SR - LMD-86-2 - 2015-16 ANNUAL ASSESSMENT ENGINEERS REPORTAGENDA ITEM
4
May 12 2015
c�UN1'Y CP
TO: Honorable Mayor and
Members of the City Council
THRU: Rick Otto
Interim City Manage
FROM: Joe DeFrancesco
Publ' Works 're for
Marie Knigh��
Community Sery ces Direct r
ReviewedNerified B .
City Manager
Finance Director
To Be Presented By: Joe DeFrancesco
X Cons Calendar
City Mgr Rpts
Council Reports
_
Legal Affairs
Boards /Crates
_ Public Hrgs
Admin Reports
Plan/Environ
1. SUBJECT
Resolution No. 10862 - A Resolution of the City Council of the City of Orange regarding
Landscape Maintenance Assessment District 86 -2 (Santiago Hills) declaring its intention to
provide for an annual levy and collection of assessments for Fiscal Year 2015 -2016; to set a time
and place for a Public Hearing to receive public testimony on the foregoing matters; and to give
preliminary approval to the Certified Engineer's Report for Landscape Maintenance Assessment
District 86 -2 (Santiago Hills).
2. SUMMARY
Each year in May the process of setting the assessment for the Landscape Maintenance Districts
(LMD) is started. This is the first step in the process. The proposed assessments are the same as
last year and are at the maximum assessment previously levied in the District. The total assessment
to be levied in Assessment District 86 -2 (Santiago Hills) for FY 2015 -16 is $533,281.00 from
assessments and $41,564.00 from Rancho Santiago Canyon College District totaling $574,845.00,
while expenses are estimated to be $640,031.00. At the April 14, 2015 meeting, the City Council
approved the formation of a new district (LMD 15 -1) to exactly overlay the existing LMD 86 -2 to
cover the additional funding necessary to serve the District. Ballots are due approving the
assessment for LMD 15 -1 on June 9, 2015. If the ballot measure is successful the District will be
fully funded at $925,904.00 between the existing LMD 86 -2, the proposed LMD 15 -1 and the
agreement with Rancho Santiago Community College District. This amount will allow us to cover
the current shortfall between revenues and expenditures, as well as begin to gradually bring the
maintenance in the District back to previous levels. If unsuccessful, services will continue to be
reduced to keep expenditures within the funding provided by the existing LMD 86 -2 and the
agreement with Rancho Santiago Community College District. However, if expenditures continue
to exceed the revenue from the maximum assessment, it will be necessary to continue with service
reductions which could result in completely eliminating some services.
ITEM 9 1 5/12/15
LaPrinted on Recycled Paper
3. RECOMMENDED ACTION
Adopt Resolution No. 10862 to approve the Preliminary Engineer's Report for Landscape
Maintenance District 86 -2, declare the intent to levy an annual assessment and set June 9, 2015 as
the date for the Public Hearing on the assessments.
4. FISCAL IMPACT
The Santiago Hills Maintenance District 86 -2 pays all costs of District administration and related
activities. The assessment revenue of $533,281.00 for Fiscal Year 2015/2016 will be placed in
Fund Number 291.
5. 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.
7. DISCUSSIONS and BACKGROUND
In 1987, Landscape Maintenance District 86 -2 was established to maintain the landscape
improvements constructed by Assessment District 86 -1(LMD 86 -1) in Santiago Hills. Annually,
a detailed accounting of expenses is compiled and a new assessment is calculated for the benefiting
property owners.
This year's assessment for a single family detached equivalent unit is $369.44. This is the same
as last year and the largest assessment currently allowed. Revenue in the District is derived from
assessments paid by property owners, both residential and commercial, as well as Ranch Santiago
Community College District who reimburses the District for the cost to maintain the parkways
adjacent to the school.
In 2005/06 the revenues received from the property owners were not keeping pace with the rising
costs of maintenance. 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, reserve funds, mainly from LMD 86-
1, 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
ITEM 2 5/12/15
O Printed on Recycled Paper
expenditures to replace damaged landscape. Some of these funds had previously 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 assessment has caused the use of most of these reserves.
On April 14, 2015, the City Council approved the formation of a new district (LMD 15 -1) to
exactly overlay the existing LMD 86 -2 and to provide the additional funding necessary to serve
the District. The annual assessment for the new district (LMD 15 -1) must be approved by the
property owners. Ballots are due approving the assessment for LMD 15 -1 on June 9, 2015 and a
public hearing will be conducted on that date. If the ballot measure is successful, the District will
be fully funded. If unsuccessful, further reductions will need to be imposed in the upcoming fiscal
year to bring expenditures in line with revenues. FY 2015 -2016 reductions, if necessary, will
include further reductions to landscape services and utilities, continued non - replacement of dead
landscape, and deferred maintenance of non - safety related items. Factors leading to the need for
additional service reductions include increased utility costs (primarily water); and major repairs to
an aging infrastructure, including electrical and lighting systems and concrete paths and trails and
increased vandalism to District assets. In addition, the drought conditions these past two winters
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 also significantly impact the District landscapes.
The proposed FY 2015 -16 budget for the combined LMD 86 -2 and LMD 15 -1 indicates the
amount of funding required to bring services levels to the pre - service reduction levels of 2007 and
a small capital budget to gradually replace aging landscaping and infrastructure over a ten year
period. The existing district LMD 86 -2 would stay at the maximum assessment. Additional
revenues to fully fund the district would be obtained through the overlay district (LMD 15 -1) and
a separate agreement with Rancho Santiago Community College District. If the proposed annual
assessment for LMD 15 -1 is approved by the property owners within the District and the City
Council, the District would be fully funded. However, if the proposed annual assessment for LMD
15 -1 is not approved, the District would continue to see a reduction in services to match the funding
from the maximum assessment of LMD 86 -2 and the agreement with Rancho Santiago Community
College District.
The maximum assessment total for LMD 86 -2 for FY 2015 -16 is $533,281.00. Expenditures in
FY 2015 -16 are anticipated to be approximately $65,186.00 over revenues.
The attached Preliminary Engineer's Report contains detailed information about the assessment.
It is proposed to schedule the Public Hearing on this assessment for June 9, 2015.
8. ATTACHMENTS
• Resolution No. 10862
• Preliminary Engineer's Report
JD;ta;ly
N:\Public Works \ADMIN \ADMIN \LYoung \LYoung \Council Items \C0LTNCIL\May- 2015\LMD 86 -2 Agenda Intent FY2015- 16.docx
ITEM 3 5/12/15
Ch Printed on Recycled Paper