DEL MAR — The city of Del Mar is moving forward with applying for $11 million in debt financing from the California Infrastructure and Economic Development Bank, or IBank, to cover the next two phases of its utility undergrounding project.
The City Council unanimously authorized city staff on June 2 to submit a formal application to IBank for a $11 million loan over 10 years. These funds will cover the estimated $10 million shortfall the city is facing to replace and relocate overhead utility lines underground in District X1A, which encompasses Crest Canyon, and District 1B, covering Stratford Court North.
Del Mar funded the construction of its first two of eight total undergrounding districts with revenue from its one-cent sales tax Measure Q, passed in 2016. The city completed Tewa Court/10th Street in 2023, and District 1A covering Stratford Court South has been substantially completed as of this month.
City leaders began to pursue alternate funding options after seeing undergrounding costs nearly double as of last summer from previous estimates. The city submitted a pre-application to IBank in March for a $17 million loan to cover X1A and 1B.
After seeing estimates, particularly from San Diego Gas & Electric, slowly drop for X1A and 1B in recent months, the city now anticipates being able to borrow $10 million and complete both districts on schedule in 2027.
“We’re in a good position here. We’re in a very solid position with this move,” said Mayor Terry Gaasterland.
The city is pursuing a total of $11 million to ensure they have enough to cover any further cost changes.
If approved by the IBank board, the loan would likely be fully processed by the fall. The city expects to award a contract for X1A in September and begin work in early 2026, with construction and pole removal expected to take around 18 months.
District X1A will underground around 12,250 linear feet of overhead power lines, affecting 152 properties and 114 residences in the Crest Canyon area, including along Racetrack View Road, Oribia Road and Crest Road.
Leaders recognized that project costs are still not set in stone. Bids for X1A will be solicited in mid-June, and costs could vary further depending on the bids the city receives.
As of May, SDG&E costs for X1A are estimated at $3.7 million.
Councilmember Dan Quirk asked why the city couldn’t pursue an initial IBank loan to cover just X1A, and then return later for another loan for 1B, just in case interest rates are better in the future.
He also requested that the matter be brought to the Undergrounding Project Advisory Committee (UPAC) for review.
“I’m not sure that we need to borrow $10 million today,” Quirk said.
City Manager Ashley Jones noted that the council’s previous direction was to pursue a loan to fund both of the next two districts together, rather than a pay-as-you-go approach, and that UPAC has already weighed in on financing.
Staff also said that if cost estimates continue to come in lower in the coming months, they have the flexibility to pursue a smaller loan.
“IBank staff has assured us that they will work with us to ensure that we only borrow the funds that we need,” said Finance Manager and Treasurer Marco Camacho.
Other council members said pursuing this loan would be more straightforward and ensure that they can proceed with the upcoming districts on schedule. Quirk agreed to vote in favor of moving forward with the loan.
