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system replacement and plant replacement, decorative fence repairs, tree pruning, lighting replacement, and repair or replacement of other features. Landscape Maintenance District 1995-1 , Moller Ranch The Moller Ranch subdivision (District 1995-1) has been in place for 28 years. Maintenance in this district includes open space areas, entry features, lighting, firebreaks, trees, shrubbery, groundcover and irrigation systems. The assessments for the coming year for District 1995-1 (Moller Ranch) will remain at $570.06 per privately-owned parcel, per year. The City will pay $1,121 .06 ($560.53 per parcel) for the assessment of two City-owned parcels. With a total of 101 parcels in the district (including the city-owned Moller Ranch water tank parcel and a staging area for Pleasanton Ridge), this year's total assessment will be $57,557. This amount will be sufficient to fund the reduced maintenance level of the district including water and electrical costs, County assessment fees, City administration fees, and operating and maintenance costs, but is not enough to increase the capital repair or replacement reserve. Although the fund balance for capital repair and replacement is approximately $263,000 for this district, there are several improvements for which replacement must be considered in the near term. The improvements consist of extensive irrigation system replacement and plant replacement, decorative fence repairs, and repair or replacement of other features. A portion of the irrigation system that waters established plants has been turned off due to numerous breaks and needs replacement. Several years ago, staff met with the Moller Ranch HOA to discuss increased assessments to meet its repair/replacement capital improvement requirements. While support for an increase in the assessment amount was not overwhelming, the HOA was interested in exploring the cost-benefit aspects of an increase. Further discussions with the Moller Ranch HOA are on hold until progress has been made on the other more demanding LMDs. Increases to Assessments Assessments in each of the districts will remain unchanged this fiscal year. As stated in this and previous reports, assessments have not been increased in the LMDs since they were created. Therefore, the current assessments are based on operation and maintenance costs, and capital replacement costs, which existed at the time the LMDs were created. The districts have operated year-to-year through a combination of reducing maintenance, shutting down irrigation systems, and depleting capital replacement reserves. This is due in large part to the process required to increase assessments created by the passage of Proposition 218 in 1996. However, annual costs have continued to increase, and capital reserves have been depleted to the point now that this operational strategy is no longer sustainable. The revenue in some districts, as detailed above, is no longer enough to cover the operational costs. This strategy also resulted in depleting the reserves needed for eventual capital replacement. Page 8 of 10