Paradise Valley to gauge local appetite for SRP under-grounding

Engineering Analysis Jeremy Knapp talking to town council. (photo by Melissa Fittro)

Town of Paradise Valley officials have been given the proverbial head nod to explore a proposed method to finish under-grounding utility lines that could cost affected residents thousands of dollars.

The Town of Paradise Valley has been undergrounding overhead utility lines from Salt River Project and Arizona Public Service Electric Company for several years.

Since 1991, 19 SRP districts have been undergrounded, while more than 30 APS districts have been buried, town officials say.

In preparation to begin talking about the fiscal year 2017-22 Capital Improvement Program, town staff presented the elected leaders with a proposed method to complete the last four SRP districts.

The presentation was given at a Thursday, Sept. 14 study session at Town Hall, 6401 E. Lincoln Drive.

Within SRP-serviced areas of town, there are four districts left to be undergrounded:

  • Keim district: 14 residential lots;
  • Denton district: 7 residential lots;
  • 40th and Lincoln district: 49 residential lots;
  • Bethany Home Road and 38th Place district: 37 residential lots.

Through an increase in aesthetics funding from SRP and altering their current cost-sharing method, town staff believes their historic approach to undergrounding power lines can be achieved in the last four districts.

The municipality has two resolutions that outline the cost-sharing idea, where the town pays for two-thirds — or 66.7 percent — of undergrounding costs, while the resident pays the additional one-third.

The third element to the equation is the aesthetics funding from SRP.

Utility lines can be hiding along the Keim district in the Town of Paradise Valley. (photo by Melissa Fittro)

Since 1990 the electricity company provided “credits” to municipalities to do SRP projects. Since the aesthetics fund started in the ‘90s, annual allocations ranged from more than $200,000 per year to less than $7,000.

Since 2011 the minimum allocation has been $100,000, Town Engineering Analysis Jeremy Knapp explained at the study session. However, SRP recently confirmed Paradise Valley’s allocation will double this year bringing the total gift to $200,000, Mr. Knapp says.

In addition, the town can reserve up to three years of credits and can borrow into the future.

By utilizing the available funding in a modified manner, Mr. Knapp says the cost per resident will significantly drop.

“We looked at all remaining districts and laid them out to try and keep with our existing CIP program, to provide a lower cost per resident and keep our town within the General Fund obligation for this project,” Mr. Knapp told the town council. “That was our goal when we put together this proposed cost sharing.”

The town’s current formula for cost sharing the underground process would be: the total SRP project cost multiplied by 66.7 percent minus the aesthetics funds plus the Cox or Century Link costs, Mr. Knapp said. Residents are requested to pay 33.3 percent of total SRP project cost.

The total Keim district project is estimated to cost $1.2 million, Mr. Knapp says. To underground the Keim district using the current funding formula residents would be asked to pay $26,699.36 per lot.

As of Sept. 14, only three of 14 residents supported the nearly $27,000 cost, while one resident said no, Mr. Knapp said.

By taking the aesthetics funding off the top of the total project cost, the town can offer residents a more cost-effective option.

“We’re proposing this generally because we’re receiving larger allocation funds, can save funds over three years and borrow into the future,” Mr. Knapp said. “We can apply funds more equitably and get lower resident contributions, which we think will fund the final four SRP districts.”

By using the Keim district as an example, Mr. Knapp says the proposed model would decrease the residents’ contribution to $13,793.50 per lot.

“I think the town’s underground program has been one of the most successful long-term programs in the town that we all kind of refer to and reflect on as a success story,” Mayor Michael Collins noted during the meeting.

“For many years we always felt that the SRP districts would struggle because the cost per property owner would be so significant that it would be difficult to assemble the funds to finish those SRP districts.”

The Paradise Valley Town Council directed town staff to begin proposing this idea to residents within the affected districts to gauge participation.

News Services Editor Melissa Fittro can be reached by e-mail at mfittro@newszap.com or follow her on Twitter at www.twitter.com/MelissaFittro

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