CITY OF PALMDALE. REPORT to the Mayor and Members of the City Council from the City Manager

CITY OF PALMDALE REPORT to the Mayor and Members of the City Council from the City Manager DATE: SUBJECT: May 4, 2016 Approval of Engineer's Report for the City of Palmdale Drainage Benefit Assessment Districts No. 1 and No. 2006-02, providing intention to continue to levy annual assessments and giving notice of a public hearing for fiscal year 2016/2017 ISSUING DEPARTMENT: Public Works SUMMARY Issue: Shall the City Council approve the following resolution providing intention to continue assessments, to preliminarily approve the annual Engineer's Report, and to provide notice of the annual public hearing for the City of Palmdale Drainage Benefit Assessment Districts No. 1 and No. 2006-02? Recommendation: Staff recommends approval of Resolution No. CC 2016-034. Fiscal Impact: The Engineer's Report indicates the proposed assessments for the City of Palmdale Drainage Benefit Assessment Districts No. 1 and No. 2006-02. For fiscal year 2016/2017, the amount of the assessments for the Assessment Districts is increased by 2.41 %, based on the increase of the February 2015 to February 2016 CPI of 2.41 /o. The proposed total assessment for both Districts for fiscal year 2016/2017 is $113,766.

Report to Mayor and Council Palmdale DBAD May 4, 2016 Page 2 BACKGROUND The Anaverde Master Planned Community (Drainage Benefit Assessment District No. 1, formed in 2004), and Ritter Ranch Master Planned Community (Drainage Benefit Assessment District No. 2006-02, formed in 2007) developments required the formation of a drainage benefit assessment district as a condition of approval in order to provide the funds to maintain the drainage facilities for the developments. As a result, the formation of the Assessment Districts was approved by the property owners (on May 12, 2004 and January 3, 2007 respectively) pursuant to mailed ballot elections conducted in accordance with Article XIIID of the California Constitution. On April 6, 2016, the City Council took the first step to continue assessing the levies for fiscal year 2016/2017 by adopting Resolution No. CC 2016-030, which directed SCI Consulting Group, the assessment engineer, to prepare the combined annual Engineer's Report for the City of Palmdale Drainage Benefit Assessment Districts No. 1 and No. 2006-02 for fiscal year 2016/2017. This Resolution No. CC 2016-034 is the second step the City Council will take, and provides intention to continue the assessments for fiscal year 2016/2017, preliminarily approves the Engineer's Report prepared by SCI, and establishes the date, time and place of a public hearing to receive testimony regarding the continued assessments to be placed on County tax rolls. The third and final step will be the public hearing regarding the final approval of the Engineer's Report and the ordering of the levies for fiscal year 2016/2017 that will be held by the City Council on June 1, 2016. The annual Engineer's Report contains information regarding the special benefit to property owners within the Districts, identifying the methodology for assigning assessments to each parcel, and estimating the cost for improvements. The Engineer's Report establishes the important foundation and justification for the continued collection of the assessments for fiscal year 2016/2017.

Report to Mayor and Council Palmdale DBAD May 4, 2016 Page 3 The purpose of the Drainage Benefit Assessment Districts is to fund the installation, construction or maintenance of any authorized improvements under the Benefit Assessment Act of 1982 (California Government Code Section 54703 et seq.), including, but not limited to, drainage improvements and any facilities which are appurtenant to any of the aforementioned or which are necessary or convenient for the maintenance or servicing thereof. Submitted by: Reviewed by: Guillermo I. Padilla City Engineer Micdt~ Director of Public Works Attachments: 1. Resolution No. CC 2016-034 2. Palmdale Drainage Benefit Assessment Districts No.1 and No. 2006-02 Engineer's Report, FY 2016/2017

CITY COUNCIL CITY OF PALMDALE, CALIFORNIA RESOLUTION NO. CC 2016-034 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE OF INTENTION TO CONTINUE ASSESSMENTS FOR FISCAL YEAR 2016/2017, PRELIMINARILY APPROVING THE ANNUAL ENGINEER'S REPORT AND PROVIDING FOR NOTICE OF HEARING FOR THE CITY OF PALMDALE DRAINAGE BENEFIT ASSESSMENT DISTRICTS NO. 1 AND NO. 2006-02 WHEREAS, the City of Palmdale Drainage Benefit Assessment Districts No. 1 and No. 2006-02 (the "Assessment Districts" or "Districts") were approved by property owners pursuant to several mailed ballot elections conducted in accordance with Article XIIID of the California Constitution, and the nb fit Assessment Act of 1982" (the "Act"), being Chapter 6.4 of Part 1 of Division ~ 5 of the Government Code of the State of California (commencing with Se 3 thereof); and WHEREAS, SCI Consulti roup has been designated as Engineer of Work for purposes of these proceedings (the "Engineer of Work") and ordered to prepare an Engineer's Report in accordance with Article XIIID of the California Constitution; and WHEREAS, the Engineer of Work has filed an Engineer's Report (the "Report') with the City Clerk, copies of which have been submitted to this City Council, which Report contains the following: (a) a calculation of the portion of the services to be provided by the Districts that constitute a special benefit to the parcels in the Districts; (b) a methodology for assigning assessments to individual parcels; (c) a listing of each lot or parcel of property that would be subject to the proposed assessment including public parcels; (d) the estimate of cost for the improvements; and (e) the amount of the proposed assessment for each lot or parcel for the fiscal year 2016/2017. NOW THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF PALMDALE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS: SECTION 1. The foregoing recitals are true and correct.

Resolution No. CC 2016-034 Page 2 of 3 SECTION 2. It is the intention of this City Council to continue to levy and collect assessments within the Districts for fiscal year 2016/2017. SECTION 3. The Report, in the form on file with the City Clerk, is hereby received, filed and preliminarily approved. SECTION 4. The proposed improvements to be made in the Districts may be briefly described as follows: the installation~ construction or maintenance of any authorized improvements under the Act, including, but not limited to, drainage improvements and any facilities which are appurtenant to any of the aforementioned or which are necessary or convenient for the maintenance or servicing thereof. SECTION 5. The general location aries of the Districts are shown on maps on file in the office of the Dir o ubric Works, are incorporated herein by reference, and are open to pu ~ gection. The designation of the Assessment Districts is as follows: Drainage B efit Assessment District No. 1 and Drainage Benefit Assessment District No. 2006-02. SECTION 6. Reference is hereby made to the Report for a full and detailed description of the improvements,. the boundaries of the Districts and the assessments upon assessable lots and parcels of land within the Districts. SECTION 7. The assessments are subject to an annual adjustment tied to the annual change in the Consumer Price Index for the Los Angeles Area as of February of each succeeding year ("CPr'). The change in the CPI from February 2015 to February 2016 was 2.41%, therefore, the maximum authorized assessment rates for fiscal year 2016/2017 are the previous year rate for each District increased by 2.41%. SECTION 8. A public hearing regarding the Engineer's Report, the proposed assessments and the Assessment Districts shall be held by the City Council. on June 1. 2016 at 7:00p.m. or as soon thereafter as the matter may be heard in the City Council Chambers located at 38300 Sierra Highway, Suite B, Palmdale, California.

Resolution No. CC 2016-034 Page 3 of 3 SECTION 9. The City Clerk is hereby authorized and directed to cause a notice of the hearing for the continuation of the assessments for the Assessment Districts to be given by publishing a notice once, at least ten (1 0) days prior to the date of the hearing above specified, in a newspaper circulated in the Districts. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED and ADOPTED this 4th day of May, 2016 by the following vote: ATTEST: James C. Ledford, Jr., Mayor Rebecca J. Smith, City Clerk Approved as to form: Wm. Matt ew Ditzhazy City Attorney

C ry o PRlrvroRr- Dnnrrunc B ru prr AssessMENT DrsrRrcrs Eructn er's R porr FrscAL YEAR 2016/201 7 APR L 2016 PURSUANT To rhe BENEFTT AssEssMENr Acr of 1 982 AND ARTcLE XlllD of THE CALTFoRNTA CoNSTrruïoN ENcTNEER of WoRK: SCtConsultingGroup 4745 MANGELS Bour vrno FRrRfl ro, CALTFoRNTA 94534 PHoNE 707.430.4300 FAx 707.430.4319 www.sct-cg.com

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PAGE i Crv or Pewore CrTY CouNcrL James C. Ledford Jr,, Mayor Steven D, Hofbauer, Mayor Pro Tem lvike Dispenza, Councilmember Roxana Martinez, Councilmember Fred Thompson, Councilmember CITY MANAGER James Purtee PuBLrc WoRKs DTRECToR lvichael J, lvischel, P,E, Crrv ArronHev Wm, Matthew Ditzhazy ENGTNEER of WoRK SCI Consulting Group Lead Assessment Engineer, John Bliss, M,Eng., P,E. C TY of PALMDALE DRATNAGE BENEFTT AssESs[4ENT DrsrRrcrs ENGINEER'S REPORT, FY 201612017 ryrgttconsult nggroup

PAGE ii TABLE of CorurErurs lnlroducïon... 4 BACKGROUND ASSESSMENT DìsTRrcT INVENToRy,,.,,, ENGINEER,S REPORT AND CONTINUATIoN OF ASSESS \ ENTS LEGtSLATtvE ANA1ysts.,,.,,.,,.,.,,.,,..,.,.. 4 4 4 Ã PLANs and SpEctFtcATtoNs... FISCAL YEAR 2016/2017 ESTIMATE of CosT AND BUDGET DTRECT CosTs.,.,.,.,..,..,..,.,..,.1 OTHER CosTS,.,.,.,.,,.,,.,..,,,,.,.1 CoNTRTBUTToN / GENERAL BENEFTT.,.,,.,,.,,.,,.,,,,.,, 1 ANNUALAssEssrvENT NCREASE.,,,.,.,,.,,.,,.,,.,,,,.,, 1 0 METHoD of ASSESSMENT DrscusstoN of 8ENEFtT,,.,,.,.,,..,.,,... SPEcTAL BENEFTT.,. GENERAL VERSUS SpEcrAL BENEFll.,.,,,,..,,.,, QuANTtFtcATloN of GENERAL BENEFTT,.,..,,,., METHoD of AssEss /ENT,,,,,,,,,.,,.,... DURATTON 0F AssESSr\ ENT,,,,.,,.,,.,... APPEALS AND INTERPRETATION CERTtFtcATEs.. Ã ô I,.','''2, APPENDTx A - ASSESSMENT R011,,......24 AppENDrx B - DRATNAcE BENEFTT DrsrRrcrs......25 AppENDrx C - DRATNAcE BENEFTT DrsrRrcrs ASSESSMENT AMouNTs...,,.,.,.,.,,,.,,.,,.,,,,,.,.,,26 CtTY of PALMDALE DRATNAGE BENEFTT AssESstvENT DtsTRtcTS ENGTNEER's REPoRr, FY 201612017 ffie SClConsultingGroup

PAGE ii Lrsr o TeeLes TABLE 1 - ASSESSI ENT DISTRIOT No. 1 -FY 201612017 BUDGET SU /MARY.,..,..,.,,.,., TABLE 2 - ASSESS[4ENT DISTRIOT No. 2006-02 - FY 2016/2017 BUDGET SUMMARY.,., TABLE 3 - CALoULAïoN of GENERAL BENEFTT,.,.,,.,,.,,..,.,, I,..,,,10.,...,17 Lrsr o Frcunes FTGURE 1 - AssEss[,4ENT DrAGRAM...,..,,,13 CllY of PALMDALE DRATNAGE BENEF TAssESs[,1ENT DtsTR crs ENGINEER,S REPoRT, FY 201612017 $ÕiConsultingGroup

PAGE 4 l tnoouclot BAcKGRoUND The City of Palmdale (the City") provides maintenance and servicing of certain publicallyowned stormwater detention and drainage basins throughout the City, ln order to fund the maintenance of these projects and improvements (the "ìmprovements"), the City has formed two Drainage Benefit Assessment Districts (the "Assessment Districts" or "Districts") covering an area of approximately 6,600 acres and over 1,470 parcels, The Assessment Districts have been formed and the levies have been made pursuant to Section 54703 ef seq, of the California Government Code, commonly known as the Benefit Assessment Act of 1982 (the "Act"), and Article XlllD of the California Constitution (the "Article"), ASSESSMENT DISTRIcT INVENToRY Palmdale Drainage Benefit Assessment District No, 'l (Anaverde Master Planned Community, DBAD No, 1) is located within the Anaverde lvaster Planned Community at Avenue S and approximately 20tt Street West, Drainage Benefit Assessment District No, 2006-02 (Ritter Ranch Master Planned Community, DBAD No. 200ô-02) is located along Elizabeth Lake Road and west of the Anaverde Community, These Assessment Districts were formed in previous years, The Anaverde DBAD No, 1 was formed ìn 2004, and Ritter Ranch DBAD No. 2006-02 was formed in 2007, These developments required the formation of a drainage benefit assessment district as a condìtion of approval in order to provide the funds to maintain the drainage facilities for the developmênts, As a result, the formation of the Assessment Districts was approved by the property owners (on May 12, 2004 and January 3, 2007 respectively) pursuant to mailed ballot elections conducted in accordance with Article XlllD of the California Constitution. ENGINEER's REPoRT AND CoNTINUATIoN of ASSESSMENTS In each subsequent year for which the assessments will be continued, the Palmdale City Council ("Council") must direct the preparation of an Engìneer's Report ("Report"), budgets, and proposed assessments for the upcoming fiscal year. After the Report is completed, the City Council may preliminarily approve the Engineer's Report and the continued assessments and establish the date for a public hearing on the continuation of the assessments, Accordingly, this Engineels Report was prepared pursuant to the direction of the Council, As required by the Act, this Report includes plans and specifications, a diagram or map of the Drainage Benefit Assessment Districts showing the boundary of the Districts, the benefits received by property from the lmprovements within the Assessment Districts, and the method of assessment apportionment to lots and parcels within each Assessment District, CtTY of PALMDALE DRAtNAcE BENEFTTASSESS[4ENT DrsTRrcrs ENGINEER,S REPoRT, FY 201612017 ffi S{: ConsultingGroup

PAGE 5 Beginning in 201012011,SC1 Consulting Group became the Assessment Engineer for these Assessment Districts. To maintain an accurate reference and legally defensible record of the Assessment Districts, pertinent language used in previous engineeis reports has been retained herein and is quoted as appropriate. LEGISLATIvE ANALYSIS PRoPosrTroN 218 The Right to Vote on Taxes Act was approved by the voters of California on November 6, 1996, and is now Article XlllC and XlllD of the California Constitution, Proposition 218 provides for benefit assessments to be levied to fund the cost of providing services, improvements, as well as maintenance and operation expenses to a public improvement which benefits the assessed property, These Assessment Districts were formed after the passage of Proposition 218 and were balloted and approved by property owners in accordance with Proposition 218. SrLrcoN VALLEY TAxpAyERs AssocrATroN, lnc. v. SANTA CLARA CouNTy OPEN SpAcE AUTHoRTTY In July of 2008, the California Supreme Court issued its ruling on the Silicon Valley Taxpayers Association, Inc, v, Santa Clara County Open Space Authority ("SVIA") This ruling is the most significant court case in further legally clarifying the substantive assessment requirements of Proposition 21 8. Several of the most important elements of the ruling included further emphasis that: Benefit assessments are for special benefits to property, not general benefits, The services and/or improvenients funded by assessments must be clearly defíned, Assessment districts must be drawn to contain all parcels that receive a special benefit from a proposed public improvement. Assessments paid in each assessment district must be proportional to the special benefit received by each such parcel from the improvements services funded by the assessment. This Engineer's Report and the process used to establish the continuation of the assessments for fiscal year 201612017 consistent with the SVL4 decision and with the requirements of Article XlllC and XlllÐ of the California Constitution based on the followìng factorsr 1, Each Assessment District is narrowly drawn to include only the properties that receive special benefit from the specific lmprovements. Thus, zones of benefit are not required and the assessment revenue derived from real property in each Assessment District is extended only on the lmprovements in that Assessment District, 2, The lmprovements, which are conshucted and maintained with assessment proceeds in each Assessment District, are located in close proximity to the real property subject to the assessment. ïhe lmprovements store stormwater and CtTY of PAL TIDALE ÐRAtNAcE BENEFTT AssEss[4ENT DtsrRtcTs ENGINEER,S REPoRT, FY 201612017 ffi SülGonsultingGroup

PAGE 6 excess runoff and facilitate its conveyance away from the assessed property thereby preventìng flooding and improving the usability of and access to the assessed property. The proximity of the lmprovements to the assessed parcels and the increased usability, safety, and access provided to the residents of the assessed parcels by the lmprovements provldes a special benefit to the parcels being assessed pursuant to the faclors outlined by the Supreme Court ìn that decision. 3, Due to their proximity to the assessed parcels, the lmprovements financed with assessment revenues in each Assessment Distrìct benefit the properties in that Assessment District in a manner ditferent in kind from the benefit that other parcels of real property in the City derive from such lmprovements, and the benefits conferred on such property in each Assessment Diskict are more extensive than a generaì increase in property values. 4, The assessments paid in each Assessment District are proportional to the special benefit that each parcel within that Assessment District receives from the lmprovements because: a, The specific drainage lmprovements and maintenance and utility costs thereof in each Assessment District and the costs thereof are specified in this Report; and b, Such lmprovement and maintenance costs in each Assessment District are allocated among different types of property located within each Assessment District, and equally among those properties which have similar characteristics, such as single-family residential parcels, multi-family residential parcels, commercial parcels, industrial parcels, etc, DAHMs V. DOWNTOWN POMONA PROPERTY 0n June 8, 2009, the 4rh Court of Appeal amended its original opinion upholding a benefit assessment for property in the downtown area of the City of Pomona in Dahms v. Downtown Pomona Property ("Dahms"), On July 22,2009, the California Supreme Court denied review, ln Dahms the Court upheld an assessment that was 100% special benefit (i.e. 0% general benefit) on the rationale that the services and improvements funded by the assessments were directly provided to property in the assessment district. The Court also upheld discounts and exemptions from the assessment for certain properties, BoNANDER v, TowN of TTBURoN 0n December 31, 2009, in Bonander v. Town of Tiburon ("Bonandel'1, the 1st District Court of Appeal overturned a benefit assessment approved by properly owners to pay for placing overhead utility lines underground in an area of the Town of Tiburon. The Court invalidated the assessments primarily on the grounds that the assessments had been apportioned to assessed property based in part on relative costs within sub-areas of the assessment district instead of the overall cost of the improvements and the overall proportional special benefits, ClTY of PAL,TDALE DRATNAGE BENEFTT AssEssi ENT DrsTRrcTs ENGINEER,S REPoRT, FY 201612017 ffie SÕlConsultingGroup

PAGE 7 Beurz v. CouHrv of RTvERSTDE 0n May 26, 2010 the 4th District Court of Appeal issued a decision in Steven Beutz v, County of Riverside ("BeutÌ'). This decision overturned an assessment for park maintenance in Wildomar, California, primarily because the general benefits associated with ìmprovements and services were not explicitly calculated, quantified and separated from the special benefìts, GoLDEN HrLL NErcHBoRHooD AssocrATroN v. CrTy of SAN DrEco 0n September 22,2011, the San Diego Court ofappeal issued a decision on the Golden Hill Neighborhood Association v. City of San Diego appeal, This decision overturned an assessment for street and landscaping maintenance in the Greater Golden Hill neighborhood of San Diego, California, The court described two primary reasons for its decision. First, like in Beufz, the court found the general benefits associated with services were not explicitly calculated, quantified and separated from the special benefits. Second, the court found that the City had failed to record the basis for the assessment on its own parcels. CoMPLTANCE wrth CURRENT LAW Thìs Engineels Report is consistent with the requirements of Article XlllC and XlllD of the California Constitution and with the SVIA decision because the lmprovements to be funded are clearly definedj the lmprovements are directly available to and will directly benefit property in the Assessment Districts; and the lmprovements provide a direct advantage to property in the Assessment Distr cts that would not be received in absence of the Assessments, This Enginee/s Report is consistent wilh Beutz, Dahms and Greater Golden Hll/ because the lmprovements will directly benefit property in the Assessment Districts and the general benefits have been explicitly calculated and quantified and excluded from the Assessments, The Engineels Report is consistent wilh Bonander because the Assessments have been apportioned based on the overall cost of the lmprovements and proporlional special benefit to each property. CITY of PALMDALE DRAtNAcE BENEFTT AssESsN ENT DtsTRtcrs ENGINEER,S REPoRT, FY 201612017 Se lconsultinggroup

PAGE 8 P -erus nruo SpecrFrcATroNs The work and lmprovements proposed to be underlaken by the City and the cost thereof paid from the levy of the annual assessment provide spec al benefit to Assessor Parcels within the Assessment Districts defined in the lvlethod of Assessment herein, Consistent with the Act, the lmprovements are generally described as follows: hlicle Xlll D of the California Constítution defines "maintenance and operation expenses" as, "the cost of rent, repair, replacement, rehabilitation, fuel, power, electrical current, care and supervision necessary to properly operate and maintain a permanent public improvement" (hereafter referred to as the "lmprovements"). The /,AssessmenfJ Dlstricts' funding includes, but is not limíted to, the removal, repair, replacement and appuñenances, electr cal energy, supplies, engineering and incidental costs relating to the naintenance and operation of the drainage improvements benefiting fhe /Assessmenf/ Dlsfncfs' parcels. The lmprovenents for DBAD No. 01 consist of five (5) drainage basins (DB) located just outside of the District along the southern boundary of the District, DB NO.1 (0.5 acres), DB No,2 (0.5 acres), DB No.5 (10 acres), 08 No,6 (3 acres), and DB No,7 (4 acres). Ihere is a/so one drainage basin located on the northern side of the California Aqueduct, DB No I (5 acres,), The lmprovements for DBAD No. 2006-02 consist of 126,658 cubic feet of drainage basin/storm water lnprovements which are detailed in the Ritter Ranch Specific Plan on file wíth the Ctty. Plans and Specifications for the lmprovements for the f,assessmeníj Districts are voluninous and are not bound in this Repoñ but by thís reference are incorporated and made a paft of this [R]epoft, The Plans and Specífications are on file in the office of the Director of Public Works where they are available for public inspection.t 1 From lhe Combined Annual Engineels Report, City of Palmdale, Drainage BenelltAssessment Districts, Fiscal Year 2009/2010 dated July '1, 2009, CtTY of PALMDALE DRAtNAcE BENEFTT AssEssMEN'r DrsTRrcTs ENGINEER'S RÊPORT, FY 201612017 ffi Ë9e lconsultinggroup

PAGE 9 Flsc+ Ye n 201612017 Esru re o Cosr mo Buooer A summary budget for fiscal year 201612017 for the maintenance of the lmprovements is provided below, The full ltemized Budget for the Assessment Districts is voìuminous and is not bound in this reporl but by reference is incorporated and made a part of this report. The Itemized Budget is on file in the Department of Publìc Works, where it is available for public inspection, Tables 1 and 2 below show the Budget Summary for each Assessment District, TABLE I - ASSESSMENT DrsTRrcT No,I -FY 201612017 Buoeer SuuN nv CITY OF PALMDALE COMBINED ANNUAL ENGINEER'S REPORT DRAINAGE BENEFIT ASSESSMENT DISTRICT NO, 1 Fund and Budget Summary, Fiscal Year 2016/2017 Budget ltem Cost Direct Maintenance Costs $41,666,03 Other Costs $15,410.73 Estimated Expenditures $57,076.76 Net Amount to Assess $57,076.76 Total Equivalent Dwelling Units (EDUs) Total Cost per EDU 1,417 $40.28 CITY of PALMDALE DRAINAGE BENEFIT ASSESS[4ENT DISTRICTS ENGINEER,S REPoRT, FY 201612017 $ClConsult nggroup

PAGE 1O TABLE 2 - ASSESSMENT DISTRICT No. 2006.02 - FY 2016/2017 BUDGET SUMMARY CITY OF PALMDALE COMBINED ANNUAL ENGINEER'S REPORT DRAINAGE BENEFIT ASSESSMENT DISTRICT No. 2006-02 Fund and Budget Summary, Fiscal Year 2016/2017 Budget ltem Cost Direct l\ aintenance Costs Other Costs Estimated Expenditures Net Amount to Assess $41,383,21 $15,306,12 $56,689.33 Total Equivalent Dwelling Units (EDUs) Total Parcels Total Cost per EDU 6,842 44 $8.29 A listing of the Assessment Districts containing the total FY 201612017 assessments, the, number of assessed parcels, and a typical per-parcel assessment is included in Appendix C. The following cost descriptions apply to the budget: DIRECT COsTs MAINIENÁA/CE COSIS Labor, Material, and Equipment - lncludes all labol material, and equipment required to properly maintain and seruice the draínage structures, and appuñenant facilities withín the district, including the maintenance and servicing of fencing, and drainage facilitíes. All improvements wíthin the district will be maintained and se viced on a regular basis. City staff w ll deternine the frequency and specífic ma ntenance ope rations required, UTILITIES Gas and Electric - The furnishing of electricity and gas required for the operat on of the drainage structures, and appurtenant facil ties such as pumps. CITY of PaLMDALE DRA NAGE BENEFITAssEss,IENT DISTRICTS ENGINEER,S REPoRT, FY 201612017 -S56,68-õ5- ffççlconsult nggroup

PAGE 1I RENOYÁI/ON Repairs, whích are unforeseen and not normally included in the yearly maintenance cosf, Ihls may include repair of damage due to vandalism, storms, and frost. Planned upgrades of the ímprovements that provide a direct benefit to the district could also be íncluded in renovation costs.z OTHER COSTS PERSONNEUOVERHEAD Ihe cosf of City staff for providing the coordination for maintenance and seruicing, responding to public concerns, and levying and collecting assessmenfs. Thís includes reimbursement for time spent by Finance and Accountíng, the City Attorney, the City Manager, and the Public Works staff. CONSULIÁNIS The cost of contracting wíth professionals to provide seruices specifc fo fhe levy and annual administration. ProfessionalFees - Ihese are fhe cosfs of contractíng with professíonals for annual certtficatton of all irrigation back flow devices, and for professlona/s to provide any additional administrative or engineering servlces specrfrc fo the dístrict such asthe cost to prepare and mail notices of the publrc meetrng and hearing, or preparation of assessment diagrams, County Administratíon Fees - The costs charged by the County to place the assessmenfs on fhe propeñy tax rolls. CoNTRIBUTIoN / GENERAL BENEFIT Any funds added to the Dtstrict's account by the City from the City's General Fund Account or other revenue source.3 ANNUAL ASSESSMENT INCREASE Annually, the assessment rates for the Districts may be increased, based upon the Consumer Price Index, All Urban Consumers, for the Los Angeles-0range-Riverside County Area ("CPl), as determined by the United States Department of Labor, Bureau of Labor Statistics, or its successor. The Assessment Engineer shall compute the percentage difference between the CPI for February of each year and the CPI for the previous February, 2 From the Annual Engineels Report, C ty of Palmdale, Drainage Benefìt Assessment Districts No. 1 and No. 2006-02, Fiscal Year 2009/2010 dated July 2, 2009, 3 These olher revenue sources noted by the original assessment engineer include (among other sources) developer impactfees, prope y tax revenue, and sales tax reven ue, aìl of which would offset any general benef t. ClrY of PALMDALE DRAINAGE BENEFIT ASSESS[4ENT DISTRICTS ENGINEER,S REPoR.T, FY 201612017 ff fic tconsultinggroup

PAGE 12 and shall then adjust the existing assessment rates by an amount not to exceed such percentage for the following fiscal year, Should the Bureau of Labor Statistics revìse such index or discontinue the preparation of such index, the Engineer shall use the revised index or a comparable system as approved by the City Councìl for determining fluctuations in the cost of living. n For fiscal year 2016/2017, the assessment amount for the Assessment D stricts is increased by 2,41%, based on the increase of the February 2015 to February 2016 CPI ol2.410/0. 4 From the Annual Engineels Repo, City of Palmdale, Drainage Benefìt Assessment Distr cts No, 1 and No, 2006-02, FiscalYear 2009/2010 dated July 2,2009, CTTYoF PALMDALE DRA NAGE BENEFtT AssEsstvlENT DtsrRtcTs ENGINEER,S REPoRl. FY 201612017 ffi- S*lConsultingGroup

PAGE 13 Assessmerur D on rvl The boundaries of the City of Palmdale Drainage Benefit Assessment Districts are displayed on the following Assessment Diagram. FTGURE I - ASSESSMENT DTAGRAM FLID IN T'IE OFfIC OFTHE CITYE IIGINEER 0F llré ctìy0f P U oâe counry0t Los,J!GE!ES, C,àl]l ornta ÛIS _ 0ÀY CITYCLERI( RECOnoC9 N the OFftCE OFÌtiE CfrvÈìGlN ar of rli ct Y 0 r PÂ!l DÁ!É, c olj NrY of Los at{getts, càlf0rfl ta tïts _oay À l ÁSSE SSII E NT W S COIIFIRI EOÁNÐ iived SYTH crlyc0urcll0t?1rê ctfy 0F ÞÀll 0,{8, cor.rnry OF LOSÁNOELES, ONTHE LO'IS. PIECESA'iO ÞÂÂcE LS O F LÀ\ Þ 0t rh is ASSE SSt E t{l 0te0R 0NrflE _oay0f-201610r ffi t frscá!y!ar 2016 017 rjt 0 sadassessr ENt 0t ßR Lt Á {0 nte ÁssE sst I Nl RoLL F0 R saþ IISCÁ!YÎARYIÊR' FILEO IN THE OF ICE OF THE COUNTYÁIJOITORDONIROLLÊR OF IIIE COI]NIY OI t0 s Á,t oer.es 0urHE _oayof 2016. RCÊIRÈIICE ÍS HERÊ Y IIÂDE fo SAD F CORDED 55E39 ElIT ROLLFOR ì1r F EXÁf,1 Âr ôù tft 0 Êacll ÁssE s$,t E Nt ltve D L.g.nd A taa6ment Dl6ff ct Bol ndary DiEHct cu'rcler( City of Palmdale Dralnago Bonoflt Ass6ssmont D lsblcts Assêssmônt Dlagram CtTY of PALMDALE DRAtNAcE BENEFTT AssEss[4ENt DtsTRtcTS ENGINEER,S REPoRT, FY 201612017 - õñ'y clefk- ffi- SC lconsultinggroup

PAGE 14 M rnoo or ASSESSMENT This section of the Engineer's Report includes an explanation of the benefits to be derived from the installation, maintenance and servicing of the lmprovements throughout the Assessment Districts and the Assessment methodology used to apportion the total Assessment to properties with the Assessment Districts, The Assessment Districts consist of all assessor parcels wìthin the boundaries as defined by the Assessment Diagram included with this report and the parcels identified by the Assessor Parcel Numbers listed with the included levy roll. The parcel list includes all privately and publically owned parcels with the boundaries, The method used for apportioning the Assessment is based on the proportional special benefits to be derived by the properties in the Assessment Districts over and above general benefits conferred on real property or to the public at large. The apportionment of special benefit is a two-step process: the first step is to identify the types of special benefit arising from the lmprovements, and the second step is to allocate the Assessments to property based on the estimated relative special benefit for each type of property, DIscUssIoN OF BENEFIT ln summary, the Assessments can only be levied based on the special benefit to property, This benefit is received by property over and above any general benefits, l/oreover, such benefit is not based on any one property ownels use of the lmprovements or a property owner's specific demographic status. With reference to the requ rements for Assessments, Section 22573 of the Act states:' The net amount to be assessed upon lands within an assessmenl dr.sfrrcf may be apporfioned by any formula or nethod which fairly distributes the net amount among all assessab/e lots or parcels in proporlion to the estinated benefits to be received by each such lot or parcel from the improvements. Proposìtion 218, as codified in Article XlllD of the California Constitution, has confirmed that Assessments must be based on the specìal benefit to property: No assessmenf shall be imposed on any parcel which exceeds the reasonable cost of the proporlional special benefit conferred on that parcel, SPECIAL BENEFIT The Assessment Districts were formed by a different engineer of record. The specific language from that engineer's most recent Engineer's Report used to describe Special Benefit is as follows: C TY of PALMDALE DRATNAGE BENEFIT AssEss[ ENT DtsrRtcrs ENGINEER'S REPOR-r, FY 201612017 æ SCiConsult nggroup

PAGE {5 Each and every parcel within the f,assessmenfj Districts receives a particular and distinct benefit from the improvements over and above general benefits conferred by the ímprovements. First, all of the lmprovements were conditions of approval for the creation or development of the parcels. ln orderto create or develop the parcels, the City of Palmdale required the developer to install and guarantee the maintenance of storm water control structures and appuñenant facilities to serue the parcels. Therefore, each and every parcel wíthin the fassessmenfj Districts could not have been developed in the absence of the installation and promised naintenance of these facilities. ln addition, the lmprovements contínue to confer a particular and distinct special benefit upon parcelswithin the /4ssessmenÍl Dístrict because of the nature of the improvements. The proper maintenance of storm water control and appurtenant facilities specially benefit parcels within the [Assessment] Districts by allevíating excess vvafer during periods of rain, This allows individual parcels to be used to their fullest extent. All of the abovementioned improvements contribute to a specific enhancement of each of the parcels within the [,4ssessmenÍj Disfncfs.s The SVLA decision clarifies that a special benefìt is a service or improvement that provides a direct advantage to a parcel, and that indirect or derivative advantages resulting from the overall public benefits from a service or improvement are general benefits. ìn addition to the special benefits described by the previous Engineer, above (i.e., the origination of each parcel and rainwater removal) the drainage improvements and stormwater detention basins greatly reduce the chance of localized flooding during periods of high runoff, thereby improving access to the property, reducing the potential for property damage, and reducing the risk of injury Clearly the lmprovements make each parcel safer, more useful, more accessible, more valuable, and more desirable, and this further strengthens the basis of these Assessments. GENERAL VERSUS SPEcIAL BENEFIT As previously noted, the Assessment Districts were formed by a different engineerof record. ln creating the Assessment District, this engineer found that while the overwhelming majority 5 From the Annual Engineer's Report, City of Palmdale, Drainage Benefit Assessment Districts No. 1 and No. 2006-02, Fiscal Year 2009/2010 dated July 2, 2009. CllY of PALMDALE DRA]NAGE BENEFIT ASSESSIVENT DISTRIcTS ENGINEER,S REPoRT, FY 201612017 ffi gõlconsultinggroup

PAGE 16 of the benefit was special, there was a small general benefit. The specific language from that engineer's most recent Engineer's Report used to describe the relationship and proportion of Special Benefit versus General Benefit is as followsr ln addition to the special benefits received by the parcels within the /AssessmenÍjJ Dlstricts, there are incidental general benefits conferred by the lmprovements, The total benefits are thus a combination of the specíal benefits to the parcels within fhe /AssessmenfJ Districts and the general benefits to the public at large and to adjacent property owners. The poñion of the total drainage maintenance cosfs, which are assoclafed with general benefits, wil/ nof be assesse d to the parcels in fhe /AssessmenÍj Dístricts, but will be paid from other City Funds. Because the drainage facilíties are located immediately adjacent to properties within the fássessmenfj Dlsfricfs and are maintained solely for the benefit of the properties within the /AssessmenÍl Districts, any benefit received by propeñies outside of fhe /AssessmenfJ Districts is merely incidental. lt is estinated that the general benefit porlion of the benefit received from the Improvements forthe [Assessmenf/ Dlsfncfs are /ess fhan one (1) percent of the total benefit, Nonetheless, fhe Clfy has agreed to ensure that no properfy ls assessed in excess of the reasonable cost of the proporlional special benefit conferred on that propeñy.6 ln the 2009 Dahms case, the California judiciary upheld an assessment in Pomona that was 100% special benefit on the rationale that the services funded by the assessments were directly provided to properiy in the assessment dishict. Therefore, Dahms establishes a basis for minimal or zero general benefits from the Assessments. QUANTIFICATION OF GENERAL BENEFIT Although the analysis used to supporl these assessments concludes that the benefits are solely special, as described above, consideration is made for the suggestion that a portion ofthe benefits are general, General benefits cannot be funded by these assessments - the funding must come from other sources, The maintenance and servicing of these lmprovements is also partially funded, directly and indirectly from other sources including the City of Palmdale, Los Angeles County, and the State of California, This funding comes in the form of grants, development fees, special programs, and general funds, as well as direct maintenance and servicing of facilities (e,9, 6 From the Annual Engineer's Report, City of Palmdale, Drainage Benef t Assessment Distr cts No, 1 and No.2006-02, FiscalYear 2009/2010 dated July 2,2009, C TY of PALMDALE DRA NAGE BENEFTT AssEsst'iENT DtsrRtc'is ENGINEER,S REPoRT, FY 201612017 æ S{:lConsult nggroup

PAGE 17 curbs, gutters, streets, drainage systems, etc.). This funding from other sources more than compensates for general benefits, if any, received by the properties withìn the Assessment Districts, As mentioned before, in the 2009 Dahms câse, the court upheld an assessment that was 100% special benefit on the rationale that the services funded by the assessments were directly provided within the assessment district, lt is also important to note that the improvements and services funded by the assessments in Pomona are similar to the lmprovements and services funded by the Assessments described in this Enginee/s Report, and the Court found these improvements and servìces to be 100% special benefit. Also similarto the assessments in Pomona, the Assessments described in this Engineer's Report fund lmprovements and Services directly provided within the Assessment Districts, and every benefiting property in the Assessment Districts enjoys proximity and access to the lmprovements, Therefore, Dahms establishes a basis for minimal or zero general benefits from the Assessments. STEP 1 - CALCULATE GENERAL BENEFTT The General Benefits from this assessment may be quantified as illustrated in the following table, TABLE 3 - CALCULATToN of GENERAL BENEFTT Benefit Factor Relative Weisht General Benefit Contribution Relat ve General Benefit lncreased safety from food control Creation of ndividual lots for de\êlopment or appro\ãl of building permits 10 orl 250k 2.5 0% 0 100 Total Calculated General Beneft = 2.5% As a result, the City of Palmdale will contribute at least 2,570 of the total budget from sources other than the assessment, This contribution offsets any general benefits from the Assessment Services, STEp 2 - CALCULATE THE CURRENT GENERAL BENEFTT CoNTRtBUTtoN FRoM THE CtTY This general benefit contribution is the sum of the following components: The City of Palmdale owns, maintains, rehabilitates and replaces curb and qutter along the border of the Assessment Districts lmprovements. This curb and gutter serves to support, contain, retain, manage inigation flow and growth, and provide a boundary for the C TY of PALtiIDALE DRATNAGE BENEFTT AssEss[,iENT D strtcts ENG NEER,S REPoRT, FY 201612017 ffi SÇ ìconsult nggroup

PAGE 18 lmprovements. The contribution from the City of Palmdale towards general benefit from the maintenance, rehabilitation, and replacement of the curb and gutter is conservatively estimated to be 1%, The City of Palmdale owns and maintains a storm drainaqe svstem along the border of the Assessment Districts lmprovements. This system serves to prevent flooding and associated damage to the lmprovements, and manage urban runoff including local pollutants loading from the ìmprovements, The contribution from the City of Palmdale towards general benefit from the maintenance, and operation of the local storm drainage system s conservatively estimated to be 1%, The City of Palmdale owns and maintains local public streets along the border of the Assessment Districts lmprovements, These public streets provide access to the lmprovements for its enjoyment as well as efficient maintenance, The contribution from the City of Palmdale towards general benefit from the maintenance of local public streets is conservatively estimated to be '1%. The value of the construction of the lmprovements can be quantified and monetized as an annuity. Since this construction was performed and paid for by non-assessment funds, this "annuity" can be used to offset general benefit costs, and is conservatively estimated to contribute 25%, Therefore the total General Benefit is conservatìvely quantified at 2,5% which is more than offset by the total non-assessment contribution towards general benefit of 28%. METHOD OF ASSESSMENT The development of an Assessment methodology requires apportioning to determine the relative special benefit for each property. (As part of the transition between assessment eng neers in 201012011, the existing methodology was reviewed and confirmed, and fundamentally maintained with some minor updates.) As the Assessment Districts were formed by a different engineer of record, the precise language from that engineels most recent Engineels Report is included below: Ihe /AssessmenfJ Dlsfrcfs' assessmenfs are based on land use so that propeñy owners are assessed in proportion to the benefits received, The land uses defined below are descriptive of the parcels expected to exist n fhe /AssessmenÍj Districts. ln the event there is a question regarding the land use designation of any parcel in the fássessr?enfj Dlstrictsthe Director of Public Works will be responsible for administratively assigning one of the land uses listed below.. Residential. Condo. Non-Res Single family residential parcels Condominium or town home parcels Non+esidential parceìs CrTY of PAL IITDALE DRAINAGE BENEFTTASSESS[4ENT DrsTRtcTS ENGINEER,S REPoRT, FY 201612017 ffire S{: lconsultinggroup

PAGE 19 Exempt Parcels exempf by law from the assessments, or those parcels that do not benefit from the lmprovements, For DBAD N0.1, in a singlelamily residential district, all the parcels in the fassessmenfj Districts receive the same special benefit from the lmprovements due to thek similarity in size and use and their similar proxrmity to the lmprovements. Therefore, each parcel ls assessed an equal amount. Storm drain lmprovements intercept storm runoff from the propeñies and convey the runoff through the area in a controlled manner providing flood protection. To properly serue development in the [AssessmenÍj Dlsf/cfs fhe developers were required to provide storm water retention/detention basins wtthin their projects, Since sform runoff is a function of area the special benefit shall be apportioned to the respective developed lots or parcels in fhe /ÁssessmenfJ Disfncfs on a gross acreage basis netof añeríaland collector streets. Within a residential tract, once the lmprovements have been allocated based on acreage as described above, it will be appotfioned further based on the number of similar lots or parcels or multilamily units such that each lot or parcel or unlf is assessed an equal amount. Within non+esidential developments, the lmprovement cosfs sha// be appotlioned based on net parcel area. Parcels in fhe /AssessmenÍj Districts will be assþned a weighting factor known as an equivalent dwellíng unit (EDU).Ihls mefhod ls used to relate dissimílar land uses such as non+esidential and resídential, Single family residential parcels are assigned an EDU of 1.0. The total number of EDUs in a district is divíded into the total balance to levy for the dlsfricú, Ihis esfab/lshes the levy per EDU (Rate). The Rate is then multiplied by the parcel's individual number of EDUs to establish the parcel's levy amount. CtTY of PÀLÌi,ìDALE DRAINAGE BENEFIT ASSESSMENT DISTRICTS ENGINEER,S REPoRT, FY 201612017 ffi- SË ConsultingGroup

PAGE 20 The following fable shows the EDU factors for each parcel type in the Districts.T Propefty Type Factor Basis Dev e lo Ded N ac ant Re sid e nti al 1.00 Parcel Dev e lo Ded/V acant M ult -F am ilv 1.00 Unit Develo pedn ac a nt Non -R e sid e nti a I 6.00 Acre For fiscal year 201612017, the amount of the Assessments for the Assessment Districts is increased by 2.410/0, based on the increase of the February 2015 to February 2016 CPI of 2.41Y0. DURATION of ASSESSMENT These Assessment Districts were formed in previous years, The Anaverde DBAD No, 1 was formed in 2004, and Ritter Ranch DBAD No. 2006-02 was formed in 2007. lt is proposed that the Assessments be continued every year thereafter, so long as the drainage lmprovements need to be maintained and improved, and the City requires funding from the Assessments for these lmprovements in the Assessment Dìstrict, As noted previously, the Assessment can continue to be levied annually after the City Council approves an annually updated Eng neer's Report, budget for the Assessment, lmprovements to be provided, and other specifics of the Assessment, In addition, the City Council must hold an annual public hearing to continue the Assessment. APPEALS AND INTERPRETATION Any property owner who feels that the assessment levied on the subject property is ìn error as a result of incorrect information being used to apply the foregoing method of assessment, may file a written appeal with the City of Palmdale Public Works department, Any such appeal is limited to correction of an assessment during the then current or, if before July '1, the upcoming fiscal year, Upon the filing of any such appeal, the City of Palmdale Public Works Engineer or his or her designee will promptly review the appeal and any information provided by the property owner, lf the Public Works Engineer of the City of Palmdale or her or his designee finds that the assessment should be modified, the appropriate changes shall be made to the assessment roll, lf any such changes are approved after the assessment roll has been filed with the County for collection, the City Engineer or his or her designee is authorized to refund to the property owner the amount of any approved reduction, Any dispute over the decision of the City Engineer or her or his designee shall be refened to the Director of Public Works of the City of Palmdale, and the decision of the Director of Public Works of the City of Palmdale shall be final. 7 From the Annual Eng neefs Report, City of Palmdale, Drainage Beneft Assessment Districts No. 1 and No, 2006-02, FiscalYear 2009/2010 dated July 2,2009. CITY of PALMDALE DRAINAGE BENEFIT AssËssIúENT DISTRIcTS ENGINEER,S REPoRT, FY 201612017 ffi SC lconsult nggroup

PAGE 2,l Cenrrncnres FrNAL REcoRDrNc CERTrFrcaïoNs 1. The undersigned respectfully submits the enclosed Engineer's Report and does hereby cerlify that this Engineels Report, and the Assessment and Assessment D agrams herein, have been prepared by me in accordance with lby Resolution No, CC 201ô-030 approved on April 6.2016. Engineer License No. C05209'1 2. l, Rebecca J, Smith, as City Clerk, do hereby certify enclosed Enginee/s Report, together with the Assessment and Assessment Diag attached, were filed and recorded with me on _, 2016, Rebecca J. Smith, City Clerk City of Palmdale State of California 3. l, Rebecca J, Smith, as City Clerk, do herebycertify thattheassessment in this Enginee/s Report, together with the Assessment Diagrams attached thereto, were approved and confirmed by the City Council of the City of Palmdale on June 1, 2016, by Resolution No,CC 201ô-038. Rebecca J, Smith, City Clerk City of Palmdale State of California CìTY of PALMDALE DRATNAGE BENEFtf AssEss[,4ENT DrsrRrc'rs ENG]NEER'S REPORT, FY 201612017 æ SClConsultingGroup

PAGE 22 AssessNe rr STATEMENT WHEREAS, on April 6, 2016 the City Council of the City of Palmdale, County of Los Angeles, California, adopted its Resolution No, CC 2016-030, initiating proceedings for the continuation of the levy of Assessments for fiscal year 2016/2017 within the Drainage Benefit Assessment Districts, pursuant to the provisions of the Benefit Assessment Act of 1982 and Article XlllD of the California Constitution (collectively "the Act"); WHEREAS, the City of Palmdale directed the undersigned Engineer of Work to prepare and filp a report present ng an estimate of costs, a diagram for the Assessment Districts, and an assessment of the estimated costs of the lmprovements upon all assessable parcels within the Assessment Dishicts, to which the description of the proposed lmprovements therein contained, reference is hereby made for further particulars; Now, THERÉFoRE, the undersigned, by virtue of the power vested in me under the Act and the order of the City Council of the City of Palmdale, hereby make the following assessment to cover the portion of the estimated cost of the lmprovements, and the costs and expenses incidental thereto to be paid by the Assessment Districts. The amount to be paid for the lmprovements and the expense incidental thereto, to be paid by the City of Palmdale Drainage Benefit Assessment Districts for the fiscal year 201612017 are generally as listed in Appendix C. As required by the Act, an Assessment Diagram is hereto attached and made a part hereof showing the exterior boundaries of the City of Palmdale Drainage Benefìt Assessment Districts, The distinctive number of each parcel or lot of land in the City of Palmdale Drainage Benefit Assessment Districts is its Assessor Parcel Number appearing on the Assessment Roll, And I do hereby assess and apportion the net amount of the cost and expenses of the lmprovements, including the costs and expenses incident thereto, upon the parcels and lots of land within the City of Palmdale Drainage Benefit Assessment Districts, in accordance wìth the special benefits to be received by each parcel or lot, from the lmprovements, and more particularly set forth in the Cost Estimate and Method of Assessment hereto attached and by reference made a part hereof, Property owners in the Assessment Districts approved in assessment ballot proceedings the initial fiscal year benefit assessment for special benefits to their property including the CPI increase schedule. As a result, the assessment may be continued to be levied annually and may be increased by up to the maximum annual CPI adjustment without any additional assessment ballot proceeding. ln the event that in future years the assessments are levied at a rate less lhan the maxir urn authorized assessment ratet the assessment rate in a subsequent year may be increased up to the maximum authorized assessment rate without any additional assessment ballot proceeding, CITY of PALMDALE DRATNAGE BENEFTT AssEssrvENT DtsTRlcrs ENGINEER'S REPORT, FY 201612017 ffi Se lconsultinggroup