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PUBLIC HEARING TO APPROVE THE ANNUAL BUDGET AND ASSESSMENT ROLLS FOR THE 2016-17 HOLIDAY PARK MAINTENANCE DISTRICT
...recommended action
RECOMMENDATION
1. Hold the scheduled noticed public hearing, and consider public comments and testimony regarding the Holiday Park Maintenance District 2016-2017 Proposed Assessment; and
2. Approve a General Fund subsidy of up to $9,100 in order to keep public swim hours consistent with other City owned pools. The subsidy is included in the 2016-17 proposed budget in the Community Services Department Recreation Division.
3. Adopt a resolution authorizing:
a. Approval of an assessment of $46,598 for the Holiday Park Maintenance District for fiscal year 2016-2017,
b. The City of Stockton Chief Financial Officer to assess those parcels within the assessment district, and
c. The City Manager to take appropriate actions to carry out the purpose and intent of the resolution.
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Summary
The City of Stockton owns a swimming pool facility that is operated and maintained through an agreement with the Holiday Park Recreation Association (Association). Each year, the Association is required to submit an operating budget for pool maintenance and operations. The budget forms the basis for disbursing funds based on an assessment of parcels within a maintenance district related to the pool. The assessment is submitted to San Joaquin County based on property values.
The pool not only serves the residents within the maintenance district, it is also open to other members of the public. Those who do not reside in the maintenance district may pay a fee to use the pool.
In 1996, California voters passed Proposition 218, after which increases to this assessment were only allowed by vote of the residents, and consequently, the assessment has not increased since the mid-1990s. Each year a public hearing is held and the assessment must be approved by a City Council resolution prior to being submitted to the San Joaquin County Assessor’s Office.
As the attached Holiday Park Assessment District budget illustrates, estimated operating expenses in 2016-17 will exceed assessment revenue by $9,100. Fund reserves have been depleted and therefore to mitigate this potential shortfall, a $9,100 General Fund appropriation has been included in the proposed 2016-17 budget in the Community Services Department Recreation Division.
DISCUSSION
Background
In 1968, the City of Stockton acquired a parcel located at 5703 Kermit Lane, Stockton, California, (Attachment A) on which the primary appurtenance was an aquatics facility. On January 13, 1969, under Council Resolution 27,450, the City formed the Holiday Park Maintenance District to care for the facility. The City accepted the Holiday Park swimming facility and adjacent parking lot as part of a parcel land transfer recorded under San Joaquin County deed number 326-211, on January 6, 1969, from the Holiday Park Recreation Association. It also adopted Resolution No. 27,450 on January 13, 1969, creating the Holiday Park Maintenance District whereby the lands lying within the district would be wholly assessed for the costs of maintaining and operating the improvements described in the deeded acquisition.
Since acquiring the Holiday Park pool in 1969, the City has continuously leased the facility to the Holiday Park Recreation Association for operation and maintenance. The current agreement with the Association to lease, operate and maintain the facility and property was executed in 1993 with an original term of 15 years, and extended in 2008 for 10 years. The current agreement expires May 12, 2019.
There are 304 parcels assessed within Holiday Park Maintenance District (Attachment B). The assessment rate is established each year based on estimated expenditures and levied to parcels according to the County’s assessed valuation for each individual parcel within the district. The assessment has remained at $46,598 since prior to 1999. Of that assessment, San Joaquin County receives a small fee of less than $500, and the City of Stockton Community Services Department receives $1,700 to administer the assessment and contract, meet with the Association, and prepare the budget and financial reports. The remaining assessment, as needed, has been used by the Association for operations and maintenance, including all utilities, chemicals, supplies, repairs, staffing, professional services, and insurance.
In the summer of 2011, significant repairs to the facility were required. A lack of reserves to finance those repairs stemmed from no increases to the assessment since prior to 1996, so the Association recommended the entire annual assessment be used for repairs, and consequently the pool was not open to residents that year. In the summers since 2012, the annual assessments were again used for operating and maintaining the pool. In 2015, the pool was vandalized during the summer, and was closed for six weeks for repairs Costs for water and electricity were also higher than expected.
Due to the combined impacts of an assessment that has not grown, higher insurance levels required by the City, and the unexpected vandalism expense, the 2016-17 assessment will not be sufficient to operate the pool. As a means to increase revenues, the Association allows access to the pool for Stockton residents outside the parcel footprint for a small fee. The 2016 swim season use fees will be: $125 for a season pass, $60 for a monthly pass and $25 for a weekly pass. However, even with these measures, fund reserves are only expected to accommodate the shortfall in 2015-16.
The forecast for 2016-17 indicates that operating expenses will exceed assessment revenue by $9,100. An appropriation has been included in the proposed 2016-17 budget in the Community Services-Recreation Department for this estimated difference.
Present Situation
The City submits an assessment roll to San Joaquin County for the Holiday Park Maintenance District on August 1 of each year. Twice a year, in December and April the County submits the collected assessment revenues to the City. The City then forwards resources to the Association sufficient to meet the operating and maintenance needs of the facility for the ensuing year. The amount the City surrenders to the Association is based on a budget submitted by the Association prior to the assessment and an examination of the Association’s operating cash balance and current year financial position at the time of payment. Examination of the cash balance assures the City does not surrender to the Association more than is needed for projected operation and maintenance levels of effort.
The Holiday Park Pool is completely maintained and operated by Assessment funding levels that have not increased since Proposition 218 passed in the 1990’s. The cost of utilities, staffing, insurance, chemicals, repairs and maintenance continues to escalate. Last year, the City increased the Association’s general liability insurance requirement, which tripled the Association’s annual premium, and thereby increased the overall cost to operate the pool. As of 2015, State of California prevailing wage laws now require the Association to pay prevailing wage for related construction projects over $15,000.
The resulting 2016-17 proposed expenditure budget is $9,100 greater than the combined revenue from the assessment and other revenues. The Association does not have sufficient funds in reserve to cover the increased costs budgeted for the summer of 2016 and General Fund support is required to keep public swim hours consistent with other pools (Oak, Sousa and Brooking) and prevent closing the pool before Labor Day weekend. To keep public swim hours consistent among all pools staff recommends funding up to an additional $9,100 if needed.
Public Notice
The City Charter requires the publication of a notice to Public Hearing before taking final action on a resolution or motion establishing any assessment. “A Notice of Intent to Hold a Public Hearing” has been published at least 10 days prior to City Council Action.
FINANCIAL SUMMARY
A 2016-17 budget for the Holiday Park Pool has been developed that takes into consideration increased costs for utilities, insurance limits and repairs. Even though the budget takes into account a small amount of revenue for swimmers from outside the assessment district, 2016-17 costs are projected to exceed revenues by $9,100. In order to maintain operating hour consistency among all the City owned pools, a General Fund appropriation sufficient to cover the expected deficit has been included in the city-wide 2016-17 proposed budget in the Community Services-Recreation Department.
Receipts from the assessment are deposited in the Holiday Park Assessment Account 680-0000-239, withdrawn annually by the City under direction of the Community Services Department, and paid to the Association, Holiday Park Recreation Association to cover the reasonable operating and maintenance costs.
The City will receive $1,700 for administration costs of the assessment district for fiscal year 2016-2017, which is credited to revenue account 044-3611-349, Recreation Fund Charges for Services - Administration Fee Holiday Park Association.
Attachment A - Holiday Park Pool Vicinity Map
Attachment B - Holiday Park Assessment District Map
Attachment C - Holiday Park Annual Budget 2016-2017