It will take an estimated $3.6 billion to underground the remaining 470 miles of overhead utility lines in San Francisco. And at the current rate of funding for the initiative, or lack thereof, it could take 600 years to complete, according to the latest numbers from the City Controller’s Office.

Keeping on top of utility bills is often a challenge for both small and large businesses. If you would like support and guidance reducing overhead business costs, take a look at the Utility Bidder website.

Last week, San Francisco’s Local Agency Formation Commission agreed to initiate a study of alternative funding strategies to expedite the undergrounding program in San Francisco.

And in fact, three strategies have already been identified by the Controller’s office which could complete San Francisco’s undergrounding program in as few as 25 years, but with rather big bills attached:

1. General Funds

Annual General Fund cash investments of approximately $140 million would be required to complete approximately 18 miles of undergrounding annually and the overall program over a 25 year program horizon. To provide some relative scale, this value exceeds the current year General Fund capital budget for all City assets by more than 40%. Implementation over a 50 year horizon and approximately 9 miles per year would require approximately $71 million annually, and $35 million annually would be required to complete 4.5 miles annually and to meet a 100 year project schedule.

2. General Obligation Bonds

General obligation bonds (or G.O. bonds) are often used to fund large scale capital programs and projects, and require a 2/3rds vote of the electorate to approve. G.O. bonds are paid back over time through a property tax charge established to service the annual debt service on the bonds.

To finance $3.6 billion in G.O. bonds in order to complete the program in 25 years, with the bonds amortized over a comparable period, would result in an incremental 0.16% property tax override rate, or an increase of approximately $786 (13%) in annual property tax payments for a typical $500,000 home.

Structuring this program to be completed over 50 or 100 years through two sales would result in approximate property tax rate increases of $393 (7%) and $197 (3%) respectively for the same $500,000 home. These figures reflect planning estimates; the actual timing and staging of bond issuances would affect ultimate property tax rates.

3. Utility User Taxes

The City’s current utility user tax (or UUT) for gas and electric services is 7.5% and only applies to commercial customers. Broadening the tax to residential customers would generate approximately $30 million annually that could be applied to fund an undergrounding program.

For the average residential customer this would result in an approximately $9.30 increase to their monthly gas and electric bills. These revenues would be sufficient to underground approximately four miles annually, resulting in an overall program schedule of approximately 118 years. In addition to expansion of the utility user tax to residential customers, the commercial utility tax could be raised from 7.5% to 10%, generating an additional $28 million annually.

Combined, these combined utility user tax increases would generate approximately $58 million annually, sufficient to underground approximately 7.6 miles per year and to complete the overall program in approximately 62 years. These increases would require adoption by the electorate by a 2/3rds vote, assuming the increase was dedicated to this purpose.

Of course, State law allows property owners to simply fund the undergrounding themselves, but at a cost of roughly $7.5 million per mile it’s a rather big ask and there’s no mechanism for forcing a neighbor to pay their fair share or exclude holdouts from benefiting.

Comments from Plugged-In Readers

  1. Posted by peanut gallery

    And you think the streets are always being torn up now, wait until all the wires are underground and need constant maintenance.

    • Posted by BigV

      you can re-run wiring through conduit without digging it up. It is different than pipes that carry liquids.

      • Posted by san FronziScheme (formerly known as lol)

        Yes all you need is a forward looking utility who will spend a little more for less headaches in the future.

        A fun fact: in the early 90s a friend of mine was living in a solid concrete building where you would get one phone line per flat. He worked from home and at that time you’d get only dial up in these places. No Skype or DSL, or dial-up-phoneline switches. Pipes were too small because someone in 1972 thought “why would people need more than 1 phone line?”

        • Posted by jwb

          The reason your friend didn’t have Skype or DSL in the early 90s was because ADSL wasn’t invented until 1994 and didn’t even begin to be widely available until after the 1996 Telecommunications Act. Skype didn’t come until 2003.

          • Posted by oscar

            jwb, that’s Fronzi’s point. He’s saying that we’re spending all this money now but who knows whether it’ll be compatible when future technology comes along. And if that’s the case, it could be money wasted if it’s not built with the future in mind.

          • Posted by San FronziScheme (formerly known as lol)

            My point precisely. He needed both internet and phone but the shortsightedness of the builders made it impossible to get 2 lines.

          • Posted by Sierrajeff

            Well if mysterious future tech is so different that it can’t be accommodated in the underground pipes, then we’ll already have that problem (at a level of magnitude higher) in the FiDi… not to mention, oh, every other major city on the planet (Manhattan, London, D.C., Montreal, Boston, downtown Chicago, downtown L.A., etc.)

            The point is, every major downtown that I can think of (and in many cases their outer regions too, *outside* the U.S.) has already undergrounded utilities. So I hardly think that “what if new tech comes along” should prevent us from *finishing* undergrounding here, and allowing poorer neighborhoods like the Outer Sunset, Outer Richmond, the Mission, etc. to experience the same safety and aesthetic improvements that have already occured not only in the FiDi, but in wealthy ‘hoods like Jackson Square, the Marina, Telegraph Hill, Pac Heights, etc.

          • Posted by JR "Bob" Dobbs

            I think san FronziScheme’s point is just the opposite – that we should underground these lines but also make sure that the undergrounding infrastructure is large/flexible enough to accommodate new technologies, even if we don’t yet know what those are. My understanding (from the undergrounding on my own street) is that the trenches have lots and lots of extra space, so I think this is actually part of the current process.

  2. Posted by BigV

    Seems like some combination of the 3 of these approaches would be ideal. If you have to get a 2/3rd vote anyways, why not combine the utility user tax and the GO bond together into one vote such that neither is overwhelming.

    This is a project that needs to happen, even if it is expensive. It has a huge impact on our cities earthquake resilience and our ability to have healthy street trees, and thus our quality of life.

    And somehow the city found the $$ to underground the utilities in the wealthy neighborhoods already. If they could do that, they can underground the utilities for the rest of us.

    My friends who visit from Europe laugh at us and how backwards of a city we are to still have wires run overhead like some shanytown. They fixed that problem 50 years ago.

    • Posted by Noodle

      You do realize why they had an opportunity to “fix” a little over fifty years ago, right?

      • Posted by san FronziScheme (formerly known as lol)

        If you are referring to WWII, you’re getting your decades mixed up. The big investments in infrastructure happened in the 60 and 70s in Europe. Sometimes in the 80s for a few laggards.

        The reasons for undergrounding utilities in big European cities is mainly practical. You can’t have power cables running around going to all floors or even all buildings. Density is way too high for that. Another factor is that because of density, big European cities have large sewer systems where you can walk and pull wires.They can attach whatever new cables to the sewer ceiling without having to dig new trenches.

  3. Posted by NoeNeighbor

    There might also be some investigation done on the “cost” side of the equation. I have heard that in San Diego the cost per mile was far less.

    • Posted by Brad

      San Diego is nowhere near as dense nor is their terrain as difficult as ours. Also, it goes without saying that everything costs more here.

      • Posted by Sierrajeff

        Greater density should mean a lower per-unit (per house, per condo) cost, not greater.

        And their topography is just as complex – not so many steep hills, but plenty of boxy arroyos that present their own major difficulties.

    • Posted by Sierrajeff

      The cost cited above is outrageous – the way to get this done faster is to tackle the cost estimates, not find every more sources of revenue.

  4. Posted by JR "Bob" Dobbs

    Yes, we should do this much quicker than 50 or 100 years or even 25. My street is undergrounded, and it is amazing how much better it looks. Many neighboring streets are not and they look like 3rd-world countries in comparison with the spider web of overhead lines. And of course the earthquake issues are obvious.

    One problem I have with these proposals is that the homeowners should foot a fair chunk. The former owners of our place paid out-of-pocket costs of $3000 for to rewire the service entry connection from the main cables in the new undergrounded location. This is a multi-decade project. It is fair to make those individually benefiting from it to pay more of the costs at the time they receive the individual benefit. It is not equitable to make all homeowners/customers contribute equally when some won’t receive the benefit in their lifetime. It should be split — something like 70/30 — between a common tax/fee and an individual assessment. Everyone will pay eventually, but this timing is more fair.

    • Posted by The Milkshake of Despair

      Yes, building owners should fund at least the service entry hookup costs. What happens though is that a block may have a few hold outs who aren’t willing or able to cough up the cash for their connections. That can stall the whole project unless they can find someone to sponsor their fees.

      • Posted by woolie

        You could do a lien that’s payable when the property is sold.

  5. Posted by Brad

    I sure hope they work something out. There’s such a noticeable difference when driving from neighborhoods where the lines have been undergrounded. It removes so much visual noise and allows the beauty of the city to really shine through.

  6. Posted by matteo

    i wonder if rincon hill developers require to fund the undergrounding around their highrises. most of lines next to the new buildings are underground.

    • Posted by Sierrajeff

      Yes – all new developments should be required to underground. Heck, you’d think they want that. Was at Market & Noe over the weekend, and there are huge poles & wire nests right by the new 5-story apartment building – such an eyesore (not to mention being unsafe).

  7. Posted by Katelola888

    I guess SF will stay looking junkie w/ these 1900’s wires in the air for the next 600 years. May be our great great great great great great grand-kids will have the luxury to enjoy wire free SF.

  8. Posted by Sierrajeff

    Someone needs to investigate the investigators. A 2012 article in the Washington Post cited an *average* urban cost to underground lines of under $1,000,000 per mile.

    And a 2013 article *on an electric industry association website* cites $1.5 to $2 million per mile.

    And for both these articles, some of the cost factors cited, such as soil types, should work in favor of *lower* costs in many neighborhoods in the City – the Richmond and Sunset in particular are built on sand – no worries about having to chip away at bedrock, nor about a high water table causing problems with the lines.

    In short, it’s hard to fathom how anyone could rationally cite $7.8 million per mile – not unless there’s some hefty price gouging (or worse) going on…

  9. Posted by eddy

    Can we get rid of the overhead muni powerlines lines please while we’re at it?

    • Posted by Mark

      We sure can. It’s called a subway system.

      • Posted by RobBob

        I think they’re installing a new induction charging system somewhere in Canada (I forget where) that charges the buses while it sits at bus stops.

  10. Posted by Unwarrantedinlaw

    3.6 billion for an artsy change. “Visual noise”, that’s hilarious. You all are a bunch of princesses whining about the pea under your mattresses.

    • Posted by Steve

      True, it looks nicer. But aside from those who want to reduce the “visual noise”, this is a real public safety issue. Undergrounding is much safer in earthquakes and reduces the amount of repair work and recovery time.

      • Posted by Sierrajeff

        It also allows street trees (which in turn provide shade / cooling, and slow water runoff); and it improves property values. Heck, I’d even argue it improves pride of place and qualify of life. Streets with nests of wires overhead are downright ugly and depressing. This is one of the most beautiful cities on Earth, and we deliberately ruin views both near and far with 19th century technology?

      • Posted by Alai

        I bet an earthquake-damaged underground line is a lot harder to fix than an earthquake-damaged overhead line.

        • Posted by Steve

          wrong. they don’t fall down and break (and hurt people in the process) and they can be designed and built to result in minimal damage.

  11. Posted by Steve

    What can be done is to halt the unnecessary sidewalk and gutter repair projects handed to politically-connected firms and divert them to undergrounding projects with a real public-safety benefit. A few years ago the granite curbs in my neighborhood’s commercial strip were torn out and replaced with concrete curb and gutter – for absolutely no good reason. Similarly, the handicap ramps at the crosswalks have been redone probably three times in the 15 years I have lived here – each time admittedly providing an incremental improvement (last time they added the yellow rubber matting – and at one corner they re-did that three times), but not necessary – minor but expensive upgrades, like code upgrades for buildings, should be done only with new construction. This happens all over the city and I wonder at what cost. I’m guessing the problem is that the politically-connected firms are less likely to do undergrounding work because that requires more specialized trades.

  12. Posted by Jamie Whitaker

    The most appropriate finding mechanism, considering how Prop 13 creates a great disparity from one property to the next in as valorem tax contributions, is to form a special assessment tax district for those geographic areas who see this as an important priority. That way, everyone pays their fair share.

  13. Posted by BobN

    Wasn’t this supposed to be PG&E’s problem?

  14. Posted by anon94123

    The ONLY good thing to happen because of the 1989 earthquake was that it caused all the streets, sidewalks and utilities to be rebuilt in the Marina because they were destroyed by the seismic event. Have you ever noticed how there are almost no overhead wires north of Lombard Street? Or how many new trees were planted, as well as new wider sidewalks?

  15. Posted by alberto rossi

    You can’t compare costs in other cities to costs in SF. We have a different currency here. I call them willars, after Willie Brown. The conversion rate seems to be about 10 to 1. So San Diego it’s $1 million/mile; in SF it’s $10 million willars/mile.

    • Posted by BigV

      That is because 1/2 of every project dollar is required to be given to a non-profit that will resist, delay, and fight back against that project. The better they are at slowing down the project, the more the project costs escalate, and thus, the more funding they get, thus helping keep jobs in the city. see — brilliant!

  16. Posted by Joseph A

    Shame SF does not sell zoning heights as a way to fund this ,

    If SF had a fee to go beyond current height limits , and those funds were used for this project it could be paid for in a few short years

  17. Posted by Pffttt

    Just had to LOL at the heading of this blog.

  18. Posted by Alai

    I recall that in Oakland it turned out that all the undergrounding money was spent in wealthy neighborhoods in the hills. Not only that, but it cost several times more per mile (because of rocky, hilly geography) and even more than that per household (because of lower density). Then, having spent all the money they had, and future money as well, the program went moribund.

    I don’t object to undergrounding, necessarily, but you have to run the program better than that.

  19. Posted by Anon

    @Alai, was the undergrounding in the Oakland hills after the big fire? If that was the case, they were mainly rebuilding utilities that were destroyed.

    • Posted by woolie

      They are still undergrounding utilities in the Oakland hills as we speak, but I’m not sure if the present program is tax or homeowner funded. (I think the latter).

  20. Posted by carpezeitgeist

    3.6 billion dollars for 470 miles of underground wiring comes to ~$120 per inch… It would cost just as much money to line the 470 miles with unsubsidized iPhone6 phones.

  21. Posted by JR "Bob" Dobbs

    Pretty clear that PG&E is just ripping of the city. From the report:

    “An additional concern relates to the extraordinary cost difference between San Francisco and other California cities, such as San Diego. PG&E has charged about $4 million per mile ($5.7/mile fully loaded) to create the underground structure and to remove its overhead facilities. The City of San Diego reports that the average cost to achieve the same result in that city costs $1.7-$1.9 million per mile.”

    That’s it! PG&E charges way too much, so, duh, I guess we just have to pay that. There is no more drilling down on this in the report, as far as I can see, while they spend page after page in coming up with ways to tax us to pay what PG&E wants.

    PG&E is a regulated entity. We obviously need to get the CPUC on board to police this. That could halve the cost. But, as so often happens with regulated entities, the regulated have ended up controlling the regulators.

    • Posted by Sierrajeff

      +1, times 100. What buffoon noted the 3x to 5x multiple over San Diego, and then just shrugged and said “gosh, we’re really going to need to raise taxes!”

    • Posted by LibertyHiller

      CPUC policing PG&E, sure that’ll start any day now.

  22. Posted by bee

    My neighborhood tried to take advantage of “State law allows property owners to simply fund the undergrounding themselves” a few years ago. We got organized and contacted the City and the untilities. Even with the help of our supervisor, we could not get an estimate of the cost (which we were willing and ready to pay). Has anyone out there successfully done this themselves in the last five years?

    In 1987, my neighborhood at that time (Ashbury Heights) had the lines put underground. This was at the initiative of the city and the utility companies, but the neighbors paid extra to get candlestick style street lights rather than freeway style.

    When does PG&E’s contract with the City expire? Couldn’t the new contract include a detailed requirement that they underground x miles of utility lines per year, or so many miles in each supervisorial district? That would seem to be the way to get it done.

    • Posted by 4Oceans

      Thanks Bee…. helpful. Strikes me that PG&E is prime culprit. Also, if you ride around SF you’ll quickly see that main beneficiaries of under grounding so far are wealthiest neighborhoods. State law is supposed to insure that scenic areas also benefit. Great example is Great Highway, Ocean Beach, where lines are horrible, ruin otherwise great views, but land values don’t inspire owners to fund or City to encourage under grounding. My sense is that Great Hwy will be last to benefit, perhaps about 600 years or so. Oh yeah, with sea rise GH will be long underwater by then!

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