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Home My WebLink About11/19/1996, 3 - RESOLUTION OF NECESSITY TO ACQUIRE STREETLIGHTS BY EMINENT DOMAIN council 4 " f-171 s 6 j acEnba aEpont CITYef OF SAN LUI S OBIS PO FROM: Michael D. McCluskey, Public Worics Director- Prepared By: David Elliott, Administrative Analyss ,,- SUBJECT: Resolution of Necessity to Acquire Streetlights by Eminent Domain CAO RECOMMENDATION 1) Adopt by a two thirds vote a resolution which a) declares that public interest and necessity require acquisition of streetlights owned by PG&E and b) directs the City Attorney to start eminent domain proceedings to acquire the streetlights 2) By motion authorize a half-time regular electrician for the signal and light maintenance program contingent on a court order for immediate possession DLSCUSSION Background At its meeting on October 22, 1996 the Council authorized the City Administrative Officer to offer PG&E $157,165 for acquisition and transfer of streetlights to the City. This price was based on an appraisal prepared for the City by R.W. Beck, Inc. On October 23, 1996 the City Administrative Officer tendered this offer by letter and stated that it would remain open until November 18, 1996. The public hearing and resolution recommended in this report will not be necessary if PG&E accepts the offer or if representatives from PG&E and the City can negotiate an acceptable price by November 18. Based on past streetlight acquisitions in other jurisdictions, though, PG&E will probably not accept the City's offer. On November 4 Public Works staff nembers met with representatives from PG&E's San Luis Obispo and San Francisco offices to begin negotiations. These negotiations will continue on November 18, and Public Works will report on their status at the Council meeting. Because the status quo benefits PG&E, there is little incentive to reach agreement, and negotiations typically lag over an unacceptably long period of time. Consequently, the City's consultant attorney has recommended that the City prepare to adopt a resolution of necessity and start condemnation proceedings. This action does not imply a lack of cooperation or good faith from PG&E. Rather, it acknowledges that negotiations in these acquisitions often naturally tend to become protracted to the City's detriment. A condemnation can speed up the acquisition process and save money and staff effort for both parties. It can also benefit the City, because the earlier the City can acquire the streetlights, the earlier it can realize significant savings in annual operating costs. Council Agenda Report- Resolution of Necessity to Acquire Streetlights Page 2 The resolution of necessity makes five necessary findings: 1) that public interest and necessity require City operation of the.streetlight system 2) that the location of the existing streetlight facilities are "most compatible with the greatest public good and the least private injury" 3) that the existing streetlight facilities are necessary for City operation of the street light system 4) that the streetlight system is more appropriately a public, rather than private, use 5) that an appropriate offer has been made to PG&E Next Stens After the Council adopts the proposed resolution, the City Attorney will file a complaint in Superior Court to condemn the streetlight system for the City's use and to ascertain just compensation. At the same time the City Attorney will file with the State Treasury a deposit of $157,165 pending resolution of the condemnation suit. Next the City Attorney will file in Superior Court an application for an order of immediate possession, which will allow the City to take over the system and begin realizing the anticipated savings in operating costs. Typically the parties in other streetlight condemnation actions have negotiated settlements of condemnation suits based on refined appraisals prepared jointly by appraisers representing both the utility and the municipality. Need for Additional Staffing The two objectives of the streetlight acquisition project are to reduce annual operating costs and to improve maintenance. If the City can take immediate possession of the streetlight system, Public Works will then assume all maintenance responsibilities. For this reason Public Works recommends authorizing a half-time regular electrician for the signal and light maintenance program contingent on a court order for immediate possession. Feasibility studies completed by an electric utilities consultant showed that a half-time electrician could maintain the 1,900 street lights and have some time also to assist with traffic signal maintenance. Before recruiting this position Public Works will solicit proposals for contract maintenance, although past investigation has shown a scarcity of qualified firms within a reasonable response time. If the court orders immediate possession and the City takes over maintenance, it will take two or three months to hire the half-time electrician. During this period Public Works maintenance crews will respond to urgent streetlight repair needs but will not be able to perform any preventative maintenance. FISCAL EMPACr Current feasibility calculations show that the City can save about $76,100 each year in 3-2 Council Agenda Report- Resolution of Necessity to Acquire Streetlights Page 3 operating costs by acquiring the streetlights and taking over maintenance. This amount will be reduced by annual debt service on the bond proceeds needed for acquisition. Depending on final acquisition cost, net annual savings after deducting debt service could range from $34,100 to $51,500. The expected savings based on an estimated mid-range acquisition cost would be about $42,300, as shown below: Annual Operating Payments to PG&E Under Existing Circumstances (1) $192,700 Less Annual Operating Payments to PG&E After Acquisition (2) -73.400 Annual Savings in Operating Payments to PG&E $119,300 Less Annual Cost of Maintenance Assumed by the City -43200 Annual Savings in Operating Cost $76,100 Less Annual Debt Service on Acquisition Financing (3) -33.800 Net Annual Savings $ 42,300 (1) for rent,maintenance, and electricity (2) for electricity only (3) over 30 years,based on estimated mid-range acquisition cost The annual cost of maintenance assumed by the City includes the following components: Compensation for Half-time Regular Electrician $21,000 Annual Amortization on the Cost of a Pickup Truck (1) 1,600 Annual Fuel and Maintenance for a Pickup Truck 600 Replacement Materials and Parts 20,000 Annual Cost of Maintenance $43,200 (1) $19,000 over 12 years Attachment Resolution (A copy of the appraisal report is available in the City Clerk's office.) hAsipatsWacquis11119.ap RESOLUTION NO. (1996 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO OF THE NECESSITY BY THE CITY OF SAN LUIS OBISPO TO ACQUIRE STREET LIGHTING FACILITIES BY EMINENT DOMAIN WHEREAS, the City of San Luis Obispo, a charter city, is authorized to acquire by eminent domain public utility facilities for the public use of street lighting pursuant to, among other provisions of state law, California Code of Civil Procedure Section 1240.110; California Constitution Article XI, Section 9; Government Code Section 37350.5; Government Code Section 39732; and Government Code Section 40404(f); and, WHEREAS, the City of San Luis Obispo desires to acquire certain public utility facilities, namely all Pacific Gas and Electric Company (hereinafter "PG&E") street lighting facilities located within the territorial limits of the City of San Luis Obispo that are on PG&E's LS-1 Rate Schedule, and which are generally described in the September 1996 Appraisal Report of R.W. Beck, Inc. (Attachment "A"); and WHEREAS, the City Council has provided the notice and has held the hearing required by California Code of Civil Procedure Section 1245.235, and no legal impediment to proceeding with the acquisition has been shown; NOW, WHEREFORE, BE IT RESOLVED by the City Council of the City of San Luis Obispo as follows: SECTION 1. The City Council of the City of San Luis Obispo declares that it has found and determined each of the following: a. The public interest and necessity require the proposed acquisition of all PG&E street lighting facilities located within the territorial limits of the City of San Luis Obispo that are on PG&E's LS-1 Rate Schedule, and which are generally described in the September 1996 Appraisal Report of R.W. Beck, Inc. (Attachment "A"). b. The project for which the public utility facilities (generally described herein and in the Attachment "A") are to be acquired has been planned and located in a manner that will be most compatible with the greatest public good and the least private injury. c. The public utility facilities (generally described herein and in Attachment "A") are necessary for the proposed project. d. The public utility facilities (generally described herein and in Attachment "A") are to be acquired pursuant to California Code of Civil Procedure Section 1240.610 and, as provided in California Code of Civil Procedure Section 1240.650, said facilities are a more necessary public use than the present use to which said facilities are appropriated. Resolution No. (1996 Series) Page 2 e. The offer required by Section 7267.2 of the Government Code (to the extent appropriate) has been made to the owner of record of the public utility facilities generally described herein and in Attachment "A". SECTION 2. The City Attorney is directed to commence proceedings in eminent domain against the owner of the public utility facilities, including but not limited to pole space on PG&E power poles on which street lighting luminaires are located, and any and all interest therein or claims thereto, for the condemnation thereof for the public use of the City of San Luis Obispo. Upon motion of , second by and on the following roll call vote: ' AYES: NOES: ABSENT: the foregoing resolution was adopted this day of 1996. ATTESTED: Mayor Allen K. Settle City Clerk APPROVED: *®rn7 J