01-20-1998 - West Covina Lighting & Maintenance District, Fiscal Year 1997/98 - Mid-Year Budget Review_f
City Of West CO7111Z[L
Memorandum
To: City Manager and City Council
From: Patrick J. Glover
City Engineer/ Public. Works Director
Subject: West Covina Lighting and Maintenance District,
Fiscal, Year 1997/98 — Mid -Year Budget Review
Summary: At tl
expe
Disti
has i
City
year
BACKGROUND
The Citywide Lightij
Lighting District. T1
West Covina and upl
of the District change
acts and the growing
and Maintenance Di,
and facilities, public
AGENDA
ITEM NO. B-4c
DATE January 20, 1998
®PRINTED ON RECYCLED PAPER
January 6,1998 City Council meeting, the City Council approved
litures of $3,192,260 for the Citywide Lighting and Maintenance
t. A review of the Citywide Lighting and Maintenance District budget
iulted in the development of greater efficiencies and a reduction in the
de Lighting and Maintenance District budget of $236,890 for fiscal
)97/98.
and Maintenance District was initially formed in 1966 as the Citywide
purpose of the District was to complete the installation of streetlights in
ule and maintain the streetlights that were already installed. The structure
over the next 30 years to meet the requirements of various State approved
.eds of the City. By 1996 the District had become the Citywide Lighting
ict and provided maintenance services for streetlights, street trees, parks
adscaping, graffiti removal and traffic lights in West Covina.
The Citywide Lighting and Maintenance District was funded through an assessment established
by the 1972 Lighting and Landscaping Act. The assessment was based on the assessable front
footage of the lot and was levied on each property in the City. The assessment and a number of
miscellaneous funding sources provided the majority of funding for the district however, prior to
1995 the District relied on some support from the General Fund.
ANALYSIS
Cost Control and Transition Plan
On February 7, 1995 the City Council approved the Maintenance Department Cost Control and
Transition Plan. The plan was designed look at staffing and service levels to determine what
improvements could be made. One result of the plans implementation was to reduce the
Citywide Lighting and Maintenance Districts' reliance on the General Fund and bring the
District out of a continued deficit spending cycle. The plan outlined a series of expenditure
reductions resulting from the normal attrition of staff and contracting of work to private
agencies.
The plan was implemented in the 1995/96 budget and caused significant reductions in the
Districts budget to the point where the District was no longer reliant on the General Fund and the
1997/98 budget showed reductions of almost $800,000 since the 1995/96 fiscal year. The
following table shows the annual operating budget totals and general fund contributions between
fiscal year 1990/91 and fiscal year 1997/98.
Citywide Lighting and Maintenance District
Operating Budget and General Fund Contribution
Fiscal Year
I
Operating Budget
General Fund
Contribution
1997/98
$3,210,262
$0
1996/97
$3,316,210
$0
1995/96
$3,466,000
$0
1994/95 j
$3,994,280
$265,000
1993/94
$3,954,230
$365,000
1992/93
$3,766,210
$538,000
1991/92
$3,951,300
$827,220
1990/91
$4,208,310
$1,448,970
i
City Manager and City Council
Page 2
Proposition 218
In 1996 Californian voters approved Proposition 218 which placed limitations on local
government's ability to collect property -related assessments and fees. In the City of West
Covina the method of collecting revenue for the Citywide Lighting and Maintenance District was
greatly impacted by the passage of the proposition.
Prior to Proposition 218 the District's primary source of funding was an assessment that was
established under the Lighting and Landscaping Act of 1972. The assessment was based on the
assessable front footage of each lot within the City and provided revenues of up to $3.5 million
annually. With the Cost Control and Transition Plan in place, the assessment as well as a
number of miscellaneous funding sources, eventually funded all the services provided by the
Citywide Lighting and Maintenance District.
With the implementation of Proposition 218 as the Right to Vote on Taxes Act, the City
reviewed the legality of the assessment under the acts' requirements. It was determined that only
a portion of the assessment met those requirements and as a result a group of services provided
by the Citywide Lighting and Maintenance District could no longer be funded through the
assessment.
The act provided a definition of the services that may be funded through property -related
assessments. Only those services that provide a direct benefit to the property being assessed may
receive funding through that assessment. The act defined all the remaining services as general
benefit services. These services provided, no direct benefit to a particular property and so could
not receive funding from a property -related assessment or fee.
The Maintenance of street trees and streetlights were identified as the only assessable services
provided by the Citywide Lighting and Maintenance District. The maintenance of parks and
facilities, street landscaping, graffiti removal and the maintenance of traffic signals could no
longer receive funds collected through the District assessment.
Impact of Proposition 218 on District Revenue
In June 1997, West Covina property owners approved a revised assessment for the Citywide
Lighting and Maintenance District through a mail ballot election. The new assessment meets the
requirements of the Right to Vote on Taxes Act by funding special benefit services only. The
remaining general benefit services, comprising of park and facility maintenance, street median
maintenance, graffiti removal and traffic signal maintenance remain without a funding source.
The revised assessment of $38.44 per equivalent dwelling unit will provide $1.16 million in
funding. This represented a significant drop in assessment revenues and created a significant
challenge for staff to address while preparing the 1997/98 District budget. The following table
shows yearly assessment revenues since the 1990/91 fiscal year.
Citywide Lighting and Maintenance District Assessment Revenues since 1990/91
Financial Year
Total Assessment
Revenues
1997/98
$1,167,285
1996/97
$3,449,204
1995/96
$3,229 952
1994/95
$3,174,240
1993/94
$3,112,000
1992/93
$2,885,656
1991/92
$2,761,290
1990/91
$2,542,400
City Manager and City Council,.,,; ..,,
Page 3
i
At the January 20, 1998, City Council meeting the City Council will consider calling an,election
to seek voter approval of a replacement special tax to fund the general benefit services that are
currently without funding. The City Council has established a tax rate of $49.90 which if
approved by voters will provide approximately $1.4 million to replace revenues lost as a result of
the Right to Vote onl Taxes Act.
The 1997/98 Citywide Lighting and Maintenance District Budget
In June 1997, the City Council approved a Citywide Lighting and Maintenance District budget of
$3,192,260. Due to the impact of the Right to Vote on Taxes Act the projected revenues from
the District's assessment fell from $3.45 million in Fiscal Year 1996/97 to $1.16 million in
Fiscal Year 1997/98 1 Under the requirements of the Act the assessment revenues were
earmarked for the special benefit services of street tree and streetlight maintenance. Additional
revenues of $70,000 from the Community Enhancement Fund and $61,000 in reimbursements
from other agencies were identified to offset some of the remaining costs.
1997/98 Budget Revenue Sources
Assessment Revenue
$1,167,287
Community Enhancement Fund (paid to the District
to fund ballfield lighting costs)
$70,000
Reimbursements by Other Agencies for Pool
And Landscape Maintenance
$61,000
Fund Balance as of June 20, 1997 (Reserves)
$1,494,170
Interest Earnings from Fund Balance
$30,000
Total Available Funds
$2,822,455
Approximately $1.89 million in general benefit services remained without funding for the
1997/98 fiscal year. In order to prevent either reduced service levels or deficit spending the
District's reserves were used to fund these services. The District came into Fiscal Year i997/98
with $1,494,170 in reserves and $30,000 in interest on the reserve balance. In addition to the
reserves, staff anticipated expenditure savings of $200,000 from the 1996/97 fiscal year. These
funds and expendit i e savings were used to offset the $1.89 million needed to fund the general
benefit services.
Use of assessments and miscellaneous revenues, district reserves and interest and the expenditure
savings from fiscal year 1996/97 resulted in $3,022,455 in identified funding for the Citywide
Lighting and Maintenance District. Even with the use of these funding sources the District still
maintained a deficit {of $187,807.
Mid -Year Review and Expenditure Reductions
Through implementation of the Maintenance Department Cost Control and Transition Plan
approximately $800;000 has been cut from the Districts budget since fiscal year 1995/96. In
order to ensure that the District continues to operate without deficit spending staff is proposing a
second series of expenditure cuts for fiscal year 1997/98. These cuts will total $236,890 and are
the result of minor staff reductions along with funding reductions based on historical use.
Staff anticipate these cuts will cause minor but tolerable effects on the District. The reductions
were made through:
• Matching the funding precisely to past expenditures
• Minor staff reductions in park maintenance
• Minor decreasesl in park building repairs and maintenance.
As a result of these reductions there is no allowance for future increase in utility, salary or
contract costs during the remaining year. Close monthly reviews of expenditures will also be
required to avoid over expenditures.. With these cuts in place staff anticipate a small surplus of
$49,083. j
t
City Manager and City Council
Page 4
The following table shows the proposed cuts to the Citywide Lighting and Maintenance District.
Mid -Year Expenditure Review and Associated Expenditure Reductions
ACCT.
NO.
DESCRIPTION
ADOPTED
FY1997-98
BUDGET
PROPOSED
BUDGET
REDUCTION
TRAFFIC SIGNALS
2214-6130
Service Contracts
$28,000
$18,300
$9,700
2214-6140
Utility Services
$100,000
$95,000
$5,000
Sub -total
$14,700
STREET LIGHTING
2216-6140
Utility Services
1 $850,0001
$826,9001
$23,100
Sub -total
$23,100
TRAFFIC SIGNAL MAINTENANCE i
2280-6010
Uniforms
$1,030
$130
$900
2280-6330
Equipment Maint. and Repair
$22,050
$19,550
$2,500
Sub -total
$3,400
LANDSCAPE MAINTENANCE
2241-6135
Medians/Rights of Way Landscape
Maim.
$143,110
$127,310
$15,800
2241-6257
Tree Supplies
$2,180
$0
$2,180
2241-6290
Small Tools
$1,000
$0
$1,000
Sub -total
$18,980
PARK MAINTENANCE
2244-6130
Graffiti Removal
$59,200
$39,400
$19,800
2244-6133
Civic Center Maintenance Contract
$75,630
$54,630
$21,000
2244-6135
Park Maintenance Contracts
$328,790
$301,290
$27,500
2244-6310
Building Maint. & Improvements
$25,000
$5,000
$20,060
2244-6330
Equipment Maint. and Repair
$1,270
$0
$1,270
Redistribute Labor to Maint. Dist.
Nos. 1 and 4
$49,700
Sub -total
$139,270
POOL MAINTENANCE
2254-6140
Utility Services
$20,440
$5,0001
$15,440
2254-6330
Equipment Maint. and Repair
$23,000
$1,0001
$22,000
Sub -total
$37,440
TOTAL SAVINGS $236,890
Total District Budget Reductions
With these additional cuts the Citywide District budget has been reduced by just over $1 million
dollars in the past three years. In addition to this, the district is no longer dependent on the
General Fund for additional funding over and above its revenues.
The following table demonstrates the total cuts that have been implemented since the 1995/96
Fiscal Year.
Citywide Lighting and Maintenance District
Expenditure Reductions since Fiscal Year 1994/95
anchiding Mid -Year 1997/99 Reductinnsl
Fiscal Year
Operating Budget
Reduction
1994/95
$3;,994,280
N/A
1995/96
$3,1466,000
$528,280
1996/97
$3,,316,210
$129,880
1997/98
$3;,210,262
$105,858
1997/98 Mid Year
$1,973,372
$236,890
Total Reductions
$1,000,908
City Manager and City Council
Pages
CONCLUSION
The passage of Proposition 218 in 1996 resulted in considerable changes to the collection and
allocation of Citywide District assessment funds. In the City of West Covina the proposition
restricted the allocation of the Citywide Lighting and Maintenance District assessment revenues
to street tree and streetlight maintenance. This left a group of services provided bythe District
without an identified. funding source. These services included park and facility maintenance,
street landscaping maintenance, graffiti removal and traffic signal maintenance. The 1997/98
District budget funded these services through the use of District reserves and miscellaneous
funding sources. Despite efforts to identify alternative funding to cover all the budgeted services
$187,807 in services remained without funding.
i
Since the 1997/98 Citywide Lighting and Maintenance District budget was adopted by the City
Council, staff have identified an additional $236,890 in reductions to the budget. These
reductions are based on minor staff reductions and on historical use rates. It is anticipated that
these reductions will result in minor but tolerable effects on the District.
With these new reductions in place the Citywide Lighting and Maintenance District has
implemented over $1 million in expenditure cuts since 1995/97. These cuts have been made as a
result of the attrition of staff and contracting of services to private agencies. The cuts have had
minor impacts on the service levels of the District.
FISCAL EMPACT
In order to reduce the impact of the loss of Citywide Lighting and Maintenance District
assessment revenues and maintain a slight surplus to the District budget, staff is proposing
$236,890 in expenditure reductions in the District Budget. These reductions will bring the total
1997/98 District expenditures to $2,955,370.
The 1997/98 Districi budget provides funding for services from assessment revenues of
$1,167,287, miscellaneous revenues of $131,00 as well as District reserves of $1,494,110 and
interest on those reserves of $30,000. Staff also anticipate expenditure savings of $200,000 from
Fiscal Year 1996/97,1 This combined with the proposed expenditure reductions of $236,890 will
result in a surplus of $49,083 for the Fiscal Year 1997/98.
At the January 20, 1998, City Council meeting staff will request City Council to allocate $20,000
from this reserve to the implementation of a Public Information Program on the replacement
special tax. This will reduce the anticipated reserves to $29,083.
RECONEHENDA
It is recommended that the City Council approve the proposed $236,890 budget reduction to the
1997/98 Citywide Lighting and Maintenance District.
Engineer/ Public Works Director