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PRELIMINARILY APPROVE THE 2016-2017 CENTRAL STOCKTON LIGHTING MAINTENANCE DISTRICT ANNUAL ENGINEER’S REPORT FOR THE PROPOSED 2016-2017 FISCAL YEAR BUDGET, AND SET A PUBLIC HEARING FOR JUNE 21, 2016
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution authorizing the City Manager to:
1. Preliminarily approve the Central Stockton Lighting Maintenance District Annual Engineer’s Report for the fiscal year (FY) 2016-2017.
2. Preliminarily approve the proposed FY 2016-2017 budget.
3. Set a public hearing for June 21, 2016.
4. Authorize the City Clerk to publish notice of the public hearing.
It is further recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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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 budget and Annual Engineer’s Report.
The recommended resolution preliminarily approves the District’s Annual Engineer’s Report and the FY 2016-2017 budget, sets a public hearing for June 21, 2016, for the final approval of the FY 2016-2017 budget and the Annual Engineer’s Report, and authorizes the City Clerk to publish notice of the public hearing. The proposed assessment rate for FY 2016-2017 has not been increased from the rate for the current 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 Measure K 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 in a voting 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 street lighting. The City funds the general benefit provided by the lighting using Measure K 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 2015-2016 operation and administration costs was $37,586.10. The general benefit was determined to be $13,763.40 and was funded by Measure K 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 2015-2016 LFF assessment rate was $0.433677. The maximum FY 2015-2016 LFF assessment rate was $0.473893. 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 greatest 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 December 2014 to December 2015, the San Francisco-Oakland-San Jose All Urban Consumers Price Index increased 3.2 percent. Therefore, the maximum escalator that can be applied to the maximum allowable assessment for FY 2016-2017 is 3.2 percent. The maximum allowable assessment has been increased by the maximum allowable escalator each year since the District was formed.
Present Situation
A summary of the proposed FY 2016-2017 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 Measure K.
The total proposed FY 2016-2017 budget is $43,216.60, which is an increase of $5,630.50 from FY 2015-2016. The increase is attributable to increases in energy costs and knockdown replacements. However, these costs are primarily attributed to the general benefit portion; therefore, there is no increase proposed in the amount to be assessed for the special benefit portion. The actual FY 2016-2017 assessment rate is proposed to be $0.433677 per LFF, which is the same as last year. The maximum assessment rate is recommended to be increased the allowed 3.2 percent to $0.489058 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. Staff is developing a plan for the timing of those refurbishments and replacements, and evaluating the reserve balance. This 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.
This District, like the Stockton Consolidated Landscape Maintenance Assessment District No. 96-2, was formed under the Act. The Act allows for consolidation of existing assessment districts formed under the Act into a single district. During FY 2016-2017 staff will pursue consolidating this District into the Stockton Consolidated Landscape Maintenance Assessment District No. 96-2. This action would streamline annual City Council approval of maintenance assessment district budgets, engineer’s reports, levy of assessments, and public hearings as a single item instead of separate approval of landscaping assessment district and lighting assessment district. All funds would continue to remain separate for each zone.
The recommended resolution will:
1. Preliminarily approve the District’s Annual Engineer’s Report for the FY 2016-2017.
2. Preliminarily approve the proposed budget for maintenance of improvements for the FY 2016-2017.
3. Set a public hearing for June 21, 2016, to consider final approval of the Annual Engineer’s Report, budget, and assessments for the District.
4. Authorize the City Clerk to publish notice of the public hearing.
Notice of the public hearing is required to be published a minimum of 10 days prior to the public hearing. The required notice will be published in The Record on June 10, 2016.
FINANCIAL SUMMARY
Total Proposed FY 2016-2017 Assessments (Special Benefit) $23,822.70
Total Proposed City Contribution (Measure K) (General Benefit) $19,393.90
TOTAL PROPOSED FY 2016-2017 BUDGET $43,216.60
TOTAL CURRENT FY 2015-2016 BUDGET $37,586.10
INCREASE/(DECREASE) $5,630.50
Assessments are collected to fund the special benefit costs received by the properties in the District. The City, via Measure K (Account No. 082-3065 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 FY 2016-2017 Budget