06-18-2019 - Item 17 - West Covina City Wide Lightening And Maintenance District Public HearingAGENDA ITEM NO. 17
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 CITYWIDE LIGHTING AND MAINTENANCE DISTRICT
PUBLIC HEARING
RECOMMENDATION:
It is recommended that the City Council adopt the following resolution:
RESOLUTION NO. 2019-44 — A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF WEST COVINA, CALIFORNIA, CONFIRMING THE DIAGRAM AND
ASSESSMENT FOR THE CITYWIDE LIGHTING AND MAINTENANCE DISTRICT
FOR FISCAL YEAR 2019-20
BACKGROUND:
The Citywide Lighting and Maintenance District was established in 1976. As the name implies, this
district encompasses the entire City. Prior to Fiscal Year 1997-1998, the Citywide District funded a
variety of public improvements and services which included: street tree maintenance, median
maintenance, park maintenance, municipal pool maintenance, area lighting maintenance, traffic
signal maintenance, traffic engineering, and street lighting engineering. Since the passage of
Proposition 218 in November 1996 and the subsequent property owner-approval in July 1997 of the
Citywide District assessment, the Citywide District currently funds only those services that have
been designated as a "Special Benefit." This includes the maintenance and servicing of most of the
street lights and street trees within the City.
The Citywide Lighting and Maintenance District funds the operation and maintenance of assessable
(special benefit) street trees and street lighting. These funds are used for the operations and
maintenance of street lights, trimming of street trees, and removal and replacement of diseased street
trees.
DISCUSSION:
The Landscaping and Lighting Act of 1972 specifies the procedures for annual renewals of
maintenance districts. At the regular meeting of May 7, 2019, the City Council preliminarily
approved the Engineer's Report for Citywide Lighting and Maintenance District prepared pursuant to
the provisions of the Act and Proposition 218. The City Council also adopted Resolution No. 2019-
29 declaring its intention to levy and collect the assessment and set June 18, 2019 as the date for the
public hearing. Assessments are used to fund the maintenance and operations of street lights,
trimming of street trees, and removal and replacement of diseased street trees. This year's Engineer's
Report identifies three capital improvement projects totaling $800,000: Master Plan of Street Trees,
Grant Matching Funds, and Street Tree & Sidewalk Projects.
The voter-approved rates for the District included a provision for not more than a 2% annual
increase based on the Consumer Price Index (CPI). The CPI for the one-year period from March
2018 to March 2019 for the Los Angeles-Long Beach-Anaheim areas is 2.71%; therefore, current
rates may increase a maximum of 2%. This increase will permit the District to provide the standard
level of service in the District.
The assessment rates in the district are based on the Equivalent Dwelling Unit (EDU) method. In
this methodology, a single-family residential parcel will equal one EDU and pay an assessment of
$53.34 per year, an increase of $1.05 per year from Fiscal Year 2018-19.
The approval of the Engineer's Report by the City Council does not commit the City Council to
adopt the proposed assessments for the District. At the public hearing, the City Council shall
consider all comments for and against the proposed assessment. During or after the public hearing,
the City Council may order maintaining or reducing the proposed rates and revising 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.
LEGAL REVIEW:
The City Attorney has reviewed and approved the staff report, resolution and Engineer's Report.
OPTIONS:
The City Council has the following options:
1.Adopt Resolution No. 2019-44, which approves the assessment for Fiscal Year 2019-20 with
the 2% adjustment; or
2.Adopt Resolution No. 2019-44 in a modified form that rejects the adjustment. Maintaining
the rates at their current levels (0% increase) would deplete the reserves at a faster pace and
require the General Fund to subsidize the district in future years; 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.
Prepared by: Miguel Hernandez, Public Works Project Supervisor
Fiscal Impact
FISCAL IMPACT:
For Fiscal Year 2019-20, the Engineer’s Report for the Citywide Lighting and Maintenance District
proposes to use the voter approved adjustment to increase the assessment rates by 2% from their
current levels, which would generate an additional $33,201 in assessments. This is the amount of
increase allowed under Proposition 218. The total projected income from the recommended rates is
$1,693,226. Including the $8,000 interest and $1,183,849 balance from the previous year, the total
funds available is $2,885,075.
The proposed operating budget for the district is $1,596,707, which reflects an increase of 1.32%
from the approved/amended budget for Fiscal Year 2018-19. The 2019-2020 operating budget for
the district includes an administration and overhead charge of $78,111, personnel costs of $108,625
maintenance contracts cost of $305,210, property and liability insurance costs of $22,370, utility
costs of $1,000,000, $36,443 in-supplies, vehicles, maintenance and gas costs, and $45,948 in
engineering costs. The administration and overhead costs are derived from support services
provided by various departments including: the City Manager’s office, City Attorney’s office, City
Clerk’s office, Finance Department, and Human Resources Department. Support services include
but not limited to payroll, personnel recruitment, insurance claims, audits, budgets, and
purchasing. In addition, staff is proposing to add three new capital improvement projects namely: 1)
Master Plan of Street Trees at a cost of $200,000; 2) Grant Matching Funds at a cost of $300,000;
and 3) a Street Tree and Sidewalk Projects at a cost of $300,000. The total cost of the proposed
capital improvement projects is $800,000 for Fiscal Year 2019-2020.
The reserves are projected to be approximately $488,368 by the end of Fiscal Year 2019-20. These
reserves partially cover the cash flow, which is needed to pay monthly expenses while income is
received twice a year. The amount necessary to avoid a net negative cash flow over the period of
one year is $798,354, which is one-half of the proposed operating budget. The City’s General Fund
will be used to cover the temporary cash flow deficiencies and later reimbursed when district funds
become available.
Since the City of West Covina is not exempt from assessments for this district, the City’s total
assessment is approximately $30,083. The City pays this assessment using General Funds within
the non-departmental operating budget.
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, emergencies, and as a benefit, it
also provides interest income.
Attachments
Attachment No. 1 - Rate History
Attachment No. 2 - Engineer's Report
Attachment No. 3 - 10-Year Projection
Attachment No. 4 - Resolution No. 2019-44