Will You Have to Pay Twice for Better Infrastructure?

Suppose your town decides to respond to frequent power outages by requiring property improvements. Good news: You've already made them and paid for them. Bad news: The town asks you to pay again. Can they do that? That’s the question raised by a recent decision of the United States Court of Appeals for the Eleventh Circuit.

The underlying facts should help us think more deeply about the delivery of municipal services; and, like just about everything just now, should make us think more deeply about how we’re making our communities resilient to climate change.

Here’s how the case arose: Tired of power outages from frequent tropical storms, the town of Palm Beach, Florida, decided a few years ago that the culprit was overhead power lines. The solution was to bury them in some neighborhoods. To pay for the cost, the town imposed a special assessment — a bill — on those who would benefit. So far, nothing unusual. Much of the cost of burying lines is typically passed on to local residents.

Among those the town billed was Palm Beach Towers, an upscale condominium development. PBT Real Estate, on behalf of itself and other owners, brought suit, arguing that the development shouldn’t be billed because its power lines had already been buried, at private cost.

This is no small deal. Burying power lines — known in the argot as undergrounding — is these days the popular solution to electrical outages, some 40% of which are caused by damage from falling branches or wind.  Undergrounding has been the recommended standard for suburban housing developments for at least sixty years. In the wake of increasingly severe storms — like the one that recently brought Texas to its knees — calls to bury power lines have only increased. (In fact, Texas law permits municipalities, within certain limits, to require that power lines be buried.) And as a bonus, burying unsightly power lines makes neighborhoods look better.

But there’s a hitch: Undergrounding is expensive. Pacific Gas & Electric estimates the cost of burying electric lines at about $3 million per mile, compared to some $800,000 per mile overhead. Some claim that the cost ratio is even higher, especially in the U.S., where our houses are further apart. We also run power lines through ducts and then bury the ducts; in Europe, where undergrounding is much more common, they mostly bury the lines directly. And due to differences in housing density, the great bulk of the benefit goes to a small minority of the customers.

Nor does undergrounding guarantee the lights will stay on. According to the Edison Institute, although buried lines are far less likely than overheads to fail, if and when failures come, customers are likely to be without electricity far longer. The fault typically takes longer to find when the wires are underground and making repairs can prove difficult. That’s why many experts recommend that we invest in hardening power lines rather than burying them.

But if, as seems likely, we nevertheless see a rise in undergrounding in the years to come, a significant part of the cost will be passed along to residents. And, this being the U.S., the bills will frequently be litigated.

Which leads us back to the Florida case. Why did the plaintiff lose?  Perhaps because fairness translates poorly into the language of law. In addition to arguing that it received no benefit from the town’s project (because its wires were already buried), PBT Realty pointed out that a number of similar properties whose wires were already buried hadn’t been asked to pay. These problems, the plaintiff argued, violated its constitutional rights.

The Eleventh Circuit rejected both contentions.

On the question of benefit, the court pointed out that the issue was not whether Palm Beach was “correct” in finding that the plaintiff would receive “some measure of benefit” from the undergrounding. The issue was only whether there was a “rational basis” for the town’s decision — a standard so low that it’s almost impossible for legislation not to meet it.

As to the exemptions for other “similarly situated” projects, the court agreed with the town that the projects weren’t similar at all. Yes, the other properties had been exempted and had buried lines, but — wrote the judges — those buried lines had already been the subject of assessments.

Maybe you’re thinking that this distinction gets the incentives backward: Why do the work at your own expense if the town’s going to charge you anyway? An eminently sensible concern, which, unfortunately, has nothing to do with constitutional law.

Despite what happened in the Palm Beach case, the plaintiffs don’t always lose such lawsuits. In 2009, a California court struck down a town’s supplemental assessment (the original was too small) as a violation of the state constitution. In 2001, South Dakota’s supreme court held that the improved aesthetics from undergrounding did not justify billing all residents of Sioux City rather than only those whose lines were actually buried.

True, more often the towns win. But the cases are tough to predict.

And those condo owners in Palm Beach haven’t given up: Their case has been remanded to the trial court to consider PBT Realty’s argument that the bill is an unconstitutional tax under Florida law. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Stephen L. Carter is a Bloomberg Opinion columnist. He is a professor of law at Yale University and was a clerk to U.S. Supreme Court Justice Thurgood Marshall. His novels include “The Emperor of Ocean Park,” and his latest nonfiction book is “Invisible: The Forgotten Story of the Black Woman Lawyer Who Took Down America's Most Powerful Mobster.”

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