For City Council Meeting July 23, 2024
TO: Honorable Mayor and City Council
APPROVAL: G. Michael Milhiser, Interim City Manager
FROM: Tim Sullivan, Director of Public Works
Title
Request City Council to Conduct a Public Hearing to Adopt 1) Resolution No. 8268 Approving the Engineer’s Reports and Ordering the Levy of Assessments for Fiscal Year 2024/2025 for Street Light Maintenance District No. 1, 2) Resolution No. 8269 for Landscape Maintenance District No. 1, 3) Resolution No. 8270 for Landscaping and Lighting District No. 2.
(ACTION)
Body
RECOMMENDATION:
Staff recommends that the City Council:
1) Adopt Resolution No. 8268 Approving the Engineer’s Report and Ordering the Continued Operation and Maintenance of Improvements for Street Light Maintenance District No. 1 and Ordering the Levy and Collection of Annual Assessments related thereto for Fiscal Year 2024/2025.
2) Adopt Resolution No. 8269 Approving the Engineer’s Report and Ordering the Continued Operation and Maintenance of Improvements for the Landscape Maintenance District No. 1 and Ordering the Levy and Collection of Annual Assessments related thereto for Fiscal Year 2024/2025.
3) Adopt Resolution No. 8270 Approving the Engineer’s Report and Ordering the Continued Operation and Maintenance of Improvements for Landscape and Lighting District No. 2 and Ordering the Levy and Collection of Annual Assessments related thereto for Fiscal Year 2024/2025.
BACKGROUND:
The Landscaping and Lighting Act of 1972, (the “Act”), beginning with Section 22500 of the California Streets and Highways Code, requires the City Council to order the preparation of an Engineer’s Report each year which details the levying of special assessments for the three separate Special Districts established within the City of Rialto (the “City”).
Street Light Maintenance District No. 1 (SLD 1):
The City established SLD 1 throughout the entire City to fund the operation of the City’s streetlight system consisting of over 3,750 streetlights, and to fund costs for tree trimming and maintenance. Proposition 218 limits the special assessments levied in SLD 1 to the historic maximum special assessment prior to November 1996.
Landscape Maintenance District No. 1 (LMD 1):
In 1977, Rialto established LMD 1 to fund the maintenance of exterior parkways, median irrigation, and landscaping adjacent to and associated with private land development. LMD 1 consists of over 100 separate areas throughout the City, annexed upon the development of various properties. Within LMD 1, the City maintains 1,000,000 square feet of turf and 3,700 trees within a total area of 61 acres. Proposition 218 limits the special assessments levied in SLD 1 to the historic maximum special assessment prior to November 1996.
Landscaping and Lighting Maintenance District No. 2 (LLMD 2):
The Act of 1972, beginning with Section 22500 of the California Streets and Highways Code, authorizes the City Council to establish Special Districts to pay for the costs to operate and maintain public improvements that benefit private properties. In January 2005, the City Council established Rialto Landscaping and Lighting Maintenance District No. 2 (LLMD 2) to fund the operation of new streetlights added to the City’s streetlight system and to fund the maintenance of exterior parkway and median irrigation and landscaping adjacent to and associated with private land development. LLMD 2 consists of 67 separate areas throughout the City, annexed upon various developments approved after 2005. Within LLMD 2, the City currently maintains a total of over 51.8 acres of landscaped area and over 180 streetlights.
All new developments within the City must annex into LLMD 2. The City may adjust LLMD 2 assessments in accordance with the Consumer Price Index (CPI). Annexation into LLMD 2 is a condition of approval for all new development projects required to provide exterior landscaped parkways or medians and/or required to install new streetlights. The special assessments in LLMD 2 are not limited to any historic maximum special assessment, and pursuant to Proposition 218, the maximum assessment may increase pursuant to the CPI.
The Act allows the City to establish Special Districts to absorb the costs of installation and maintenance of various improvements that provide special benefits to properties within its area of influence. Proposition 218 requires that property owners ratify increases in special assessments related to SLD 1. The maximum special assessment within SLD 1 for a typical residential parcel is approximately $26; the maximum special assessment within LMD 1 for a typical residential parcel is approximately $58. For residential parcels in both SLD 1 and LMD 1, the total maximum special assessment is limited to approximately $84.
ANALYSIS/DISCUSSION:
The City must approve various Resolutions to initiate the process of levying special assessments to collect funds for the maintenance of improvements within SLD 1, LMD 1, and LLMD 2. The method for calculating the special assessments for these Districts remains unchanged from last year. Formulas apply the special assessments to the properties in the City based on the benefit of having streetlights and/or landscaping (as the case may be), and other District services within the City. Engineer’s Reports for SLD 1, LMD 1, and LLMD 2 have been prepared pursuant to requirements of the Act, and the projected revenues and expenditures have been estimated for these Districts in Fiscal Year 2024/2025.
Street Light Maintenance District No. 1 (SLD 1):
Assessments on parcels are dependent upon their classification as residential or commercial and whether vacant or developed. Residential properties include single-family units, multiple-family units (condominiums and apartment complexes), and mobile home parks. For residential, a Land Benefit Factor of $8.18 per acre applies, with a minimum assessment of $2.05; and a Development Factor of $24.03 applies to each residential parcel. The maximum special assessment for a typical residential parcel is $26.08 and cannot be increased without voter approval.
Non-residential properties include commercial, professional, office, and industrial uses, and the City applies an assessment formula similar to residential properties. A Land Benefit Factor of $8.18 per acre applies, with a minimum assessment of $4.09, and a Development Factor of $52.09 per acre applies. The maximum special assessment for a typical commercial parcel is $56.18 and the City cannot increase it unless approved by a majority vote of members within the district.
The Engineer’s Report for SLD 1 provides a full discussion of SLD 1 and a detailed budget (Attachment 1).
Landscape Maintenance District No. 1 (LMD 1):
The City assesses parcels based on three established Zones of Benefit:
Zone 1 includes residential parcels that benefit from parkway/median landscaping that does not include trees. The City established the maximum special assessment in 1993 at $58 per Equivalent Benefit Unit (EBU). A single-family residential parcel is 1 EBU, and Zone 1 of LMD 1 contains 1,802.40 EBUs.
Zone 2 includes residential parcels that benefit from parkway/median landscaping that includes trees. The City established the maximum special assessment in 1993 at $58 per EBU. A single-family residential parcel is 1 EBU, and Zone 2 of LMD 1 contains 6,392.30 EBUs.
Zone 3 includes multi-family residential or non-residential (commercial/industrial) parcels that benefit from parkway/median landscaping (with or without trees). The formula determines a parcel’s EBU by allocating costs to each parcel on a per-parcel apportionment, utilizing the best representation of each parcel’s benefit compared to other parcels. The maximum special assessment varies from $2.58 per EBU to $2,666.67 per EBU, dependent upon the individual annexation area. Zone 3 of LMD 1 contains 2,929.52 EBUs.
The Engineer’s Report for LMD 1 provides a full discussion of LMD 1 and a detailed budget (Attachment 2).
Landscaping and Lighting Maintenance District No. 2 (LLMD 2):
The City assesses parcels based upon seventeen established Zones of Benefit for Landscaping and Lighting. The maximum assessment rates for all Zones of Benefit within LLMD 2 escalate annually by the percentage increase of the Local Consumer Price Index (CPI) for Riverside-San Bernardino-Ontario California Area for All Urban Consumers from January to January, as previously approved by the property owner(s) through a Proposition 218 Ballot Proceeding at the time of formation/annexation. The allowable percentage increase in special assessments for Fiscal Year 2024/2025 is 2.88%, consistent with the CPI.
Staff recommends that the City Council defer any increase in special assessments for all Zones of Benefit within LLMD 2 at this time. The existing special assessment rates per EBU vary from $0.60 to $567.92.
Zone L includes developments and parcels classified as residential and non-residential properties benefiting from the maintenance, operation, and servicing of street lighting adjacent to and/or in close proximity to the development or property. The existing special assessment rates per EBU vary from $6.45 to $30.80.
The Engineer’s Report for LLMD 2 provides a full discussion of LLMD 2 and a detailed budget (Attachment 3).
To levy assessments for SLD 1, LMD 1, and LLMD 2, the City Council must make certain findings and adopt various Resolutions related to the Special Districts and conduct a Public Hearing. At the Public Hearing, property owners will have an opportunity to comment on the continued operation and maintenance of improvements within SLD 1, LMD 1, and LLMD 2. Based on the public testimony, the City Council will consider approving the Engineer’s Reports, to approve the continued operation of SLD 1, LMD 1, and LLMD 2 for Fiscal Year 2024/2025, and to order the levying and collection of assessments.
The City Clerk published notices for the Public Hearing, as required by Sections 22552 and 22553 of the California Streets and Highways Code.
ENVIRONMENTAL IMPACT:
Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY:
Approval of this action complies with the City of Rialto General Plan Goals and related Policies:
Goal 2-8: Preserve and improve established residential neighborhoods in Rialto.
Goal 2-10: Create distinctive gateways at all entry points into Rialto and for individual districts or neighborhoods.
Goal 2-12: Design new streets to be pedestrian friendly.
Goal 2-13: Achieve quality aesthetic design of all signage in the City of Rialto.
Goal 2-17: Provide high-quality and environmentally sustainable landscaping.
Goal 2-19: Encourage neighborhood preservation, stabilization, and property maintenance.
Goal 2-21: Ensure high-quality planned developments in Rialto.
Goal 2-22: Promote commercial and/or industrial development that is well designed, people-oriented, environmentally sustainable, sensitive to the needs of the visitor or resident, and functionally efficient for its purpose.
LEGAL REVIEW:
The City Attorney’s Office has reviewed the resolutions and Engineer’s Reports and
approved them as to form.
FINANCIAL IMPACT:
Operating Budget Impact:
Street Lighting Maintenance District No. 1 (SLD 1):
Consistent increases in labor costs and significant increases in utility costs have resulted in increased costs to maintain the improvements within SLD 1, which exceeded the maximum special assessments levied within SLD 1. In prior years, SLD 1 has operated at a deficit, relying on the General Fund to cover the excess costs. Staff estimates the maximum collections within SLD 1 included in the proposed Fiscal Year 2024/2025 at $858,777. The projected expenditures for Fiscal Year 2024/2025 are $1,535,285 resulting in a budget deficit of $676,508. To cover the deficit, $547,291 will be a Reserve Fund contribution and $129,217 will be contributed from the General Fund. The Engineer’s Report for SLD 1 provides a full discussion of SLD 1 and a detailed budget is included as Attachment 1.
Landscape Maintenance District No. 1 (LMD 1):
As a result of consistent increases in labor costs and significant increases in utility costs, the costs to maintain the improvements within LMD 1 in prior years exceeded the maximum special assessments that can be levied within LMD 1. The City estimates the total collection for the Residential Zones 1 & 2 within LMD 1 for Fiscal Year 2024/2025 to be $475,292.60. The projected expenditures for the Residential Zones 1 & 2 for Fiscal Year 2024/2025 are $513,663.79, resulting in a budget deficit of $38,371.19 which will be funded by the Reserve Fund for these Zones.
The City estimates the total collection for the Non-Residential Zone 3 within LMD 1 for Fiscal Year 2024/2025 to be $66,287.99. The projected expenditures for the Non-Residential Zone 3 for Fiscal Year 2024/2025 is $513,663.78 resulting in a deficit of $447,375.79, which will be partly funded by the Reserve Fund in the amount of $79,532.81 and the remaining deficit will need to be covered by the General Fund. The Engineer’s Report for LMD 1 provides a full discussion of LMD 1 and a detailed budget is included as Attachment 2.
Landscaping and Lighting Maintenance District No. 2 (LLMD 2):
The following is a summary of assessments for Zones 1-33 of Benefit.
As shown in the Table, the total estimated expenses are $1,517,001.35 for Zones 1-33 in LLMD 2. The maximum allowable assessment that may be levied is $1,431,263.36 resulting in a deficit of $85,737.99. By deferring the allowable annual CPI adjustments, the assessment that will be levied is $1,108,046.07 resulting in a deficit of $408,955.28 which will be covered by the reserve fund balance.
The following is a summary of assessments for Zone L of Benefit.
As shown in the Table, the total estimated expenses are $19,041.94 for Zone L in LLMD 2. Of those expenses $16,030.53 are considered a general benefit to the City as a whole and are not covered by the assessment. The maximum allowable assessment that may be levied is $15,957.76 but only $8,668.28 in assessments are needed to cover expenses as well as a reserve fund collection.
The special assessments levied in LLMD 2 have not increased by the allowable annual CPI adjustment since Fiscal Year 2016/2017 except for new Zones which are being levied at the assessments established at annexation.
Staff is recommending that the City Council defer any increase in special assessments at this time for all Zones of Benefit within LLMD 2. The Engineer’s Report for LLMD 2 provides a full discussion of LLMD 2 and a detailed budget is included as Attachment 3.
Capital Improvement Budget Impact:
There is no impact to the Capital Improvement Budget.
Licensing:
A Business license application and payment of a Business License tax is not required.