City Council
Report
City Council Meeting: May 12, 2026
Agenda Item: 4.D
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To: Mayor and City Council
From: Oliver Chi, City Manager, Office of Economic Development Subject: Authorization to Apply Previously Approved Consumer Price Index (CPI) Increase for Main Street Lighting and Sidewalk Cleaning Assessment District Recommended Action
Staff recommends that City Council:
1. Adopt a finding of Exemption pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Confirm and authorize the application of the previously approved Consumer Price Index (CPI) adjustment to the Main Street Area Festoon Lighting and Sidewalk Cleaning Assessment District resulting in a 3.2 percent adjustment based on the Los Angeles–Long Beach–Anaheim CPI for the 12-month period ending June 2025.
Summary
The Main Street Business Area Festoon Lighting and Sidewalk Cleaning Assessment District (“Assessment District”) was formed by the City in concert with the Main Street Business Improvement Association (MSBIA) to cover the maintenance of the district’s festoon lights and cleaning of sidewalks. The Assessment District was formed in 2008 through Resolution No. 10325 (CCS) based on Benefit Assessment Act of 1982 (commencing with California Government Code Section 54703 et seq.) and based on a 2008 Engineer Report that expressly authorized as part of the approved assessment methodology an annual adjustment based on Consumer Price Index (CPI).
The CPI adjustment is a pre-established, non-discretionary component of the assessment formula adopted in 2008 and which can be implemented ministerially on an annual basis. Staff recommends that the City Council approve a 3.2 percent CPI- based 2 of 5
adjustment based on the Los Angeles-Long Beach-Anaheim for 12-month period ending June 2025. This adjustment will be applied to the 140 private and 16 public properties that are located within the Assessment District for FY 2026-27. This adjustment represents implementation of the previously approved CPI escalation mechanism and does not constitute a new or discretionary assessment increase.
Discussion
The Assessment District was established in 2008 pursuant to the Benefit Assessment Act of 1982 (California Government Code Section 54703 et seq.), which authorizes local agencies to levy assessments based on special benefit received, following formation proceedings, Engineer’s Report approval, and noticed public hearing.
The Assessment District is comprised of 156 privately and publicly owned parcels along Main Street which begins at Pico Boulevard and extends to the southern boundary just past Marine Avenue. Property owners, including the City, are assessed fees used to finance ongoing maintenance of festoon lighting and sidewalk cleaning. When the Assessment District was formed in 2008, it included: (1) Lightbulb replacements (first 5 years only), (2) Festoon lighting operating and maintenance, and (3) as-needed sidewalk cleaning. The District Assessment includes a previously approved mechanism for annual CPI adjustment for Items 2 and 3. Item 1 was discontinued in 2014.
The Assessment District was formed following duly noticed proceedings, and the City Council adopted Resolution No. 10325 (CCS) based on an Engineer’s Report that expressly included authorization for annual CPI-based adjustments. All procedural due process requirements, including notice and public hearing, were satisfied during the 2008 formation proceedings. Those proceedings established the full scope of the assessment methodology, including CPI-based adjustments. The application of CPI adjustments is consistent with the original intent of the Assessment District to provide sustainable funding for ongoing maintenance services over time.
Property owners were notified through mailed notices provided in connection with the formation proceedings that the proposed assessments would be subject to annual adjustments based on changes in the Consumer Price Index (CPI). Accordingly, the CPI 3 of 5
adjustment mechanism was fully disclosed to property owners at the time of formation and constitutes an integral component of the approved assessment methodology.
CPI adjustment is formulaic, objective, and non-discretionary, requiring only application of a published index to previously established rates. Accordingly, the CPI adjustment constitutes ministerial implementation of a pre-approved assessment methodology and does not involve discretionary action or the adoption of a new assessment. Fiscal Year 2026–27 assessments will not exceed the maximum assessment methodology previously approved in 2008; do not constitute a new assessment or discretionary increase; and represent only application of a previously authorized CPI adjustment formula. Therefore, the action does not constitute a new or increased assessment requiring additional proceedings under California Government Code Section 54715.
The CPI adjustment has historically not been applied in prior fiscal years based on operational sufficiency and Board determination but remains an available and preauthorized adjustment mechanism under the Engineer’s Report.
The MSBIA Board did not elect to increase the assessments in past years, as they believed the assessment revenues were sufficient to meet ongoing operating needs for the last 18 years. At its August 2025 board meeting, however, MSBIA voted for an increase to the Assessment District for Fiscal Year 2026–2027 to account for the rise in service and operating costs. The proposed adjustment will be 3.2 percent based on the Los Angeles-Long Beach-Anaheim for 12-month period ending June 2025.
The CPI adjustment included in the Assessment District’s approved methodology is intended to preserve the purchasing power and operational effectiveness of the assessment revenues over time. Because the costs of labor, materials, utilities, and contracted services necessary to maintain festoon lighting and perform sidewalk cleaning increase over time due to inflationary pressures, the CPI mechanism provides a standardized and objective method to ensure that revenues remain aligned with actual service delivery costs. Absent periodic CPI adjustments, the real value of assessment revenues would erode, potentially resulting in diminished service levels, deferred maintenance, or the need for more significant, discretionary rate increases in future 4 of 5
years. Accordingly, the CPI adjustment is a prudent fiscal tool that supports long-term financial stability of the Assessment District, ensures continuity of services at the level originally contemplated in the Engineer’s Report, and reduces the likelihood of abrupt or disproportionate increases that could otherwise be required to address accumulated funding shortfalls.
The District Assessment will be an increase of 3.2% for 140 privately-owned properties and 16 City-owned properties between Pico Boulevard to a half block beyond Marine Avenue along Main Street. The net increase for the 156 properties is $1,706 and to begin in Fiscal Year 2026-2027.
Improvements
FY 2025-26
Assessment
FY 2026-27
Assessment
Increase
Amount
Festoon Lighting O & M $29,900 $30,857
Sidewalk Cleaning $23,408 $24,157
Total Annual
Assessment
$53,308 $55,014 $1,706
Environmental Review
This action is exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines because it can be seen with certainty that the activity has no potential to cause a significant effect on the environment. The CPI adjustment represents a purely financial implementation of a pre-existing assessment methodology and does not authorize or result in any physical change to the environment.
Past Council Actions
Meeting Date Action
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07/22/08 Adoption of Resolution No. 10325 approving the formation of the Main Street Business Area Festoon
Lighting and Sidewalk Cleaning Assessment District and
approved and confirmed the levy of the assessments for
the District, including express authorization of CPI-based annual adjustment mechanism as set forth in the
Engineer’s Report.
04/23/24 Adoption of Resolution to Amend Resolution No. 10325 in order to clarify the Authorization to Levy and Place the Assessments on the LA County Property Tax Rolls Each
Year
Financial Impacts and Budget Actions
If approved, the recommended action will have a negligible financial impact that can be absorbed in the FY 2026-27 proposed budget. The CPI adjustment reflects implementation of a pre-established formula contained in the Engineer’s Report and does not constitute a discretionary increase or new funding obligation.
Prepared By: Erika Cavicante, Senior Development Analyst Approved Forwarded to Council
Attachments:
A. Resolution CPI Adjustment