06-04-2019 - Item 09 - West Covina Landscape Maintenance District No. 4 Public HearingAGENDA ITEM NO.9
AGENDA STAFF REPORT
City of West Covina I Office of the City Manager
DATE: June 4, 2019
TO: Mayor and City Council
FROM: David Carmany
Interim City Manager
SUBJECT: WEST COVINA LANDSCAPE MAINTENANCE DISTRICT NO.4 PUBLIC HEARING
RECOMMENDATION:
It is recommended that the City Council adopt the following resolution, which provides for the assessment rates to
be maintained at their current levels:
RESOLUTION NO.2019-38 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST
COVINA, CALIFORNIA, APPROVING THE ENGINEER'S REPORT AND CONFIRMING A
DIAGRAM AND ASSESSMENT FOR FISCAL YEAR 2019-20 FOR LANDSCAPE MAINTENANCE
DISTRICT NO.4
BACKGROUND:
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 No. 4 (LMD4). 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 specifies the procedures for renewal of landscape maintenance
districts. At its regular meeting on May 7, 2019, the City Council preliminarily approved the Engineer's Report
prepared pursuant to the provisions of the "Landscaping and Lighting Act of 1972" and Proposition 218. The City
Council also adopted Resolution No. 2019-21 declaring its intention to levy and collect the assessment and set June
4, 2019, as the date for the public hearing.
The preliminary approval of the Engineer's Report does not commit the City Council to adopt the proposed
assessments for the District. During or after the public hearing, the City Council may maintain or reduce the
assessment rates and revise expenditures that are funded by the District. The City Council's action only becomes
final when the assessments are confirmed by resolution upon completion of the public hearing. However, it cannot
raise the rate that is now capped by Preposition 218.
The next step is the approval of the assessment rates. Following the Public Hearing, the City Council may adopt a
resolution confirming the diagram and assessment levy either as proposed or as revised by the City Council. This
action levies the assessment for the Fiscal Year.
At this time, staff recommends that the assessment rates be maintained at their current levels for Fiscal Year
2019-2020 and in order to increase the rates further, it would be necessary to comply with the voting requirements
of Article XIIID of the California Constitution. LMD4 has nine separate zones of benefit based in property type
and level of benefit with varying annual assessment rates including maximum benefit rates of $49.16 for a Zone Al
commercial property, $232.48 for a Zone A4 condo, $348.02 for a Zone A7 single family unit, $386.66 for Zone
A8 4-plex and $464.00 for a Zone A9 duplex unit.
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. Provide alternative direction.
ENVIRONMENTAL REVIEW:
This project is a General Exemption under the California Environmental Quality Act.
Prepared by: Miguel Hernandez, Public Works Project Supervisor
Fiscal Impact
FISCAL IMPACT:
The Fiscal Year 2019-20 Engineer's Report for LMD4 recommends that the assessment rates be maintained at
their current levels. The annual maximum assessment rates for LMD4 will be maintained at $49.16 for
commercial property, $232.48 for condos, $348.02 for a single dwelling unit, $464.00 for a duplex unit, and
$386.66 for a 4-plex 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 projected fund balance from the previous fiscal year, the total funds available are $3,286,033.
The preliminary operating budget for LMD4 for Fiscal Year 2019-20 is $1,015,579 which is a decrease of 1.13%
compared to the approved/amended budget for Fiscal Year 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 improvements,
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 CIP projects is $500,000 for Fiscal Year 2019-20.
There are no 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 - Rate History
Attachment No. 2 - LMD4 Engineer's Report
Attachment No. 3 - 10 Year Projection
Attachment No. 4 - Resolution No. 2019-38