SR - LMD-86-2 - 2014-2015 ANNUAL ASSESSMENT ENGINEERS REPORTAGENDA ITEM
June 10, 2014
TO: Honorable Mayor and
Members of the City Council
THRU: John W. Sibley
City Manager
FROM: Joe DeFrancesco, t
Public Works Dir cXor
Marie KnighT, / f/ G
Community Servi es
ReviewedNeri ed By:
City Manager
Finance Dire or
To Be Present : Joe DeFrancesco
Cons Calendar
City Mgr Rpts
Council Reports
Legal Affairs
Boards /Crates X
Public Hrgs
Admin Reports
Plan /Environ
1. SUBJECT
Resolution No. 10788; A Resolution of the City Council of the City of Orange approving the
Engineer's Report and providing for the Annual Assessment for Landscape Maintenance
Assessment District 86 -2 (Santiago Hills).
2. SUMMARY
On May 13 ", Council adopted Resolution No. 10782 which approved the Preliminary Engineers
Report for LMD 86 -2 and set June 10 as the date for the public hearing. Each year the process
for setting the assessment of the Landscape Maintenance Districts is initiated. The process
began on May 13 2014 with the City Council approval of the Resolution of Intent. The public
hearing is the second step in the process. It is recommended that the City Council now hold the
public hearing in accordance with the Lighting and Landscape Maintenance Act of 1972 as
outlined in the "Order of Procedure ". At this time, property owners will have an opportunity to
be heard on this issue. The proposed assessments for fiscal year 2014 -2015 will not increase and
will remain the same as last year at $369.44 for each single family detached unit. This is the
maximum allowable assessment. The total assessment to be levied in Landscape Maintenance
District 86 -2 (Santiago Hills) will be $533,650.77, while expenses are estimated to be $620.000.
Services will continue to be reduced to keep expenditures down. However, if expenditures
continue to exceed the revenue from the maximum assessment, it will be necessary to completely
eliminate some services or utilize District reserve funds in FY 14 -15 and FY 15 -16.
3. RECOMMENDED ACTION
1. Adopt Resolution No. 10788 approving the Engineer's Report for the Annual Assessment for
Landscape Maintenance Assessment District 86 -2 (Santiago Hills).
2. Establish the assessment for fiscal year 2014/2015 for Landscape Maintenance Assessment
District 86 -2 at $369.44 per single family unit per year.
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14. FISCAL IMPACT
The Santiago Hills Landscape Maintenance District 86 -2 pays all costs of District administration
and related activities. The City is a property owner within the District and pays $5,535 annually.
The assessment revenue for Fiscal Year 2014/2015 will be placed in Fund Number 291.
15. STRATEGIC PLAN GOAL(S)
3a. Enhance and promote quality of life in the community — refurbish, maintain, develop and /or
expand public use places and spaces.
6. GENERAL PLAN IMPLEMENTATION
Land Use Element Goal 6.0 Advance development activity that is mutually beneficial to both
the environment and the community.
Policy 6.3 - Establish and maintain greenways, and pedestrian and bicycle connections that
complement the residential, commercial and open space areas they connect.
Policy 6.8 - Maximize landscaping along streetscapes and within development projects to
enhance public health and environmental benefits.
17. DISCUSSION and BACKGROUND
In 1987, Landscape Maintenance District 86 -2 was established to maintain the landscape
improvements constructed by Assessment District 86 -1 in Santiago Hills. Annually, a detailed
accounting of expenses is done and a new assessment is calculated for the benefiting property
owners.
This year's proposed assessment for a single family detached unit is $369.44. This is the same
as last year and is at the highest assessment currently allowed. A ballot approval for a proposed
increase above the maximum assessment was held in 2007 when increases in maintenance and
utility costs had exceeded incoming revenue. The property owners in the District rejected the
proposed increase. As a result, service reductions were imposed in the 2007/08 fiscal year and
additional reductions annually thereafter to keep expenditures within the maximum assessment.
In addition, District reserve funds were utilized in order to be able to make the service level
reductions less severe and not all at once which is detrimental to the landscape and would have
required significant future expenditures to replace damaged landscaping. Some of these funds
had been earmarked for landscape redesign of the District in order to reduce future maintenance
and water costs as well as capital improvements to the aging infrastructure. However, the rising
costs of maintaining the District with no increase in the assessments has caused the use of these
reserves.
Further reductions will need to be imposed in the upcoming fiscal year to limit the impact to the
remaining reserve fund balance. FY 2014 -2015 reductions will include the elimination of
landscape areas, non - replacement of dead plant material, as well as reductions to landscape
services and utilities as needed. Factors leading to the need for additional service reductions
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include increased utility costs (primarily water); and major repairs to an aging infrastructure,
including electrical and lighting systems and concrete paths and trails. In addition, the drought
conditions this past winter prevented the usual winter practice of decreasing the irrigation
schedules and required the use of more water than is traditional during these months. Moving
forward, necessary reductions to water use will significantly impact the District landscapes.
The maximum assessment total for FY 2014 -2015 is $533,650.77. Expenditures in FY 13 -14
were $78,000 over revenues. The proposed FY 14 -15 budget will exceed revenues by $45,000,
based on budgeted expenditures of $620,000, even after significant service reductions and the
reimbursement from Santiago Canyon College of approximately $42,000. The resulting deficit
spending has caused and will continue to require the use of additional resources from the reserve
fund balance, leaving the District extremely underfunded for capital improvements or major
repairs. The remaining reserve fund balance has been targeted for use in installation of a new
irrigation control system to help better manage water use and reduce utility expenditures, and to
design and implement landscape revisions to reduce maintenance costs and water use.
See the attached Final Engineer's Report for more detailed information about the assessment.
Given the fact that expenditures, even at a significantly reduced and underfunded amount
continue to exceed revenues, staff plans again to put forth a ballot approval for an increase above
the maximum assessment for a vote for FY 15 -16.
It should be noted that to maintain the District at the level prior to the reductions that began in
2007, the total cost for maintenance and utilities would be approximately $732,000,
approximately $200,000 more than current incoming revenue amount.
18. ATTACHMENTS
• Resolution No. 10788
• Final Engineers Report
• Area Map
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N:\Public WorkM13MIN\LYoung \Council Items \COUNCIL \June - 2014 \86 -2 Agenda 1415.doc
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RESOLUTION NO. 10788
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ORANGE APPROVING THE ENGINEERS REPORT AND
PROVIDING FOR THE ANNUAL ASSESSMENT FOR
LANDSCAPE MAINTENANCE DISTRICT 86 -2 (SANTIAGO
HILLS).
WHEREAS, the City Council of the City of Orange has previously formed a special maintenance
district pursuant to the terms of the "Landscaping and Lighting Act of 1972" being part 2 of Division 15
of the Streets and Highways Code of the State of California, in what is known and designated as
Landscape Maintenance District No. 86 -2 (hereinafter referred to as "Assessment District "); and
WHEREAS, the City Council has initiated proceedings for the levy of the annual assessment for
the Assessment District; and
WHEREAS, at this time a public hearing has been held in the manner and form as required by
law, and the City Council has considered all oral statements and written protests made or filed by all
interested persons; and
WHEREAS, this City Council is now satisfied with the assessment and diagram and all other
matters as contained in the Engineer's Report as now submitted for final consideration and approval, and
is now desirous of proceeding with the levy of the annual assessment.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Orange as
follows:
Section I•
That the above recitals are all true and correct.
Section II:
That all protests and objections of every kind and nature by, and the same hereby are, overruled
and denied.
Section III:
That the Final Engineer's Report consisting of the final submitted assessment and diagram for the
proceedings, is hereby approved and confirmed and a copy of said Report is hereby filed with the City
Clerk.
Section IV•
That the assessments for fiscal year 2014/2015 be established as approved by the City Council,
and are hereby confirmed and levied upon the respective subdivisions of land in the Assessment District
in the amounts as set forth in said final approved Engineer's Report.
Section V•
The City Clerk shall immediately accomplish the following:
A. Deliver to the City Engineer the assessment, together with the diagram attached thereto and
made a part thereof, as confirmed, with a Certificate of Confirmation attached and the date thereof. Said
City Engineer shall then immediately place for a record said diagram and assessment in his office in a
suitable book as a permanent record and attach a Certificate of Recordation.
B. Cause to be filed a certified copy of a diagram and assessment with the County Auditor, said
filing to be completed no later than the 3` Monday in August.