CITY COUNCIL STAFF REPORT
Meeting Date: May 15, 2023
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
SUBJECT: ADOPT RESOLUTION NO. ___-23 APPROVING INTENTION TO LEVY
AND COLLECT ASSESSMENTS AND TO PROVIDE FOR PUBLIC
HEARING AND NOTICE IN ASSESSMENT DISTRICT NO. 20 FOR
FISCAL YEAR 2023/2024
SYNOPSIS
An assessment district is a financial mechanism that allows for the levy of an assessment on a specific geographic area or parcels of real estate, which have been identified as receiving a direct and special "benefit" from a public improvement or service. Assessment District No. 20 (“AD 20”) enables the City to provide landscape maintenance and street lighting at an enhanced level along commercial streets. The properties within AD 20’s boundaries directly benefit from these landscape and lighting improvements. The annual assessments paid by the benefiting property owners of parcels within AD 20 and contributions by the City fund the maintenance and services provided.
In order for the City to continue to levy and collect assessments within the Assessment District for the 2023/2024 fiscal year, an Annual Report must be prepared and the City must hold a public hearing. Staff requests that the City Council adopt a Resolution of Intention to Levy and Collect Assessments within AD 20 for the 2023/2024 fiscal year and give notice of the time and place for a public hearing on the levy of the assessments.
DISCUSSION
Background
AD 20 was formed in 1988 pursuant to the provisions of the Landscaping and Lighting Act of 1972 and the California Streets and Highways Code. Upon formation, AD 20 consisted of five zones. AD 20 was amended in 1999 to create a new zone (Zone 6) that includes the Downtown area.
In order for the City to continue to levy and collect assessments within the Assessment District for the 2023/2024 fiscal year (“FY 23/24”), the City Council adopted a resolution directing the Engineer of Work to prepare an annual report at its February 6, 2023 meeting. The Engineer of Work, Harris & Associates, has completed and filed the annual report (attached) for FY 23/24 with the City Clerk. The Annual Report includes descriptions of the improvements to be made during the fiscal year, an estimate of costs, and the levy of assessments upon the benefiting properties.
Construction of Phase I of the Downtown tree replacement project along Crescent Drive is proposed to be completed in FY 23/24 in Zone 6. There are no new services or substantial changes in existing services proposed for FY 23/24 in the other five zones.
There are 17 properties within the AD 20 boundaries that are located in the City of Concord:
eight properties are located east of Contra Costa Boulevard and south of Sun Valley Boulevard; the Sun Valley Mall Shopping Center contains six properties, and the remaining three properties are east of Contra Costa Boulevard and south of Concord Avenue at the on-ramp to Interstate Freeway 680. The City of Concord has granted the City of Pleasant Hill authority to levy assessments on these properties since the District was established. This authority must be requested and granted annually. Pleasant Hill Resolution No. 6 -23, adopted February 6, 2023, requested consent from the City of Concord to collect AD 20 assessments for FY 22/23. The City of Concord adopted Resolution 23-22 approving the request on April 4, 2023.
A resolution of intention to collect assessment for FY 23/24 and call for a public hearing is attached.
Analysis
The collecting of assessments from properties within the boundaries of AD 20, together with the funds provided by the City, will ensure continued maintenance of lighting and landscape improvements within the boundaries of the District. City Maintenance staff provides for the maintenance of improvements, with the exception of the Downtown along Crescent Drive and Crescent Plaza (the Downtown property management contracts for maintenance work in the Downtown and is reimbursed by the Assessment District). The maintenance activities include weekly mowing and edging of turf; maintaining and repairing irrigation systems; pruning; removing debris and graffiti; repairing streetlights; maintenance and weeding, as well as paying for utility charges for water and electricity.
If AD 20 assessments are confirmed for FY 23/24, staff will continue to provide maintenance services for the District. The source of funds to provide the necessary maintenance and services is derived from annual assessments collected from property owners within six zones in the District. The attached Engineer’s Report lists the projected fund balances and proposed revenues and expenditures for FY 23/24 per zone. All of the zones with the exception of Zone 1 and Zone 6 have sufficient revenues and fund balances to cover FY 23/24 expenses.
The reserve fund for Zone 1 was depleted at the end of FY22/23. Staff recommends conducting a property owner assessment ballot process within Zone 1 so that assessment rates can be increased above the current allowable maximum.
In FY 22/23, Zone 6 was projected to have sufficient funds to allocate $90,000 to the Downtown Tree Replacement Project which is slated for construction in FY 23/24. The projected beginning fund balance for FY 23/24, however, is estimated at $9885, therefore it was determined that the Assessment District budgeted contribution is not possible. Additional outside funding must be identified to complete this project.
Although our consultant cannot determine exactly why Zone 6 had an initial projected fund balance of $90,000 +/-, each year the overall fund balance must be reallocated to each of the 6 Zones. With the expenses changing from estimated to projected, to actuals, allocating the fund balance each year becomes challenging, especially when we consider that some Zones are trending positive and some are trending negative.
Moving forward, staff will work with our consultant and Finance to track the fund balance specifically for each Zone in the Assessment District. This will track the fund balance more accurately.
The reserve fund for Zone 6 will be depleted at the end of FY23/24. Staff recommends conducting a property owner assessment ballot process within Zone 6 so that assessment rates can be increased above the current allowable maximum.
The estimated cost for the preparation and filing of all necessary reports required to continue the levy and collection of assessments is $21,689, which will be paid from the assessment funds.
Assessments are made upon the various properties within the District in proportion to the estimated special benefits received. As part of establishing special benefit, properties within the District are divided into six zones of improvement noted above with different assessments based on the amount of special benefit conferred. The City tracks the cost of maintaining the improvements, including incidental expenses within each zone. Contributions from the City’s General Fund are made by the City in Zones 1, 2, 3, 5 and 6 to offset benefits shared with the general public. In Zone 4, in lieu of a contribution, the City pays for the cost to maintain a portion of the Canal Trail median at Gregory Lane. Assessment rates have been established in each zone based upon acreage, street frontage, and benefit. These rates are listed in the attached Engineer’s Report.
FISCAL IMPACT
The City of Pleasant Hill annually contributes $97,946 from the General Fund toward the landscaping and lighting costs. This contribution is intended to offset the portion of the landscaping and lighting improvements that provide shared benefit to both the general public and, in particular, those properties outside the District but contiguous to District improvements in areas adjacent to or within the City’s right of way.
PUBLIC CONTACT
Public contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center, and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page. The Resolution of Intention will be published in a newspaper of general circulation in accordance with the statutes not less than ten days prior to the public hearing.
RECOMMENDED CITY COUNCIL ACTION
Adopt the Resolution of Intention.
ALTERNATIVES TO RECOMMENDED ACTION
Should the City Council decline to renew the Assessment District for the 2023/2024 fiscal year, there would be a loss of $431,901 in assessment revenues that fund maintenance activities within AD 20. The City would need to fund these maintenance activities, or the services would need to be suspended or substantially reduced.
ATTACHMENTS:
Proposed Resolution
AD 20 Engineer’s Report
Prepared by: Ann James, Public Works Manager
Approved by: June Catalano, City Manager