Agenda Item: 2
CITY OF SANTA CLARITA
AGENDA REPORT
PUBLIC HEARINGS
CITY MANAGER APPROVAL:
DATE: June 25, 2024
SUBJECT: FISCAL YEAR 2024-25 ANNUAL LEVY OF ASSESSMENTS AND
SPECIAL TAXES FOR SPECIAL DISTRICTS
DEPARTMENT: Administrative Services
PRESENTER: Andrew Adams
RECOMMENDED ACTION
City Council:
1. Conduct a public hearing for the Landscaping and Lighting District; the Drainage Benefit Assessment Areas; the Golden Valley Ranch Open Space Maintenance District; the Tourism Marketing District; and the Vista Canyon Wastewater Standby District.
2. Adopt resolutions approving the Engineer’s Reports for the Fiscal Year 2024-25 annual levy of assessments for the continuation of maintenance for the Landscaping and Lighting District; the Drainage Benefit Assessment Areas; the Golden Valley Ranch Open Space Maintenance District; the Tourism Marketing District; and the Vista Canyon Wastewater Standby District.
3. Adopt a resolution authorizing the establishment of annual special taxes for the Community Facilities District No. 2016-1 (Vista Canyon CFD).
4. Accept and file the annual report for the Community Facilities District No. 2016-1.
BACKGROUND
For the City Council’s consideration, this report presents the Final Engineer’s Reports for the Special Districts identified below and directs Willdan Financial Services (Willdan) to transmit all necessary assessment data to the Los Angeles County Auditor Controller for inclusion on the Fiscal Year (FY) 2024-25 Property Tax Rolls.
1. Landscape and Lighting District (LLD), inclusive of the City’s Landscape Maintenance
District (LMD) and Streetlight Maintenance District (SMD);
2. Drainage Benefit Assessment Areas (DBAA) 3, 6, 18, 19, 20, 22, 24, 33, 35, 2008-1, 2008- 2, 2013-1, 2014-1, 2015-1, 2017-01, and 2017-02;
3. Golden Valley Ranch Open Space Maintenance District (GVROSMD);
4. Tourism Marketing District (TMD); and
5. Community Facilities District No. 2016-1 (Vista Canyon CFD).
The City of Santa Clarita (City), 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 LLD.
Collectively, the LLD incorporates the City’s SMD Zones A and B, and the 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 approval of the Engineer's Reports prepared by Willdan for the City’s LLD, the DBAAs, the GVROSMD, and the TMD. The proposed actions are authorized by state law as outlined in the Constitution, and are required to levy assessment on properties receiving special benefits.
The City, on behalf of the Vista Canyon CFD and the Parking CFD (collectively, CFDs), under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the California Government Code (1982 Act), annually determines and levies the special tax rate and amount to be levied in accordance with the respective rates and methods (RMAs). The attached resolutions include a resolution for the FY 2024-25 annual levy for the Vista Canyon CFD as provided in its authorizing ordinance. The Parking CFD’s levy is set administratively. In addition, the Vista Canyon CFD and Parking CFD Annual Reports, as required by Government Code Section 50075.3, are included for the City Council to receive and file.
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, 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, comprised of 66,297 residential and non-residential parcels, include landscape and ornamental improvements that provide special benefits to properties throughout Santa Clarita. In total, more than 80 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 property owners' 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 34 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 2024-25, the CPI increase as of December 2023, is 3.47 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 2024-25, staff is recommending the City Council levy less than the maximum allowable rate for 39 of 62, or 63 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 17,791 streetlights with energy efficient light-emitting diode (LED) fixtures for maintenance.
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 2023-24 is $99.54 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 2024-25 streetlight assessment rate for parcels located in Zone B is set to adjust by the annual change in CPI to $101.95, staff recommends holding the rate at $66.00 per EBU, or $35.95 less than the maximum allowable assessment. This marks the sixth 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 fourth 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 35 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 $859,975, 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 will retire all bonds by September 2028. This action will save property owners approximately $6.2 million in interest.
Drainage Benefit Assessment Areas (DBAAs)
The City is responsible for administering 16 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 2024-25, staff recommends levying the maximum rate for 13 of the 16 DBAAs, inclusive of the 3.47 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 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 2024-25, staff recommends the City Council levy the maximum allowable rate of $214.29 for single-family residential units and $85.10 for single-family condominium units, inclusive of the 3.47 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.
Vista Canyon Wastewater Standby District
In November 2017, the City Council approved an Engineer’s Report creating and annexing parcels into the Vista Canyon Wastewater Standby District. A standby assessment and sewer rate were established in accordance with the applicable state law including Article XIIID of the State Constitution and Health and Safety Code, Section 5470, to support operations and capital replacements costs associated with the future Vista Canyon Recycled Water Facility.
The Vista Canyon Project required, and was financially responsible for, the construction of the Recycled Water Facility as a condition of approval. Properties subject to the standby assessment and subsequent sewer rate are limited only to parcels within and directly adjacent to the Vista Ranch Project area that directly benefit from the Recycled Water Factory.
At the November 28, 2017, public hearing, the City Council ordered and commenced standby assessment levies upon vacant parcels associated with the Vista Canyon Project. Levying of the standby assessment commenced in FY 2018-19 and will remain in effect until individual parcels within the District are developed and serviced by the Water Factory.
Consistent with the approved Wastewater Engineer’s Report Anticipated Standby Charges schedule, the recommended FY 2024-25 Standby Rate is $547.54. Upon the subsequent approval
of occupancy for individual parcels served by the Vista Canyon Recycled Water Factory, collection of the approved sewer rate will take the place of the standby assessment rate.
Vista Canyon CFD
In 2016, the City formed a community facilities district designated for the approved Vista Canyon development located at the end of Lost Canyon Road near Sand Canyon. Vista Canyon CFD boundaries covers only the apartment and commercial use parcels. Ordinance No. 16-06 authorized the levy of the special taxes within the CFD pursuant to a Rate and Method of Apportionment (RMA).
In February 2020, the Vista Canyon CFD issued its first series of bonds (Bonds) secured by special taxes within the Vista Canyon CFD to fund 1) a public parking facility, the Cooper Street Parking Structure, a City-owned public parking garage with 84 dedicated spaces for the adjacent apartment complex and 529 public parking spaces, and 2) a portion of the Transit Center. In October 2020, following final review by the City’s Public Works department, the City purchased the Cooper Street Parking Structure from the master developer for $15,000,000 using the proceeds of the Bonds. Commencing in FY 2019-20, property within the Vista Canyon CFD began paying special taxes to fund debt service on the Bonds.
The annual levy of the special taxes for the CFD has in the past been approved by adoption of a separate resolution, unlike the other City-established community facilities districts, which have delegated the administrative levy placement to the Director of Administrative Services. The annual special tax rates are calculated by a special tax consultant pursuant to the RMA. Instead of bringing a resolution to the City Council each year for the determination of these rates, the resolution before the City Council authorizes the Director of Administrative Services to 1) administratively determine the amount of the annual special taxes pursuant to the Rate and Method of Apportionment, 2) prepare the list showing each parcel within the CFD and its related annual tax amount for that fiscal year, and 3) deliver the annual special tax levy listing, along with a copy of this resolution, to the County Auditor for inclusion on the tax roll.
An annual report detailing the activities of the CFD will continue to be brought to the City Council each year for their review and information. The annual report for the CFD is included as part of this item for the City Council's acceptance and filing.
ALTERNATIVE ACTION
Other direction as determined by the City Council.
FISCAL IMPACT
Special Districts assessments are budgeted, assessed, and collected annually for the provision of various services to the community.
ATTACHMENTS
Special Districts Public Hearing Notice
TMD Public Hearing Notice
FY 2024-25 LLD Approving Resolution
FY 2024-25 DBAA Approving Resolution
FY 2024-25 GVROSMD Approving Resolution
FY 2024-25 TMD Approving Resolution
FY 2024-25 VCWSD Approving Resolution
FY 2024-25 Vista Canyon CFD Resolution
FY 2024-25 Recommended LMD Rate Table and Rate History
FY 202-25 LLD Engineer's Report (available in the City Clerk's Reading File) FY 2024-25 DBAA Engineer's Report (available in the City Clerk's Reading File) FY 2024-25 GVROSMD Engineer's Report (available in the City Clerk's Reading File) FY 2024-25 TMD Annual Report (available in the City Clerk's Reading File) Vista Canyon CFD Annual Report and Levy (available in the City Clerk's Reading File) FY 2024-25 LMD Assessment Roll (available in the City Clerk's Reading File) FY 2024-25 SMD Assessment Roll (available in the City Clerk's Reading File) FY 2024-25 DBAA Assessment Roll (available in the City Clerk's Reading File) FY 2024-25 GVROSMD Assessment Roll (available in the City Clerk's Reading File)