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Staff met with the Moller Ranch Homeowners Association to discuss increased assessments to meet their repair/replacement capital improvement requirements. While there is not overwhelming support for an increase in the assessment amount, the Association is interested in exploring the cost and benefit aspects of an increase. With the assessment of two City-owned parcels, the City will pay $1,121. Increases to Assessments Assessments in each of the districts will remain unchanged this fiscal year. As stated in this report and in previous years' reports, assessments have not been increased in the LLMDs since they were created. Therefore, the current assessments are all based upon operation/maintenance costs and capital replacement costs that existed at the time the LLMDs were created. The districts, some to a greater degree, have operated year-to- year through a combination of reducing maintenance and depleting capital replacement reserves. This is due in large part to the complicated process required to increase assessments created by the passage of Proposition 218 in 1996. However, annual costs have and will continue to increase, and capital reserves have been depleted to the point that this operational strategy is no longer sustainable. The revenue in some districts, as detailed above, is no longer enough to cover the operation costs. In other districts, it is just keeping up with maintenance but is not growing a reserve as needed for capital repair and replacement. As managers of the LLMDs, staff is working with a consultant that specializes in LLMDs, SCI Consulting Group (SCI), to assist with analyzing the special benefit areas, the maintenance requirements, the capital replacement requirements, Proposition 218 compliance, and assessments paid by each property owner within the districts. As a first step in the process, SCI reviewed previous years' Engineering Reports and produced the Engineering Report for each LLMD this year. This coming year, SCI, with the assistance of the City's Landscape Architect, will be working to determine maintenance expectations and appropriate maintenance standards for each district, and determine the appropriate reserve amount to cover eventual capital replacements. When complete, required assessment increases will be calculated. The goal of this effort will be to fully understand the funding required to implement a sustainable landscape maintenance program in accordance with PUD requirements and special assessment district residents' expectations, and grow the capital reserve with an annual contribution to fund eventual replacement based upon an anticipated replacement cycle, for each LLMD. With this information, in the coming year SCI will assist the City with the public outreach and required Proposition 218-compliant voting process necessary to increase the assessments in the two Districts currently most underfunded, Windsor LLMD and Bonde Ranch LLMD. The results of these efforts will either be presented to the City Council during the current fiscal year, or when the fiscal year 2020/21 LLMD Engineer Reports are presented for adoption next year. Over the course of the next couple of years, the intention is to go through the same process for all five LLMDs so they are all sustainable into the future. It is likely that an annual escalator, such as a consumer price index Page 7 of 8