To: Honorable Mayor and Members of City Council
From: Julie Lucido, Public Works Director
Prepared By: Jessica Lowe, Deputy Public Works Director
TITLE:
Title
Jefferson Street Undergrounding Project Update
LABEL
RECOMMENDED ACTION:
Recommendation
Receive a presentation about the Jefferson Street Utility Undergrounding Project and provide direction to staff to reduce the project scope.
Body
DISCUSSION:
The City of Napa has been working with Pacific Gas and Electric Company (PG&E) to prepare a project to move existing overhead utility lines underground along a section of Jefferson Street from Trancas Street to Lincoln Avenue. The project would remove utility poles and overhead wires, aesthetically enhance the area, improve safety, and clear sidewalk barriers. The proposed project was intended to connect two areas where overhead utilities are already underground: Trancas Street from State Route 29 to Jefferson Street, and along Jefferson Street from Lincoln Avenue to Polk Street. PG&E’s project cost estimates exceed the funding available.
City staff and PG&E representatives will present an overview of the proposed project and present potential options to advance the project. Staff recommends reducing the project scope and will be presenting information related to considerations for setting priority areas within the project.
Background
The project is funded primarily by Rule 20A, a tariff passed by the California Public Utilities Commission (CPUC) that allows local governments to request the conversion of overhead utilities to underground service using accrued “work credits”. Rule 20A projects are separate from PG&E's wildfire safety undergrounding work. To qualify for Rule 20A work credits, the Jefferson Street Underground Utility District was formed on May 6, 2014. Based on the established district and a design prepared by PG&E, the City purchased permanent easements from eight property owners along Jefferson. In October 2021, PG&E advertised the undergrounding project for construction bidding. Three bids were submitted; however, all bids exceeded the credits available at the time by approximately $3 million, and PG&E rejected all bids.
As PG&E was actively working on the Jefferson project, the requirements for the Rule 20A program set through the California Public Utility Commission (CPUC) changed. Shortly before the project was advertised for bid, in June 2021, the CPUC issued an order that eliminated future Rule 20A work credit allocations, ended the ability for local agencies to borrow against future work credits, and banned the trading of work credits between agencies. These changes eliminated future credit allocations to PG&E that would have supported the completion of the full project. The CPUC was then proceeding with additional program changes, and during that process, PG&E staff was required to stop work on our project. In June 2023, the CPUC issued an additional rule establishing that all existing Rule 20A work credits will expire December 31, 2033. As a result of these actions, the project in Napa will not accrue any additional work credits and all existing work credits may only be used on an existing project area that can be completed before the end of 2033.
After the CPUC rulemaking process, PG&E was required to develop a comprehensive workplan for the use of remaining work credits throughout their service area in California and seek CPUC approval of that plan. The Jefferson Street project was included in PG&E’s submitted work plan, which was approved by the CPUC in 2025.
With the CPUC rule making complete for the Rule 20A program and the Jefferson Project included in the approved PG&E work plan, the project may now proceed to construction. However, the current construction cost estimate significantly exceeds the available Rule 20A work credits. PG&E has experienced substantial increases in undergrounding construction costs over time, contributing to the current funding shortfall. The City of Napa has $9,920,852 in work credits through the Rule 20A program, while the estimate to complete PG&E’s portion of the project is $15,169,874, resulting in a funding gap of $5,249,022.
This estimate and funding gap does not include the City’s share of construction costs associated with modifications to the street lighting system, traffic signal system, and related coordination, engineering, and inspection activities required to deliver the project. The cost estimate for the City’s portion of the work is $1,100,000 and funding is programmed in the Capital Improvement Program (CIP) from developer impact fees, specifically the Street Improvement Fee, Underground (SIFU) component, which is restricted for use to relocate existing overhead utilities underground. No other funding is currently budgeted for the project.
A community meeting was held on January 22, 2026, and 165 notices were mailed directly to all residents, businesses, and property owners with frontage along Jefferson Street from Lincoln Avenue to Trancas Street. The meeting notice was also advertised through the City’s communication division on social media and newsletter. During the meeting, City staff and representatives from PG&E presented information on the Rule 20A program and the Jefferson Street undergrounding project and received feedback from the community. The total attendance of the meeting was approximately eight people and there were quite a few questions that were answered by PG&E and City staff.
Options
To commence construction on the Jefferson Street project with the existing Rule 20A work credits, PG&E has presented the City with four options:
1) Cancel the project; allocated work credits would be distributed to other communities at PGE’s discretion;
2) Establish an underground utility assessment district to generate revenue for undergrounding projects;
3) The City pay PG&E $5.25 million to fund their gap, including PG&E contingencies; or
4) Reduce the project scope to match the available work credits.
Option 1: Cancel Project
The option to cancel the project is not recommended. The goal is to fully utilize all existing credits to complete as much of the project scope as possible.
Option 2: Form Assessment District
The option of establishing an underground utility assessment district would require majority approval by property owners in the district and present timing constraints. During the community meeting, attendees expressed that they would not support the formation of an assessment district. In addition, over $5 million is needed and costs will escalate as the construction is delayed. This does not appear to be a viable alternative to fund the project before the CPUC’s completion deadline in December 2033.
Option 3: City Pay PG&E $5.25 Million
To fully fund PG&E’s gap, over $5.25 million would need to be paid from the City to PG&E. Public Works and Finance staff analyzed the SIFU fund for approved budget expenditures, projected revenue, and future projects for the SIFU funding. $1,300,000 is budgeted in the CIP to complete the City’s share of the work for the Jefferson Project. This funding level is anticipated to be sufficient to meet the obligations for the City’s required work. The City responsibility includes modifications to the traffic signal systems, lighting, and construction management work. If the option to pay PG&E $5.25 million to construction the entire project were to be pursued, additional funding to support the City work may also be required. $2.15 million is currently projected to be available in the SIFU fund balance through the end of FY2026 for additional projects. The most significant future undergrounding planned project is to support the Silverado 5-way Intersection Project. The undergrounding funds are appropriate to specifically fund the undergrounding work needed as part of that project. Should the SIFU funds not be available, the funding gap for the 5-way Project will increase. The City does not have sufficient funds in the SIFU to fund the completion of the Jefferson Street Undergrounding project, and existing projects would need to be delayed or canceled to pursue this option.
Option 4: Reduce Project Scope/Area
Based on PG&E project cost estimates, PG&E is targeting a reduced project scope that would result in completion of approximately half of the original project area. While undergrounding the entire length of the district remains the goal, additional opportunities to underground utilities are anticipated in the future through property redevelopment projects, streetscape projects, and boulevard enhancements. The planning efforts for the Jefferson Street Traffic Safety and Complete Streets Project are underway, and staff anticipates applying for external grants to support improvement projects along this corridor in the future. Staff has reviewed several phasing options for the Jefferson Street undergrounding project in coordination with PG&E and has identified that beginning at one end of the underground utility district and progressing toward the center would maximize the amount of work able to be completed with available funding. The Napa Valley Wine Train railroad tracks divide the underground utility district into two segments, with the northern segment slightly longer than the southern segment. Boring beneath the railroad tracks requires special equipment and is a large cost item. If the railroad is included as part of the undergrounding project, the total linear footage of utilities that could be undergrounded will be reduced due to the limited work credits available.
Feedback from the community meeting about the project was positive, with most community members expressing the desire to complete utility undergrounding along the full original project limits from Lincoln to Trancas. The option of additional funding being paid by the property owners in the area was not supported.
Some general considerations for use in identifying the primary areas to focus the limited funding include traffic safety conditions, surrounding land use and redevelopment potential, opportunities to remove or reduce barriers to pedestrian access, and coordination with ongoing fiber-optic upgrades to connect that City’s traffic signal systems. During the presentation, Staff will walk through how each of these considerations applies on both sides of the railroad tracks and where conditions differ.
To ensure that the City’s existing work credits are used to the fullest extent possible, Staff recommends reducing the project scope to fit within the available work credit balance and is seeking direction from the City Council on the areas to be prioritized for PG&E’s project.
FINANCIAL IMPACTS:
The City has previously budgeted funding in the CIP to complete the City share of the undergrounding which includes installation of new light poles, modifications of traffic signal systems, engineering, and construction management. Based on current information, the existing funding is expected to be sufficient to complete a reduced project scope (option 4).
CEQA:
The Public Works Director has determined that the Recommended Action described in this Agenda Report is not in-and-of-itself a “project” (pursuant to CEQA Guidelines Section 15378) since it does not result in a physical change in the environment. However, the Recommended Action is a part of a larger “project” that will be subject to environmental review in accordance with CEQA at the “earliest feasible time” prior to “approval” consistent with CEQA Guidelines Section 15004 and 15352. The larger “project” is the Jefferson Street Utility Undergrounding Project, and staff plans to bring back a CEQA analysis of that project to Council prior to contract award.
DOCUMENTS ATTACHED:
ATCH 1 - General Location Map
ATCH 2 - Frontage Length by Land Use Type
NOTIFICATION:
None.