Agenda packet — Diamond Bar City Council, July 18, 2023 (part 2 of 2)

Method of Assessment Apportionment
Method of Apportionment
This section of the Engineer's Report explains the benefits to be derived from the Improvements and the methodology used to apportion the total assessment to properties within the District.

The District consists of certain assessor parcels within the boundaries as defined by the Assessment Diagram referenced in this report and the parcels identified by the Assessor Parcel Numbers listed with the levy roll. The parcel list includes all privately and publicly owned parcels as shown. The method used for apportioning the Assessment is based upon the relative special benefits to be derived by the properties in the District over and above general benefits conferred on real property or to the public at large. The Assessment is apportioned to lots and parcels in proportion to the relative special benefit from the Improvements. The apportionment of special benefit is a two-step process: the first step is to identify the types of special benefit arising from the Improvements and the second step is to allocate the Assessments to property based on the estimated relative special benefit for each type of property.

Discussion of Benefit
In summary, the Assessments can only be levied based on the special benefit to property.

This benefit is received by property over and above any general benefits. With reference to the requirements for assessments, Section 22573 of the Landscaping and Lighting Act of 1972 states:
"The net amount to be assessed upon lands within an assessment district may be apportioned by any formula or method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated benefits to be received by each such lot or parcel from the improvements." Proposition 218, as codified in Article XIIID of the California Constitution, has confirmed that assessments must be based on the special benefit to property and that the value of the special benefits must exceed the cost of the assessment:
"No assessment shall be imposed on any parcel which exceeds the reasonable cost of the proportional special benefit conferred on that parcel."

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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The following benefit categories summarize the types of special benefit to residential, commercial, industrial, and other lots and parcels resulting from the Improvements to be provided with the assessment proceeds. These types of special benefit are summarized as follows:

A. Proximity and access to Improved Landscaped Areas and Other Public Improvements within the District.

B. Improved Views within the District.

C. Extension of a property’s outdoor areas and green spaces for properties within close proximity to the Improvements.

D. Safety and Security within the District
E. Creation of individual lots for residential use that, in absence of the Assessments, would not have been created.

In this case, the recent SVTA v. SCCOSA decision provides enhanced clarity to the definitions of special benefits to properties from similar improvements in three distinct areas:
 Proximity
 Expanded or improved access
 Views
The SVTA v. SCCOSA decision also clarifies that a special benefit is a service or improvement that provides a direct advantage to a parcel and that indirect or derivative advantages resulting from the overall public benefits from a service or improvement are general benefits. The SVTA v. SCCOSA decision also provides specific guidance that park improvements are a direct advantage and special benefit to property that is proximate to a park that is improved by an assessment:

The characterization of a benefit may depend on whether the parcel receives a direct advantage from the improvement (e.g. proximity to a park) or receives an indirect, derivative advantage resulting from the overall public benefits of the improvement (e.g. general enhancement of the district’s property values).

Proximity, improved access and views, in addition to the other special benefits listed herein further strengthen the basis of these assessments.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Moreover, the Dahms decision further clarified that certain services and improvements funded by assessments, that are over and above what otherwise would be provided and that other property in general and the public do not share or receive are 100% special benefit. The assessment-funded services upheld by Dahms included streetscape maintenance and security services.

Special Benefit
SCI assessment engineers have identified the following special benefits:

Proximity and Access to Improved Landscaped Areas within the District Only the specific properties within close proximity to the Improvements are included in the District. The District has been narrowly drawn to include the properties that receive special benefits from the Improvements. Therefore, property in the District enjoys unique and valuable proximity and access to the Improvements that the public at large and property outside the District do not share.

In absence of the Assessments, the Improvements would not be provided, and the public improvements funded in the District would be degraded due to insufficient funding for maintenance, upkeep and repair. Therefore, the Assessments provide Improvements that are over and above what otherwise would be provided. Improvements that are over and above what otherwise would be provided do not by themselves translate into special benefits but when combined with the unique proximity and access enjoyed by parcels in the District, they provide a direct advantage and special benefit to property in the District.

Improved Views within the Assessment District
The City, by maintaining permanent public improvements funded by the Assessments in the District, provides improved views to properties in the District. The properties in the District enjoy close and unique proximity, access and views of the specific Improvements funded in the District; therefore, the improved and protected views provided by the Assessments are another direct and tangible advantage that is uniquely conferred upon property in the District.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Extension of a Property’s Outdoor Areas and Green Spaces for Properties within Close Proximity to the Improvements
In large part because it is cost prohibitive to provide large open land areas on property in the District, the residential, commercial, and other benefiting properties in the District do not have large outdoor areas and green spaces. The Improvements within the District provide additional outdoor areas that serve as an effective extension of the land area for proximate properties because the Improvements are uniquely proximate and accessible to property in close proximity to the Improvements. The Improvements, therefore, provide an important, valuable and desirable extension of usable land area for the direct advantage and special benefit of properties in the District because such properties have uniquely good and close proximity to the Improvements.

Safety and Security within the Assessment District
The City, through proper installation, maintenance and servicing of public and private improvements funded by the Assessments in the District, provides increased security and safety by preventing crime and suppressing fire. For parks and recreation Improvements, proper lighting and well-kept landscapes help to deter crime and vandalism. Other landscaped area activities such as slope maintenance and brush clearing provide critical fire suppression.

Creation of Individual Lots for Residential Use that, in Absence of the Assessments, Would Not Have Been Created
In the District, the original owner/developer(s) of the property within the District agreed unanimously to the Assessments. The Assessments provide the necessary funding for improvements that were required as a condition of development and subdivision approval. Therefore, such Assessments allowed the original property to be subdivided and for development of the parcels to occur. As parcels were sold, new owners were informed of the Assessments through the title reports, and in some cases, through Department of Real Estate “White Paper” reports that the parcels were subject to assessment. Purchase of property was also an “agreement” to pay the Assessment.

Therefore, in absence of the Assessments, the lots within most of the District would not have been created. These parcels, and the improvements that were constructed on the parcels, receive direct advantage and special benefit from the Assessments.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Summary of Relative Weight of Benefit Factors
A solid argument could be made that the Creation of Individual Lots benefit comprises 100% of the benefit because the Improvements were incorporated into the original planning and design of the subdivision, and thus were deemed to be necessary and required for the development of the lot. Without those Improvements and associated benefit, the lots would not have been created in the first place. Nevertheless, four other definitive benefits accruing to the parcels within the District are identified, and an allowance should be made within the overall relative importance of benefits. The relative benefit level of the five identified benefits used in this Report is shown below.

Table 3: Relative Benefit Levels
Benefit Category
Proximity & Access 10%
Views 10%
Outdoor Area Extension 10%
Safety & Security 10%
Creation of Lots 60%
TOTAL Benefit 100%
Relative Weight
General Versus Special Benefit
Article XIIIC of the California Constitution requires any local agency proposing to increase or impose a benefit assessment to “separate the general benefits from the special benefits conferred on a parcel.” The rationale for separating special and general benefits is to ensure that property owners subject to the benefit assessment are not paying for general benefits. An assessment can fund special benefits but cannot fund general benefits. Accordingly, a separate estimate of the special and general benefit is given in this section.

In other words:

Total
Benefit = GeneralBenefit
+ Special
Benefit

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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There is no widely accepted or statutory formula for general benefit. General benefits are benefits from improvements or services that are not special in nature, are not “particular and distinct” and are not “over and above” benefits received by other properties. SVTA vs. SCCOSA provides some clarification by indicating that general benefits provide “an indirect, derivative advantage” and are not necessarily proximate to the improvements.

In this Report, the general benefit is liberally estimated and described, and then budgeted so that it is funded by sources other than the Assessment.

The starting point for evaluating general and special benefits is the current, baseline level of service. The Assessment will fund Improvements “over and above” this general, baseline level and the general benefits estimated in this section are over and above the baseline.

A formula to estimate the general benefit is listed below:

General
Benefit =
Benefit to Real
Property Outside the
Assessment District
+
Benefit to Real
Property Inside the
Assessment District
that is Indirect and
Derivative
+ Benefit to the
Public at Large
Special benefit, on the other hand, is defined in the state constitution as “a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large.” The SVTA v. SCCOSA decision indicates that a special benefit is conferred to a property if it “receives a direct advantage from the improvement (e.g., proximity to a park).” In these Assessments, as noted, properties in the District have close and unique proximity, views and access to the Improvements and uniquely improved desirability and other benefits from the Improvements, and the public at large does not receive significant benefits because they do not have proximity, access or views of the Improvements. Therefore, the overwhelming proportion of the benefits conferred to property is special and is only minimally received by property outside the Districts or the public at large.

Benefit Finding
Quantification of General Benefit
In this section, the general benefit from landscaping and other types of Improvements is liberally estimated and described, and then budgeted so that it is funded by sources other than the Assessment.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Benefit to Property Outside the Assessment Districts
Properties within the District receive almost all the special benefits from the Improvements because properties in the District enjoy unique close proximity and access to the Improvements that is not enjoyed by other properties or the public at large.

However, certain properties within the proximity/access radius of the Improvements, but outside of the boundaries of the District, may receive some benefit from the Improvements. Since this benefit is conferred to properties outside the District boundaries, it contributes to the overall general benefit calculation and will not be funded by the Assessments. The general benefit to property outside of the District is calculated with the parcel and data analysis performed by SCI Consulting Group.

Since certain properties outside the District enjoy close proximity and access to the Improvements cannot be assessed by the District, this is a form of general benefit to other property. There are eight parcels outside the District that lie within a half mile travel distance of one of mini parks within the District. In addition, there are 79 parcels outside the District that are directly adjacent to areas where brush clearing activity is performed by the District. The benefits conferred to these properties do not include the Lot Creation benefit factor, therefore the benefit is reduced by 60%. The general benefit to property outside of the District is calculated as follows.
87 Parcels Outside District
1,246 Parcels In the District
40% Benefit Factor
87 87 + 1,246
x 40%
Assumptions:

Calculation:

General Benefit to Property Ouside the District
= 2.61%
Benefit to Property Inside the Assessment Districts that is Indirect and Derivative
The “indirect and derivative” benefit to property within the District is particularly difficult to calculate. A solid argument can be presented that all benefit within the District is special because the other Improvements are clearly “over and above” and “particular and distinct” when compared with the baseline level of service and the unique proximity, access and views of the other Improvements enjoyed by benefiting properties in the District.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Approximately 1.51% of the land area in the District is used for such regional purposes, so this is a measure of the general benefits to property within the District.

Benefit To The Public At Large
The general benefit to the public at large can be estimated by the proportionate amount of time that the District’s Improvements are used and enjoyed by individuals who are not residents, employees, customers or property owners in the District. There are two ways in which the public at large can enjoy the improvements, with each counting for half the general benefit: use of parks, and pass-by trips where landscaped areas can be viewed.

In the case of the mini parks that serve primarily the neighborhood, City staff estimate that approximately 10% of the users do not live, work or own property in the District. The general landscape improvements are typically along slopes and open space areas, out of view of the general public, so no general benefit is conferred for views of landscaping.

Finally, the general benefits conferred to the public at large does not include the benefit of lot creation, so this benefit is further reduced by half. Therefore, we find that ((50% of 10%) x 50% =) 2.50% of the benefits from the Improvements are general benefits to the public at large.

Total General Benefits
Using a sum of these three measures of general benefit,

2.61% Outside the District

1.51% Inside the District

2.50% Public At Large

6.62% Total General Benefit
Landscaping General Benefit Calculation
we find that approximately 6.62% of the benefits conferred by the Improvements may be general in nature and should be funded by sources other than the assessment.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Zones of Benefit
The boundaries of the District were developed in conjunction and concurrent with the planning and design of the subdivisions and Improvements, and thus include only the properties in the City of Diamond Bar that are proximate to the Improvements and that would materially benefit from the Improvements. Certain other properties surrounding the District were not part of the designed association between the Improvements and the assessed areas and are generally less proximate to the Improvements. In other words, the boundaries of the District have been narrowly drawn to include only properties that will specially benefit from the Improvements and would receive a declining level of service if the Assessments were not approved.

The SVTA decision indicates:
“In a well-drawn district — limited to only parcels receiving special benefits from the improvement — every parcel within that district receives a shared special benefit. Under section 2, subdivision (i), these benefits can be construed as being general benefits since they are not ‘particular and distinct’ and are not ‘over and above’ the benefits received by other properties ‘located in the district.’ “We do not believe that the voters intended to invalidate an assessment district that is narrowly drawn to include only properties directly benefiting from an improvement. Indeed, the ballot materials reflect otherwise. Thus, if an assessment district is narrowly drawn, the fact that a benefit is conferred throughout the district does not make it general rather than special. In that circumstance, the characterization of a benefit may depend on whether the parcel receives a direct advantage from the improvement (e.g., proximity to park) or receives an indirect, derivative advantage resulting from the overall public benefits of the improvement (e.g., general enhancement of the district’s property values).”
In the District, the benefit that each parcel receives from the Improvements is direct, and the boundaries are narrowly drawn to include only parcels that benefit from the Assessment. However, proximity to the improvements varies somewhat within the District. In order to most conservatively assure that Assessments are proportional to the relative benefits in the District, three zones have been created:

A. In the area south of Grand Avenue the concentration of landscaped areas (brush and slopes) as well as mini parks is the greatest.

B. In the area north of Grand Avenue but south of Pantera Park there is less concentration of landscaped slopes and brush-cleared areas, but still a high concentration of mini parks.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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C. In the area around and north of Pantera Park there is less concentration of landscaped slopes and brush-cleared areas and no mini parks within a half mile.

Based on the varying characteristics of these three distinct zones, each of the five benefit categories have been assigned a benefit factor to estimate the overall relative benefit.

Using Zone A as the benchmark (100%), the other two zones derive less benefit due to the proximity of relatively fewer improvements. This estimation is summarized below.

Table 4: Zones of Benefit – Relative Levels
Benefit Category Weight
Factor Benefit Factor Benefit Factor Benefit
Proximity & Access 10% 100% 10.0% 75% 7.5% 75% 7.5%
Views 10% 100% 10.0% 100% 10.0% 75% 7.5%
Outdoor Area Ext. 10% 100% 10.0% 100% 10.0% 75% 7.5%
Safety & Security 10% 100% 10.0% 100% 10.0% 100% 10.0%
Creation of Lots 60% 100% 60.0% 100% 60.0% 100% 60.0%
Relative Benefit 100.0% 97.5% 92.5%
Zone A Zone B Zone C
A map of these zones is shown on the following page.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Method of Apportionment
As previously discussed, the proposed Assessments will provide comprehensive Improvements that will clearly confer special benefits to properties in the proposed District. The allocation of special benefits to property is partially based on the type of property and the size of property. These benefits can also partially be measured by the occupants on property in the District because such parcel population density is a measure of the relative benefit a parcel receives from the Improvements. It should be noted that many other types of “traditional” assessments also use parcel population densities to apportion the Assessments. For example, the assessments for sewer systems, roads and water systems are typically allocated based on the population density of the parcels assessed. Therefore, the apportionment of benefit is reasonably based on the type of parcel, the size of parcels and the population density of parcels.

The next step in apportioning Assessments is to determine the relative special benefit for each property. This process involves determining the relative benefit received by each property in relation to a single-family home, or, in other words, on the basis of SingleFamily Equivalents (SFE). This SFE methodology is commonly used to distribute Assessments in proportion to estimated special benefit and is generally recognized as providing the basis for a fair and appropriate distribution of Assessments. For the purposes of this Engineer’s Report, all properties are assigned an SFE value, which is each property’s relative benefit in relation to a single-family home on one parcel. In this case, the "benchmark" property is the single-family detached dwelling which is one Single Family Equivalent or one SFE.

Residential Properties
In the District, there is only one type of residential property present: the single-family home. Other types of residential property, such as multifamily, apartments and condominiums, are not present. Furthermore, the property in the District is fully developed, has been stable since its original development in the late 1980s, and is zoned such that a change in that dominate land use is not expected in the future. As a result, there is no need for a detailed analysis of population densities to determine relative benefit for other types of residential properties. Each single-family residential property is assigned one SFE.

Vacant/Undeveloped Properties
While there are currently no vacant or undeveloped properties in the District, the following discussion is included in the event that properties become vacant in the future.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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The benefit to undeveloped properties is determined to be proportional to the corresponding benefits for similar type developed properties, but at a lower rate due to the lack of improvements on the property. A measure of the benefits accruing to the underlying land is the average value of land in relation to Improvements for developed property. An analysis of the assessed valuation data from the City of Diamond Bar found that approximately 45% of the assessed value of improved properties is classified as the land value. It is reasonable to assume, therefore, that approximately 45% of the benefits are related to the underlying land and 55% are related to the improvements and the dayto-day use of the property. Using this ratio, the SFE factor for vacant/undeveloped parcels is 0.45 per parcel.

Other Property Types
Notwithstanding the foregoing discussion, there are four other types of property uses to be considered: School, municipal park, water utility, and open space. These are discussed below.

School Property: Pantera Elementary School lies within the District and may derive some benefit from the Improvements. However, all benefits that may be derived from the Improvements are included in the General Benefits calculation noted earlier. Therefore, the School accrues no further Special Benefit and is not assessed a fee.

Municipal Park: Pantera Park lies partly within the District. However, all benefits that may be derived from the improvements are included in the General Benefits calculation noted earlier. Therefore, the park accrues no further special benefit and is not assessed a fee.

Water Utility: The Walnut Valley Water District owns a parcel with two water tanks used to supply water for domestic use and fire protection. This property has no people stationed on-site and derives no benefit in any category. Therefore, it is not assessed a fee.

Open Space: The open space parcels that lie within the District are part of the improvements (views, safety & security, etc.) Therefore, these parcels are not assessed a fee.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Annual Cost Indexing
The assessment shall be subject to an adjustment tied to the Consumer Price Index-U for the Los Angeles-Riverside-Orange 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.

Duration of Assessment
It is proposed that the Assessments, if approved by property owners, will be continued every year after their formation, so long as the public Improvements need to be maintained and improved, and the City requires funding from the Assessments for these Improvements in the District. As noted previously, the Assessment can continue to be levied annually after the City Council approves an annually updated Engineer’s Report, budget for the Assessment, Improvements to be provided, and other specifics of the Assessment. In addition, the City Council must hold an annual public hearing to continue the Assessment.

Appeals of Assessments Levied to Property
Any property owner who feels that the Assessment levied on the subject property is in error as a result of incorrect information being used to apply the foregoing method of assessment may file a written appeal with the City of Diamond Bar City Manager or his or her designee. Any such appeal is limited to correction of an Assessment during the thencurrent Fiscal Year and applicable law. Upon the filing of any such appeal, the City Manager or his or her designee will promptly review the appeal and any information provided by the property owner. If the City Manager or his or her designee finds that the Assessment should be modified, the appropriate changes shall be made to the Assessment Roll. If any such changes are approved after the Assessment Roll has been filed with the County for collection, the City Manager or his or her designee is authorized to refund to the property owner the amount of any approved reduction. Any dispute over the decision of the City Manager or his or her designee shall be referred to the Diamond Bar City Council, and the decision of the City Council shall be final.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Assessment Funds Must Be Expended Within the District Area The net available Assessment funds, after incidental, administrative, financing and other costs shall be expended exclusively for Improvements within the boundaries of the District or as described herein, and appropriate incidental and administrative costs as defined in the Plans and Specifications section.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Assessment
WHEREAS, the City of Diamond Bar directed the undersigned engineer of Work to prepare and file a report presenting an estimate of costs, a Diagram for the District and an assessment of the estimated costs of the Improvements upon all assessable parcels within the District;
NOW, THEREFORE, the undersigned, by virtue of the power vested in me under the Act, Article XIIID of the California Constitution, and the order of the City of Diamond Bar City Council, hereby makes the following Assessment to cover the portion of the estimated cost of the Improvements, and the costs and expenses incidental thereto to be paid by the District.

The amount to be paid for said Improvements and the expense incidental thereto, to be paid by the District for the Fiscal Year 2023-24 is generally as follows:

Table 5: FY 2023-24 Summary Cost Estimate
Salaries & Benefits $ 33,505
Operating Expenses & Services 582,500
214,001
Total Budget $ 830,006
Less General Fund Contribution (42,560)
Less Carryover (144,556)
Net Amount to Assessments $ 642,890
Enhancements / Improvements / Reserves
As required by the Act, an Assessment Diagram of the District is hereto attached and incorporated herein by reference. The distinctive number of each parcel or lot of land in the District is its Assessor Parcel Number appearing on the Assessment Roll.

I do hereby assess and apportion the net amount of the cost and expenses of the Improvements, including the costs and expenses incident thereto, upon the parcels and lots of land within the District, in accordance with the special benefits to be received by each parcel or lot, from the Improvements, and more particularly set forth in the Estimate of Cost and Method of Assessment in the Report.

The Assessment is made upon the parcels or lots of land within the District in proportion to the special benefits to be received by the parcels or lots of land, from the Improvements.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Each parcel or lot of land is described in the Assessment Roll by reference to its parcel number as shown on the Assessor's Maps of the County of Los Angeles for the Fiscal Year 2023-24. For a more particular description of the property, reference is hereby made to the deeds and maps on file and of record in the office of the County Recorder of the County.

I hereby will place opposite the Assessor Parcel Number for each parcel or lot within the Assessment Roll, the amount of the assessment for the Fiscal Year 2023-24 for each parcel or lot of land within the District.

Dated: June 2, 2023
Engineer of Work
By
Edric W. H. Kwan, P.E.

License No. C062829

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Assessment Diagram
The District boundary and the parcels to be assessed in Landscaping Assessment District No. 39-2022 are shown on the Assessment Diagram, which is on file with the City Clerk of the City of Diamond Bar and includes all those properties included in the original formation of the District and subsequent annexations. The following Assessment Diagram is for general location only and is not to be considered the official boundary map. The lines and dimensions of each lot or parcel within the District are those lines and dimensions as shown on the maps of the Assessor of the County of Los Angeles, for Fiscal Year 2023-24, and are incorporated herein by reference, and made a part of this Diagram and this Report.

6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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6.2.b
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City of Diamond Bar
Landscaping Assessment District No. 39-2022
Engineer’s Report, Fiscal Year 2023-2024

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Assessment Roll
An Assessment Roll (a listing of all parcels assessed within the District and the amount of the Assessment) will be filed with the City Clerk and is, by reference, made part of this Report and is available for public inspection during normal office hours at the City Hall at 21810 Copley Drive, 2nd floor, Diamond Bar, California 91765.

Each lot or parcel listed on the Assessment Roll is shown and illustrated on the latest County Assessor records and these records are, by reference, made part of this Report.

These records shall govern for all details concerning the description of the lots or parcels.

6.2.b
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Agenda #: 6.3
Meeting Date: July 18, 2023
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: LEVYING ASSESSMENTS ON LANDSCAPE ASSESSMENT
DISTRICT NO. 41-2021 FOR FISCAL YEAR 2023/24.

STRATEGIC
GOAL: Responsible Stewardship of Public Resources
RECOMMENDATION:

A. Receive presentation, open Public Hearing to receive testimony, close Public Hearing; and
B. Adopt Resolution No. 2023-28 to levy and collect assessments for Landscape Assessment District No. 41-2021 for Fiscal Year 2023/24.

FINANCIAL IMPACT:

The assessments generated by this District in the amount of $301,806, and $11,298 of General Fund Contribution (3.84% General Benefit), with an $18,692 Fund Balance Carryover, are included for the operation and maintenance costs in the Fiscal Year 2023/24 Budget Special Fund No. 241.

BACKGROUND/DISCUSSION:

As part of the assessment district updates, the City must undergo a three-step process.

Throughout the entire process, all proceedings for the maintenance of improvements have been pursuant to the provisions of the Landscape and Lighting Act of 1972 of Part 2 Division 15 of the Streets and Highways Code of the State of California and applicable provisions of Proposition 218, Article 10 XIIID of the California Constitution.

On April 4, 2023, the City Council adopted Resolution No. 2023-09, ordering the City Engineer to prepare and file an Engineer's Report related to maintenance of improvements in Landscaping Assessment District No. 41-2021 (District) and any assessment thereon for Fiscal Year 2023/24.

6.3 Packet Pg. 188
On June 20, 2023, the City Council adopted Resolution No. 2023-23, declaring the City's intention to levy and collect assessments for the District and directing staff to advertise the Public Hearing to be set for the July 18, 2023, regular meeting.

This is the final part of the three-step process in which the City Council conducts a public hearing on the District’s proposed annual assessment, and subsequently considers the related resolutions confirming the levy assessments.

The attached Engineer’s Report for the City’s Landscaping Assessment District Number 41-2021 (Attachment 2), which 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 estimated number of parcels within the District is 554 parcels. The Engineer’s Report contains a full and detailed description of the improvements, the boundaries of the assessment district, and the proposed assessments upon assessable lots and parcels of land within the District for Fiscal Year 2023/24. Said proposed assessment amounts for the single-family and multi-family parcels are $557.21 and $512.64, respectively, an increase of 3% from Fiscal Year 2022/23.

LEGAL REVIEW:

The City Attorney has reviewed and approved the Resolution as to form.

PREPARED BY:

REVIEWED BY:

Attachments:

1. 6.3.a Resolution No. 2023-28

2. 6.3.b Engineer's Report - FY2023-24

6.3 Packet Pg. 189
RESOLUTION NO. 2023-28

A RESOLUTION LEVYING AN ASSESSMENT ON CITY OF DIAMOND
BAR LANDSCAPE ASSESSMENT DISTRICT NO. 41-2021 FOR FISCAL YEAR 2023-24.

RECITALS
WHEREAS, by Resolution No. 2023-23, the City Council approved a report of the Engineer of Work (the “Report”) related to City of Diamond Bar Landscape Assessment District No. 41-2021 (“District”) prepared pursuant to Article XIIID of the California Constitution, and the Landscape and Lighting Act of 1972 (the “Act”), Part 2 of Division 15 of the California Streets and Highways Code (commencing with Section 22500 thereof), which described the improvements thereon, and gave notice of and fixed the time and place of the hearing on the question of assessment thereon for Fiscal Year 2023-

24. A diagram of the area encompassed by the District is attached hereto as Exhibit "A"; WHEREAS, the Report is on file with the City Clerk of the City of Diamond Bar; WHEREAS, said hearing was duly and properly noticed, commenced in the SCAQMD Auditorium located at 21865 Copley Drive, Diamond Bar, California on July 18, 2023, and was concluded prior to the adoption of this Resolution; and WHEREAS, all legal prerequisites to the adoption of this Resolution have occurred.

NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Diamond Bar does hereby:

Section 1. The Recitals of this Resolution are in all respects true and correct.

Section 2. The City Council hereby expressly overrules any and all protests filed objecting to the proposed improvements specified herein or the assessment levied, therefore.

Section 3. Based upon its review of the Report, and other reports and information, the City Council hereby finds that (i) the land within the District will be benefitted by the improvements specified in the Report, (ii) the District includes all of the lands so benefitted, and (iii) the net amount to be assessed upon the lands within the District for the 2023-24 fiscal year is apportioned by a formula and method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated benefits to be received by each such lot or parcel from the improvements.

Section 4. The improvements specified in the Report are hereby ordered to be completed.

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Resolution No. 2023-28
2 Section 5. The assessment diagram contained in the Report and the assessment amounts of $557.21 and $512.64 for the single-family and multi-family parcels, respectively, within said District are hereby adopted and confirmed and said assessment hereby is levied for the 2023-24 fiscal year.

Section 6. The assessment is in compliance with the provisions of the Act, and the City Council has complied with all laws pertaining to the levy of an annual assessment pursuant to the Act. The assessment is levied for the purpose of paying the costs and expenses of the improvements described in the Report for Fiscal Year 2023-24.

Section 7. The City Council hereby certifies that the assessments to be placed on the 2023-24 property tax bills meet the requirements of Proposition 218 that added Articles XIIIC and XIIID to the California Constitution.

Section 8. The assessments are levied without regard to property valuation.

Section 9. The City Treasurer shall deposit all moneys representing assessments collected by the County to the credit of a special fund for use in City of Diamond Bar Landscape Assessment District No. 41-2021.

Section 10. The City Clerk is hereby authorized and directed to file the diagram and assessment with the County Auditor, together with a certified copy of this Resolution upon its adoption.

Section 11. A certified copy of the assessment and diagram shall be filed in the office of the City Clerk and open for public inspection.

Section 12. The City Clerk shall certify to the adoption of this Resolution.

PASSED, ADOPTED AND APPROVED this 18th day of July 2023.

CITY OF DIAMOND BAR
_______
Andrew Chou, Mayor
[Signatures continued on the following page]

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Resolution No. 2023-28
3 ATTEST:

I, Kristina Santana, City Clerk of the City of Diamond Bar, do hereby certify that the foregoing Resolution was passed, approved and adopted at the regular meeting of the City Council of the City of Diamond Bar held on the 18th day of July 2023, by the following roll call vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

ABSTAINED: COUNCIL MEMBERS:
_______
Kristina Santana, City Clerk

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Resolution No. 2023-28
4 Exhibit A
Landscape Assessment District 41-2021

6.3.a
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FY 2023-24 ENGINEER’S REPORT
City of Diamond Bar
Landscaping Assessment District No. 41-2021
June 2023
Pursuant to the Landscape and Lighting Act of 1972 and Article XIIID of the California Constitution

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24
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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24
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City of Diamond Bar
City Council
Andrew Chou, Mayor
Stan Liu, Mayor Pro Tem
Ruth M. Low, Councilmember
Chia Yu Teng, Councilmember
Steve Tye, Councilmember
City Manager
Dan Fox
Public Works Director
David Liu
City Attorney
Omar Sandoval
Engineer of Work
Edric Kwan, P.E.

SCI Consulting Group

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Table of Contents
Introduction.................................................................................................... 1 Overview ......................................................................................................................1 Engineer’s Report and Continuation of Assessments..................................................2 Legislative Analysis.......................................................................................................2 Plans & Specifications ..................................................................................... 5 Fiscal Year 2022-22 Estimate of Cost and Budget ............................................. 7 Budget for Fiscal Year 2023-24.....................................................................................7 Method of Assessment Apportionment........................................................... 9 Method of Apportionment...........................................................................................9 Discussion of Benefit....................................................................................................9 Special Benefit............................................................................................................11 General Versus Special Benefit ..................................................................................13 Benefit Finding ...........................................................................................................15 Method of Apportionment.........................................................................................17 Residential Properties................................................................................................18 Vacant/Undeveloped Properties................................................................................18 Other Property Types.................................................................................................19 Annual Assessment Calculation..................................................................................19 Duration of Assessment .............................................................................................20 Appeals of Assessments Levied to Property ..............................................................20 Assessment Funds Must Be Expended Within the District Area................................20 Assessment................................................................................................... 21 Assessment Diagram ..................................................................................... 24 Assessment Roll ............................................................................................ 25

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List of Tables
Table 1: FY 2023-24 Estimate of Costs................................................................................ 7 Table 2: Assessment Rate Determination........................................................................... 8 Table 3: FY 2023-24 Summary Cost Estimate ................................................................... 21

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Introduction
Overview
The City of Diamond Bar (the “City”) services and maintains turf areas, slopes and open space areas and other improvements (“Improvements”) in the Diamond Bar Hills area of the City. In order to fund the maintenance and operation (“Services”) of these projects and improvements, Landscaping Assessment
District No. 41 was formed in 1985 by the
County of Los Angeles prior to the
incorporation of the City of Diamond Bar.

Upon incorporation in 1989, the City assumed
jurisdiction over the District. Since the passage
of Proposition 218, the assessments for this
existing District cannot be increased beyond
the previously approved amount of $280.00
per parcel. This assessment amount does not
generate sufficient revenue to fund the
District’s improvements and services, and the
annual shortfalls have been funded by the
City’s General Fund.

In 2021, the City Council directed that a new
assessment be proposed and voted on by property owners within the District in accordance with Proposition 218 (Article XIIIC and D or the California Constitution). Their intent was to replace the existing District No. 41 with a new District No. 41-2021 that would adhere to the existing boundary and include the same improvements and services.

These proposed assessments were supported by 87.55% of assessment ballots received from property owners (with each ballot weighted by the amount of assessments it represented). Therefore, on July 6, 2021 by its Resolution No. 2021-33, the City Council levied the new assessments for District No. 41-2021.

This Engineer’s Report ("Report") was prepared to establish the budget for the Improvements (as described below) that will be funded by the proposed assessments and other revenue, and to determine the general and special benefits received from the Improvements by property within the District and the method of assessment apportionment to lots and parcels. This Report and the assessments have been made pursuant to the Landscaping and Lighting Act of 1972, Part 2 of Division 15 of the California Streets and Highways Code (the "Act") and Article XIIID of the California Constitution (the “Article”).

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Engineer’s Report and Continuation of Assessments
The assessments were approved by a property-owner ballot proceeding in 2021, and were intended to replace the original District No. 41 which was established in 1985. In each subsequent year for which the assessments will be continued, the Diamond Bar City Council (the “Council”) must direct the preparation of an Engineer’s Report, budgets, and proposed assessments for the upcoming fiscal year. After the report is completed, the City Council may preliminarily approve the Engineer’s Report and the continued assessments and establish the date for a public hearing on the continuation of the assessments. Accordingly, this Engineer’s Report (the “Report”) was prepared pursuant to the direction of the City Council.

As required by the Act, this Report includes plans and specifications, a diagram or map of the District, the benefits received by property from the Improvements within the District, and the method of assessment apportionment to lots and parcels within the District.

If the Council approves this Engineer’s Report and the continuation of the Assessments by resolution, a notice of public hearing must be published in a local newspaper at least 10 days prior to the date of the public hearing. The resolution preliminarily approving the Engineer’s Report and establishing the date for a public hearing is typically used for this notice.

Following the minimum 10-day time period after publishing the notice, a public hearing is held for the purpose of allowing public testimony about the proposed continuation of the Assessments. This hearing is currently scheduled for July 18, 2023. At this hearing, the Council will consider approval of a resolution confirming the continuation of the Assessments for fiscal year 2023-24. If so confirmed and approved, the Assessments would be submitted to the Los Angeles County Auditor/Controller for inclusion on the property tax rolls for fiscal year 2023-24.

Legislative Analysis
Proposition 218
The Right to Vote on Taxes Act was approved by the voters of California on November 6, 1996 and is now Article XIIIC and XIIID of the California Constitution. Proposition 218 provides for benefit assessments to be levied to fund the cost of providing services and improvements, as well as maintenance and operation expenses to a public improvement which benefits the assessed property.

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Silicon Valley Taxpayers Association, Inc. v Santa Clara County Open Space Authority (2008) 44 Cal. 4th 431
In July of 2008, the California Supreme Court issued its ruling on the Silicon Valley Taxpayers Association, Inc. v. Santa Clara County Open Space Authority (“SVTA”). This ruling is significant in that the Court clarified how Proposition 218 made changes to the determination of special benefit. The Court also found that:
 Benefit assessments are for special, not general, benefit  The services and/or improvements funded by assessments must be clearly defined
 Special benefits are directly received by and provide a direct advantage to property in the Improvement District
 The assessment paid by property should be proportional to the special benefits it receives from the Improvements
Dahms v. Downtown Pomona Property (2009) 174 Cal. App. 4th 708 In Dahms v. Downtown Pomona Property (“Dahms”) the Court upheld an assessment that was 100% special benefit (i.e. 0% general benefit) on the rationale that the services and improvements funded by the assessments were directly provided to property in the assessment district. The Court also upheld discounts and exemptions from the assessment for certain properties.

Bonander v. Town of Tiburon (2009) 180 Cal. App. 4th 103 Bonander v. Town of Tiburon (“Bonander”), the 1st District Court of Appeal overturned a benefit assessment approved by property owners to pay for placing overhead utility lines underground in an area of the Town of Tiburon. The Court invalidated the assessments primarily on the grounds that the assessments had been apportioned to assessed property based on the costs within sub-areas of the assessment district instead of the overall cost of the improvements and the overall proportional special benefits.

Beutz v. County of Riverside (2010) 184 Cal. App. 4th 1516 Steven Beutz v. County of Riverside (“Beutz”) the Court overturned an assessment for park maintenance in Wildomar, California, primarily because the general benefits associated with improvements and services were not explicitly calculated, quantified and separated from the special benefits.

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Golden Hill Neighborhood Association v. City of San Diego (2011) 199 Cal.

App. 4th 416
On September 22, 2011, the San Diego Court of Appeal issued a decision on the Golden Hill Neighborhood Association v. City of San Diego appeal. This decision overturned an assessment for street and landscaping maintenance in the Greater Golden Hill neighborhood of San Diego, California. The court described two primary reasons for its decision. First, like in Beutz, the court found the general benefits associated with services were not explicitly calculated, quantified and separated from the special benefits. Second, the court found that the City had failed to record the basis for the assessment on its own parcels.

Compliance with Current Law
This Engineer’s Report is consistent with the SVTA decision and with the requirements of Article XIIIC and XIIID of the California Constitution because the Improvements to be funded are clearly defined; the benefiting property in the District enjoys close and unique proximity, access and views to the Improvements; the Improvements serve as an extension of usable land area for benefiting properties in the District and such special benefits provide a direct advantage to property in the District that is not enjoyed by the public at large or other property.

This Engineer’s Report is consistent with Beutz, Dahms and Greater Golden Hill because the Improvements will directly benefit property in the District and the general benefits have been explicitly calculated and quantified and excluded from the Assessments. The Engineer’s Report is consistent with Bonander because the Assessments have been apportioned based on the overall cost of the Improvements and Services proportional special benefit to each property, rather than the proportional cost to the District to provide the Improvements to specific properties.

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Plans & Specifications
The City maintains landscaping and other improvements in locations within the District’s boundaries. The work and improvements to be undertaken by Landscaping Assessment District No. 41-2021, (“District”), and the cost thereof paid from the levy of the annual Assessment provide special benefit to Assessor Parcels within the District as defined in the Method of Assessment herein. In addition to the definitions provided by the Landscaping and Lighting Act of 1972 (the “Act”), the work and improvements are generally described as mini-parks, slopes and open space areas within the District. The Assessment Diagram shows the location and extent of the Improvements to be installed, maintained or serviced by the proceeds from this Assessment District.

Installation, maintenance and servicing of Improvements, may include, but are not limited to, turf and play areas, landscaping, ground cover, shrubs and trees, irrigation systems, sidewalks, lighting, fencing, graffiti removal and repainting, and labor, materials, supplies, utilities and equipment, as applicable, at each of the locations owned, operated or maintained by the District.

As applied herein, “Installation” means the construction of Improvements, including, but not limited to, land preparation (such as grading, leveling, cutting and filling), sod, landscaping, irrigation systems, walkways and drainage, lights, playground equipment, play courts, playing fields, recreational facilities and public restrooms. “Maintenance” means the furnishing of services and materials for the ordinary and usual maintenance, operation and servicing of any improvement, including repair, removal or replacement of all or any part of any improvement; providing for the life, growth, health, and beauty of landscaping, including cultivation, irrigation, trimming, spraying, fertilizing, or treating for disease or injury; the removal of trimmings, rubbish, debris, and other solid waste, and the cleaning, sandblasting, and painting of walls and other improvements to remove or cover graffiti.
“Servicing” means the furnishing of electric current, or energy, gas or other illuminating agent for any public lighting facilities or for the lighting or operation of any other improvements; or water for the irrigation of any landscaping, the operation of any fountains, or the maintenance of any other improvements.

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Incidental expenses include all of the following: (a) The costs of preparation of the report, including plans, specifications, estimates, diagram, and assessment; (b) the costs of printing, advertising, and the giving of published, posted, and mailed notices; (c) compensation payable to the County for collection of assessments; (d) compensation of any engineer or attorney employed to render services in proceedings pursuant to this part; (e) any other expenses incidental to the construction, installation, or maintenance and servicing of the Improvements; (f) any expenses incidental to the issuance of bonds or notes pursuant to Streets & Highways Code Section 22662.5; and (g) costs associated with any elections held for the approval of a new or increased assessment (Streets & Highways Code §22526).

Modifications to the District structure could include, but are not limited to, substantial changes or expansion of the Improvements provided, substantial changes in the service provided, modifications or restructuring of the District including annexation or detachment of specific parcels, revisions in the method of apportionment, or proposed new or increased assessments.

The assessment proceeds will be exclusively used for Improvements within the District plus incidental expenses.

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Fiscal Year 2022-22 Estimate of Cost and Budget
Budget for Fiscal Year 2023-24
The 1972 Act provides that the total costs for providing the maintenance and servicing of the District Improvements and facilities can be recovered in the assessment spread including incidental expenses. The latter can include engineering fees, legal fees, printing, mailing, postage, publishing and all other costs identified with the District proceedings.

An estimate of District costs for fiscal year 2023-24 for the maintenance and servicing of the Improvements is provided below.

Table 1: FY 2023-24 Estimate of Costs
Expenditure Item Amount
Salaries & Benefits $ 51,788
Operating Expenses
Advertising 3,500
Utilities 78,000
Maintenance of Grounds/Buildings 13,800
Professional Services 6,500
Contract Services
Landscape Maintenance 65,000
Tree Maintenance 21,200
Weed/Pest Abatement 60,300
Capital Improvements 0
Estimated Expenditures $ 300,088
Contingencies/Reserves 31,708
Total Budget $ 331,796
Revenue Item Amount
Direct Benefit Assessments $ 301,806
Carryover from Prior Year 18,692
General Fund Contribution 3.84% 11,298
Estimated Revenues 1 $ 331,796
LANDSCAPING ASSESSMENT DISTRICT NO. 41-2021

1. The Act requires that proceeds from the assessments must be deposited into a special fund that has been set up for the revenues and expenditures of the District. Moreover, funds raised by the assessment shall be used only

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for the purposes stated within this Report. Any balance remaining at the end of the Fiscal Year, June 30, must be carried over to the next Fiscal Year.

The District may also establish a reserve fund for contingencies and special projects as well as a capital improvement fund for accumulating funds for larger capital improvement projects or capital renovation needs. Any remaining balance would either be placed in the reserve fund or would be used to reduce future years' assessments.

Table 2 below shows how the assessment rates are determined including the estimated number of single-family equivalents (“SFE”) and how the costs of improvements are allocated to parcels as defined later in this Report.

Table 2: Assessment Rate Determination
Single-Family Equivalents Parcels SFE factor SFEs
Single Family Parcels 410 100% 410.00
Condominium Parcels 144 92% 132.48
Total 554 542.48
Budget Allocation to Parcels
Total Amount Assessed $ 301,806
Total SFEs 542.48
Assessment per SFE 1 $ 557.21
Single-Family Assessment $ 557.21
Condominium Assessment $ 512.64

1. The rate shown here is for a single-family home or its equivalent. For the definition of the term SFE and rates for other types of property, see the section titled, “Method of Assessment Apportionment” and the sections following it in this report.

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Discussion of Benefit
In summary, the Assessments can only be levied based on the special benefit to property.

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The following benefit categories summarize the types of special benefit to residential, commercial, industrial and other lots and parcels resulting from the Improvements to be provided with the assessment proceeds. These types of special benefit are summarized as follows:

A. Proximity to Improved Landscaped Areas and Other Public Improvements within the District.

B. Improved Views within the District.

C. Extension of a property’s outdoor areas and green spaces for properties within close proximity to the Improvements.

D. Safety and Security within the District
E. Creation of individual lots for residential and commercial use that, in absence of the Assessments, would not have been created.

In this case, the recent SVTA v. SCCOSA decision provides enhanced clarity to the definitions of special benefits to properties from similar improvements in three distinct areas:
♦ Proximity ♦ Expanded or Improved Access ♦ Views
The SVTA v. SCCOSA decision also clarifies that a special benefit is a service or improvement that provides a direct advantage to a parcel and that indirect or derivative advantages resulting from the overall public benefits from a service or improvement are general benefits. The SVTA v. SCCOSA decision also provides specific guidance that park improvements are a direct advantage and special benefit to property that is proximate to a park that is improved by an assessment:

Proximity, improved access and views, in addition to the other special benefits listed herein further strengthen the basis of these assessments.

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Special Benefit
SCI assessment engineers have identified the following special benefits:

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Extension of a Property’s Outdoor Areas and Green Spaces for Properties within Close Proximity to the Improvements
In large part because it is cost prohibitive to provide large open land areas on property in the District, the residential, commercial and other benefiting properties in the District do not have large outdoor areas and green spaces. The Improvements within the District provide additional outdoor areas that serve as an effective extension of the land area for proximate properties because the Improvements are uniquely proximate and accessible to property in close proximity to the Improvements. The Improvements, therefore, provide an important, valuable and desirable extension of usable land area for the direct advantage and special benefit of properties in the District because such properties have uniquely good and close proximity to the Improvements.

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Benefit Category
Proximity & Access 10%
Views 10%
Outdoor Area Extension 10%
Safety & Security 10%
Creation of Lots 60%
TOTAL Benefit 100%
Relative Weight
General Versus Special Benefit
Article XIIIC of the California Constitution requires any local agency proposing to increase or impose a benefit assessment to “separate the general benefits from the special benefits conferred on a parcel.” The rationale for separating special and general benefits is to ensure that property owners subject to the benefit assessment are not paying for general benefits. An assessment can fund special benefits but cannot fund general benefits. Accordingly, a separate estimate of the special and general benefit is given in this section.

In other words:

Total
Benefit = General Benefit + Special
Benefit

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There is no widely-accepted or statutory formula for general benefit. General benefits are benefits from improvements or services that are not special in nature, are not “particular and distinct” and are not “over and above” benefits received by other properties. SVTA vs. SCCOSA provides some clarification by indicating that general benefits provide “an indirect, derivative advantage” and are not necessarily proximate to the improvements.

In this Report, the general benefit is liberally estimated and described, and then budgeted so that it is funded by sources other than the Assessment.

A formula to estimate the general benefit is listed below:

General
Benefit =
Benefit to Real
Property Outside
the Assessment
District
+
Benefit to Real
Property Inside the
Assessment District
that is Indirect and
Derivative
+
Benefit to
the Public
at Large
Special benefit, on the other hand, is defined in the state constitution as “a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large.” The SVTA v. SCCOSA decision indicates that a special benefit is conferred to a property if it “receives a direct advantage from the improvement (e.g., proximity to a park).” In these Assessments, as noted, properties in the District have close and unique proximity, views and access to the Improvements and uniquely improved desirability from the Improvements and other properties and the public at large do not receive significant benefits because they do not have proximity, access or views of the Improvements. Therefore, the overwhelming proportion of the benefits conferred to property is special and is only minimally received by property outside the Districts or the public at large.

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Benefit to Property Outside the Assessment Districts
Properties within the District receive almost all of the special benefits from the Improvements because properties in the District enjoy unique close proximity and access to the Improvements that is not enjoyed by other properties or the public at large.

Since certain properties outside the District enjoy close proximity and access to the Improvements cannot be assessed by the District, this is a form of general benefit to other property. There are 23 parcels outside the District that are directly adjacent to areas where slopes are maintained by the District. The benefits conferred to these properties do not include the Lot Creation benefit factor, therefore the benefit is reduced by 60%.

The general benefit to property outside of the District is calculated as follows. 23 Parcels Outside District
554 Parcels In the District
40% Benefit Factor
23 23 + 554
Assumptions:

Calculation:

General Benefit to Property Ouside the District
x 40% = 1.59%

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Benefit to Property Inside the Assessment Districts that is Indirect and Derivative
The “indirect and derivative” benefit to property within the District is particularly difficult to calculate. A solid argument can be presented that all benefit within the District is special, because the other Improvements are clearly “over and above” and “particular and distinct” when compared with the baseline level of service and the unique proximity, access and views of the other Improvements enjoyed by benefiting properties in the District.

Nevertheless, the SVTA vs. SCCOSA decision indicates there may be general benefit “conferred on real property located in the district” A measure of the general benefits to property within the Assessment area is the percentage of land area within or directly abutting the District that is publicly owned and used for regional purposes such as regional parks, major roads, rail lines and other regional facilities because such properties used for regional purposes could provide indirect benefits to the public at large. The District boundaries are narrowly drawn to include only the residential areas within the neighborhood, and there are no regional facilities within the District. Therefore, the indirect and derivative general benefits to property within the District are zero.

Benefit To The Public At Large
The general benefit to the public at large can be estimated by the proportionate amount of time that the District’s Improvements are used and enjoyed by individuals who are not residents, employees, customers or property owners in the District. It should be noted that these Improvements do not attract the public at large in the same was as park improvements, and they confer far less benefit to the public at large than do similar park improvements. In essence, the public does not visit an area to enjoy slope improvements in the same way as they may visit a park.

However, certain slopes maintained by the District may provide some enhancement to views enjoyed by the public as they drive past. Approximately 25% of the slopes and linear green areas maintained by the District lie along arterial roadways that carry a high percentage of traffic not associated with people who are not residents or property owners within the District. While there are not statistics available as to what percentage of passby vehicle trips are by non-residents or non-property owners, a liberal factor of 90% is assumed. Finally, of all the types of benefits conferred by the Improvements, passersby only benefit from views, which are estimated at 10% of the total benefits. Therefore, we find that ((90% of 25%) x 10% =) 2.25% of the benefits from the Improvements are general benefits to the public at large.

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Total General Benefits
Using a sum of these three measures of general benefit, we find that approximately 3.84% of the benefits conferred by the Improvements may be general in nature and should be funded by sources other than the assessment.

Outside the District
Inside the District
Public At Large
Total General Benefit
Landscaping General Benefit Calculation

1.59%

0.00%

2.25%

3.84%
Method of Apportionment
As previously discussed, the proposed Assessments will provide comprehensive Improvements that will clearly confer special benefits to properties in the proposed District. The allocation of special benefits to property is partially based on the type of property and the size of property. These benefits can also partially be measured by the occupants on property in the District because such parcel population density is a measure of the relative benefit a parcel receives from the Improvements. It should be noted that many other types of “traditional” assessments also use parcel population densities to apportion the Assessments. For example, the assessments for sewer systems, roads and water systems are typically allocated based on the population density of the parcels assessed. Therefore, the apportionment of benefit is reasonably based on the type of parcel, the size of parcels and the population density of parcels.

The next step in apportioning Assessments is to determine the relative special benefit for each property. This process involves determining the relative benefit received by each property in relation to a single-family home, or, in other words, on the basis of SingleFamily Equivalents (“SFE”). This SFE methodology is commonly used to distribute Assessments in proportion to estimated special benefit and is generally recognized as providing the basis for a fair and appropriate distribution of Assessments. For the purposes of this Engineer’s Report, all properties are designated a SFE value, which is each property’s relative benefit in relation to a single-family home on one parcel. In this case, the "benchmark" property is the single-family detached dwelling which is one Single Family Equivalent or one SFE.

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24

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Residential Properties
Certain residential properties in the District that contain a single residential dwelling unit are assigned one Single Family Equivalent or 1.0 SFE. Detached or attached houses and zero-lot line houses are included in this category of single-family residential property. If there is more than one single family detached dwelling on a parcel, it will be charged one SFE per single family detached dwelling.

Another residential property type in the District is the condominium. These properties benefit from the Improvements in proportion to the average number of people who reside in multi-family residential units versus the average number of people who reside in a single-family home (Population Density Factor, or PDF). Using the total population of each property type in the City from recent Census data and dividing it by the total number of such households reveals that approximately 3.42 persons occupy each single-family residence, whereas an average of 2.48 persons occupy each condominium. The ratio of

2.48 people (condominium) to 3.42 people (single-family) results in a PDF of 0.73 for condominiums.

The PDF of 0.73 for condominiums is applied to certain benefit categories, whereas other benefit categories are applicable to condominiums in full measure. The calculation of the overall SFE factors are summarized below.

Benefit Category
PDF SFE Factor PDF SFE Factor
Proximity & Access 10% 100% 10.0% 73% 7.3%
Views 10% 100% 10.0% 73% 7.3%
Outdoor Area Extension 10% 100% 10.0% 73% 7.3%
Safety & Security 10% 100% 10.0% 100% 10.0%
Creation of Lots 60% 100% 60.0% 100% 60.0%
TOTAL Benefit 100% 100% 92%
Weight SFR Condo
There are no other multi-family property types (e.g., duplex, triples, fourplex, apartments) in the District, and none are foreseen in the near future. Therefore, no SFR-based assessment rate is calculated.

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24

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Other Property Types
Notwithstanding the foregoing discussion, there are two other types of property uses to be considered: Water utility and open space. These are discussed below.

Open Space: The open space parcels that lie within the District are part of the improvements (views, safety & security, etc.) Therefore, these parcels are not assessed a fee.

The property in the District is fully developed, has been stable since its original development in the late 1980s, and is zoned such that a change in the predominately residential land use is not expected in the future. As a result, there is no analysis of type, size and population densities for other uses such as commercial, industrial and institutional properties.

Annual Assessment Calculation
The assessment shall be subject to an adjustment up to a cap of 3% annually, which adjustment shall be based upon actual costs, including any reasonable reserves, supported by an Engineer’s Report prepared in accordance with Article XIIID of the California Constitution. If the Engineer’s Report does not support an increase or supports a reduction in the assessment, then the assessment shall not be increased or shall be lowered as applicable.

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24

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Duration of Assessment
The District was formed or annexed in previous years. It is proposed that the Assessments be continued every year after their formation or annexation, so long as the public Improvements need to be maintained and improved, and the City requires funding from the Assessments for these Improvements in the District. As noted previously, the Assessment can continue to be levied annually after the City Council approves an annually updated Engineer’s Report, budget for the Assessment, Improvements to be provided, and other specifics of the Assessment. In addition, the City Council must hold an annual public hearing to continue the Assessment.

Appeals of Assessments Levied to Property
Any property owner who feels the Assessment levied on the subject property is in error as a result of incorrect information being used to apply the foregoing method of assessment may file a written appeal with the City of Diamond Bar City Manager or his or her designee. Any such appeal is limited to correction of an Assessment during the thencurrent Fiscal Year and applicable law. Upon the filing of any such appeal, the City Manager or his or her designee will promptly review the appeal and any information provided by the property owner. If the City Manager or his or her designee finds the Assessment should be modified, the appropriate changes shall be made to the Assessment Roll. If any such changes are approved after the Assessment Roll has been filed with the County for collection, the City Manager or his or her designee is authorized to refund to the property owner the amount of any approved reduction. Any dispute over the decision of the City Manager or his or her designee shall be referred to the Diamond Bar City Council, and the decision of the City Council shall be final.

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24

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The amount to be paid for said Improvements and the expense incidental thereto, to be paid by the District for the Fiscal Year 2023-24 is generally as follows:

Table 3: FY 2023-24 Summary Cost Estimate
Salaries & Benefits $ 51,788
Operating Expenses & Services 248,300
Capital Expenses/Reserves 31,708
Total Budget $ 331,796
Less General Fund Contribution (11,298)
Less Carryover (18,692)
Net Amount to Assessments $ 320,498
Fund and Budget Summary Fiscal Year 2023-24
LANDSCAPING ASSESSMENT DISTRICT NO. 41-2021
As required by the Act, an Assessment Diagram of the District is hereto attached and incorporated herein by reference. The distinctive number of each parcel or lot of land in the District is its Assessor Parcel Number appearing on the Assessment Roll.

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24

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The Assessment is made upon the parcels or lots of land within the District in proportion to the special benefits to be received by the parcels or lots of land, from the Improvements.

Dated: June 2, 2023
Engineer of Work
By
Edric W. H. Kwan, P.E.

License No. C062829

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24

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Assessment Diagram
The District boundary and the parcels to be assessed in Landscaping Assessment District No. 41-2021 are shown on the Assessment Diagram, which is on file with the City Clerk of the City of Diamond Bar and includes all those properties included in the original formation of the District and subsequent annexations. The following Assessment Diagram is for general location only and is not to be considered the official boundary map. The lines and dimensions of each lot or parcel within the District are those lines and dimensions as shown on the maps of the Assessor of the County of Los Angeles, for Fiscal Year 2023-24, and are incorporated herein by reference, and made a part of this Diagram and this Report.

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CITY OF DIAMOND BAR
LANDSCAPE AND LIGHTING ASSESSMENT – DISTRICT NO. 41-2021 ENGINEER’S REPORT, FISCAL YEAR 2023-24

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Each lot or parcel listed on the Assessment Roll is shown and illustrated on the latest County Assessor records and these records are, by reference, made part of this Report.

These records shall govern for all details concerning the description of the lots or parcels.

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Agenda #: 7.1
Meeting Date: July 18, 2023
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: UPDATED PROGRAM POLICIES FOR THE DIAMOND BAR HOME

IMPROVEMENT PROGRAM

STRATEGIC
GOAL: Safe, Sustainable & Healthy Community
RECOMMENDATION:

A. Determine that the proposed action does not constitute a project and is therefore exempt from the California Environmental Quality Act (“CEQA”); and B. Adopt Resolution No. 2023-29 approving the updated Program Policies for the City’s Home Improvement Program.

FINANCIAL IMPACT:

The updated Home Improvement Program is funded annually with federal Community Development Block Grant (CDBG) and state Permanent Local Housing Allocation (PLHA) funds, and thus does not impact the City’s General Fund.

BACKGROUND & DISCUSSION
The City’s Home Improvement Program (HIP) was originally established in 2003 as a CDBG-funded program, providing interest-free, deferred loans to eligible homeowners for the maintenance of safe, decent and sanitary housing. HIP funds are used to correct hazardous structural conditions; to make reasonable accommodations for persons with disabilities; to improve the overall exterior appearance of the home; to eliminate an appearance of blight; to provide energy-efficient upgrades; and to correct exterior code violations. The HIP Program Policies were last updated in 2016.

Because of the spending restrictions on CDBG funds, the households eligible to receive HIP loans have been limited to owner/occupants of single-family homes with household incomes not exceeding 80 percent of Los Angeles County’s Area Median Income (AMI).

PLHA funds, however, have fewer restrictions, and allow HIP loans to also be issued to

7.1 Packet Pg. 225
households earning up to 150 percent of AMI, as well as to owner/occupants of condominiums.

On June 20, 2023, the City Council approved the expansion of the HIP to utilize both CDBG and PLHA funds to broaden the scope of homeowners eligible to receive HIP loans. To implement the expanded program, the attached updated Program Policies (Attachment 2) have been prepared for Council consideration and will supersede the current policy document. A redline/strikeout version of the updated Program Policies is included as Attachment 3 to show how the document has been revised.

Summary of Updated Program Policies
Key changes to proposed updated HIP Program Policies are highlighted below:
• The maximum loan amount for single-family detached homes is increased from $20,000 to $30,000.
• Owner-occupants of condominiums that meet the household income requirements are now eligible for HIP loans for up to $20,000, provided that PLHA funds are available. The maximum loan amount is lower than the cap for single-family detached homes because costlier improvements, such as roof maintenance and exterior repairs, are the responsibility of the condominium homeowners associations, not the individual homeowners.
• PLHA funds may be used to issue loans to households (both single-family detached and condominium) earning up to 150% of the Area Median Income (AMI) for Los Angeles County. CDBG funds continue to be restricted to owner-occupied households of single-family detached housing earning no more than 80% of AMI. • A minimum loan amount of $10,000 is now required. Previously, no minimum was specified. Establishing a minimum loan amount encourages homeowners to address more improvements at once, and provides economies of scale with respect to the administrative costs associated with processing loans.

ENVIRONMENTAL ANALYSIS:

The proposed revisions to the HIP Program Policies do not constitute a project under the California Environmental Quality Act (“CEQA”). As such, this matter is exempt under CEQA.

PREPARED BY:

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REVIEWED BY:

Attachments:

1. 7.1.a Resolution No. 2023-29

2. 7.1.b 2023 HIP Program Policy

3. 7.1.c HIP Policies - Tracked Changes

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RESOLUTION NO. 2023-29

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DIAMOND

BAR APPROVING UPDATED PROGRAM POLICIES FOR THE HOME
IMPROVEMENT PROGRAM.

WHEREAS, the City of Diamond Bar Home Improvement Program (“HIP”) was originally established in 2003 to preserve and enhance residential neighborhoods throughout the City by providing interest-free, deferred loans to eligible owner-occupants of single family detached dwellings for the following purposes: the preservation of safe, decent and sanitary housing; to correct hazardous structural conditions; to make reasonable accommodations for persons with disabilities; to improve the overall exterior appearance of the home; to eliminate an appearance of blight; to provide energy-efficient upgrades; and to correct exterior code violations;
WHEREAS, the City desires to update the HIP Program Policies to allow both Community Development Block Grant (“CDBG”) and Permanent Local Housing Allocation (“PLHA”) monies to be used as funding sources for HIP loans, thereby enabling the City to offer loans to more households and income categories than would otherwise be possible with CDBG monies as the sole funding source;
WHEREAS, the City desires to expand the HIP by providing interest-free, deferred loans to eligible owner-occupants of condominium dwellings; WHEREAS, the City desires to increase the maximum loan amount for the SingleFamily Home Improvement Program (“SHIP”), inclusive of all fees, from $20,000 to $30,000; and
WHEREAS, the City desires to set the maximum loan amount for the Condominium Home Improvement Program (“CHIP”), inclusive of all fees, at $20,000.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Diamond Bar as follows:

Section 1. That the updated HIP Program Policies are hereby adopted as shown in Exhibit “A” attached hereto, and supersedes all previous Program Policies.

Section 2. That the City Council determines that the proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), based on Section 15061(b)(3) of the CEQA Guidelines.

Section 3. The City Clerk shall attest and certify to the passage and adoption of this Resolution and enter it into the book of original resolutions, and it shall become effective immediately upon its approval.

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Resolution No. 2023-29
2 PASSED, APPROVED, AND ADOPTED this 18th day of July, 2023.

CITY OF DIAMOND BAR
__________________________
Andrew Chou, Mayor
ATTEST:

I, Kristina Santana, City Clerk of the City of Diamond Bar, California do hereby certify that the foregoing Resolution was duly and regularly passed, approved and adopted by the City Council of the City of Diamond Bar, California, at its regular meeting held on the 18th day of July, 2023, by the following vote, to wit:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:
__________________________
Kristina Santana, City Clerk

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PROGRAM

PROGRAM POLICIES

CITY OF DIAMOND BAR

DEPARTMENT OF COMMUNITY

DEVELOPMENT
21825 EAST COPLEY DRIVE
DIAMOND BAR, CA 91765

REVISED DRAFT
DECEMBER 29, 2008
City of Diamond Bar
Community Development Department
21810 Copley Drive
Diamond Bar, CA 91765

Program
Policies
Home Improvement Program
ADOPTED BY THE CITY COUNCIL:

Resolution No. 2023-XX
____ __, 2023
Exhibit “A” 7.1.b
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Home Improvement Program Policies | July 18, 2023 Page 1 of 16 I. INTRODUCTION AND OVERVIEW
A. Purpose and Goal
The purpose of the City of Diamond Bar Home Improvement Program (HIP) is to preserve and enhance residential neighborhoods throughout the City by providing interest-free loans to eligible owners of single family detached and attached dwellings for the following purposes: the preservation of safe, decent and sanitary housing; to correct hazardous structural conditions; to make reasonable accommodations for persons with disabilities; to improve the overall exterior appearance of the home; to eliminate an appearance of blight; improve energy efficiency; and to correct exterior code violations.

The HIP encompasses two loan categories:

1. The Single-Family Home Improvement Program (SHIP) offers interest-free, deferred loans to income-eligible, owner-occupants of detached, single-family homes, where the owner is responsible for the maintenance of both the exterior and interior of the structure.

2. The Condominium Home Improvement Program (CHIP) offers interest-free, deferred loans to income-eligible, owner-occupants of condominiums, where a homeowners association (HOA) is primarily responsible for exterior structure maintenance.

B. Program Objectives
Interest-free, deferred loans may be provided to eligible low- and moderate- income households of owner-occupied residences to cover the cost of housing repairs in accordance with the criteria outlined within this program. A loan shall be repaid in full upon the sale or transfer of the home; when the loan recipients no longer occupy the property; when the property is refinanced; or when the loan recipients become owners of any other real property.

C. Source of Funds
Funds for the Home Improvement Program are administered by the Los Angeles County Development Authority (LACDA) through a subrecipient agreement with the City of Diamond Bar. LACDA acts as an agent for, and receives HIP funding from the following sources:

1. Community Development Block Grant (CDBG) funds made available by the U.S. Department of Housing and Urban Development (HUD). These funds are specifically targeted to benefit households earning no more than 80% of the Area Median Income (AMI).

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Home Improvement Program Policies | July 18, 2023 Page 2 of 16

2. Permanent Local Housing Allocation (PLHA) funds collected through State Property Transfer Fees. These funds may be used to benefit households earning up to 150% of AMI.

PLHA funds allow for a much broader scope of home improvement types and household income categories than CDBG funds. The following restrictions in the use of CDBG funds must be taken into account when determining which funding source to use for a loan:
• CDBG funds cannot be used to fund CHIP loans.
• CDBG funds cannot be used when issuing loans to households earning more than 80% of AMI.

Although CDBG and PLHA funds may be pooled to fund a SHIP loan for a household earning up to 80% of AMI, commingling of funding sources should be avoided to minimize the risk of future accounting errors and audit findings, and in most cases should be unnecessary.

D. Denied Applications
Applicants who are denied authorization to participate in the City of Diamond Bar’s Home Improvement Program for any reason other than failure to submit a complete application may not reapply for assistance within the following two (2) years after the date of the denial of the application.

II. SINGLE-FAMILY HOME IMPROVEMENT LOANS
Eligible homeowners may utilize assistance under the deferred loan program. Repeat assistance will be allowed for loans once every five (5) years provided that the balance of all outstanding loans does not exceed the amounts specified below. The City will offer the following home improvement programs to assist low- and moderate-income households with necessary improvements to their residences. Participation in the Single-Family Home Improvement Program is subject to the additional requirements described in Sections IV through VII of these Program Guidelines.

Household Income Limit: 80% or 150% of AMI, depending on funding source (see Section I.c above).

Minimum Loan Amount: $10,000
Maximum Loan Amount: $30,000 (inclusive of all fees, including hazardous material abatement).

Loan Amount Amendment: Applicants who initially elect to obtain a deferred loan in an amount less than the allowable maximum may amend
the amount of the loan not to exceed the allowable
maximum if such amendment is approved by the
Community Development Director.

Eligible Properties: Owner-occupied single-family detached residences throughout the City.

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Home Improvement Program Policies | July 18, 2023 Page 3 of 16 Security: Recorded Trust Deed / Promissory Note.

Loan Rate and Term: 0% interest deferred loan payable upon sale, transfer of title or refinancing of any loan in prior position to that of the City; when the loan recipients no longer occupy the property; or when the loan recipients become owners of
any other real property.

Fees: All Fees associated with the loan such as PIRT Policy and recordation fees shall be added to loan principal. The
combined total of the loan and fee amounts shall not
exceed the Maximum Loan Amount.

Repeat Assistance: Owner Occupied Single-Family Properties – Repeat assistance may be allowed for loans once every five (5) years provided that the balance of all outstanding deferred loans does not exceed $40,000.

Equity The total indebtedness or all recorded liens may not exceed ninety-five (95%) of the fair market value of the home after rehabilitation.

Special Requirements: Home Improvement Program loans must be recorded against the property in first or second position only.

Exceptions will be reviewed on a case by case basis.

Eligible Improvements: Correction of hazardous structural conditions; modifications necessary to provide reasonable
accommodations for persons with disabilities;
improvements to the overall exterior appearance of the
home; elimination of an appearance of blight; correction of exterior code violations; energy-efficient fixtures and system upgrades; and other eligible exterior and interior improvements. See Section V for a more detailed
explanation of eligible and noneligible improvements, as well as the order of priority for eligible improvements.

III. CONDOMINIUM HOME IMPROVEMENT LOANS
Eligible condominium owners may utilize assistance under the deferred loan program.

Repeat assistance will be allowed for loans once every five (5) years provided that the balance of all outstanding loans may not exceed $30,000, subject to the availability of PLHA funds. The City will offer the following home improvement programs to assist lowand moderate-income households with necessary improvements to their residences.

Participation in the Condominium Home Improvement Program is subject to the additional requirements described in Sections IV through VII of these Program Guidelines.

Household Income Limit: 150% of area median household income.

Minimum Loan Amount: $10,000
Maximum Loan Amount: $20,000 (inclusive of all fees, including hazardous material abatement).

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Home Improvement Program Policies | July 18, 2023 Page 4 of 16 Loan Amount Amendment: Applicants who initially elect to obtain a deferred loan in an amount less than the allowable maximum may amend
the amount of the loan not to exceed the allowable
maximum if such amendment is approved by the
Community Development Director.

Eligible Properties: Owner-occupied condominium residences throughout the City.

Security: Recorded Trust Deed / Promissory Note.

Loan Rate and Term: 0% interest deferred loan payable upon sale, transfer of title or refinancing of any loan in prior position to that of the City; when the loan recipients no longer occupy the
property; or when the loan recipients become owners of
any other real property.

Repeat Assistance: Repeat assistance may be allowed for loans once every five (5) years provided that the balance of all outstanding deferred loans does not exceed $30,000, subject to the
availability of PLHA funds.

Equity The total indebtedness or all recorded liens may not exceed ninety-five (95%) of the fair market value of the home after rehabilitation.

Special Requirements: Home Improvement Program loans must be recorded against the property in first or second position only.

Exceptions will be reviewed on a case-by-case basis.

Eligible Improvements: Interior modifications necessary to provide reasonable accommodations for persons with disabilities; electrical, plumbing and mechanical system repairs and
replacement that are not the responsibility of the HOA; window replacements; energy-efficient fixtures and
system upgrades; and other interior improvements that
are not the responsibility of the HOA. See Section VI for a more detailed explanation of eligible and noneligible improvements, as well as the order of priority for eligible improvements.

IV. APPLICATION SUBMITTAL PROCESS
A. Pre-Screening
Prior to preparing a Home Improvement Program deferred loan application, prospective applicants are encouraged to first contact the City of Diamond Bar Community Development Department to determine, to the extent possible, if they meet basic eligibility requirements.

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Home Improvement Program Policies | July 18, 2023 Page 5 of 16 B. Interest List
The City will maintain a list of potential applicants interested in participation in the HIP program. The interest list order shall be based on the chronological date and time of initial contact, and shall be served on a first-come, first-served basis.

C. Application
The Home Improvement Program Administrator will contact potential applicants on the interest list in order as funding becomes available. After verifying that the homeowner still meets the basic eligibility requirements, the HIP Program Administrator will forward an application. The application will include the following materials:

1. General Qualifications and Conditions Form

2. Items Required for Submission List

3. Program Application

4. Lead Based Paint Pamphlet

5. Lead Based Paint Notification

6. Hazardous Materials Inspection Notice

7. Asbestos in Your Home Pamphlet

8. Confirmation of Receipt (Hazardous Materials Transmittals) Completed applications and required supporting documents should be submitted directly to the Community Development Department located at Diamond Bar City Hall.

Applications will be reviewed in the order in which they are received.

V. ELIGIBILITY CRITERIA
A. Applicant Eligibility Requirements
For CDBG-funded loans, applicant eligibility is established by Federal Law set forth in the Code of Federal Regulations 24CFR Part 5 and as interpreted by LACDA. For PLHA-funded loans, applicant eligibility is established by the California Department of Housing and Community Development (HCD) PLHA Guidelines. The City will require documentation of both household size and household income information in order to determine applicant eligibility.

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Home Improvement Program Policies | July 18, 2023 Page 6 of 16 Eligible Activity pursuant to HCD’s 2019 PLHA Final Guidelines.1 c. Definition of Household: For the purposes of determining Program eligibility, “household” means a person or persons occupying a dwelling unit as the principal place of residence.
d. Definition of Annual Income: For the purposes of determining Program eligibility, annual income shall be defined as the total household income received from all sources by an individual or family, including the head of household, spouse, and each additional adult member of the household who has earned or received income during a 12-month period prior to their application for services.

2. Income Subject to Review
Income determinations are subject to the submission and verification requirements of the City of Diamond Bar, and are subject to changes based on the programmatic requirements of LACDA and the CDBG Program.

The City of Diamond Bar will make the final decision in situations where the classification of income is disputed.

Failure to disclose or adequately document all sources of income will result in an automatic denial of the application for assistance.

Reported income must include, but not be limited to, the following:
a. Personal Service Income, including the full amount of all earnings, before any payroll deductions of wages and/or salaries, overtime pay, commissions, fees, tips, bonuses, and other compensation for personal services.
b. Business or Professional Service Income, including net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness must not be used as deductions in determining net income. Any withdrawal of cash or assets from the operation of a business or profession will be considered income, except to the extent the withdrawal is a reimbursement of cash or assets invested in the operation by the family. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight-line depreciation as provided in Internal Revenue Service regulations.
c. Interest and Dividend Income, including interest, dividends, and other net income of any kind from real or personal property. Expenditures for amortization of capital indebtedness shall not be used as a deduction in determining net income. An allowance for depreciation is permitted only as authorized in Section 2, above. Any withdrawal of cash or assets from an investment will be included as part of net income, except to the extent 1 Section 301(a)(2) of HCD’s 2019 PLHA Final Guidelines states that Eligible Activities include “(t)he predevelopment, development, acquisition, rehabilitation, and preservation of Affordable rental and ownership housing…that meets the needs of a growing workforce earning up to 120 percent of AMI, or 150 percent of AMI in high-cost areas.”

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Home Improvement Program Policies | July 18, 2023 Page 7 of 16 the withdrawal is reimbursement of cash or assets invested by the family.

Where the family has net family assets in excess of $5,000, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on the current passbook savings rates as determined by HUD.
d. Payments in Lieu of Earnings, such as unemployment and disability compensation, worker's compensation and severance pay (except for lump-sum payments described in Income Exempt from Review - Section 2, [Income Exempt from Review] below).
e. Periodic Payments, including the full amount of periodic payments received from social security, annuities, insurance policies, retirement, pensions, disability or death benefits and other similar types of periodic receipts, including a lump-sum payment for the delayed start of a periodic payment. f. Periodic and Determinable Allowance, such as alimony and child support payments, and regular contributions of gifts received from persons not residing in the dwelling.
g. Welfare Assistance, including the amount of welfare allowance or grant, but excluding any funds specifically designed for shelter and utilities that are subject to adjustment by the welfare assistance agency (in accordance with the actual cost of shelter and utilities).
h. Armed Forces Income, including all regular pay, special pay and allowances of a member of the Armed Forces (but exempting armed forces special pay described in Income Exempt from Review - Section 6, [Income Exempt from Review] below).
i. Tax Credits, including any earned income tax credit to the extent it exceeds income tax liability.

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Home Improvement Program Policies | July 18, 2023 Page 8 of 16 a veteran for tuition fees, books, equipment, materials, supplies, transportation and miscellaneous personal expenses of the student. Any amount of such scholarship or payment to a veteran not used for the above purposes that is available for subsistence is to be included in income. f. Armed Forces (Special Pay), special pay to a family member serving in the Armed Forces, exposed to hostile fire.
g. Government Program Payments, including the following:
(1) HUD Funded: Amounts received under training programs funded by HUD.
(2) Disabled Person Income: Amounts received by a disabled person that are disregarded for a limited time for purposes of Supplemental Security Income (SSI) eligibility and benefits, because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS). (3) Public Program Assistance: Amount received by a participant in other publicly-assisted programs, which are specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and made solely to allow participation in a specific program.
(4) Federal Statue Exempt Income: Amounts specifically excluded by any other Federal statue from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under the U.S. Housing Act of 1937.
h. Temporary Income, considered temporary, nonrecurring or sporadic in nature (including gifts).

4. Ownership of Real Property other than Primary Residence Ownership of rental property or other real estate holdings other than the owner’s primary residence is prohibited and will result in the rejection of an application for assistance.

B. Property Eligibility Requirements
In accordance with the requirements of Section IV.A. (Applicant Eligibility Requirements) above, following determination of homeowner eligibility, the owner must demonstrate property eligibility. To be eligible to receive program assistance, real property will be evaluated and must meet each of the requirements set forth below:

1. Location and Type of Property
The property must be located within the corporate boundaries of the City of Diamond Bar, and consist of one of the following two development types:
a. A legally-recorded parcel with one detached single-family dwelling. b. A condominium unit located within a common-interest subdivision.

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2. Condition
a. Single-Family Detached dwellings: The property must be in need of repairs to (i) correct existing nonconforming development standards, (ii) correct existing nonconforming local and/or state code requirements, (iii) correct existing local and/or state code violations, (iv) protect the structural integrity of the dwelling, (v) promote neighborhood preservation and safety, (vi) refurbish exterior and/or eligible interior improvements (necessary for health and safety), or (vii) aid the mobility of the physically disabled and/or elderly.

All repairs must qualify as eligible repairs as defined in Section V and as may be approved by LACDA.
b. Condominiums: Eligible repairs to the dwelling unit, including its attached garage, are limited to those that fall within the sole maintenance responsibilities of its owner, and are necessary for health, safety and decent living conditions. Repairs or maintenance to portions of the structure that are the responsibility of the HOA (e.g., roofing, stucco, exterior stairs, centralized water heating, etc.) do not qualify for CHIP funding.

Note: Existing City code violations that represent health and safety or hazardous conditions may be resolved using Home Improvement Program (HIP) funds. Any noneligible code violation must be resolved by the homeowner.

3. Ownership and Owner-Occupancy Requirements
The income eligible homeowner(s) must hold record fee simple title to the property, and must occupy the property as a principal residence. The City will not approve home improvement projects for homes listed for sale.

4. Length of Ownership
The income eligible homeowner(s) must have owned the eligible property for a minimum of one (1) year at the time of application.

5. Equity
The total indebtedness of all recorded liens, including the City’s Home Improvement Program loan, may not exceed ninety-five percent (95%) of the fair market value of the home after rehabilitation. For the purposes of this calculation, encumbrances must include the proposed principal amount of the Program loan requested by the eligible owner.

6. Hazard Insurance
All properties must be insured with an all-risk property insurance policy in an amount equal to the full replacement value of all structures located on the property. Furthermore, all properties located within the 100-year floodplain that receive assistance under the Program must maintain flood insurance in the amount of the improvements for the term of the loan. For condominiums, this requirement may be satisfied by a combination of individual and HOA insurance policies.

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7. Property/Income Tax Delinquency or Liens
All property taxes and assessments must be paid current, and the property must not have any recorded property or income tax liens.

8. Outstanding Judgments and Obligations
All outstanding mortgages recorded against the subject property must be current. Furthermore, outstanding tax liens, mechanics liens and/or judgments recorded against the property to be rehabilitated must be paid prior to participating in the program unless waived by the Home Improvement Screening Committee.

9. HOA Approval
For improvements requiring HOA approval (such as window and door replacements), the homeowner shall apply for and obtain such approval, and provide the City with proof of approval prior to Screening Committee review.

VI. ELIGIBLE & NONELIGIBLE IMPROVEMENTS
A. Order of Priorities for Eligible Improvements
The following order of priorities will apply to all eligible improvements made using the City’s Home Improvement Program funds. All improvements listed within any given priority category must be addressed prior to the inclusion of items identified as having a lower priority.

1. Mandatory Improvements: Mandatory improvements including those needed to alleviate conditions that present an immediate threat to the health and safety of the property’s occupants and those needed to correct existing hazardous building, zoning and public nuisance code violations.

2. Exterior Improvements: Improvements needed to repair or replace hazardous, broken, damaged and/or deteriorated elements of the main dwelling.

3. Lead Based Paint Improvements: Lead based paint improvements as required by the U.S. Department of Housing and Urban Development.

B. Eligible Improvements
All eligible improvements must be physically located on the subject property or be permanently attached to the subject dwelling unit. Following an inspection of the subject property in accordance with Program requirements, the City’s Screening Committee must approve: 1) applicant eligibility; and 2) the scope, type and nature of the proposed improvements. All eligible rehabilitation work must be accomplished by qualified, licensed, and insured contractors selected in accordance with Program Implementation Procedures.

The City’s Home Improvement Program is designed to provide for the repair, and if necessary, the replacement of hazardous, damaged, deteriorated or failing items

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1. Abatement of Code Violations: All work including but not limited to demolition, construction, rehabilitation, replacement (subject to program restrictions), and installation needed to abate hazardous violations of the City codes.

2. Accessibility Modifications: All modifications, alterations, or additions necessary to facilitate access and use of the dwelling by disabled persons are permitted. These may include the installation of handicap ramps, grab bars, and accessible shower enclosures; the modification of doorways, hallways, countertop elevations; and other adaptive measures.

3. Deadbolt Locks: Installation of single cylinder deadbolt locks is required on all entry doors.

4. Doors/Windows/Screens: Repair and replacement of worn or damaged exterior doors, windows, or screens is permitted with those of similar type and/or quality. Enlargement of door/window openings is permitted only where the existing door/window area is non-compliant with current building codes, and only to the extent needed to achieve building code compliance.

5. Electrical: Repair and upgrading of electrical system, if required by the current adopted Electrical Code, including service panels, wiring, outlets, and switches.

6. Energy Conservation: Installation or replacement of insulation, weather stripping, water heater, and attic ventilators. Installation of energy efficient doors and windows is allowable provided that the conditions outlined under Doors/Windows are met. Other energy conservation measures or equipment as may be approved by the LACDA may be installed.

7. Garage Doors: The repair or replacement of garage doors, including the replacement of inoperable garage door openers and broken springs is eligible, provided that the repair is incidental to the overall cost of rehabilitation to the property.

8. HVAC Systems: Repair or replacement of failed, failing, damaged or inoperative existing integral HVAC system components including furnaces, air conditioning compressors, forced air units, heat pumps, ducts and vents is permitted. The installation of new air conditioning equipment is not permitted except in cases where medically necessary as prescribed by a doctor. The installation or repair of window air conditioners is not permitted.

9. Rear or Side-Yard Slope Landscaping (as a hazardous soil erosion mitigation measure): The replacement of dead sod, trees, shrubs and ground cover (other than sod) is permitted on rear and side-yard slopes having an

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10. Overgrown/Dead Vegetation: Only the trimming of overgrown vegetation and the removal of dead vegetation that is documented as a hazardous condition or an impediment to the rehabilitation activity is permitted. Dead vegetation, other than sod, that is removed may not be replaced.

11. Painting (exterior): Exterior painting is eligible and must be undertaken if the current condition represents a violation of adopted Codes as determined by the City. All painting must comply with the Lead Based Paint requirements of the U.S. Department of Housing and Urban Development.

12. Termite/Pest Control: Eradication of insect infestations and repairs to elements of the dwelling damaged by insect infestation is permitted.

13. Plastering, siding, and stucco: Repairs (e.g. patching, filling or localized replacement) to damaged plaster, stucco or siding is permitted.

14. Plumbing/Sewer Pipes and Fixtures: Repair or replacement of leaking or damaged water/sewer pipes and fixtures (including toilets, bathtubs, shower enclosures, faucets and garbage disposals) is permitted only to the extent necessary to address health and safety considerations.

15. Property Clean-up: The removal of overgrown vegetation, trash and debris located on the subject property is permitted only when necessary to eliminate documented hazardous or health and safety conditions, or when incidentally required for the performance of other rehabilitation activities. Removal of excessive debris and trash from the inside of the home is permitted only where the homeowner(s) is/are physically incapable of completing such work and when necessary to eliminate hazardous conditions. Appropriate documentation of these circumstances must be maintained in the project file. Applicants shall sell, donate, or arrange for removal by a licensed and bonded salvage company, any inoperative vehicle that is not stored within an enclosed garage.

16. Roofing: Complete repair or replacement of deteriorated or damaged roofing of the main dwelling is permitted. Materials of the same type and quality as the existing roof must be used (i.e. composition shingle must be replaced by composition shingle) except where 1) different roofing materials are needed to match the type and quality of roofs found on a majority of homes in the immediate neighborhood, or 2) if the existing roof is made of wood shake a light weight tile roof may be installed to meet code requirements. Roof replacements that require an engineering survey or engineered structural modifications are not permitted. The repair or replacement of patio roofs is not permitted.

17. Smoke Detectors: Smoke detectors must be installed throughout the home as required by adopted building codes.

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18. Ground-Fault Circuit-Interrupter Protection (GFCI): GFCIs must be installed in all locations as required under the California Electrical Code.

19. Structural Repairs/Modifications: Structural repairs/modifications are permitted to the extent that such repairs/modifications 1) correct existing structural deficiencies as defined by the California Building Code; and/or 2) provide accessibility for disabled persons.

20. Water Heaters: Repair or replacement of deteriorated or inoperable water heaters including the repair or installation of enclosures, insulation blankets, earthquake strapping and/or pressure release valves is permitted.

21. Lead Based Paint (LBP) Testing and Treatment/Abatement: The performance of required LBP testing and clearance, and the treatment and/or abatement of lead based paint are permitted.

22. Asbestos Testing and Abatement: The performance of required Asbestos testing, and the abatement of asbestos hazards is permitted.

C. Noneligible Improvements

1. Common-Interest Portions of Buildings: Structural, mechanical, electrical and plumbing systems, including those listed in Section V.B. above, that fall within the repair and maintenance responsibilities of the HOA are noneligible for funding.

2. Accessory Buildings and Structures: Rehabilitation to areas not considered in the square footage of a housing unit is generally considered an noneligible HIP rehabilitation activity. Rehabilitation of accessory buildings and structures including but not limited to: patios, enclosed patios, decks, porches, sheds, greenhouses, barbecue pits, outdoor fireplaces, bathhouses, swimming pools, saunas, hot tubs, and similar buildings or structures is an noneligible activity.

However, if a hazardous condition exists in one of the aforementioned areas, the City may use HIP funds to demolish the structure. Such hazardous condition must be remedied prior to the commencement of any eligible rehabilitation work.

3. Non-Permanent Attachments: The removal, replacement or rehabilitation of valances, cornice boards, drapes, blinds, and indoor or outdoor furnishings is a noneligible activity;

4. Unauthorized Improvements: Any rehabilitation activity not approved by the City is noneligible.

VII. ELIGIBLE & NONELIGIBLE COSTS
A. Eligible Costs. Home Improvement Program funds may only be used for the actual reasonable cost of materials and services necessary to complete all rehabilitation work approved by the City as set forth in the approved Scope of Work, and additional costs, as follows:

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1. Permits: Building permits and inspection and other related fees necessary for the completion of the approved rehabilitation work;

2. Processing Costs: Costs of loan processing, including without limitation, credit reports, property appraisals, and if necessary, preliminary title reports and recording fees.

B. Noneligible Costs. Specific costs not eligible for payment under the Home Improvement Program include, but are not limited to the following:

1. Luxury Materials: Materials, fixtures, or equipment of a type or quality that exceeds that customarily used in properties of the same general use as the property to be rehabilitated;

2. Furnishings: Purchase, installation or repair of interior or exterior home furnishings;

3. Personal Labor Costs: Compensation/reimbursement of owner’s personal labor;

4. Unauthorized Costs: Compensation/reimbursement for noneligible improvements or any work not included and authorized in the City approved Contractor Agreement or subsequent City approved change orders.

5. Prior Work Costs: Any repair work not listed as eligible in this Program and any work contractually entered into prior to approval by the City.

VIII. TERMS AND CONDITIONS OF PROGRAM ASSISTANCE
A. Maintenance/Occupancy Requirements
Assisted properties shall be maintained in compliance with all City of Diamond Bar Municipal Codes and ordinances. Assisted properties shall maintain occupancy not to exceed the maximum occupancy limits as established by HUD. Property owners shall not permit criminal activities to occur on the property; permit property improvements to suffer deterioration or decline; or maintain, cause or permit to be maintained, any public nuisance on the subject property. Failure to adhere to these terms and conditions shall be grounds for the City to demand immediate repayment of the HIP loan.

B. Hazard Insurance
Property owners receiving HIP Program loan assistance shall maintain, throughout the term of the loan, an all-risk property insurance policy, including flood insurance if the property is located in a flood zone, insuring the property in an amount equal to the full replacement value of the structures on the property. The insurance policy or policies shall name the City of Diamond Bar as an additionally insured/loss payee.

Documentation shall be provided in a manner approved by the City Attorney.

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D. Compliance with Program Policies and Procedures
Throughout the applicable term of Program assistance, Program participants shall comply with all Program requirements and procedures as set forth in these Policies and Procedures and as required by the City and as set forth in Grant and Loan agreements and related attachments.

IX. GUIDELINE & COST AMENDMENT PROCEDURES
A. Amendment - Program Guidelines. The Diamond Bar City Council must approve all amendments to these Home Improvement Program Guidelines.

B. Emergency Project Funding Modification.

1. Health & Safety Discoveries: After the rehabilitation construction work has commenced and the contractor discovers health and safety problems, as defined by the California Building Codes, that were not included in the initial Scope of Work the following procedures shall be implemented:
a. The property owner may request that the Deferred Loan be increased to cover the cost of the correction of health and safety issues only; and b. The contractor shall prepare a written Change Order Request specifying the scope, nature and cost of the work necessary to correct the unforeseen health and safety issues. In no event shall the Change Order Request be of an amount that would cause the total Deferred Loan to exceed the maximum amounts set forth in Sections II and III.
c. The written Change Order Request shall be submitted to the property owner for review and approval.
d. Upon receiving property owner approval, the City Project Coordinator shall review the cost reasonableness of the proposed changes. The City Project Coordinator must review the original Scope of Work to determine if it can be modified in order to provide the funds necessary to cover the cost of the remediation of the newly discovered health and safety issues. If costs are deemed reasonable and if sufficient funding can be provided via modification to existing contracted improvements, a formal contract change order will be prepared and the required signatures of the contractor and property owner shall be obtained.
e. If in the judgment of the City Project Coordinator the newly identified health and safety issues are critical to maintaining the habitability of the subject residence and the original Scope of Work cannot be adequately modified to make available the funds needed to cover the cost of the expanded scope of work, a recommendation to increase the amount of the Deferred Loan may be submitted to the City’s Home Improvement Screening Committee for consideration. The total Deferred Loan amount, with the

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2. Screening Committee Review & Recommendation: The City of Diamond Bar Home Improvement Screening Committee shall review all facts relating to the property owner’s request for an increase in the amount of the Deferred Loan. If in the judgment of the Screening Committee an increase in the Deferred Loan is warranted, it may recommend to the City Manager that the maximum amount of the Deferred Loan be increased by an amount not to exceed $5,000 provided that it finds that all of the following circumstances apply:
a. Additional work is essential to return the subject rehabilitated residence to a habitable condition and the original Scope of Work cannot be modified to provide the funds needed to pay for the cost of the newly identified health and safety issues; and
b. The property owner has or is willing to execute the necessary documents to increase the amount of the Deferred Loan; and
c. The required additional work is the result of unforeseen circumstances not apparent during the preparation of the initial Scope of Work; and d. The required additional work is required to address health and safety issues; and
e. The property owner has provided written acknowledgement that he or she shall assume the responsibility to pay for the cost of work that exceeds the amount of rehabilitation assistance provided by the City.

X. AUTHORITY TO ADMINISTER
The City Manager or their designee shall have the authority to administer this Home Improvement Program inclusive of the establishment, maintenance and modification of appropriate implementation procedures. All program legal documents shall be approved as to form by the City Attorney prior to use.

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PROGRAM

PROGRAM POLICIES

CITY OF DIAMOND BAR

DEPARTMENT OF COMMUNITY

DEVELOPMENT
21825 EAST COPLEY DRIVE
DIAMOND BAR, CA 91765

REVISED DRAFT
DECEMBER 29, 2008

City of Diamond Bar
Community Development Department
21810 Copley Drive
Diamond Bar, CA 91765

Program
Policies
Home Improvement Program
ADOPTED BY THE CITY COUNCIL:

Resolution No. 2023-XX
____ __, 2023
ADOPTED BY THE CITY COUNCIL:

JULY 19, 2016

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Home Improvement Program Policies | July 19, 201618, 2023 Page 1 of 17 I. INTRODUCTION AND OVERVIEW OF PROGRAM
A. Purpose and Goal
The purpose of the City of Diamond Bar Home Improvement Program (HIP) is to preserve and enhance single family residential neighborhoods throughout the City by providing interest-free loans to eligible owners of single family detached and attached dwellings for the following purposes: the preservation of safe, decent and sanitary housing; to correct hazardous structural conditions; to make reasonable accommodations for persons with disabilities; to improve the overall exterior appearance of the home; to eliminate an appearance of blight; improve energy efficiency; and to correct exterior code violations.

B. Objective
The HIP encompasses two loan categories:

1. The Single-Family Home Improvement Program provides(SHIP) offers interestfree, deferred loans to assist income-eligible low- and moderate- income residential, owner/-occupants in maintainingof detached, single-family homes, where the City’s existing residential neighborhoods through home rehabilitation owner is responsible for the maintenance of both the exterior and interior of the structure.

C. Program

B. Program Objectives
Interest-free, deferred loans may be provided to eligible low- and moderate- income households of owner-occupied single-family detached homesresidences to cover the cost of housing repairs in accordance with the criteria outlined within this program.

LoansA loan shall be repaid in full upon the sale or transfer of such propertiesthe home; when the loan recipients no longer occupy such propertiesthe property; when the property is refinanced; or when the loan recipients becomesbecome owners of any other real property other than such properties.

D.C. D. Source of Funds
The source of funds
Funds for the Home Improvement Program is a Community Development Block Grantare administered by the Community Development Commission (CDC) of the County of Los Angeles County Development Authority (LACDA) through a subrecipient agreement with the City of Diamond Bar. The CDCLACDA acts as an agent for, and receives HIP funding from the following sources:

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1. Community Development Block Grant (CDBG) funds made available by, the U.S. Department of Housing and Urban Development (HUD). These funds are specifically targeted to benefit low- and moderate- income households and eliminate slums and blight.earning no more than 80% of the Area Median Income (AMI).

The City of Diamond Bar desires to make these funds available to qualified low- and moderate- income residents. The City is obligated to follow and fulfill the terms and conditions of its agreement with the CDC, established CDC policies and procedures and Federal and local rules and regulations.

This document establishes City Council policy and procedures for the Home Improvement Program (HIP).

2. Permanent Local Housing Allocation (PLHA) funds collected through State Property Transfer Fees. These funds may be used to benefit households earning up to 150% of AMI.

II. DEFERRED LOAN PROGRAM
D. Denied Applications
Applicants who are denied authorization to participate in the City of Diamond Bar’s Home Improvement Program for any reason other than failure to submit a complete application may not reapply for assistance within the following two (2) years after the date of the denial of the application.

II. SINGLE-FAMILY HOME IMPROVEMENT LOANS
Eligible homeowners may utilize assistance under the deferred loan program. Repeat assistance will be allowed for loans once every five (5) years provided that the balance of all outstanding loans maydoes not exceed $30,000.the amounts specified below. The City will offer the following home improvement programs to assist low- and moderate-income households with necessary improvements to their residences. Participation in the SingleFamily Home Improvement Program is subject to the additional requirements described in Sections IIIV through VIVII of these Program Guidelines.

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Home Improvement Program Policies | July 19, 201618, 2023 Page 3 of 17 TargetHousehold Income GroupLimit: 80% or 150% of area median household incomeAMI, depending on funding source (see Section I.c above).

Minimum Loan Amount: $10,000
Maximum Loan Amount: $2030,000 (inclusive of all fees), including hazardous material abatement).

Eligible Properties: Owner-occupied single-family detached residences throughout the City.

Security: Recorded Trust Deed / Promissory Note.

Fees: All Fees associated with the loan such as PIRT Policy and recordation fees mayshall be added to loan principal. The combined total of the loan and fee amounts shall not
exceed $20,000the Maximum Loan Amount.

Equity The total indebtedness or all recorded liens may not exceed ninety-five (95%) of the fair market value of the home after rehabilitation.

Special Requirements: Home Improvement Program loans must be recorded against the property in first or second position only.

Exceptions will be reviewed on a case by case basis.

Eligible Improvements: Correction of hazardous structural conditions; modifications necessary to provide reasonable
accommodations for persons with disabilities;
improvements to the overall exterior appearance of the
home; elimination of an appearance of blight; correction of exterior code violations; energy-efficient fixtures and system upgrades; and other eligible exterior and interior improvements. See Section V for a more detailed
explanation of eligible and ineligiblenoneligible
improvements, as well as the order of priority for eligible improvements.

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Home Improvement Program Policies | July 19, 201618, 2023 Page 4 of 17 E.B. Denied Applications
Applicants who are denied authorization to participate in the City of Diamond Bar’s Home Improvement Program for any reason other than failure to submit a complete application may not reapply for assistance within the following two (2) years after the date of the denial of the application.

III. CONDOMINIUM HOME IMPROVEMENT LOANS
Eligible condominium owners may utilize assistance under the deferred loan program.

Participation in the Condominium Home Improvement Program is subject to the additional requirements described in Sections IV through VII of these Program Guidelines.

Household Income Limit: 150% of area median household income.

Minimum Loan Amount: $10,000
Maximum Loan Amount: $20,000 (inclusive of all fees, including hazardous material abatement).

Eligible Properties: Owner-occupied condominium residences throughout the City.

Security: Recorded Trust Deed / Promissory Note.

Loan Rate and Term: 0% interest deferred loan payable upon sale, transfer of title or refinancing of any loan in prior position to that of the City; when the loan recipients no longer occupy the
property; or when the loan recipients become owners of
any other real property.

Equity The total indebtedness or all recorded liens may not exceed ninety-five (95%) of the fair market value of the home after rehabilitation.

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Home Improvement Program Policies | July 19, 201618, 2023 Page 5 of 17 Special Requirements: Home Improvement Program loans must be recorded against the property in first or second position only.

Exceptions will be reviewed on a case-by-case basis.

IV. APPLICATION SUBMITTAL PROCESS
A. Pre-Screening
Prior to preparing a Home Improvement Program Deferred Loandeferred loan application, prospective applicants are encouraged to first contact the City of Diamond Bar Community Development Department to determine, to the extent possible, if they meet basic eligibility requirements.

B. Interest List
The City will maintain a list of potential applicants interested in participation in the HIP program. The interest list order shall be based on the chronological date and time of initial contact, and shall be served on a first-come, first-served basis.

C. HIP Application
The Home Improvement Program Administrator will contact potential applicants on the interest list in order as funding becomes available. After verifying that the homeowner still meets the basic eligibility requirements, the HIP Program Administrator will forward an HIP application. The application will include the following materials:

1. General Qualifications and Conditions Form

2. Items Required for Submission List

3. Program Application

4. Lead Based Paint Pamphlet

5. Lead Based Paint Notification

6. Hazardous Materials Inspection Notice

7. Asbestos in Your Home Pamphlet

Applications will be reviewed in the order in which they are received.

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Home Improvement Program Policies | July 19, 201618, 2023 Page 6 of 17 IVV. ELIGIBILITY CRITERIA
A. Applicant Eligibility Requirements
ApplicantFor CDBG-funded loans, applicant eligibility is established by Federal Law set forth in the Code of Federal Regulations 24CFR Part 5 and as interpreted by the Los Angeles County Community Development Commission (CDC).

LACDA. For PLHA-funded loans, applicant eligibility is established1. Household Income
Adjusted Gross annual household income may not exceed 80% of the Los Angeles County median income adjusted for family size as provided by the U.S.California Department of Housing and UrbanCommunity Development (HUD). HCD) PLHA Guidelines. The City will require documentation of both household size and household income information in order to determine applicant eligibility.

1. Household Income
a. CDBG-Funded Loans: Adjusted gross annual household income may not exceed 80% of Area Median Income (AMI) median income adjusted for family size as provided by HUD.
b. PLHA-Funded Loans: Adjusted gross annual household income may not exceed 150% of AMI adjusted for family size as provided by HUD. This income limit is based on HCD’s determination that the HIP promotes the rehabilitation and preservation of ownership housing’s classification as an Eligible Activity pursuant to HCD’s 2019 PLHA Final Guidelines.1 a.c.Definition of Household: For the purposes of determining Program eligibility, “household” means a person or persons occupying a dwelling unit as the principal place of residence.
b.d. Definition of Annual Income: For the purposes of determining Program eligibility, annual income shall be defined as the total household income received from all sources by an individual or family, including the head of household, spouse, and each additional adult member of the household who has earned or received income during a 12-month period prior to their application for services.

INCOME ELIGIBLE FOR REVIEW

2. Income Subject to Review
1 Section 301(a)(2) of HCD’s 2019 PLHA Final Guidelines states that Eligible Activities include “(t)he predevelopment, development, acquisition, rehabilitation, and preservation of Affordable rental and ownership housing…that meets the needs of a growing workforce earning up to 120 percent of AMI, or 150 percent of AMI in high-cost areas.”

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Home Improvement Program Policies | July 19, 201618, 2023 Page 7 of 17 Income determinations are subject to the submission and verification requirements of the City of Diamond Bar, and are subject to changes based on the programmatic requirements of LACDA and the CDBG Program.

The City of Diamond Bar will make the final decision in situations where the classification of income is disputed.

Failure to disclose or adequately document all sources of income will result in an automatic denial of the application for assistance.

Reviewed
Reported income must include, but not be limited to, the following:
a. Personal Service Income, including the full amount of all earnings, before any payroll deductions of wages and/or salaries, overtime pay, commissions, fees, tips, bonuses, and other compensation for personal services.
b. Business or Professional Service Income, including net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness must not be used as deductions in determining net income. Any withdrawal of cash or assets from the operation of a business or profession will be considered income, except to the extent the withdrawal is a reimbursement of cash or assets invested in the operation by the family. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight-line depreciation as provided in Internal Revenue Service regulations.
c.b.Interest and Dividend Income, including interest, dividends, and other net income of any kind from real or personal property. Expenditures for amortization of capital indebtedness shall not be used as a deduction in determining net income. An allowance for depreciation is permitted only as authorized in Section 2, above. Any withdrawal of cash or assets from an investment will be included as part of net income, except to the extent the withdrawal is reimbursement of cash or assets invested by the family.

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Home Improvement Program Policies | July 19, 201618, 2023 Page 8 of 17 f.e. Periodic and Determinable Allowance, such as alimony and child support payments, and regular contributions of gifts received from persons not residing in the dwelling.
g.f. Welfare Assistance, including the amount of welfare allowance or grant, but excluding any funds specifically designed for shelter and utilities that are subject to adjustment by the welfare assistance agency (in accordance with the actual cost of shelter and utilities).
h.g. Armed Forces Income, including all regular pay, special pay and allowances of a member of the Armed Forces (but exempting armed forces special pay described in Income Exempt from Review - Section 6, [Income Exempt from Review] below).
i.h. Tax Credits, including any earned income tax credit to the extent it exceeds income tax liability.

INCOME EXEMPT FROM REVIEW

3. Income Exempt from Review
The calculation of annual income shall not include the following:
a. Income from Children, including income from the employment of children (including foster children) under the age of 18 years, or payments received for the care of foster children.
b. Lump-Sum Payments, including additions to family assets, such as inheritances, insurance payments (e.g.., health and accident insurance, and worker's compensation), capital gains and settlement for personal or property losses (see Income Eligible for Review - Sections 4 and 5, [Income Eligible for Review] above, for income that should be included). c. Reimbursement for Medical Costs, including all payments received by the family that are specifically for or in reimbursement of medical expenses for any family member.
d. Live-in Aide Income, including the income of a live-in aide employed because of a medical condition of a family member.
e. Education Payments, including educational scholarships paid directly to the student or to the educational institution, and Government funds paid to a veteran for tuition fees, books, equipment, materials, supplies, transportation and miscellaneous personal expenses of the student. Any amount of such scholarship or payment to a veteran not used for the above purposes that is available for subsistence is to be included in income. f. Armed Forces (Special Pay), special pay to a family member serving in the Armed Forces, exposed to hostile fire.
g. Government Program Payments, including the following:
(1) a) HUD Funded: Amounts received under training programs funded by HUD.
(2) b) Disabled Person Income: Amounts received by a disabled person that are disregarded for a limited time for purposes of

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Home Improvement Program Policies | July 19, 201618, 2023 Page 9 of 17 Supplemental Security Income (SSI) eligibility and benefits, because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS).
(3) c) Public Program Assistance: Amount received by a
participant in other publicly-assisted programs, which are specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and made solely to allow participation in a specific program.
(4) d) Federal Statue Exempt Income: Amounts specifically excluded by any other Federal statue from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under the U.S. Housing Act of 1937.
h. Temporary Income, considered temporary, nonrecurring or sporadic in nature (including gifts).

Income determinations are subject to the submission and verification requirements of the City of Diamond Bar, and are subject to changes based on the programmatic requirements of the Los Angeles County Community Development Commission (CDC) and the Community Development Block Grant Program (CDBG).

The City of Diamond Bar will make the final decision in situations where the classification of income is disputed.

2.4. 2. Ownership of Real Property other than Primary Residence Ownership of rental property or other real estate holdings other than the owner’s primary residence is prohibited and will result in the rejection of an application for assistance.

B. Property Eligibility Requirements
In accordance with the requirements of Section III.(A) (HomeownerIV.A. (Applicant Eligibility Requirements) above, following determination of homeowner eligibility, the owner must demonstrate property eligibility. To be eligible to receive program assistance, real property will be evaluated and must meet each of the requirements set forth below:

1. Location and Type of Property
The property must be alocated within the corporate boundaries of the City of Diamond Bar, and consist of one of the following two development types:
a. A legally-recorded parcel with one detached single-family dwelling. a.b. A condominium unit located within the corporate boundary of the City of Diamond Bara common-interest subdivision.

2. Condition

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Home Improvement Program Policies | July 19, 201618, 2023 Page 10 of 17 a. Single-Family Detached dwellings: The property must be in need of repairs to (i) correct existing nonconforming development standards, (ii) correct existing nonconforming local and/or state code requirements, (iii) correct existing local and/or state code violations, (iv) protect the structural integrity of the dwelling, (v) promote neighborhood preservation and safety, (vi) refurbish exterior and/or eligible interior improvements (necessary for health and safety), or (vii) aid the mobility of the physically disabled and/or elderly.

All repairs must qualify as eligible repairs as defined in Section V and as may be approved by CDC. LACDA.
b. Condominiums: Eligible repairs to the dwelling unit, including its attached garage, are limited to those that fall within the sole maintenance responsibilities of its owner, and are necessary for health, safety and decent living conditions. Repairs or maintenance to portions of the structure that are the responsibility of the HOA (e.g., roofing, stucco, exterior stairs, centralized water heating, etc.) do not qualify for CHIP funding.

Note: Existing City code violations that represent health and safety or hazardous conditions may be resolved using Home Improvement Program (HIP) funds. Any non-eligiblenoneligible code violation must be resolved by the homeowner.

4. Length of Ownership
The income eligible homeowner(s) must have owned the eligible property for a minimum of one (1) year at the time of application.

7. Property/Income Tax Delinquency or Liens

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Home Improvement Program Policies | July 19, 201618, 2023 Page 11 of 17 All property taxes and assessments must be paid current, and the property must not have any recorded property or income tax liens.

9. VHOA Approval
For improvements requiring HOA approval (such as window and door replacements), the homeowner shall apply for and obtain such approval, and provide the City with proof of approval prior to Screening Committee review.

VI. ELIGIBLE & INELIGIBLENONELIGIBLE IMPROVEMENTS
A. Order of Priorities for Eligible Improvements
The following order of priorities will apply to all eligible improvements made using the City’s Home Improvement Program funds. All improvements listed within any given priority category must be addressed prior to the inclusion of items identified as having a lower priority.

2. Exterior Improvements: Improvements needed to repair or replace hazardous, broken, damaged and/or deteriorated elements of the main dwelling.

3. Lead Based Paint Improvements: Lead based paint improvements as required by the U.S. Department of Housing and Urban Development.

The City’s Home Improvement Program is designed to provide for the repair, and if necessary, the replacement of hazardous, damaged, deteriorated or failing items located on an eligible property. In the event that the replacement of damaged,

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Home Improvement Program Policies | July 19, 201618, 2023 Page 12 of 17 deteriorated or failing items is necessary, the replacement items shall be in-kind or like-priced material. Luxury quality items will not be used in making necessary repairs. The program is not designed to provide for the upgrade of single-family dwellings. Some eligible improvements are subject to material allowances. A description of all applicable cost allowances will be provided to the applicant if requested. A listing and description of all eligible improvements, including itemspecific restrictions (if applicable) is provided below:

3. Deadbolt Locks: Installation of single cylinder deadbolt locks is required on all entry doors.

5. Electrical: Repair and upgrading of electrical system, if required by the current adopted Electrical Code, including service panels, wiring, outlets, and switches.

Replacement of fixtures and installation of security lighting is eligible subject to a $40.00 per fixture material cost allowance.

9. Rear or Side-Yard Slope Landscaping (as a hazardous soil erosion mitigation measure): The replacement of dead sod, trees, shrubs and ground

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Home Improvement Program Policies | July 19, 201618, 2023 Page 13 of 17 cover (other than sod) is permitted on rear and side-yard slopes having an incline of at least 10:1. The subject yard areas must be adjacent to or visible from public rights-of-way. The scope and nature of the permitted slope landscaping will be only that necessary to eliminate the hazard and meet minimum municipal code requirements provided that the cost for such improvements does not exceed $500.

12. Termite/Pest Control: Eradication of insect infestations and repairs to elements of the dwelling damaged by insect infestation is permitted.

13. Plastering, siding, and stucco: Repairs (e.g. patching, filling or localized replacement) to damaged plaster, stucco or siding is permitted.

17. Smoke Detectors: Smoke detectors must be installed throughout the home as required by adopted building codes.

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18. Ground-Fault Circuit-Interrupter Protection (GFCI): GFCIs must be installed in all locations as required under the California Electrical Code.

21. Lead Based Paint (LBP) Testing and Treatment/Abatement: The performance of required LBP testing and clearance, and the treatment and/or abatement of lead based paint are permitted.

22. Asbestos Testing and Abatement: The performance of required Asbestos testing, and the abatement of asbestos hazards is permitted.

C. IneligibleNoneligible Improvements

1. 1. Common-Interest Portions of Buildings: Structural, mechanical, electrical and plumbing systems, including those listed in Section V.B. above, that fall within the repair and maintenance responsibilities of the HOA are noneligible for funding.

Accessory Buildings and Structures: Rehabilitation to areas not considered in the square footage of a housing unit is generally considered an ineligiblenoneligible HIP rehabilitation activity. Rehabilitation of accessory buildings and structures including but not limited to: patios, enclosed patios, decks, porches, sheds, greenhouses, barbecue pits, outdoor fireplaces, bathhouses, swimming pools, saunas, hot tubs, and similar buildings or structures is an ineligiblenoneligible activity.

1.2. However, if a hazardous condition exists in one of the aforementioned areas, the City may use HIP funds to demolish the structure. Such hazardous condition must be remedied prior to the commencement of any eligible rehabilitation work.

2.3. 2. Non-Permanent Attachments: The removal, replacement or rehabilitation of valances, cornice boards, drapes, blinds, and indoor or outdoor furnishings is an ineligiblea noneligible activity;

3.4. 3. Unauthorized Improvements: Any rehabilitation activity not approved by the City is ineligiblenoneligible.

VIVII. ELIGIBLE & INELIGIBLENONELIGIBLE COSTS

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Home Improvement Program Policies | July 19, 201618, 2023 Page 15 of 17 A. Eligible Costs. Home Improvement Program funds may only be used for the actual reasonable cost of materials and services necessary to complete all rehabilitation work approved by the City as set forth in the approved Scope of Work, and additional costs, as follows:

1. Permits: Building permits and inspection and other related fees necessary for the completion of the approved rehabilitation work;

2. Processing Costs: Costs of loan processing, including without limitation, credit reports, property appraisals, and if necessary, preliminary title reports and recording fees.

B. IneligibleNoneligible Costs. Specific costs not eligible for payment under the Home Improvement Program include, but are not limited to the following:

1. Luxury Materials: Materials, fixtures, or equipment of a type or quality that exceeds that customarily used in properties of the same general use as the property to be rehabilitated;

2. Furnishings: Purchase, installation or repair of interior or exterior home furnishings;

3. Personal Labor Costs: Compensation/reimbursement of owner’s personal labor;

4. Unauthorized Costs: Compensation/reimbursement for ineligiblenoneligible improvements or any work not included and authorized in the City approved Contractor Agreement or subsequent City approved change orders.

5. Prior Work Costs: Any repair work not listed as eligible in this Program and any work contractually entered into prior to approval by the City.

VIIVIII. TERMS AND CONDITIONS OF PROGRAM

ASSISTANCE
A. Maintenance/Occupancy Requirements
Assisted properties shall be maintained in compliance with all City of Diamond Bar Municipal Codes and ordinances. Assisted properties shall maintain occupancy not to exceed the maximum occupancy limits as established by the U.S. Department of Housing and Urban Development (HUD).HUD. Property owners shall not permit criminal activities to occur on the property; permit property improvements to suffer deterioration or decline; or maintain, cause or permit to be maintained, any public nuisance on the subject property. Failure to adhere to these terms and conditions shall be grounds for the City to demand immediate repayment of the HIP loan.

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Home Improvement Program Policies | July 19, 201618, 2023 Page 16 of 17 B. Hazard Insurance
Property owners receiving HIP Program loan assistance shall maintain, throughout the term of the loan, an all-risk property insurance policy, including flood insurance if the property is located in a flood zone, insuring the property in an amount equal to the full replacement value of the structures on the property. The insurance policy or policies shall name the City of Diamond Bar as an additionally insured/loss payee.

Documentation shall be provided in a manner approved by the City Attorney.

C. Nondiscrimination
There shall be no discrimination against or segregation of any person or group of persons in accordance with Executive Order 11246, Title VI of the Civil Rights Act of 1964, Section 109, Title I of the Housing and Community Development Act of 1974, Age Discrimination Act of 1975, and Section 504 of the Rehabilitation Act of 1973, in the selection of contractors or subcontractors to complete the rehabilitation work financed with Program assistance, or in the sale, leasing, transferring, use, occupancy, tenure, or enjoyment of assisted properties.

VIIIIX. GUIDELINE & COST AMENDMENT PROCEDURES
A. Amendment - Program Guidelines. The Diamond Bar City Council must approve all amendments to these Home Improvement Program Guidelines.

B. Emergency Project Funding Modification.

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Home Improvement Program Policies | July 19, 201618, 2023 Page 17 of 17 Coordinator must review the original Scope of Work to determine if it can be modified in order to provide the funds necessary to cover the cost of the remediation of the newly discovered health and safety issues. If costs are deemed reasonable and if sufficient funding can be provided via modification to existing contracted improvements, a formal contract change order will be prepared and the required signatures of the contractor and property owner shall be obtained.
e. If in the judgment of the City Project Coordinator the newly identified health and safety issues are critical to maintaining the habitability of the subject residence and the original Scope of Work cannot be adequately modified to make available the funds needed to cover the cost of the expanded scope of work, a recommendation to increase the amount of the Deferred Loan may be submitted to the City’s Home Improvement Screening Committee for consideration. The total Deferred Loan amount, with the Change Order added in, shall not exceed $20,000the maximum amounts set forth in Sections II and III.

2. Screening Committee Review & Recommendation: The City of Diamond Bar Home Improvement Screening Committee shall review all facts relating to the property owner’s request for an increase in the amount of the Deferred Loan. If in the judgment of the Screening Committee an increase in the Deferred Loan is warranted, it may recommend to the City Manager that the maximum amount of the Deferred Loan be increased by an amount not to exceed $5,000 provided that it finds that all of the following circumstances apply:
a. Additional, CDBG eligible work is essential to return the subject rehabilitated residence to a habitable condition and the original Scope of Work cannot be modified to provide the funds needed to pay for the cost of the newly identified health and safety issues; and
b. The property owner has or is willing to execute the necessary documents to increase the amount of the Deferred Loan; and
c. The required additional work is the result of unforeseen circumstances not apparent during the preparation of the initial Scope of Work; and d. The required additional work is required to address health and safety issues; and
e. The property owner has provided written acknowledgement that he or she shall assume the responsibility to pay for the cost of work that exceeds the amount of rehabilitation assistance provided by the City.

IXX. AUTHORITY TO ADMINISTER
The City Manager or his/hertheir designee shall have the authority to administer this Home Improvement Program inclusive of the establishment, maintenance and modification of appropriate implementation procedures. All program legal documents shall be approved as to form by the City Attorney prior to use.

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Diamond Bar City CouncilJuly 18, 2023

Diamond Bar City Council
July 18, 2023