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HomeMy WebLinkAboutAgenda - Agenda Packets - Regular Meeting 6/7/2011REQUEST TO SPEAK CITY COUNCIL AGENDA ITEM#: 4, (. SUBJECT: DATE: V(©/ 07/ I IN FAVOR: ❑ NEUTRAL: 0 IN OPPOSITION: Name: N;]CG1, Representing: Address: City: Telephone No: (- S 1) ( ( —0 (0 Individual speakers wishing to address an agenda item are requested to complete this card. Although you are not required to complete this card, the information will assist the City in addressing the issue(s) you raise. Individual speakers are limited to three minutes for their presentation. Organized presentations with more than one speaker are limited to 15 minutes, at the discretion of the Mayor and Council. When speaking, be brief, stay on the subject. The Mayor will call you to speak at the appropriate time. Please make your presentation from the microphone. HAND SPEAKER SLIPS TO THE CITY CLERK PRIOR TO THE START OF THE MEETING. REQUEST TO SPEAK CITY COUNCIL AGENDA ITEM#: (;? ' 6 SUBJECT: 4 1 Y DATE: ,/f % % •� r IN FAVOR: ❑ Name: Repr, Address: City:, NEUTRAL: ❑ IN OPPOSITION: ❑ Telephone No: 1/ f V (v l 2 Individual speaks wishing to address an agenda item are requested to complete this card. Although you are not required to complete this card, the information will assist the City in addressing the issue(s) you raise. Individual speakers are limited to three minutes for their presentation. Organized presentations with more than one speaker are limited to 15 minutes, at the discretion of the Mayor and Council. When speaking, be brief, stay on the subject. The Mayor will call you to speak at the appropriate time. Please make your presentation from the microphone. HAND SPEAKER SLIPS TO THE CITY CLERK PRIOR TO THE START OF THE MEETING. REQUEST TO SPEAK CITY COUNCIL AGENDA ITEM#: q. 1 SUBJECT: Witt DATE:' / 7 / t l IN FAVOR: ❑ NEUTRAL: ❑ Name: �- , ee L_ p c� ( ,: C 1n srA)(:4 Representing: Address: ? LF y tr . A IN OPPOSITION: e City:.R6/14, ctc,� i,,,- , C� , Telephone No: Individual speakers wishing to address an agenda item are requested to complete this card. Although you are not required to complete this card, the information will assist the City in addressing the issue(s) you raise. Individual speakers are limited to three minutes for their presentation. Organized presentations with more than one speaker are limited to 15 minutes, at the discretion of the Mayor and Council. When speaking, be brief, stay on the subject. The Mayor will call you to speak at the appropriate time. Please make your presentation from the microphone. HAND SPEAKER SLIPS TO THE CITY CLERK PRIOR TO THE START OF THE MEETING. CITY COUNCIL AGENDA ITEM#: DATE: % `%I IN FAVOR: ❑ REQUEST TO SPEAK /f, % V -, / SUBJECT: NEUTRAL: ❑ IN OPPOSITION: _ Name:mil/ Representing: Address: City: Telephone No: Individual speakepra'wishing to address an agenda item are requested to complete this card. Although you are not required to complete this card, the information will assist the City in addressing the issue(s) you raise. Individual speakers are limited to three minutes for their presentation. Organized presentations with more than one speaker are limited to 15 minutes, at the discretion of the Mayor and Council. When speaking, be brief, stay on the subject. The Mayor will call you to speak at the appropriate time. Please make your presentation from the microphone. HAND SPEAKER SLIPS TO THE CITY CLERK PRIOR TO THE START OF THE MEETING. MEMORANDUM TO: Mayor and Members of Council FROM: Rick Miller, City Clerk DATE: June 7, 2011 SUBJECT: Agenda item 4.1 — Changes in Rate Structure for Water Service Fees Mayor and Members of Council, Since the posting and delivery of your agendas on June 2nd, we have only received one additional letter in opposition to the change in rate structure from Mary A. Neely. I have attached the letter that was received on June 6`h If you have any questions, please let me know. Thank you! Rick Miller City Clerk City of San Jacinto May 19,2011 Public Notice of Proposed Increase in Water Services Rates Notice of Public Hearing I am opposed to the proposed water rate increase. I have been a resident of San Jacinto 25 years. In these very hard times we cannot afford a increase in our water bill. I am the property owner at , Mary A. Neely 683 Salam Place San Jacinto, CA. 92583 3 C!T ?F �! Sincerely C --"D • ct "." „5-',J, 5,3. 2orr oc / kz) C E 7-1 s 61_ l/q kl() /1/ f_t = /1/ ty..1.1:,-.3 6- )Th („40 (z.is /4- 1,1/7 jT r 1)Z crzai s 2-141/_ -4/ / 1) 2 ) e - Ms Magdelena_MArtine 441E 3rd St t jacilit°' CA 9258315-.5 City Clerk 595 S. San Jacinto Ave. Building B San Jacinto, Ca. 92583 Attn: City rk May 2, 2011 Subject: Proposed water consumption charge increase Gentlemen, My name is John Bradley and I reside at the following address. 1451 E. Beringer Drive San Jacinto, Ca. 92583 1 am writing in protest to the recent public notice of proposed increase in water services rates for those who live in the City of San Jacinto. As a Senior Citizen, and on a fixed income, I still try to keep our home and lawn well kept, because I feel proud to live in San Jacinto. This proposed increase in the Consumption charge will be a hardship for me and I strongly encourage vou NOT to pass this proposal. I urge you to keep the Senior's on tixed income in mind on this issue. Sincer John Bradley,( 1451 E. Beringer Drive San Jacinto, Calif 92583 1 E Beringer Di Jacinto; CA )258- Cu' T` Pt L (+6164 ceNti s(}NJ TACl 1 i) 1 Ci4 N \AA-avc Chfar-1,(-77:s ci'iz c,(±,-_ 3a icco-l-v C. "e' 1 CITY OF SAN JACINTO PUBLIC NOTICE OF PROPOSED INCREASE IN WATER SERVICES RATES NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN pursuant to Article XIIID of the California Constitution that the City of San Jacinto ("City") is proposing to increase its rates for water services to the parcel for which you are shown as record owner, as follows: The City's water rates are currently as follows: Meter Size Basic Monthly Charge Consumption Charge per 100 cf 5/8" and 3/4" $15.36 $1.53 (500 -1,500 cf)* $2.12 (1,500 + cf) 1" to 2" $24.04 - $69.25 $1.53 (0 - 2,000 cf) $2.12 (2,000 + cf) Larger than 2" $74.08 - $334.75 $1.64 Construction $64.42 $1.98 The City adds an energy surcharge of $2.00 per meter per month. The City is proposing to increase only the consumption rate for 5/8" and'/" meters above as follows:. Meter Size Basic Monthly Charge Consumption Charge per 100 cf 5/8" and 3/," no change $1.53 (0 - 1,500 cf)* The basis and reason for this proposed increase is to enable the City to equitablly charge for all water consumption in a financially prudent manor and as required by law. Further details regarding the basis and reason of the proposed increases are available at the City Hall located at 595 S. San Jacinto Avenue, Building B, San Jacinto; and may be reviewed there by any interested person. NOTICE IS FURTHER GIVEN that on June 7, 2011, at 7:00 p.m., or as soon thereafter as may be heard, at the San Jacinto Community Center, located at 625 S. Pico Avenue, San Jacinto; the City of San Jacinto City Council will conduct a public hearing on the proposed increase. At the time of the public hearing, the City Council will hear and consider all protests and objections concerning these matters and will consider and may adopt the increased rates. Any property owner or any tenant directly responsible for the payment of water service fees may submit a written protest to the proposed increase to the rates; provided, however, only one protest will be counted per identified parcel. Any written protest must: (1) state that the identified pro erty owner or tenant is opposed to the proposed water rate increase; (2) provide the location of the identified parcel by ass ress ; a ude the name and signature of the property owner or tenant submitting the protest. Written protests may be submitted by mail or in person to the City Clerk at 595 S. San Jacinto Ave., Building B, San Jacinto, CA 92583, or at the Public Hearing, so long as they are received prior to the close of the Public Hearing, which will occur when public testimony on the proposed rate increase is concluded. Any protest submitted via e-mail or other electronic means will not be accepted. Please identify on the front of the envelope for any protest, whether mailed or submitted in person to the City-Cferti; that the "enclosed protest is for the Public Hearing on the Proposed Increase to Rates for Water Services. The City Council will hear and consider all written and oral protests to the proposed rate increase at the Public Hearing. Oral comments at the Public Hearing will not qualify as formal protests unless accompanied by a written protest. Upon the conclusion of the Public Hearing, the City Council will consider adoption of the proposed rate increase to the water services as described herein. If written protests against the proposed rates for these charges as outlined above are not presented by a majority of the property owners or customers of the identified parcels upon which the rates and charges are proposed to be imposed, the City Council will be authorized to impose the respective rate increase. Except as noticed, all other fees remain the same. Dated: April 18, 2011 Tim Hults City Manager kkv-4,va elv),((.6:75 t3cx jOZL tk-t- (7,--A- C12 faroiR: 3 77 locre.as:L="_ i,,\; c &AtIctti. A() .1. --a- r. t a.a.aSara lab ihaimagalan rLL.ra..*La..a. a.P.taa palace Agar tr. egenesaaalama -ae .a aa.a dace a.=..ace,alla *ma ma t agar. to *a _ *1 S war,. ,at Maio VW maw prima aaa Whoa, lavialsmaa art ammamallia ammaamo Meant Aga aal aap.aq rrnamarwr s.ly ia.+rt awn s... goalvala aria a,t.* ..Wad ar. M .ace -&RV ?t. al .i map mar ai numaaaa.Ynalp*anal Wa anima 1ytlabia Hr.IYYn alCNSAR. TRAFFIC "... Proposed Action A would generate a total of approximately 22,525 daily vehicle trips, ... Approximately 19,568 more daily vehicle trips would occur ... than are currently generated. The events arena is projected to generate a total of approximately 6,848 daily vehicle trips. During special events, the high volume of vehicles traveling to and from the events arena has the potential to create "bumper -to -bumper" traffic conditions." (page 4-39) And: "TABLE 4-68 ESTIMATED AVERAGE DAILY TRAFFIC VOLUMES Existing 2010 No -Build 2010 wl Proposed Developments Lake Park Drive 11,700 12,900 18,400 Soboba Road 9,100 10,000 11,500" (page 4-223) The first estimate results in one car every 3.8 seconds; the second paragraph amounts to one car every 2.9 seconds. "I CI ENCE • F CRIME A potential effect related to casino development is the increase in the incidence of crime in the area due to the casino. However, since the casino is only being relocated under Proposed Action A, changes in the crime rate should not differ from the present situation. Based on this and discussions presented ..., no crime -related effects associated with casinos are anticipated as a result of Proposed Action A. Thus, the crime rate in the area will not be affected by the proposed casino development." (page 4-161) "FIRE PROTECTION AND EMERGENCY MEDICAL SERVICES A potential effect of the Proposed Action A is an increase in calls for service to the proposed facilities. The increase in fire protection service calls can be estimated by comparing the Proposed Action A to the demand on similar existing facilities, since the frequency of fire department calls is roughly proportional to the number of employees and patrons visiting a casino." (page 4-162) "TABLE 4-50- PROJECTED FIRE PROTECTION & EMERGENCY MEDICAL SERVICE CALLS TO THE PROPOSED ACTION A Development Annual Number of Service Calls Pechanga Resort & Casino (2007) 674 Morongo Casino, Resort, & Spa (2007) 700 Proposed Action A (Projected) 700" (page 4-164) "TRIBAL SOVEREIGNTY Following approval of the Section 151 Trust Acquisition, all of the Project Site parcels would be exempt from local land use regulations. The only applicable land use regulations on trust lands are those that are Tribal. The Tribal Government relies upon the Tribal Council, the governing body of the Tribal Government, to guide and regulate land use on Tribal lands. The Soboba Indian Reservation Integrated Resource Management Plan (2007) recommends that the Tribe develop a general planning and zoning system, however, to date, this has not been developed." (page 4-87) And: "While the Proposed Action A is consistent with the economic goals of the (City of San Jacinto's) Land Use Element, development of the proposed facilities would not be considered consistent with existing land use designations ... However, once the land is placed into Federal trust, the City of San Jacinto's land use regulations would not apply to the Project Site." (page 4-88) vir•n -nt•I As defined by the U.S. Environmental Protection Agency's (EPA) Office of Environmental Justice: "The fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies. Fair treatment means that no group of people, including racial, ethnic, or socioeconomic group should bear a disproportionate share of the negative environmental consequences resulting from industrial, municipal, and commercial operations or the execution of Federal, state, local, and tribal programs and policies." ✓ AGRICULTURE ✓ AIR QUALITY ✓ BIOLOGICAL RESOURCES ✓ CULTURAL RESOURCES ✓ ECONOMIC AND SOCIOECONOM IC CONDITIONS ✓ HAZARDOUS MATERIALS T ✓ LAND RESOURCES ✓ LAND USE ✓ NOISE ✓ PUBLIC SERVICES ✓ RECREATIONAL RESOURCES ✓ TRANSPORTATION NETWORKS ✓ VISUAL RESOURCES ✓ WATER RESOURCES ✓ AIR QUALITY ✓ BIOLOGICAL RESOURCES ✓ CULTU L RESOURCES ✓ ECONOMIC AND SOCIOECONOMIC CONDITIONS ✓ CUMULATIVE EFFECTS ✓ INDIRECT EFFECT ✓ LAND RESOURCE ✓ PUBLIC SERVICES ✓ RESOURCE USE PATTERNS ATER RESOURCES ITI ✓ AGRICULTURE ✓ AIR QUALITY ✓ BIOLOGICAL RESOURCES ✓ CONSTRUCTION EFFECTS ✓ CULTURAL RESOURCES ✓ FIRE PROTECTION AND EMERGENCY MEDICAL SERVICES ✓ GROUNDWATER ✓ LAND RESOURCES ✓ LAND USE ✓ LAW ENFORCEMENT ✓ MINERAL RESOURCES ✓ OPERATIONAL EFFECTS ✓ PUBLIC SERVICES ✓ SCHOOL SERVICES ✓ SEISMIC HAZARDS ✓ SOCIOECONOMICS AND ENVIRONMENTAL JUSTICE ✓ SOILS AND GEOLOGY ✓ SURFACE WATER ✓ TOPOGRAPHY ✓ TRANSPORTATION NETWORKS ✓ WATER QUALITY ✓ WATER RESOURCES ✓AT LEAST 850 ACRES REPRESENTED BY APPROXIMATELY 1,200 OWNERS & RESIDENTS OPPOSEING THE FEE -TO - TRUST ✓NOT ADDRESSED IN DEIS MEMORANDUM TO: Mayor and Members of Council FROM: Rick Miller, City Clerk DATE: June 7, 2011 SUBJECT: Agenda item 4.1 — Changes in Rate Structure for Water Service Fees Mayor and Members of Council, Since the posting and delivery of your agendas on June 2nd, we have only received one additional letter in opposition to the change in rate structure from Mary A. Neely. I have attached the letter that was received on June 6th If you have any questions, please let me know. Thank you! Rick Miller City Clerk City of San Jacinto Public Notice of Proposed Increase in Water Services Rates Notice of Public Hearing May 19,2011 I am opposed to the proposed water rate increase. I have been a resident of San Jacinto 25 years. In these very hard times we cannot afford a increase in our water bill. I am the property owner at , Mary A. Neely 683 Salam Place San Jacinto, CA. 92583 Sincerely Mary A. Neely June 7, 2011 To: The City Counsel of San Jacinto, This letter is in response to your considerations of raising water service Fees (Public Hearing 4.1). My name is William May I own a home on a half acre lot 240 N, Wateka St. I have lived there for over Nine years_ I am 64 years old, retired, and disabled and live off a small fixed income of $18,000 dollars a year. I have 30 trees, mostly fruit trees, and 12 various grape vines and berry bushes. Most of the fruit is given away to recovery programs in the area. I am very prudent about my water usage. but I still average over 22 eels per month per year. An approximant $8.00 increase in my monthly water rate at first glance, doesn't seem like much. But when I realize it's about a$100 dollars a year. My social security has been frozen to cost of living for l&1/2 years. The price of gas is up around a $1.00 a gallon. My food prices have increased by 15%. Even though t feel like I'm the only one who might feel this way, I wouldn't be surprised to find many more like me experiencing the same financial squeeze. Of all the utilities I pay, you are the only one that does not offer a reduction or a discount to its disabled or fixed minimum income citizen's. I would hope you consider all this in your quest for more revenue in this area. Keep in mind, the more you take away from low income residents, the more those residents take away from the local businesses. Not because of retribution, but because of the pure necessity to live within their financial means. Thank you for your empathy and consideration in this vote you are about to make, MEMORANDUM TO: Mayor and Members of Council FROM: Rick Miller, City Clerk DATE: June 7, 2011 SUBJECT: Agenda item 4.1 — Changes in Rate Structure for Water Service Fees Mayor and Members of Council, Since the posting and delivery of your agendas on June 2nd, we have only received one additional letter in opposition to the change in rate structure from Mary A. Neely. I have attached the letter that was received on June 6th If you have any questions, please let me know. Thank you! Rick Miller City Clerk City of San Jacinto Public Notice of Proposed Increase in Water Services Rates Notice of Public Hearing May 19,2011 I am opposed to the proposed water rate increase. I have been a resident of San Jacinto 25 years. in these very hard times we cannot afford a increase in our water bill. I am the property owner at , Mary A. Neely 683 Salam Place San Jacinto, CA. 92583 = 4 Sincerely Mary A. Neely ccs �V 0-11 Lott June 7, 2011 To: The City Counsel of San Jacinto, This letter is in response to your considerations of raising water service Fees (Public Hearing 4.1). My name is William May I own a home on a half acre lot 240 N, Wateka St. I have lived there for over Nine years. I am 64 years old, retired, and disabled and live off a small fixed income of $18,000 dollars a year. I have 30 trees, mostly fruit trees, and 12 various grape vines and berry bushes. Most of the fruit is given away to recovery programs in the area. I am very prudent about my water usage. hut I still average over 22 ccf s per month per year. An approximant $8.00 increase in my monthly water rate at first glance, doesn't seem like much. But when I realize it's about a$100 dollars a year. My social security has been frozen to cost of living for l&1/2 years. The price of gas is up around a $1.00 a gallon. My food prices have increased by 15%. Even though I feel like I'm the only one who might feel this way, I wouldn't be surprised to find many more like me experiencing the same financial squeeze. Of all the utilities I pay, you are the only one that does not offer a reduction or a discount to its disabled or fixed minimum income citizen's. I would hope you consider all this in your quest for more revenue in this area. Keep in mind, the more you take away from low income residents, the more those residents take away from the local businesses. Not because of retribution, but because of the pure necessity to live within their financial means. Thank you for your empathy and consideration in this vote you are about to make, Southern California Edison 2011 State of the Utility System for the City of San Jacinto Ray Hicks, Region Manager Local Public Affairs Enhancing Our Electric Grid to Meet the Needs of a Growing Region SCE is making state-of-the-art improvements to its electric grid to ensure that it continues to provide safe, electrical power now and can meet the needs of the region's growing energy demands. Over the past several years, SCE has been making upgrades to its electric grid... Improves grid safety and reliability for electric customers Increases local government revenue and creates new jobs • Offers business & residential customers more choices for energy -efficiency products, programs and services to help them manage their energy use and lower costs • Allows for the integration of more renewable energy and reduces the state's and the country's dependence on foreign oil • Provides a means for reducing greenhouse gas emissions 1 SCE's Investments Helping the Region: Job Creation and Tax Revenue Generation* Los Angeles Orange San Bernardino Riverside Central Coast* Central Valley*" Other Areas Total *2010-2014 31,700 13,137 3,448 3,009 1,887 1,627 8,992 63,800 588,400,000 275,440,000 62,770,000 62,420,000 30,650,000 27,000,017 168,860,000 1,215,710,000 SCE is Providing Benefits to the City of San Jacinto Transmission Projects and Other SCE Investments in the Community Transmission Projects and other SCE Investments in the Community $1,434,214.00 Purchases from Local Vendors $ 505,191.00 Franchise Payment • Payments by SCE to use public rights -of -way as the company's electric distribution lines are installed throughout cities and counties Franchise Payment $ 259,294.68 2 Providing Meaningful Energy Efficiency Solutions for Homes and Businesses Residential Information Here on Residential Rebate Programs, and Summer Discount Plan Whole House Fan Heating and A/C • Pool Pump/Motors • Summer Discount Plan Business Information Here on Business Rebate Programs and Services Savings by Design • Direct Install Energy Centers SCE Energy Leadership Partnerships, Helping Governments and Institutions Save Energy and Money Energy Efficiency Partnership Information Here Local Government • SCE provides guidance and support for local governments to identify and address energy efficiency opportunities in municipal facilities Institutional • SCE helps large institutions achieve aggressive energy saving goals so that there are long term changes in company sustainability policies, planning and execution 3 SCE Supporting the City of San Jacinto SCE's success is directly linked to the vitality of the communities it serves Community Contributions, Scholarships and Volunteers* SCE's long-standing tradition of helping those in need through its corporate giving efforts, including providing grants to educational, environmental and other nonprofit organizations 43 SCE employees live in the city of San Jacinto and volunteer their time in the community Empowering Customers to Save Energy and Save Money via SCE's Special Programs and Services CARE (California Alternate Rates for Energy) • Provides a discount of 20% or more on monthly electric bills for customers who meet the income qualifications Energy Management Assistance Customers can receive FREE appliances (such as new refrigerators and air conditioners) and benefit from energy -saving services, if they meet eligibility and income requirements Payment Arrangements • Customers having difficulty paying their SCE bill can contact SCE for a payment arrangement ' U Let us - `:how we <a 4 Providing More Energy Choices and Management With New Edison SmartConnectTM Smart Meters SmartConnect smart meters are now being installed on homes and businesses throughout SCE's service area. Soon, customers will be able to participate in new energy -saving programs that will help them monitor and manage their energy use online and, if they want, get information via in -home internet displays or even cell phones. Powering Up The Region for Plug-in Electric Vehicles (PEV) In 2011, more new electric cars and trucks are coming to your city. We need your help in developing an expedited permitting process that makes it easy for residents to charge their new electric cars or trucks at home or work 5 Contact us for Assistance General Business Customer Service Mon —Fri from 7am to 7pm and Saturdays Sam to 5pm 1-800-990-7788 • Account Balance • 1-800-950-2356 • Authorized Payment Agencies • 1-800-747-8908 • Billing Questions • 1-800-684-8123 • Business Customers • 1-800-990-7788 • Digging Hotline (SoCal) 811 • Digging Hotline (Other areas) • 1-800-642-2444 • TTY (for the hearing impaired) • 1-800-352-8580 Low Income Rate Assistance: If you are having difficulty paying your bill, please contact us. You could be eligible for a payment arrangement or other financial assistance. 1-800-447-6620 In -language Numbers Monday —Friday 8am-5pm Cambodian: 1-800-843-1309 Chinese: 1-800-843-8343 Korean: 1-800-628-3061 Spanish: 1-800-441-2233 Vietnamese: 1-800-327-3031 Payments, Extensions or Payment Options 1-800-950-2356 Rates or other Service Related Questions 1-800-655-4555 6 MEMORANDUM TO: Mayor and Members of Council FROM: Rick Miller, City Clerk DATE: June 7, 2011 SUBJECT: Agenda item 4.1 — Changes in Rate Structure for Water Service Fees Mayor and Members of Council, Since the posting and delivery of your agendas on June 2nd, we have only received one additional letter in opposition to the change in rate structure from Mary A. Neely. I have attached the letter that was received on June 6th If you have any questions, please let me know. Thank you! Rick Miller City Clerk City of San Jacinto Public Notice of Proposed Increase in Water Services Rates Notice of Public Hearing May 19,2011 I am opposed to the proposed water rate increase. I have been a resident of San Jacinto 25 years. In these very hard times we cannot afford a increase in our water bill. I am the property owner at , Mary A. Neely 683 Salam Place San Jacinto, CA. 92583 sv Sincerely Mary A. Neely sexel Ieioadg.pue s;uauassassy Ie!oads uoI4onpoaluI uV S1OI1:I1SIa ONIONVNId 1VIO3dS Published by NBS All Rights Reserved Copyright 2006 by NBS Revised and reprinted January 2011 No part of this book may be reproduced or transmitted in any Form without the permission of the publisher. This book intends to serve as a primer on local property -based revenue mechanisms in the State of California. The intended audience is local public agency staff, community leaders, property owners, and other interested parties. The book provides a general review and discussion of these revenue sources, which fall under the basic heading of "Special 'faxes and Special Assessments" as provided by California statutes, and which are collectively termed "Special Financing Districts." (Note that this book was first published in 2006 and updated for reprinting early in 2011, and the information contained herein is subject to change.) N.xamples of property -based revenue mechanisms in California are: a Landscape & Lighting District assessment that finances the maintenance of parks and parkways within a specific area (Special Assessment), and a tax levied on all properties within a city to fund police services (Special Tax). Most other states in the U.S. maintain similar revenue systems, albeit through different processes (and employing different terminology). WHAT IT IS NOT (the disclaimer) This publication is not a technical how-to guide, and is not to be construed as legal or technical advice. This book is to be used for general informational purposes, and is not meant to replace the services of experienced attorneys, engineers, finance professionals, or consultants with expertise in this field. Note that Proposition 26, known as the "Stop Hidden Taxes Initiative," was approved in the November 2010 election by the voters of California. Proposition 26 was aimed at a certain class of government "regulatory fees," but it contained broad local government revenue language. In summary, there are seven categories of exceptions, and it is the current understanding that Special Assessments and Special Taxes (and generally Property - related Nees) as covered under Proposition 218 constitute one category of these exceptions. Proposition 218 is discussed further wit hin I his hoo. LIST OF DEFINITIONS The following definitions must be understood within the world of local government public finance and the context of this book; they are not intended to serve as all -encompassing dictionary definitions. In fact, general definitions will only confuse the layperson. For example, Merriam -Webster defines a Special Assessment as "a special tax levied on private property_." However, the lexicon of California local public finance males a distinction between a "Special Assessment" and a "Special Tax" Special Financing District (SFD) Thus term; vela le not part of file legal lexicon or State statutes, refers to all Special 3lssesstnents anee Special Taxes that are levied by local public agencies on parcels of land. An SFD is nearli ahaay s a. dependent entity tied' to a city; cousin; school, or special dstrict. -in SFD is not to be confused vvitli a Special D str ct as defined below: Special Assessment - Also known as a "Spcciah Benefit Assessment" (or simply "Benefit Assessment"), this is a financial charge levied on parcels of land or businesses, based a the special benefit received from the service or capital zprovement. The benefit criteria and formula are typically gilled a "Methiad of Assessment " Special Tax - This is a financial charge that is calculated via some tape of special Tax formula or Rate and Method of �lppsxrtct), and is levied annually oionmeit, in the case of a Commtmity- Facilities Distrin propert (or other -basis in the case of a transient occupanc« or utility' fax') for a defined period of rears. Assessment — This is a charge levied against a parcel of land for the Benefit that is generated by the underlying public service or improvement project. The governing body of the entity levying the Assessment must make a finding of Special Benefit in order to validate this process. Assessment Engineering — This is the process of defining and calculating an Assessment, managing it from initial conception to the final levy of an Assessment. The process originated in the world of civil engineering, but has become more financial in nature. Ballot Process — Not to be confused with an actual election subject to the Elections Code, a Ballot Process is the process used in the formation of an Assessment District (and certain Special Taxes) to validate a proposed Assessment. It usually consists of a mailed ballot sent to property owners with instructions for the course of action and return of the ballot. Benefit — The notion of Benefit is extremely important in the case of a Special Assessment. There must be demonstrated Special Benefit to a parcel of land to validate a Special Assessment. Proposition 218 defines Special Benefit as "a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. General enhancement of property value does nol constitute special benefit." General benefit is available to the public, and therefore cannot be charged I property owners. Bond — A Bond is an interest -bearing certificate of indebtedness. A so-called Municipal Bond (or `Muni Bond") is issued by a local governmental agency, and the interest paid is typically tax-free to the individual bondholders. The offering statement for such a bond is called an Official Statement, referred to in abbreviated form as an "O/S." The 0/S contains all of the bond information, as well as extensive background information including the description of any underlying SFD. Brown Act — The Ralph M. Brown Act is part of California Government Code Section 54950 et seq. Its primary purposes are to encourage public participation in local government and to ensure free and open meetings of the governing bodies of local agencies. Some specific public noticing provisions also relate to the implementation of SFDs. Capital Project Financing — This is an effort that involves a significant investment in infrastructure that must be paid back over a number of years, but no longer than the expected lifespan of the improvement. (See the "Pay-as-you-go Financing" definition for comparison.) Charter City — A Charter City has unique abilities over a general law city. In essence, a Charter City has its own constitution, and may tailor its organization and laws with regard to "municipal affairs" (although the specific definition of municipal affairs is legally complex). There are now 120 (in 2010) charter cities in California, from Adelanto to Woodlake, which may promulgate their own unique assessment and tax laws, as long as they do not violate California State law Community Facilities District ("CFD") — This is a common and popular type of Special Tax district that can fund ongoing maintenance services, capital projects, or both. It is allowed under the Mello -Roos Community Facilities Act of 1982, and is found in California Government Code Section 53311 et seq. CHARTER cja( Local Governmental Agency — This refers to any local political entity with typical local or regional governmental powers, including cities and towns, counties, school districts, community college districts, and special districts, and excluding any State or federal governmental agency. The governing body of an Agency is commonly the city or town council, board of supervisors, board of directors, or similar. Mello -Roos District — Henry Mello and Mike Roos were the two California legislators who wrote the Community Facilities Act of 1982; thus, a Community Facilities District (see definition above) is often termed a "Mello -Roos District." Official Statement -- See "Bond." Pay-as-you-go Financing — This type of effort involves raising revenues each year for commensurate annual costs, and is sometimes referred to as a "non -bonded financing" in that no initial outlay is paid back over time. An example is a annual Special Assessment levied under a Landscape and Lighting District to pay for annual maintenance costs of a park. (See "Capital Project Financing" description for comparison.) Proposition 13 — The historic "property tax revolt'' measure passed by California voters in 1978 added Article XIIIA to the California Constitution, which rolled back property taxes to 1 percent of the "assessed value" of a parcel of land, and required any new Special Taxes to be approved by two -I hirds of the voters. 'Note: This Proposition reduced local governmental tax revenues, a chief component of all local revenue sources, by 57 percent, and ultimately spawned a renewed interest in SFDs, certain fees and general taxes, and other financing mechanisms.] Proposition 218 — The so-called "Right to Vote on Taxes Act" was approved by California voters in 1996. It added Articles XI I IC and XI I ID to the California State Constitution, and thus affects the over 6,0110 Local Governmental Agencies across the state. The primary results were stricter definitions of assessments, special taxes, fees (including the addition of the new and contested Ierrn "property related fees") and charges, and a general mandate for some type of voter approval for any new or increased tax, assessment, or property -related tee. Public Meeting — This meeting is held by the Local Governmental Agency to discuss an SlD and receive public comments. Typically, no definitive actions are taken at such a meeting. Public Hearing — A Public Hearing is held by the Local Governmental Agency for public input and comments, and typically marks the deadline for submission of Ballots. Special Benefit — See `Benefit" Special District — '[his is a local governmental body formed under the kiwi of the State. A Special District may be independent or dependent (upon another local governmental agency such as a County). Examples of a Special District . are water districts, sewer districts, and community services districts (CSDs). Note that this is distinct from a Special Financing District, which is not a government entity but rather a financing mechanism. Special Tax Consulting — This is the process of analyzing and defining the parameters of a proposed Special Tax, and of developing a formula for levying the charge. 1"H BOOK GtJ r.' NC)'S TO AS A F Introduction 2 A brief history 2 The future 3 Legal Landscape 3 Why Form an SFD? 3 Forms of Local Government 6 General Concepts for the Selection of SFDs 7 Fairness and equity 7 Market sensitivity 8 Potential for approval 8 Timing and predictability of revenues and expenses (and need for debt) 9 The legal perspective 10 Legal Considerations in Selecting a Special Financing District 10 Selecting the Team for an SFD 13 Timeline for Startup of an SFD 15 Bond Issuance 16 The Political Considerations 17 10 Keys Elements a/ a Succesful Revenue Measure 18 Using Public Relations to Gain Support for Special Financing Districts 19 Conclusion 20 Additional Resources: Sources and Additional Reading 21 Case Studies 22 Fact Sheet— Landscape & lighting Districts 24 Fact Sheet — Benefit Assessment Districts 25 Fact Sheet— 1913/1915 Act Assessment Districts 26 Fact Sheet — Open Space Maintenance Districts 27 Fact Sheet — Community Facilities Districts 28 Fact Sheet — Property and Business Improvement Districts 29 Comparative Table of Taxes, Assessments, Fees, and Charges 30 About the Author 31 Credits 31 A BRIEF HISTORY THE FUTURE The basic concept of an assessment purportedly dates back to "merry olde England," when the local powers assessed at will for funds to provide improvements or services. Assessments were first applied in the L.S. in New York City in 1691. Assessments became rather widespread in the U.S. in the early part of the 20th century; they became a significant revenue source for some municipalities, including Los Angeles and Oakland, as well as for irrigation districts in the Central Vallee In burgeoning California, a number of assessment laws were established after 1910, and many more have been added since then. Assessments fell out of favor during the Great Depression, and were less commonly used until the passage of Proposition 13 in California in 1978. In the California of today, significant assessment activity exists. The State maintains a lengthy list of statutes and Charter City ordinances that authorize SFDs, and an economic necessity for them to be utilized. The current system is complicated, and requires community leadership, public outreach, political will, a myriad of approval processes, many expert consultants, and an ongoing administration process to ensure its smooth application. Unless a drastic change occurs in either the financial or political landscape, the use of SFDs in California will increase, as the population (and the resultant desire for additional services and infrastructure) increases in many communities throughout the state. However, he funding for such services and projects is typically unavailable. Occasionally, statewide bond initiatives or one-time funding sources emerge; however, in most cases, these needs must be funded locally. It is worthy to note that California's basic infrastructure is in serious jeopardy. Since the post -World War II building boom, in many cases, maintenance and replacement of infrastructure has been erratic and even non-existent. For example, the American Society of Civil Engineers (ASCE) released a report in March 2005 that gave failing grades to the collective infrastructure of California. The report cited the following facts: • 222 million gallons per day of drinking water are lost due to leaking pipes • A $17.5 billion investment is required to maintain the drinking water infrastructure over the next 20 years • The wastewater infrastructure currently requires $14.4 billion • 87 percent of California's schools have at least one unsatisfactory environmental condition • There is a strong need for more investment in parks and open spaces f In the November 211(4 Stare election, only 5 of 58 counties reported no local bond or tax measures. Those counties are 11 (Source CD -AG election report.) Glen, Plum;u, mil Sierra. LEGAL LANDSCAPE Attempting to understand the nuances behind the discussion of Special Assessments and Special Taxes involves an awareness of two major initiatives that affect the California landscape: Proposition 13 and proposition 218. Proposition 13, known to many as the "property tax revolt of 1978," basically mandated a roll back to a 1 percent property tax rate at the commensurate assessed value (ad valorem) of the property. For this discussion, the important point is that local governments are now severely limited from raising additional revenues for various efforts by the basic property tax system. (Some states have ad valorem property tax rates that range from 3 percent to as high as 6 percent to fund local government services.) Proposition 218, the "Right to Vote on Taxes," was approved by voters in 1996. This in effect created a complicated categorization of assessments, taxes, fees, and charges, with a commensurately complicated approval process for each category, many with conditions that affect the process itself. The implementation and understanding of Proposition 218 has been long and arduous, and continues today. For the purposes of this publication, the key point to consider is that Special Assessments and Special Taxes are two distinct groupings that require differing methods of approval and start-up, as well as ongoing administration. The terms "Special Assessment" and "Special Tax" are confusing to many, even to experts in the field (and are often mistakenly used interchangeably), but there is a difference. Proposition 26 was approved by the voters in 2010. The emphasis for this measure was on "fees" and the assumption (at the time of the reprinting of this book) is that there will not be direct effects to SFD's. An SFD can fund large capital improvements for infrastructure that has a long useful life, or ongoing "pay-as-you-go" services and maintenance, or both. SFDs can provide funding for a myriad of services and capital improvements. Although they have been in application for many years, the economic and political trends over the past few decades have bolstered their use and popularity. In terms of newly developing areas, the trend has been toward a national consensus that "new development must pay its own way" This trend has been fostered by a number of factors, chiefly the downturn in federal and State spending. Such spending peaked in the 1960s and again in the 1980s, but has declined significantly since then. Exacerbating this trend has been the numerous efforts to limit taxes by the voters. The most notable milestones were Proposition 13 and Proposition 218, as mentioned above. SEDs can provide the necessary funding for new development. In developed areas, the requests for replacement and additional facilities, as well as increased and enhanced services, continue. Added to these demands are the additional requirements with which local governments must comply, such as the National Pollutant Discharge Elimination System (_NPDES). NPDI-'S arose fro eguhtions+ originalh promulgated "m the '19?0s. n the 1990s, the U.S. Fmiionmental Protection P_y) adopt d r gulations that required a rermittang s}'stem for storm\ 'net dischar es at certain ndustrialandamsauctionsite,.1h California State•�ti'ater vgional\Y'ater Boards. The State s regulatons•are•complex. general, all construction sites disturbing more than one c, mam'm d istrial. sites, and all designated \lunicipal eparate Storm Sewer Systems (\FS4s) are required to abt;tin and'I meet the requirements of NPDES permit coverage. There are costs invoh ed with compliane . As mentioned above, all of these demands come at a time of shrinking revenue sources and voter- backed tax limitations and reforms. That makes a strong case for the creative, but well crafted, use of SFDs. Whether the need is in a developing area or a well -seasoned community, there is a trend for focused local sources of funding with direct accountability. Many recent initiatives have focused on dedicated revenues for various projects or concerns, often resulting in the unintended effect of limiting government's flexibility. In any case, an SFD can provide focused and accountable revenues for local projects and services of importance to the community. LOCAL. Gk..ii,i'w '';':. T The focus of this book is on local governmental entities in the State of California. (Discussion of any State or federal entities is mostly irrelevant.) The primary local entities are: • Cities and towns ("Municipalities") • Counties • Special districts • School districts California has 481 cities and towns formed under general or charter (total of 120) law These cities have broad purposes and powers, and may generally utilize all forms of SFDs. Charter cities can create new forms of SEDs under their charter powers, as long as they do not conflict with the State Constitution. California's 58 counties, including the City and County of San Francisco, and their numerous subdivisions also have broad powers and typically utilize all forms of SFDs. California contains an estimated 4,500 special districts, including over 2,300 independent special districts. This is the largest number of special districts in any U.S. state that provide a variety of services with varying levels of authority_ Depending on the type of special district, virtually all types of SFDs can be used in one manner or another. For example, a community services district with police powers can levy a special tax for police services, and a water district may create an assessment district that funds infrastructure for water capital needs. School districts are somewhat restricted in the use of SODS. Nevertheless, many possibilities exist for schools to issue an SFD. For example, a school may form a parcel tax district to enhance the curriculum offered or establish a landscape and lighting assessment district. Other types of related entities and non-profit groups are also interested in SFDs. These organizations do not have the power to actually form a district and levy a tax or assessment. However, they may derive benefit from the existence of an SFD. An example of this is a Chamber of Commerce or business group that obtains funding from a Business Improvement District (BID). I ' Soiree California Special Districts Association (Sacramento, California). 'The U.S.Bureau of the Census only tracks udmc ndent Special Districts. In 1987, it rcgorted 29,427 independent Special Districts itcross the U.S., with many more dg,endent Special Districts. Many perspectives must be taken into consideration when selecting an SFD. Most of them can be categorized into the following groupings (discussed in further detail below): 1. Fairness and equity 2. Market sensitivity 3. Potential for approval 4. Timing and predictability of revenues and expenses (and need for debt) 5. Legal perspective All of these must be considered against the backdrop of basic political will to use an SFD and follow through with the inevitable trials and tribulations associated with the process. The proponents and, in particular, the local governing body must be prepared for an onslaught of opposition, including basic ignorance of SFDs and resistance to change. FAIRNESS AND EQUITY Most would agree that local government is the level of government most immediate and responsive to the needs of "common folk." In addition to proximity and responsiveness, in the interest of good public policy, it is incumbent upon local governments to be as fair as possible. This must extend to the formation and use of SFDs. For the imposition of a Special Assessment in particular, this concept of fairness is codified in the requirement of actual special benefit above that of general benefit anti in the relationship of assessment amount to the special benefits received. In general, most agree that the "user" or beneficiary of any improvements or services should pay in proportion to his or her benefit. Merriam -Webster describes equity as a "freedom of bias or favoritism." Most SFD practitioners attempt to develop a mechanism that is equitable in this manner, whether or not it is legally required. This first requires a factual analysis of the costs and commensurate benefits to determine appropriate ways of levying a charge. Each project contains many variables, including the improvements and services to be provided, local environmental and geoaphie conditions, history and customs of the area, etc. Therefore, the second step in the process of SFD development requires some level of creativity or "art" in devising unique solutions to account for the many variables in place. MARKET SENSITIVITY POTENTIAL FOR APPROVAL To choose the appropriate SFD, the potential market effects of die revenue requirement must be taken into account. Can the land or current property owner accept the burden of the proposed financial liability? What are the current market and economic conditions of the area and interested parties? how will the value of the benefits be perceived? In the case of new development, there is a balance between shifting the burden of certain infrastructure forward to future property owners via an SFD, moving it backward to the original landowners in terms of price paid, or leaving it in the present by immediate payment by the developer. In the case of burdening the future property owners, the "unwritten rule" in the greater development and public finance community is that residential property should not have a total property tax burden of greater than 2 percent of the assessed value. This amounts to a doubling of the basic 1 percent ad valorem property tax rate. IIowever, given the substantial rise in retail home prices in California starting in 1996, and then leading up to the downturn in 2008, this "rule" may require updating. For any type of SFD usage, consideration must be given to the economics of the local area, employment, property values, and other conditions before the most appropriate strategy is devised. Since the passage of Proposition 218, all SIDS require an approval mechanism. Thus, even with all of the required analyses prepared, the local economic conditions and customs understood, and the "best" type of SFD selected, the process would be for naught without consideration of the potential for approval. In general, there is either a majority (so-called "50 percent plus I") or two-thirds supermajority requirement, as follows: • Special Assessments: Special Assessments are subject to a protest ballot process. A protest exists, which stops the district formation, if a majority of those ballots returned are against the assess men t. Theballots returned areweighted based up on the financial obligation placed on each property. • Special Taxes: Special Taxes require a two-thirds supermajority of the voters voting in the election. It is critical to understand the audience to gauge the potential for approval. Detailed polls, community meetings, public outreach, discussions with local leaders, and other vehicles are recommended. TIMING AND PREDICTABILITY OF REVENUES AND EXPENSES (and need for debt) The patterns, timing, and predictability of expenses will affect the choice of revenue mechanism(s). Initial considerations should include whether a one-time expenditure is required, or pay-as-you- go costs are preferable. Will bonds or some other form of debt be needed? Although deviations from the predicted outlays and revenues are likely, the harmony of this timing equation is of great importance. For example, at one end of this continuum is a large infrastructure outlay for streets and sewer systems. This is clearly a one-time expenditure that likely will require bonds and a longer -term payback period. At the other end of the continuum is maintenance of a park and provision of street lighting. These activities require ongoing pay -as -you-go revenues. In the middle of the spectrum could be a project that requires some maintenance and significant outlays for replacement costs during the life of the facilities. tt THE LEGAL PERSPECTIVE Any discussion of an SFD must include an analysis of its basic legality, the methods of implementation, and Proposition 218 issues. This includes every step of the process, and experienced professionals and legal counsel are required. Should an assessment or tax be used? Can the local government use the desired SFD statutes? Will charter city ordinances need to be developed or revised? What arc the benefit issues if an assessment mechanism will be used? What are the legal issues with any potential bond issuances? These issues arc not to be taken lightly Michael Colantuono, an experienced attorney in the local government arena, offers his perspective: Legal; Considerations in Selecting a Special Financing District By Michael Colantuono, Colantuono & Levin, PC k number of issues must he considered to dete - a particular SI'D can be legally used to accomplish a specific purpose. A\ Bile an exhaust n c analysis of these issues is beyond he scope of this book, the major issues follow; \.s to Assessment Districts these ate tl sluesquestions Does the assessing agency ha e the legal pow er to male use of the assessment district statute' in issue? There are at least 44 assessment statutes of general application and most local gosetnments'hsse the,posser to use assessment financing for the setsices they areauthorixed to provide. Does the a sessment district 'statute. & proceeds to be used for the facilities or services the agency wishes to provide? Lach assessment statute has a specified scope of improvements and services that may be funded at statute. 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Sa34.117S puB sap11TB3 to tneT 01d alp 1Bt11 a343.44suotuap 4444ua31u u1Ssasse. 3tp m';) ssessor or other entdry does not provide • a tax forma a must comph' with. the L.yhi t! Protection ClatLse be havgmg at least a minimum ration alitt uhd bI not being discriminatory on the basis i�f protected classifications tirace, gender, etc.); a tan formula must be pohticall5 acceptable. Charging apartments 10 times as much as houses is lilel} lei;ally defensible, but it likely to generate a pposi�itto the tax. - Special taxes differ from general taxes in that their proceeds may be used onl'-'for the purposes stated in the tax. Telling oters'what their taxes will usedfor facilitates approval f the tau, but triggers a 2, 3-voter approval requirement. Generaltaxes require approval of onh 50 a of voters. Proposition 218 requires 2, 3 approval of all parcel taxes,; so genera! parcel taxes are no longer pursued. Special measures measures to be stated invoters, prvidi orn ng for acc require rnandatoii accountability tax ordinance presented to nting and audits and the like. Some additional'account<abiliry measur s ma} be advisable to enhance the likelihood' voters will approve a tax, such as a citizens' oversight committee, or a date b' which the tax expires(a .'sunset clause„J. Please refer to the table entitled "Comparative Table of Taxes, Assessments, Fees, and Charges" at the back of this book. As mentioned in the preface, this book is not intended to serve as legal advice nor as a "cookbook" with the recipe for the formation of new SFDs. It is intended solely to provide an introduction and background information for parties interested in the SFD process. A number of parties are involved in the formation of any new SFD. The most important individuals in this process arc the nitiators—typically, community leaders and local agency staff in the city manager or district manager's office, community planning and development, engineering, public works, finance, etc. External consultants and other professionals may also be needed for the startup of a new SFD, such as: 1pedal lax Consn/tant ar Assecrarent Engineer - 'This individual or firm may perform an initial feasibility study to help determine the most appropriate mechanism. Depending on the type of SFD, the consultant will then perform the analysis on the many variables and develop a rationale for spreading costs and forming the district as required by law: A Special Tax typically requires a written report that includes background, rationale, and a special tax formula tax formula, or Rate and Method of Apportionment. A Special Assessment typically requires an Engineers Report with benefit descriptions and a logical and defensible Method of Assessment. Generally, a BID consultant fits within this designation. Pc/lie Relations Pryersianals - Depending on the numerous variables and existing conditions, specialists may be needed to do polling, develop communication materials, orchestrate the outreach and informational meetings, etc. Note that government may only fund research and unbiased informational. activities. Any advocacy must be financed by community or business -based groups. • Finane/a1 Advisor - A Financial Advisor (FA) may provide expertise on the overall financial plan. An EA will be very involved with the details of performing a bond sale. Underwriter - If bonds or similar debt instruments will be utilized, an Underwriter may manage the process of the bond sale. An Underwriter, or syndicate of Underwriters, may be selected by a "competitive bid" or "negotiated sale." There are good reasons to select an Underwriter via either one of these processes, depending on the details of the transaction. • Underwriter's Counsel —The Underwriter's Counsel works for the Underwriter to handle any legal issues that may arise in the course of issuing bonds. Attorney or Bond Counsel — The local agency Attorney, whether a contracted specialist or staff person, is typically involved with the legal structure of forming a new SFD. Should debt be issued, the Bond Counsel manages the legal aspects of the bonds and ultimately writes an opinion on the taxability of the bonds sold (most such bonds arc sold on a tax-exempt basis, resulting in a lower borrowing cost for the local agency and tax free income to the bond purchaser). Note that the bond process alone requires a plethora of consultants and processionals, including some or all of the following: • Real estate and land appraisers • Trustees and bankers • Absorption and economic consultants • Disclosure consultants and attorneys • Credit rating agency • Credit enhancement provider Further details may be found in many other materials. See the Additional Resources list for recommended references. EXTERN 9 i _ l " NTS '� rt� �w, �rc.,� h �h &..N 6..4d ".,�w & mu.. The general timeline for the successful implementation of a new SFD is 6 to 12 months, but often the process can take more than a year. Bringing all the interested parties into accord can take a very long time, and this part of the process must be taken into consideration. A well -managed and orderly process involves various meetings, forms of analysis, and consensus building. The steps in the formation process typically include: 1. Feasibility Analysis Answers the questions regarding the type of SFD mechanism to use, and the financial and political viability of the measure. 2. Initiation by Government Resolution or Landowner or Voter Petition -The "official" start of the process. 3. Initial Report -The official document that will be adopted by the governing board (often known as the Special Tax or Engineers Report). 4. Resolutions and Ordinances - The governing board official documents passed in public forums. 5. Notice of Public Meetings and Hearings -Informs the public of the official process. 6. Ballot Process -The official process of approval by the affected parties (may take many forms). 7. Recordation - If the measure is approved, a legal notice, lien, map, or diagram will be recorded. S. Issuance of Bonds (if applicable) - If debt is required, funds arc raised through the process of selling bonds or similar instruments. 9. Initial Levy of Charges - The charges that finance the SFD are typically placed on and collected by the county property tax billing system, but this may vary. 10. Annual Administration Process - Once an SFD is in place, administrative process is required to address a multitude of duties and to ensure that charges are appropriately calculated, levied, and collected on an annual basis. FORMAT iON STEPS kra.ribilily Analysis Initiation by GovernmentReso/utioa or.La rrdowner/ Voter Petition Initial Report Resolutions and Ordinances Notice of Public Meetings and Hearin nit Ballot Process Recordation Issuance of Bonds (e/ applicable) Initiallaay of (:haryes Annual Administration Process An inherent timing mismatch may occur between the expenditures and the sources of revenue for SFD,. For example, an SFD that is funding general infrastructure requires a large infusion of capital at the Outset to pay for streets, water, and sewer systems. The cash neededin the early years of the SFD exceed the amount of initial revenues. The bond market can provide these types of long-term funds, typically with the added benefit of tau -free (i.e, lower) interest costs. The concept of issuing such type of bonded indebtedness is simple. The local agency sells bonds to raise the needed capital, and it pledges all or a portion of the SFD revenue to pay the interest and principal payments. An underwriter or syndicate of underwriters will buy the bonds from the agency and then resell them to investors. These investors might he mutual funds or individual investors who appreciate the tax-exempt (usually) interest paid. The lime period for payback is typically 30 years, hut can range from 10 to 40 years. To be cost effective, hood issues should be at least $2 million; olden, they are in the tens of millions_ like all debt, such bond issuances must he performed with care, clue diligence, and an understanding of the value of the underlying property. Realistic projections and analysis of the revenue streams must he undertaken to ensure the viability of the overall funding scheme. Although these bonds are issued by the local agency, they are typically "non -recourse," and therefore not an obligation of the agency or its general fund should a default occur. This does not, however, release the agency from appropriate diligence and oversight in the process. California State law generally prohibits local governments from entering into any indebtedness or liability exceeding the revenues of any one year. However, indebtedness may be allowed by an appropriate vote of the people or by certain exceptions to the general prohibition. One of these exceptions, the so-called Special Fund exception, includes special taxes, fees, and assessments. Therefore, no additional public approval process is needed to issue bonds if the SFD is appropriately formed. OFFICIAL STATEMENT DATED J.ANUARY 21, 2005 NEW ISSUE NOT RATED In the opinion of C2uira & Thinning LLB Sari Francisco, California, Bond Counsel, subject, however, to certain qualifications descrihed herein, under existing lair, Interest on the Bonds is excluded front gross income for federal Income tax purposes and is nor an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporal rots,, although for the purpose of cnnpntmg the- ahernotive ruinirman tax on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from Califbrnis personal income taxes See LEChla ,4MlTTERS- Tax .Wailers." S27,5011,000 IMPROVEMENT AREA A OF THE CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2003-1 (ANAVERDE PUBLIC IMPROVEMENTS) SPECIAL TAX BONDS, SERIES 2110S-A CITY or Pal MI)AI.t Dated: Dote of Delivery Due: September I, as shown "Victorious minion. Win j?vt and then go to uar; while defeated warriors go to war first and them seek to with"— Sun Tzu (400 BC) With the passage of Proposition 218, public outreach, community input, and a subsequent campaign have become absolutely necessary to ensure the passage of any measure; in fact, an approval process is required for any new or increased special assessment or special tax. Thus, the development of any SPD calls for a vibrant public policy component, one that involves affected property owners and local voters. Planning for an SFD often requires a long lead time to ensure success. Ultimately, a timeline with important milestones and clear responsibility for achieving the casks is required. As well, strong leadership is needed throughout the process. This monumental topic is the subject of other books and resources, so only a summary of the concepts is provided here. In general, however, the following questions must be asked: • IIow strong is the desire or need for the project or service? • What is the overall ability and desire to pay the proposed assessment or tax? • Which is more appropriate - an assessment or tax? • What are the commensurate approval thresholds and processes required? • How long will the process take, and how will other events affect the timeline? • Flow much outreach is required? • What is the chance of success? These key elements represent the essence of the proposed SFD and must be addressed to achieve success. It is important to note that local governments may not advocate a new measure; however, they should offer clear information about the measure, its commensurate costs and benefits, and the overall process. If any advocacy is needed, and it usually is, private individuals or non-profit groups should be involved. Included below is a list of 10 general key elements (provided by the League of California Cities) applicable for any successful revenue measure, which should be considered when approaching an SFD. Note that some of the language about a "ballot measure" is synonymous with a "proposed SFD initiative." 10 KEY ELEMENTS ENTS OF A SUCCESSFUL REVENUE MEASURE * 1. Develop a ballot measure responsive to public concerns; gather information about the public's concerns through polling. 2. Develop a strong expenditure plan for the money that will be generated by the proposed measure. Keep the proposal simple and include accountability measures such as sunset clauses and yearly audits reported to the public [Author's note - these arc often required]. 3. Draft factual ballot language and persuasive ballot arguments signed by community "white hat" organizations. 4. Gain unanimous support for the measure on the council — if the governing body is not united, the public will wonder if the measure is really a good proposal. 5. Pursue a strong grass roots campaign to gain every endorsement that can be mustered from the community and, in turn, educate the community about the importance of the measure. 6. Visit the editorial board of the local newspaper(s) to explain the need for the measure and to seek coverage. 7. Create a coalition of wide, diverse interests that represent the entire community. Source: League of California Cities. SecurinaVoterApproval of Lo 8. Contact and speak to as many businesses and organizations as possible. 9. Engage in a strong letters -to -the -editor program and solicit placement of editorial (op-ed) features authorized by high -profile members of your coalition. 10. Create interesting and concise informational materials that emphasize key messages, address community concerns and clearly outline the benefits to the community. Note: Because of restrictions on the use of public resources for advocacy efforts, achieving a number of these elements requires leadership and involvement from the private sector. revenue Measures. 1999 EQiuo For additional perspective, Evette Davis of Berg Davis Public Affairs offers this advice: Using Public Relations to Gain Support for Special Financing Districts By Etettt Dot ir, Beira D nis Puiafic ill/r lr:, In today's political climate, the use of Public Relations professionals in conjunction with the limitation of Special Tax Assessment or Special Tax Financing Districts should best on,4lyconsidere dbvpublic oflicials.The subjectof new"taxes" can be a hot button issue in many communities. Additionally, there are often well -established local anti -tax groups that act as self-appointed fiscal watchdogs, monitoring city and county budgets. If these kinds of groups and situations are not 'planned for in advance, officials can quickly find themsches in a defensive position moments after a new district has been proposed. The key to the success of a new financing district is to treat the project as if it were a campaign — whether the measure is headed for the ballot box or not. While it may seem overtly political to be so calculating, the fact is that many agencies have quickly found themselves in retreat over new financing schemes simply because they did not anticipate any opposition. It is important for agenciestoknowwhetherameasurecanevensurvive politically before they go to the to Luble and expense to introduce it; being prepared for negative comments or even full-blown opposition in advance of introducing a measure to the public is the key to success. Public Relations allows cities to use time -tested tools such as polling and focus groups to learn in advance about what kinds of districts communities will accept, what kinds of messages sway the public to be supportive and what kinds of messages can turn a voter off, These key messages can be used later to develop a comprehensive communications campaign to support a Special Financing District. Most successful opposition campaigns work because they sow the seeds of misinformation and doubt about the costs and benefits of a new tax or assessment. The key to succeeding in this kind of climate is to mount a very aggressive information campaign in advance of introducing a measure. Ilea opinion leaders should be engaged ahead of time to give their feedback and approval. Once cities have gained the acceptance of the most important decision makers, then the measure can be introduced with confidence. It may be necessary to educate the public in advance of introducing a new Financing District. Public relations professionals can help public officials to develop education campaigns that draw on the key messages to help educate members of the ciimmunity- and voters in advance of introducing a measure. Once a measure has been proposed, cities can continue to support the initiative through the use of community relations to build partnerships with community groups to endorse the District Lind other tools such as direct mail. Should a measure require the approval of voters, a public relations firm in conjunction with a good campaign consultant can help develop the strategy and messages necessary to win the ballot or voting process. Over the years, many SFDs have come to fruition, and some have failed. A level of uncertainty exists throughout the process. The political winds blow in many directions, unpredictable events occur, and timelines can be extended. If there is a common thread of success, it revolves around leadership of the initiative and the strength of the need or desire. To enact a successful SFD, strong leadership is crucial. An individual or a group must be the standard bearer. From there, the essential steps are as follows: • Gather input • Define the need • Select the appropriate SFD mechanism • Craft a simple message • Execute the tasks over an appropriate timeline This book has attempted to describe the types of SFDs available in California, and to illuminate the facets of these mechanisms. The goal is to provide the basics for each type of tool, so that the reader is better informed to take the essential steps forward. I hope that this book has achieved the goal, and I invite your input and questions. Tim Seufert San Francisco Contact information: Email: tseufert@nbsgov.com NBS corporate office mailing address: 32605 Temecula Parkway Suite 100 Temecula, CA 92592 NBS San Francisco office mailing address: 870 Market Street Suite 1223 San Francisco, CA 94102 American Society of Civil Engineers. Report Card for America's Infrastructure. March 2005 Report Date. Bland, Robert I.. A Revenue Guide for Local Government. International City/County Management Association. 2005 (second edition). California Debt and Investment Advisory Commission. Guidelines for Mello -Roos Financing. October 1991. California Debt and Investment Advisory Commission. California Debt Issuance Primer. April 1998. California Debt and Investment Advisory Commission. State and Local Bond and Tax Ballot Measures — Results of the November 2004 General Election. February 2005. California State Legislature —Senate Local Government Committee Parks, Progress and Public Policy. October 2001. California State Legislature — Senate Local Government Committee. What's So Special about Special Districts? A Citizen's Guide to Special Districts in California. February 2002 (third edition). California State Legislature — Senate Local Government Committee. It's Time to Draw the Line: A Citizen's Guide to LAFCO's (California's Local Agency Formation Commissions). May 2003 (second edition). California State I .egislature —Senate local Government Committee. Assessing the Benefits of Benefit Assessments: A Citizen's Guide to Benefit Assessments in California. December 2004 (second edition). Field, Donald, Greg Ilarrington, and John Hartenstein. The XYZ's of California School District Debt Financing (Third Edition). Orrick Herrington & Sutcliffe, 2005. Horler, Virginia L. Guide to Public Debt Financing in California (Revised Edition). Packard Press, September 1987. Institute for Local Government. Funding Open Space Acquisition Programs: A Guide for Local Agencies in California. 2005 Edition. International City/County Management Association. Introduction to Infrastructure Financing. March 1999. League of California Cities. Securing Voter Approval of Local Revenue Measures. 1999 Edition. League of California Cities. Proposition 218 Guide. 2007 Edition. League of California Cities. Municipal Revenue Sources Handbook. 2008 Edition. Porter, Douglas et al. Special Districts A Useful Technique for Financing Infrastructure. The Urban Land Institute, 1992 (second edition) . Tramutola, Larry. Sidewalk Strategies — Seven Winning Steps for Candidates, Causes and Communities. TurnKey Press, 2004 (second edition). Below are three mini -case studies involving actual situations; these are used to demonstrate some of the nuances required when reviewing Special Financing District options: 1. Need — Additional Parking in Downtown Area The installation of additional parking spaces was needed in a compact and lively downtown area of a city to accommodate the robust business environment We were called upon by the City to investigate a number of SFD options, none of which would have been viable without the involvement and buy -in of the business and property owners. Some of the more obvious choices were: • Parking Districts Laws of 1943 and 1951 • Property and Business Improvement District Law of 1994 (PBID) • Community Facilities District (Mello -Roos) Special Tax The Special Tax would require a two-thirds majority of voters, but would be the most flexible in achieving many goals. The Parking District Laws have positive attributes, but have somewhat fallen out of favor. The PBID assessment can fund both capital (in 2004, capital funding was added to the statute) and services, and has a mechanism for private involvement in district management. The usual political pressures and differing goals from various constituencies were evident. It was important to gather input from the property owners, and we discovered some additional interests beyond parking. Ultimately, the PBID mechanism was favored over the others. 2. Need — Funding for Street Trees In many communities, we have seen the desire to increase the planting and maintenance for community trees. In many cases, a group will approach the City Manager with the idea of planting more trees throughout the City area. Such a project involves a large initial expenditure, followed by an ongoing level stream of maintenance and replacement costs. This has varying levels of impact throughout the City The City can implement either a special assessment or tax, but each has pros and cons. The options include: • Landscape & Lighting District assessment • Community Facilities District Special Tax • Parcel Tax The Tax measures require a two-thirds majority of voters, but have the most flexibility. An assessment would work, but it could be difficult to demonstrate the special benefit to justify an assessment. The assessment would require a mailed protest ballot process, and majority approval of affected property owners based on the ballots returned weighted by assessment amounts. For each community, an assessment is needed of the baseline level of tree planting and maintenance, the community's unique environment and customs, before determining the best mechanism. 3. Need — Sewer Infrastructure We worked with a Community Services District with a large geographic area that was supported by a failing septic system. The District General Manager was required to develop options for funding the collection system and an expansion of the sewer system that serves the rest of the area. The project involved a very large initial capital expenditure, followed by ongoing normal operating costs. The options for acquiring the capital included: • 1913/ 1915/1911 Act Assessment Districts • Community Facilities District Special Tax • Loan Program for Property Owners The maintenance costs should be covered by the sewer rates, or a rate increase or other charge must be considered. Once again, the Special Tax option would require a two-thirds majority of voters, but has some flexibility. The assessment process would be expected to work well, but the special benefit for any public parcels must be taken into consideration as private property owners cannot be asked to pay for the portion of the program that would benefit public property. We determined, due to many of these conditions, that the Special Tax was the best route. Category Special Assessment Oueruiew I andscape & Lighting Districts (L&L) can fund the installation and annual maintenance of • Landscaping • Public Lighting • Sidewalks, Curbs and Gutters • Park or Recreational Improvements In addition, an L&L may fund the acquisition of land for park, recreational, or open --space purposes. Bonds may be used for capital financing, but this is not common. Who Can Use There Any public agency with the authority to provide such services can start an l&L. Cities are the most frequent user. Requirements A formation process is required, including appropriate planning and Assessment Engineering-, an Assessment Engineer's Report, a public hearing, and a protest ballot process for affected landowners. A finding of benefit is required. Underlying Legislation California Streets and Highways Code, Section 22500 and following, entitled the Landscape and lighting Act of 1972. (Tafn ar y Special Assessment Overview Benefit Assessment Districts (BAD) can fund the maintenance and operation costs of • Drainage • Flood Control • Street Lighting • Street Maintenance In addition, a BAD may fund the costs of installation and improvement of such facilities. to Can Use Them Any public agency with the authority to provide such services can start a BAD. Cities are the most frequent user. 1Z quarements A formation process is required, including appropriate planning and Assessment Engineering, an Assessment Engineer's Report, a public hearing, and a protest ballot process for affected landowners. A finding of benefit is required. Utrderlyiug I.rXi.datiort California Government Code, Section 54703 et seq., entitled the Benefit Assessment Act of 1982. Ceitegoty Special Assessment Ouerview 1913/ 1915 Act Assessment Districts (1915 Act) can fund items that include die following: • Public Works and Infrastructure • Utility Infrastructue • Real Property Acquisition • Payment of Existing Special Assessment Liens In addition, a 1915 Act may fund certain maintenance and repair costs for installed facilities. Who C.em 1 J r 1t'henr Any public agency with the authority to provide such services can start a 1915 Act. Requirements A formation process is required, including appropriate planning and Assessment Engineering, an Assessment Engineer's Report, a public hearing, and a protest ballot process for affected landowners. A finding of benefit is required. Unde,fyiezg Legist/otion California Streets & highways Code, Section 10000 et seq., entitled the Municipal Improvement Act of 1913 and Section 8500 et seq., entitled the Improvement Bond Act of 1915. Category Special Assessment O'crvieav Open Space Maintenance Districts (OSMD) can fund the costs of improving and maintaining open space areas, including: • Improving and Protecting Open Spaces • Planting and Maintaining Trees and Vegetation • Removal of Aggressive and Noxious Plants • Regulation as Necessary for Preservation Vim Cara Use "Thein Any public agency with the authority to provide such services can start an OSMD. Requirements A formation process is required, including appropriate planning and Assessment Engineering, a Report, a public hearing, and a protest ballot process for affected landowners. A finding of benefit is required. Underlying Legir/atian California Government Code, Section 50575 et seq., entitled the Open Space Maintenance Act. Category Special Tax )rera/ee, Community Facilities Districts (CFD), sometimes known as "Mello -Roos Districts" (Senator Henry Mello and Assemblyman Mike Roos were the original authors of the legislation), can fund certain public services on an annual basis as well as large infrastructure capital needs. The services that may be funded include: • Police Protection Services • Fire Projection and Suppression Services • Park, Parkways, and Open Space :Maintenance • Flood end Storm Protection Services • Park or Recreational Improvements Capital projects with a useful life of at least five years chat may be funded include: • Park, Recreation, and Open Space Facilities • School Facilities • Libraries • Child Care Facilities • Infrastructure Needs 1P ho Cue Use Thera Any public agency with the authority to provide the types of services and facilities may form a CFD. Cities, counties, school districts, and special districts are common users of this tool. Requirements A formation process is required, including appropriate financial analysis and planning. A Special Tax Consultant will develop a Special Tax Formula and Report. There will be public hearings and either a mailed ballot process to property owners or a regular election if there are 12 or more voters in the district. Underlying Legislation California Government Code, Section 53311 et seq., entitled the Mello -Roos Community Facilities Act of 1982. Category Special Assessment OtserView Property and Business Improvement Districts, known as PBIDs, can fund improvement items, including: • Parking Facilities • Benches, Kiosks, Shelters, and Signs • Public Restrooms, Decorations, Parks, and Fountains • Street, Sidewalk, and Plaza Improvements In addition, a PBID may fund activities that include: • Promotion of Public Events and Tourism • Furnishing of Music • Security, Graffiti Removal and Other Cleaning Services • Other Services that Benefit Businesses and Real Property lkho Can Use Them A city or county may form a PBID. Requirements .A formation process is required, including appropriate planning and financial analysis, a Management Plan, and a public hearing, as well as a petition or a protest ballot process or both. A finding of benefit is required. Underlying Legislation California Streets & Highways Code, Section 36000 et seq., entitled the Property and Business Improvement District I any of 1994. Note that many charter cities have created their own legislation that mirrors the PBID in most aspects. The City and County of San Francisco utilizes the friendly -sounding Community Benefits District (CBI)) mechanism. Category Examples Benefit Criteria Approval Threshold Act of Payment Special Tax (including Special Property Tax) Parcel Tax for Fire Special Purpose 'fax Not Required Suppression for Transportation Two-thirds (Voters'ia) Involuntary Special Assessmen landscape & Lighting District for Park maintenance 1913/1915 Act Assessment District for Streets, Sewer, Water Infrastructure Special iv Majority Involurrrar} Notes: 1) Most general and special taxes typically must be paid as part of regular financial transactions, and are therefore categorized as "involuntary." However, it hould be noted that a Sales Tax might be considered "voluntary" in that purchase of non-food items is not mandatory. 2) Community Facilities Districts have a unique approval process involving property owners in situations of an "uninhabited" area, defined as less than 12 egistered voters. 3) Any general benefit associated with a Benefit Assessment must be paid for by other funding sources, as only special benefit may be assessed to properties. 4) Fees and Charges are listed here for the purposes of illustration and comparison, hut are not a subject matter of this book. Note that Proposition 218 categorically does not restrict fees for electricity, gas, and those imposed as a condition of development. Furthermore, the discussion of Property Related Fees nd Charges and their relationship to Proposition 218 is lengthy, and continues to be debated in the public finance "court of opinion" as well as by the legal court wstem. 5) Fees may not exceed the cost of the program or service provided, and there ate legal limits on the distribution of fee obligations among those who pay them as well. Note passage of Proposition 26 in November 2010 causes some fees or charges to be labeled as "taxes" subject to voter approval. This is not the focus if this book, and left to other publications. The focus of this book is on SFDs, which are represented by the first two categories in the table; the categories in gray are for comparative purposes. Note that a General Obligation bond, which increases the ad valorem property tax rate, must he approved by a two-thirds majority of the registered voters voting in the election. ABOUT THE AUTHOR Tim Seufert is Managing Director of NBS, and works with many local public agencies in California. NBS is a private and independent firm that provides consulting and services to local government agencies across California, as well as outside the Golden State. Tim has been in the world of finance for well over 20 years. He spent a decade in the corporate Fortune 1000 private sector world, and over a decade in the local government public finance arena prior to writing this book. He has addressed various groups on financing topics including the League of California Cities, California Special District Association, the California Municipal Treasurers Association, and the California Society of Municipal Finance Officers. He is a graduate of the University of Southern California. When he is not working, Tim can be found roaming in San Francisco with his wife, chasing around their two young sons or perhaps skiing and hiking in the mountains. CREDITS This book would not have been possible without the advice, insight, and counsel of many knowledgeable people. I would like to note the following individuals for their contributions: Geralin Reyes, NBS 1'(ike Rerareer NBS Dave Ketcham, NU Pablo Perez, NBS MichaelColantuono, Colantrrono '"Levin, PC Evette Davis, Berg Dams PublicA/7airs Thomas Fil, Cit}' of Belmont Pauline Marx, Czty and County nl San Fi'ancis'a