El Porto undergrounding vote underway
by Mark McDermott
El Porto, North Manhattan Beach’s northernmost neighborhood, has been known for many things over the years: its unruly and not-so-distant history as an unincorporated area (documented by Hollywood in the movie “Blow”), its locally-famed surf break, and, of late, its world-famous Emoji House. But if you are local and you close your eyes and summon visions of El Porto, one image likely to arise is of narrow alleys sloping downwards towards the ocean, crisscrossed by wires. Lots and lots of wires.
“I hate those wires,” said Bob Sievers, a local resident who has called El Porto home for 15 years and Manhattan Beach for 30. “I am so tired of looking at those wires.”
“I don’t mind those wires at all,” said Corky Lowry, who has lived all of his 69 years in El Porto. “I kind of like watching birds landing on the wires. I really do. It’s about the only place they can land around here. I have one of the only trees in El Porto.”
Sievers has been waging a campaign against those wires. Over the last five years, he almost single-handled revived the process of utility undergrounding that had begun in El Porto in 2005 — when residents submitted signed petitions showing over 60 percent support among neighborhood property owners — but stopped in 2010 when the Great Recession hit and the City Council at the time passed a moratorium. Still, the districts formed in El Porto and part of that initial work, called Utility Undergrounding Assessment Districts 12 and 14, remained legally valid. When Sievers began looking into the issue, he realized that the groundwork had already been laid for undergrounding in El Porto.
“It was in suspended animation,” said Sievers, considered the unofficial “mayor of El Porto” by some locals, partly due to his work on this issue and in the fight against desalination.
Sievers is a former Wall Street hedge fund manager who is now a Realtor with a particular focus on North Manhattan Beach. He began lobbying the council to lift the moratorium, which they did in June 2017. The three utility companies with wires in the area — Southern California Edison, Spectrum, and Frontier — were directed to proceed with design plans. In June 2018, the city put out a Request For Proposals (RFP) for the development of assessments — a consultant who, in other words, would devise a methodology and arrive at what undergrounding would cost each property owner. That consultant, Jeffrey Cooper of NV5, came back to the Council on Aug. 6 with his results.
The cost of undergrounding in the two neighborhoods would range between $19,754 and $56,185 per parcel, with an average of $29,540 in District 12 and $27,910 in District 14. Cooper’s methodology allocated a third of the cost on aesthetics, a third on safety, and a third on reliability. Safety and reliability are assumed to benefit all parcels equally, according to a city staff report. “The remaining one-third, the aesthetic benefit, is based on the unique area of each parcel and not on the size or value of the parcel dwelling itself,” the report said. “Larger parcels receive a higher neighborhood benefit and thus a larger portion of the project costs.”
The council approved the report and thus set in motion the final phase needed to approve undergrounding, a Prop. 218-governed vote among registered property owners in the two districts. More than 50 percent of property owners must approve, as well as more than 50 percent of the “weighted returns” — an overall vote that weighs each property’s assessment cost, meaning that those parcels with a higher proposed underground assessment have a stronger vote.
Ballots were sent out to each property owner. Voting will be open until Oct. 1, after which the council will consider the results and vote upon whether to proceed.
Sievers told the council that by his estimation, the average increase in property value for each property in El Porto after undergrounding would be 10 percent, conservatively. He said the average property value on one of the so-called alley streets — the non-numbered streets, such as Shell, Kelp, and El Porto Street — is $1.8 million. By Sievers’ math, this means that by the second year of undergrounding, after paying the estimated $3,000 to $6,000 in per household connection fees and beginning to pay the rest of the assessment over a 20 year finance plan, residents would already have realized an average of a $180,000 return on investment.
“So I want to say to you, thank you for this gift, because I think it is a gift,” Sievers said. “I know some people say, ‘I don’t want somebody forcing me to have to pay it.’ Well, I’ve been forced to pay taxes every time they raise the tax rate in California or the federal tax rate. I have no say — well, I have one say, my vote, like all of us, have our vote. I wish somebody forced me to make an investment like this. It’s like having someone force you to buy Apple Computers in 2005, and see what happened.”
Sievers also calculated that the overall cost, given a $30,000 assessment financed over 20 years, would come out to about $1,950 a year, which for many property owners would also be tax-deductible.
“That comes out to roughly, for the non-tax-deductible, $4.80, or less than a Starbucks cup of coffee a day,” Sievers said.
Lowry, who wasn’t present at the council meeting, wasn’t impressed by the math.
“That’s only valid if you want to sell your property, which I don’t,” he said. “That’s the truth. It’s okay with me if they devalue the property.”
Lowry’s family has been in El Porto since 1926. He and his two brothers inherited three properties in the neighborhood from their parents, and the assessments on the three homes ranged from $32,000 to $37,000. Lowry is a revered guitarist, repairer of guitars, and luthier, but his yearly income rarely tops $22,000, he said.
“It’ll drain our bank account, essentially,” Lowry said. “I drive a 22-year-old car. I’d love to have a brand new car, instead. I could be driving a Mazarreti for what it’s going to cost. It seems illegal to force somebody to pay for something they don’t want.”
“It’s pure vanity, really. It’s not functionally any better. It’s actually more expensive, once something breaks, to fix it. It’s always been like this so I’m used to it. I’m okay with it. I have an honors degree in art and my brother has a masters, and he was going, ‘I kind of like the wires.’ Actually, they kind of makes the place more interesting.”
Guy Katich, who is Lowry’s neighbor and like him, a lifelong El Porto resident, said that if the assessment isn’t illegal, it should be. He argues that it goes against the whole idea of Prop. 13, which was intended to keep property taxes low. He also wonders why Sievers bought into the neighborhood if he disliked the wires so much.
“I understand he bought a building thereon Moonstone and there’s a power pole off his deck, and that’s why he wants this gone,” Katich said. “Well, why didn’t you buy property that didn’t have a power pole right by it? We didn’t ask him to buy a house there. He did it of his own volition. I’m just saying.”
Another neighbor, Dana Keniry, took issue with the methodology.
“The way they figure it is a third safety, a third dependability, and a third is view,” he said. “But every person I talk to who is for it, all they want to get rid of is the unsightly wires. And then you think about it — one of the major expenses for utilities is maintenance. So we are going to pay to make those lines supposedly maintenance-free, and who is benefiting from that? Why can’t Edison share in the cost a little bit? I mean, we are rebuilding their lines.”
All three neighbors agree on one thing: undergrounding in El Porto represents a cultural divide between newer residents and old-timers.
“It’s like they are saying this place your family has been since 1926, you no longer belong here, because you are not a wealthy person,” Lowry said. “It’s gentrification in its purest form. It’s the nouveau riche who have come in, and they are so vain. They want to do plastic surgery on El Porto.”
The council approved an assessment deferment program in order to meet some of the financial concerns of such residents. To qualify, residents must be 62 years old, blind or disabled, the property must be their primary residence, and their total assets excluding their El Porto property must not exceed $1 million. Also, those with household incomes below $100,000 would be eligible to defer payment or receive help on a tiered basis (100 percent below $40,000, and a sliding scale up to $100,000) up to 20 years or until the property ownership changes. The city will also look at case-by-case exceptions for those who might not meet all the conditions but still will suffer hardship due to undergrounding costs.
“I just want to make sure that we have something in there for those who perhaps don’t meet the exact conditions,” said Mayor Nancy Hersman. “But we would want to help them.”
Dave Fratello, a local Realtor who publishes the MB Confidential real estate blog, said that based on the areas of the Hill Section and Sand Section that were undergrounded in the early 2000s, a 10 percent value increase, on average, for each house is an accurate projection.
“That seems completely reasonable to me, because of improved views — every fourth or fifth house has serious impacts, power poles or lines right in the view corridor,” Fratello said.
But in keeping with old-timers’ worst fears, Fratello said the unleashed value in the neighborhood could lead to dramatic change in El Porto. He said it’s one of the few areas in the Beach Cities, particularly on the coast, where “spec” development has not occurred. The power lines, he said, in addition to the nearby presence of a refinery, have meant that El Porto has developed less than any other coastal area locally.
“Lines and poles will prevent spec development on a good number of lots,” Fratello said. “A builder knows they are going to put all this money into getting the land and building a new house and what would be a great view instead has a giant power pole right where people are supposed to enjoy the view. They won’t put pen to paper on it. The price they’d pay would not be low enough to make up for the fact they’d have a bad product at the end.”
“So 10 percent across the board is not overpromising,” Fratello said. “That is really fair. But it could lead the way to a 20- or 30-year transformation of the housing stock. I’m not necessarily arguing that should happen, or El Porto needs to change, but from a value standpoint, if more view locations could be capitalized on with nice new views, you would see that happen.”
Sievers, in an interview, agreed that the neighborhood would be transformed. But he said it would be almost entirely in a positive way.
“Make no mistake about it: our motivation is the beautification of the neighborhood. And El Porto looks like a slum,” he said. “You have multi-million dollar houses in a neighborhood that looks like a slum.”
He said that currently a little over half the housing stock is rentals. The transformation that undergrounding would spur, Sievers said, would result in more permanent residences.
“One thing about El Porto — sure, the wires go away, but the factory will always be there, and the parking lot [by the beach] is never going away,” Sievers said. “So it’s never going to be chichi Manhattan Beach. It’s not going to be Beverly Hills. If there are a few more residences and a few less rentals, that adds permanent people to the neighborhood, rather than transients who are there for a year and then gone. Which is good for the neighborhood.”