhead utilities.  However, if you are in a Phase C district and wanted to extend natural gas service, then portions of Phases A and B would need to be completed first. The reason is, SDG&E opposes the installation of a natural gas line that would not be connected, but would have to be maintained independently from the natural gas distribution network (you may review the Utility Undergrounding Districts Map at the Association Office).

9. Are telephone and cable television lines included in the utility undergrounding?

Yes.  All overhead utilities (e.g., electric lines, telephone lines and cable television lines) are included in utility undergrounding. In addition, where appropriate, it may be cost effective to install an extra conduit while the trench is open, for future use.

10. Will utility undergrounding impact the existing wireless antenna system?

The Wireless Master Plan anticipated that undergrounding may occur in the future. All components of the wireless system, except for the actual utility poles with cellular antennas attached to them, can be undergrounded. Where components of the wireless system can be undergrounded, the Wireless Master Plan requires that ExteNet pay for undergrounding their overhead lines and other infrastructure.

11. How will the costs for utility undergrounding be allocated?

Property specific costs for utility undergrounding are based on the benefit derived by an individual property. For example, if a particular property would have an unobstructed ocean view through the undergrounding of overhead utilities, that property would have a proportionally higher cost allocation than a similar property where utility undergrounding did not improve or “de-clutter” the view.

12. Does everyone have the equivalent of one vote, or are the votes to form an assessment district weighted?

The votes are weighted using a number of factors, which include the impacts of overhead utilities on a specific property and the benefit derived from undergrounding.

13. Can sewer lines be extended through this program?

No.  Sewer service is the core mission of the CSD, and they already have the ability to extend sewer lines if requested and funded by a property owner. For additional information, please contact the CSD directly at (760) 942-5147.