05-07-2019 - Item 08 - Begin Annual Proceedings For Landscape Maintenance District No. 4 And Prelimary Approval Of the Engineer's ReportAGENDA ITEM NO. 8
AGENDA STAFF REPORT
City of West Covina | Office of the City Manager
DATE:May 7, 2019
TO:Mayor and City Council
FROM:David Carmany
Interim City Manager
SUBJECT:BEGIN ANNUAL PROCEEDINGS FOR LANDSCAPE MAINTENANCE
DISTRICT NO. 4 AND PRELIMINARY APPROVAL OF THE ENGINEER'S
REPORT
RECOMMENDATION:
It is recommended that the City Council adopt the following resolutions:
RESOLUTION NO. 2019-21 - A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF WEST COVINA, CALIFORNIA ORDERING THE PREPARATION OF A
REPORT REGARDING THE FISCAL YEAR 2019-20 ASSESSMENT TO BE LEVIED
IN CONNECTION WITH LANDSCAPE MAINTENANCE DISTRICT NO. 4
RESOLUTION NO. 2019-22 – A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF WEST COVINA, CALIFORNIA PRELIMINARILY APPROVING THE
ENGINEER’S REPORT FOR LANDSCAPE MAINTENANCE DISTRICT NO. 4,
DECLARING THE INTENTION OF THE CITY COUNCIL TO LEVY AN
ASSESSMENT FOR FISCAL YEAR 2019-20 IN CONNECTION WITH SUCH
DISTRICT AND SETTING A PUBLIC HEARING FOR JUNE 4, 2019 REGARDING
THAT ASSESSMENT
BACKGROUND:
Landscape Maintenance District No. 4 (LMD4) was established in 1975. This district is located in
the southeasterly part of the City. The assessments collected are used to maintain landscaping,
irrigation, hardscape (e.g. sidewalks, walls, graffiti abatement, clean-up of sites, etc.) and area
lighting on 130 acres of public open space within the boundaries of the district. To encourage
innovative housing types and neighborhood designs and to preserve the ridgelines in the San Jose
Hills, this area was originally developed with relatively narrow street rights-of-way and small lot
sizes. The resulting surplus land was converted to landscaped slope areas and park like "green belt"
areas containing walkways, landscaping, and lighting.
DISCUSSION:
The Landscaping and Lighting Act of 1972 (Streets & Highways Code 22500 et seq.) sets forth
requirements for annual proceedings for a Landscape Maintenance District (LMD).
A LMD is not a separate entity of the City. It is a financing vehicle utilized when the development
of a neighborhood in the community is identified to specially benefit by certain improvements, such
as parks, playgrounds, landscapes, sidewalks, trees, etc. Due to this special benefit, landowners in
the identified area are assessed to pay the costs of the construction and/or ongoing maintenance of
such improvements.
Each LMD is created through formation proceedings (also known as a vote of the affected property
owners) pursuant to the Landscaping and Lighting Act of 1972 (the "1972 Act"). This usually
occurs at the time a residential or commercial project is first developed. The “1972 Act” allows a
local agency (such as the City of West Covina) to levy an annual assessment for the maintenance of
the community improvements, based on special benefit directly or indirectly, to the property owners
within the LMD. Annual assessments are paid as part of a line-item on individual property tax bills.
This reports concerns LMD number 4. The first step in the process is to adopt a resolution ordering
the preparation of an "Engineer's Report" for the District. The Engineer's Report, prepared by
Willdan Financial Services, includes plans and specifications for improvements, estimated costs, an
assessment diagram, and assessment spread for the estimated costs.
Also, for Council's consideration is the adoption of a “Resolution of Intention” that preliminarily
approves the Engineer’s Report and states the Council’s intention to levy the assessments for 2019-
20. This Resolution also sets a public hearing on the assessments for June 4, 2019. At the public
hearing, the City Council will consider any written and oral comments regarding the level of
assessments and proposed maintenance and capital improvement work within the district. Notice of
the hearing will be published as required by law. Following the June 4, 2019 hearing, the Council
will have an opportunity to adopt a resolution levying the assessment for the Fiscal Year.
At this time, Staff recommends that the assessment rates be maintained at their current levels for
Fiscal Year (FY) 2019-20.
LEGAL REVIEW:
The City Attorney has reviewed and approved the staff report, resolutions and Preliminary
Engineer’s Report.
OPTIONS:
The City Council has the following options:
1.Approve Staff’s recommendation to maintain the assessment rates at their current levels. The
attached “10-Year Fiscal Projection” shows rates being maintained at their current levels and
the reserve levels over the next 10 years; or
2.Reduce the assessment rates; LMD4’s reserves will be depleted at a faster pace requiring the
City’s General Fund to subsidize the district; or
3.Increase the assessment rates above the previously approved maximum amounts. LMD4
would need to comply with the mail ballot provision of Proposition 218. In FY 2009-10, a
mail ballot election on a proposed increase of the assessment rates was processed and not
approved by the property owners; or
4.Not renew the district. If the City Council does not wish to continue the district and wishes to
fund the districts from the General Fund, the resolutions are not necessary.
Prepared by: Miguel Hernandez, Public Works Project Supervisor
Fiscal Impact
FISCAL IMPACT:
The Fiscal Year (FY) 2019-20 Engineer’s Report for LMD4 recommends that the assessment rates
be maintained at their current levels. The annual assessment rates for LMD4 will be maintained at
$348.02 for a single dwelling unit and $464 for a duplex unit. The projected income from the
recommended rates is $1,037,950. In addition, $9,000 is projected to be received from Landscape
Maintenance District No. 2 (LMD2) for costs of maintenance in an overlap area between LMD2 and
LMD4. The total projected revenue is $1,057,950 including $11,000 in interest. With the
$2,228,083 balance from the previous year, the total funding available is $3,286,033.
The preliminary operating budget for LMD4 for FY 2019-20 is $1,015,579 which is a decrease of
1.13% compared to the approved/amended budget for FY 2018-19. The proposed operating budget
only funds the regular landscape maintenance. Ongoing improvements such as irrigation system
improvements, enhancement to existing landscaping, tree trimming, and other extras are being
eliminated to maintain the operating budget within projected revenues from the capped assessment
rates. Staff is proposing two new capital improvement projects, namely: (1) tree trimming and shrub
clearing in the amount of $400,000; and (2) repair and replacement of paseo lights in the amount of
$100,000. The total cost of proposed Capital Improvement Program (CIP) projects is $500,000 for
FY 2019-20.
There are no specific legal requirements or formal guidelines for the amount of reserves in an
assessment district; however, at least 50% is required to cover cash flow. A reserve between 100%
and 200% is recommended by staff to cover cash flow, future capital projects, and emergencies.
Attachments
Attachment No. 1 - LMD4 Rate History
Attachment No. 2 - LMD4 Engineer's Report
Attachment No. 3 - 10-Year Projection
Attachment No. 4 - Resolution No. 2019-21
Attachment No. 5 - Resolution No. 2019-22