Funding Utility Relocation

How can communities find funds to reduce the visual impact of utility wires? The cost of a burial or relocation project can be staggering and communities often forego utility relocation projects to save money. However, several sources of funding from federal, state, and local agencies, in addition to special assessments, can help pay for utility relocation.

Federal Sources

One way for communities to pay for utility relocation is through the federal Transportation Enhancements Program, under the Transportation Equity Act for the 21st Century (TEA-21). Through their state department of transportation, communities can apply for Transportation Enhancements (TE) funds for utility burial or relocation under the categories of landscaping, scenic beautification, or scenic/historic highway programs and welcome centers. Utility relocations are often incorporated as part of a larger project to improve local appearance. For example, Vidalia, GA and Augusta, ME used TE funds to bury utility wires as part of their downtown improvement projects. Maryland has also used federal Community Development Block Grants (CDBG) to fund utility relocation projects.

State and Local Sources

Local and state community improvement grants are another method of funding smaller scale undergrounding projects. Some states, like Pennsylvania and Maryland, consider utility burial an aesthetic improvement akin to landscaping and allow communities to apply for funding to bury utilities as part of downtown and Main Street improvement grants. For example, the Pennsylvania Department of Community and Economic Development’s “Downtown and Communities of Opportunity” grant program awards funding for communities seeking to enhance their quality of life and aesthetics.

In some states, like Washington, the state department of transportation (DOT) has the authority to pay for utility relocation costs necessitated by highway construction. In these states, the DOT can use federal highway funds for utility relocation under one or more of the following conditions:

  • the relocation is in the public interest from a safety, aesthetic, economic, or legal standpoint;
  • the utility has a property interest in its present location;
  • the relocation involves implementing safety measures to reduce the roadside hazards of utility facilities to highway users;
  • the utility is municipally owned and occupies the public right-of-way; and
  • the state has a utility reimbursement law which gives it the authority to pay for utility relocation.

Special Assessment Districts

Some communities establish “special assessment areas” in regions that are scheduled for undergrounding in which utility subscribers pay an extra fee, generally two percent, on their monthly bill to fund the project. Special assessment areas are usually created through a petition by the majority of property owners in an area. Since the early 1970s, Commonwealth Electric in Massachusetts has successfully used special assessments to fund utility burial efforts in historic Cape Cod communities, such as Nantucket. However, one drawback to special assessments is that the total revenue collected is often minimal in comparison to the cost of utility relocation, forcing communities to extend the schedule for undergrounding utilities over a long period of time.

Several states, including California and Oregon, have established special “undergrounding districts” to help communities pay for burying utility wires. For example, in California the public utilities commission collects a percentage of revenue from all wire-based utilities to pay for undergrounding. In order to receive a share of this funding to bury wires, a community must form an undergrounding district by either collecting signatures from at least 70 percent of the property owners within the proposed district or through a special resolution passed by the local government. In addition, property owners in the undergrounding district must agree to pay for the cost of hookup from the new underground conduit to their property (typically $500-$2000). Once community meets these requirements, the local government can apply to the public utilities commission for undergrounding funds and coordinate an undergrounding schedule with planners and utility providers.