Placentia City Council
AGENDA REPORT
TO: CITY COUNCIL
VIA: CITY ADMINISTRATOR
FROM: DEPUTY CITY ADMINISTRATOR/ PUBLIC SERVICES AND INFRASTRUCTURE DATE: JUNE 6, 2023
SUBJECT: PUBLIC HEARING TO PROVIDE FOR THE ANNUAL LEVY OF ASSESSMENT FOR THE CITY OF PLACENTIA LANDSCAPE MAINTENANCE DISTRICT 92-1 FISCAL
IMPACT: REVENUE: $ 450,858 (RECOUPED THROUGH ASSESSMENTS) EXPENDITURES: $ 419,200 (PROPOSED FY 2023-24 BUDGET LMD 92-1 FUND) SUMMARY:
The City of Placentia administers Landscape Maintenance District ("LMD") 92-1 ("District").
Property owners in the District pay an assessment on their property tax bill for the maintenance of common area landscaping. Each year, the City Council must order the preparation of an Engineer's Report which determines the amount of the assessment to be levied and reconfirms the boundaries and composition of the district. Based on the Engineer's Report (Attachment 2), the rate for Fiscal Year ("FY") 2023-24 for LMD 92-1 will remain the same at $154.87 per parcel, which is the maximum allowed by law for this district without a new vote of the property owners to approve a rate adjustment. This action requests that the City Council conduct a public hearing to receive public testimony, and upon conclusion of the public hearing, adopt a resolution approving the Engineer's Report and setting the annual levy of assessment for FY 2023-24.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Open the Public Hearing concerning the levy and collection of assessments within the Landscape Maintenance District 92-1; and
2. Receive the Staff Report, consider all public testimony, ask questions of Staff; and
3. Close the Public Hearing; and
4. Adopt Resolution No. R-2023-34, a Resolution of the City Council of the City of Placentia, California, approving Engineer's Report, confirming diagram and assessment, and ordering levy of continued assessments for Fiscal Year 2023-24 for Placentia Landscape Maintenance District No. 92-1.
2.b.
June 6, 2023
City Council Agenda
June 6, 2023
DISCUSSION:
The City Council adopted Resolution No 92-R-123 on May 2,1992, which initially formed the District. This District, utilizing benefit assessments, funds the cost to maintain and administer the landscape areas identified within LMD 92-1, which includes Placentia Champions Sports Complex ("Complex"). In 1996, the City Council transferred the financial responsibility for maintenance of the Complex from the District to the City's General Fund. At the time it was determined that since the Complex had grown operationally and hosted sport leagues from outside the City, the General Fund should instead fund the cost to maintain the Complex. However, in 2010, the City Council adopted Resolution No. R-2010-03, which returned the financial responsibility of maintaining the Complex back to the District. This was done due to the extensive financial difficulties the City was faced with at the time, and the City's General Fund could not support the cost of maintaining the Complex. The Complex, however, is still an assessed improvement within the District and is one of numerous improvements maintained by the District. By 2014, it had become apparent that the District no longer generates sufficient revenue to maintain all the improvements within the District even when excluding the cost to maintain the Complex. As part of the Fiscal Year 2014-15 Operating Budget the maintenance cost for the Complex was informally transferred again to the City's General Fund to reduce the structural deficit within the District Fund.
Current Status of LMD 92-1 Fund
The cost to maintain the Complex as well as the rest of the improvements within the District have grown since 1992 when the District was first created. However, the rates paid by the assessed parcels have never been increased to keep pace with the rate of inflation since the District was formed. As such, an ongoing structural deficit exists within the District Fund that is balanced each year by adjusting operational costs (i.e., reducing service levels) to ensure the District Fund remains solvent, and to avoid a direct General Fund subsidy to balance it each year. In addition to landscape maintenance costs, the assessments the District collects provide funding for irrigation and electrical costs associated with the District improvements and additional funds for maintenance and repair of District infrastructure and costs associated with the maintenance and management of the District. These costs have continued to grow over time. Including the maintenance costs for the Complex in the District budget would result in a running deficit each year which would continue to require a General Fund subsidy to balance it. As such, maintenance costs for the Complex are budgeted in the City's General Fund. However, it should be noted that the City collects user fees from sports groups using the Complex and fees for electrical costs associated with sports field lights, both of which are considered General Fund revenues and help offset the City's maintenance costs for the Complex.
The current maximum rate per assessment unit established for the LMD 92-1 is $154.87. In 1996, the voters of California approved Proposition 218, which limits the ability of public agencies to increase assessments for such districts. The cost to maintain the Complex and all other District improvements will continue to grow, and despite removing the maintenance costs of the Complex from the District, the City can expect to begin subsidizing the District in the next two (2) fiscal years. The revenue the District is currently collecting is insufficient to cover routine maintenance costs, and does not include a capital improvement component for needed capital repairs and improvements. As such, this structural deficit needs to be addressed to ensure the District's
City Council Agenda
June 6, 2023
financial solvency. Staff will present the City Council with potential options to evaluate as part of a future study session in FY 2023-24 for consideration for FY 2024-25.
Public Hearing Process
The Landscaping and Lighting Act of 1972 (Streets and Highways Code § 22500-22647) requires that the City undertake certain proceedings for any fiscal year during which assessments are to be levied and collected upon private property. Each fiscal year, the City Council directs the preparation of an Engineer's Report, budgets and proposed assessments before the assessments can be levied. The Engineer's Report establishes the foundation and justification for the continued collection of the assessments for FY 2023-24. These proceedings are usually accomplished at two (2) separate City Council meetings. On May 2, 2023, the City Council adopted a resolution declaring its intention to provide for the Annual Levy of Assessments for LMD 92-1 and setting the time and date for a public hearing.
The Annual Levy of Assessments is for the purpose of providing landscape maintenance and means of assessment for the same as shown in the attachments. Documents to provide for the annual levy have been prepared by the Assessment Engineer contracted by the City and herewith presented for City Council approval as follows:
1. Resolution confirming a Diagram and Assessment, providing for Annual Assessment Levy (Attachment 1)
2. Engineer's Report and Assessment Diagram (Attachment 2)
3. Assessment Roll (On File with The City Clerk)
Staff recommends that the City Council conduct the public hearing and adopt the attached Resolution (Attachment 1). Although verbal testimony may be taken, protests to the annual levy must be submitted in writing and filed with the City Clerk. No written protests have been filed as of May 31, 2023. The City Clerk will provide City Council with copies of any written protests received subsequently.
FISCAL IMPACT:
The proposed Assessment Units ("AU") for FY 2023-24 have not increased. The assessments are currently set at the maximum allowable rate. For FY 2023-23, the estimated revenue from assessments is $450,868 against budgeted expenditures of $419,200 leaving $31,668 to address contingency costs. There is no impact to the General Fund associated with these recommended actions. As previously mentioned, the revenue the District is currently collecting is insufficient to cover routine maintenance costs, and does not include a capital improvement component for needed capital repairs and improvements. As such, this structural deficit needs to be addressed to ensure the District's financial solvency. Staff will present the City Council with potential options to evaluate as part of a future study session in FY 2023-24 for consideration for FY 2024-25.
City Council Agenda
June 6, 2023
Prepared by:
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Elsa Y. Robinson
Senior Management Analyst
Reviewed and approved:
Luis Estevez
Deputy City Administrator
Reviewed and approved:
Jennifer L/ampman
Director of Finance
Reviewed and approved:
Damien R. Arrula
a
City Administrator
Attachments:
1. Resolution R-2023-34 — Engineer's Report and Levy of Assessment for LMD 92-1
2. FY 2023-24 Engineer's Report & Assessment Diagram
3. Assessment Roll (on file with City Clerk)