06-18-2019 - Item 08 - West Covina Landscape Maintenance District No. 2 Setting of Fiscal Year 2019-20 Assesment RateAGENDA ITEM NO. 8
AGENDA STAFF REPORT
City of West Covina | Office of the City Manager
DATE:June 18, 2019
TO:Mayor and City Council
FROM:David Carmany
Interim City Manager
SUBJECT:WEST COVINA LANDSCAPE MAINTENANCE DISTRICT NO. 2 SETTING
OF FISCAL YEAR 2019-20 ASSESSMENT RATE
RECOMMENDATION:
It is recommended that the City Council adopt the following resolution, which provides for the
assessment rate to be maintained at the current rate of 6.43 cents per 100 dollars of assessed
valuation.
RESOLUTION NO. 2019-46 – A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF WEST COVINA, CALIFORNIA, SETTING THE ASSESSMENT RATE
FOR WEST COVINA LANDSCAPE MAINTENANCE DISTRICT NO. 2
ASSESSMENT FOR THE FISCAL YEAR BEGINNING JULY 1, 2019
BACKGROUND:
In 1970, a planned community development known as Woodside Village began with “clustered”
housing units on smaller lots and numerous open space areas. This combination of small lots and
open space areas were developed to provide more cost-effective housing and to create a park-like
setting. In order to pay for maintenance of the open space areas, Landscape Maintenance District
No. 2 (LMD2) was formed as an ad valorem assessment district pursuant to the Municipal
Improvement Act of 1911. LMD2 is generally located north of Amar Road between Lark Ellen
Avenue and Azusa Avenue and consists of 787 properties (Attachment No. 1). The assessments
within an ad valorem district are based on property values rather than benefit as in other districts,
which were formed pursuant to the Landscaping and Lighting Act of 1972. In 1972, Proposition 92
capped the assessment rates for the ad valorem (Latin term for “according to value”) districts at their
1972 rates, which for LMD2 was 18.75 cents per 100 dollars of assessed value.
DISCUSSION:
For Fiscal Year (FY) 2019-20, Staff is proposing to maintain the current rate of 6.43 cents per 100
dollars of assessed value. At this rate, the annual assessment for a home and property valued at
$400,000 would be $257.20 per year. The projected revenue for the proposed rate is $144,000 plus
$3,000 in interests, which will continue to fund the current maintenance activities without any
negative impact on the reserves for the district. Attachment No. 2 shows the history of assessment
rates in this district for the last 15-years. There have been no increases in assessment rates over the
last four years.
LEGAL REVIEW:
The City Attorney has reviewed and approved the resolution.
OPTIONS:
The City Council has the following options:
1.Approve staff’s recommendation; or
2.Reduce the assessment rate; LMD2’s reserves maybe depleted at a faster pace requiring the
City’s General Fund to subsidize the district; or
3.Provide alternative direction.
ENVIRONMENTAL REVIEW:
This item is exempt from the provisions of the California Environmental Quality Act (CEQA)
pursuant to Section 15061(b)(3)of the CEQA Guidelines in that it consists of the maintenance and
operations of landscaping and irrigation within the district, which does not have the potential for
causing a significant effect on the environment.
Prepared by: Miguel Hernandez, Public Works Project Supervisor
Fiscal Impact
FISCAL IMPACT:
For FY 2019-20, the assessment rate is proposed to be maintained at the current rate of 6.43 cents
per 100 dollars of assessed value. The projected revenue from the recommended rates is $144,000.
In addition, $3,000 is projected to be received in interest thus, the total projected revenue is
$147,000. The total funds available is $427,641, including the $280,641 fund balance from the
previous fiscal year.
The proposed operating budget for LMD2 is $139,601 which is an increase of 5.1% when compared
to the approved/amended budget for FY 2018-19. The proposed operating budget only funds
regular landscape maintenance services.
Furthermore, a portion of LMD2 is overlaid by Landscape Maintenance District No. 4 (LMD4).
LMD4 benefit assessment district was formed in 1975 to encompass the previously remaining
undeveloped areas of the Woodside Village planned community development. As a result, a portion
of the assessments collected from LMD2 is reimbursed to LMD4. In turn, this benefit assessment
within the overlaid portion of LMD4 is reduced proportionately to reflect this reimbursement. For
FY 2019-20, the reimbursement is $9,000 to reflect the appropriate share of the actual assessment
collections. LMD4 rates were adopted by the City Council on June 5, 2019.
In addition, for the 370 properties that are within the overlaid portion of LMD4, the property owners
pay an assessment to LMD4 that ranges from $77.89 to $260.98 per year. This assessment is based
on the benefit received by the property from the surrounding landscaping improvements.
There are no legal requirements or formal guidelines for the amount of reserves in an assessment
district. However, Staff recommends a fund balance reserve equivalent to a minimum of at least
one-year operating expenditures to cover cash flow. The financial status of the district will be
reviewed annually to determine the appropriate assessment rate and impact on reserves.
Attachments
Attachment No. 1 - Map
Attachment No. 2 - Rate History
Attachment No. 3 - Financial Report
Attachment No. 4 - 10 Year Projection
Attachment No. 5 - Resolution No. 2019-46