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HOLD PUBLIC HEARING FOR THE APPROVAL OF THE ENGINEER’S REPORTS, FY 2026-27 ANNUAL BUDGETS, AND ASSESSMENTS FOR INDUSTRIAL STORM DRAINAGE BASIN MAINTENANCE DISTRICTS
recommended action
RECOMMENDATION
It is recommended that the City Council conduct the Public Hearing called for at its meeting on April 28, 2026, to consider public comment and testimony regarding the approval and adoption of the annual budgets and assessment rolls for the six (6) special districts listed below (each, a “District”).
At the conclusion of the Public Hearing, if less than 50 percent of the owners of the assessable land within a District file a protest of the proposed levy of annual maintenance assessments, it is recommended that the City Council adopt resolutions to:
1. Overrule all public hearing protests or objections (including all written protests not withdrawn in writing before the conclusion of the Public Hearing) to the proposed levy of assessments in each District, provided, as to each District, no majority protest exists.
2. Approve and adopt the preliminary Fiscal Year (FY) 2026-27 annual budget for each District.
3. Confirm and levy FY 2026-27 assessments for each of the following six (6) industrial storm drainage basin maintenance Assessment Districts (Districts):
1) Western Pacific Industrial Park Storm Drainage Basin Maintenance District, Project Number 81-1 (Western Pacific)
2) Charter Way Industrial Site Storm Drainage Basin Maintenance District, Project Number 86-4 (Charter Way)
3) Arch Road Industrial Park Storm Drainage Basin Maintenance District, Project Number 84-2 (Arch Road)
4) Airport Gateway Center Storm Drainage Basin Maintenance District, Project Number 96-03 (Airport Gateway)
5) Stockton Airport Business Center Storm Drainage Basin Maintenance District, Project Number 84-1 (Stockton Airport)
6) North Newcastle Storm Pump Station and Basin Maintenance District, Project Number 20-1 (North Newcastle)
4. Approve and adopt the Engineer’s Reports (Reports) showing the FY 2026-27 assessments and the adjusted drainage acres to be used in assessing the costs and expenses in connection therewith as the method of assessment to be used to pay the costs and expenses of the maintenance and operation.
5. Approve, confirm, and levy the assessments, as described in the Reports, of the annual amount of costs and expenses to maintain and operate the improvements upon the several subdivisions of land in each District, in proportion to the estimated benefits to be received by said subdivisions from the operation of said improvements and of the related incidental expenses as described in each respective Report.
It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of these resolutions.
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Summary
The Municipal Utilities Department Stormwater Utility manages a consolidated storm drainage maintenance district and six industrial storm drainage basin maintenance districts throughout the City. These districts were formed under state law and the Stockton Improvement Procedure Code. They provide for the maintenance and operation of capital improvements that offer a special benefit to a designated area, including stormwater quality treatment and flood control.
Each special district requires an annual engineer’s report to identify budgets, boundary changes, and parcel assessments within the district. District budgets include engineering fees for the annual report and tax rolls; attorneys’ fees; maintenance costs for the devices; city administrative costs; county collection fees; replacement reserves; and contingencies. City administrative costs include staff time for overseeing the annual report and tax rolls, managing maintenance contracts, coordinating inspections and maintenance schedules, and administering district finances. Assessments are approved through a public hearing process.
If approved by the City Council, this action will adopt the FY 2026-27 budgets and assessments for the six (6) Districts listed above.
A copy of the FY 2026-27 Annual Engineer’s Reports is on file in the Office of the City Clerk and can also be found on the City of Stockton website at the following link: www.stocktonca.gov/stormwater. <http://www.stocktonca.gov/stormwater>
DISCUSSION
Background
The City Council, by Resolution Numbers 85-0416, 86-1059, 88-0492, 88-0552, 99- 0400, and 2020-12-15-1501, authorized the formation of the six (6) Districts (Attachment A). As a condition of their subdivision agreements, each developer was required to form a maintenance district to provide ongoing maintenance of the basins after construction was complete and the basins were turned over to the City. The formation of these Districts was based on the provisions of the Municipal Improvement Act of 1913 (Act) and the Stockton Improvement Procedure Code (Stockton Code). The Act and the Stockton Code contain provisions for the City to form assessment districts for the maintenance and operation of improvements that award a special benefit to an area.
The purpose of these Districts is to provide funding for the operations and maintenance of the storm drainage basins. The maintenance spraying of weeds, rodent control, maintenance of fences, removal of debris/trash, and general upkeep of the basin. The original Engineer’s Reports, which were approved by the landowners at the time of formation of each District, detail how the City can legally calculate the annual assessments.
The original Engineer’s Reports for the Arch Road, Charter Way, and Western Pacific Districts did not allow for a Cost-of-Living Adjustment to be applied to increase the maximum allowable assessment over the years. Thus, these three basins will remain at the maximum allowable assessment.
The Stockton Airport Business Center District was established in a similar manner, but parcels were annexed to the District in fiscal year 2004-05. The annexed parcels are subject to a cost-of-living adjustment.
Any changes to the formulas used to calculate these assessments must be approved by the affected parcel owners, as required by Article 13D, Section 6, of the California Constitution, commonly known as Proposition 218.
Approved by voters in 1996, Proposition 218 amended the California Constitution to ensure that property owners and tenants who pay directly for property-related services receive adequate notice and have an opportunity to comment on new or increased property-related fees. The law requires that property owners subject to an assessment be given a chance to weigh in on each proposed annual assessment at a public hearing held by the City Council.
On April 28, 2026, the City Council preliminarily approved and confirmed the budgets and proposed assessments for each of the Districts and scheduled a public hearing for June 9, 2026. Through this process, annual assessments are included on the San Joaquin County property tax roll for collection.
Present Situation
Attachment B provides a summary of the proposed fiscal year 2026-27 budget and assessments for each District. Western Pacific Industrial Park, Charter Way Industrial Site and Arch Road Industrial Park are the only assessment districts where the proposed budget exceeds the maximum annual allowable assessments established in the original engineer’s reports, which were approved by landowner ballots or written consent and adopted by the City Council during district formation.
The proposed budgets for the Districts include engineering fees, attorney fees, estimated basin maintenance costs, city administrative costs, and a contingency amount.
For FY 2026-27, the parcel identified as APN 177-020-78 will be annexed into the District, and the total assessment will be reapportioned based on the District’s updated total area. The total assessment cannot increase because the original Engineer’s Report does not include a cost-of-living adjustment; however, parcels may be added if the basin is determined to have adequate capacity. In this case, the basin was found to have sufficient capacity, and the property owner-through building conditions of approval-agreed to annex into the District and pay a fair share of District costs.
For FY 2026-27, the proposed annual and maximum assessments for the Western Pacific Industrial Park, Charter Way Industrial Site, and Arch Road Industrial Park Districts remain unchanged from the FY 2025-26 levels, as the original Engineer’s Reports approved by the landowners do not allow annual increases.
Operational costs of the three basin Districts referenced as Western Pacific Industrial Park, Charter Way Industrial Site, and Arch Road Industrial Park are projected to exceed their maximum allowable assessments in FY 2026-27 based on the contracted costs for preparation of the Engineer’s Report and district maintenance. Sufficient fund balance exists in reserve to cover the gap between costs and the amount funded by the new assessment. Therefore, staff recommend approving the full operational budget and authorizing the transfer of the necessary funds from the reserve balance.
Staff recommend approving the full operational budget. The FY 2025-26 Actual Assessments, FY 2026-27 Proposed Assessments, FY 2026-27 Proposed Amount to Transfer from Fund Balance, FY 2026-27 Operational Budgets, FY 2026-27 Projected Fund Balances, and FY 2026-27 Maximum Allowable Assessments are as follows:
|
District |
FY 2025-26 Actual Assessment |
FY 2026-27 Proposed Assessment |
FY 2026-27 Proposed Amount to Transfer to Expenditure Account |
FY 2026-27 Operational Expenditure Budget |
FY 2026-27 Projected Fund Balance |
FY 2026-27 Maximum Allowable Assessment |
|
Western Pacific Industrial Park |
$17,319.58 |
$17,319.54 |
($7,308.00) |
$24,627.58 |
$69,724.66 |
$17,320.00 |
|
Charter Way Industrial Site |
$12,999.98 |
$12,999.98 |
($9,409.00) |
$22,408.98 |
$5,983.10 |
$13,000.00 |
|
Arch Road Industrial Park |
$17,372.44 |
$17,372.44 |
($7,094.00) |
$24,466.44 |
$116,955.79 |
$17,373.00 |
The Engineer’s Report for the Airport Gateway Center District, and the applicable parcels in the Stockton Airport Business Center District and North Newcastle District contain provisions for an annual cost-of-living adjustment. Each year, the maximum annual assessments are increased in an amount equal to the greater of either 3.0 percent or the annual increase as shown in the Local Consumer Price Index for the San Francisco-Oakland-San Jose All Items, All Urban Users, as published by the Bureau of Labor Statistics for a similar period.
For calendar year 2025, the annual increase is approximately 3.0 percent. For FY 2026-27, the 3.0 percent adjustment has been applied to the calculation of the total maximum allowable assessment and the actual assessment for Airport Gateway Center, and the annexed portions of the Stockton Airport Business Center Districts and North Newcastle District. Proposition 218 allows flexibility to approve the maximum allowable assessment, if warranted, based on estimated expenditures, or if estimated expenditures do not justify the maximum to collect a lesser amount.
Staff recommend that the City Council approve the increase in the maximum allowable assessment and the increase in the actual assessment that will set the base for upcoming fiscal year calculations. Staff also recommend approving the full operational budget and the transfer of funds needed from reserve balance to cover the gap in expenses in the Stockton Airport Business Center.
Sufficient fund balance exists in reserve to pay for the gap between costs and the amount funded by the new assessment. The FY 2025-26 Actual Assessments, FY 2026-27 Proposed Assessments, FY 2026-27 Proposed Amount to Transfer from Fund Balance, FY 2026-27 Operational Budgets, FY 2026-27 Projected Fund Balances, and FY 2026-27 Maximum Allowable Assessments are as follows:
|
District |
FY 2025-26 Actual Assessment |
FY 2026-27 Proposed Assessment |
FY 2026-27 Proposed Amount To Transfer To Expenditure Account |
FY 2026-27 Operational Expenditure Budget |
FY 2026-27 Projected Fund Balance |
FY 2026-27 Maximum Allowable Assessment |
|
Airport Gateway |
$33,683.22 |
$34,693.70 |
$0.00 |
$34,693.70 |
$409,909.20 |
$129,725.71 |
|
Stockton Airport Business Center |
$15,430.96 |
$29,966.62 |
$0.00 |
$29,966.62 |
$351,652.46 |
$45,314.29 |
|
North Newcastle |
$74,861.06 |
$77,106.68 |
$0.00 |
$77,106.68 |
$240,783.67 |
$94,256.21 |
Administrative and operational costs for the maintenance of the Stockton Airport Business Center basin are offset with transfers from the Little John Creek Landscape Maintenance District No. 94-1 and Seabreeze Landscape Maintenance District No. 96-2 ($6,825.00 and $2,836.00), respectively, as the basin landscaping is provided for in those districts. Due to these contributions, $9,661.00 will be deposited back into the reserve.
Fund balances are reserved for infrastructure replacement and are used to construct new facilities when existing ones reach the end of their operational life.
The tax rolls submitted for collection show the approved maximum assessment and the actual amount that will be collected through San Joaquin County property taxes.
This Public Hearing provides any interested person(s) the opportunity to protest the proposed budget, the proposed method and proportion of assessment, or the maximum annual assessment, either in writing or verbally, for each district. A majority protest exists if more than 50 percent of the owners of assessable land within a district submit a written or verbal protest. Notice of this public hearing was published in The Record on May 8, 2026, and May 29, 2026.
FINANCIAL SUMMARY
The City does not contribute financially to any of the Districts. All fees and expenses are paid solely from the annual assessments collected on the San Joaquin County tax roll or from District reserve funds. Under Proposition 218, funds collected in each District may only be used for maintaining and operating that District’s storm drainage basin.
District funds must benefit only the properties within that District and cannot be used for the broader stormwater system or any other utility.
Administrative and operational costs for the maintenance of the Stockton Airport Business Center basin are offset with transfers from the Little John Creek Landscape Maintenance District No. 94-1 and Seabreeze Landscape Maintenance District No. 96-2 ($6,825.00 and $2,836.00), respectively, as the basin landscaping is provided for in those districts. Due to these contributions, $9,661.00 will be deposited into the reserve.
This action has no impact on the General Fund or any other unrestricted funds.
Attachment A - Storm Drainage Basin Districts Location Map
Attachment B - Storm Drainage Basin District Budgets and Fund Balance Projections