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BACKGROUND The Landscaping and Lighting Act of 1972 authorizes local agencies to impose an annual assessment on real property benefiting from project-specific improvements in order to pay for the construction and maintenance of landscaping and lighting special improvements that benefit those parcels. The assessments are collected on the City's behalf by Alameda County as part of the annual property tax bill. For the formation of each LMD, the City follows procedure set forth in Division 15, Part 2, Chapter 2, Sections 22585 et. seq. of the Streets and Highways Code. The City has five Lighting and Landscape Maintenance Districts. All five were created prior to the passage of Proposition 218 in 1996. These LMDs were each created to maintain (and eventually replace) the landscaping and lighting improvements within the areas of each housing development accessible to the owners of each property created by the subdivision developments. The assessment amounts have never been increased in any of the five districts. Over the years, the costs to provide landscape maintenance in the districts have outpaced the revenue. As a result, the level of maintenance in all five districts has decreased. Now, in addition to inadequate funding for annual maintenance, there are no funds available in reserve for capital replacement of district assets such as irrigation systems, decorative entry walls, signage, drainage ditches, plantings, etc. While funding for all five districts is unsustainable, Windsor Landscape Maintenance District 1993-1 and Bonde Ranch Landscape Maintenance District 1993-2 are the two most underfunded districts. Effects of Proposition 218 Proposition 218 was passed by California voters on November 1996. The Proposition amends the State's Constitution by adding Articles XIII(C) and XIII(D) to do the following: • Limit the authority of local governments (including cities, counties, special districts and school districts) to impose taxes and property related assessments, fees, and charges. • Establish procedures for implementing annual assessments which include benefit assessments, special assessments, and maintenance assessments, etc. For landscaping and lighting maintenance districts, procedures include a requirement that the City develop an engineering report which identifies the special benefits that will accrue to each individual property as a result of the assessment. Further, subject to certain exceptions, it establishes that the majority of the property owners in the assessment district must vote in favor of any proposed increase in an assessment for it to be implemented. The majority is based on the number of votes received, not the total properties within the district (i.e. if the district includes 90 properties, but only 40 votes are submitted with 21 in favor of the assessment, the increase in assessment would be approved) Page 2 of 6