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Tales from the Dark Fiber

LARRY GROSSMAN
Contributing Writer
opinion@lbknews.com

The Commission is moving forward with the second referendum question to underground all Neighborhood utilities on the island  including the installation of fiber optic cable and street lights. The Commission also discussed the installation of dark fiber for areas already undergrounded and a possible upgrade to the electrical utilities which are thirty years old.  It may be that these old installations need to be modernized and made more resilient against future climate conditions and sea level rise. Would these improvements be authorized through another referendum limited to the undergrounded neighborhoods? Or would they be encompassed In the overall Project and within a single Special Benefit Assessment District? Or would these improvements be a separate FP&L project paid for by the utility and all ratepayers?

It seems the scope of this Project is ever evolving and expanding to take advantage of the economies, efficiencies and possibilities of a complete modernization of our utility, communication and safety infrastructure to meet foreseen and unforeseen future needs. All to the good.

However, what also needs to evolve is the Commission’s thinking on a fair and equitable apportionment of costs and tax burden. The Commission has chosen a non-ad- valorem method of allocating project costs based on benefit. According to WillDan’s methodology, benefits are defined by safety, reliability and aesthetics. However, as applied, the methodology results in enormous disparities of costs affecting individual properties that are not commensurate or aligned with the benefits relative to all affected properties in the Special Benefit Assessment District.

The  GMD project largely flattens out the cost allocation so that most properties will pay $2476 over the next 30 years. This even allocation is based on the presumption that since everyone drives on GMD then everyone benefits from the undergrounding equally and the costs should be shared equally. However, there is no rational nexus between a roadway we all need to use and utility improvements. If GMD were being upgraded so that its driving safety or capacity were improved then this argument would make sense. However, that’s not what is happening. The transportation function of GMD is not being improved by the Project.

Under this formulation, the costs or tax burden of these benefits are being applied to properties that are quite diverse in size, value and function. The notion that a small 500 square foot condominium on St. Judes Drive occupied by a single person is deriving the same benefit as a far more valuable fifteen hundred or two thousand square foot home occupied for a four member family on the same street requires a stretch of imagination. Similarly, the idea that a home at the edge of a canal furthest from GMD is experiencing the same aesthetic enjoyment of not seeing poles and wires along GMD as a home on GMD is enjoying ever day also stretches credulity. By the same token, a commercial property or hotel along GMD will derive many more benefits from the undergrounding than a condominium of single family unit in terms of property value and business attraction. This is a function of density, use, added real estate value and the value of the commercial enterprise.

On the other hand, the cost allocation of the Project affecting the side residential streets are anything but flat. The small condominium of St. Judes would pay $2476 for GMD and another $4256 for the Neighborhood Undergrounding Project or $6732 (81.5% of the original estimate for this property).  A much higher value and probably larger condominium in an existing underground utility neighborhood would pay about $2991 ($2476 for the GMD project and $515 for the Neighborhood Project). One could argue that undergrounding the poles and wires has benefit to the St. Judes condominium. But is the benefit really proportionate to its cost as applied to a small property which has limited capacity to increase in value?

Are residents who bought older homes on the island with overhead utilities somehow at fault or less virtuous than residents who bought in newer neighborhoods with underground utilities? Why the disparity of effective treatment in terms of tax burden?

The Commission should consider using an ad valorem method to remove the unfairness and disparities of tax burden and benefit from the two Projects as and if approved. Alternatively, the Commission should consider re-working the non-ad valorem methodology to change the way costs are allocated between General Benefits and Specific Benefits. Make the Aesthetic Benefit a General Benefit shared equally by all properties, for example and make the optic fiber a general benefit especially if dark fiber is to be extended to the underground Neighborhoods.

On Monday the Commission should discuss and decide on the full scope of the Project and how the Project costs can be more equitably and fairly allocated. The Commission last Monday made a gesture in this direction. More effort is needed.

 

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1 Response for “Tales from the Dark Fiber”

  1. LBK taxpayer says:

    Larry — I am not following the equality in your proposition and would like to ask for you to consider other options. First, I agree this project is very different today than what was proposed months ago and that is quite frustrating.

    My last read of the side street assessment summary, posted on this town website, is that it is ultimately based on acreage. ( Every single family home with overhead lines and under 1 acre pays the same thing.)
    If I understand you correctly, you are requesting an ad valorem method (I understand that to be based on property tax valuation). Therefore you are asking for the non voters and non residents to pay a higher price because their property values are not locked and capped like yours. I do not find this equitable at all. Are you saying that you want to make the people that cannot vote pay the most money?
    Perhaps a usage based method could be adopted. The number of days your car is on the island is factored into the calculation. Therefore full time residents that receive the greatest benefit will pay the most. Just some food for thought from the other side that is receiving very little benefit from this whole endeavor.
    Seriously, please find another recommendation that does not penalize the majority of property owners, those that are not residents and will not receive daily benefits from this change.

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