HomeMy WebLinkAboutAGENDA REPORT 1997 1119 CC REG ITEM 09GTO:
FROM:
DATE:
SUBJECT:
AGENDA REPORT
CITY OF MOORPARK
The Honorable City Council
Steven Kueny, City Manager
/35 -a(a7)
ITEM 4. &.
CTT Y OF MOORPART—CAMMMW
.
November 17, 1997 (CC Meeting of November 19, 1997)
Consider Potential Options to City's Parks Maintenance
Assessment District (AD85 -1)
BACKGROUND:
The City Council established Parks Maintenance Assessment
District (AD85 -1) to take effect in the 1985/86 Fiscal Year. The
purpose of AD85 -1 was to fund parks maintenance. It was formed
under the 1972 Lighting and Landscaping Act. The City Council
has authorized assessments in all but two years (1987/88 and
1988/89). In those years, the City Council approved use of a
portion of excess proceeds of taxes (GANN). Such excess GANN
funds no longer exist since the voters increased the City's
expenditure limit in 1988. For a few years after the City's 1983
incorporation, the City was able to use interest income on
developers` park -in -lieu fees. These were funds paid for park
land purchase and improvements in lieu of dedicating land. This
is generally called Quimby funds. The ability to use the earned
interest for park maintenance ended in about 1986.
The Parks Maintenance Assessment for single family homes has
increased from about $15.00 in 1986/87 to about $40.00 in 1997/98
(actual costs about $58.00). Had the $15.00 just gone up by 5
percent per year for inflation, it would be about $27.00 today.
When the City initiated AD85 -1, it maintained about 12 acres of
parks. AD 85 -1 now includes about 84 acres of parks. (This
includes 1 acre of maintenance area at the 5 -acre Monte Vista
Park) .
1986/87 1997/98 % Increase
# of SFDU 4,000 8,000 100%
# of Acres Maintained 12 ac. 84 ac. 600%
SFDU Assessment $15.00 $40.00 167%
(Actual) ($58.00) (287 %)
In the last few years, the funding to supplement the parks
maintenance assessments came from prior year General Fund savings
not current year General Fund Revenue.
The City's Incorporation Study did not address parks'
maintenance. Primarily, as a result of the effects of
Proposition 13, the County of Ventura placed Glenwood Park in an
assessment district to be funded only by the homeowners in the
tract north of the park. In the approved Mountain Meadows
Planned Community project, the three (3) neighborhood parks were
to be funded by the planned Master Homeowners Association for the
approved 2500 homes until a public mechanism was in place. The
public mechanism is AD85 -1.
At the time of incorporation, the City's calculated property tax
(which is essentially determined by calculating the cost of
expenditures for the services the City will be providing) did not
include consideration of park maintenance. At the time of
incorporation, the City assumed maintenance for the 2.5 acre
Campus Park and within a year the 4 -acre Griffin Park. The 10-
acre Peach Hill Park had been dedicated by the developer, but
there were no plans for improvements and as previously mentioned,
Glenwood Park was to be maintained by an assessment placed on the
homeowners in the tract adjacent to the park. In addition, the
65+ acre community park site in Mountain Meadows was to be
dedicated to the City as a successor to the County, but again
there were no plans for development.
General Fund Revenue is increasing, however, the City continues
to be a low sales tax and property tax City. The City receives
less than eight cents (8G) on each property tax dollar. While
sales tax continues to increase, Moorpark is still ranked 8th or
9th of the County's ten cities on sales tax per capita. At about
$50.00 per capita, Moorpark is only about one -half of the
statewide average. The combined sales tax ($1.4M) and property
tax ($1.3M) are less than the approximate $3M needed for police
services. While cost increases have been as low as 2 percent,
staff usually plans for a 5 percent annual increase for the law
enforcement contract. This could mean an increase of $150,000
for 1998/99.
While the City has a $5.8M General Fund, only about $5M is truly
discretionary.
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$174,300 AB 939
$101,515 Transfer from other funds
$234,000 Grants
$280.000 Recreation program fees
$789,825
Over the last seven years, the deficits in the State of
California's budgets and other state actions have had negative
impacts on the City's traditional revenue sources. As a
reminder, the following historical State actions continue to
impact the City's budget:
1. In the 1990/91 and 1991/92 fiscal years, the County was
given the authority to impose booking fees and property
tax administration fees. The imposition of booking
fees was subsequently discontinued by Ventura County as
part of a settlement agreement with the 10 cities. The
property tax administration fee continues;
2. Phasing in of a two -year elimination of the cigarette
tax subvention;
3. Diversion of 50% of the non - parking violation court
fines;
4. Reduction of the vehicle license fee (VLF) subvention
by 18.75 %; and
5. Taking, in FY 1992/93, of $140,000 or property tax from
the City as well as $40,000 from the then litigation
restricted Redevelopment Agency. As a low property tax
city, Moorpark did not suffer any further revenue
losses in FY 93/94 or FY 94/95 but did not have the
previous cuts restored.
The combined loss in revenue and increase in fees has an impact
of nearly $400,000 each year to the City's budget.
In November 1996, California voters passed Proposition 218 (Prop.
218) known as the Right to Vote on Taxes Act. This law affects a
number of provisions related to taxes and assessments. Its
immediate practical effect on Moorpark is that it made the City's
existing AD85 -1 method of assessment void after the 1997/98 FY.
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In June and July of 1997, the City Council took action to place
Measure P, a special tax for parks maintenance, on the November
1997 ballot. It generally followed the current method of
assessment used in AD85 -1. Consistent with Prop. 218, Measure P
required a 2/3 vote for passage. It failed to achieve the
required 2/3 majority, receiving only about 55 percent of the
vote.
DISCUSSION:
As previously indicated, the AD85 -1 assessments have been offset
for the past few years by prior savings from the General Fund.
Most recently, $179,000 have been set aside from 1996/97 and
1995/96 savings to be used to lower assessments in 1997/98.
$169,000 was set aside for use in 1998/99 for this same purpose.
In order to maintain status quo without regard to inflationary
increases, for not only parks maintenance but also General Fund
financial services, the City needs about $600,000 in 1998/99 and
$800,000 a year thereafter. Anticipated cost increases for
ongoing operations will add to this difficult task.
There are several options to consider to address the projected
funding shortfall for 1998/99 and subsequent years. They are as
follows:
1. Request Voters to Consider one or more Ballot Measures:
Such a measure(s) could be placed on either the June or
November 1998 ballot and consolidated with the County. A
June election requires filing with the County by January
1998. A November 1998 election will require filing by June
1998. If this option is chosen, I would recommend November
to allow more time to study available options. There will
probably be a higher voter turnout in November. Waiting
until November would require the adoption of at least an
interim 1998/99 FY Budget prior to the election. The City
Council could consider special or general taxes including
parcel tax, business license tax, or utility users tax,
among others. All would require a 2/3 voter approval. The
City can also revisit the possible use of a special
assessment for parks maintenance following the procedures
required by Prop. 218. City staff will revisit the basis on
which a few other cities used this to validate their parks
maintenance assessments.
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2. Use of General Fund Reserve: The City has not substantially
increased its reserve for several years. The City's policy
has been to maintain the equivalent of one year's General
Fund revenue as a reserve. The City currently has a General
Fund reserve of about $5.4 million. Spending down the
reserve from the General Fund or other funds including
capital projects or the Equipment Replacement Fund for
ongoing operations is not recommended. While this may
appear to be a short -term option, it will be difficult to
replenish it in future years without substantial future
increases in the General Fund and the return of 100 percent
of City revenues previously diverted by the State.
3. Short -Term Savings: Staff is currently reviewing the adopted
budget for potential savings. We will have some salary
savings from vacancies in certain positions. Savings from
the 1997/98 FY would be available for use in 1998/99 but
unless such expenditures are permanently reduced, this would
not yield any benefit in future years. This could include
deferring certain items funded by the 1996/97 surplus such
as the organizational study and canceling City funded
special events, such as the fireworks show. As with any
reduction in services, such actions will come up with an
impact on the City organization and community.
4. Service Level Reduction and Economies: The City Council can
consider a number of potential service reductions not only
for parks and recreation but other City services. This
could run the gamut from reducing the hours park restrooms
and Arroyo Vista Recreation Center are open to closing
parks, or reducing the City's contract police services. As
part of the staff's review discussed in No. 3 above, we will
develop numerous potential actions, their savings and
impacts.
5. Shift Costs to Other Funds: Historically, the City has paid
for many costs from funds other than the General Fund where
appropriate. For example, a portion of the Director of
Community Services is funded by Transportation Development
Act (TDA) funds because this position is responsible for
transit programs. However, TDA funds are not used to fund a
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portion of the Department's Administrative Secretary that
supports the Director nor of the City Manager (or the
Executive Secretary) who provides general direction to the
Director. Any such potential action does have a downside.
TDA funds are to be used first for transit related
activities and the remaining monies can be used for street
purposes. TDA is an important supplement to the City's gas
tax monies since, unlike many cities, we are unable to
supplement the City's capital or maintenance street budget
from the General Fund. The City's philosophy in the past
has been to minimize such heavy use of the special/
restricted funds for other than direct costs because of such
impacts. There are several other similar cases involving AB
939 Gas Tax and Traffic Safety revenues among others that
could be considered but not without long -term implications.
6. New Revenue Sources and Increases in Existing Revenues: I
already mentioned the potential for new revenue as part of
the Ballot Measure option. This, of course, requires voter
approval. There is some potential to increase some fees and
even certain franchises. It should be pointed out that with
deregulation of the electric utility industry, that
franchise fees from Southern California Edison are expected
to decline. There is not a lot of room to increase many
existing fees such as for recreation programs. They are at
market when compared to nearby communities and substantial
increases could result in fewer programs /participants and
thus a net reduction. Staff will consider the potential for
charging youth sports leagues for use of parks.
Many experts feel that there is an increasing likelihood
that the State will return some of the property taxes it
previously took from local agencies. However, this is
subject to political actions (it failed in 1997/98 despite
an improved economy) and continuing growth in the State's
economy. There is also the potential for more unfunded
state mandates and the fear of such funds being frozen (nc
growth) or taken away again.
The City Council could consider changing the current
practice of placing rental income from vacant park land in
the Park Improvement Fund by putting it in the General Fund.
Buttercreek Park, for example, currently is generating about
$11,000 per year. AB 233 will return a larger share of the
fines and forfeitures (traffic tickets for the most part)
revenue to cities. It's too early to forecast what this
means in actual dollars because it's based on the number of
tickets written. Staff will work to develop a reliable
estimate for FY 1998/99. Longer term options which are
predicated on the decisions of others could include modest
increases in property taxes from the dissolution of the
Moorpark Mosquito Abatement District and action by Ventura
Regional Sanitation District (VRSD) to share its property
taxes with member cities and the county. Even though
Moorpark is no longer a member of VRSD, we are working to
receive a portion of the property taxes given to Ventura
County at the time the City detached from VRSD.
Any consideration of new or increases in revenue needs to
consider the City's need for additional revenue without
regard to the loss of AD 85 -1. The City, as already stated,
receives a relatively small amount of property tax and sales
tax. This is further compounded by the State's diversion of
over $400,000 per year from the City. With the City's size
and expected growth, we can expect property and sales tax to
generally grow in proportion to population. While we
anticipate some new sales tax producers, unless we reduce
sales tax leakage and attract out -of -town shoppers, we won't
see significant increases in sales tax revenue.
This report is not intended to focus on questions of growth
and economic development activities, but we must consider
such on the long term as it relates to providing services
within the City's fiscal limitations. Regardless of the
final decision on Specific Plan No. 8 (Messenger), the city
can expect millions of dollars from new development, as a
result of a Settlement Agreement with Carlsberg Specific
Plan, and Development Agreements with Bollinger Development,
Pacific Communities, and future Specific Plan Nos. 1, 2, 9,
and 10, and other projects. Such considerations wouldn't be
fully realized for 10 to 20 years, so they are not a
consideration in the current funding issue.
The above discussion was not intended to be all inclusive but to
provide an overview of the general options. It's likely that a
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resolution to the funding shortfall will involve activities from
most of the options.
As indicated, staff has already worked on items related to all of
the options. We will be prepared to present more specifics to
the City Council in January 1998. The Council could direct this
matter to the Budget and Finance Committee (Mayor Hunter and
Councilmember Wozniak) for review with staff to return to the
City Council with a full range of options and recommendations by
a date certain. The Council may want to consider reviewing such
a report at one or more meetings dedicated to this matter. In
the event the Council is interested in a June 1998 election,
specific direction should be provided now to allow sufficient
time to prepare the requisite documents.
In summary, there are a number of potential actions available.
It is my belief that reducing existing General Fund services by
$600,000 to $800,000 will severely impact service levels and the
amenities and benefits of living in Moorpark.
STAFF RECOMMENDATION:
Direct staff as deemed appropriate.
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