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HomeMy WebLinkAbout0526.091, , , "'! December 5, 1991 HONORABLE CITY COUNCIL Palo Alto, California Attention: Finance Committee LANDSCAPING AND LIGHTING ~SSESSMENT DISTRICT Members of the Council ~ ~rt in Brief The Lendscapinq and Lighting Act of 197.2 could be used to create an assessment district and shift some capital improvement and ongoing maintenance costs from the City budget to the property -r.axes of individuals and businesses within an assessment district Qr districts. This report addresses the concept... describes the process, presents planned expenditures which could be inclUded in an assessment district, provides examples from other cities, cites a case currently before the California supreme Court, and provides a potential timetable for establishing such a district. In California, the most c.)rnmonly used special assessment acts, bond acts and regulatory acts are all contained in the Streets and Highway Code~ Part of that code is the LandscaFiJlg and Lighting Act of 1972 which can be used for improvement or maintenance of public open spaces, landscaping, playground equipment, lighting and traffic signals. An assessment dist.rict is formed in order to assess property o\llners via tl'.e tax roll for annual :maintenance costs~, debt service costs if capital improvements are financed by bonds, or a combination of the two. Payments would be cOllected by the county. Assessments would not be tax: deductible on an individual's federal income taxes. CMR:526:91 1 I I I I I • .,~ , -,--,-----, _____ IIIIIlfI ..... Two-Phase Proeess If the city Council authorizes staff to pursue the establishment of an assessment district, staff -would follow a t .... o-phase process. Phase I 'iIIould be to hire an engineering firm to: 1) assist in determining ",'hich expenditures should be included in an assessJ1'I.ent district, 2) d~termine ho\ol' re.sidential, industrial and commercial property owners should be 2Issessed based on benefit, and 3) calculate appro~imately how much it would cost each category of property owner. The: intent of Phase I .... ork is t:J provide Council with technical data which supports an assessmen~ methodology. It docs not inclUde obtaining public reaction or consensus on forming an assessment district. During Phase I, staff 'Would work closely .... ith the conSiultant to review three options: 1) an assessment district for only mainte­ nance expenses, 2) an assessment district for only capital improvements, or 3) an assessment district for both maintenanc~ expenses and capital impravements~ Staff 'Would also revie ...... the possibility of direct assessments for the expenditures, or the sale of bonds to assist in making the annual assessments more level if the ex-penditures are different in different yean:;. Staff would return to council ~ith this information and request authority to proceed to Phase II. During Phase II, the City Council ~ould need to take five steps: 1) adopt a resolution initiating proceedir,gs; 2) receive an engineer's report on the proposal to form the districti 3) adopt a resolution of intent to fonn the district; 4) conduct a public hearing on the engineer' 5 report after nQtifyi:r.g the affected property owners; and 5) adopt a resol'.ltion orderinq the i:nprove­ ments~ S~aff would hire a consultant to prepare the engineer's report and furnish engineering services ino:::l'..lding preparation of boundary mapsj preparation of benefit .zones~ formulas and rationale for determining benefitj development of a budget; spreadinq of assessments; prepa!:'ation of the eaSSE!ssment roll for county tax collection: and drafting a notice to property owners~ Staff estimates that the engine~ring consultant ~ould charge up to $20, 000 for Phase I services based upon a citYJllide assessment district. Th~ cost of Phase II services would be deter~ined after an asseSSffient methodology has been approv~d by th~ council. Based on other cities~ experience, this ~ould cost between $50,000 and $100,000. ~ote~_tial Assessment District ~_~'penditures Staff has reviewed the 1991-92 budget, inclUding the. 1991-96 Capital Improvement Program, to determine ~hich expenditures could conceivably be include.d in a 1972 Landscaping and Lighting Act assessment district. Attachment A is a list of these e>cpenditures. CMR:526:9l 2 • - "'nile staff believes all of these expenditu.res are itetls which could be included in an assessment. dist.rict, they '\t,'ill need to be revie·..;ed by a consultant to determine which best fit the pr-?cess. Staff r.as intentionally pre~ented a large list to demonstrate that there are mar,y projects and maintenance activities ... 'hich mi3Y be finance~ by the imposition of an assessment district. cle~rly, the final assessment district ",,'ill contain a much smaller list of projects. Article XIII B of trlc California State constitution reqlJ.ires that the City's Proposition 4 (Gann) appropriations limit be adjusted permanently whenever there is a transfer of financial responsibili­ ty, in this case from Gener.al Fund support to assessment district funding. The legisla~ure Clarified the process of determining when such a transfer has occurred in Government Code section 7913, which states that transfer of financial responsibility has taken place only when the dollar amount allocated from other revenues to the provision of such services has decreased. To the extent that there is a maintenance of effort to fund services that are ftreasonably related" to those moved to assessment district financing, the City's appropriations limit need not be adjusted. In the 'Worst case, the City's appropriations limit ~ould be permanently reduced by the entire amount of expenditures moved to assessment district financing in the year in '",'hich the transfer of responsibil it}' occurs. !r. this case, the city could pursue a Gann Limit override to imple:r;,ent t.he new Landscaping and Lighting Assessment District. If, hOlolever, there is augmented funding for programs ...... hich are -reasonably related" to those programs Which 2re moved to the assessment district l there potentially would not be such a drastic reduction in the City's appropriations limit. Current projections sho ..... tnat the City probaoly has $) to $4 million in "room" between its Gann Limit and appropriations subject to the Limit. ~le~om Other Cities The City of Wats;oI".ville recently est3.blished -3 s:r.all landscaping and lighting assessment district y..'hicn is expected to generate approximately $127,000 annually. At their meeting of June 3, 1991 r the watsonville Recredtion and Parks Commission adopted a recommen­ dation to assess all residential property at the rate of $1_00 per month (single family homes, each apartment unit, condominium, mobile home) and accept the engineer'~ reco~~endation for commer­ cial and industrial rates of $1.00 per unit. Commercial property is rated as 4 units per acre and industrial at 0( units per acre. The City of Bcrkp-Iey established c.it~ide landscaping and lighting assessment districts in 1981-1982. Currently, two districts raise approximately $7 million annually_ Trle lighting district raises $1.4 million by charging residents 1.2 cents per square foot of improved property (approximately $22 per year) ; commercial property owners pay 4.8 cents per square foot; and industL .tal property CMR:526:91 3 • owners pay 2.4 cents per square foot. Separately, a landscaping distr iet rai$es '$5.5 rei 11 ion per ~lear by chargiT19 residential, commercial and industria 1 property owners 6.9 cents per square foot. In August 1982, the City of San Pablo tormed a cit)"rtlide district under the :Landscaping and Lighting Act. 'l'he costs for lighting are apportioned ~mong t~e benefiting properties according to parcel's frontage and inte~sity of stre~t lighting fronting the parcel. The benefits derived from residential landscaping ''''<is said to be 1) inversely proportional to proxi!!lity of the parcel to John Davis ParJ<, and 2} dire<-tly proportional to the ml!t'lbet' of residential units. COL1mercial landscaping 'Was separated between com.mercial streets .... ith and without landscaped frontage. Total revenue for FY 1991-92 was estimated at $779,000. The City of Pittsburgh established a cit}'\o'ide landscaping and liqhting assessment district in FY 1988-89. The assessments raise appr-oximately $2 mil] ion per year 'Ji th residents pay ing appro){i­ mately 55 percent and commercial and in.:l'tstrial property owners paying 45 percent. The benefit (and charge} received by ~ single family residence is Uniform and provides the basis for measuring the benefit to other land uses; the benefit of all other land uses is tied to the ~ingle family resident. The benefits for industrial and commercial property owners are based on area and frontage and decrease with increasing parcel size or frontage. The City of Pleasanton has a cityvio!? assessment district ..... hich raises bet~een $300,000 and $400,000 per year. All ~ssessments ~re on commercial prcper-ty based on a ct.arge per acre of frontage foot. The City of LaVerne ~as the subject of an article in the November 1991 issue of nWestern city~~ Prior to adoption of an assessment dh:;trict, the City put an advisory vote on the November 1990 ballot. The assessment district will generate over $1 million for street lighting, parks and landscape maintenance to .. free up" general funds for police t fire and other city services. Other cities which have 1972 Landscaping and Liqh~ing Act asses~­ ment districts include: Albar.y, Antioch, Clayton, Concord, El Cerrito, Hercules, Oakland/ orinda/ Pleasant Hill, and Union citv. Not all attempts to establish such an assessmen~ district have been successful. In the City of Pinole, the Counci 1 stopped the process and in the Cities 0"( Lafayette and Richmond, the process .. as stopped by protests. California supr __ I§!_J::!._L~.9_lJ_:I';"t Case The California supreme Court recently accepted a case involving the City of Orland involving two issues: 1) whether the Landscaping and Lighting Act of 1972 allo ..... s assessments for the sole purpose of CMR:~26:91 4 • • 11' maintaining parks 'Without construction of any improvements, and 2) whether a flat assessmerl.t (Jf $24 per d",el:ting unit. is a valid a$6eSs~ent or is a special tax. The lo~er court in an unpublished opinion held that the Landscaping and Li;hting Act authorized the maintenance of pre-existing improvements and that the flat fee of $24 was reasonable based on studies performed by the City. The City of FdIo Alto has filed an amicus curiae brief in the case~ Timetable If Council decides to prOGeed with. the formation of a 1972 Landscaping and Lighting Act assessment district, the earliest it can be accomplishe.d is for the ~99~-94 property tax roll. 'l'he fOr!Cation of the district might be delayed due -co any of the following: Co· .. mcil wis~.es to place an advisory measure on the ballot ~rior to approving the aistrict; Council involvement in the consultant selection process; or the chosen assessment methodology is extremely camp-lex:. T.he esti1r'.atea time required for Phases 1 and 2 are: Action Phase I o Retain consultant o Prepare report tor Council Phase II o Prepar~ engineers report, hold public hearings, adopt final resolution, send tax calculations to County Jleeommendatioll Time Required 3 to 4 months 3 to 4. months 12 toO 16 months staff recommends that Council revieW" the attached exhibit and provide qui dance to staff as to 1) ' ... hether or not a landscap­ ing/lighting assessment district should be formed; 2) the geo­ graphic extent of any such district; 3) the scope of services to be provided by the district; and 4) the need to place the matter on the ballot. CMR:526:91 5 • -.o,~", "'-... --__ 0;,. ....... ,. ............. Respectfully submitted, . / ' '-~-( //: / ~ .. _r~ /';'<.:c-' (>;' '" ( '", GORDON B. FORD Trea$ury Manager . rf) ;j~u-~0. " EM'h:Y HARJU SON ' D~rector c~ce WILCrA~~ER ---- City ~:qer ! , AttachIl<.~nts: )..ttachment .'- CMR.:52E:91 .. 6 Cl tywiJ;te. "rll ~int~f' Open Spec" Meintenllnu' Terr.\a Court. "'-{rrtenence r rH ItrlO'Vllt r«1 H'I .. \(s) Street "-1 nt8Nt'ie'e SiliNllk .. lnten.nc:e S~,....t Lighting ,.nre "'ntenance Traffic: =ont.~ol rOUl CPRATHlIi M.OG.ST Projec.t$ o..rr1/lltty App.-oved: "lt1)Ot I..,..~ t.:; BeyL ..... Athletic: QT01Al Pr-oJtct. Delaytd fCW" 1 to Z fetlrs Perk P .. ~ J:ep.irl. 'laygr«nj 'umit~NII !IIitehil'Ll Park Ir-rf .. tlon Syatetl Rerwwatiot'1 SUlTOTtJ. p.-ojectl DeL.,...:I If'll2f;nlltely GI"Mf' "Irk '!'!mil/bsl-:ett:.!l 1.0000000000ts lttlleti" F!eldilll RetIOV'It',:::, P~#I'rQjeet. Nedl., Repair­ Terr.il C~t hplir o Ir1"lflltiO'1 5yst .. ~l to AutOMatic !,r!ptian Syste. Mftcl!ell .. 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