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Home My WebLink About2006-04-19 STAFF REPORTS 4A ;�pFLM gp� O V N f � RRO R/.TEO♦ Cq</FORa�P CITY COUNCIL STAFF REPORT APRIL 19, 2006 UNFINISHED BUSINESS Subject: 2006/2007' CITYWIDE ANNUAL MAINTENANCE DISTRICTS, PROPOSITION 218 NOTICING AND BALLOTING From: David H. Ready, City Manager Initiated by: Public Works and Engineering Department SUMMARY On July 20, 2005, the City Council approved the Final Engineer's Reports for the City's various Maintenance Districts, several of which are operating with a deficit, with operating costs exceeding the maximum allowable assessments that can be levied. As a part of Council's approval was direction to the City Engineer to schedule Property Owner Protest Ballot Proceedings for fiscal year 2006/2007 for a second attempt to address increased assessments for those Maintenance Districts that require continued subsidy of General Plan revenues. On April 5, 2006 Council approved a Contract Services Agreement with MuniFinancial for noticing and balloting services and directed staff to bring the item back to Council April 19, 2006 to discuss possible consequences with the full Council present. RECOMMENDATION: 1) DISCUSS POSSIBLE CONSEQUNCES OF INCREASED ASSESSMENTS NOT BEING APPROVED IN THE DISTRICT ELECTION. GIVE STAFF DIRECTION FOR USE IN THE PROPERY OWNER'S MEETINGS. STAFF ANALYSIS: In accordance with the Streets and Highways Code of the State of California, the City is required to prepare Engineer's Reports on the annual costs to operate and maintain improvements within the City's various Street Lighting or Parkway Maintenance Districts, which include: 1. Street Lighting Maintenance District No. 1 (Belardo Road Area - 165 Properties) 2. Street Lighting Maintenance District No. 2 (McManus Drive - 25 Properties) 3. Street Lighting Maintenance District No. 3 (Crossley Tract- 75 Properties) 4. Street Lighting Maintenance District No. 4 (Eagle Way Area- 43 Properties)Item No. A ./`/� 1. City Council Staff Report April 19, 2006- Page 2 2006/2007 Citywide Maintenance Districts—Proposition 210 Services 5. Parkway Maintenance District No. 6A (Fairport Development - 23 Properties) 6. Parkway Maintenance District No. 6B (Parkside Estates - 93 Properties) 7. Parkway Maintenance District No. 6C (Park Sonora Tract - 30 Properties) 8. Parkway Maintenance District No. 7 (Sunrise Norte Tract - 53 Properties) 9. Parkway Maintenance District No. 8 (Vintage Palms Tract - 64 Properties) 10. Parkway Maintenance District No. 9 (Flora Vista Tract- 77 Properties) 11. Parkway Maintenance District No. 10 (Mountain Gate —308 Properties) The City Council's adoption of the Final Engineer's Reports for seven of the City's eleven Maintenance Districts last year continued subsidy of General Fund revenues from the 2005/2006 fiscal year budget to operate the following Maintenance Districts, with the total cumulative deficit for each District indicated as shown: DISTRICT DEFICIT (as of 6/30/05) Street Lighting Maintenance District No. 1 $20,267 Street Lighting Maintenance District No. 2 $10,720 Street Lighting Maintenance District No. 4 $11,419 Parkway Maintenance District No. 6B $9,811 Parkway Maintenance District No. 6C $22,623 Parkway Maintenance District No. 8 $33,368 Parkway Maintenance District No. 9 $19,676 Total cumulative General Fund subsidy (as of 6/30/05) $127,884 City Council directed the City Engineer to schedule Property Owner Protest Ballot Proceedings for fiscal year 2006/2007 for a second attempt to address increased assessments for those Maintenance Districts that require continued subsidy of General Fund revenues. Staff had previously held Property Owner Protest Ballot Proceedings for the 2004/2005 fiscal year, but none of the proceedings were successful. Following City Council's direction, staff has coordinated with MuniFinancial to offer Proposition 218 noticing and balloting services. A contract services agreement was approved by Council and the services have begun. Other local agencies have encountered similar situations where older Maintenance Districts, established prior to Proposition 218, now operate with expenses exceeding the maximum allowable assessment that can be levied in accordance with Proposition 218. Most Maintenance Districts established prior to Proposition 218 did not include a mechanism to automatically increase the maximum annual assessment to cover increasing costs, usually linked to the Consumer Price Index. This was due to the fact that, at that time (prior to Proposition 218), local agencies were allowed to increase assessments to cover estimated costs without the need to hold an election. This fact changed with passage of Proposition 218. After passage of Proposition 218, as operating costs increase, the allowable revenue that may be collected remains constant, causing a cumulative increase in the "gap" of revenues necessary to cover City Council Staff Report April 19, 2006- Page 3 2006/2007 Citywide Maintenance Districts—Proposition 218 Services annual operating expenses. As can be seen above, the City is legally unable to recover annual operating expenses from the seven Maintenance Districts, resulting in a cumulative General Fund subsidy of approximately $128,000. It is staffs recommendation that with each Maintenance District operating with a deficit, that Property Owner Protest Ballot Proceedings in accordance with Proposition 218 be held to increase the maximum annual assessments within each District to cover the current estimated annual operating expenses, as well as to recover the estimated 2005/2006 deficit; and to establish an annual CPI escalator to allow the maximum annual assessment to be automatically increased each year by the CPI. Should the election proceedings support increased assessments in all of the Districts, the City would recapture approximately $24,500 of the cumulative total General Fund subsidy of $128,000 to date. However, it is likely that some or all of the Proceedings in the Districts will fail to support any increase of assessments. In that event, it is necessary for the City Engineer to receive direction from the City Council for what should occur in the event increased assessments from the residents within each District are not approved. Regarding Lighting District No. 1, the improvements within this District are continually failing, as the lighting system was constructed almost 40 years ago, and replacing or repairing the aging system is impossible due to an inability to find replacement parts that are compatible to the system. As this District has an existing deficit, there is no surplus of funds available with which a new lighting system may be designed and installed. Eventually, this system will become inoperable, and unless a neighborhood initiated request to self-fund its replacement occurs, this District may require dissolution at the time when the system fails. The neighborhood had previously expressed an unwillingness to self-fund a complete replacement of the old lighting system, after informal canvassing by a neighborhood representative in coordination with Engineering Department staff. Although the Public Works Department maintenance staff has the ability to obtain some fixtures and parts to repair broken lights, ultimately the system itself will fail. At that time, unless the neighborhood approves a substantial increase in assessments necessary to cover the cost to replace the entire lighting system (estimated at $500,000 or more), the choices for City Council to make are to fund replacement of the lighting system, or abandon it all together. At this time, annual operating expenses exceed the annual maximum assessment by approximately $1,000; approval to increase the maximum annual assessment will allow staff to continue to maintain this system in its current operating status, without the need to subsidize the District with General Fund revenue. Without an increase in assessments staffs only choices are to pay maintenance repair costs (parts & labor) until the budgeted amount is; reached and then stop any repair work until the subsequent year and/or reduce light times by 20%. City Council Staff Report April 19, 2006 - Page 4 2006/2007 Citywide Maintenance Districts—Proposition 218 Services Regarding Lighting District No. 2, this District was established to cover expenses for operating and maintaining a few street lights along McManus Drive between Saturmino Drive and Sunset Way, for 25 properties. Annual operations expenses exceed maximum assessment by approximately $3,100. If increased assessments are not approved by the residents, the choices for City Council to make are to continue to subsidize the annual operating and maintenance expenses with General Fund revenue; or to have the street lights removed and to have the District abandoned, because total energy bills are only about$4,000. Regarding Lighting District No. 4, this District was established to cover expenses for operating and maintaining street lights along Birdie Way, Divot Lane, Eagle Way and Far Drive, for 43 properties. Annual operations expenses exceed maximum assessment by approximately $3,100. If increased assessments are not approved by the residents, the choices for City Council to make are to continue to subsidize the annual operating and maintenance expenses with General Fund revenue; or for reasons similar to No.2 to have the street lights removed and to have the District abandoned. Regarding Parkway District No. 6B ("Parkside Estates"), this is a Parkway Maintenance District for landscape maintenance of existing parkways along Avenida Evelita and Calle San Raphael, where homes have rear yards abutting these streets (a total distance of approximately 1,000 feet). It appears that at the time this District was established, more extensive parkway landscaping may have existed along these streets. However, at some point in the past, a new sidewalk was constructed along the parkway, removing most of the previous landscaping. The only landscaping that remains, and is maintained as a part of this District, are several street trees. Annual operating expenses include approximately $2,000 for the City's landscape maintenance Contractor (currently PacWest) and $125 for irrigation, as well as incidentals and administrative costs, for a total of approximately $3,500. The current maximum annual assessment is $1,818. If increased assessments are not approved by the residents in this District, the choices for City Council to make are to continue to subsidize the annual operating and maintenance expenses with General Fund revenue; or to have the street trees removed and replaced with sidewalk or the trees removed from City Maintenance, and the District abandoned. Regarding Parkway Districts No. 6C, 8, and 9, all of these are parkway landscape improvement Districts for various neighborhoods. It is difficult to decrease the City's operational expenses to a degree that the maximum annual assessments will cover current and future increased expenses. It is certainly possible to reduce the City's schedule for landscape maintenance, and decrease the amount of irrigation; however, the result will likely be the same as if the City discontinued maintenance efforts altogether — the landscaping would become unsightly, overgrown, and eventually deteriorate. For example, District 6C has annual operating expenses exceeding maximum assessment by $4,100 and the Pac-West Maintenance Contract is only $5,100. Similarly District 9 would require maintenance reduced by 50%. Therefore, City Council Staff Report April 19, 2006- Page 5 2,006/2007 Citywide Maintenance Districts— Proposition 218 Services staff believes that If increased assessments are not approved by the residents, the choices for City Council to make are to continue to subsidize the annual operating and maintenance expenses in these Districts with General Fund revenue; or to cease the C;ity's maintenance of the parkway landscaping, and to have the Districts abandoned. At that time, obligation for maintenance of the parkway landscaping in these various neighborhoods would become the responsibility of the residents of these neighborhoods, and not the City. FISCAL IMPACT: jFinance Director Review: None. David J. Barakian Thomas J. Wilso Director of Public Works/City Engineer Assistant City M nager David H. Ready, City Marvdger ATTACHMENTS 1. Photos - �F d �♦ V Ylra^ I� w,114 :a "Od41 r ,.. i ~wa�t4+�^dil� I mwt,�Nri�. * awM r e'Sx, tl Na{,at II -milli, 1�III IIII I I.. .rr;...vk;. I � I d" ki iPRiN i � , Y, arm VO f4'IMwfr.,a,r ,. ' ``4 s w;.� 'I 'c .ra W rr4H3' "Ri 1 M 46 �•, . ri* a mph ..c5 r,+S nA , ryx4rdlar�i „ �•. -.• d} 41IM 10 y'•.r . F"}', '^apt Wm x ....�n9 -Y.A a�y V" Y • r �ryrv,M � R �np' II y,n. "xem M RR , . . . . .•�..i%�..,q,4r.RW1,X��. � , ., � .,.,v�,+e`FnfiPhbNNM} Mxk n.. I. ,.,rx MalpNM, � a+-. +. 4M",!fMmYn>�/RN•,I�R,+pp51.,-. 4 n.vm,µrpy -l_ . �`u^�f•{M+'�nfiRM.ao-•IM'.nn- ..,. � ,.r^•>uwurAryi.. � �- v Y .�a.ery,ax ; T n y .,nn+r� ra••R .� ,. .. . M.T ,. v v..I..l u-.rviryTvyryppn�,}0.�1 1k , I n M1p i•,• .. k .. n''"1�;�" 4'. '{�':'m�:"R"NpRW r•rR 1:�W"V'w