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LMDs Formed Prior to Proposition 218 If an assessment district was formed prior to the passage of Proposition 218, and pursuant to a petition signed by the property owners of all the parcels subject to the assessment, the district is exempt from the requirement that a majority of the property owners must vote in favor of the current assessment. The City's five existing LMDs, including the Windsor and Bonde Ranch LMDs formed in 1993, were formed pursuant to such a petition (the developer was the only property owner and signed the petition), and prior to the passage of Proposition 218. Since a vote to increase the annual assessment amounts has never taken place, the annual assessments have continued unchanged since creation. LMDs are Only Allowed if They Provide Special Benefit Assessment districts must comply with Proposition 218's requirement that only special benefits, not general benefits, may be assessed when evaluating LMDs. The definition of a special benefit is "a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large." General enhancement of property value does not constitute a "special benefit." To the extent an assessment provides both general benefits and special benefits, the City must separate the general benefits from the special benefits and will pay for the general benefits out of another revenue source, typically the City's General Fund. Since the passage of Proposition 218, the City has evaluated this distinction between special and general benefits and determined that maintaining the landscaping and other improvements under each district is of special benefit to the property owners in each district. After the assessments are updated to meet current maintenance requirements, assuming the majority of property owners within each district vote to affirm the new assessment, the assessment process will provide efficient and effective means to provide sustainable maintenance and eventual capital replacement. Process to Form New LMDs The process to form LMDs is defined by Proposition 218. Formation requires a majority of property owners within each district to vote in support of the new district formation which will include the new assessment amount to be levied against each property owner. Public outreach to the Windsor and Bonde Ranch LMD property owners will be of critical importance for the new districts to be successfully formed Annual Process to Levy Assessments in the Five Existing LMDs in Pleasanton The formation of the two new replacement districts will occur on a parallel track to the annual process of creating the Engineer's Report and holding the public hearings required to establish the fiscal year 2020/21 assessment amount for all five existing districts, with Windsor and Bonde Ranch being two of the existing five. If the vote is successful in Windsor and Bonde Ranch, the assessments will increase in accordance with the vote. If the vote is unsuccessful in Windsor and/or Bonde Ranch, the normal process that has occurred in parallel will govern, and fiscal year 2020/21 assessments will remain unchanged. Page 3 of 6