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HOLD PUBLIC HEARING TO APPROVE THE ANNUAL BUDGET AND ASSESSMENT ROLLS FOR THE 2018-19 HOLIDAY PARK MAINTENANCE DISTRICT
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RECOMMENDATION
This scheduled noticed public hearing is being held to consider public comments and testimony regarding the Holiday Park Maintenance District 2018-19 proposed Assessment budget and the levy of assessments.
At the conclusion of the public hearing, if a majority protest does not exist, it is recommended that the City Council adopt a resolution to:
1. Overrule all public hearing protests.
2. Approve the Annual Budget for Holiday Park Pool Recreation Association for the fiscal year 2018-19.
3. Confirm and approve the assessment of $46,598 for the Holiday Park Maintenance District for the fiscal year 2018-19.
4. Authorize the City of Stockton Chief Financial Officer to assess those parcels within the assessment district.
5. Certify the Assessments meet the requirements pertaining to the levy of annual assessments.
6. Authorize 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 (Attachment A) 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, but 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.
The Holiday Park Association proposed budget (Attachment C) indicates estimated operating expenses in 2018-19 will exceed assessment revenue by $7,263 due primarily to maintenance, repairs, and higher insurance requirements imposed by the City on all pool operators. Last year’s revenue shortfall was $6,663, and the City approved a subsidy in this amount primarily because of the higher City-imposed insurance requirements. However, the department cannot continue to supplement the revenue shortfall indefinitely. The association conducted an informal poll of residents in the assessment district, and there was not enough support for holding an election for an increased assessment. Staff is recommending the same level of General Fund support as last year in the amount of $6,663; The association will raise the additional $600 through fundraising efforts. This is also the last year of the City’s agreement with the Holiday Park Recreation Association, and it is possible the association will not renew. Should that occur, staff will need to assess whether further operation is possible or if the facility will need to close. The appropriation has been included in the proposed 2018-19 budget in the Community Services Department Recreation Division.
DISCUSSION
Background
On January 6, 1969, the City of Stockton completed the acquisition of two parcels located at 5703 Kermit Lane, Stockton, California (Attachment A) on which the primary appurtenance was an aquatics facility, the Holiday Park swimming pool. The City accepted the Holiday Park Pool and adjacent parking lot as part of a parcel land transfer from the Holiday Park Recreation Association. On January 13, 1969, the City Council adopted Resolution 27,450 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 fifteen (15) years and extended in 2008 for ten (10) years. The current agreement expires May 12, 2019.
The 2018 swim season will be the last swim season under this current agreement. Staff met with representatives of the Holiday Park Recreation Association Board (“Board”) for a pre-season kick off in 2017 and notified them of the process and timeline to increase the assessment. The Board reviewed the process and completed an informal vote with property owners to determine resident interest in increasing the assessment to support the continued operation of the pool. City staff was notified in December 2017 there was little resident support for increasing the assessment, even if it meant closing the pool. Unless the Board establishes a new significant source of revenue, the budget forecast estimates that assessment revenue and City subsidy will not be adequate to cover expenditures. At that point, the City will need to complete a cost-benefit analysis for rehabilitating the pool or closing it permanently. According to an aquatic consultant’s evaluation of the pool, the facility has significant deferred maintenance issues. The City has limited rehabilitation funds for all City-operated pools. The needs of this facility will need to be measured against the needs of the other City-owned pools.
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 on parcels according to the County’s assessed valuation for each individual parcel within the district. The assessment has remained at $46,598 since 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. Costs for minimum wage increases have impacted the budget, and the pool has limited revenue opportunities (monthly admission and snack bar) to improve the budget.
Due to the combined impacts of an assessment that has not grown, increasing costs of doing business, deferred maintenance, and higher insurance levels required by the City, the 2018-19 assessment will not be sufficient to operate the pool. To create additional revenues, the Association allows access to the pool for Stockton residents outside the parcel footprint for a small fee. The 2018 swim season use fees will be $150 for a season pass, $100 for a monthly pass, and $50 for a two-week pass. The Board is considering the approval of a daily use pass.
The budget forecast for 2018-19 indicates that operating expenses will exceed assessment and other revenues by $7,263. An appropriation equal to last year in the amount of $6,663 has been included in the proposed 2018-19 budget in the Community Services Department- Recreation Division for this estimated difference. The association will make up the $600 difference through fees and fundraising.
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 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.
The resulting 2018-19 proposed expenditure budget is $7,263 greater than the combined revenue from the assessment and other sources. To address the shortfall, staff recommends funding up to an additional $6,663. The Board will explore additional revenue generating options.
Public Notice
“A Notice of Intent to Hold a Public Hearing” has been published at least ten (10) days prior to City Council Action.
FINANCIAL SUMMARY
A 2018-19 budget for the Holiday Park Pool has been developed that takes into consideration increasing costs for operations, utilities, and insurance. Costs are projected to exceed revenues by $7,263. An appropriation in the amount of $6,663 has been included in the city-wide 2018-2019 proposed budget in the Community Services Department.
Receipts from assessment are deposited in the Holiday Park Assessment Account 680-0000-239, withdrawn annually by the City under the 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 2018-19, 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 2018-2019