Council has maintained the existing level of $360,000 per year in BWP funding for aesthetically-driven undergrounding. By itself, this amount can fund about one-tenth street mile of undergrounding per year; today�s cost of undergrounding along major streets runs $3.6 million per mile or more. Given the current level of funding, staff is concentrating on short view corridor segments for which undergrounding would have maximum visual impact.

Underground Utility Districts (UUDs) allow the City to leverage its own undergrounding resources. On occasion, new developments and electric system upgrades allow aid-in-construction fees and capital improvement funding to supplement the $360,000 amount, but significant and predictable leveraging comes from forming a UUD:

• All utilities must underground their overhead lines, not just the City�s utility.

• Communication utilities underground their lines at their own cost and pay their proportionate share of street restoration costs. (Investor-owned utilities like Edison resist paying anything more than the equivalent cost of installing overhead lines, which is usually 20% of the cost of installing underground lines.)

UUDs increase the aesthetic impact of undergrounding by ensuring that other utilities underground their lines when the City undergrounds its utilities� overhead lines. With planning and coordination, UUDs can be timed to coincide with the City�s scheduled street resurfacings.

UUDs have been used to good effect by a number of municipal utilities including Anaheim, Pasadena, and Palo Alto. (Anaheim currently has 25 distinct UUDs, and its undergrounding program is a favorite of its residents and businesses alike.) Under Burbank Municipal Code Section 7-1002, the Council can form UUDs; and at its Study Session in June 15, 2004, Council directed staff to pursue establishing UUDs.

Attachment 2 was staff�s presentation to Council during the June 15, 2004 Study Session and includes PowerPoint slides as well as the staff report that reviewed undergrounding policy issues.

Council approved the first step towards forming UUD#1. On September 13, 2005, Council approved Resolution 27063, which directed the Public Works Director to:

• Prepare a report on the fiscal and other associated impacts on the general public and the parties affected by establishing UUD#1

• Prepare a map or plat of the area covered by UUD#1

Since the passage of the Resolution, BWP and Public Works have been working with the affected communication companies and customers.

ANALYSIS

UUD#1 would allow the City to achieve considerable visual impact with a minimum of complication.  As mentioned earlier, UUD#1 encompasses Olive Avenue from the Western Flood Control Channel to Victory Boulevard, and Lake Street from Olive Avenue to Magnolia Boulevard. It represents a nearly ideal first UUD for several reasons:

• The affected street segments are only 0.38 miles for Olive Avenue and 0.21 mile for Lake Street, or 0.59 miles total, which makes possible a reasonable completion time. Undergrounding along these short segments would have a dramatic visual impact, giving the community a good return on its undergrounding investment.

• The affected street segments, though short, support critical utility lines along heavily traveled roadways. Undergrounding these lines would improve both traffic safety and service reliability.

• UUD#1 would complete BWP�s efforts to underground along all its perimeters by undergrounding all utilities along BWP�s southern and western perimeters. (BWP had earlier removed overhead street lighting conductor along its northern, Magnolia perimeter; and undergrounded 69,000-volt lines along its eastern, Flood Control channel perimeter.)

• There are no overhead electric utilities besides BWP, only communications utilities, which pay a greater share of undergrounding costs while presenting less undergrounding challenges. Some of these utilities, like AT&T, have already done considerable undergrounding within the proposed UUD#1.

• There are only a handful of private customers whose overhead services would have to be converted to underground service. Most customers along UUD#1 receive electric service from their side or rear property lines rather than from Olive Avenue or Lake Street.

• UUD#1 takes advantage of undergrounding efforts along Lake Street that would occur as part of establishing new underground getaways for a new Burbank Station near the corner of Olive Avenue and Lake Street. UUD#1 also takes advantage of BWP�s need to build an underground segment along Olive Avenue for its new, 69,000-volt Olive-Valley No. 2 line. These efforts, which are driven by system upgrades rather than aesthetics, would be funded out of BWP�s capital improvement budget.

The only drawback to UUD#1 is that BWP and the other utilities are entering a recently-resurfaced segment of Olive Avenue between the Olive Avenue Bridge and Lake Street; and this segment would have to be restored to its current condition. On balance, however, UUD#1 provides the community with �a lot of bang for the buck� without the complications that can occur with most UUDs.

UUD#1 would affect three communication utilities. As pointed out in the Report, BWP, the City, and three communications utilities would be undergrounding their lines within UUD#1:

• The City�s Burbank Water and Power (BWP) utility, which has both power and fiber optic lines

• The City�s street lighting utility, which BWP manages

• The telephone company, AT&T (formerly SBC)

• The cable TV company, Charter Communications (Charter)

• A telephone service provider, Verizon

The Report describes in detail each utility�s facilities within UUD#1.

Customer impacts are minor. As described in the Report, a handful of private customers along Olive Avenue would have to switch from overhead service to underground service as a result of UUD#1:

• Bormann Steel (service from BWP and AT&T), which would need electric service from a padmount transformer on its property

• Community Chevrolet Shed (service from BWP and Charter)

• Two Bus Shelter Media Kiosks, one near Lake Street and one near Victory Boulevard (service from BWP)

United Rental has underground service already, but BWP would need to move it from Olive Avenue to Orange Grove Avenue. Also, BWP would need to install a padmount switch at Pep Boys to enable the undergrounding of one of the power lines. BWP has contacted these customers, as well as Bormann Steel, and identified acceptable undergrounding routes within their property.

As described in the Report, a handful of private customers along Lake Street would have to switch from overhead service to underground service as a result of UUD#1:

• Landscape Warehouse (service from AT&T and Charter)

• Valley Screen Company (service from AT&T and Charter)

• Edge FX, Inc. (service from AT&T and Charter)

• ASCO Products, Inc. (service from AT&T)

Notice that, along Lake Street, BWP does not have to convert any of its customers from overhead to underground electric service.

For both the Olive Avenue and Lake Street customers, the underground line extensions are less than 100 feet, and so the utilities pay for them, not the customer. Customers would have to suffer the usual inconveniences during trenching and street restoration, which would last three or four months.

The work under UUD#1 would be similar to other BWP undergrounding projects. Although somewhat more extensive in its scope, undergrounding within UUD#1 involves the same basic steps of other undergrounding projects:

• Dig one or more trenches in the street and if necessary on customers� property.

• Construct duct banks, pull boxes, maintenance holes and related substructures.

• Fill in trenches and restore street surfaces to existing or better condition.

• The Public Works Department intends to restore portions of Olive Ave and Lake Street to their final resurfacing state after completion of all the substructure work. (The Olive Avenue segment between the Olive Avenue Bridge and Lake Street would cost more to restore because the City resurfaced it within the past three years.)

• Public Works would put a moratorium of five years for any excavation in these street segments unless it is absolutely necessary.

• Public Works would not bear any of the costs of street restoration in this case because the affected street segments were not scheduled for resurfacing.

• Pull and splice cable, and make customer connections.

• Remove poles, wires, and other overhead facilities.

The economies of undergrounding within a UUD come mainly from joint trenching and the sharing of street restoration costs (when entering streets not scheduled for resurfacing).

BWP and the other utilities reached a consensus on key cost issues.

BWP and Public Works held a kickoff meeting with these parties on November 7, 2005, as well as follow up meetings on December 8, 2005, and February 9, 2006. Working with a preliminary design of the proposed undergrounding (Exhibit �D� of the Report), the utilities were able to reach a consensus on key cost issues:

• The utilities would use joint trenching to reduce construction costs, although the extent of joint trenching is yet to be determined. Therefore, cost estimates do not reflect joint trenching.

• Competitive bidding for the substructure installation (duct banks, pull boxes, maintenance holes) and street restoration would proceed under the City�s purchasing rules and procedures.

• The contractor chosen for the substructure installation and street restoration would receive specified progress payments from the City.

• In turn, the City would receive reimbursements from the other utilities within 30 days of each progress payment date.

• Each utility would do its own cable and customer connection work at its own expense.

• Each utility would remove its own overhead conductors and related facilities, except that BWP would remove any jointly-owned poles.

• BWP will be making several electric system capital improvements that involve undergrounding within the proposed UUD#1 over the next several years:

• Constructing the underground substructures along Olive Avenue from 390 feet east of Lake Street to Victory Boulevard, and along Victory Boulevard from Olive Avenue to a riser pole 325 feet north of Olive Avenue, as part of the route for the new 69kV Olive-Valley No. 2 line

• Building underground substructures along Lake Street from Olive Avenue to Magnolia Boulevard to allow reconfiguration of the 34.5kV network that is to interconnect with the new Burbank Station

• Building underground substructures along Lake Street from Orange Grove Avenue to Magnolia Boulevard to interconnect 12kV circuits with the new Burbank Station, and to reroute several 4kV circuits

BWP�s cost estimates for these capital improvements do not reflect joint trenching but do reflect a joint sharing of street restoration costs.

Under Rule 32 of the California Public Utilities Commission (CPUC), the communication utilities will be in a position to pass on their share of the detail design and construction costs to their ratepayers once the Council establishes UUD#1. Until then, cost-sharing estimates rely on the preliminary design and await later refinement.

Dividing the work into two phases lowers the operational and financial impact in any one fiscal year. BWP and the other utilities also agreed to divide the undergrounding work into two phases that span a total of three years (June 20, 2006 to May 30, 2009):

• Phase 1 would include all street segments except Lake Street north of Orange Grove Avenue.

• Phase 1 would begin immediately after the City forms UUD#1 and authorizes BWP staff to proceed with soliciting bids for the underground substructure work, Council may hold a public hearing on UUD#1 on June 20, 2006, and have the opportunity to grant authorization at that time. 

• City Council awards contract for underground substructure work on September 12, 2006.

• Complete the substructure work by February 14, 2007.

• Complete cable work and customer connections by September 30, 2007.

• Remove all poles and wires by October 31, 2007.

• Phase 2 would be along Lake Street from Orange Grove Avenue to Magnolia Boulevard, and would include any underground work in Magnolia Boulevard itself.

• Phase 2 would begin November 1, 2007.

• Complete the substructure work by October 17, 2008.

• Complete cable work and customer connections by April 22, 2009.

• Remove all poles and wires by May 30, 2009.

This phased approach would spread the cost over the next three fiscal years (2006/07, 2007/08 and 2008/09) and would allow BWP to better coordinate UUD#1 undergrounding activities with its station construction activities.

The estimated costs for Phase 1 and Phase 2, from detail design through street restoration and removal of overhead facilities, break down by utility as follows and are based upon the judgment of the various utility staffs:

The Report provides cost estimate details for each utility. Most of BWP�s undergrounding efforts in UUD#1 are driven by the nature of the capital improvements to the electric system:

• Due to overhead routing challenges, the new, 69,000-volt (69 kV) Olive-Valley No. 2 line would have been undergrounded along Olive Avenue anyway.

• The electric lines that will be leaving from the new Burbank Station would have been undergrounded anyway for at least several hundred feet.

• Rebuilding and converting lines from 4,000 volts (4 kV) to 12,000 volts (12 kV) near the new Burbank Station would have entailed extensive undergrounding anyway due to existing overhead lines already supporting multiple circuits.

Only the existing 69kV lines would be undergrounded purely for aesthetics. Out of BWP�s total undergrounding cost of $3,021,000, this represents a cost of only $980,000, or 32%. (Italicized costs occur during Phase 2):

The undergrounding work within UUD#1 is categorically exempt under the California Environmental Quality Act (CEQA).  The exemption falls under the provisions of Paragraph 15302, Class 2(d) of �Guidelines For Implementation of the California Environmental Quality Act � as adopted by  the Secretary for Resources of the State of California , June 1992 or the latest revision. According to the State�s Secretary for Resources, converting overhead facilities to underground, and restoring the streets to as good or better condition, does not have a significant effect on the environment and is declared  to be categorically exempt.

BWP has filed a Notice of Exemption in the office of the Community Development Department�s Planning Division.

FISCAL IMPACT STATEMENT

Creating UUD#1 would not have an adverse impact on BWP (Fund 496). The electrical undergrounding work would be funded within BWP�s existing funding for aesthetic undergrounding, supplemented by previously-identified capital improvement activities.

Creating UUD#1 would not have an adverse impact on the City�s Street Lighting Fund (Fund 129). The street lighting undergrounding work would be funded within the existing funding for street lighting (1.25% of electric retail revenues).

Creating UUD#1 would not have an adverse impact on the General City, including Public Works. The affected utilities would bear the costs of street restoration because, in the case of UUD#1, the affected street segments were not scheduled for resurfacing.

Creating UUD#1 would have minimal adverse impact on customers, as they would not have to bear the costs of conversion to underground service.

Creating UUD#1 enables the City to leverage BWP�s planned capital improvement activities into an opportunity to beautify highly visible segments of the Olive Avenue and Lake Street corridors.

RECOMMENDATION

Staff recommends that Council:

• Approve the Map and Report by the Public Works Director for the proposed Olive Avenue Underground Utility District No.1 (UUD#1)

• Adopt a Resolution of Intention and set June 20, 2006 as a public hearing date for forming UUD#1

If the Council concurs, the appropriate action would be motions to adopt the following resolutions:

1. A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING THE MAP AND REPORT OF THE PUBLIC WORKS DIRECTOR FOR THE PROPOSED OLIVE AVENUE UNDERGROUND UTILITY DISTRICT NO. 1 AND DIRECTING THAT SAID MAP AND REPORT BE FILED WITH THE CITY CLERK. 

2. A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK DECLARING ITS INTENTION TO FORM OLIVE AVENUE UNDERGROUND UTILITY DISTRICT NO. 1 AND SETTING A HEARING THEREON FOR June 20, 2006, AT 6:30 P.M. IN THE COUNCIL CHAMBER.

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L:\City Council\Staff Reports\2006\Olive Ave. Underground Utility District No. 1.doc

Attachment 1-Report of the Public Works Director

Exhibit �A�-Council Resolution No. 27,063

Exhibit �B�-Burbank Municipal Code, Sections 7-1001 through 7-1032

Exhibit �C�-Map showing boundaries for UUD#1

Exhibit �D�-Preliminary underground design on which cost estimates were based          

Attachment 2-Staff presentation at June 15, 2004 Study Session          

c:          Bonnie Teaford-Public Works

Rick Morillo-City Attorney�s Office

Paul Hermann-Purchasing

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