Beaufort seeks options to pay for underground utilities on Boundary Street

emoody@beaufortgazette.comMay 22, 2014 

Utility poles are coming down on Boundary Street, but one big question remains: who is going to pay to put utilities underground?

In a special meeting Thursday night, Beaufort City Council considered a special franchise fee district that would require 160 South Carolina Electric and Gas customers on or near Boundary Street to pay an additional 7 percent for up to 10 years to fund the $2.8 million project.

Councilmembers gave initial approval to the district Thursday night on a unanimous vote but voiced a number of reservations. Councilman George O'Kelley Jr. was absent.

A public hearing and a second and final vote on the district will be held at 7 p.m. June 3. A decision must be made by June 9 since it affects the Boundary Street project, which must comply with federal and state regulations, city manager Scott Dadson said.

Councilman Mike Sutton asked city staff to compile a report on alternatives to the district with an eye on spreading the financial burden over all 15,000 SCE&G customers in the city.

Dadson and finance director Kathy Todd did some quick math Thursday and said if everyone's bills went up 3 percent, the utility work would take 4.5 years to pay off.

Mayor Billy Keyserling is interested in that option, though the idea of charging customers to bury the utilities doesn't sit right with him.

"I feel like we're subsidizing a profit-making venture," he said.

City attorney Bill Harvey said the special fee district proposal came out of negotiations with SCE&G. The city filed suit against the company last year.

Putting wires underground is part of a $26.8 million project to narrow lanes, insert medians with plants, and add sidewalks and bike paths on Boundary Street. The city is paying to install an underground utility conduit.

SCE&G had resisted putting the utilities underground, Harvey said.

Company spokeswoman Kim Asbill said underground lines are considered a "non-standard service."

As such, municipalities can choose to use money from a non-standard service fund the municipality and SCE&G pay into, or create the special fee district.

"SCE&G works with the municipality to support such projects where possible," she said.

The district is allowed under the terms of a 1999 franchise agreement between the city and SCE&G.

City Council may create special franchise fee districts for 25 or more customers, with up to a 7 percent fee.

The franchise agreement must be extended to allow the special district.

Property owner Andina Foster opposed the fee, saying it won't affect her service nor will lines be underground near her property a few blocks off Boundary Street.

Courtney Worrell, with developer 303 Associates, said the fee could discourage businesses from moving into the district.

Follow reporter Erin Moody at twitter.com/IPBG_Erin.

Related content: SCE&G customers on Boundary Street could see 7 percent increase on bills

Construction on Beaufort's Boundary Street project could begin in January, Oct. 27, 2014

Beaufort couple fights to keep home endangered by city project, July 14, 2012

Medians remain concern for business owners, residents as Boundary Street plan moves forward, Nov. 15, 2012

$12 million federal grant gives life to Boundary Street project in Beaufort

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