Undergrounding: $46 Million, $110 Million, or… $0 ?

A village committee is getting closer to putting its stamp of approval on what would be Key Biscayne’s biggest-ever public works project: burying power and other utility lines. But after a lengthy meeting Tuesday, big questions remain: how much will it cost, what will the project do, and will the village enact a precedent-setting new assessment system to pay for it? It’s not even clear if the question will come to a vote by residents or property owners. And, there’s the most fundamental question of all:  is the project worth it? Or should the village simply let FPL go forward with its planned hardening of existing power lines at essentially no cost, allowing the village to spend tax dollars on other projects?

COST.  Estimates for the cost of the project vary widely, depending on whether the project goes beyond burying utility lines to include other sea level rise resiliency measures, such as pumping stations and other flood-control improvements. For example, Mayor Mike Davey, the former Undergrounding Task Force chairman, said in an October 11 debate that undergrounding would cost about $70 million, including additional resiliency measures. At the task force meeting, chair Michele Estevez said the panel has moved away from estimates for a larger, $110 million project. She said that’s because the task force did not have sufficient time to review a more comprehensive set of proposals with a deadline looming. Village Manager Andrea Agha laid out a $46 million plan for power line and communications undergrounding, without any major additional resiliency improvements. The manager told panel members that beach restoration and storm water flooding projects are part of the village’s five-year capital improvement plan and are still in development. The undergrounding cost estimate was provided by the Village’s engineering firm, Kimley-Horn.

Still, some panel members and a number of residents said the village should at least consider authorizing a much larger bond issue, even if details of other projects are not part of the plan so that the community understands other critical issues are not being ignored.

WHO PAYS? The task force has already endorsed a new “assessment” system instead of using standard property taxes for the project, but the concept appears controversial based on comments from residents and several current and former elected officials attending Tuesday’s workshop. This idea, which would create a complicated system of “Economic Benefit Units”, or EBU’s, seeks to even out costs based on a computation of each property’s estimated benefit. The benefits are divided into categories: a reliability benefit, a safety benefit, an aesthetic benefit.  Proponents say the system is fairer than property taxes, but some worry an assessment system would endanger homestead exemptions for some homeowners. It could also sock churches with huge bills (houses of worship are exempt from ordinary property taxes). The assessment concept remains under legal attack in Palm Beach, which has spent more than $400,000 defending the EBU plan developed by the same consulting firm the Village is using, according to the Palm Beach Daily News. A judge denied the Palm Beach’s motion to dismiss the case and the court now weighing whether to let it proceed as a class action.

Proponents insist the EBU system is better than using property taxes because it can take into account whether some properties already have buried lines, but the most recent estimate showed that condominiums would still shoulder 38 percent of the project’s costs — even though many condominium complexes are largely undergrounded. Single family homes would pay 50 percent of the costs.  Commercial and governmental properties would pay the remainder.

Former Palm Beach Town Manager Tom Bradford, who shepherded that community’s undergrounding project, told the task force that while the EBU system has some advantages over property tax millage increases, it’s also harder to sell to voters. In Palm Beach, he said, the plan passed by just 65 votes.

“If I was king and I did it again, I’d do millage because people understand it,” he said.

At the workshop, Agha said she is asking her staff to come up with a “hybrid” system that might blend concepts, but she did not elaborate.

WHO DECIDES?There are three possible scenarios. First, the village could simply add the project as a standard capital project without going for a bond issue. This would only require a village council ordinance and no public vote would take place. If the assessment system is chosen, property owners – not necessarily voters – would make the decision. Finally, if the village were to borrow the money under a general obligation bond, a general referendum would be required. In that case, residents would vote, but some property owners might not.

IS IT WORTH IT? The idea of burying power lines has a long history in Key Biscayne, but the question now has urgency because FPL is under a mandate to harden power lines statewide. If the village pays for undergrounding, the village hopes to get more than the $3 million credit from FPL that is currently part of the $46 million estimate. If the village rejects buried lines, FPL will go ahead and start installing new poles to harden the electrical system in 2022, finishing in 2024. FPL’s John Lehr, who manages underground conversion for the utility, said hardening would involve both concrete and taller wooden poles in some locations. As for cable and telephone, it’s unclear what would happen, according to Agha. Those utilities might relocate along with power – but they might not do so immediately.  So, it’s possible, she said, that twin utility poles might show up in some areas of the village, at least for a while.

The main selling point of undergrounding power is reliability, according to proponents. Citing data from FPL, Agha stated  that “buried lines are 80% more reliable” than lines on poles.

But other studies have raised the point that for certain types of storms, underground lines take much longer to repair, and at higher cost than overhead lines.

“Relocating power lines underground only shifts the risk of damage from wind events to the risk of damage from corrosive storm surge and flooding,” wrote Theodore Kury, the director of energy studies at the University of Florida’s Public Utility Research Center, according to an article posted on the center’s website. “Areas with relatively greater vulnerability to storm surge and flooding will experience decreased system reliability at greater cost as a result of undergrounding,” he wrote.

With all the open issues, Agha reminded residents that nothing is set in stone.

“This is our coming out party, a quinceañera, not our wedding,” she said.

Updated 20 February 2019 20:36