Neighbors’ votes could cost homeowners $20,000 apiece if underground utilities project is OK’d

Sitting in his two-story Newport Beach home that he’s owned for 35 years, Jim Young can think of a few ways he could spend the money he saved in his younger years to help sustain him through his retirement.

Shelling out tens of thousands of dollars to place the utility lines underground in his Newport Heights neighborhood doesn’t make the 83-year-old’s list.

Some homeowners in Young’s neighborhood, bordered by Tustin Avenue, Irvine Avenue, Cliff Drive and 15th Street, recently sent a request to the city to establish an assessment district with the intent of eventually placing the above-ground electric, phone and cable lines out of sight.

Proponents of the project have said it would improve views, make electricity service more reliable and boost property values in the neighborhood.

The catch: Homeowners would bear the cost of the work, whether they want to or not.

Before the city can form an underground utility assessment district, at least 60% of the homeowners in that neighborhood must sign a form expressing a desire for the project. If the quota is reached, the city will then get an estimate of the project’s cost from the utility companies and hold a neighborhood election. If 51% of the homeowners vote in favor, the project is approved and all property owners must pay an equal amount of the cost.

“At the end of the day, this is a financial decision for property owners,” Mark Vukojevic, deputy public works director and city engineer, said during a City Council study session Tuesday.

The city has estimated that putting utilities underground in Newport Heights could cost $20,000 per household.

“I don’t usually just hand over that kind of money for no reason,” Young said.

In the past week, about 50 Newport Heights homeowners have signed a petition at https://www.noundergrounding.com urging their neighbors to oppose the project.

In addition to Newport Heights, homeowners in portions of Corona del Mar, the Balboa Peninsula and Balboa Island have started petitions to place utility lines underground in an effort to modernize their aging neighborhoods.

In the past decade, some neighborhoods on the Balboa Peninsula and Little Balboa Island have undergrounded their utilities, Councilman Keith Curry said.

The entire process can take up to seven years, according to city staff. In that time, the price sometimes increases.

In 2009, homeowners on Balboa Island who had expressed interest in undergrounding their utilities voted against the project because the cost had increased, Curry said. The city had spent about $700,000 on related studies.

“The price grew and it wasn’t what the homeowners bargained for,” Curry said. “I think it would have been good for the neighborhood, but at the end of the day, that’s what the people voted for.”

Several Corona del Mar residents spoke in favor of their neighborhood’s project during Tuesday’s study session, noting that underground utilities would eliminate downed lines and pointing to anecdotal evidence of a reduction in power outages.

Though he has the financial means to cover the Newport Heights project, Young said his neighbors shouldn’t determine how he spends his money.

Still, he considers himself “one of the lucky ones.” Many of his neighbors who also oppose the project are retired and living on fixed incomes without disposable cash, he said.

Besides paying out of pocket, homeowners in an assessment district have the option of financing through loans, second mortgages or bonds, which spread the payments over many years but accrue interest.

“When we get done paying for it, we own nothing,” Young said.