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PRELIMINARILY APPROVE THE 2016-2017 STOCKTON CONSOLIDATED LANDSCAPE MAINTENANCE ASSESSMENT DISTRICT NO. 96-2 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. Describe improvements to be added for maintenance to Zone C-2 of the Stockton Consolidated Landscape Maintenance Assessment District No. 96-2 and order the Engineer to describe them in the Engineer's Report.
2. Preliminarily approve the Stockton Consolidated Landscape Maintenance Assessment District No. 96-2 Annual Engineer’s Report for the fiscal year (FY) 2016-2017.
3. Preliminarily approve the proposed FY 2016-2017 budget.
4. Set a public hearing for June 21, 2016.
5. 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 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 describes improvements to be added to Zone C-2 and orders these improvements to be described in the Engineer's Report, preliminarily approves the Consolidated Landscape 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. None of the proposed FY 2016-2017 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.
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.
There are now a total of 34 zones in the Consolidated Landscape District. During the FY 2015-2016, 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. Any 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, 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.
Section 22622 of the Act provides for adding new improvements to an existing maintenance assessment district. Adding improvements requires a resolution in which the described improvements are to be approved by the City Council, including a description of the improvements in the Engineer's Report, and considered at the public hearing. If there is not a majority protest of the property owners, the addition is authorized by resolution.
Zone C-2 was originally formed on July 23, 2002, by Resolution No. 02-0486. On September 14, 2004, by Resolution No. 04-0672, additional territory that included the Beck Farms development were annexed to Zone C-2. Beck Farms was conditioned to provide maintenance for street landscaping installed with the development. Zone C-2 improvements currently include approximately 16,800 feet of back-up walls and 256,480 square feet of landscaping.
The Beck Farms Unit No. 2 Tentative Map (TM24-04) was approved on November 22, 2004. TM24-04 required the installation of approximately 230 feet of back-up fencing and approximately 1,500 square feet of landscaping along the westerly side of Jennifer Lane and the northerly side of Little Grass Way. The Beck Farms Unit No. 2 final map was recorded on March 2, 2006. However, due to the economic downturn these improvements were not constructed at that time, and the addition of these improvements to Zone C-2 was deferred.
Present Situation
The Beck Farms Unit No. 2 development stalled with the economic downturn. Over the last couple of years the pace of homebuilding increased and the development is nearing completion. Development is now at a point where the required back-up fencing and landscaping on Jennifer Lane and Little Grass Way is to be installed.
It is recommended that the fencing and landscaping be added to Zone C-2 as improvements that are eligible to be maintained. The additional fencing represents 1.35 percent of the current fencing and the additional landscaping is .58 percent of the current landscape area. The recommended FY 2016-2017 Zone C-2 assessment is $130.00 per single-family residence, and the maximum is $219.29 per single-family residence. Given the small amount of improvements proposed to be added to Zone C-2 in relation to the overall quantity of improvements currently in Zone C-2, the Jennifer Lane/Little Grass Way improvements can be added without having to increase the recommended actual FY 2016-2017 assessment and without exceeding the recommended maximum assessment.
Attachment B is a summary of the proposed FY 2016-2017 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. The budgeted revenues are from assessments on the property owners. None of the proposed FY 2016-2017 assessments have 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 3.2 percent.
The overall budget for FY 2016-2017 is approximately $4.58M. This is a decrease of approximately $410K from the $4.99M FY 2015-2016 budget. The decrease is primarily attributable to the new street landscape maintenance contract that was bid at the same cost as the expiring contract, which was approximately $150K less than estimated; a renegotiated park maintenance contract resulting in an approximately $200K annual cost reduction, and a completed $135K tree trimming contract that was included in the FY 2015-2016 budget.
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 to balance estimated expenditures; however, in order to avoid such an increase, and keep the assessment as low as possible, it is recommended that reserve funds be utilized. The remaining seven zones where an appropriation has been requested have a fixed assessment, and the appropriation from reserve funds is the only method of balancing the budgeted expenditures.
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 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 maintenance at the level currently provided. 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 reserve funds have been established over a number of years to fund eventual replacement of improvements such as turf, trees, shrubs, irrigation system components, 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 re-lamping and knock-down repairs/replacement as needed. While the reserves are generally adequate for short term operation and maintenance, the reserves in the seven zones with fixed assessment are insufficient for the long term replacement of larger improvements such as walls, park play equipment, and park structures. A plan for long term sustainability of each zone is being developed. This plan will result in a recommended amount that should be set aside each year for reserve, the amount that should be in reserve, and recommended adjustments to each zone's assessment to reach those levels.
The FY 2016-2017 Annual Engineer’s Report for the Consolidated Landscape 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. Describe improvements to be added for maintenance to Zone C-2 of the Consolidated Landscape District and orders the Engineer to describe them in the Engineer's Report.
2. Preliminarily approve the Consolidated Landscape District’s Annual Engineer’s Report for the FY 2016-2017.
3. Preliminarily approve the proposed FY 2016-2017 budget.
4. Set a public hearing for June 21, 2016.
5. 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 May 25, 2016.
FINANCIAL SUMMARY
Total Proposed FY 2016-2017 Assessments $2,870,856
Total Proposed FY 2016-2017 Appropriation from Reserves $1,717,687
TOTAL PROPOSED FY 2016-2017 BUDGET $4,588,543
TOTAL CURRENT FY 2015-2016 BUDGET $4,995,320
INCREASE/ (DECREASE) ($406, 777)
The requested appropriation from the reserves will leave an estimated $8,451,958 in total 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 any other unrestricted fund as a result of taking the recommended actions. 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