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Many California cities are facing budget constraints that limit the ability to pay outright for desperately needed infrastructure upgrades. Like school districts funding replacement or expansion of schools, a special tax assessment is used to fund capital needs and infrastructure. In these instances, cities turn to assessment districts to help finance projects that would otherwise go unfunded. View examples of cities that established assessment districts to pay for vital citizen needs:
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The City owns approximately 3,310 street lights citywide. The High Voltage Regulated Output (RO) street light circuits account for 23% of the total inventory. The ROs most affected by the outages are the four located in Skyline, Palisades, Westlake, and St. Francis neighborhoods. This accounts for approximately 6% of the City’s entire street light system.
These street light systems have served these neighborhoods since the 1950s and 1960s. Periodic problems with these lights have existed for decades, especially in areas most affected by coastal fog. Street light failures have increased over the years as equipment has aged and replacement parts have become more difficult to obtain. Affected street lights typically stay off for a few days or sometimes much longer depending on the cause of the failure and how quickly PG&E or the City can respond.
No, the City has never turned street lights off to save money. In fact, only PG&E can turn Regulated Output (RO) lights off. While the City continues to face the challenges of increasing operational costs and little growth in revenues, the City does not have a practice of reducing expenses by implementing "rolling blackouts."
The street light outages can make residents feel less safe as there is a perception that malfunctions signal an opportunity for crime, impact business shopping hours, lead to the negative motorist, pedestrian, and bicyclist impacts, and overall decrease Daly City’s quality of life for residents.
Street light failures have increased over the years as equipment ages and replacement equipment and parts become more difficult to obtain. Outages are reported as often as four times per month in some neighborhoods and ten times per month citywide.
Street lights typically stay off for several days or up to a month or more depending on the cause of the failure and how quickly PG&E responds.
Daly City leadership is seeking to improve the quality of life for residents residing in areas with regular street light outages. Without street lights, children cannot play outside past sundown and residents face unsettling neighborhood walks that can make them feel uneasy or unsafe in their own homes.
Poorly lit shopping districts may see a decrease in revenue once the sun goes down. Shoppers and tourists are more likely to visit a well-lit area perceived as safe. Without shoppers, businesses that depend on walk-in traffic may suffer financially. In addition, residents who drive may face a trip back to their car in complete darkness.
Daly City, unfortunately, cannot fund the replacement and upgrades alone. Over the last decade, the City has struggled to keep up with increasing costs and inflation. For a city that is primarily residential and lacks a diverse economic base, the revenue received does not keep pace with the costs to provide services. When the Great Recession hit, the City cut staff positions and employees made concessions. Despite these efforts, the City continues to face financial challenges. If the City were to fully fund the upgrades through a "save and pay" model (no borrowing and cash only), the project would take approximately 20 to 30 years to acquire enough funding for replacement.
Street lights on the western side of Daly City are powered by high voltage PG&E transformers and switchgear. Recent experience indicates most street light failures (9 out of 10) are the result of failures in PG&E power supply equipment. Daly City cannot control the problem with PG&E equipment but can convert the Daly City street lights to lower voltage. Converting to a lower voltage would eliminate the high voltage PG&E transformers and switchgear which cause frequent outages. In addition, replacement of the regulated outputs ROs would be with the latest LED technology, which would lower energy costs and reduce greenhouse gas emissions.
It would take the City approximately 20 to 30 years to fund replacements to the malfunctioning parts of the system. Street light maintenance is funded through gas and sale tax; however, there is not enough tax revenue generated to fund all of the roadway, storm drain, and other capital needs simultaneously. Basically, the City has $2 to spend with $20 worth of needs.
In short, revenue is not keeping pace with the cost of inflation and other increasing operational costs (e.g., fuel, energy, health care, etc.). As the largest city in the County, with a limited residential tax base, funding direct services has in recent years received greater priority than funding capital investments. It continues to be a challenge for many cities in the state, including Daly City, to fund significant capital needs without increasing taxes.
One option is to do nothing. Doing nothing entails more street light outages and repairs based on PG&E’s availability and the City’s finances. A more permanent solution is to determine a financing plan that pays for street light circuit conversion to lower voltage and eliminate the High Voltage Regulatory Output (RO) equipment. One plan evaluated by the City is the creation of a special assessment district to fund these improvements and expedite a permanent solution. View more information on assessment districts (PDF).
An assessment district is a financing method advocated by property owners and used by public agencies to fund the construction of public improvements or maintenance of public improvements that directly benefit the properties, or parcels, located within the boundary of the district. View more information on the assessment district (PDF).
The replacement of one High Voltage Regulated Outputs (RO) street light circuit is estimated to cost approximately $500,000. The four ROs that fail the most are 256, 366, 406, and 460. The estimated cost to replace all four ROs is approximately $2 million. See the map of the ROs.
If an assessment district option is selected, each property owner pays a share of the cost of improvements over a period of years through their property tax bill. Assessment districts are property owner funded; homeowners and rental property owners directly benefit from the proposed maintenance or upgrade from the improvements. The costs per owner will depend upon the capital cost for the improvement, the size of the district, and in some cases, the size of a particular property. Since a number of affected neighborhoods would be included in an assessment district to handle the four most problematic Regulated Outputs (RO), fixed costs could be spread over more property owners which will result in lower costs per assessment.
An assessment district is typically financed with a bond. For example, if a 15-year bond is selected, the annual assessment per property owner could range between $75 to $150 per year depending on the size of the district, the size of the property, and the degree of City financial contribution. The assessment would sunset when the bond or debt is paid off.
The City will hire a licensed engineer to determine the accrual and final costs as required by law to determine the exact cost of the assessment per property owner, if and when property owners elect to pursue assessment district financing.
If an assessment district were established, the annual fee is collected through a property owner’s property tax bill. The assessment district would appear as a separate line item, similar to a school bond.
For a permanent solution, Daly City recommends residents consider forming an assessment district (PDF) with neighbors seeking to improve safety and the quality of life in their neighborhoods.
Watch this video on what causes street light outages.
Watch this video on why street lights are so difficult to repair.