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HomeMy WebLinkAboutSR - LMD-15-1 - PROPOSED ASSESSMENT� pF OR AGENDA ITEM Date: June 9, 2015 TO: Honorable Mayor and Members of the City Council THRU: Rick Otto City Manager FROM: Marie Knigl Community Joe De Francesco Public Works MY ReviewedNerifie City Manager Finance Direc To Be Presented By: Marie Knight Cons Calendar _ City Mgr Rpts Council Reports _ Legal Affairs Boards /Cmtes X Public Hrgs Admin Reports Plan/Environ 1. SUBJECT Public hearing for the proposed Landscape Maintenance District No. 15 -1 assessment. After the conclusion of the public input portion of the public hearing, the balloting period will be closed and the City Clerk, as tabulator, will tabulate all ballots received. The public hearing will be continued to July 14, 2015 to announce the results of the balloting and, if successful, to allow the City Council the opportunity to consider levying the assessments. 2. SUMMARY The Santiago Hills neighborhood has had a Landscape Maintenance District (LMD 86 -2) in place since 1987 to levy assessments that pay for landscape maintenance of public areas in the neighborhood. The maximum levy rate, set in 1987, was frozen in 1996 with the passage of Proposition 218, which henceforth required a vote of property owners to increase assessments. Since that time, District maintenance costs have continually risen and unfortunately, now significantly outpace assessment revenue received. On March 10, 2015, the City Council adopted Resolution No. 10853 initiating the process for a Proposition 218 ballot proceeding to create a new District (LMD No. 15 -1) that would exactly overlay the original District with the effect of increasing the net assessments on the properties in the Santiago Hills neighborhoods. On April 14, 2015, the City Council adopted Resolutions 10857 and 10858 which preliminarily approved the Engineer's Report, set the notice of the public hearing and ordered the ballot proceeding to commence. Ballots were mailed on April 24, 2015. The purpose of this public hearing is to receive public input regarding the proposed assessments, and for the City Council to receive any additional ballots. Following the close of the public hearing, the ballots will be tabulated and the results will be announced at the City Council meeting on July 14, 2015 when the City Council may consider ordering the levy of the assessments. 1 ITEM DATE OF MEETING:...., rrwrrrrriril ITEM 06/9/15 3. RECOMMENDED ACTION 1. Open the public hearing for the proposed Landscape Maintenance District No. 15 -1 assessment; 2. After the conclusion of the public input portion of the public hearing, close the balloting period and direct the City Clerk, as tabulator, to tabulate all ballots received; and 3. Continue the public hearing to July 14, 2015 to announce the results of the balloting and, if successful, to consider levying the assessments. 4. FISCAL IMPACT If approved, LMD No. 15 -1 would generate approximately $328,108 in FY 15 -16. Combined with the estimated revenue from the existing LMD 86 -2 and revenue from Santiago Community College, the total revenue would be approximately $925,904 in FY 15 -16, which is adequate for the annual maintenance and servicing of the District improvements plus a gradual capital improvement program. 5. STRATEGIC PLAN GOAL(S) GOAL 3: Enhance and promote quality of life in the community a. Refurbish, maintain, develop and/or expand public use places and spaces. 6. GENERAL PLAN IMPLEMENTATION Infrastructure Element Goal 3.0: Ensure adequate maintenance of public rights -of -way to enhance public safety and improve circulation. Policy 3.2: Provide sufficient levels of street sweeping, landscaping, graffiti abatement, shopping cart and bulk -item removal from streets, sidewalks, alleys, and other public rights -of -way. 7. DISCUSSION and BACKGROUND Background In 1987, Landscape Maintenance District 86 -2 (District) was established to maintain the landscape improvements constructed by Assessment District 86 -1 in Santiago Hills. The District comprises over 32 acres of landscape, lighting, and other infrastructure improvements maintained by the City. Funds supporting the maintenance of the District landscape and other infrastructure are derived from an annual assessment of 1,571 parcels within the District. Although located within the District boundaries, the following properties are not maintained by the assessments collected from the property owners: Santiago Hills Park, Chapman Elementary School, City of Orange Fire ITEM 6/9/15 Station 7, and Santiago Canyon College. With respect to Santiago Canyon College, there are landscape improvements that were constructed adjacent to the College when the District was initially formed. The infrastructure for those improvements are connected to those of the surrounding District, and are maintained as part of the District; however, the College reimburses the District annually for the costs of that maintenance. Since the District was established in 1987, a detailed accounting of expenses was performed annually and a new assessment was calculated to fund the following year's projected budget expenses. In 1987, the single- family assessment was set at $369.44 and had fluctuated from year to year. Although the assessment never increased, it did occasionally decrease in response to changes in labor and materials. However, at the time the District was created, the intent was that when costs outpaced the revenues received from the property assessments, the City would be able to raise the assessment over the set amount of $369.44 if needed. With the passage of Proposition 218 in 1996, the annual assessments were, in effect, frozen at the then - maximum rate set in 1987 of $369.44 for a typical single - family home. Any future increases could only be implemented by a majority vote of the property owners within the District. By 2005, the District reserves were dwindling and expenditures far outpaced the revenues. The City initiated a 218 Ballot Proceeding in 2007 to increase the annual assessment. The residents in the District overwhelmingly voted against the increase, and the City was forced to make significant reductions to the service levels in the District. In that time, reductions have continued as costs have increased, and the deterioration of the District has been exacerbated by increased repairs needed for an aging infrastructure, drought conditions and water rate increases. Since 2007, numerous residents have called to complain about the reductions in maintenance and declining aesthetics of the District. In recent years, those calls and complaints have significantly increased. The impact of these service reductions have been more visible, and clearly noted by many residents who have indicated that further reductions in service levels and watering would be unacceptable. The City again began to explore the possibility of conducting a ballot proceeding to increase the assessments in the District. In the fall 2014, the City hired SCI Consulting Group to assist with a ballot proceeding process and the necessary public outreach, including a public opinion survey. At the March 10, 2015 meeting, the City Council adopted Resolution No. 10853 initiating proceedings for a proposed new Landscape Maintenance District (LMD No. 15 -1). This Assessment District would be identical to the existing Landscape Maintenance District 86 -2 in its geographic boundaries, parcels to be assessed, and improvements to be serviced, maintained, or repaired, and budgeted cost centers. At the April 14, 2015 meeting, the City Council adopted Resolution No. 10857 preliminarily approving the Engineer's Report, setting the notice of the public hearing and ordering the ballot proceeding to commence, and Resolution No. 10858 adopting Proposition 218 proceeding procedures. Ballots were mailed on April 24, 2015. 3 ITEM 6/9/15 Discussion The Engineer's Report describes the structure of the benefit assessment, including cost estimates for the maintenance of the improvements and assessment rates for the various types of land uses. Those rates are based on the single - family residence (by far the most prevalent land use) by creating a single - family equivalent ( "SFE "), which is then applied to other land uses incorporating appropriate factors. For instance, commercial and industrial uses are converted using population and land - coverage factors. Prop 218 requires a benefit assessment be performed by zones for this new assessment, based on how parcels in each particular zone benefit from the landscape improvements in ways such as access, view, proximity, and land use rights. The benefit assessment for the new LMD No. 15 -1 showed that the property owners in the Hillsdale neighborhood of the District (Zone B) received 25% less special benefit from the landscape improvements than those properties in closer proximity, as outlined in the attached Engineer's Report. Therefore, the proposed increased assessment for the property owners in the Hillsdale neighborhood (Zone B), would be less than the assessment for the properties in Zone A. Based on the feedback received from the public outreach efforts, and the projected cost increases as well as capital improvements that will be necessary in the next five to ten years, staff developed a budget for the maintenance of the District. This budget would accomplish the following: restore higher maintenance levels to pre -2007 standards, keep pace with some of the anticipated increased costs of goods and services in the coming years, gradual replacement of landscape that has died and been removed, and funds for annual capital improvements that include a gradual transition to drought - tolerant landscape and infrastructure renovations. The proposed assessment for LMD No. 15 -1 was based on this overall budget. The total assessment for the proposed LMD No. 15 -1 is estimated to be $328,108 for FY 15 -16, based on the SFE rate depending on Zone. In Zone A (Santiago Hills neighborhood), assessments will be $235.00 for single - family homes, $166.85 for condominiums, and $979.17 per acre for commercial property. In Zone B (Hillsdale neighborhood), assessments will be $176.00 for single - family homes (there are no other types of properties in this zone). Combined with the estimated revenue from the existing LMD 86 -2 and revenue from Santiago Community College, which would also increase to meet the increased costs for the maintenance of their adjacent properties, the total revenue would be approximately $925,904 in FY 15 -16. The Engineer's Report also includes an annual escalation mechanism based on the Consumer Price Index ( "CPI ") for the District and is capped at three (3) percent per annum. The CPI would be applied only to the proposed new assessment LMD No. 15 -1 and not the existing assessment LMD 86 -2, and would affect assessments in FY 16 -17 and beyond. The CPI would allow some increases to the new District in order to keep pace with the increased costs of goods and services related to the maintenance of the improvements. Since there is no CPI on the existing LMD 86 -2, a CPI on the new LMD No. 15 -1 would be the only mechanism available to account for a portion of increases in costs of goods and services in the future without another ballot measure. Proposition 218 sets forth specific guidelines for the creation of a benefit assessment: 4 ITEM 6/9/15 • All special assessments are required to be supported by a detailed Engineer's Report prepared by a registered professional engineer. • Properties are assessed proportionate to the special benefit to each property. • Notice of the proposed assessment and ballots are mailed to all property owners subject to the proposed assessment at least forty-five (45) days prior to the date of the Public Hearing on the proposed assessment. • The City holds a Public Hearing at the end of the balloting period to receive public comment. • At the conclusion of the Public Hearing, the ballots will be tabulated. In order for the assessments to be imposed, a majority of the returned ballots, weighted by their proposed assessment, must be in support. This process has been followed by the mailing of the ballots on April 24, 2015, along with a public hearing notice and ballot guide, and the hearing was also advertised in the Orange City News on May 27, 2015. The purpose of this public hearing is to give all interested parties the opportunity to hear, and have heard, comments regarding the proposed assessments and assessment ballot proceeding and for the City Council to accept any additional ballots. In addition, the balloting period officially closes at the conclusion of the public input portion of the hearing. Following the close of the public input portion of the public hearing, the Council may continue the public hearing until a later time to allow sufficient time for the tabulation of the ballots received, and may direct the City clerk, as the tabulator, to tabulate all valid ballots that were received prior to the close of the public input portion of the public hearing. The tabulation of ballots will begin after the close of the public input portion of the public hearing in the Weimer Room of City Hall. The ballot proceeding will conclude at the July 14, 2015 meeting when the results of the balloting will be announced. Provided that a majority protest has not been filed (i.e. a majority of weighted ballots cast are in favor of the measure), it is recommended that the Council consider approval of a resolution to order the levy of the assessments for Landscape Maintenance District No. 15 -1. If LMD No. 15 -1 does not pass, LMD 86 -2 will be the only revenue source to fund maintenance in the District. Since the assessment revenues from LMD 86 -2 are not sufficient to cover the current maintenance costs for the District, further maintenance reductions will have to be implemented. Those reductions will be prioritized based on health and safety and would likely include: turning off irrigation for large turf areas, continued non - replacement of dead landscape, further reductions in trimming, edging and mowing and frequency of trash removal from landscaped areas, non - repair of irrigation and other infrastructure, etc. 8. ATTACHMENTS 1. Engineer's Report, SCI Consulting Group, May 2015. ITEM 6/9/15