Title
Adoption of Resolution Initiating Proceedings for a Proposed Increase in Assessments and Ordering the Preparation of an Assessment Engineer's Report for Island City Landscaping and Lighting District 84-2, Zone 4 (Park Street); and
Adoption of Resolution Preliminarily Approving the Engineer’s Report and Declaring Intention to Order Levy and Collection of Assessments and Providing for Assessment Ballot Proceeding and Notice of Public Hearing on June 4, 2019 Regarding a Possible Assessment Increase, Island City Landscaping and Lighting Maintenance District 84-2, Zone 4 (Park Street). (Public Works 275.4)
Body
To: Honorable Mayor and Members of the City Council
From: Amy Wooldridge, Interim City Manager
EXECUTIVE SUMMARY
Assessments in Zone 4 (Park Street) of the City of Alameda's Landscape and Lighting District (LLD or District) 84-2 fund the area's enhanced maintenance. These assessments have remained unchanged since the early 1990s. As a result, the level of maintenance has significantly decreased.
At the request of the Downtown Alameda Business Association (DABA), the City of Alameda (City) entered into an agreement with NBS Government Finance Group (NBS), a consulting firm specializing in assessment districts, in November 2018 to complete the first phase of the process to increase assessments. On February 19, 2019, Council approved an amendment to the NBS agreement to complete the second phase of the balloting work. This second phase covers the assessment methodology, an Engineer's Report (Report), and the balloting itself.
Staff now seeks City Council’s approval to initiate the balloting proceedings for a proposed increase in assessments, including preliminary approval of the Report and setting a public hearing date of June 4, 2019, at which time the City Council will consider approval of the final Report and the returned ballots will be tabulated.
BACKGROUND
The City's LLD began in 1984 and has six zones throughout the City. Zone 4 covers Park Street from the Park Street Bridge to San Jose Avenue, including some adjacent streets. Property owners in this zone have an average yearly assessment of approximately $374. The assessments pay for maintenance of this zone’s public areas, including sidewalks, litter cans, and landscaping. These assessments have been unchanged since the early 1990s. Since that time, annual costs have increased without any additional revenue. As a result, the level of maintenance has decreased.
In 2013, staff began discussions with the DABA Board of Directors regarding an assessment increase. In 2014, DABA requested the balloting be postponed to the following year. When the balloting occurred the next year, a near doubling of assessments spread over three years was proposed. On July 7, 2015, ballots were tallied with 26% cast in favor and 74% opposed. The balloting did not pass and existing assessments remained unchanged. (A similar process was executed in 2014 with the West Alameda Business Association and resulted in a successful balloting to increase assessments in Fiscal Year (FY) 2014-15 for the Webster Street Zone of the Landscape and Lighting District 84-2.)
As part of the routine annual process to set assessments, the City Council must approve a budget for each zone for the coming year. With the total cost of services for the zone exceeding the total assessment, the FY 2018-19 Budget required the use of the zone’s remaining reserves at the time and an additional $7,421 service cut.
At DABA’s request, the City entered into an agreement with NBS in November 2018 to complete the first phase of the process required for a vote to increase assessments. This first phase involved preparation of parcel data, establishing zone boundaries, determining services to be funded, and preparation of a findings report. On February 19, 2019, the City Council approved an amendment to the NBS agreement to complete the second phase of the balloting work. This second phase covers the assessment methodology, the Report, and the balloting itself.
This analysis is complicated because any assessment increase triggers Proposition 218, passed long after the District's founding. Proposition 218's "special benefit" analysis requires a parcel-by-parcel review of land use and benefits, rather than the previously used analysis, which was exclusively based on the parcel's acreage and frontage. The analysis showed, among other things, that some parcels in the District have not been assessed for some time and some parcels receive benefit, but are not assessed. State law mandates that any property that receives the special benefit must be assessed. As a result, this balloting process would cause the parcels that have inadvertently been skipped and those that have been receiving benefit to all be assessed.
City staff shared the results of the analysis with DABA and its Board of Directors voted to proceed with balloting their property owners on the full assessment increase in one year. City staff initially proposed spreading out the proposed total increase of assessments over three years, consistent with past efforts. DABA has been conducting education and outreach to the zone’s property owners and has key property owner commitment to support a one year increase. Additionally, DABA and the City will hold a property owners' meeting on Monday, May 6, 2019, to fully inform property owners and answer questions.
As a result of these changes, the next year's average increase per property owner on Park Street is approximately 196%, as DABA proposed. However, due to the special benefit analysis, the increase in each individual property owner's assessment will vary dramatically and, in some cases, decrease.
Staff recommends initiating ballot proceedings on Park Street to proceed with the one year increase as proposed by DABA. Should City Council decide this increase is too aggressive, a draft report showing a three year increase is also included with this staff report.
DISCUSSION
To conduct the balloting of property owners for an assessment increase, the City is required to follow a prescribed legal process, which is described in Article XIIID of the Constitution of the State of California and Sections of Government Code ARTICLE 4.6. Proposition 218 Omnibus Implementation Act [53750 - 53758]. In this current step, the City Council adopts a resolution to initiate proceedings to increase assessments and orders preparation of the Report. This step also includes adopting another resolution preliminarily approving the Report, declaring the intention to levy and collect assessments for FY 2019-20, and providing notice of a public hearing on June 4, 2019 regarding the possible increase of assessments. The latter resolution is required to be published at least once in a local paper with a minimum of ten days between the first publication of the City's resolution and the public hearing.
With adoption of these resolutions, property owners in Zone 4 will be balloted by mail, postmarked no later than April 19. On June 4, the City Council will hold a hearing to tally the ballots and consider approving assessments for FY 2019-20. Unless there is a majority protest, the proposal to increase assessments on Park Street may proceed and the City Council may approve increased assessments. Ballots are weighed according to the proportional financial obligation of the affected property and a majority protest exists if, upon the conclusion of the hearing, ballots submitted in opposition to the assessment exceed the ballots submitted in favor of the assessment. If there is a majority protest, then the proposed assessment increase fails and the existing assessments for Zone 4, which will be considered for approval on June 4, will remain in effect. To make the County's tax roll, assessments must be submitted by early August.
Two versions of the Report were prepared by NBS, a consultant specializing in assessment districts, in accordance with Section 22565 et seq. of the California Streets and Highways Code, and are attached as Exhibit 1 (One-Year Assessment Increase) and Exhibit 2 (Three-Year Assessment Increase). Other than the assessment analysis and calculation (as seen on page 1), the information in both Engineer’s Reports is the same The details of the one-year versus the three-year assessment can be found on pages 1, 8, 18, 20 and the Assessment Roll list. Both Reports were reviewed by the City Engineer. The report includes identifying boundaries, analyzing special versus general benefits, the methodology for assessments, and the assessments themselves. The report provides a budget, which more than doubles assessments over the coming year, and a FY 2019-20 budget, which shows the complete overall increase in the first year of 196% when compared to the total assessments in FY 2018-19. If approved, this assessment increase will restore levels of maintenance in the zone that have declined due to the unchanged assessment revenue. Increased maintenance activity would include resuming service levels to seven days per week maintenance and pressure washing, increased management of public litter cans, and funding of capital improvements such as landscape upgrades.
FINANCIAL IMPACT
The direct costs of enhanced maintenance is funded primarily through assessments. Should the balloting succeed, the annual budget for this zone will increase by $118,220 (from $60,313 to $178,532). The General Fund (Fund 001) is scheduled to contribute $5,558 for Park Street Zone in FY 2019-20. This contribution is required to cover the general benefit portion of the enhanced maintenance.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action does not affect the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
In accordance with the California Environmental Quality Act (CEQA), this project is Categorically Exempt pursuant to CEQA Guidelines section 15301, Maintenance of Existing Facilities.
RECOMMENDATION
Adopt a resolution initiating proceedings for a proposed increase in assessments and ordering the preparation of an assessment Engineer's Report for Island City Landscaping and Lighting District 84-2, Zone 4; and
Adopt a resolution preliminarily approving the Engineer’s Report and declaring intention to order levy and collection of assessments and providing for assessment ballot proceeding and notice of public hearing on June 4, 2019 regarding possible assessment increases, Island City Landscaping and Lighting Maintenance District 84-2, Zone 4.
Respectfully submitted,
Liam Garland, Public Works Director
By,
Liz Acord, Public Works Coordinator
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Engineer's Report (One Year Assessment Increase)
2. Engineer’s Report (Three Year Assessment Increase)