For the Economic Development Committee Meeting of March 26, 2026
TO: Honorable Economic Development Committee Members
FROM: Christina Taylor, Community Development Director
...Title
Discussion on In-Lieu Fee Program for Undergrounding Utilities.
...Body
RECOMMENDATION
Staff recommend that the Committee hold discussion and provide direction to staff.
BACKGROUND
The City of Rialto Municipal Code Chapter 15.32 Underground Utilities establishes the requirements for new and existing development as it pertains to the installation or relocation of electrical, telephone, cable and other similar service lines. This code requires all electrical distribution lines of sixteen thousand volts or less, telephone, cable antenna television, and similar service wires or cables, which provide direct service to a property being developed, to be installed underground.
There are a few exceptions:
1. Utility service poles may be placed in the area within six feet of the rear lot line of the property to be developed, for the sole purpose of terminating underground facilities.
2. Temporary utilities along with the necessary service poles, wires and cables may be permitted for the period during which authorized construction is continuing for which valid building permits have been issued or for temporary uses which comply with requirements of the zoning ordinance, building code and other applicable regulations.
3. Risers on poles and buildings are permitted and shall be provided by the developer or owner on the pole which provides service to said property.
4. Appurtenances and associated equipment including, but not limited to, surface mounted transformers, pedestal mounted terminal boxes and meter cabinets, and concealed ducts in an underground system may be placed above ground.
5. The undergrounding of existing utility services as a requirement of a precise plan of design may be waived when determined by the community development director or planning commission, as applicable, to be impractical or economically infeasible.
ANALYSIS/DISCUSSION
The City Council has the authority to establish an in-lieu fee program under the Mitigation Fee Act. To establish a fee, a nexus study would need to be prepared and adopted by City Council through the public hearing process. There are several key points that need to be addressed in the framework of what an in-lieu fee program could look like.
Purpose
The purpose of the Underground Utility In-Lieu Fee Program is to:
• Support the conversion of overhead electric and communication utilities to underground systems
• Provide a flexible compliance option for development projects
• Create a dedicated funding source for undergrounding projects
• Improve public safety, aesthetics, and infrastructure reliability
Applicability
The in-lieu fee could apply when any or all of these conditions exist:
• A project triggers undergrounding requirements under municipal code
• Undergrounding cannot be completed by the developer due to scope of what is needed or being cost prohibitive
• Undergrounding would require work outside the project limits
• Undergrounding requires multiple property owner participation
• Utility companies cannot complete the work during project construction
• The work requires future district formation
Fee Calculation Methodology
There are three methods for calculating the estimated cost of undergrounding utilities:
• Linear foot cost
• Proportional share
• Cost estimate (engineer or utility)
Fee Timing
Fees can be collected:
• Prior to building permit issuance
• Prior to final map recordation
• Prior to certificate of occupancy
The city typically collects fees prior to permit issuance.
Use of Funds
Funds must be used only for underground utility improvements, including:
• Design and engineering
• Utility relocation
• Conduit installation
• Trenching and restoration
• District formation costs (if applicable)
Funds are typically placed in a separate restricted account to ensure transparency and accountability. To comply with the Mitigation Fee Act, cities must:
• Maintain separate accounting
• Track revenue and expenditures
• Provide annual reporting
• Complete five-year findings if funds remain unspent
If the program is to move forward, next steps would include commissioning a nexus study and working with the City Attorney’s office to prepare an amendment to the existing undergrounding ordinance, stakeholder outreach and public noticing/hearing process.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with establishing a fee program.
GENERAL PLAN CONSISTENCY
Goal 3-4: Revitalize aging and underperforming commercial and industrial areas.
Policy 3-4.2: Link redevelopment tools and provide incentives with the processes of community facilities district formation and other similar funds to improve public infrastructure.
LEGAL REVIEW
Staff will work with the City attorney’s office if an in-lieu program is to be developed.
FINANCIAL IMPACT
If a program is developed, funds would be collected and used toward eligible projects.
ATTACHMENTS
None.