Report to City Council
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TO: Mayor and City Council Acting in its Capacity as
President and Members of the Board of Directors of
the Moreno Valley Community Services District (CSD)
FROM: Dena Heald, Chief Financial Officer
AGENDA DATE: March 18, 2025
TITLE: ADOPT RESOLUTIONS TO INITIATE PROCEEDINGS
TO LEVY ASSESSMENTS IN FISCAL YEAR 2025/26
FOR MORENO VALLEY COMMUNITY SERVICES
DISTRICT LIGHTING MAINTENANCE DISTRICT NO.
2014-01 (RE PORT OF: FINANCIAL AND
MANAGEMENT SERVICES)
TITLE SUMMARY: Resolutions to Initiate Proceedings to Levy FY2025/26 Assessments for LMD 2014-01
Recommendation(s)
That the CSD:
1. Adopt Resolution No. CSD 2025 -__, a Resolution of the Board for the Moreno Valley Community Services District of the City of Moreno Valley, California, Initiating Proceedings to Levy Fiscal Year 2025/26 Assessments against Real Property in Moreno Valley Community Services District Lighting Maintenance District No. 2014 -
01. 2. Adopt Resolution No. CSD 2025 -__, a Resolution of the Board for the Moreno Valley Community Services District of the City of Moreno Valley, California, Approving a n Engineer's Report in Connection with Fiscal Year 2025/26 Assessments against Real Property in Moreno Valley Community Services District Lighting Maintenance District No. 2014-01.
3. Adopt Resolution No. CSD 2025 -__, a Resolution of the Board for the Mor eno Valley Community Services District of the City of Moreno Valley, California, Declaring its
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Intention to Levy Fiscal Year 2025/26 Assessments against Real Property in Moreno Valley Community Services District Lighting Maintenance District No. 2014.01.
SUMMARY
This report recommends adoption of three resolutions (Attachments 1, 2, and 3), which will initiate the annual process to continue the levy of special assessments on the fiscal year (FY) 2025/26 property tax roll for Moreno Valley Community Services District (CSD) Lighting Maintenance District (LMD) No. 2014-01. If adopted, the resolutions will 1) initiate proceedings to levy the annual assessments, 2) approve the assessment engineer’s report for the district, and 3) declare the intent to lev y assessments for FY 2025/26 and set May 20, 2025, the date of the Public Hearing. This is a routine process that is required each year.
The proposed assessments are a continuation of the real property assessments currently levied on the property tax roll. There are no increases proposed to the assessments other than an annual inflationary adjustment, provided the property owners previously approved such adjustment. Revenue received from the assessments partially funds the street lighting services provided by the district.
On February 25, 2025, the Finance Subcommittee granted staff the authority to conduct the annual inflationary adjustment review. If applicable, an adjustment will be applied to the proposed maximum assessment rates, if previously approved by the property owners.
DISCUSSION
On May 27, 2014, the CSD adopted its Resolution No. CSD 2014 -08, establishing LMD No. 2014 -01 (“District”) (formerly Zone B, residential street lighting) under the Landscaping and Lighting Act of 1972 (the “1972 Act”). Property owners of parcels within the District pay a special assessment as part of their annual property tax bill. Revenue received from the assessment funds a majority of the Special Benefit cost, as defined in the Assessment Engineer’s Report (“Report” ) (Attachment 4), to maintain, service, and operate street lights located within the District.
Parcels within the District are grouped into one of the three benefit zones based on the Special Benefit the property receives from the District improvements. Most of the parcels are located in either Zone 01 or Zone 02 which are separated for administrative purposes.
The parcels in Zone 01 are not subject to an annual inflationary adjustment, whereas the parcels in Zone 02 are subject to an annual inflationary a djustment based on the Consumer Price Index. The level of service is substantially identical in the two zones and the ratio of the number of lights to the number of parcels is substantially the same.
Zone 03 includes the 65 residential parcels in Tract 21 958 (immediately north of SR 60, east of Nason Street, west of Oliver Street). This tract was developed with a substantially lower street light density (i.e. street lights are spaced farther apart than those found in Zone 01 and Zone 02). As a result, the cost to provide the Special Benefit to the parcels in Tract 21958 is significantly less than the cost of providing the street lighting elsewhere
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in the District. Therefore, the assessment for parcels in Zone 03 is less than Zones 01 and 02.
The assessment cannot be levied on the property tax roll nor can an adjustment be made to the assessment unless the property owners previously approved and the CSD Board authorizes such adjustment. The 1972 Act requires the CSD Board to initiate annual proceedings and conduct a Public Hearing to receive public input on the proposed levy, prior to authorizing such levy each year. The 1972 Act also requires an annual review and evaluation of the District’s revenues and expenditures before assessments can continue to be levied on the property tax roll for the next fiscal year.
The Report includes a description of the improvements within the District, the projected annual expenses, the method of assessment apportionment for each lot or parcel within the District boundaries, and a diagram showing the parcels within the zones that make up the District. The Report also provides an analysis of the District’s annual financial status. It separates and apportions the cost of Special Benefit of the street lighting services to the benefiting properties. The budget in the Report identifies, by zones, the number of parcels within the zones that can be assessed and the proposed assessments to levy on the FY 2025/26 property tax bills.
Costs considered to be of General Ben efit, as defined in the Report, are not allowed to be assessed to properties and therefore are apportioned as a General Fund expense.
General Benefit refers to the benefit the general public receives from the street lighting improvements of the District. T he projected special assessment revenue and other District revenues (e.g. interest, property taxes, etc.) are not sufficient to cover the full cost of the Special Benefit provided to the respective parcels. Therefore, the Report also identifies a projected budget shortfall. The City’s FY 2025/26 proposed Operating Budget includes a General Fund contribution necessary to cover this shortfall and to continue operation of the street lighting program.
Adoption of the proposed resolutions will 1) initiate proce edings for the annual levy of assessments for LMD No. 2014 -01, 2) approve the Report, and 3) declare the intent to levy assessments on the FY 2025/26 property tax roll and set 6:00 p.m. on May 20, 2025, as the date of the Public Hearing. After the close of the Public Hearing and provided there is not a majority protest, the CSD Board can consider authorizing the recommended assessments to levy on the FY 2025/26 property tax bill of parcels within LMD No. 2014-
01. Conflict of Interest Analysis
Section 18702.2 of the Fair Political Practices Commission (FPPC) Regulations provides that if a Council Member has a financial interest in a parcel of land (other than a leasehold interest), the Council Member must recuse him or herself from voting on any proposal that would impose, repeal, or modify any taxes, fees, or assessments that apply to the parcel owned by the Council Member. However, there is an exception under Section 18703 of the FPPC Regulations, which provides that if a governmental decision's financial effect on a Council Member’s financial interest is indistinguishable from its effect on the
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public generally, then the Council Member is not disqualified from participating in the subject decision. In other words, if the Council Member can establish that a significant segment of the public is affected by the decision, and the effect on the Council Member’s financial interest is not unique compared to the effect on the public generally, then the subject Council Member may participate in the subject decision.
Section 18703 also includes a provision titled “Specific Rules for Special Circumstances,” which provides in part that there is no potential conflict of interest if the decision involves a proposal to set or adjust the amount of an assessment or tax for broadly provided public services that is applied equally, proportionally, or by the same percentage to the official's interest and all businesses, properties, or individuals subject to the assessment or tax.
This exception, however, does not apply if the d ecision would initially impose the assessment or tax, or determine the boundaries of a property or who is subject to the assessment or tax. Under this exception, a Council Member is only permitted to take part in setting or adjusting the amount of the asse ssment or tax, once the decisions to implement the assessment or tax, or determine which property or persons that will be subject to the assessment or tax have already been made.
Since the instant situation pertains to recommendations regarding whether to adjust the amounts of various assessments and taxes in a manner that will be the same across the board, which are associated with assessment and special tax districts that have already been established, any Council Member who owns property within any of t he subject districts who are subject to payment of the assessments and/or special taxes may vote on the assessments and/or special taxes, whether it is recommended that the amounts remain the same or be increased.
With respect to those Council Members who rent or lease real property within any of the subject districts, there is a different rule which applies that suggests that there may be a potential conflict of interest that requires such Council Members to recuse themselves from voting on the proposed a ssessments and/or special taxes, whether it is recommended that the amounts remain the same or be increased.
Section 18702.2 of the FPPC Regulations, titled “Materiality Standard: Financial Interest in Real Property” provides that it is reasonably foreseeable that a governmental decision on any real property in which a Council Member has a leasehold interest is material if the governmental decision will increase or decrease the potential rental value of the property.
In cases involving any proposed increas e in an assessment or special tax that must be paid by the landlord as the property owner, it is foreseeable that the landlord may pass - through any such increase to anyone leasing the property that is subject to the assessment or special tax.
In light of the foregoing, it is recommended that each Council Member who rents property within a particular district that is subject to the taxes and assessments listed in this staff report should recuse themselves from participating in any decision to increase any tax or assessment that may be passed through by the landlord and consequently affect the potential rental value of the property rented by the Council Member. On the other hand, for those who own property within the subject districts may vote on the proposed taxes
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and assessments since they will be applied equally across the board that presumably will not create a unique effect on the Council Member’s interest.
ALTERNATIVES
1. Adopt the proposed resolutions. Staff recommends this alternative as it is consistent with the 1972 Act and required to initiate the annual process to continue levying the annual assessments on the property tax roll to support the residential street lighting program for FY 2025/26.
2. Do not adopt the proposed resolutions. Staff does not recommend this alternative as it may prevent the City from levying the FY 2025/26 assessments and collecting funding to support the services of the District as requested by the property owners.
3. Do not adopt the proposed r esolutions but rather continue the item to a future Council meeting. Staff does not recommend this alternative as it may prevent the City from meeting Riverside County’s deadline to included assessments on the FY 2025/26 property tax roll.
FISCAL IMPACT
Property owners pay the special assessment as part of their annual property tax bill. The assessment, including an inflationary adjustment to the maximum assessment where applicable, has been approved through prior proceedings. Funds received for the benefit of the District are restricted and can only be used to fund the services of the District. The recommended assessment rates for FY 2025/26 are listed in the table below. Parcel specific details of the proposed maximum and applied assessment are included in the Report as attached and are also available from the City Clerk’s office and accessible from the City’s Website (www.moval.org/sd).
For FY 2025/26, the total projected expenditures for the District are $1,588,449.00. The property assessments are projected to generate $1,016,842.14 in revenue. Other revenue sources to the District (e.g. property tax revenues), and a contribution from the Zone # of EBUs1 Maximum Applied2 Maximum Applied2
Adjustment
to Maximum
Change in
Applied
Assessment
Revenue 5
Zone 013
32,799 $ 23.00 $ 23.00 $ 23.00 $ 23.00 0.00% $ - $ 754,384.36 Zone 024 7,192 $ 35.25 $ 35.25 $ 36.46 $ 36.46 3.42% $ 1.21 $ 262,067.78 Zone 033
65 $ 6.00 $ 6.00 $ 6.00 $ 6.00 0.00% $ - $ 390.00 Total Projected Assessment Revenue $ 1,016,842.14
LMD 2014-01 Assessment Rates
(Residential Street Lighting)
FY 2024/25 Proposed FY 2025/26
5 Total of proposed levy differs from calculation of EBUs and rate shown due to rounding. 1 Equivalent Benefit Units. An EBU is equivalent to a single-family residential (SFR) parcel. 2 Rounded down. Riverside County requires even numbered dollar amounts to be applied to the property tax roll. 3 Property owners have not approved an annual inflationary adjustment. 4 Property owner approved inflationary adjustment to max rate based on percentage change calculated for the prior year in the Los Angeles-Long Beach- Anaheim Regional Consumer Price Index, as published by the Department of Labor’s Bureau of Labor Statistics (index approved by property owners).
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General Fund are programmed to fund the difference between the projected expenditures and assessment revenue.
The City’s FY 2025/26 Proposed Operating Budget includes a total General Fund contribution of $ 375,406.86. This includes the required General Benefit cost and a General Fund subsidy.
Third party costs associated with the annual levy approval process and preparation of the Report for LMD No. 2014-01 are projected not to exceed $5,000.00. Third party services include a consultant assessment engineer, special legal counsel, and publication of a legal notice. These cost s are included in the City’s FY 2025/26 proposed Operating Budget for LMD No. 2014-01 (Fund 5012).
NOTIFICATION
Posting of the agenda.
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval:
Zara Terrell Dena Heald
Senior Management Analyst Chief Financial Officer
Concurred By:
Felicia London
Special Districts Division Manager
CITY COUNCIL GOALS
Community Image, Neighborhood Pride and Cleanliness: Promote a sense of community pr ide and foster an excellent image about our City by developing and executing programs which will result in quality development, enhanced neighborhood preservation efforts, including home rehabilitation and neighborhood restoration.
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
Type Description Amount
General Benefit Cost
As defined in the Report, represents costs which are not allowed to be assessed to properties and therefore, are apportioned to the General Fund.The General Benefit is the benefit the public receives from the public street lighting improvements in the District. 31,770.00$
Additional Agency
Contribution1
Funds the shortfall between revenues and expenditures to continue operating the street lighting program. 343,636.86$
375,406.86$
General Fund Costs
Total
1 Projected contribution included in proposed Operating Budget. The actual contribution may be lower than needed to cover expenses. In the event additional amounts are needed, a budget adjustment will be requested.
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5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
See the Discussion section above for details of how this action supports the City Council’s Strategic Priorities.
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Report Approval Details
Document
Title:
STAFFREPORT_FMS_SD_RESOLUTIONSTOLEVYASSESSMENTSF
ORLMD_2014-01_03.18.25.docx
Attachmen
ts:
- LMD 2014-01 Resolution Initiating Proceedings.docx
- LMD 2014-01 Resolution Approving Engineer's Report.docx - LMD 2014-01 Resolution Declaring Intent.docx
- LMD 2014-01 Preliminary Engineer's Report FY2025-26.pdf Final
Approval
Date:
Mar 11, 2025
This report and all of its attachments were approved and signed as outlined below:
No Signature found
Felicia London, MPA
Natalia Lopez
Dena Heald
Launa Jimenez
Brian Mohan
Patty Rodriguez