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PRELIMINARILY APPROVE THE FISCAL YEAR 2015-2016 STOCKTON CONSOLIDATED LANDSCAPE MAINTENANCE ASSESSMENT DISTRICT NO. 96-2 ANNUAL ENGINEER’S REPORT, PROPOSED FISCAL YEAR 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 Stockton Consolidated Landscape Maintenance Assessment District No. 96-2 Annual Engineer’s Report for Fiscal Year 2015-2016; 2) preliminarily approves the Fiscal Year 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 Stockton Consolidated Landscape Maintenance Assessment District No. 96-2 (Consolidated Landscape District) levies assessments to fund maintenance of landscaping, parks, and related improvements in 27 zones across the City. The Landscaping and Lighting Act of 1972 (Act), under which this District was formed, requires annual preliminary approval of the Consolidated Landscape District budget and the Annual Engineer’s Report, and requires an annual public hearing for final consideration of the budget and the Annual Engineer's Report.
The recommended resolution preliminarily approves the Consolidated Landscape District’s Annual Engineer’s Report and the Fiscal Year (FY) 2015-16 budget, sets a public hearing for June 9, 2015, for the preliminary approval of the District’s FY 2015-16 budget and final approval 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, and authorizes the City Clerk to publish notice of the public hearing. None of the proposed FY 2015-16 assessments have been increased from the assessments for the current fiscal year. All costs are funded by assessments levied on the properties in the zones of the Consolidated Landscape District. All funds generated from the assessments for each zone can only be used for specific work in that zone.
DISCUSSION
Background
On February 26, 1996, Council adopted Resolution No. 96-0084 that consolidated the eight Landscape Maintenance Districts that existed at that time into one Consolidated Landscape District. The City used the provisions of the Act to establish the original individual districts and the Consolidated Landscape District. The Act contains provisions for the City to form an assessment district, or annex territory to an existing district, for the maintenance and operation of improvements that impart a special benefit to an area. Though the title of the Act references landscaping and lighting, a district can be formed to maintain a variety of improvements. These improvements include, but are not limited to, landscaping, fountains, ornamental structures, public lighting (such as street lights and traffic signals), walls, irrigation, parks, and park equipment. The Consolidated Landscape District provides for the maintenance of these types of improvements in certain subdivisions throughout the City.
There are now a total of 34 zones in the Consolidated Landscape District. During the 2014-2015 fiscal year, no new zones were formed, and no new territory was annexed to any existing zone. Assessments are levied in 27 zones (Attachment A). Assessments are not levied in the remaining seven zones as there are no improvements to maintain.
Of the 27 zones where assessments are levied, seven of the zones (A-1 Weber/Sperry, A-2 Morada West, B-1 Long Park, B-2 Weston Ranch, B-3 Weston Park, C-1 Spanos East, and D-1 Bridgeport Trails) do not have a provision for an annual increase to the assessment. The assessment in these districts is at the same level as when the zones were originally formed in the early 1990's. Consequently, the revenues collected do not automatically keep pace with inflation and there is a diminishing amount of maintenance that can be afforded year after year. Any proposed increase in the annual assessment would have to be approved by a majority of the affected property owners.
Assessments in the remaining 20 zones were 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. The actual assessment may be lower than the maximum allowable assessment if the zone’s estimated expenses for the fiscal year warrant a lower assessment. 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. Zones that allow for an automatic inflator have a level of revenue that better ensures a regular level of maintenance year after year, including allowing for eventual replacement of the infrastructure.
The Consolidated Landscape District sets annual assessments, collected by the County with annual property taxes, on each taxable parcel contained within the Consolidated Landscape District. These annual assessments provide funding for maintenance of the improvements, parks, inspection, repair and replacement of improvements, and other associated administrative costs, including preparing an Annual Engineer’s Report and assessment roll. The Annual Engineer’s Report contains the Consolidated Landscape District's budget. The budget details the maintenance and administrative costs for all affected zones. The property owners are responsible to fund only those improvements within their zone.
The assessments are apportioned in a manner to distribute the amounts among all assessable parcels in proportion to the special benefit conferred on each parcel. Each year all properties are evaluated to determine if they meet the criteria to be assessed. If they are to be assessed, a dwelling unit equivalent factor (dueF) is assigned to each parcel. The dueF is based on the parcel's use. A single-family residential lot is equivalent to one dueF. The dueF for other classifications of properties, such as multi-family or commercial, is determined by the Allocation of Costs and Method of Assessment Spread contained in the Annual Engineer’s Report.
Present Situation
Attachment B is a summary of the proposed FY 2015-16 budget for the Consolidated Landscape District, and includes the proposed per dueF/single-family dwelling assessment for each zone where an assessment is proposed to be levied. The budgeted expenditures include: contracted maintenance, utilities, administration, repair and replacement of plant material and infrastructure, and a contingency allowance. The budgeted revenues are from assessments on the property owners. None of the proposed FY 2015-16 assessments has been increased from the assessments for the current fiscal year. For the zones that have a provision for an annual escalator, it is proposed that the maximum allowable assessment be increased by three percent.
The overall budget for FY 2015-16 is approximately $4.99M. This is an increase of approximately $1.18M from the $3.81M FY 2014-15 budget. The increase will fund the items as noted below. Approximately $600,000 of the increase is for “one-time” project/repair costs.
• The current maintenance contract was originally commenced January 1, 2012, and expires at the end of 2015. The current contract annual value is $958,000. The Consumer Price Index increased approximately 13 percent during those four years. It is anticipated that the new maintenance contract will increase by approximately 15 percent or $150,000.
• City staff costs increased approximately $156,000 due to increased payroll charges and staff assignments for inspection.
• The amounts budgeted for wall repairs has been increased approximately $250,000 from approximately $152,000 to $400,000. This provides an allowance in each zone to accommodate the cost to repair vehicular damage to walls, should an incident occur.
• A tree trimming project throughout Zone A-3 (La Morada) is estimated at $135,000. There are an estimated 1,000 trees in Zone A-3 that are located between the curb and back-up walls that require trimming to provide clearance over roadways for vehicles and to remove limbs that are extending into resident's yards.
• $30,000 is budgeted for tree trimming or emergency tree removal services in the parks.
• A game court resurfacing project is estimated at $187,000.
• The street lighting budget has been increased by $65,000 to pay for lights in certain zones that are eligible to be funded. These are lights that are currently funded from the Gas Tax budget.
• $25,000 is budgeted in Zone E-3 (Seabreeze) to replace wire for pathway lights along the open space that lies under the PG&E transmission west of Pock Lane.
Should some of these projects not be completed during FY 2015-16, or should the amount or cost of the work be less than what has been budgeted, any unexpended funds at the end of the year are returned to the individual zone’s reserve account.
In all 27 zones, there is a request for an appropriation from the Reserve for Continuing Appropriations (the reserve) to balance each zone's budget. Typically this appropriation from reserve funds is less than the budgeted contingency for unplanned expenditures and therefore in many cases will not be spent. In most of these zones, the amount remaining in reserve is considered sufficient to meet any current obligations and provide for an unplanned contingency, such as damage to landscaping or theft of wire from lights in a park. For 20 of the zones, there is an allowance for an increase in the annual assessment that could be used to balance estimated expenditures. However, in order to keep the assessment as low as possible, it is recommended that reserve funds be utilized. The remaining seven zones have a fixed assessment, and the appropriation from reserve funds is the only method of balancing the budgeted expenditures.
Siegfried Engineering, Inc. has completed an evaluation of the asset replacement cost in each zone ($58M in total), and of the adequacy of the reserve funds for incremental replacement. The reserve funds have been established over a number of years to fund eventual replacement of improvements such as turf, trees, shrubs, irrigation controllers and booster pumps, park play equipment, masonry block and pre-cast concrete back-up walls, and park structures such as picnic structures and bathroom buildings. In zones where street lighting is an improvement whose maintenance is funded, the annual assessment is set at a rate to fund eventual replacement of the street lights. The evaluation found that while the reserves are generally adequate for short term operation and maintenance, the reserve level for most zones is insufficient for the long term replacement of larger improvements such as walls, park play equipment, and park structures. Over the upcoming fiscal year, staff will develop a plan for each zone as to how to best address this shortfall to ensure the long term sustainability of each zone.
The seven zones that do not have a provision for an annual increase to the maximum allowable assessment are A-1, A-2, B-1, B-2, B-3, C-1, and D-1. Any proposed increase in the annual assessment in these zones would have to be approved by a majority of the affected property owners. Reserves are currently being drawn down to fund maintenance. Ultimately, given increases in costs in future years, the reserves in each of the seven zones will be depleted, and the zones will become unable to fund adequate maintenance. Current projections are that the reserves in any of these seven zones will be adequate to continue the current service levels for at least five years. The evaluation completed by Siegfried Engineering, Inc. included development of proposals for addressing this long term imbalance. These proposals are being evaluated, and the plan for long term sustainability of each zone will include options to address this issue.
The FY 2015-16 Annual Engineer’s Report for the District, which contains the budget, assessment amounts, and a description of improvements eligible to be maintained, is on file with the City Clerk. Attachment B is a summary of the budget and includes the proposed actual assessment per dueF/single-family dwelling, and the proposed maximum assessment. The assessments fund maintenance of over four million square feet of street landscaping, 68+ acres of open space, 42+ miles of back-up walls, 10.5+ miles of bicycle/pedestrian paths, and 12 parks totaling over 114 acres. A brief summary of the improvements eligible to be maintained by each zone, and the proposed actual assessment and proposed maximum assessment per dueF for each zone, is contained in Attachment C.
The recommended resolution will: 1) preliminarily approve the Consolidated Landscape District’s Annual Engineer’s Report for the FY 2015-16; 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, preliminary budget, and assessments for the Consolidated Landscape 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 Consolidated Landscape 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 $2,870,059
Total Proposed FY 2015-16 Appropriation from Reserves $2,125,261
TOTAL PROPOSED FY 2015-16 BUDGET $4,995,320
TOTAL CURRENT FY 2014-15 BUDGET $3,813,650
INCREASE/(DECREASE) $1,181,670
The requested appropriation from the reserves will leave an estimated $8,048,044 in reserve funds available for future programming. For additional details of particular zones, please see attachments.
There is no impact to the City’s General Fund or to any other unrestricted fund as a result of taking the recommended action. The City makes no financial contribution to the Consolidated Landscape District. All fees, costs, and expenses, including staff costs, are paid from the proceeds of the annual assessments to be levied.
Attachment A - Vicinity Map
Attachment B - Proposed Budget
Attachment C - Summary of Zones