ACTION:
____________________________
Clerk/Secretary
Department: Finance Item No: D1
Prepared by: Mike Sylvia, Director/Treasurer Meeting Date: September 4, 2025 Approved by: John Conley, City Manager Agenda Location: Discussion S
UBJECT: ASSESSMENT DISTRICTS FUNDING AND FISCAL UPDATE
RECOMMENDATION: Receive the presentation and provide direction to City staff on funding levels for the City’s three assessment districts.
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RRELATION TO CITY COUNCIL GOALS: Fiscal Responsibility.
PRIOR ACTIONS: On May 27, 2025 adopted City Council Resolution No. 2025-92, declaring the results of the City of Vista, Vista Citywide Street Maintenance Assessment District No. 2025-1 (SMAD) Ballot Proceeding and Abandoning Procedures to form the district, and adopted City Council Resolution No. 2025-93, declaring the results of the City of Vista, Vista Citywide Landscaping and Lighting Maintenance Assessment District No. 2025-2 (LLMAD) Ballot Proceeding and Abandoning Procedures to form the district (Vote: 5-0).
For a comprehensive list of prior actions, please see Exhibit 1.
STATEMENT ON THE SUBJECT: In May 2023, City staff briefed City Council on long-term funding shortfalls in the City’s three assessment districts: South Melrose Landscaping Maintenance District (South Melrose LMD); Landscape and Lighting District No. 1 (LLMD No. 1); and the Street Maintenance District (SMD). Staff presented financial models indicating that all three districts would face depleted reserves and unsustainable service levels within five years without new revenue.
The as
sessment districts were established in the early 1990s and provide a variety of maintenance services: street maintenance, street sweeping, landscaping, and street lighting/traffic signal maintenance.
These districts were established to provide an ongoing source of funding for the operation, maintenance, and servicing of the City’s streets, street trees, landscaping, street lighting, traffic signals, and street sweeping, specific to each district’s original scope of services and consistent with California state law.
However, while the districts’ costs have continued to increase due to decades of inflation, there has not been an increase in the districts’ assessment rates and thereby aggregate revenue since 1997, due to the legal requirements of Proposition 218—approved by voters in 1996—and subsequent court decisions that continue to shape how assessment districts may operate. Compounding the revenue/cost imbalance, none of the districts have an inflation factor within the current method of assessment.
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uring the May 2023 presentation, staff presented three options in order of preference: 1) Complete Proposition 218 balloting to adjust assessment rates to fully fund the services being provided and AGENDA
REPORT
CI TY COUNCIL
C OMMUNITY DEVELOPMENT COMMISSION
S UCCESSOR AGENCY
BUE NA SANITATION DISTRICT
J OINT POWERS FINANCING AUTHORITY
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MEETING DATE: September 4, 2025 PAGE 2
SUBJECT: ASSESSMENT DISTRICTS FUNDING AND FISCAL UPDATE establish an annual assessment escalation factor to mitigate the effect of inflation; 2) Reduce the level of services to match assessment revenue with district expenditures; or 3) Continue to provide increasing General Fund subsidies to augment assessment revenue in matching district expenditures.
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uncil chose option 1 and directed staff to pursue an RFP process to contract with an Assessment Engineering consultant to facilitate a two-phased Proposition 218 balloting process to adjust assessments to fully fund the ongoing level of service, update the method of assessment for congruence with state law, and establish an annual assessment escalator to maintain sufficient funding in perpetuity. Staff completed the RFP, and Council approved the selected Assessment Engineering Consultant – NBS. NBS worked with staff over a nearly two-year period for the required Proposition 218 balloting.
P
hase I – South Melrose LMD (October 2023 – May 2024):
The first district proposed for a new assessment was the South Melrose LMD. The ballot included increases aligned with actual service costs, along with an annual Consumer Price Index (CPI) inflator.
Despite our efforts, property owners rejected the ballot measure with 63.8% opposed and 36.2% approved. The district now operates at an eroding level of service due to a combination of static revenues and consistently elevating costs. In prior years, the funding deficit was filled by drawing down limited reserves to maintain service levels.
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hase II – LLMD No. 1 and Street MD (June 2024 – May 2025):
Phase II of the effort included simultaneous balloting for the two largest districts: LLMD No. 1, which provides landscaping maintenance throughout most of the City; and Street MD, which provides street sweeping and some pavement and road maintenance.
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imilar to Phase I, staff conducted multiple community meetings and outreach efforts in early 2025. Ballots for both districts were mailed in March 2025, with public hearings held in May 2025. Despite outreach and additional community engagement efforts, a majority protest again occurred for both districts (LLMD
63.9% opposed, 36.1% approved; SMD 59.8% opposed, 40.2% approved), preventing assessment increases from being enacted.
W
ith significant opposition to the new districts, Council now has two remaining options from the original three presented in 2023, assuming another Proposition 218 balloting process (Option 1) is not pursued at this time.
• O
ption 2: Reduce expenditures (and level of service) to match each district’s aggregate maximum assessment, which unburdens the General Fund of LLMD No. 1 subsidy; or • Option 3: Continue to subsidize LLMD No. 1, currently budgeted at $526,718 and $567,559 for FY 2025/26 and 2026/27, respectively. Staff conservatively estimates a 10-year aggregate cost of nearly $6.3M for FY 2025/26 to 2034/35 with the utilization of this option.
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taff recommends a phased-in approach to Option 2, leaving the current fiscal year as budgeted, reducing the FY 2026/27 General Fund subsidy from $567,559 back to the former maximum subsidy of $275,000, and finally eliminating the subsidy completely beginning with the next biennial Operating Budget for FY 2027/28 and 2028/29, and all future fiscal years. Finance and Public Works staff will present examples of what a reduction in expenditures means for proposed maintenance activities and operations.
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ISCAL IMPACT: Staff’s recommendation has no fiscal impact for FY 2025/26; would create $292,559 in General Fund savings for FY 2026/27; and would eliminate the General Fund subsidy to LLMD No. 1 in future biennial Operating Budgets.
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XHIBITS:
1. Prior Actions
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PRIOR ACTIONS
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n May 27, 2025 adopted the following City Council Resolutions:
1. Resolution No. 2025-92, declaring the results of the City of Vista, Vista Citywide Street Maintenance Assessment District No. 2025-1 (SMAD) Ballot Proceeding and A
bandoning Procedures to form the district.
2. Resolution No. 2025-93, declaring the results of the City of Vista, Vista Citywide Lands
caping and Lighting Maintenance Assessment District No. 2025-2 (LLMAD) Ballot Proceeding and Abandoning Procedures to form the district. (Vote 5-0)
O
n May 13, 2025, conducted the Public Hearings regarding the formation and levy of assessments for the City of Vista, Vista Citywide Street Maintenance Assessment District No. 2025-1 (SMAD) and the City of Vista, Vista Citywide Landscaping and Lighting Maintenance Assessment District No. 2025-2 (LLMAD) and ordered the associated ballot tabulations to be completed May 14 and 15, 2025. (No vote.)
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n March 25, 2025, adopted the following City Council Resolutions:
1. Resolution No. 2025-41 initiating proceedings and declaring its intention to form the City of Vista, Vista Citywide Street Maintenance Assessment District No. 2025-1 as well as preliminarily approving the Engineer’s Report.
2. Resolution No. 2025-42 setting a time and place for the Public Hearing for May 13, 202
5, and ordering the initiation of assessment ballot proceedings for the City of Vista, Vista Citywide Street Maintenance Assessment District No. 2025-1.
3. Resolution No. 2025-43 initiating proceedings and declaring its intention to form the City of Vista, Vista Citywide Landscaping and Lighting Maintenance Assessment District No. 2025-2 as well as preliminarily approving the Engineer’s Report.
4. Resolution No. 2025-44 setting a time and place for the Public Hearing for May 13, 202
5, and ordering the initiation of assessment ballot proceedings for the City of Vista, Vista Citywide Landscaping and Lighting Maintenance Assessment District No. 2025-2. (Vote 5-0)
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n May 14, 2024 conducted a Public Hearing to Consider Adoption of a Resolution Confirming the Ballot Results to Determine Whether a Majority Protests Exists in the Proceedings to Form the City of Vista South Melrose Landscape Maintenance District No. 2024-1 and Adoption of One of Two Resolutions Declaring the Ballot Results and Approving Certain Actions. Confirmed the ballot results to determine whether a majority protest exists in the proceedings to form the City of Vista South Melrose Landscape Maintenance District No. 2024-1 and adopted City Council Resolution No. 2024-62, declaring the results of the South Melrose Landscape Maintenance District No. 2024-1 and abandoning procedures to form the District. (Vote 4-0, Green absent)
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EXHIBIT 1
On March 12, 2024 adopted the following City Council Resolutions:
1. Resolution No. 2024-31, initiating proceedings for the formation, levy and collection of assessments for the South Melrose Landscape Maintenance District No. 2024-1 for the Fiscal Year 2024/25.
2. Resolution No. 2024-32, declaring its intention to provide for the formation, annual levy and collection of assessments for the maintenance of improvements, and calling an assessment ballot proceeding to submit to the qualified property owners within such district the question of the levy of the proposed assessments for the district, Fiscal Year 2024/25.
(Vote 4-0, O’Donnell absent)
On October 10, 2023 adopted City Council Resolution No. 2023-174, awarding a contract to NBS for assessment engineering consulting services; adopted City Council Resolution No. 2023-175, amending the Operating Budget for Fiscal Years 2023/24 and 2024/25. (Vote: 5-0)
On May 9, 2023 presented and discussed pesticides and chemicals used in the City parks and streets and provided direction to staff to immediately stop the use of glyphosate and dithiopyr at parks, historic downtown, and within .25 miles of schools, and to post a notice when the spraying of pesticides will occur. (Vote 4-0, Green absent)
On May 9, 2023 directed staff to work with the City’s Assessment Engineering consultant to explore the formation of one or more Overlay Districts to provide a long-term, sustainable funding solution beginning in FY 2024/25. (No Vote)
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