Agenda #: 6.1
Meeting Date: January 18, 2022
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: CONSIDERATION TO DISSOLVE LANDSCAPE ASSESSMENT
DISTRICT NO. 39 AND TO DECLARE INTENTION TO FORM A NEW
LANDSCAPE ASSESSMENT DISTRICT NO. 39-2022.
STRATEGIC
GOAL: Responsible Stewardship of Public Resources
RECOMMENDATION:
A. Receive presentation, open Public Hearing to receive testimony, close Public Hearing, and discuss; and
B. Adopt Resolution No. 2022-03 to dissolve Landscape Assessment District No. 39; and
C. Adopt Resolution No. 2022-04 declaring intention to form Landscape Assessment District No. 39-2022 and levy assessments, preliminarily approving the Engineer’s Report, providing notice of Public Hearing and ordering the mailing of the assessment ballot.
FINANCIAL IMPACT:
New District 39-2022 Engineer's Report Assessments - The attached FY 2022/23 Engineer's Report for the proposed District 39-2022 shows that the costs are annualized at $656,156. If approved by the property owners, the new annual assessments ranging from $466.74 to $504.58 per parcel would generate revenues of $612,713, which would be supplemented by $43,443 from the General Fund for the requisite general benefit portion of the proposed District. Considering that District 39-2022 is proposed to pay $27,000 in staff costs to administer the District, which otherwise would be paid from the General Fund, the net General Fund contribution to the maintenance cost of the proposed District would be $16,443.
Existing District 39 Not Dissolved and New District 39-2022 Not Approved – If the existing District 39 is not dissolved and new District 39-2022 is not approved (i.e., the
status quo), the FY 22/23 General Fund contribution needed to provide full services to maintain District 39 is estimated at $213,400 and will continue to grow as costs increase without the ability to increase property assessments.
Existing District 39 Dissolved and New District 39-2022 Approved – If existing District 39 is dissolved and a new District 39-2022 is approved, the FY 22/23 General Fund contribution with full services to maintain District 39 is estimated at $43,450. This amount reflects the requisite general benefit amount (6.62%) assigned in the Engineer's Report. It is anticipated that increases in costs for services will not further significantly impact the General Fund in future years because the new District 39-2022 provides for an increase in assessments based upon the Consumer Price Index.
Existing District 39 Dissolved and New District 39-2022 Not Approved – If existing District 39 is dissolved and a new District 39-2022 is not approved, the maintenance of the City-owned five mini-parks, trails, and open space areas will remain the City's responsibilities. The FY 22/23 General Fund contribution for full services for City property maintenance is estimated at $175,000 or about $38,000 less than maintaining the status quo ($213,400 vs. $175,000). The General Fund contribution would increase in future fiscal years as costs increase.
Under any of the above scenarios, appropriate funding/budget will be proposed in the Public Works Department Operating Budget for the Fiscal Year 2022/23 to maintain the City's mini-parks, trails and open space areas.
BACKGROUND:
Landscape Assessment District No. 39 (District 39) was formed to be self-supporting.
However, it gradually became dependent on a subsidy from the General Fund due to a fixed annual assessment and increasing cost over the last three decades. Therefore, District 39 has been recommended to be dissolved to relieve the General Fund from that burden. In response to a petition by a group of property owners, Landscape Assessment District No. 39-2022 (District 39-2022) has been proposed to replace District 39, after its dissolution, with the same service area and a different annual assessment structure.
On November 2, 2021, the City Council adopted Resolution No. 2021-49 to declare the City's intention to dissolve District 39 and directed staff to advertise the public hearing before the Council at its January 18, 2022 regular meeting. Public Hearing notice was published in a local newspaper, and notices were sent to the property owners in District
39. The Resolution provided in Attachment 1 provides for the existing District 39 to be dissolved, effective July 1, 2022.
Concurrently, on November 2, 2021, the City Council adopted Resolution No. 2021-50, initiating proceedings for the formation of the proposed District 39-2022 pursuant to provisions of Division 15, part 2, of the Streets and Highways Code of the State of California, and designating SCI Consulting Group as the Engineer of Record. The Resolution provided in Attachment 2 would approve the Engineer's Report and initiate the balloting process for a new District 39-2022.
Should the proposed District 39-2022 receive voters' approval and be approved by the City Council, it will take over the maintenance of the current District 39 area. If the proposed District 39-2022 does not receive voters' approval, maintenance of those properties will be the sole responsibility of their owners after the dissolution of District 39 effective July 1, 2022.
ANALYSIS:
Community Outreach Efforts
Since November 2, 2021, the following outreach efforts have been implemented:
• Webpage: A webpage for Districts 39 and 39-2022 has been developed and deployed to inform the community on the District's history, timeline, and dissolution and formation processes and offer specialized maps and graphics. The webpage is accessible from the City website.
• Email Campaign: An email campaign was created along with a listserv to distribute information to the community members who have signed up. • Surveys: To gather information and feedback from the District 39 community, a survey was developed and added to the webpage.
• Postcards: Two Postcards were mailed out to all District 39 households announcing the survey and community meetings and explaining how to receive updates. In early January, a third postcard was sent out informing property owners of the public hearing to dissolve District 39 on January 18, 2022 and the second community meeting on January 26, 2022.
• Community Meeting #1: The community was able to discuss and learn about the dissolution of District 39 through a virtual community meeting on December 2, 2021.
The recordings of community meetings have been shared on the webpage and social media sites.
• Community Working Group: A working group of property owners in the proposed District 39-2022 was formed. A variety of support has been provided to the working group throughout the process, including one-on-one discussions, flyers in multiple languages that have been distributed and posted in neighborhood centers, and email communication with updates. The Working Group first met on January 5, 2022.
• Community Meeting #2: A second Community Meeting has been scheduled for January 26, 2022.
Engineer's Report and Assessment Rates
The draft Engineer's Report for the proposed FY 2022/23 Landscaping Assessment District 39-2022 (Attachment 3) has been prepared pursuant to provisions of the Landscaping and Lighting Act of 1972 of Part 2 of Division 15 of the Streets and Highways Code of the State of California, includes authority for the Report, estimated costs of operation and maintenance, a diagram for the District and the assessments.
The annualized cost to perform the required services to be $656,156 in FY 2022/23 dollars. Table 1 on page 7 of the draft Engineer’s Report provides details of the estimated budget for the proposed District 39-2022 in FY 2022/23.
Below is a summary of the main financial aspects in the Report:
• Assessment Calculation: Based on the benefits received from the maintained areas, the Report divides District 39-2022 into three zones with three different assessment amounts. Details of the calculation of the benefits for each zone along with a map showing their boundaries are provided in the Report. Based on various categories of benefits, the Engineer has determined that the property in Zones B and C should pay 97.5% and 92.5% of the rate of the Zone A properties, respectively. The resultant annual assessment rates proposed for the Fiscal Year 2022/23 are:
o Zone A - $504.58
o Zone B - $491.97
o Zone C - $466.74
• City General Fund Contribution: The Report calculated the amount of benefit received by properties outside District 39-2022 or by the public at large (referred to as General Benefit) to be 6.62% or $43,443 of the overall benefit. This percentage of the annual costs must be paid from other sources such as the General Fund. • Additional Enhancement and Improvement: Due to the request by the property owners, the Report is establishing an amount for accumulating funds for special improvements and larger capital improvement projects/needs of the new District.
Examples include the gradual replacement of existing plants with more droughttolerant plants and mini-parks amenities. The Report proposes to include 33% or an extra amount of $148,005 for this purpose. For the Fiscal Year 2022/23 budget, $63,100 of this $148,005 will be used for reimbursing the General Fund for the balloting process to establish District 39-2022.
• Contingency/Reserve: The Report proposes to include a 10% contingency amount or $59,651 to establish a reserve fund for contingencies. An example of using the contingency fund is when the maintenance cost goes higher than estimated, or there are unforeseen expenses, such as needed irrigation system repairs. Any remaining balance would either be placed in the reserve fund or would be used to reduce future years' assessments.
• Annual Assessment Calculation: The assessment is proposed to be subject to an adjustment tied to the Consumer Price Index-U for the Los Angeles-RiversideOrange County area as of December of each succeeding year (the "CPI"). The maximum authorized assessment rate is equal to the maximum assessment rate in the first fiscal year the assessment was levied adjusted annually by the change in CPI.
Procedure
The process of increasing the assessment levels for a district or formation of a new district is governed by Proposition 218 and requires a ballot proceeding where the property owners would need to approve the increase. The procedure is laid out in Division 15, Part 2 of the California Streets and Highways Code as well as Section 53750 - 53754 of the Government Code. It requires three steps:
1. Adopt a resolution to initiate the proceedings and direct preparation of the Engineer's Report (completed on November 2, 2021);
2. Adopt a resolution approving an Engineer's Report (which establishes assessment rates) and setting the date for a public hearing (this Report's recommendation); and
3. Conduct the public hearing (currently scheduled for March 15, 2022), at which time ballots will be tabulated, and the outcome of the balloting proceeding will be known.
The ballots, along with a formal notice, will be mailed to each property owner by the end of January 2022, at least 45 days prior to the public hearing pursuant to law. The ballots can be returned any time up to the close of the hearing. A draft version of the formal notice that will be included in the ballot packet is provided in Attachment 4.
In accordance with the statutes, these proceedings are voted on by property owners (instead of registered voters). In addition, votes are weighted by the amount of the proposed assessment. For example, a property owner assessed $504.58 has slightly more voting power than an owner assessed $466.74. A majority of the weighted votes received by the deadline in favor of the new District 39-2022 are needed to establish the new District.
LEGAL REVIEW:
The City Attorney has reviewed and approved the Resolutions as to form.
PREPARED BY:
REVIEWED BY:
Attachments:
1. 6.1.a Resolution No. 2022-03 - District 39 Dissolution
2. 6.1.b Resolution No. 2022-04 - District 39-2022 Formation Intent
3. 6.1.c District 39-2022 Engineer's Report
4. 6.1.d Draft Ballot Notice