Utility funding options explored
If property owners approve the controversial Sunset and North Hills undergrounding projects later this year, they next face the challenge of privately funding the amount their land was assessed for moving utility lines below ground.
They will have the choice between two options through the city of Del Mar. They will either have 50 days to pay some or all of their assessment, interest free and with a 10 percent discount. The other option is to have the cost applied to their property tax bill, to be paid over the next 30 years with an estimated interest rate of 7 percent.
In the North Hills district, for example, more than half of the 321 homes were assessed an undergrounding cost between $15,000 and $25,000. In other large categories, 66 were assessed between $25,000 and $35,000, and 47 will be charged less than $15,000.
North Hills resident Ann Dempsey’s home was assessed $34,000. She said that means she will have to cut $225 per month from her budget in order to pay her property tax bill each half year. Her grand total over 30 years will be more than $80,000.
While Dempsey says this is an unfair financial burden to be placed on her in this economic climate, proponents of undergrounding say the project will boost her property value and eliminate the risk of falling power lines.
Some have raised issue with the estimated 7 percent interest rate that comes with the assessment, saying it is too high for what should be available in this recession.
However, consultant Thomas Johnsen, retained by the city of Del Mar, said the rate could reach 10 percent if this were a better economic climate.
For those who qualify, Del Mar Union Bank branch manager Walter Beerle said they could get a private loan on their home with an interest rate of 5.25 percent. The bank could pay off the original assessment with the 10 percent discount, and the homeowner could pay the bank directly.
This assessment, however, does not cover the cost of connecting the new underground utility lines to homes, which, on average will be between $2,000 and $3,000, but can go up to $10,000. This amount largely depends on the distance between the underground utility line and actual home.
There is, however, a program that will loan the connection cost amount with a 3 percent interest rate payable upon death, moving out, or in 15 years, whichever comes first.
“This is not an endorsement but it’s helping we hope seniors and others to stay in their own homes,” said Sarah Dubin-Vaughn, chair of the Community Support Fund committee.
The program, which requires an applicant to show a true need, has already raised roughly $25,000. However, Sunset district underground project committee member Greg Fehr said the goal is more like $100,000. He said he expects more donations will come in if the measures pass.
The Del Mar City Council has already given the North Hills Assessment District the go-ahead to be put to a weighted vote, ending April 19. The more money a property has been assessed, the more weight its owner’s vote carries.
The council will decide whether to do the same for the Sunset Assessment District at its Feb. 22 meeting, although, in a recent interview, Mayor Richard Earnest said it that it would be surprising if the council does not let both go to a ballot measure.
For more information, visit www.delmar.ca.us and click on the “North Hills and Sunset Undergrounding Project Information” link.
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