CITY COUNCIL STAFF REPORT
Meeting Date: June 03, 2024
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
SUBJECT: ADOPT RESOLUTION NO. ___- 24 DECLARING THE INTENTION TO
LEVY AND COLLECT ANNUAL ASSESSMENTS IN ASSESSMENT
DISTRICT NO. 20 FOR THE 2024/2025 FISCAL YEAR AND SETTING
THE TIME AND PLACE FOR A PUBLIC HEARING
SYNOPSIS
The purpose of this item is for the City Council to adopt a Resolution of Intention to levy and collect the annual assessments for Assessment District 20 (AD 20) and set a public hearing for August 5, 2024 at 7 p.m. to consider adopting assessment rate increases and inflationary adjustments for AD 20.
There are six zones within AD 20. The maximum assessment rates for Zones 1-5 have not been increased since 1998 and the maximum assessment rate for Zone 6 has not increased since 1999.
It is necessary to increase rates to address increases in operating costs and to fund needed maintenance along certain commercial streets within AD 20.
BACKGROUND
An assessment district creates an authority to levy an assessment on a specific geographic area or parcels of land which have been identified as receiving a direct “special benefit” from a public improvement. AD 20 enables the City to provide enhanced levels of landscape maintenance and street lighting along commercial streets. These landscape and lighting improvements are considered to be of special benefit to the properties within the AD 20 boundaries. The funding for the maintenance and services is provided through annual assessments paid by the benefiting property owners within AD 20 and contributions by the City.
AD 20 is governed by the Landscape and Lighting Act of 1972 (Streets and Highway Code section 22500 et seq.). AD 20 was formed in 1988 and funds the maintenance of lighting, landscaping and sidewalks at an enhanced level along certain commercial streets. 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.
These landscape and lighting improvements are considered to be of direct benefit to the properties within the AD 20 boundaries. The maintenance activities include weekly mowing and edging of turf; maintenance and repair of irrigation systems; pruning; debris removal; graffiti removal; streetlight repair, weeding, as well as utility charges for water and electricity. The funding for the maintenance and services is provided through annual assessments paid by benefiting property owners within the AD 20. Over the past years the annual maintenance and servicing costs have increased while the assessment rates for AD20 have remained relatively unchanged.
Harris and Associates has been the City’s Engineer of Work since 2019, helping the City to confirm there are secure funding sources for the ongoing maintenance within AD 20. The annual reports prepared by Harris and Associates for FY 2023/24 determined that several zones with AD 20 were either in a funding deficit or trending in that direction, and without additional assessment revenue, the City would have to reduce the level of services provided to each zone within AD20, commensurate with available funds.
When the District was formed, a range of assessments was established for the first 5 Zones of the District but those ranges did not allow for assessment rates to be increased beyond the established range. Zone 6, annexed into the District in 1999, also has a range of assessments. Although there is also an annual escalation factor included in the methodology for Zone 6, that escalation factor does not allow for the assessment rate to go beyond the established maximum.
As a result, two of the Zones (Zone 1 and Zone 6) are currently upside down financially – expenditures having outpaced revenues - two Zones (Zone 4 and Zone 5-B) will also be upside down within a year. The remaining Zones (Zones 2, 3 and 5-A), while financially healthy now, will at some point in the future, run into the same financial trouble if the assessment rates are not allowed to increase. The proposed assessment rate increases and inflationary adjustments for each Zone are shown in the Engineer’s Report.
Additionally, Zone 6 has a proposed tree replacement project, estimated to be approximately $300,000. The City Council has agreed to loan that amount to Zone 6, with the intention of having it paid back through the assessments over the next five years. If the property owners approve the proposed increase in the assessment rates, the City will make the loan. If property owners do not approve the increased assessment rates, the City is not obligated to provide the loan funds.
The City Council, at the June 5, 2023 City Council meeting, directed staff to pursue a Proposition 218 proceeding for AD20. The purpose of the Proposition 218 proceeding will be to allow the City Council to consider establishing an increased assessment rate for the under-funded zones and to also incorporate an annual escalation factor to keep pace with inflation.
In order for the City to increase assessments or install an annual inflationary adjustment, the City Council adopted a resolution directing the Engineer of Work to prepare an Engineer’s Report.
On February 26, 2024, the City Council approved Resolution No. 20-24 authorizing Harris and Associates to perform Assessment Engineering Services for a Proposed Rate Increase for AD 20.
The Engineer’s Report includes a detailed description on the proposed assessment increases and inflationary adjustments for each Zone.
On May 21, 2024, the Budget Committee recommended the City Council conduct a public hearing to review the proposed assessment rate increases to AD 20 and to spread the increases to each of the Zones over three years (FY 2024-25, FY 2025-26, and FY 2026-27) to alleviate large increases in a single year. The Engineer’s Report details the increases for the next three years and shows the proposed assessment rates for each year. In addition, a 3.5% inflationary adjustment would be applied to the maximum assessment rates for FY 2024-25, FY 2025-26, and FY 2026-27. Beginning in FY 2027-28, a Consumer Price Index inflationary adjustment would be applied in lieu of the 3.5% adjustment.
Harris and Associates’ Engineer’s Report is now complete and attached. The Engineer’s Report was updated since the May 21, 2024 Budget Committee meeting to include assessments for FY 2025-26, and FY 2026-27 in addition to FY 2024-25. In addition, the fund balances were updated to account for the new formatting of the budget tables and the addition of new, benefiting parcels into the Zones.
If the City Council approves the Resolution of Intention, the City will commence the Proposition 218 proceedings by sending a notice of public hearing and assessment ballot to all property owners within AD 20. The notice and ballots must be mailed to the property owners at least 45 days prior to the scheduled public hearing.
FISCAL IMPACT
There is no direct fiscal impact on the General Fund associated with approving the Resolution of Intention. However, if the proposed assessment rate increases and inflationary adjustments are not approved by the property owners, the existing assessment rates will continue, but the Zones will become further impacted.
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 Proposition 218 notice and assessment ballots will be mailed to property owners will inform owners of the August 1, 2024 public hearing to consider increases to the assessment rates for AD 20 and how they can vote on the proposed increases.
RECOMMENDED CITY COUNCIL ACTION
Adopt the Resolution of Intention and set the public hearing for August 5, 2024, on the proposed assessment rate increases for AD 20.
ATTACHMENTS:
Engineer’s Report for AD 20
Proposed Resolution of Intention
Sample Proposition 218 Public Hearing Notice
Sample Assessment Ballot
Prepared by: Janet Coleson, City Attorney
Reviewed by: Ann James, Interim Public Works Director
Approved by: Ethan Bindernagel