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HomeMy WebLinkAbout07 - Open Space Assessment District9-x_93 TO: FROM: CITY OF NEWPORT BEACH OFFICE OF THE CITY MANAGER April 12, 1993 Honorable Mayor and Members of the City Council Kevin J. Murphy, City Manager �v SUBJECT: OPEN SPACE ASSESSMENT DISTRICT CITY COUNCIL Agenda Item No. 2 CITY Of NEWRL"i 1 s 7 19M PURPOSE To seek City Council approval of a Resolution authorizing the preparation of an Engineering Feasibility Study, at no cost to the City, for the possible creation of an assessment district pursuant to the Landscaping and Lighting Act of 1972 for the acquisition, improvement and maintenance of two open space sites in the City. Facts 1. Over the past two years there has been an interest expressed by the members of the Newport Conservancy and others for the acquisition of additional open space now owned by the Irvine Company and planned for future residential development. The City Council late last year approved the Circulation Improvement and Open Space Development Agreement between the City and The Irvine Company for 11 remaining vacant parcels owned by the Irvine Company. Within that agreement it provides that The Irvine Company may sell two of these sites, Newporter North and the Upper Castaways, for open space purposes. 2. On October 12, 1992 at the City Council Study Session the Council discussed financing options for open space acquisition. A copy of the report that accompanied that discussion is attached. Since that meeting the Council's Open Space Committee has met to discuss this item with Mackenzie Brown, an attorney specializing in municipal debt financing, and representatives from Willdan Associates. Willdan Associates is an Orange County based engineering firm that specializes in many areas of engineering, including assessment district formation. 3. Recently City staff requested a letter opinion from Mackenzie Brown on whether the State "Landscaping and Lighting Act of 1972" can be utilized for the acquisition, improvement and maintenance of open space. Mr. Brown's letter opinion is attached and refers in detail to a recent California Supreme Court decision on this issue. 4. Following the approval of the Circulation Improvement and Open Space Agreement, The Irvine Company and the Newport Conservancy have been actively discussing the sale of the two parcels. The City's appraisal from 1992 completed by George Jones which estimated the value of the two parcels at approximately $80 million has recently been updated at the expense of The Irvine Company and the Conservancy. It now estimates the value of the two parcels at approximately $69 million. The two parties have recently been discussing a purchase agreement at a number substantially below the appraised value and according to the parties it is expected that an agreement will be reached in the next few weeks. 5. If The Irvine Company and the Newport Conservancy are able to reach an agreement then it is the intent of the Conservancy to ask the City Council to place on a ballot in November the possible purchase of the land by the City from the Conservancy. The ballot measure would ask the voters to finance the acquisition, improvement and future riiaintenance of the site. 6. As discussed in the October 1992 memorandum there are many possible methods to finance the acquisition of these parcels including cash, general obligation bonds, certificates of participation, Mello -Roos Bonds or Assessment Districts. After reviewing all of the options it is staffs' recommendation that the best method for public acquisition of the open space is through an assessment district under the legal auspices of the Landscaping and Lighting Act of 1972. 7. In order to consider the formation of an Assessment District pursuant to this State law, the City Council must first request that an Engineering Feasibility Study be completed and contain all of the following: a. Plans and specifications for the improvements. b. An estimate of the costs of the improvements. C. A diagram of the assessment district. d. An assessment of the estimated costs of the improvements. e. If bonds or notes will be issued, an estimate of their principal amount. 8. In addition to the above, the Engineering Study must include a plan for how the assessment district proposes to spread the assessment among the various property owners included within the district. It is this area of the study that will undoubtedly undergo the most scrutiny by the City Council. If this matter is to be placed on a special November 1993 ballot, then an election must be called in July 1993. It is suggested that the ballot measure would ask the voters for their advice on the formation of such a district. In order to provide sufficient lead time to look at various alternatives for the manner by which an assessment might be spread among the property owners, it is essential that the Engineering Feasibility Study begin immediately. This will allow the City Council to review the work and determine whether to proceed with an election and the formula to propose to the voters. It is expected that this review would take place during the months of May and June. 9. The Newport Conservancy and The Irvine Company have indicated a willingness to pay the full cost of the Engineering Feasibility Study at this time. If an Assessment District is ultimately created after voter and Council approval then the cost of this study would be reimbursed through the district. It is expected that the study would cost in the range of $12,000-$20,000 depending on the extent of the alternatives explored by the City and Conservancy. RECOMMENDATION The City Council approve a Resolution authorizing Willdan Associates to prepare an Engineering Feasibility Study on the formation of an Assessment District for the acquisition, improvement and maintenance of Open Space. F. MAt7C mie RE;J",P WARREN B. DIVEN DANIEL 5.1•IENTSUKB ROBMT E. HuSELL $A MOPMbDNAL CKWI AT'ION LAW Omcw BROWN, DIVEN & HENTSC' 4KE 12770 Hm Bu;w r*tvg, Sulu 250 LEAN DOW, CALIAXNK 92134 (619) 45&1915 FAX 254.0292 MEMORANDUM TO: KEVIN PIURPHY, CITY MANAGER CITY OF NEWPORT BEACH RCBER;' BURNHAM, ESQ., CITY ATTORNEY CITY OF NEWPORT-SEA;H FROM: MAC BROWN DATE: 4/7/93 RE: 1972 ACT/OPEN SPACE ACQUISITION r 0 2 Np wPORT BEAM (715) 551-1915 Los ANoEus (2 13) 587.19is The question presented is whether the "Landscaping & Lighting Act of 1972" (Streets and Highways Code §22500, et �.) (the "1972 Act") can be utililized for the purpose of levying assessments to acquire parkland and open space properties within the incorporated limits of the City. The 1972 Act is a special assessment district statute and thus does not create a separate legal, political entity or agency like a Redevelopment Agency or parking Authority, but is strictly a financing statute available to cities which allows the financing of authorized public improvements and maintenance through the levy of assessments on benefitted properties, with the costs and expenses specifically being apportioned in accordance with the special and local benefit that each parcel receives from the improvement. Streets and Highways Code §22525 specifically autho- rizes the acquisition of improvements and further defines improvements as being park or recreational improvements, including open space. A recent California Supreme Court decision, William F. Knox v. the Cit of Orland, 4 Cal.4th 132 involved a special assessment l-vy or par ma ntenance purposes under the 1912 Act, and the court concluded that the maintenance of the existing perks was within the scope of the defined improvements as authorized by the 1972 Act and further that the assessments were valid benefit assessments and not subject to the Article XIIIA special tax requirements. In that case, the first issue concerned the authorized scope of the improvements and the Court referred to the previously 'referenced Section 22525 and stated that the installation of park improvements and/or open spate was an expressed purpose autho- rized by the statute. In addressing the question of benefit, the court stated that the determination of the legislative body relating to the findings of benefit shall be conclusive in the absence of fraud or prejudicial abuse of discretion, and any challenge should be 64-07-93 09 - 4 i Alii 4R0MI D /"-,H f P03, based upon the record as iresented to the City Council. In the Orland case, the city's study of park use d confirm that residents from the geograp�ii cal areas of the assessment district would use the facilities to the same degree, thus receiving nearly equal benefits from the availability of the improvement, thus justifying a relatively equal uniform per dwelling unit assessment. It should be noted that in that case the improvements constituted an active playground, i.e., pool, playground, tennis. courts, etc.; however, the language did indicate that a well-maintained open parkland does contribute to the attractiveness of the district. Another issue discussed in the case is whether or not the levy of the assessments was a valid special assessment or was a disguised special tax, thus requiring a 2I3's voter approval for authorization. The court upheld the validity of the special assessment, indicating that a special benefit was conferred upon the property inasmuch as parks do provide a special benefit to the properties, and thus the property owners should pay their proportionate fair share. The court did indicate the existence of a lengthy history of cases recognizing that parks do constitute the proper subject for special assessments, and indicated that the property owners within the boundaries of the district would uniquely benefit by the proximity of these facilities to their property, and that the facilities would enhance the value of their properties, again stating that the presence of well- maintained open parkland contributes to the attractiveness of the area, etc. Other issues to resolve in conjunction with any special assessment district would also be the following: 1. Are all properties that receive a special benefit from the improvement or acquisition included within the boundaries of the assessment district? It is recognized that properties outside the district could receive incidental benefit from the improvements, It is clearly obvious that people outside the boundaries cf the assessment district will also gain the advantage of the facilities. 2. A rule of all special assessments is that the assessments must be apportioned in accordance with the benefits received from the facility. The above two questions must be referred to a competent assessment engineer, who would have the responsibility for determining and recommending the boundaries of the assessment district, as well as the proper apportionment and benefit distribution of the costs. In conclusion please note: 1. The 1972 Act specifically authorizes the levy of assessments and issuance of bonds for purposes of acquiring land for park, recreational or open space purposes. 2. The questions relating to benefit, the apportionment of the charges and the boundaries must be referred to the -assessment engineer.