SUMMARY
The 2021-2022 El Dorado County (County) Grand Jury investigated the El Dorado Hills (EDH) Community Services District’s (CSD) management of Landscape and Lighting Assessment Districts (LLAD).
The investigation focused on the following questions:
Are the David Taussig and Associates (DTA) Annual Engineer’s Reports (ER) for Fiscal Years (FY) 2019-2020, FY 2020-2021, FY 2021-2022 understandable and complete, and do they correctly calculate the LLADs’ assessments?
Is there a defined, functioning, and understandable LLAD complaint and assessment appeals process for parcel owners to follow?
For LLAD improvements that generate rental income, is this income credited to the underlying LLAD to offset costs?
Is there a conflict between the interests of EDH CSD Board (Board) and the individual LLADs?
BACKGROUND
The EDH CSD is authorized as a local agency by the Landscaping and Lighting Act of 1972 (§22500 et seq. of the Streets and Highways Code), to create smaller districts in its boundaries for assessment purposes. An LLAD is a local community service district created and governed by those provisions.
LLAD parcel owners supply EDH CSD funding for maintenance and improvement of landscaping and lighting facilities, including parks within each LLAD’s boundaries. The
amount paid by each parcel is not based on the value of the parcel; it is a benefit assessment based on the benefit the parcel receives from the improvements.
The EDH CSD was formed by the County Board of Supervisors (BOS) in 1962 for the provision of parks, fire services, median improvements, and other local services. Prior to the creation of LLADs in 1972, maintenance costs for parks and other improvements, such as landscaping, medians, and entrance signs, within the boundaries of the district were the responsibility of the CSD and paid from the General Fund. With the creation of LLADs, the maintenance costs are now paid by the specific LLAD assessments.
When a new housing development is built in EDH, the builder pays the County a park impact fee for each lot to be developed. These funds are set aside, held by the County, and distributed to the EDH CSD to pay for the building of a public park and/or other improvements within the new development. LLAD parcel owners’ benefit assessments are used to pay for only the maintenance of these improvements, not for the initial construction.
The determination of the improvements that will be built usually occurs between the County (that determines land use, approves the housing development, and imposes the conditions and fees), the developer (that provides the land and funding to build the park) and EDH CSD (that may decide where new parks are needed in its boundaries, decides what facility and/or improvements are needed at the parks and frequently contracts for the design and construction of the parks). The County’s standard conditions make the developer responsible for the maintenance, repair, and replacement of all landscaping improvements until maintenance is assumed by EDH CSD not less than 90 days after notice of completion. For smaller housing developments, the builder is NOT responsible for building the park and are only required to pay fees.
Before EDH CSD agrees to accept the improvements or the new park and assumes the maintenance responsibility, EDH CSD may require the developer to create a maintenance funding mechanism. The funding mechanism, known as an LLAD, is created by the parcel owners signing a Waiver and Consent document. Initially, the developer is the sole parcel owner if no parcels have been sold.
The LLAD formation document sets the boundaries, establishes an initial maximum assessment amount, approves the payment of annual assessments, lists if an annual inflationary factor will be applied to the maximum amount, and waives some of the rights originally conveyed to California parcel owners within Proposition 218, adopted in 1996. Proposition 218 required a vote by parcel owners (usually a developer at formation time), to approve annual assessment increases, however, when forming the LLAD, parcel owners can agree to waive the requirement to vote for subsequent increases. With this change, a vote by LLAD parcel owners would only be required to modify the provisions of the governing documents, such as boundary changes or the addition of new improvements….
