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    25.    
City Council Regular
Meeting Date: 02/14/2017  

SUBJECT:
SOUTHERN CALIFORNIA EDISON (SCE) AGREEMENT FOR THE ACQUISITION OF STREETLIGHTS
RECOMMENDATION:
  1. Amend the 2016-17 Capital Improvement Program to add a project for the Acquisition of Streetlights from SCE. 
     
  2. Appropriate funds in the amount of $2,751,200 from the General Fund Unreserved Fund Balance to the Capital Improvement Project Fund for the acquisition and transfer costs. 
     
  3. Authorize the City Manager to prepare and execute an agreement with SCE for the purchase of streetlights.
BACKGROUND/ANALYSIS:
SCE owns, maintains, and leases streetlights to the City.  The cost for this service has been rising substantially over the years and has reached over $740,000 annually.
 
In 2012, a group of Southern California cities formed a coalition for the purpose of encouraging SCE to sell such streetlights to the respective cities.  As a result, SCE provided a limited window of an opportunity for the cities to request a valuation of their streetlight systems and enter into a purchase agreement with SCE.
 
The City of Chino Hills applied for and eventually received a valuation of approximately $2.7 million in May 2016.  SCE has proposed selling an estimated 4,446 streetlights with an average annual fee of $155.16 per pole.  Once the City obtains ownership, the cost will drop to an estimate of $108.26 annually.  This equates to annual savings for the City of over $208,000 for the system.  Without considering avoided rate increases, the straight-line cost recovery period would be approximately 13 years.
 
The future sale of the streetlights to the City is conditional upon the City entering into an agreement with SCE by May 2017.  Staff evaluated this opportunity and presented the findings to the Public Works Commission on January 4, 2017.  The Commission was highly supportive of the action. Therefore, staff is recommending that Council authorize the City Manager to enter into this agreement with SCE committing to purchase the streetlights within the City. 

With the execution of the agreement, SCE and City staff will field verify the exact quantities and locations of the streetlights and, after PUC approval, the transition will occur. Transition costs, estimated at $50,000, will include a City identifier and digital mapping of each pole.  Once the infrastructure is owned, the City will have an additional opportunity to upgrade the lighting with LED, which will result in further savings. Staff anticipates this upgrade to occur shortly after the turnover of the streetlights.
ENVIRONMENTAL (CEQA) REVIEW:
The proposed project is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Title 14 California Code of Regulations § 15301 (h) as a Class 1 categorical exemption (Existing Facilities). The project involves maintenance of existing facilities and is not anticipated to have any significant impacts with regard to traffic, noise, air quality, or water quality. 
FISCAL IMPACT:
This project was not anticipated in the 2016-17 CIP budget and will reduce the General Fund Unreserved Fund balance by $2,751,200 for the initial investment. Once ownership of the street lights has been transferred, the General Fund will be reimbursed for the initial investment through internal charge back to the appropriate cost centers on a pro-rata share basis (i.e. Gas Tax and the various Landscape and Lighting Districts).  Staff projects an annual city-wide savings of approximately $208,000 due to lower street light maintenance costs.  It is anticipated that the city-wide savings will offset the initial purchase price in 13 years.
 
REVIEWED BY OTHERS:
The Finance Director and Contracts Compliance Officer have reviewed this action. 

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