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HomeMy WebLinkAboutSR - LMD-15-1 - 2015-16 ANNUAL ASSESSMENT ENGINEERS REPORTAGENDA ITEM Date: July 14, 2015 TO: Honorable Mayor and Members of the City Council THRU: Rick Otto Interim City Manager FROM: Marie Kni t Community Se ices Dire or Joe De Francesco Public Works Director ReviewedNerified B : City Manage ' Finance Dir for To Be Presence By: Marie Knight Cons Calendar City Mgr Rpts Council Reports _ Legal Affairs Boards /Cmtes X Public Hrgs Admin Reports Plan/Environ 1. SUBJECT Continue the public hearing from June 9, 2015 to hear and accept the tabulation of ballot results from the City Clerk (Tabulator) for the proposed Santiago Hills Landscape Maintenance District No. 15 -1 assessment and adopt Resolution 10879 approving the Engineer's Report, Confirming Diagram and Assessment, and Ordering Levy of the Santiago Hills Landscape Maintenance District No. 15 -1 Assessment for Fiscal Year 2015 -16. 2. SUMMARY On March 10, 2015, the City Council adopted Resolution No. 10853 initiating proceedings for a Proposition 218 ballot proceeding to create a new Landscape Maintenance District 15 -1 that would exactly overlay the original Santiago Hills Landscape Maintenance District 86 -2 with the effect of increasing the net assessments on the properties in the Santiago Hills neighborhoods. At a Public Hearing held on June 9, 2015 and continued to this meeting, the ballot period was concluded and tabulation of those ballots commenced. The final step in forming the District is to accept the results of the tabulation, and, since a majority protest does not exist, order the levy of the Assessment for Fiscal Year 2015 -16. 3. RECOMMENDED ACTION 1. Continue the Public Hearing from June 9, 2015 to hear and accept the tabulation of the ballot results from the City Clerk (Tabulator) for the proposed Santiago Hills Landscape Maintenance District No. 15 -1 assessment; and 2. Adopt Resolution 10879 approving the Engineer's Report, Confirming Diagram and Assessment, and Ordering Levy of the Landscape Maintenance District No. 15 -1 for Fiscal Year 2015 -16. ITEM_a_�_J_ 07/14/15 4. FISCAL IMPACT If approved, LMD 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 1,517 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 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 is performed annually and a new assessment is 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 $369.44 if needed. 2 ITEM 7/14/15 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, with only 30% of the weighted votes in favor, and 70% against. As a result, the City was forced to make significant reductions to the service levels in the District. Since 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 year after year 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 and 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 of 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 15 -1). This Assessment District would be identical to the existing Landscape Maintenance District No. 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. At the June 9, 2015 meeting, the City Council held a public hearing on the matter, closed the balloting period, ordered the tabulation of the ballots cast, and continued the hearing to this meeting to accept the ballot tabulation results and, if no public protest exists, order levy of the Assessments for Fiscal Year 2015 -16. 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 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. In performing the benefit assessment for the new LMD 15 -1, it 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 3 ITEM 7/14/15 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 repairs. The proposed assessment for LMD 15 -1 is then based on this overall budget. The total assessment for the proposed LMD 15 -1 is estimated to be $328,108 for FY 15 -16, based on the SFE rate ranging from $176.00 to $235.00 per year, 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). 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 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 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, therefore, staff recommended the ballots include the CPI as indicated in the Engineer's Report. Discussion Proposition 218 sets forth specific guidelines for the creation of a benefit assessment: • 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 (mailed April 24, 2015). • The City holds a Public Hearing at the end of the balloting period to receive public comment (held on June 9, 2015 and continued to this meeting). • At the conclusion of the Public Hearing, the ballots are tabulated. In order for the assessments to be imposed, a majority of the returned ballots, weighted by their proposed assessment, must be in support. 4 ITEM 7/14/15 The tabulation process has been concluded, and the City Clerk (Tabulator) has certified that a majority protest does not exist. In summary, a total of 637 ballots were received and processed prior to the close of the public hearing on June 9, 2015, representing a ballot return rate of 43.2 %. Of the returned ballots, four were declared invalid, resulting in 633 valid ballots returned. The Tabulator has certified that 54.36% of the total assessment value of the valid ballots received were in favor of levying the Assessments for LMD 15 -1 for Fiscal Year 2015 -16. This result is especially significant due to the amount of support for the increase since the last vote in 2007. It is important to note that compared to 2007, the "Yes" votes increased from 30% to 54.36 %, representing an increase of 24.36 %, while the "No" votes decreased by that amount from 70% to 45.64 %. While the law stipulates that the weighted value of the returned ballots determines the outcome of the vote, the un- weighted ballot count is almost identical, with 54.66% of the unweighted ballots cast in favor of the increased assessment. Given the support shown for the increase by a majority of the ballots returned, staff recommends the City Council adopt the attached resolution to form the District and levy the Assessments. Once approved, the Assessments will be collected by the Auditor /Tax Collector of the County of Orange and will be placed on the 2015 -16 secured tax rolls at the same time and manner as County taxes and the assessments for the existing Santiago Hills Landscape Assessment District LMD 86 -2. After collection by the County Tax Collector, the assessments will be deposited in a separate fund established under the distinctive designation of the Landscape Maintenance District No. 15 -1 and shall be expended only for the special benefit of parcels within the District. It is important to note that the increased funds collected for the District will not be available until early 2016, and the increased maintenance service levels will need to be included in amended or new maintenance contracts. In addition, the FY 2015 -16 proposed budget for LMD 15 -1, as included in the Engineers Report dated May 2015, provides approximately $115,000 for capital replacement/dedicated reserves. These funds are anticipated to be available each year to gradually remove and replace turf and end -of -life plant materials with drought - tolerant plant materials and related irrigation in a phased approach throughout the District. Staff has been working with the Santiago Hills community on conceptual plans and priorities for a phased approach to these long term improvements and will return to the City Council for approval of the initially phased capital projects in the coming months. 8. ATTACHMENTS 1. Resolution No. 10879 2. Engineer's Report, SCI Consulting Group, May 2015. �1 ITEM 7/14/15 RESOLUTION NO. 10879 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ORANGE APPROVING ENGINEER'S REPORT, CONFIRMING DIAGRAM AND ASSESSMENT, AND ORDERING LEVY OF THE LANDSCAPE MAINTENANCE DISTRICT NO. 15 -1 ASSESSMENTS FOR FISCAL YEAR 2015 -16 WHEREAS, by Resolution No. 10853, approved March 10, 2015, the City Council ordered the initiation of proceedings for the formation of a landscape maintenance district pursuant to the Landscaping and Lighting Act of 1972 (Part 2 of Division 15 of the California Streets and Highways Code (commencing with § 22500 thereof) ( "Act ") and Article XIII -D of the California Constitution to be known as the Landscape Maintenance District No. 15 -1 ( "Assessment District ") of the City of Orange, for the purpose of financing the cost of installation, maintenance and servicing as detailed in the Engineer's Report prepared by the Assessment Engineer, SCI Consulting Group; and WHEREAS, the City Council has adopted a resolution approving and filing an Engineer's Report which includes: (1) a description of the Improvements to be funded with assessment proceeds; (2) an estimate of the annual cost of the Improvements described in the Engineer's Report; (3) a description of the assessable parcels of land within the District and proposed to be subject to the new assessment; (4) a description of the proportionate special and general benefits conferred on property by the proposed assessment; (5) a diagram and boundary map for the Assessment District, and (6) a specification of the amount to be assessed upon various types of assessable land within the Assessment to fund the cost of the Improvements. The Engineer's Report is incorporated herein by this reference; and WHEREAS, the City Council adopted Resolution No. 10857 on April 14, 2015, a Resolution Declaring Intention to Levy Assessments, Preliminarily Approving the Engineer's Report, Providing Notice of Public Hearing and the Mailing of the Assessment Ballots. The annual assessment rates for various types of real property within the proposed assessment, the total number of parcels to be assessed, and the total amount of annual assessment revenue is contained within the Engineer's Report; and WHEREAS, the City Council adopted Resolution No. 10858 on April 14, 2015, a Resolution of Intention to Conform with Proposition 218 and its requirements; and WHEREAS, the City Council has provided a 45 -day written mailed notice to each record owner of assessable parcels of real property located within the Assessment boundaries for the proposed Landscape Maintenance District, as set forth on the Assessment Diagram and Boundary Map, of a public hearing which was held at a regular meeting of the City Council on June 9, 2015, at 7:00 p.m. at the Orange City Hall, located at 300 East Chapmen Avenue,