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PRELIMINARILY APPROVE THE 2026-27 ANNUAL ASSESSMENTS FOR INDUSTRIAL STORM DRAINAGE BASIN MAINTENANCE DISTRICTS AND ANNUAL ENGINEER’S REPORT, THE PROPOSED FISCAL YEAR 2026-27 BUDGET, AND SET A PUBLIC HEARING FOR JUNE 9, 2026
recommended action
RECOMMENDATION
It is recommended that the City Council adopt six resolutions of intention to:
1. Preliminarily approve the Fiscal Year (FY) 2026-27 annual assessments for the total of six (6) Storm Drainage Basin Maintenance Districts proposed budgets.
2. Preliminarily approve and confirm the Engineer’s estimate of the itemized costs and expenses of the maintenance and incidental expenses contained in the proposed budget.
3. Preliminarily approve the annexation of property under Assessor’s Parcel Number (APN) 177-020-78 into the District as required by the recent building permit issued for the site’s development.
4. Approve setting a Public Hearing for June 9, 2026, for the following six (6) industrial storm drainage basin districts:
i. Western Pacific Industrial Park Storm Drainage Basin Maintenance District, Project Number 81-1 (Western Pacific)
ii. Charter Way Industrial Site Storm Drainage Basin Maintenance District, Project Number 86-4 (Charter Way)
iii. Arch Road Industrial Park Storm Drainage Basin Maintenance District, Project Number 84-2 (Arch Road)
iv. Airport Gateway Center Storm Drainage Basin Maintenance District Project Number 96-03 (Airport Gateway)
v. Stockton Airport Business Center Storm Drainage Basin Maintenance District, Project Number 84-1 (Stockton Airport)
vi. North Newcastle Storm Pump Station and Basin Maintenance District, Project Number 20-1 (North Newcastle)
5. Authorize the City Clerk to publish notice of the public hearing.
It is also 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 several Storm Drainage Maintenance Districts and Storm Drainage Basin Districts (District) throughout the City. These Storm Drainage Maintenance Assessment Special Districts were formed pursuant to State law and the Stockton Improvement Procedure Code. The Districts provide for the maintenance and operation of capital improvements that impart a special benefit to a designated area, including stormwater quality treatment and flood control.
These Special Districts require an annual Engineer’s Report to identify the budgets, changes to boundaries and assessments for each parcel contained within each District. The budgets for each District include engineering fees for the preparation of the annual Engineer’s Report and tax rolls; attorney’s fees; estimated costs of maintenance work to the device(s); City administrative costs; County costs to collect the assessments on the tax rolls; replacement reserve costs; and contingency fees. City administrative costs include staff salary expenses to oversee the annual Engineer’s Report and tax rolls, maintenance service contracts, coordinate device inspections, and maintenance schedules, as well as District finances management. The assessments are approved through a public hearing process.
If approved, this action will preliminarily approve the Annual Engineer’s Reports (Annual Reports) and the FY 2026-27 budgets for the six (6) Storm Drainage Basin Maintenance Districts and set a Public Hearing date for June 9, 2026.
The FY 2026-27 assessments for the Arch Road, Charter Way, and Western Pacific Districts are not proposed to change and will remain the same as in FY 2025-26. The remaining three Districts, Airport Gateway Center, North Newcastle, and Stockton Airport Business Center, are subject to an annual Cost-of-Living Adjustment.
The Municipal Improvement Act of 1913 and the Stockton Improvement Code, Part V require annual approval of the budgets and Engineer’s Reports. A copy of the FY 2026-27 Annual Engineer’s Reports is on file in the Office of the City Clerk and is also available on the City of Stockton website at the following link:
<http://www.stocktonca.gov/stormwater>.
DISCUSSION
Background
The City Council, in accordance with Resolutions 85-0416, 86-1059, 88-0492, 88-0552, 99-0400, and 2020-12-15-1501, authorized the formation of six storm drainage basin maintenance districts. All six storm drainage basins are in industrial areas of Stockton. Attachment A shows the location of each basin. Attachment B contains the budgets for each district. 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 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 impart a special benefit to an area.
The purpose of these districts is to provide funding for the inspection, operation, and maintenance of the storm drainage basins, including weed abatement, rodent control, fence maintenance, debris/trash removal, and general basin upkeep. 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 similarly established, but parcels were annexed to the District in FY 2004-05. The annexed parcels of this District are subject to a Cost-of-Living Adjustment. The Stockton Airport Gateway District was established in 1999. All parcels in this District are subject to a Cost-of-Living Adjustment. Any changes to the formulas for the calculation of any of these assessments are subject to a vote by the impacted parcel owners as required by California Constitution Article 13(D) Section 6, commonly known as Proposition 218. Approved by taxpayers in 1996, Proposition 218 amended the California Constitution to require that property owners subject to the assessment receive ample notice and have an opportunity to weigh in on the adoption of each proposed annual assessment via a public hearing held by the City Council.
Present Situation
Attachment B provides a summary of the proposed FY 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 budget exceeds the established Maximum Annual Allowable Assessments contained in the original Engineer’s Reports, which were approved by landowner ballots or written consent of the landowners and subsequently approved by the City Council as part of the district formation proceedings. The proposed budgets for the districts include engineering fees, attorneys’ fees, estimated pond (basin) maintenance work, City of Stockton administration costs and contingency.
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 new total area. The total assessment cannot increase due to the absence of a Cost-of-Living Adjustment factor in the original Engineer’s Report; however, parcels may be added if the basin is determined to have adequate capacity. In this case, the basin was deemed 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.
By approving the six (6) resolutions of intention, the City Council will:
1. Provide preliminary approval to annex parcel 177-020-78 into the District;
2. Provide preliminary approval of the budgets for the maintenance of the improvements for the above listed maintenance districts for FY 2026-27;
3. Schedule the public hearing for the final approval of the proposed budgets for all districts on June 9, 2026; and
4. Direct that a public notice be published in The Record at least ten days prior to the hearing date.
The proposed FY 2026-27 annual and maximum assessments for the Western Pacific Industrial Park, Charter Way Industrial Site, and Arch Road Industrial Park Districts remain at the same level as the FY 2025-26 annual assessments due to no annual increases allowed within the original Engineer’s Report approved by the landowners.
Operational costs of the three basin districts referenced as Western Pacific Industrial Park, Charter Way Industrial Site, and Arch Road Industrial Park are not projected to exceed their maximum allowable assessments in FY 2026-27 based on the contracted costs for preparation of the Engineer’s Report and maintenance of the district. 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.
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 (CPI) 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 2026, 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 to levy a lesser amount if the estimated expenditures do not justify collecting the maximum.
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 |
Little John Creek Landscape Maintenance District No. 94-1 and Seabreeze Landscape Maintenance District No. 96-2 contribute to the Stockton Airport Business Center basin reserve balance ($6,825.00 and $2,836.00, respectively). Due to these contributions, $9,661.00 will be added to the reserve.
Fund balances are for infrastructure replacement accounts to fund construction of new facilities at the end of their operational life.
The tax rolls submitted for collection show the approved maximum assessment as well as the actual amount that will be submitted for collection on the San Joaquin County property taxes.
FINANCIAL SUMMARY
The City makes no financial contribution to any of the Districts. All fees, costs, and expenses incurred will be payable solely from the proceeds of the annual assessments to be levied and collected on the San Joaquin County tax roll, or from each District’s reserve funds. The use of the funds collected within the various districts is restricted by Proposition 218 to pay only the expenses related to the maintenance and operation of the specific storm drainage basin for which they were collected.
Funds collected from the property owners within a district may only be used for work on the basin serving that district, as the improvements provide a special benefit solely to the properties within that district. District funds are kept separate and may not be used to operate, maintain, or otherwise support the stormwater utility or any other utility outside of the specific district.
This action has no impact on the General Fund or any other unrestricted funds.
Attachment A - Storm Drainage Basin Districts Map
Attachment B - Summary of Industrial District Budget- FY26-27