CITY COUNCIL STAFF REPORT
Meeting Date: August 05, 2024
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
SUBJECT: ADOPT RESOLUTION NO. ___- 24 ORDERING THE INCREASE LEVY AND ASSESSMENT FOR ASSESSMENT DISTRICT NO. 20 (AD 20)
SYNOPSIS
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.
Notice of the August 5th public hearings for each of the zones within AD 20 and the assessment ballots were mailed to property owners on June 21, 2024, at least 45 days before the public hearings in accordance with Section 4 of Article XIII D of the California Constitution.
The City Council will conduct a public hearing for the proposed increased assessment for each of the zones for AD 20 and order ballots to be opened and counted by the City Clerk. Seven public hearings will be conducted; a public hearing will be conducted for Zones 1, 2, 3, 4, 5-A, 5-B, and
6. If a majority protest does not exist for any of the zones within AD 20, the City Council will consider upholding the results of the ballot measure and approve a resolution ordering the levy of the new assessments. If the dollar amount of the ballots submitted in support of the levy of the assessments is more than the dollar amount of the ballots submitted in opposition to the levy of the assessments, there is no majority protest.
If a majority protest does exist for any of the zones within AD 20, the City Council will consider approving a revised Engineer’s Report and will amend the resolution ordering the assessments to omit the proposed assessment increases for said zones and approve the assessments for those zones previously authorized pursuant to Section 4 of Article XIII D of the California Constitution.
DISCUSSION
Background
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. The maintenance activities for AD 20 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.
Annually, the City Council must initiate proceedings to renew the levy and collection of special assessments for AD 20. 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. Over the past years the annual maintenance and servicing costs have increased while the assessment rates for AD 20 have remained relatively unchanged
Analysis
Assessments can only be increased in accordance with Proposition 218 (Prop. 218), which amended the California Constitution by adding Article XIII D, which limits the ability of local government to generate revenue using special assessments, local taxes, fees and charges without taxpayer or property owner approval.
Prop. 218 stipulates that prior to levying a new or increased assessment not approved by a previous Prop. 218 proceeding, an agency shall give notice by mail at least 45 days prior to the date of the public hearing. In addition, assessments may only be levied for special benefits, and requires that all assessments be supported by a detailed Engineer’s Report prepared by a Registered Professional Engineer certified by the State of California. Harris and Associates prepared the Engineer’s Report.
When the District was formed, a range of assessments was established for the first five 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 now 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, 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 (5) 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 Engineer’s Report includes a detailed description on the proposed assessment increases and inflationary adjustments for each Zone (Attachment 1). The proposed assessment rate increases to AD 20 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 (CPI) inflationary adjustment, not to exceed 4%, would be applied in lieu of the 3.5% adjustment.
FISCAL IMPACT
There is no direct fiscal impact on the General Fund associated with approving the Resolution.
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 be in deficit. This will require the City Council to consider support by the General Fund, reduction in services, or combination of both.
PUBLIC CONTACT
The Proposition 218 notice and assessment ballots were mailed to property owners to inform owners of the August 5, 2024 public hearing to consider increases to the assessment rates for AD 20 and how they can vote on the proposed increases. In addition, 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.
RECOMMENDED CITY COUNCIL ACTION
1. For each of the zones within AD 20, conduct a public hearing, receive public testimony, and request the City Clerk to report on the ballots received during the 45-day notice period up to the public hearing.
2. For each of the zones within AD 20, close the public hearing and direct the City Clerk to tabulate and report the results of the ballot measure. Any member of the public will be permitted to view the tabulation if requested. The ballots are weighted by the amount assessed to determine the passing or failing of the proposed assessment.
3. For each of the zones within AD 20, adopt a resolution, entitled: A RESOLUTION OF THE
CITY COUNCIL OF THE CITY OF PLEASANT HILL, CALIFORNIA, DECLARING THE
RESULTS OF THE PROPERTY OWNER PROTEST BALLOT PROCEEDING CONDUCTED FOR THE LEVY OF INCREASED ASSESSMENTS WITHIN ZONE ____ OF ASSESSMENT DISTRICT NO. 20, AND APPROVING CERTAIN RELATED ACTIONS (Attachment 2).
If a majority protest does not exist for any of the zones within AD 20, adopt a resolution, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PLEASANT HILL,
CALIFORNIA, DECLARING THE RESULTS OF PUBLIC HEARINGS, APPROVING ASSESSMENTS FOR ASSESSMENT DISTRICT NO. 20, CONFIRMING THE ENGINEER’S
REPORT, THE ASSESSMENT DIAGRAM AND ASSESSMENTS RELATED THERETO,
AND APPROVING THE LEVY AND COLLECTION OF ASSESSMENTS COMMENCING IN FISCAL YEAR 2024-25 (Attachment 3)
ALTERNATIVES TO RECOMMENDED ACTION
If a majority protest does exist, for certain zones within AD 20, amend the resolution described immediately above to omit the proposed assessment increases for said zones and approve the assessments for those zones previously authorized pursuant to Section 4 of Article XIII D of the California Constitution, as described in the annual Engineer’s Report, without the proposed increased assessments ordered by the City Council (Attachment 4).
ATTACHMENT(S):
1. Engineer’s Report for AD 20 (for proposed increased assessments)
2. Sample Resolution Declaring Ballot Results
3. Resolution Approving Assessments for AD 20
4. Annual Engineer’s Report for AD 20 (without proposed increased assessments) Prepared by: Janet Coleson, City Attorney
Reviewed by: Ann James, Public Works Director
Approved by: Ethan Bindernagel, City Manager