Despite concerns about rapidly rising costs, the Del Mar City Council voted 2-1 during its July 8 meeting to award a $4.7 million construction contract to Teichert Utilities for utility undergrounding in District 1A, which runs along Stratford Court South.

That figure exceeds the $3 million engineer’s estimate the city received previously. It’s also a microcosm of the estimated cost to complete undergrounding throughout the whole city, which has risen multiple times over the years, most recently from $50 million to approximately $100 million.

Construction will begin later this summer for District 1A, which is on schedule to be completed in August 2025. It includes 56 poles and 7,650 linear feet that will be replaced with 9,135 linear feet of underground trench from 4th to 12th streets, across 464 residences.

Following a Tewa Court/10th Street pilot project completed last year, District 1A is the first major undertaking in the utility underground plan, which is funded with a local Measure Q sales tax. In recent months, council members have raised concerns about the Measure Q fund’s long-term viability. City staff said during the meeting that they plan to hire a financial consultant to map out the budgeting and timing of undergrounding projects.

Mayor Dave Druker and Councilmember Terry Gaasterland recused themselves from the vote because they live within the district.

At $4.7 million, Teicher Utilities submitted the lowest of five bids that the city received. The highest was $8.8 million and three others were between $5-6 million.

City staff said factors such as inflation and difficulties performing construction in that particular area have driven the cost up.

Adding in other services and phases of the project, the cost of utility undergrounding in District 1A is currently $10.03 million.

“I wish the prices hadn’t doubled,” Councilmember Dwight Worden said. “I wish it wasn’t going to be a $100 million-plus project, and I think we’re going to have to back up a bit and evaluate what all that means.”

Faced with the prospect of further escalating costs if the city reevaluated and restarted the bidding process, Worden and Councilmember Tracy Martinez voted to award the construction contract for District 1A.

Councilmember Dan Quirk said he would prefer to wait to issue the contract, pending further financial analysis of how undergrounding can be completed citywide with the escalating costs.

“Future projects can’t happen if we spend all of our Measure Q money today,” Quirk said.

He again advocated for taking a more granular approach to evaluating the costs of materials, although city staff and other council members have said the typical public bidding process of selecting the lowest responsible bidder does not include specific negotiation over materials.

The next phase of utility undergrounding is District X1A, located near Crest Canyon, which is in the design phase. There are five more districts that are supposed to be completed after that, with a potential sixth, to cover the whole city.