Controller Calls on Utility Companies To Pay More for Street Repairs

Posted on January 19, 2017

Read Controller Galperin’s Letter here

Los Angeles -- Controller Ron Galperin today called on the City and its Public Works Commission to expedite a study that would update fees charged to utility companies for their street cuts and excavations -- so as to boost the pool of funds available for much-needed street maintenance and repairs.

“Utilities need to cut into our streets to make repairs and upgrades, but the City needs to make sure we get adequately compensated and use that money to repair and upgrade our streets,” said Galperin. “The way that street damage restoration fees are determined is outdated and does not reflect the true impact of cuts into our pavement.”

In a letter to City leaders, Galperin outlined a series of changes he recommended to the City’s Street Damage Restoration Fee (SDRF), established in 1998, and which hasn’t been updated in 10 years. In the last fiscal year, the City collected $9.6 million from utility companies in fees for cutting and digging into our streets. The fees are based on the estimated wear-and-tear to a street that results from cutting and digging into our streets -- and the money is used through a Street Damage Restoration Special Fund (No. 41A) to help fund the budget of the Dept. of Public Works’ Bureau of Street Services.

The City’s collections are perhaps only half of what they could be, said Galperin. The missed opportunity to recover costs stems from the failure of the City to make its fees more current and the current fee exemption that has applied to Sempra Energy, parent of Southern California Gas Co., which has a franchise to distribute gas within the City. Galperin also urged the City to establish a practice of incorporating SDRF calculations in all future franchise agreements -- this would serve to ensure compliance and also allow full cost recovery associated with street damage.

Additionally, Galperin’s letter highlighted the need to change (a) City policies so as to charge for both regularly scheduled cuts and emergency cuts; (b) how the City can reconsider street designations and categories; (c) the methodology used in calculating the lifespan of streets and street repairs; (d) and the frequency of when fees adjustments based on the City’s increased costs over time.

The Controller’s office issued an audit in July 2014 where the City was urged to hire a consultant to develop new SDRF calculations. The City subsequently hired a consultant -- but now needs to expedite the process so that the new fees are in place for the next budget year. Simultaneously, added Galperin, the City must expand the scope of the consultant’s work to make sure the City recovers every dollar that it can to help pay for fixes to our streets.

“The City needs a fee that is truly reflective of the current state of our streets, the damage caused by these cuts, and the overall cost of repair to the average taxpayer,” added Galperin. “In a time where we have to tighten our purse strings, it is unfair for utility companies to not pay their fair share.”

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