Agenda Item: 11
CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR
CITY MANAGER APPROVAL:
DATE: June 13, 2023
SUBJECT: FISCAL YEAR 2023-24 ANNUAL LEVY OF ASSESSMENTS FOR
SPECIAL DISTRICTS
DEPARTMENT: Administrative Services
PRESENTER: Keith Miller
RECOMMENDED ACTION
City Council:
1. Adopt resolutions declaring the City's intention to levy assessments, preliminarily approve Engineer's Reports in connection with the Special Districts for Fiscal Year 2023-24, and set a public hearing for June 27, 2023.
2. Adopt the annual report for the Tourism Marketing District, adopt a resolution of intent to continue a business improvement area in the City of Santa Clarita designated as the Tourism Marketing District, and set a public hearing for June 27, 2023.
BACKGROUND
This procedural matter orders, approves, and sets the public hearing for the annual levy of the following special districts:
• Landscape and Lighting District (LLD), inclusive of the City of Santa Clarita’s (City) Landscape Maintenance District (LMD) and Streetlight Maintenance District (SMD);
• Drainage Benefit Assessment Areas (DBAA) 3, 6, 18, 19, 20, 22, 24, 33, 2008-1, 2008-2, 2013-1, 2014-1, 2015-1, 2017-01, and 2017-02;
• Golden Valley Ranch Open Space Maintenance District (GVROSMD); and
• Tourism Marketing District (TMD).
The City of Santa Clarita, under the provisions of the Landscaping and Lighting Act of 1972,
Part 2 of Division 15 of the California Streets and Highways Code (1972 Act), and the provisions of the California Constitution Article XIII D enacted by Proposition 218 (Constitution), annually levies and collects special assessments for the Landscape and Lighting District (LLD).
Collectively, the LLD incorporates the City’s Streetlight Maintenance District (SMD) Zones A and B, and the Landscape Maintenance District (LMD) Zones 1, 2, 3, 3A, 4, 5, 5A, 6, 7, 7A, 8, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 2008-1, T1, T1B, T2, T2A, T3, T3B, T4, T5, T6, T7, T8, T17, T20, T23, T23-1, T23-2, T23A, T23B, T29, T31-1, T31-1A, T31-2, T33, T44, T46, T47, T48, T51, T52, T62, T65, T65A, T65B, T67, T68, T69, T71, T76, and T77.
The attached resolutions relate to the preliminary Engineer's Reports for the City’s Special Districts, prepared by Willdan Financial Services for approval by the City Council. These Special Districts include the LLD, the DBAA, the GVROSMD and the Santa Clarita TMD.
This action also schedules a public hearing to consider the Fiscal Year (FY) 2023-24 assessment rates recommended for these special districts. If approved, the public hearing ordering the FY 2023-24 levies will be scheduled for the June 27, 2023, City Council meeting.
Descriptions of the City’s Special Districts are provided below.
Landscape Maintenance District (LMD)
The City has 62 financially independent LMD zones, primarily administered through contracts, which encompass over 2,000 acres of landscape areas including landscaped slopes and parkways, side-panels, numerous monument signs, and more than 29 miles of paseos. The City also maintains area-wide amenities located throughout Santa Clarita, including 47 linear miles of landscaped medians, park facilities, and approximately 65,000 street trees located within the public right-of-way.
Each of the 62 LMD zones, comprising 63,009 residential and non-residential parcels, include landscape and ornamental improvements that provide special benefits to properties throughout Santa Clarita. In total, 88 percent of all parcels throughout the City are located within one or more LMD zones and fund these landscape amenities through special assessments appearing on their consolidated annual property tax bill.
The operating budget of a typical LMD encompasses expenditures that include contractual landscape maintenance, water and electrical utilities, plant replacements, administration, scheduled and unanticipated repairs, and monitoring services. On average, contractual landscape maintenance services represent 31.5 percent of the total annual operational cost. A typical landscape maintenance contract term is two years with three incremental one-year renewal options.
In zones where parcel owners have authorized assessment rate escalators, the maximum annual assessment rate adjusts automatically every year by an amount equal to the annual Consumer Price Index (CPI) for the month of December. Independent of these escalators, the City Council
maintains the discretion to levy assessment rates up to, or less than, the maximum assessment rate, with all levies ultimately approved as part of a noticed public hearing.
For FY 2023-24, the CPI increase as of December 2022, is 4.93 percent. The CPI escalators allow the City to maintain and provide a consistent level of landscape service to each LMD zone, as maintenance costs increase from year to year. The CPI escalators allow the City to be responsive to requests identified by the community for new projects, and maintain adequate funds to support future capital reserve needs.
The City takes a conservative fiscal approach to the management of its LMD zones, having implemented many cost-saving measures and aggressively rebidding landscape contracts to ensure operational costs remain competitive. For FY 2023-24, staff is recommending the City Council levy less than the maximum allowable rate for 42 of 62, or 68 percent, of the City's LMD zones. A complete listing of recommended levy amounts for all LMD zones is attached to this report.
In instances where individual zones do not meet their financial operational and reserve goals, staff is recommending levying the maximum assessment rate. As an annual practice, staff has included an LMD rate history, which identifies each LMD zone and provides assessment levy information for each of the last five fiscal years.
Streetlight Maintenance District (SMD)
The SMD supports operations and maintenance of the City’s streetlights and traffic signals. The California Public Utilities Commission formally approved the sale of the streetlight system from Southern California Edison (Edison) in May 2018. As of April 2023, the City has acquired and accepted for maintenance 17,791 streetlights with energy efficient light-emitting diode (LED) fixtures.
Consistent with the City Council’s original commitment to the community, in FY 2020-21 the City began passing along net operational savings realized by purchasing the streetlight system to property owners in the form of reduced assessments.
All parcels receiving special benefit from the streetlight system financially contribute to the SMD. The composition of the SMD encompasses parcels that are assessed at either the Zone A or Zone B rate.
Parcels contributing to Zone A are part of the original district formed by Los Angeles County prior to the City’s incorporation, and pay an annual fixed assessment rate of $12.38.
Parcels annexed into the SMD following transfer from Los Angeles County to Santa Clarita in 1997 contribute to Zone B, and pay an annual assessment rate that can be adjusted each year by the change in the CPI. The current maximum assessment rate for FY 2022-23 is $93.91 per equivalent benefit unit (EBU).
The assessment rate for parcels located in Zone A will remain at a rate of $12.38. The assessment methodology for parcels located in Zone A does not include a CPI escalator
provision. As a result, properties in Zone A receive subsidized streetlight services, as State law does not allow the City to increase this assessment rate without first securing property owner approval.
While the maximum FY 2023-24 streetlight assessment rate for parcels located in Zone B is set to adjust by the annual change in CPI to $98.54, staff recommends holding the rate at $66.00 per EBU or $32.54 less than the maximum allowable assessment. This marks the fifth consecutive year in which the City has levied an assessment for parcels located in Zone B that is less than the maximum rate allowable by law, and the third straight year the rate has been held at $66.00.
Despite incremental increases imposed by Edison, beginning in March 2020, to the energy charge component of their monthly service cost, staff’s ability to recommend setting the coming year’s rate at 33 percent less than the maximum assessment is a direct result of the City Council’s decision to purchase Santa Clarita’s Streetlight System.
These operational savings will also expedite paydown of revenue bonds issued to finance the purchase of the streetlight system and conversion to LED fixtures. The City’s current annual debt service is $860,656, with all bonds originally scheduled for retirement in FY 2046-47. To reduce the amount of debt service, or total interest payments, tied to bond financing, the City intends to retire all bonds by September 2028. This action will save property owners approximately $6.2 million in interest.
Drainage Benefit Assessment Areas (DBAA)
The City is responsible for administering 15 DBAAs. Each DBAA benefits properties by preventing groundwater from rising and channeling surface or sub-surface water to drainage areas. This operation includes the use and management of multiple pump stations, hydro-augers, monitoring and observation wells, terrace drains, and swale drains. For FY 2023-24, staff recommends levying the maximum rate for 12 of the 15 DBAAs, inclusive of the 4.93 percent change in CPI.
Golden Valley Ranch Open Space Maintenance District (GVROSMD)
As a condition of project approval, the City Council required the Golden Valley Ranch development to create an open space maintenance district. The GVROSMD is comprised of 920 acres of natural and undeveloped land and administered by the City through contracts for park ranger services. This assessment also supports trail maintenance and open space management within the boundaries of the GVROSMD.
For FY 2023-24, staff recommends the City Council levy the maximum allowable rate of $207.11 for single-family residential units and $82.24 for single-family condominium units, inclusive of the 4.93 percent change in CPI.
Tourism Marketing District (TMD)
The City Council established the TMD as part of the 21-Point Business Plan for Progress. Local hotels participating in the TMD pay 2 percent of total room rents charged and received from
hotel guests who do not make the hotel their principal place of residence. The TMD generates funds to market the City as a tourism destination and attract high-quality, high-economic impact events to Santa Clarita.
The TMD is authorized by the Parking and Business Area Law of 1989 (Section 36500 et. seq. of the Streets and Highways Code of the State of California). This state code permits the City to levy assessments on businesses within a business improvement area and to use such proceeds for the benefit of the businesses within said area.
ALTERNATIVE ACTION
Other direction as determined by the City Council.
FISCAL IMPACT
There is no impact to the General Fund associated with these actions.
ATTACHMENTS
LLD Intent Resolution
DBAA Intent Resolution
GVROSMD Intent Resolution
TMD Intent Resolution
FY 2023-24 LMD Recommended Rate Table
FY 2023-24 LLD Engineer's Report (available in the City Clerk's Reading File) FY 2023-24 DBAA Engineer's Report (available in the City Clerk's Reading File) FY 2023-24 GVROSMD Engineer's Report (available in the City Clerk's Reading File) FY 2023-24 TMD Annual Report (available in the City Clerk's Reading File)