$42.1 million: The cost of undergrounding

It’s not going to be cheap.

A draft report that will be presented to the Longboat Key Town Commission Feb. 17 at its regular workshop estimates the cost of burying power poles and utilities islandwide at $42.1 million.

The cost includes a 15% construction contingency built into the amount in case costs go higher. If construction costs require a 25% construction contingency built in, the cost could jump to $47.7 million.

If the town chooses a cheaper Gulf of Mexico Drive-only project, it will cost taxpayers $23.4 million.

Previous estimates released in October came in at $19 million. The $23.4 million cost includes a 15% construction contingency built into the project cost. If construction costs need a 25% construction contingency built in, the town is looking at a $26.5 million project.

Costs have increased, in part, due to Florida Power & Light Co.’s updated costs that also now include transformers and increased material costs. The costs now also include neighborhood and side street costs (see sidebar).

The town has the option to fund projects through ad valorem (uniform millage rate funded through property taxes) or non-ad valorem assessments. The town could also use a combination of the two assessments to fund a project.

Non-ad valorem assessments are based on the benefit each property receives, meaning residents who already have utilities buried underground would pay less for a project, while those who need their neighborhood or street utilities buried would pay more.

Assistant Town Manager Anne Ross, though, said a non-ad valorem assessment islandwide “is much more convoluted” and “would be difficult to implement for a project of this size.”

“It’s not as simple as the 80/20 beach split,” Ross said, referring to the measure that has property owners on the Gulf paying 80% of the cost for beach projects, while property owners east of Gulf of Mexico Drive pay 20% for those projects. “We can’t take a map and draw a line and tell these people they pay this much and these people over here they pay this much for a project like this.”

The draft presentation states a non-ad valorem funding mechanism has “potential issues of uniformity” and “creates an unreasonable start-over risk in debt financing.”

A project that would be funded by both ad valorem taxes and non-ad valorem funds would also require two referendums, which could cause confusion among voters.

With the latest information, commissioners are charged with receiving public input and deciding whether to implement an islandwide project or limit its scope to just Gulf of Mexico Drive. If they pursue undergrounding, the commission will also have to decide what kind of funding should be put on a referenda ballot.

So far, the town has approved spending up to $50,000 for an engineering study by Brannon & Gillespie LLC and up to $30,000 for staff to evaluate other options for underground utilities.

Discussion of underground utilities has flickered on and off at Town Hall for approximately 20 years.

At a November special meeting, four out of six commissioners in attendance voted against an ordinance on second reading that would have placed referenda on the March 10 ballot asking voters to approve bonds of no more than $19 million to bury utilities along Gulf of Mexico Drive and no more than $5 million to help neighborhoods with costs for undergrounding utilities.

Although more than 40 residents in attendance at the November meeting agreed that an undergrounding utilities plan was the right decision, they expressed a desire to hold off until the commission could bring islandwide underground utilities to voters.

The majority of the commission cited a need to get it done correctly the first time and a need to know what that the cost would be to bury utilities islandwide.

Some commissioners expressed concern many residents would vote down the GMD undergrounding project if the entire island was not included in the project.

The draft presentation states town staff needs referenda language by July 1 for a Nov. 3 mail ballot and by July 20 for on-site voting in the Nov. 3 election.

Town-wide Project Costs
If voters pay for a town-wide $42.1 million undergrounding project through ad valorem funds, a property owner with a $500,000 home would pay an additional $315.01 annually in taxes over 20 years.