Consultant to explore financing options for utility undergrounding districts

Faced with escalating costs, the City Council on Nov. 18 approved $20,000 for a consultant to further evaluate borrowing options to finance the Crest Canyon (X1A) and Stratford Court North (1B) utility undergrounding districts.

The consultant, NHA Advisors, presented an analysis and model to assist the Council in selecting a funding strategy that best addresses the community's goals and challenges presented by the project. The strategies include a "pay-as-you-go" model, with no financing, and "finance-as-you-go," which includes strategic financing when needed.

In January, NHA is expected to present borrowing options, timing, and costs to fund construction of the Crest Canyon and Stratford Court North districts to the Undergrounding Project Advisory Committee and the Finance Committee. The committees' recommendations would accompany an NHA presentation to the City Council shortly thereafter.

Earlier, both committees recommended that the council further investigate public and private financing options to fund the next phase of undergrounding.

In total, the undergrounding program parcels the city into eight districts. One of them is completed and construction of a second is underway.

Construction cost inflation and spikes in SDG&E costs are driving up the cost of the program. In today's dollars, the base total project cost is estimated at $105 million. Over the life of the project, inflation and financing costs could increase that sum to more than $200 million.

Depending on which financing strategy the council chooses, the full undergrounding program is expected to continue for 20 to 35 years.

Open staff report