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Burying Longboat’s power lines: What will we pay, who gets to say?

STEVE REID
Editor & Publisher
sreid@lbknews.com

The plan to bury some or all of Longboat Key’s power lines will be discussed by the town commission Monday night, now that they have a parcel-by-parcel breakdown of what the benefit is to each and every property owner. The project to bury power lines has been under discussion for several years and over the past year expanded from a desire of the Longboat Key commission to bury utility lines along Gulf of Mexico Drive to entertaining the idea of undergrounding all of the remaining lines on the entire key.

The commission decided not to move forward last fall with a referendum question asking voters if they wanted to use property taxes to pay for bonds to bury Gulf of Mexico Drive’s power lines.

Instead the commission asked Town Manager Dave Bullock to come back with a menu of options including paying for either Gulf of Mexico Drive or the entire key using non-ad valorem assessments instead of a tax based on property value.

Bullock, using a consultant who was paid $90,000, came back with a comprehensive study and database showing the proportional benefit of undergrounding Gulf of Mexico Drive or the entire key to every single parcel of property on Longboat Key.

The cost to underground Gulf of Mexico Drive is about $23.4 million and the cost to do the entire key including Gulf of Mexico Drive is projected at $42.1 million.

In his report, Bullock talks about the two funding mechanisms and says ad valorem taxes would be calculated using a property tax millage rate multiplied by an assessed property value. It is the method used to pay for most government services on Longboat Key including its Fire, Police, general operations and beach maintenance. Ad valorem taxes are generally tax deductible and are collected through the annual tax bill.

Non-ad valorem assessments, the other method and the one the consultant calculated, collects money from property owners based on a calculation of the benefit received to that property by the project. These special assessments are generally not income tax deductible. The purpose of calculating and defining the specific benefit to each property unit is to meet the legal requirement in issuing non-ad valorem bonds and debt. In short, the calculation method must be fair, equitable, and legally defensible; that is what the consultant was hired to accomplish.

According to Bullock, paying by simple ad valorem has a long history and the payment is generally higher for those in the most expensive properties with the subtext that the amount paid is predicated on wealth and the ability to pay.

“Generally speaking, every affluent area pays more for fundamental services than they receive when it comes to taxation,” said Bullock.

Bullock explained the argument for non-ad valorem assessments to be used to pay for the project as predicated on the idea that everyone pays according to the benefit received to their property based on an objective formula. He said the benefit is independent and has nothing to do with the property value when it comes to the non-ad valorem assessment.

But when it comes to how much difference the two methods make for property owners in some instances the disparity is tremendous. Bullock provided in his report numerous examples of specific properties and what they would be paying under the different options.

Take one of Longboat Key’s most expensive properties, 825 Longboat Club Road, which has an assessed property value of $13 million. If ad valorem taxes are used to pay for the $42.1 million town wide undergrounding project, the owner of this parcel would pay more than $107,000 toward the project.

In this instance, the subject property is already undergrounded so the benefit of the project is not as great as for others. If non-ad valorem assessments using the calculated benefit method is used, the same $13 million property would pay only about $3,700.

If only Gulf of Mexico Drive is undergrounded, this property owner will pay almost $60,000 if the ad valorem method is used and about $2,000 if non-ad valorem.

On the other end of the spectrum is the home located at 755 St. Judes Drive, which has a property value of $273,000 and currently has overhead utility lines. If ad valorem taxes are used, they will pay $2,328 toward the $42.1 million project, and conversely if the non-ad valorem method is used, they will pay more than $8,000.

 

Genesis of the proposal

Bullock explains that the idea of burying the lines came about after it became clear that Florida Power and Light planned to install new hardened poles on Longboat Key. The poles would be more intrusive, but more storm resistant, and FP&L is going community by community throughout the state with this project. Currently, Bradenton Beach already has the hardened poles installed.

The plan to underground utilities will also allow the enhancement of street lighting, the beautification of Gulf of Mexico Drive and side streets as well as the installation of fiber optic line. Bullock said that within the cost of the proposals, $4 million is included for lighting enhancement. When the power poles come down, any and all lights affixed will be gone as well and must be replaced.

As for safety, Bullock says right now when an overhead power line comes down there is a live electric line on the ground and that situation can happen in a car accident, a storm or by a falling tree limb. He points out that burying the lines removes this vulnerability for residents.

 

Fiber optic opportunity

Bullock and staff have cited several of the opportunities installing fiber optic underground could bring to Longboat Key property owners. It could allow the access of wireless wi-fi service on most of the island as well as state of the art medical monitoring, and more robust cellular services with high data download speeds. It could also increase safety with cellular E911 that gives GPS location capacity in cases of emergencies directly to dispatch.

In the report, generated by consultants DAS Advisors, it is recommended that the town pursue the opportunity because of the positive impact on the island’s businesses, residents, municipal offices, public services and the continuance of government during emergencies.

DAS Advisors said the town will save about 80 percent of the cost of fiber deployment because it would be piggy backing on the burying of the power lines. The advisor also said that multiple opportunities will emerge to lease the fiber to the private sector and it will lead to a more competitive market within the town.

 

A bonding experience

Whichever method the town commission decides it wants to use to fund either Gulf of Mexico Drive or the entire key, a public referendum of Longboat’s voters must be held in order for the town to issue debt through bonds. The consultant who is used to develop the calculated benefit of undergrounding for every parcel has created an entire database of all of Longboat Key’s 10,038 taxable properties. In total there are 7,196 condominium units, and 1,793 single-family homes. The remaining properties are divided into marina slips, vacant land, multi-family and non-residential.

The commission and residents will soon react to the five options in funding the undergrounding project that Bullock is providing.

Option 1 is to pay for the entire town with ad valorem taxes. Option 2 is to pay for only Gulf of Mexico Drive with ad valorem taxes and not do the rest of the town. Option 3 is to underground GMD with ad valorem taxes and use non-ad valorem assessments for the side streets and neighborhoods. Option 4 is to bury the entire town with non-ad valorem assessments. Option 5 is to underground Gulf of Mexico Drive with non-ad valorem assessments and the neighborhoods being paid for with non-ad valorem assessments but utilizing two separate votes on separate occasions.

If the town commission wants to piggy back this issue in the November general election it must determine which funding methodology it wishes to place before voters and whether it wants to ask voters to bury only Gulf of Mexico Drive power lines or all of the key. To be on the November ballot, the commission must decide the issue and approve referendum language no later than July 6 to meet the requirements of election law. The commission will discuss the undergrounding plan and methods at the regular commission meeting at 7 p.m. on Monday, June 1 in Town Hall.

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4 Responses for “Burying Longboat’s power lines: What will we pay, who gets to say?”

  1. Brad says:

    People don’t make a decision to come to LBK because the power lines are buried or not. Please this is an incredible waste of money.

  2. Ross says:

    I agree with Jeff. LBK has a number of other major expenses: pensions, worn out pipe in the bay, etc. to deal with before going to underground utilities
    Ross

  3. Jeff Goss says:

    I hope LBK pays for my pension first. Retired Firefighter

  4. Brad says:

    Let FP&L put up hardened power poles and call it a day. This is a complete waste of money in my opinion.

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