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Commission to retackle, rethink neighborhood underground plan

STEVE REID
Editor & Publisher
sreid@lbknews.com

The underground movement, or lack thereof, begins again at a special workshop Monday on Longboat Key.

The commission will be presented with options to help address complaints made by several property owners and an attorney who stated that the town’s method for assessing the undergrounding of Longboat Key neighborhoods was arbitrary and unfair and needed to be revisited.

Last July, a Club Longboat representative in particular made the case that it should not be categorized as an above ground community and assessed at that higher tier when a single above ground line feeds an accessory building on the property.

The way the rule works is that any parcel that is within 55 feet of an existing overhead line is placed into the highest assessment tier. Numerous property owners have expressed dissatisfaction that the cost to bury the power lines will be in the $5,000 – $9,000 range for their property.

In light of these issues, Town Manager Dave Bullock spent the last two months developing a set of options to either reduce the cost or reframe the undertaking so the town can move forward.

 

Drop dead date

One issue that has been presented is several property owners have complained that they can bury their above ground lines for far less than the town’s proposal and then be reclassified in a lower cost tier and they would like that opportunity.

Bullock said that if the town wishes to create a window to allow property owners to self-bury, the latest the town should consider accepting changes to the property would be June 17 of 2017. Bullock said that date corresponds with the tax evaluation and noticing procedures that are in place.

Bullock writes that if the commission wants to allow self-funding, that property owner must install and connect fiber optic to the town, must underground all of the utilities on the site and must give the town a performance bond equal to 100 percent of the cost.

 

Change the rule?

The other option is to change the 55-foot rule. Several communities are placed in the highest payment tier because the existence of an overhead line is within 55-feet of an existing structure on the property.

Some of the properties, such as Spanish Main and Bayport and Land’s End have their utilities undergrounded but have the existence of a line along the perimeter of the property or perhaps serving a maintenance building.

One of the proposals Bullock will ask the commission to consider is to change the assessment to only charge for taxable dwelling units within 55 feet of an overhead line, not parcels. Bullock said that change alone would decrease the neighborhood assessment by almost $1 million due to reclassifying condominium units. The impact of such a change on single family homes could remove between $1.7 and an additional $4 million from the project. Bullock said it would take a major analysis in the field to verify home-by-home how many properties would no longer be assessed at the higher rate. Bullock said it does raise equity and legal issues.

 

What is the goal?

Bullock said the primary question he expects the commission to face on Monday is to determine what exactly is the goal?

If the goal is to reduce the cost to those in the highest category, meaning those who currently have above ground lines, then there may be an even easier way. Bullock said the commission can take other non ad valorem revenues, such as franchise fee revenue, sales tax revenue or communication services tax revenue and use these revenue sources to pay for part of the undergrounding rather than directly assess the property owner for the complete cost. For instance, about $10 million of the total $23 million of the assessment is being charged as a general benefit to any property owner who has above ground lines. If that $10 million were completely paid through a bonded tax, it would lower the cost to each of those property owners by $3,675.

Bullock said the town can pay down the cost using these other non ad valorem revenues since that is what is allowed in the referendum question that voters approved. Since the project is being assessed using several categories such as aesthetic benefit, safety benefit, and general benefit, the commission could reduce the cost to all property owners or one of the categories. Bullock said that if that is the goal of the commission – to reduce the impact in the most costly cases – using other non ad valorem tax revenues might make perfect sense.

Bullock said a disadvantage is it could create future budgetary pressure and could limit the town’s bonding capacity for future projects.

Right now, the electric franchise revenue fee that the town charges brings in about $880,000 per year. Bullock wrote that that fee alone could support a 30-year bond between $8 – $10 million depending on the interest rate. The town’s ½ cent sales tax and communication services tax bring in about $560,000 in revenue to the town each and could each support a bond between $5.7 and $7.1 million.

Again, if these non ad valorem revenue sources are pledged by the commission, they could be used to specifically and strategically lower the cost in the various  categories of undergrounding costs.

 

Commission direction

Voters approved last fall an undergrounding referendum to bury Gulf of Mexico Drive power lines using non ad valorem assessments. Due to the popularity of that vote, and the potential for cost savings, the commission asked voters last spring if they wished to underground their neighborhoods using the same payment methodology. That vote was also approved but left waves of protest with many property owners complaining that they had little to no benefit and were being asked to pay thousands of dollars.

Vice Mayor Terry Gans said last July that he was in favor of examining some of the issues but did not want to reopen the whole vote and the whole decision. That left Bullock with the directive to see if there were ways to reevaluate the method without jeopardizing the integrity of the process. One of the constraints is you can make modifications but the assessment level cannot be increased, but only reduced at this point. That means that anything that reduces the cost to a parcel would have to be made up financially another way.

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