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Council pauses undergrounding decision after staff outlines Rule 28 credit limits, easement hurdles
Summary
Staff reported about $3.8 million in remaining Rule 28 (CPUC) credits and three potential subdistrict options for undergrounding Utility District 6. Council questioned easement needs, non‑PG&E utilities, cost uncertainty and continuity with earlier undergrounding work and agreed to continue the item for further analysis.
Capitola staff on May 28 briefed the council on options for using remaining CPUC Rule 28 credits to underground overhead utilities in Utility District 6. Staff told the council the city currently has roughly $3.8 million in unused credits (less about $45,000 already spent on preliminary work) and outlined three options: proceed with the originally scoped Bay/Capitola Avenue segment (6A1), attempt a more extensive Monterey/Monterey Park alignment (6A2) or pivot to a Capitol Avenue segment (6B).
Constraints and findings: staff explained Rule 28 credits are intended for PG&E infrastructure; other utilities (telecoms, cable, municipal streetlights) are handled separately and may require additional city expense or negotiation. Staff emphasized easement acquisition is often required (underground utility vaults sometimes extend onto private property) and the city is responsible for negotiating and acquiring those easements. Construction cost uncertainty remains high until detailed engineering and bidding are completed; staff said that if a project proceeds to bid the city can withdraw before incurring debt or repaying credits, but abandoning a project after easement work creates staff time and outreach costs.
Council response: members debated whether to advance the Bay/Capitola intersection segment, which benefits from prior design work, or to prioritize continuity with the previously‑completed undergrounding down Capitola Avenue. Given recusal concerns raised by one councilmember and unresolved easement / cost details, the council agreed to continue the item and direct staff to return with deeper analysis of easement needs, more precise cost estimates and options for sequencing projects so the city can provide a single clear directive to PG&E.
Why this matters: Rule 28 funds are finite and largely must be claimed before the program sunsets; using the credits efficiently requires aligning undergrounding with roadway projects, securing easements, and deciding whether the city can afford any non‑PG&E costs such as streetlight replacements or private utility relocations.
Next steps: staff will prepare additional analysis on easement requirements and preliminary cost estimates for alternate segments and return to council for a decision on which district (if any) to advance to PG&E for engineering and bidding.
