Above ground or below? The fight over utility boxes comes to Green Acres

Utility wires may be out of sight in Green Acres, where they are tucked away in underground vaults, but they are hardly out of mind for the residents in the quiet south Palo Alto neighborhood.

The city has been talking for more than a year about the need to replace the neighborhood's aged electric system, which has been buried in underground vaults since its installation in 1973. As part of the project, Palo Alto Utilities is proposing to take transformers out of their vaults and mounting them on concrete pads while leaving all the wires and conduits underground.

The proposal has triggered heated opposition from Green Acre I's homeowners, who are arguing that their financial contributions to an underground system more than four decades ago effectively entitles them to keep the entire system underground in perpetuity. Under that 1972 deal, the city and the property owners agreed to an arrangement in which all the utilities were placed underground, with the city paying 75% of the costs and the owners paying the remaining 25%. The property's owners' share totaled about $43,000, roughly the equivalent of $265,000 in today's money.

The dispute between Palo Alto Utilities and the homeowners bubbled up this week, when residents persuaded the city to defer revising some regulations in the utilities code pertaining to special facilities. And it will take center stage next Monday, when the City Council considers a new rule that would allow property owners to request special accommodations, provided they are willing to foot the bill for installing and maintaining the new equipment.

The council hearing will be the culmination of more than a year of debate, revised plans and threats of litigation. Kent Mitchell, an attorney representing the Green Acres I residents, argued in an April letter that when the installation of the underground equipment was approved, there was no indication that the undergrounding was not permanent.

Instead, the council's actions created the reasonable expectation that the city would maintain and repair the equipment and, as owner of the facilities, spread the cost evenly to all property owners much in the same way it does for road maintenance and drainage facilities, Mitchell argued.

"It was eminently reasonable for Greenacres I owners to expect the same for their undergrounded facilities, given that they paid a substantial sum for such undergrounding privileges and property benefits in the first instance," Mitchell wrote.

Mitchell argued that because the property owners bought the right to have underground utilities, it would be "unlawful and a violation of their rights for the City to charge them for the perceived extra cost of maintaining underground facilities as compared to above ground facilities."

"It would also be a breach of good faith and fair dealing for the City to do so because of its desire to save maintained money, and thereby deny our clients the financial and aesthetic benefits of undergrounding they contracted and paid for in full."

But the city's utilities officials are arguing that keeping transformers underground would make the system both more expensive and less reliable than having a standard pad-mounted installation. Greg McKernan, a senior engineer at Utilities Department, said at the April 9 meeting of the Utilities Advisory Commission that two districts have already seen their underground utilities rebuilt, with transformers shifted to pad-mounted equipment. About seven currently have fully underground equipment, he said.

One advantage of having pad-mounted equipment, he said, is that it makes it easier to locate the source of a power outage. Underground vaults are sometimes filled with water, which needs to be pumped out before equipment can be inspected. Pad-mounted equipment does not fill with water, he said.

"While it may sometimes be technically feasible to install equipment in underground vaults, this sort of fully subsurface installation is substantially more expensive than a standard pad-mounted installation, and — in the view of CPAU staff — is likely to be less reliable and more costly to maintain and operate than a standard installation," a new report from Utilities Department states.

Debra Lloyd, assistant director of the engineering division, said utilities staff have tried to address residents' concerns by considering less visible places for the pad-mounted equipment.

"What we heard back was, 'We don't want to talk about pad-mounts; We want to talk about fully undergrounded,'" Lloyd said.

The Utilities Advisory Commission recommended on April 9 allowing the residents to have a say in whether their utilities should remain fully undergrounded. If the council approves a new proposal from Utilities Department, each neighborhood where the utilities are being rebuilt will have a chance to request a fully undergrounded system, provided they pay the extra costs.

Even that proposal, however, is facing a rough reception in Green Acres I, where residents are characterizing it as a bait-and-switch by the Utilities Department. Several residents addressed the council on the topic this week and many more sent emails to the council, protesting the plan to either replace the underground transformers with pad-mounted ones or make the neighbors foot the bill for a fully undergrounded system.

Michael Maurier, who lives in the neighborhood, called the utilities plan "entirely unrealistic, wholly unworkable and unacceptable."

"Green Acres I property owners paid to have their wiring, transformers and switches all placed FULLY underground," Maurier wrote. "They are invested in our system and thus are partial owners. This is a documented fact. The CPAU and those that support their position are taking away something that Green Acres I residents OWN."

Resident Ning Mosberger-Tan said the neighbors are "strongly against CPAU's plan to move the switches and transformers above the ground in our neighborhood."

"It'll be aesthetically devastating with potential negative impact on the property value," Mosberger-Tan wrote.

Under the proposed rule change, neighborhoods where utilities are getting upgraded will have 45 days after notification from the city to submit a petition showing at least 60% of the parcels in the utility undergrounding district support a fully undergrounded system. They will also have to submit a payment to cover engineering costs for developing the underground system.

After the city receives the petition and the payments, it would provide the neighborhood with either a written estimate for the underground installation or a finding that such an installation is not practicable. The neighborhood will then have 90 days to provide the city a full payment for the cost difference between underground installation and the standard type.

In the case of Green Acres I, staff estimates that an underground installation would cost about $200,000 more than a standard installation. Ongoing costs of ownership are estimated to add another $275,000 over the 30-year life of the equipment. Under the staff proposal, the 15 property owners in the Green Acres I district would pay the full $475,000 in incremental costs. The remaining $420,000 (the cost of a standard installation) would be covered by the broader base of City of Palo Alto Utilities ratepayers.

The commission generally supported staff's recommended approach, with Commissioner A.C. Johnston noting that a fully underground system is a "specific benefit to your neighborhood."

"The rest of the ratepayers don't share in that benefit," Johnston said. "So I think it's fair to have the neighborhood share the additional cost of undergrounding — if that's their choice."

Former Commissioner Judith Schwartz disagreed and said allowing neighbors to dictate what their utility system will look like would set a bad precedent — one that will go beyond Green Acres I and that could apply to other types of utilities equipment. The debate isn't about underground equipment, she said. It's about whether neighborhoods "get to dictate to the utilites how to do it."

"I think the idea of having individual neighborhoods decide — make engineering decisions, — strikes me as problematic," Schwartz said.