Item 10-A
Council Meeting: 6/17/97 Santa Monica, CA
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Recommendation to Hold a Public Hearing to Confirm
Assessment Costs for the FY 1995-96 Annual Street
Resurfacing Program and Appurtenant Work on Various
City Streets Including the Assessment of Non-Profit
Organizations
Introduction
This report recommends that the City Council hold a public
hearing to confirm the assessment costs for work done as part of
the FY 1995-96 Annual Street Resurfacing Program and to hear
protests regarding the completed work. These improvements were
performed at various commercial, industrial and residential
locations. The report also presents a recommendation regarding
assessment of non-profit organizations.
Background
On April 8, 1997, City Council approved Resolution 9134(CCS),
setting a public hearing on May 27, 1997. The FY 1995-96 Annual
Street Resurfacing Program included at various locations in the
City: concrete gutter construction, street resurfacing, slurry
sealing, parkway pavement removal, curb ramp construction, alley
reconstruction, and curb, gutter, sidewalk and driveway repairs.
The criteria used to determine the streets to be included in that
year's program and the method of repair included: age, drainage
problems, surface and subsurface conditions, complaints received,
type of use (i.e., commercial or residential), current traffic
volume and projected change of use or traffic volume of the
streets. To assist in attaining a sustainable City, 100% of the
existing pavement was recycled and approximately 10,000 used
tires were added to the asphalt mix used in the resurfacing.
When street improvements are constructed the City offsets a
portion of the costs by creating assessment districts. Assessment
districts are areas that receive a special benefit from the
improvement. Various State statutes authorize and govern the
formation of such districts. For street improvements, the City
relies upon the Improvement Bond Act of 1911 (The Act). The Act
allows an assessment against all properties benefiting from the
improvement work and authorizes the creation of liens against
benefitted properties and the issuance of bonds.
Under current City policy, adopted in 1979, residential
properties are assessed at one half the cost of removal and
replacement of damaged curbs, sidewalks, driveways, and parkway
pavement. Residential properties are not assessed for new
concrete gutter construction or street resurfacing. In contrast,
commercial and industrial property owners are assessed the full
cost of the repairs. Non-profit organizations are categorized
with commercial and industrial property for the purposes of
assessment.
Discussion
On December 28, 1995, notices of the City's intent to form a
street resurfacing assessment district and hold a public hearing
were posted and mailed in accordance with State law to all
affected property owners. The public hearing was held on
February 13, 1996, and a number of non-profit organizations
appealed to the City Council for exemption from the assessment.
After closing the public hearing, the City Council ordered the
work to commence and requested that staff make recommendations
regarding the status of non-profits.
The Annual Street Resurfacing Program is complete and property
owner assessments are now due. A public hearing to confirm the
assessment costs must be held pursuant to Section 5882 of the
California Streets and Highways Code. All affected property
owners were notified of the public hearing date and the
assessment amount on April 10, and April 28, 1997. The
assessment map, list of property owners (including non-profit
organizations), and assessment amounts for all residential and
non-residential properties are attached.
The unit assessment costs include staff time to conduct
engineering surveys, posting and mailing notices, construction
management, inspections, and construction.
Owners of corner lots where the legal address is the street being
repaired pay 100% of applicable repair work. If the legal
address is the adjacent street, property owners pay 50%. Corner
lots have the potential of being assessed for both sides of their
lot if both streets are repaired. This policy eases the impact
on corner lots by assessing 100% on one street and 50% on the
cross street.
The assessments related to street resurfacing for commercial and
industrial properties are based on linear footage of street
frontage, ignoring the width of the street adjacent to their
property. A typical assessment for a commercial or industrial
property owner with a 50-foot wide lot is $1,075 for street
resurfacing and $1,150 for new concrete gutter construction.
The areas included in the assessment district were properties at:
RESURFACED STREETS, RECONSTRUCTED ALLEYS, AND CONSTRUCTED
CONCRETE GUTTERS (Commercial and Industrial Properties Assessed
including non-profits) ON:
Street Limits
4th Court Wilshire Boulevard to Arizona Avenue
4th Court Arizona Avenue to Santa Monica Blvd.
5th Court Wilshire Boulevard to Arizona Avenue
5th Court Arizona Avenue to Santa Monica Blvd.
5th Court Broadway to Colorado Avenue
Hill Street Main Street to 6th Street
Ocean Avenue Arizona Avenue to Pico Boulevard
Ocean Park Boulevard Lincoln Boulevard to Highland Avenue
Urban Avenue Pico Boulevard to 265' north of Pico
Blvd.
SIDEWALKS, DRIVEWAYS, AND CURBS REPAIRED; PARKWAY PAVEMENT
REMOVED (Commercial, Industrial, and Residential Properties
Assessed including non-profits) ON:
Street Limits
Carlyle Avenue 9th Street to Euclid Street
Hill Street Main Street to 6th Street
Hollister Avenue 5th Street to 6th Street
Marguerita Avenue 4th Street to 7th Street
Ocean Avenue Arizona Avenue to Pico Boulevard
Ocean Park Blvd. Lincoln Boulevard to Highland Avenue
Urban Avenue Pico Blvd. to 265' north of Pico Blvd.
The assessment district was administered in accordance with the
procedures set forth in the Improvement Act of 1911 of the
California Streets and Highways Code and the Government Code.
Assessment of Non-Profit Organizations
Properties owned by non-profit organizations are treated as
commercial properties because they do not fall under the
definition of a residential property nor serve as the primary
residence of a citizen of the City of Santa Monica. As to this
assessment, the costs to be charged to the non-profit
organizations totals $112,701 (ranging from $2,300 to $27,000
each).
For comparison purposes, non-profit organizations are responsible
for paying 100% of all other City fees, charges, and taxes. While
some non-profit organizations may qualify for an exemption from
property taxes, they remain responsible for payment of all taxes
related to improvements to their property and special district
assessments which appear on the property tax bills. An exemption
for non-profits would shift the costs of the improvements to the
taxpayers who support the City's General Fund.
Staff recommends that the Council not exempt non-profit
organizations from the assessments. Staff believes this is the
appropriate policy direction for several reasons. First, staff
contacted ten other jurisdictions, including the other Westside
cities, and none had a policy to exempt or provide a reduced rate
for non-profit organizations for street assessments. Second,
this policy treats non-profits consistently in that non-profits
have had to pay assessment costs historically. Third, with
passage of Proposition 218, voters indicated that they do not
support blanket exemptions from assessments. If the Council
exempts non-profit organizations from the current project, it
will constitute a blanket waiver. Fourth, by exempting non-profits, the Council would treat them more favorably than
residents in the assessment process. And finally, if the waiver
was adopted, the costs for the non-profits, including religious
organizations, would be paid for using General Fund revenues
which are supported by City taxpayers.
Budget/Financial Impact
The total revenue from this assessment is $585,767.73. Alley
reconstruction, gutter construction, street resurfacing, sidewalk
repair, driveway repair, and curb repair assessments for non-residential properties will generate $418,375.23 and will be
deposited in Trust Account No. 80-000-00000-9750-04392, pending
payment to the contractor. Payment is due within 30 days of
invoicing. After 30 days, a lien will be placed on
commercial/industrial properties with unpaid assessments and
serial bonds bearing an interest rate of 8.75% will be issued.
These properties will then be able to pay for their assessed
costs to the bond holder over a ten year period. Additional
revenue in the amount of $167,392.50 for the repair of sidewalks,
driveways and curbs, and the removal of pavement in parkway areas
for residential properties will be deposited in Revenue Account
No. 01-500-421-00000-0179-10000, "Sidewalk Repair Revenue." Any
unpaid assessments will be placed on the 1997-98 property tax
roll by the Los Angeles County Assessor's Office.
Recommendation
Staff recommends that the City Council:
1. Open the public hearing;
2. Close the public hearing;
3. Adopt the resolution confirming the assessment costs for
all properties.
Prepared by: Susan E. McCarthy, Assistant City Manager
Craig Perkins, Director of Environmental and Public Works
Management Department
Anthony Antich, P.E., City Engineer
Attachment (available at the Santa Monica City Clerk's Office or
at any of the Santa Monica Public Libraries): Resolution
Street Superintendent's Report
Property Owners' list and amounts
Notices of assessment and time of Public Hearing
RESOLUTION NUMBER
(CITY COUNCIL SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
APPROVING THE ASSESSMENT MAP (DIAGRAM) AND CONFIRMING ASSESSED
COSTS FOR CONCRETE GUTTER CONSTRUCTION, STREET RESURFACING AND
THE REPAIR OF DAMAGED SIDEWALKS, DRIVEWAYS AND CURBS, AND THE
REMOVAL OF DAMAGED PARKWAY PAVINGS AND APPURTENANT WORK ON
VARIOUS CITY STREETS IN CONJUNCTION WITH THE FY1995-96 STREET
RESURFACING PROGRAM
WHEREAS, the City of Santa Monica, pursuant to Sections 5100
and following of the Streets and Highways Code, commenced
proceedings to resurface streets, construct concrete gutters,
repair sidewalks, driveways, and curbs and remove damaged parkway
pavings and appurtenant work on:
RESURFACED STREETS, RECONSTRUCTED ALLEYS, AND CONSTRUCTED
CONCRETE GUTTERS (Commercial and Industrial Properties Assessed)
ON:
Street Limits
4th Court Wilshire Boulevard to Arizona Avenue
4th Court Arizona Avenue to Santa Monica Blvd.
5th Court Wilshire Boulevard to Arizona Avenue
5th Court Arizona Avenue to Santa Monica Blvd.
5th Court Broadway to Colorado Avenue
Hill Street Main Street to 6th Street
Ocean Avenue Arizona Avenue to Pico Boulevard
Ocean Park Boulevard Lincoln Boulevard to Highland
Avenue
Urban Avenue Pico Boulevard to 265' north of Pico
Blvd.
SIDEWALKS, DRIVEWAYS, AND CURBS REPAIRED; PARKWAY PAVEMENT
REMOVED (Commercial, Industrial, and Residential Properties
Assessed) ON:
Street Limits
Carlyle Avenue 9th Street to Euclid Street
Hill Street Main Street to 6th Street
Hollister Avenue 5th Street to 6th Street
Marguerita Avenue 4th Street to 7th Street
Ocean Avenue Arizona Avenue to Pico Boulevard
Ocean Park Boulevard Lincoln Boulevard to Highland Avenue
Urban Avenue Pico Boulevard to 265' north of
Pico Blvd.
WHEREAS, the proceeding is more fully described in
Resolution of Intention Number 8988 (CCS) adopted by the City
Council on February 13, 1996; and
WHEREAS, the contract for the above-described work has been
fulfilled to the satisfaction of the Superintendent of Streets;
and
WHEREAS, the Superintendent of Streets has made an
assessment to cover the sum due for the work performed and
specified in the contract; and
WHEREAS, the assessment has been filed with the City Clerk;
and
WHEREAS, City Staff gave the notice required by Sections
5362 and 5363 of the Streets and Highways Code; and
WHEREAS, upon the day and hour fixed for hearing by the City
Clerk, the City Council of the City of Santa Monica shall hear
and pass upon any and all objections, appeals, and protests,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS:
SECTION 1. All objections, appeals and protests of every
kind and nature to the confirmation of assessment of costs are
hereby overruled and denied.
SECTION 2. The final map (diagram) of property, affected
and benefited by:
RESURFACED STREETS, RECONSTRUCTED ALLEYS, AND CONSTRUCTED
CONCRETE GUTTERS (Commercial and Industrial Properties Assessed)
ON:
Street Limits
4th Court Wilshire Boulevard to Arizona
Avenue
4th Court Arizona Avenue to Santa Monica
Blvd.
5th Court Wilshire Boulevard to Arizona
Avenue
5th Court Arizona Avenue to Santa Monica
Blvd.
5th Court Broadway to Colorado Avenue
Hill Street Main Street to 6th Street
Ocean Avenue Arizona Avenue to Pico Boulevard
Ocean Park Boulevard Lincoln Boulevard to Highland Avenue
Urban Avenue Pico Boulevard to 265' north of
Pico Blvd.
SIDEWALKS, DRIVEWAYS, AND CURBS REPAIRED; PARKWAY PAVEMENT
REMOVED (Commercial, Industrial, and Residential Properties
Assessed) ON:
Street Limits
Carlyle Avenue 9th Street to Euclid Street
Hill Street Main Street to 6th Street
Hollister Avenue 5th Street to 6th Street
Marguerita Avenue 4th Street to 7th Street
Ocean Avenue Arizona Avenue to Pico Boulevard
Ocean Park Boulevard Lincoln Boulevard to Highland Avenue
Urban Avenue Pico Boulevard to 265' north of
Pico Blvd.
all in the City of Santa Monica, as more fully described in
Resolution Number 8988 (CCS) and therein declared to be the
property to be assessed to pay the expense of the improvements,
is approved and the City Clerk is directed to execute the
certificate on the map certifying such approval and to deliver
the map (diagram) to the Superintendent of Streets. SECTION 3. The assessment for:
RESURFACED STREETS, RECONSTRUCTED ALLEYS, AND CONSTRUCTED
CONCRETE GUTTERS (Commercial and Industrial Properties Assessed)
ON:
Street Limits
4th Court Wilshire Boulevard to Arizona
Avenue
4th Court Arizona Avenue to Santa Monica
Blvd.
5th Court Wilshire Boulevard to Arizona
Avenue
5th Court Arizona Avenue to Santa Monica
Blvd.
5th Court Broadway to Colorado Avenue
Hill Street Main Street to 6th Street
Ocean Avenue Arizona Avenue to Pico Boulevard
Ocean Park Boulevard Lincoln Boulevard to Highland Avenue
Urban Avenue Pico Boulevard to 265' N/O Pico
Blvd.
SIDEWALKS, DRIVEWAYS, AND CURBS REPAIRED; PARKWAY PAVEMENT
REMOVED (Commercial, Industrial, and Residential Properties
Assessed) ON:
Street Limits
Carlyle Avenue 9th Street to Euclid Street
Hill Street Main Street to 6th Street
Hollister Avenue 5th Street to 6th Street
Marguerita Avenue 4th Street to 7th Street
Ocean Avenue Arizona Avenue to Pico Boulevard
Ocean Park Boulevard Lincoln Boulevard to Highland Avenue
Urban Avenue Pico Boulevard to 265' north of
Pico Blvd.
as more fully described in Resolution Number 8988 (CCS), be and
the same hereby is confirmed and approved.
SECTION 4. The Superintendent of Streets shall forthwith
attach a warrant to said assessment bearing the date of this
confirmation.
SECTION 5. The assessment roll, warrant, and diagram shall
be recorded in the Office of the Superintendent of Streets, and
immediately thereafter the City Clerk shall file a copy of the
assessment map (diagram) in the Office of the County Recorder,
and thereafter shall record in said Office of the County Recorder
a Notice of Assessment, all in the manner and form prescribed by
Section 3114 of the Streets and Highways Code of the State of
California.
SECTION 6. Assessments not paid to the City within the
specified time shall be sent to the Los Angeles County Assessor
to collect such assessments upon the tax roll which general taxes
are collected.
SECTION 7. The City clerk shall certify to the adoption of
this Resolution, and thenceforth and thereafter, the same shall
be in full force and effect.
APPROVED AS TO FORM:
MARSHA JONES MOUTRIE
City Attorney
SUPPLEMENTAL STAFF REPORT
TO: Mayor and City Council
FROM: City Staff
RE: Discussion of Options for Reducing the Financial
Impact on Non-Profit Organizations from the FY
1995-96 Street Resurfacing Project
INTRODUCTION
On May 27, 1997 after concluding the public hearing, Council
requested that staff investigate options for reducing the
financial impact on non-profit organizations for the FY 1995-96
Street Assessment District and evaluate various possible
eligibility criteria, including the "welfare exemption", for
granting of full or partial assessment waivers to non-profit
property owners. Four options and various eligibility criteria
are presented in this supplemental staff report.
DISCUSSION
A number of options are available for waiving all or a portion of
assessment costs for non-profit property owners. The City Council
can consider the following options if it wishes to reduce the
financial impact on non-profits from assessment charges. A
discussion of possible eligibility criteria for application of
these options is presented later in this report.
Option A. Reduce the assessment cost to eligible non-profits
so that they match the costs charged to
residential property owners. This option would
result in charges being assessed only for
sidewalk, curb, and parkway work. No charges would
be assessed for alleys, streets, gutters, or curb
ramps. Although this option would entail minimal
administrative difficulty, some of the affected
non-profits would see their charges reduced to $0
and others would still face substantial
assessments.
Option B. Fully waive the assessment cost to eligible non-profits. The City's current assessment policies
were developed and approved after the passage of
Proposition 13, as it had become impossible for
streets, sidewalks, curbs, gutters, and alleys to
be adequately maintained in the face of greatly
reduced property tax revenues. Since most non-profit property owners have been exempted from the
payment of property taxes since before the passage
of Proposition 13, the change in the City
assessment policy, which took place in 1979,
placed a new burden on non-profits which may serve
to actually nullify the concept of a property tax
exemption. A full waiver of assessments would
therefore be consistent with the spirit of long-standing state and federal regulations granting
special tax status to non-profits.
Option C. Reduce the interest rate charged to non-profits for
time payment of assessments and/or extend the payment
term for non-profits. These approaches would increase
administrative costs to the City and therefore
constitute a less cost-efficient method to reduce the
financial impact on non-profits than a partial or full
waiver of total costs as is discussed in options A and
B.
Option D. Grant a "financial hardship" waiver (full or
partial) for non-profits. No method for defining
and verifying what would constitute a "financial
hardship" exists and this option would also be
difficult to administer.
Staff examined two possible criteria for eligibility of non-profits for partial reduction or full exemption of assessment
costs. The first is to use the "welfare exemption" from the
payment of property tax. Religious organizations, hospitals, and
educational institutions who own their property and apply for the
exemption annually are eligible for a welfare exemption. A
"welfare exemption" is granted by and registered with the Los
Angeles County Tax Assessors office.
Currently, the City receives the Tax Assessor's information via
computer disk twice per year. The County Assessor places
exemptions into seven (7) different categories. These categories
are specific to the type of exemption the parcel is receiving.
This information is then downloaded into the City's automated
permitting system. In an attempt to determine which properties in
the City have received an exemption, Information Systems Division
staff sorted parcels that received any type of exemption on their
property taxes. This information was cross referenced with the FY
1995-96 street assessment district parcels to determine which
parcels possessed a "welfare exemption."
Staff determined that, according to the Tax Assessor's data, only
3 parcels in the FY 1995-96 assessment district receive any type
of exemption. This was far below the number of organizations that
staff believed might be receiving the exemption. Staff then
contacted the Los Angeles County Tax Assessor's office to
determine if there could be errors in their database. The
Assessor's office informed staff that much of the data provided
to the City might not be current. The lack of accuracy in the
data is due in part to a backlog of information at the Assessor's
office including the dividing and/or combining of parcels and the
volume of property owners seeking exemptions.
Staff has determined that there is no accurate method for the
City to determine which parcels have a "welfare exemption" based
on the deficiencies in the Assessor's database. It appears that
the only feasible method of determining exempted parcels would be
for parcel owners to provide proof/documentation to the City. If
the Council desires to use the "welfare exemption" as a means of
determining the eligibility for waivers from assessment charges,
then staff would need to develop a waiver application and
certification process for those impacted property owners. Such a
process could be completed within 60 days of final Council action
on the FY 1995-96 Street Resurfacing Assessment district.
The second possible eligibility criteria is exemption from City
business license taxes as outlined in Santa Monica Municipal Code
Section 6.04.190. This exemption criteria applies to entities
"organized under California law for charitable purposes" and
"from which profit is not derived, either directly or indirectly
by any person." The Code section requires that before the
exemption can be granted, the non-profit entity must provided
satisfactory documentation to the Finance Director verifying
their non-profit status. Any organization that can produce such
documentation becomes exempt so virtually all non-profit
organizations that own property in the City can be presumed to
qualify for exemption. Staff believes that this criteria is the
preferred approach from the standpoint of ease of administration
and consistency with existing City practices and policies. A
process to determine eligibility under this criteria could be
completed within 60 days.
BUDGET/FINANCIAL IMPACT
It is not possible to arrive at more than an approximate estimate
for the financial impact from implementation of any of the above
options. However, staff estimates that a full waiver of
assessment costs for eligible non-profits would increase the
costs of the FY 1995-96 Street Resurfacing project to the City by
$100,000 or less.
RECOMMENDATION
Staff recommends that Council adopt a policy to fully waive the
assessment cost to eligible non-profits (Option B) as described
above using the provisions of Municipal Code Section 6.04.190 as
the eligibility criteria and direct staff take any necessary
action to return to the City Council in order to confirm
assessments for the FY 1995-96 Street Resurfacing Project.
Prepared by: Craig Perkins, Director of Environmental and
Public Works Management
Roger Gorke, Senior Administrative Analyst, EPWM