The Signal Hill City Council approved an interim ordinance on Aug. 16 that adopted temporary regulations to oversee development on property with abandoned oil wells.
Signal Hill has had deep ties to the oil industry since oil was discovered in the area in 1919. Now, almost 100 years later, speculators drilled numerous wells that dotted the landscape. Over the last two decades, City officials worked closely with a state regulation agency to oversee development on the land affected by these oil wells, especially when these wells were no longer in use.
According to a staff report by City Manager Ken Farfsing, there are currently more than 1,100 abandoned and re-abandoned wells. Developers over the years had proposed to build on the land with the abandoned oil wells. Over time, residential projects, shopping centers and other commercial projects have been constructed close to these wells. Food4Less, for instance, has 14 abandoned oil wells underneath its store, according to Farfsing.
But there’s been a sudden policy shift by the Department of Oil, Gas and Geothermal Research (DOGGR), the state regulation agency that oversees oil well operations in addition to the well abandonment process. The policy shift has created a few hurdles for developers and property owners who want to build on land with abandoned oil wells.
DOGGR announced in November 2010 that they would end the state development review process for well abandonment and would also discontinue methane leak testing. According to Farfsing, DOGGR did not provide any notice to the City nor provide any public hearing forum to discuss the issues before they announced the changes last November.
“Now this abrupt ending to the state’s 22-year development review and well abandonment program just created a major lack of guidance and ambiguity for our property owners and for our City planners,” Farfsing said Tuesday during the City Council meeting.
The current City oil codes regulating the development of property with abandoned wells were created in consultation with DOGGR, according to the city manager’s presentation. By eliminating their own specific established programs that reviewed the well abandonment process, DOGGR created a number of problems that Farfsing outlined.
“DOGGR has effectively shifted liability to the City and the property owner to make the decision to construct atop or adjacent to an abandoned well with DOGGR failing to provide their expertise in abandonments to equivalent standards, well mitigations and by not confirming that wells are free from leaks,” Farfsing said. “The DOGGRS’s action effectively clouds the ability of property owners and developers to finance projects and raises issues with insurance, refinancing and the resale of properties without intervention of the City.”
This also meant that even current construction projects were left in limbo.
“The oil code requires us to have the certification prior to staff issuing the grading for the projects. So even though several of these projects are under plan check and had been previously approved by Commission or Council, the permits hadn’t been issued and so they were stuck essentially in a quagmire,” Community Development Director Scott Charney said.
Plans for construction of EDCO’s administrative office and truck terminal facility were affected, Charney confirmed Wednesday. He added that Aragon Condominiums north of the Signal Hill Collection project and Signal Hill Petroleum’s plans for single-family homes on Crescent Heights were also among the current projects affected.
City staff recommended to the Council to take quick steps to approve an ordinance that would adopt interim regulations to compensate for the ambiguity in safety requirements. According to the city manager’s staff report, studies are being conducted to determine how to change the oil code to address safety issues.
Now that the Council has approved the interim ordinance, some development projects under these interim regulations would be able to continue construction. Other developers will choose to wait for permanent revisions to be made, modify their plans to comply with the new interim regulations or develop their projects in phases, according to Charney.
The ordinance is only valid for 45 days, and it will be reviewed on Sept. 20. At that time, the City Council can choose to extend the life of the ordinance for 10 months and 15 days. After that time period expires, the ordinance can be extended a second time for up to a year, however the interim ordinance can’t be in effect for more than two years, according to Charney.
The Council approved the ordinance in a 4-0 vote. Councilmember Michael Noll was absent.
Other Council highlights:
The City Council and Friends of the Signal Hill Cultural Arts recognized major sponsors of the 2011 Concerts in the Park series.
Library design: The City Council voted 3-1 to approve Robert R. Coffee Architect and Associates to provide architectural services to design and oversee construction of the new library. The firm’s services will total over $610,000, according to a report from Pilar Alcivar-McCoy, community services director. Bond proceeds will fund the project, and the costs will not impact the City’s general funds, Alcivar-McCoy said. The recommendation in favor of the firm came from the Library Design Committee, which indicated that the architect firm had a history with the library project and that its work would serve as the basis for an upcoming project phase, according to Alcivar-McCoy’s staff report. Councilmember Ed Wilson voted against the contract and stressed that the City should have asked for bids for projects over $100,000.
Los Angeles Universal Preschool: Celia Ayala, CEO of Los Angeles Universal Preschool, presented highlights from her preschool program and the advantages of preschool education.
Hotel/motel registration: The City Council approved a change to a municipal code that would now allow motels and hotels to use electronic guest registration systems as an alternative to the guest registration cards. Guests now have an option to provide their registration information electronically. The ordinance was approved on Tuesday during a first-reading vote. The ordinance change will need to be approved in a second reading at a future City Council.
Investment portfolio: City Treasurer Emerson Fersch presented a report on the City’s and RDA’s investment portfolios. Fersch discussed the return potential of equity-linked CDs. The statement-of-investment policy emphasized a conservative investment philosophy with a diversified portfolio. Fersch recommended against investing money long-term in any type of individual bond. The Council and RDA approved resolutions to adopt and change their respective policies for investing public funds.
Credit card transactions: The City Council voted to enter into a contract with Paymentus, who will provide an online and telephone credit-card payment processing service for water utility payments.
Special Redevelopment Agency meeting: The RDA will be meeting on Aug. 22 at 5:30pm. In light of redevelopment legislation, the City’s RDA will establish the “schedule of enforceable obligations” at that meeting, according to City Manager Ken Farfsing.
The next City Council meeting will be Tuesday, Sept. 6 at 7pm in the Council Chambers.