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Clarification from the City of Santa Clarita in Response to Alan Ferdman’s Opinion Piece

| Opinion | December 20, 2018

Currently 24,699 property owners pay $81.71 a year for the same streetlight services that 33,664 Santa Clarita property owners are paying just $12.38. These rates are not proportional as required by law. The $12.38 rate requires a subsidy of $2.8 million each year. The $81.71 rate is not subsidized. The annual funding gap of $2.8 million is currently made up by using general property taxes. This action will create proportionality among all parcels and bring the City’s District into compliance.

To answer the questions in Mr. Ferdman’s article:
The City follows State law, specifically the 1996 Right to Vote on Taxes Act, known as Proposition 218. Street lighting and landscape services are both components of the City’s combined Landscape and Lighting District. The City takes a conservative approach in fully complying with Proposition 218 and ballots all affected property owners as part of the same ballot process.

The Ballot Notice provided to property owners was prepared as required by Proposition 218. The Ballot Notice provides a consolidated listing of all Zones within the affected District.

The estimated beginning fund balance for the City’s Streetlight Assessment Fund for Fiscal Year 2018-19 of $14,746,278 includes bond proceeds that are committed to the acquisition of the streetlight system from Southern California Edison and the conversion of lights to LED fixtures. The projected 2018-19 unreserved ending fund balance is $0.00.

The $4,444,513 million transfer out of the Streetlight Assessment Fund is necessary to correct the budget appropriation from the Ad Valorem Fund to the Streetlight Assessment Fund. At no time were bond proceeds transferred outside of the streetlight budget, as use of these revenues are for expenditures related to acquiring the streetlight system and conversion of lights to LED fixtures.

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The City accounts for landscape assessment funds and street lighting assessment funds separately. The City prepares its annual operating budget, as well as the annual Landscape and Lighting Engineers’ Report that authorizes the levying of assessments, in accordance with state law.

The $2.8 million is a subsidy. Ongoing streetlight assessment revenues are not adequate to support all Streetlight District operational and reserve funding requirements. This creates an annual funding gap of $2.8 million that the City covers by using general property tax revenues.

Property owners within some local LMD zones previously financed local park maintenance with funds from both their LMD assessment and their property tax. This two-tiered funding created an inequity.

To correct this disparity, the City shifted park-related maintenance costs from local LMD zones to the Area Wide Zone that covers nearly the entire City.

Again, the City takes a conservative approach in fully complying with Proposition 218. Article XIIID, Section 4e of the California Constitution expressly states, “In tabulating the ballots, the ballots shall be weighted according to the proportional financial obligation of the affected property.”

No pending development projects have been included in this ballot process.

The City’s estimated Edison operational costs for 2018 are in excess of $3.0 million, as compared to approximately $1.1 million when the City assumed streetlight operations in 1999. The City will assume ownership and maintenance of the streetlight system and begin converting all streetlights to LED fixtures in early 2019.

In March of 2018, the City issued approximately $15 million in bonds to finance the purchase of the system and to upgrade to LED fixtures. Anticipated operational savings will pay down these bonds and allow the City to pass along future savings by reducing the streetlight assessment in equally among all property owners.

Items placed on the Consent Calendar can be discussed at City Council meetings. A member of the public can speak on a consent item to get clarification, ask questions or raise issues. Items on the Consent Calendar are always open for public discussion.

I would like to invite Mr. Ferdman, or anyone else who has questions on this process, to reach out to me at clujan@santa-clarita.com or (661) 255-4314.

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