Laguna Beach pledges more funding for West Street undergrounding district

In a move that could help secure more votes for a proposed underground utility district in south Laguna Beach, the City Council agreed to contribute up to 20% of the estimated $7-million cost if the district gets the nod from affected property owners.

The district — identified as West Street — includes 101 assessable parcels along portions of West Street, Monterey Street and Eagle Rock Way, among other streets.

Property owners within the district would bear the majority of the cost of the project, although a draft engineer’s report called on the city to provide 10% of the cost in the form of a general benefit contribution.

Pierre Sawaya, a senior project manager for the city, advised the council that there was precedent for the city covering a greater portion of undergrounding projects.

“City Council did take prior actions on contributing to assessment districts on the last two projects,” Sawaya said at the Feb. 25 meeting of the City Council.

“A 10% general benefit was applied to those projects, in addition to a 10% city contribution, so for a total of 20%,” he said. “That was applied to the Diamond Street project, which was completed two years ago, and was applied to the recently formed Woods Cove district, which is currently in construction.”

The Diamond Street assessment district contained 20 parcels, while the Woods Cove project had 380 assessable parcels.

Councilman Bob Whalen said the city needed to be “equitable among the neighborhoods” in making a motion for a 20% city contribution, including the general benefit. It was approved by a 4-0 vote. (Mayor Alex Rounaghi recused himself from the item because the district would involve immediate family members.)

“If it’s a $7-million estimate and we contribute $1.4 million, that gets it down to about $5.6 million, which is up about 12% from the original $5 million that was estimated back in 2021,” Whalen said. “Well, we all know [with] inflation, everything’s gone up and things are more expensive. …

“I think we should look at doing a 25-year scenario, so they can stretch payments out over a longer period of time, reduce the annual cost. … I want to make sure that the city purchase of bonds is a possibility here for this district, because we can control the interest rate on that better than out in the public market. We may be able to save some interest costs on that and reduce some legal and other costs, if we look at that alternative.”

Several residents appeared before the council to request the additional contribution. In some cases, the ask of the council was for the city to cover 30% of the cost of construction. Proponents of an additional city contribution cited inflation and assessment amounts as “cost-prohibitive” to supporting the project.

“Since the project’s inception in 2021, costs have ballooned from $5 million to $7.2 million, a reality that puts this crucial safety initiative at risk,” said Amy Berk, a resident of Eagle Rock Way. “Our community took action early with 65% of residents voting in favor and committing significant personal funds. However, without city support, the financial burden may prove too great, preventing us from completing this project.

“We’ve all seen the devastation caused by wildfires — the Coastal fire in 2022, which would have taken our homes if the wind was blowing toward the ocean, at least from my block, and the tragic Palisades fires. Ninety-nine percent of fires caused by electrical lines can be prevented by undergrounding utilities. Why wait until tragedy strikes Laguna Beach? Our district is the last remaining area in the south Laguna neighborhood surrounding Aliso Canyon that needs undergrounding.”

City staff will meet with the assessment engineer to determine what changes will be made to the assessment amounts of the individual parcels. A meeting will then be set up with property owners within the district to review the engineer’s report.

Sawaya said the engineer’s report could be brought forth to council for approval in the spring. City staff would also return with a funding strategy to cover the additional city contribution. A staff report said the city could appropriate $700,000 from the street lighting and utility fund to cover the general benefit.

A public hearing and vote on the project by property owners within the district would likely come in the summer, Sawaya said.