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PRELIMINARILY APPROVE THE 2015-2016 CENTRAL STOCKTON LIGHTING MAINTENANCE DISTRICT ANNUAL ENGINEER’S REPORT, PROPOSED 2015-2016 BUDGET, AND SET A PUBLIC HEARING FOR JUNE 9, 2015
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution that: 1) preliminarily approves the Central Stockton Lighting Maintenance District Annual Engineer’s Report for FY 2015-2016; 2) preliminarily approves the FY 2015-2016 budget; 3) sets a public hearing for June 9, 2015; and 4) authorizes the City Clerk to publish notice of the public hearing.
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Summary
The Central Stockton Lighting Maintenance District (District) levies assessments to fund maintenance of specialty streetlights in the Oxford Manor area (Attachment A). The Landscaping and Lighting Act of 1972 (Act), under which this District was formed, requires annual preliminary approval of the District budget and the Annual Engineer’s Report, and requires an annual public hearing for final consideration of the Annual Engineer’s Report for final approval of the FY 2015-16 District’s budget with the City’s FY 2015-16 Annual Budget.
The recommended resolution preliminarily approves the District’s Annual Engineer’s Report and the FY 2015-2016 budget, sets a public hearing for June 9, 2015, for the final approval of the FY 2015-2016 the Annual Engineer’s Report, and authorizes the City Clerk to publish notice of the public hearing. The proposed assessment rates for FY 2015-2016 are the same as the rates for the current fiscal year. All funds generated from the assessments can only be used for specific work in the zone from which they were collected.
DISCUSSION
Background
The City operates and maintains approximately 19,000 streetlights. In most areas of the City, the cost of operating and maintaining streetlights is funded from the Gas Tax Fund. However, in the area of central Stockton, a special street lighting District was formed to provide enhanced lighting. The enhanced lighting consists of more lights per block than a standard design would require, and more expensive, non-standard poles and fixtures.
The District was formed in 2011 after achieving a passing vote under the process established by Proposition 218. This process requires all benefiting property owners to be given the opportunity to vote on the establishment of a maintenance assessment district. In order for an assessment district to be established, a majority of the votes cast must be in favor. The District consists of 278 non-City standard streetlights in the Oxford Manor area, and allows for assessments to be collected for the special benefit received as a result of the non-standard lighting. The City funds the general benefit provided by the lighting using Gas Tax funds.
The District sets annual assessments collected by the County with annual property taxes on each taxable parcel contained within the District. These annual assessments provide funding for operation, electricity, maintenance, and other administrative costs associated with the specialty lighting system, including preparing an Annual Engineer’s Report and assessment roll. The Annual Engineer’s Report contains the District’s budget. The budget details the maintenance and administrative costs for the Oxford Manor zone.
The total estimated revenue required for FY 2014-2015 operation and administration costs was $35,719.50. The general benefit was determined to be $11,896.80 and was funded by Gas Tax revenues. The remaining $23,822.70 was determined to be the special benefit and was assessed proportionately to the properties within the District.
The special benefit received by each parcel is directly proportional to the Linear Front Footage (LFF) of each parcel fronting the enhanced lighting corridor or street. Therefore, the assessment per parcel was determined by first defining a “Unit Assessment Rate” (dollars per LFF) for the Oxford Manor zone. This assessment rate was calculated by dividing the total special benefit cost in the zone by the total LFF of the zone. This Unit Assessment Rate (dollars per LFF) was then multiplied by each parcel LFF to determine the special benefit assessment for each parcel. The actual FY 2014-2015 LFF assessment rate was $0.433677. The maximum FY 2014-2015 LFF assessment rate was $0.46009. The actual assessment rate has not been increased since the FY 2012-2013 assessment year.
The District assessment was approved with an annual escalator. The escalator is the greater of three percent, or the increase in the San Francisco-Oakland-San Jose All Urban Consumers Price Index. The escalator allows the assessment, when necessary, to keep pace with inflation without having to go through the time and expense to ballot the property owners. The maximum allowable assessment annually adjusts by the Consumer Price Index, while the actual assessment needed to cover a zone's expenses is determined based on the estimated expenses for the fiscal year. From February 2014 to February 2015, the San Francisco-Oakland-San Jose All Urban Consumers Price Index increased 2.5 percent. Therefore, the maximum escalator that can be applied to the maximum allowable assessment for FY 2015-2016 is three percent. The maximum allowable assessment has been increased three percent each year since the District was formed.
Present Situation
A summary of the proposed FY 2015-2016 budget for the District (Attachment B) is contained within the Annual Engineer’s Report, which is on file with the City Clerk. The budgeted expenditures include: energy use, bulb replacements, administration, replacement reserves, general maintenance, re-painting, knock downs, and contingency. Funding for expenditures is from assessments levied on the properties within the District and Gas Tax.
Although the total proposed expenditures for FY 2015-2016 have increased from the current year due to increase electricity costs, the total proposed FY 2015-2016 assessment amount is unchanged at $23,822.70. This has been achieved by reducing the contingency allocation. Accordingly, the proposed FY 2015-2016 assessment rate is $0.433677 per LFF, which is the same as the current assessment rate. The maximum assessment rate is recommended to be increased the allowed three percent from $0. 46009 to $0.473893 per LFF.
The District was established with the expectation that longer term refurbishment and gradual replacement of equipment would be accomplished utilizing a combination of operating and reserve funds. A plan will be developed over the next year for the timing of those refurbishments and replacements, and to evaluate the reserve balance compared to needs contemplated when the District was formed. The evaluation will include determining whether the assessment is being levied at a level that will allow for continued maintenance for all lights at contemplated service levels and provide sufficient reserve to meet long term needs. The District currently generates sufficient revenue for regular operations and has significant reserves, so a substantial revision to the current assessment is not anticipated.
At the end of each fiscal year, any unexpended funds are returned to the District’s reserve, which can be used to fund major repairs, such as wire and/or conduit replacement, foundation replacements, or other major repair or improvement.
The recommended resolution will:
1. Preliminarily approve the District’s Annual Engineer’s Report for the FY 2015-2016;
2. Preliminarily approve the proposed budget for maintenance of improvements for the FY 2015-2016;
3. Set a public hearing for June 9, 2015, to consider final approval of the Annual Engineer’s Report and assessments for the District; and
4. Authorize the City Clerk to publish notice of the public hearing.
Notice of the public hearing is required to be published in The Record a minimum of ten days prior to the public hearing, or no later than May 29, 2015.
FINANCIAL SUMMARY
The proposed Central Stockton Lighting Maintenance District budget for FY 2015-16 is detailed in Attachment B and summarized below. The accompanying resolution recommends preliminary approval of this budget with final approval with the City’s FY 2015-16 Annual Budget to be presented to Council on June 23, 2015.
Total Proposed FY 2015-16 Assessments (Special Benefit) $23,823
Total Proposed City Contribution (Gas Tax) (General Benefit) $13,763
TOTAL PROPOSED FY 2015-16 BUDGET (Fund 071) $37,586
TOTAL CURRENT FY 2014-15 BUDGET (Fund 071) $35,720
INCREASE/(DECREASE) $1,866
Assessments are collected to fund the special benefit costs received by the properties in the District. The City, via Gas Tax (Account No. 030-3065 Electrical and Traffic Signals), funds the general benefit costs.
There is no impact to the City’s General Fund or to any other unrestricted fund as a result of taking the recommended action.
Attachment A - Map of Central Stockton Lighting Maintenance Assessment District (Zone 4, Oxford Manor)
Attachment B - Proposed 2015-2016 Budget