Monday, October 5, 2015

Unequal Taxation?

Unequal Taxation?


Below is a Florida Public Service Commission paper on the deficiencies of burying power lines. It's worth a read to get a better understanding of what the Longboat commission is proposing. The commission is asking voters to agree to tax themselves 25 million dollars to bury power lines on just Gulf of Mexico Drive.

My two major complaints concern unfair and inequitable tax apportionment and the economic inefficiencies of the commission plan. 

The commission's special tax assessment for undergrounding power lines along GMD, has the great majority of taxpayers paying an identical amount, no matter where your property is located.

The town's two special beach maintenance taxing districts acknowledges that those properties lying west of GMD receive greater benefit, from maintaining beaches, than those properties located east of GMD. This includes financial benefits in the form of property values. 

Under the current commission special assessment referendum, the commission ignores their own beach taxing rational and asserts that all properties on the island will enjoy identical benefits from undergrounding GMD. I do not believe that anyone, besides the commissioners, thinks that properties on GMD will not experience increased property values as a result of burying power lines in front of their homes.

Likewise, I do not believe that many residents believe that the various neighborhoods will be able to facilitate undergrounding projects in individual areas where there are existing overhead power lines, after GMD is undergrounded. The commission's GMD or nothing plan will have negative impacts on future efforts to underground the entire island. Is is a bad plan!

PUBLIC UTILITY COMMISSION ANALYSES
Florida (2007-2008)
In 2006, the Florida Public Service Commission directed each investor-owned electric utility in the state to investigate the implications of converting their overhead electric distribution systems to underground. The primary focus of the project was the impact of undergrounding on the performance of the electric infrastructure during
hurricanes, i.e., the ability of the electric system to withstand high winds, storm surges, and other damage from hurricanes and to minimize the number and duration of customer interruptions
The project was divided into three phases. Phase 1, published in 2007, reviewed existing research, reports, methodologies, and case studies. The literature review identified a range of benefits and costs of undergrounding. The benefits include increased reliability, improved aesthetics, and decreased costs for vegetation management. On the other hand, the review found an average cost of $1 million per mile, although it noted that actual costs could vary widely depending on customer density, terrain, and other factors. The review found that the costs of undergrounding are “… far in excess of the quantifiable benefits presented in existing studies, except in rare cases where the facilities provide particularly high reliability gains or otherwise have a higher than average impact on community goals.” The literature indicated that the wholesale conversion of overhead distribution systems to underground would require electricity rates to approximately double. This phase of the report is available athttp://warrington.ufl.edu/purc/docs/initiatives_UndergroundingAssessment.pdf.
Phase 2, also published in 2007, examined four undergrounding projects in Florida, two of which were done in conjunction with road widening. In two, the underground lines were substantially longer than the overhead lines they replaced (by 100% in one case and by 143% in the other). The increased length in these cases was due to an underground loop that was built to provide flexibility in responding to outages. Preliminary data indicated that undergrounding did not significantly affect the reliability of the affected circuit outside of storms. It found that the high initial costs of undergrounding were not fully justified by such things as reduced hurricane damage and reduced operations and management costs. The phase 2 report is available at http://warrington.ufl.edu/purc/docs/initiatives_UndergroundingAssessment2.pdf.
Phase 3 was published in 2008. It developed and tested a methodology for analyzing the costs and benefits of specific undergrounding proposals. The methodology has two components: a normal weather assessment and a hurricane assessment. The model used in the normal weather assessment includes the basic cost of utility capital and operations. It also includes reliability information that allows for the calculation of customer interruption rates and interruption-related costs. The hurricane model determines infrastructure damage and related costs associated with tropical storms of hurricane strength that make landfall in Florida.
The report notes that the methodology is specific to Florida, but the general approach is valid wherever extreme weather events have the potential to wreak havoc on electricity infrastructure. It also states that the model requires specification of many parameters and makes many assumptions. For many of these parameters and assumptions, there is little basis in historical data. The tool should be viewed as a “calculator” and the user must make appropriate decisions about the parameters and assumptions.
The report notes that there are several intangible benefits and costs to undergrounding. These include aesthetic benefits such as elimination of overhead facilities, improved landscaping, and the potential positive impact on property values. The intangible costs include reduced flexibility for both utility operations and system expansion. Undergrounding can have an adverse environmental impact including erosion and disruption of ecologically sensitive habitats.
The report notes that underground equipment is prone to damage by storm surges in hurricanes and by excavations near the lines. The time needed to repair underground lines is often longer than for overhead lines and the specialized crews needed for underground repairs are often scarce during restoration. The report concludes that “it is quite possible that undergrounding an existing overhead system in a coastal area may result in more hurricane damage and longerrestoration times for customers” (emphasis in original). The phase 3 report is available at http://warrington.ufl.edu/purc/docs/initiatives_UndergroundingAssessment3.pdf. 

Saturday, October 3, 2015

A Better Buried Power Lines Plan

Come November, Longboat Key voters will be asked to approve a referendum ballot, championed by the town commission, to approve a $25,000,000 bond to bury power lines the length of Gulf of Mexico Drive. The referendum does not contain provisions to underground power lines in the "neighborhoods" presently with above ground power lines.

At the beginning of the commission's efforts to underground GMD, and only GMD, while taxing every property owner, I asked that the town spend $5,000 to contact every property owner / real estate taxpayer to measure the sentiments of those who will end up paying the bill to have properties along GMD receive a major property value increase as a result of placing their overhead power lines underground.

Unfortunately the commission was not interested in what the bill-payers wanted. The commission forged ahead with what has become a divisive internecine struggle between those who want everyone to pay for their personal property improvements, while excluding the rest of the island, and those of us who seek an optimal solution, with maximum benefits for the entire community, not just those along GMD and those who already live in developments with underground utilities.

Commissioner Zunz, among others, has proposed an alternative funding scheme that has the entire island undergrounded, for not much more than the commission's limited underground deployment just on GMD.

The Zunz plan has every property owner pay $4,000 to underground the entire island, instead of $2,500 to underground only GMD.  With proper 10 year bond management, the bond + interest total is almost the same amount as the town's proposed 30 year bond for undergrounding just GMD. The voters are voting based in great part on special assessment information appearing on the town's web site. It would be questionable if the commission attempted to alter published property tax liabilities after the election.

The commission has effectively resisted having those who already have underground power lines from paying a penny more than what it costs to do just GMD. Sadly , their unwillingness to listen to alternative views, such as that of Ms. Zunz, most likely will doom further deployment of underground power lines into the neighborhoods, due to inefficient project scale, the volunteer resources required to form a local neighborhood taxing district and sell a small scale bond into an already skittish bond market.

The commissioner's strong opposition to community-wide funding of an island-wide underground project, ignores the current way we fund both beach and canal maintenance.

The really unfortunate aspect of what the commission has been doing is to stifle meaningful community discussion and to limit the voter's choices to their single proposal. The illegal removal of vital taxing information from the town web site is another example of the commission's attempts to control the voting process and prevent the taxpayers from having a complete understanding of the commission's referendum proposal.


That the commission is preventing Longboat taxpayers the right to choose between several plans flies in the face of fair and open government. All the taxpayers have already spent tens of thousands of dollars to have consultants study various funding models for just GMD and/or the entire island. Now that the commission has withdrawn any consideration for an island-wide project, voters are left with an all or nothing choice for only GMD. It is my opinion that we can to a lot better as a community, just as we do when it comes to beach and canal improvements. Voters can reject the current offering by the commission. That will trigger a more comprehensive plan that includes underground power lines for the entire island at a slightly higher cost to taxpayers than the current flawed commission plan.

To Underground or Not Underground

I believe almost every property owner on Longboat Key is in favor of under-grounding our power lines. That unanimity begins to break down over who pays for what. 

Under the town commission's project, everyone pays for GMD, no matter what cost/benefit is actually enjoyed by different property owners, in various parts of the island. For instance, how far away a land parcel lies from GMD. It seems logical that those properties directly on GMD will increase in property value from under-grounding the power lines.

One problem with the town's assessment formulation is that the Key Club Islandside only pays the same $2,476 that most every other property owner will pay. The Islandside property has 1.3 miles of frontage on GMD. I believe the approximate per mile cost for burying the power lines on GMD is $2,000,000. We all have to pay for the 1.3 miles of the Islandside property. I believe residents have a bonafide concern surrounding the taxing model published by the commission.

That the town commission refused to allow the residents to vote to pay to either bury power lines on just Gulf of Mexico Drive or throughout the entire community, has now divided the community and may well be the primary reason that voters reject the commission's funding plan.

At this point the commissioners have completely withdrawn any consideration of an island-wide under-grounding project. The commission has acknowledged that their assessment model for the neighborhoods is so faulty and unpopular that they chose to no longer consider an island-wide project. There is no assurance that the commission will reinstate an island-wide project even if their current referendum passes. Certainly there will be far fewer residents who are affected by overhead power lines once GMD is under-grounded, making further under-grounding efforts less likely.

If the commission's GMD referendum is approved, I cannot see an effective resident-based initiative to underground other neighborhoods being likely. The legal and political challenges are daunting and the cost of doing the island peace-meal can only translate into higher costs compared to a large island-wide project that will attract more contractors with more competitive bids.

I believe the voters would be better off rejecting the commission's GMD project and have the town formulate a better, more encompassing and cost effective under-grounding plan. 

Commissioner Zunz has presented an alternative funding initiative that might be accepted by the voters for the same reasons that voters approved both the beach and canal management taxing formulas.



Finally, here is a link to a study on undergrounding siting advantages and disadvantages.

http://www.entergy.com/2008_hurricanes/Underground-lines.pdf


Power Poles in Paradise



I just finished counting, on Google maps, the number of streets on LBK, intersecting with GMD that are gateways to neighborhoods with overhead power lines.

I counted 75 intersections that will require a power pole on or very close to GMD. This count could be off by a few streets where there are no houses with overhead power lines and thus not requiring a power pole on GMD.

In addition to the larger power poles at most intersections on GMD, the town's plan calls for the addition of between 300 to 600 new street light poles at a height of 30 feet. Currently street lights are mounted on existing power poles. 

Residents should not be lead to believe that undergrounding GMD will eradicate the visual blight of utility poles on GMD.