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Home My WebLink About2012/07/12 - Agenda Packet - Special~~~ city of ~ `L~ANCHO (~UCAMONGA AGENDA CITY COUNCIL SPECIAL MEETING Thursday, July 12, 2012 ~ 6:00 p.m. Rancho Cucamonga Hall ~ Central Park 11200 Base Line Road ~ Rancho Cucamonga, CA 91130 A. CALL T®®RDER: A1. Pledge of Allegiance A2. Roll Call: Mayor Michael Mayor Pro Tem Spagnolo Council Members Alexander, Buquet and Williams B. COMMUNICATION FROM THE PUBLIC: This is the time and place for the general public to address the City Council on any item listed on the agenda. State law prohibits the City Council from addressing any issue not previously included on the Agenda. The Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual or less, as deemed necessary by the Mayor, depending upon the number of individuals desiring to speak. All communications are to be addressed directly to the Mayor and not to the members of the audience. This is a professional business meeting and courtesy and decorum are expected. Please refrain from any debate between audience and speaker, making loud noises, or engaging in any activity which might be disruptive to the decorum of the meeting. C. ITEMS OF DISCUSSION: C1. OPTIONS TO ADDRESS THE STRUCTURAL BUDGET DEFICIT IN LANDSCAPE MAINTENACE DISTRICT (LMD) NO. 2 D. ADJOURNMENT I, Debra L. McKay, Records Manager/Assistant City Clerk, of the City of Rancho Cucamonga, hereby certify that a true, accurate copy of the foregoing agenda was posted on July 5, 2072, per Government Code 54954.2 at 70500 Civic Center Drive, Rancho Cucamonga, California. STAFF REPORT PUBLIC WORKS SERVICES DEPARTMENT RANCHO (;UCAMONGA Date: July 12, 2012 To: Mayor and Members of the City Council John R. Gillison, City Manager From: William Wittkopf, Public Works Services Director Lon E. Bassoon, Deputy City Manager/Administrative Services By: Dean Rodia, Parks and Landscape Maintenance Superintendent Subject: OPTIONS TO ADDRESS THE STRUCTURAL BUDGET DEFICIT IN LANDSCAPE MAINTENANCE DISTRICT (LMD) 2 Staff recommends the City Council implement Option 2 in order to address the structural budget deficit in Landscape Maintenance District (LMD) 2. BACKGROUNDlANALYSIS The formation of LMDs was an integral part of the City's early years of development following incorporation. The purpose of LMDs was to act as an alternative to HOA's and enhance property values through the installation of landscaping and other improvements in the common areas surrounding residential and commercial development, which would in turn enhance property values. The LMDs also provided the mechanism to finance the maintenance of these areas, with the costs home by the property owners that benefit from the improvements rather than the City's General Fund. LMD 2 was first formed in 1982. At the time of formation it consisted of 737 dwelling units and 1,280 acres of vacant land. Subsequently, as development took place, the LMD expanded to its present day size of 5,795 single-family residential parcels, 525 condominiums, 589 multi-family units, a church, fire station, 45.16 acres of commercial property and 19.72 acres of vacant property. The map found in Exhibit A shows the boundaries of LMD 2. The assessment rates in LMD No. 2 were last increased in 1993-19 years ago. The assessment rates are as follows: Single family dwellings, condos, and multi-family units: $422 per unit Non-residential/commercial property: $844 per acre Vacant land: $105 per acre The operating budget for LMD 2 totals $3,102,300 for FY 12-13. The projected revenue for the district is $2,880,640, leaving a budget shortfall of $221,660: Revenue vs. Expenditures Projected Revenue for FY 12/13 $2,880,640 Projected Expenditures for FY 12/13 - $3,102,300 Projected Shortfall for FY 12/13 -$ 221,660 CITY COUNCIL STAFF REPORT OPTIONS TO ADDRESS TIC STRUCTURAL BUDGET DEFICIT IN LANDSCAPE MAINTENANCE DISTRICT (L.bII~) 2 ULY 12, 2012 PAGE2OF4 LMD 2 is estimated to have a reserve balance of $2,392,950 as of June 30, 2013. This reserve fund, however, has already been tapped in the current fiscal year to meet operating expenses, and is quickly dwindling. A minimum of $1.6 million is required in reserves (6 months of operation costs) to meet cash flow requirements. This leaves only $1.5 million for other uses, which will be exhausted in approximately 3-5 years. Clearly, the financial situation in LARD 2 is unsustainable, and must be addressed. Options for Addressing the Structural Budget Deficit Since 2009, the City has taken a number of steps to address the structural budget deficit that has developed in LMD 2 (6chibit B-"LMD~2 Chronology of Prior Actions"). This deficit has been created as contract maintenance, utility, and personnel costs have gradually risen while assessment rates have remained the same fior the -last 19 years. F~chibit B is a chronology of these various efforts aimed toward having LMD 2 operate within its means. Still, despite these extensive efforts, the operating deficit remains. In accordance with the Council's March 2012 direction, staff has prepared plans for decommissioning landscaping in LMD 2 in orcier to balance its budget. As the details of these plans and their assoaated cost savings have been further analyzed, it is evident that decommissioning of the magnitude necessary would have significant, serious adverse impacts on the appearance of all neighbofioods in LMD 2. For that reason, staff is recommending a second option, which would be to establish a decommissioning pilot progrem, and conduct a community engagement process to determine whether or not property owners would prefer an .increase in their LMD assessment to avoid the need for decommissioning. O ion 1: Decommission 1.5 million square feet of turf area to reduce expend'Rures by $300,000 annually. Option 1 is the decommissioning of approximately 1.5 million square feet of tort areas in the public landscape and park areas (See 6chibit G°LMD 2 Turf Decommissioning°). This large amount of decommissioning is necessary to .generate the required cost savings. It would, however, have significant adverse impacts on the appearance of the neighborhoods, and ultimately neighborhood property values. The process for decommissioning would be to tom off the irrigation to the tort, cap the irrigation heads, and allow the turf to naturally decine. While the turf will go fallow, the remaining landscape material -such as shrubs and small trees will .remain in place and still .provide aesthetic .value to a landscaped areas. Although the turf will not be irrigated, it will continue to receive a minimal level of maintenance, inGuding mowing to keep any grass or weeds from becoming overgrown, and trash removal once every two weeks. If this option is selected, the decommissioning process will begin in September 2012 with staff turning off the individual irrigation systems; this step will take approximately 30-60 days to complete. After the irrigation is fumed off, the sprinkler heads will be removed and capped and the heads will be stored for future use. The timeline of the actual turf decline will vary depending on site and weather conditions, but will likely begin to show significant signs of decline within the first 30 days. This option achieves the necessary cost savings required, complies with Prop. 218's special/general benefit provisions, and allows the LMD to continue operations for 2-4 years with no increase in the current assessment amount. CITY COUNCIL STAFF REPORT OPTIONS TO ADDRESS THE STRUCTURAL BUDGET DEFICIT IN LANDSCAPE MAINTENANCE DIS'1'KICl' (I,MD).2, JULY 12,2012 PAGF. 3 OF 4 COST SAVING/DECOMMISSIONING MEASURES Turf Contract Cost Savings $118,175 Projected Water Savings + $184,580 Projected Savings $302,755 Exhibit D is a set of visual simulations that show how the fallow turf will appear in LMD 2 neighborhoods. Because of the sheer size of these turf areas, d is clear that the impact to the neighborhoods would be significant and detrimental. As previously noted, staff is very concerned about the potential reaction if this option is selected and implemented immediately, and that property values will deGine. For that reason, staff is not recommending this option. Oation 2: Establish a decommissioning pilot program, and conduct a community engagement process to determine whether or not properly owners would prefer an increase of approximately $38 annually in their LMD assessment to avoid the need for decommissioning. In lieu of proceeding immediately to decommission most turf areas, it is proposed that a pilot decommissioning program first be conducted in ahighly-visible visible area of LMD 2. This pilot program will allow property owners to better understand the aesthetic impacts of decommissioning before any final decisions are made. For the pilot program, a one acre area of turf in ahigh-traffic area will be decommissioned beginning in late July. The pilot area would likely be a roughly 1 acre area on Victoria Park Lane, south of Rancho Cucamonga High School and near Vintage Park. This area is not located directly in front of homes. Irrigation in the pilot program area will be fumed off, allowing the Surf to deGine and eventually die. Signage will be posted to indicate that this is a pilot project to evaluate the impacts of possible decommissioning throughout LMD 2. In conjunction with the pilot program, the City would conduct a very focused and extensive effort to engage the community in a discussion regarding the fiscal realities of LMD 2, the possible implementation of decommissioning throughout the district, and the option to preserve maintenance at an A level if a modest assessment increase is approved. The pilot project will be referenced as the example of how decommissioned landscape would appear. This additional educational effort will allow property owners to make a fully informed decision regarding the options available. In order to facilitate meaningful community participation in the process, staff would recommend the use of a firm that would conduct the community engagement process, as well as assist in the development of educational materials and mailers. While public meetings have been reasonably well-attended in the past, a new and more intensive approach is recommended in order to better reach all property owners with information and options for consideration. We anticipate that the pilot program and community engagement efforts will take place over the next six months. At the end of that time, a statisticelly-valid survey would be conducted of property owner views regarding the implementation of decommissioning as compared town assessment rate increase. While the exact assessment increase would be based on a new Engineer's Report that has not yet been prepared, it is estimated that a modest increase of $38 per home/condo/apartment (and corresponding increases in commercial and vacant land) would be sufficient to preserve all services at the A level for years to come. The cost for the public engagement process and survey is estimated to total $40,000. CITY COUNCIL STAFF REPORT OPTIONS TO ADDRESS TIC STRUCTURAL BUDGET DEFICIT IN LANDSCAPE MAINTENANCE DISTRICT (LMD) 2 Jt7LY 12, 2012 PACE 4 of 4 The results of the survey would then be presented to the City Council in early 2013 for review and discussion regarding next steps. If the community supports an adjustment to assessment rates in LMD 2, the City can initiate the Prop 218 process.in the spring.of 2013 to consider a rate adjustment for FY 13-14. If not, decommissioning can proceed, with the knowledge that the community made an informed, educated, and reasoned decision before decommissioning was implemented. RECOMMENDATIONS Staff recommends the City Council implement Option 2,in orderto address fhe structural budget deficit in Landscape Maintenance District (LMD) 2. Re ctfull submi ed, William Wittkopf Public Works Services Director WW:DR:jau Exhibit A--LMD 2 Boundary Map Exhibit B-LMD 2 Chronology of Prior Actions Exhibk C-LMD 2 Turf Decommissioning Map Exhibit D-Visual Simulation of Decommissioned Areas Nom, EXI III3IT A ~ V ~~ •,~, .y ~ o ~ o ~F~,+ o •~ Q V ny epuenn!i3 G J ny Ja~sayooa ny ua~!11!W nb ua~l!II!W ny uaneH ny uaneH ny esowJaH ny esouLaH ny Ple4!yoJ'd ^d Ple4!yoJt/ ny uewpaH ny uewllaH 3S uegawe~ ~ :$g:e~~~~~ S5~°b~i g~~s~ bhS FF d6 ei~g•~o 0 ~ ~ O L ~ae~~~c a`Lt~ ~ N fp O Q ~gyr~~o~~$~f ~ C m lL. $a~Kg.~~~€.~ f0 g ;fro . (A tp ~~~~~~~~gs m ;;'8 x ~ ._'a ~P"ys~ F _~ aun~~~bg~~~~ ~~ ~!°rf ~°re 6~~x Z_ t 6, ~ „ A_ M g m~ .~ ~ ..` W.`. ..~~ c 4 E J NO Q C V ~ ~ ~ rxt ~~ '' J .._..~.._o ~ 1 °~ c _ r J m ~ ~ o ~ m LL. Q _.._.._' ny ;se3 N ~ t ~ ny epuenn!I3 g ~aaJ~ eQ ny Ja;sayooa r"- i r.._.._.._.. i i i i i 1 1 i ~ w f .. r ~ v ~ i ny pJe~(au!n ~ ~~~. .~~ ' .7 'O • ~ ~ ~ J = 1 ~ 1 1 i ~ i i t Exhibit B LMD 2 - Chronoloav of Prior Actions 2009: Service levels adjusted to have expenses meet revenue. Community response provides feedback on service expectations; residents are displeased with lower service levels. 2009: Staff conducts service level audit to identify specific ways to improve service but still reduce costs. Frequency of maintenance is adjusted so that service still remains in the A-C levels. October 2010: New bid specifications are used to bid out services. Spectrum Care is selected at a lower cost; service is restored to A level. March 2011: Prop 218 ballot process begins in LMD 2 with proposal to increase assessment by approximately $38 per home/apartment/condo. March -April 2011: Series of community meetings held on Prop 218 ballot proposal. Multiple mailings are also conducted. June 1, 2011: City Council authorizes mailing of ballots to LMD 2 property owners. July 20, 2011: Ballots are counted, and a majority protest exists; new assessment is not approved. Existing assessment rate remains in place. Council directs staff to present options in October 2011 for balancing LMD 2 budget. October 2011: Staff presents options for reducing expenses. These include reducing landscape maintenance from an "A" level of service to a "B" level of service; eliminating new projects such as cobble upgrades, mulch replacement and plant material replacement, and reducing treatment of eucalyptus trees for Redgum Lerp Pysllid; reducing ballfield maintenance. October 2011: Spectrum Care notifies city that they cannot provide maintenance at the current contract cost. Service is again put out to bid using October 2010 bid specifications. March 2012: City Council is updated on the bid process. Lowest bid is significantly higher than prior vendor. Contract is awarded at B level of service, and some LMD 2 reserve funds are used to balance the LMD budget. 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