title
PRELIMINARILY APPROVE THE 2024-25 ANNUAL ASSESSMENTS FOR INDUSTRIAL STORM DRAINAGE BASIN MAINTENANCE DISTRICTS AND ANNUAL ENGINEERS’ REPORT, THE PROPOSED FISCAL YEAR 2024-25 BUDGET, AND SET A PUBLIC HEARING FOR JUNE 4, 2024
recommended action
RECOMMENDATION
It is recommended that the City Council adopt six (6) resolutions of intention to:
1. Preliminarily approve the Fiscal Year (FY) 2024-25 annual assessments for the six (6) Storm Drainage Basin Maintenance Districts proposed budgets.
2. Preliminarily approve and confirm the Engineer’s estimate of the itemized costs and expenses of the maintenance and incidental expenses contained in the proposed budget.
3. Approve setting a Public Hearing for June 4, 2024, for the following industrial storm drainage basin districts:
i. Western Pacific Industrial Park Storm Drainage Basin Maintenance District, Project Number 81-1 (Western Pacific)
ii. Charter Way Industrial Site Storm Drainage Basin Maintenance District, Project Number 86-4 (Charter Way)
iii. Arch Road Industrial Park Storm Drainage Basin Maintenance District, Project Number 84-2 (Arch Road)
iv. Airport Gateway Center Storm Drainage Basin Maintenance District (Airport Gateway)
v. Stockton Airport Business Center Storm Drainage Basin Maintenance District, Project Number 84-1 (Stockton Airport)
vi. North Newcastle Storm Pump Station and Basin Maintenance District, Project Number 20-1 (North Newcastle)
4. Authorize the City Clerk to publish notice of the public hearing.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of these resolutions.
body
Summary
If approved, this action will preliminarily approve the Annual Engineers’ Reports and the FY 2024-25 budgets for the six (6) Storm Drainage Basin Maintenance Districts and set a Public Hearing date for June 4, 2024. The FY 2024-25 assessments are not proposed to change for three (3) of the basins, Arch Road, Charter Way, and Western Pacific Districts, and will remain the same amount as FY 2023-24. The remaining three (3) Districts, Airport Gateway Center, North Newcastle, and Stockton Airport Business Center are subject to an annual Cost-of-Living Adjustment. Annual approval of the budgets and Engineers’ Reports is required by the Municipal Improvement Act of 1913 and the Stockton Improvement Code, Part V. A copy of the FY 2024-25 Annual Engineers’ Report is on file in the Office of the City Clerk and can also be found on the City of Stockton website at the following link: www.stocktonca.gov/stormwater <http://www.stocktonca.gov/stormwater>
DISCUSSION
Background
The City Council, in accordance with Resolutions 85-0416, 86-1059, 88-0492, 88-0552, 99-0400, and 2020-12-15-1501, authorized the formation of six (6) storm drainage basin maintenance districts. All six (6) storm drainage basins are in industrial areas of Stockton. Attachment A is a map showing the location of each basin. Attachment B contains the budgets for each district. As a condition of their subdivision agreements, each developer was required to form a maintenance district to provide ongoing maintenance of the basins after construction was complete and the basins were turned over to the City. The formation of these districts was based on the provisions of the Municipal Improvement Act of 1913 (Act) and the Stockton Improvement Code (Stockton Code). The Act and the Stockton Code contain provisions for the City to form assessment districts for the maintenance and operation of improvements that impart a special benefit to an area.
The purpose of these districts is to provide funding for the operations and maintenance of the storm drainage basins. The maintenance includes spraying for weeds, rodent control, and maintenance of fences, removal of debris/trash, and general upkeep of the basin. The original Engineers’ Reports, which were approved by the landowners at the time of formation of each District, detail how the City can legally calculate the annual assessments. The original Engineers’ Report for the Arch Road, Charter Way, and Western Pacific Districts did not allow for a Cost-of-Living Adjustment to be applied to increase the maximum allowable assessment over the years. Thus, these three (3) basins will remain at the maximum allowable assessment.
The Stockton Airport Business Center District was similarly established, but in FY 2004-05 parcels were annexed to the District. The annexed parcels of this District are subject to a Cost-of-Living Adjustment. The Stockton Airport Gateway District was established in 1999. All parcels in this District are subject to a Cost-of-Living Adjustment. Any changes to the formulas for the calculation of any of these assessments are subject to a vote by the impacted parcel owners as required by California Constitution Article 13(D) Section 6, commonly known as Proposition 218. Approved by taxpayers in 1996, Proposition 218 amended the California Constitution to require that property owners and tenants that pay for property related services directly to a public agency receive ample notice and have an opportunity to weigh in on the adoption of new or increased property related fees. The law provides that property owners subject to the assessment have an opportunity to weigh in on the adoption of each proposed annual assessment via a public hearing held by the City Council.
Present Situation
Attachment B provides a summary of the proposed FY 2024-25 budget and assessments for each district. Western Pacific Industrial Park, Charter Way Industrial Site, Arch Road Industrial Park, and Stockton Airport Business Center are the only districts of the FY 2024-25 assessments where the budget exceeds the established Maximum Annual Allowable Assessments contained in the original Engineers’ Reports that were approved by landowner ballots or written consent of the landowners and approved by the Council as part of the district formation proceedings. The proposed budgets for the districts include engineering fees, attorneys’ fees, estimated pond (basin) maintenance work, City of Stockton administration costs and a contingency.
By approving the six (6) resolutions of intention, the City Council will:
1. Provide preliminary approval of the budgets for the maintenance of the improvements for the above listed maintenance districts for FY 2024-25;
2. Set the date of June 4, 2024, for the respective public hearing for the final approval of the proposed budgets for all the districts; and
3. Direct that a public notice be published in The Record at least ten days before the hearing date.
The proposed FY 2024-25 annual and maximum assessments for the Western Pacific Industrial Park, Charter Way Industrial Site, and Arch Road Industrial Park Districts remain at the same level as the FY 2023-24 annual assessments due to no annual increases allowed within the original Engineer’s Report approved by the landowners.
Operational costs of the three (3) basin districts referenced as Western Pacific Industrial Park, Charter Way Industrial Site, and Arch Road Industrial Park are projected to exceed their maximum allowable assessments in FY 2024-25 by $10,708.00, $6,757.02, and $10,494.00, respectively, based on the contracted costs to prepare the Engineers’ Report and maintain the district. Year after year, the existing fund balance has covered the gap in costs not covered by the new assessment, and consequently, the assessment for FY 2025-26 and beyond may require an increase to meet the district’s operational needs.
In the coming fiscal year, staff will evaluate options to cover the cost gap. For FY 2024-25, sufficient fund balance exists for the Western Pacific Industrial Park, the Arch Road Industrial Park, and the Charter Way Industrial Site to cover the gap in costs not covered by the new assessment; therefore, staff recommends approving the full operational budget and the transfer of funds needed from the reserve balances. The FY 2023-24 Actual Assessments, FY 2024-25 Proposed Assessments, FY 2024-25 Proposed Amount to Transfer from Fund Balance, FY 2024-25 Operational Budgets, FY 2024-25 Projected Fund Balances, and FY 2024-25 Maximum Allowable Assessments are as follows:
|
District |
FY 2023-24 Actual Assessment |
FY 2024-25 Proposed Assessment |
FY 2024-25 Proposed Amount to Transfer from Fund Balance to Expenditure Account |
FY 2024-25 Operational Expenditure Budget |
FY 2024-25 Projected Fund Balance |
FY 2024-25 Maximum Allowable Assessment |
|
Western Pacific Industrial Park |
$17,319.58 |
$17,319.58 |
$10,708.00 |
$28,027.58 |
$47,239.48 |
$17,320.00 |
|
Charter Way Industrial Site |
$12,999.98 |
$12,999.98 |
$6,757.02 |
$19,757.00 |
$3,915.73 |
$13,000.00 |
|
Arch Road Industrial Park |
$17,372.44 |
$17,372.44 |
$10,494.00 |
$27,866.44 |
$98,163.32 |
$17,373.00 |
The Engineers’ Report for the Airport Gateway Center District, and the applicable parcels in the Stockton Airport Business Center District and North Newcastle District contain provisions for an annual Cost-of-Living Adjustment. Each year, the maximum annual assessments are increased in an amount equal to the greater of either 3.0 percent or the annual increase as shown in the Local Consumer Price Index (CPI) for the San Francisco-Oakland-San Jose All Items, All Urban Users, as published by the Bureau of Labor Statistics for a similar period.
For the calendar year 2023, the annual increase is approximately 2.63 percent. For FY 2024-25, the 3.00 percent adjustment has been applied to the calculation of the total maximum allowable assessment and the actual assessment for Airport Gateway Center, and the annexed portions of the Stockton Airport Business Center Districts and North Newcastle District. Proposition 218 provides cities the latitude to approve the maximum allowable assessment, if warranted, based on estimated expenditures, or if estimated expenditures do not justify the maximum to collect a lesser amount.
Staff recommends that the City Council approve the increase in the maximum allowable assessment and the increase in the actual assessment that will set the base for upcoming fiscal year calculations. Staff also recommends approving the full operational budget and the transfer of funds needed from reserve balance to cover the gap in expenses in the Stockton Airport Business Center. Sufficient fund balance exists in reserve to pay for the gap in costs not covered by the new assessment. The FY 2023-24 Actual Assessments, FY 2024-25 Proposed Assessments, FY 2024-25 Proposed Amount to Transfer from Fund Balance, FY 2024-25 Operational Budgets, FY 2024-25 Projected Fund Balances, and FY 2024-25 Maximum Allowable Assessments are as follows:
|
District |
FY 2023-24 Actual Assessment |
FY 2024-25 Proposed Assessment |
FY 2024-25 Proposed Amount to Transfer from Fund Balance to Expenditure Account |
FY 2024-25 Operational Expenditure Budget |
FY 2024-25 Projected Fund Balance |
FY 2024-25 Maximum Allowable Assessment |
|
Airport Gateway |
$31,752.08 |
$32,704.66 |
$0.00 |
$32,704.66 |
$355,486.68 |
$122,278.92 |
|
Stockton Airport Business Center* |
$14,821.16 |
$14,988.30 |
$8,318.16 |
$31,098.78 |
$288,462.53 |
$45,006.37 |
|
North Newcastle |
$70,563.98 |
$72,680.84 |
$0.00 |
$72,680.84 |
$101,392.53 |
$88,845.51 |
*The FY 2024-25 operational expenditure budget is $31,098.78, which includes $7,792.32 transferred from other districts.
Administrative and operational costs for the maintenance of the Stockton Airport Business Center basin are offset with transfers from the Little John Creek Landscape Maintenance District No. 94-1 and Seabreeze Landscape Maintenance District No. 96-2 ($5,506.06 and $2,286.26, respectively), as the basin landscaping is provided for in those districts.
Fund balances are for infrastructure replacement accounts to fund construction of new facilities at the end of their operational life.
The tax rolls submitted for collection show the approved maximum assessment as well as the actual amount that will be submitted for collection on the San Joaquin County property taxes.
FINANCIAL SUMMARY
The City makes no financial contribution to any of the Districts. All fees, costs, and expenses incurred will be payable solely from the proceeds of the annual assessments to be levied and collected on the San Joaquin County tax roll, or from each District’s reserve funds. The use of the funds collected within the various districts is restricted by Proposition 218 to pay only the expenses related to the maintenance and operation of the specific storm drainage basin for which they were collected.
The funds collected from the property owners of a district can only be used for the work on the basin in that district as it imparts special benefit restricted to the properties of that district. District funds are segregated and cannot be used to operate, maintain, or support the activities of the stormwater or any other utility at large.
There is no impact to the City’s General Fund or any other unrestricted fund because of the recommended actions.
Attachment A - Storm Drainage Basin Districts Map
Attachment B - Budgets for Each District