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CC - CONSENT ITEM: (1) FOUR-FIFTHS VOTE REQUIREMENT: Ratification of a Transfer of $426,395 from Special Assessment District Fund (Fund 425) to the General Fund (Fund 101) for Special Assessment District-Related Maintenance Expenses; and (2) FOUR-FIFTHS VOTE REQUIREMENT: Ratification of a Transfer of $352,101.45 from Special Assessment District Fund (Fund 425) to the General Fund (Fund 101) to Reclassify Business License Tax Revenue Received in Fiscal Year 2022-2023.
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Meeting Date: June 9, 2025
Contact Person/Dept: Elizabeth Shavelson / Finance Department
Phone Number: (310) 253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Attachments: Yes [] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (06/05/2025)
Department Approval: Lisa Soghor, Chief Financial Officer (06/02/2025)
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RECOMMENDATION
Staff recommends the City Council: (1) ratify a transfer of $426,395 from Special Assessment District Fund (Fund 425) to the General Fund (Fund 101) for special assessment district-related maintenance expenses (requires a four-fifths vote); and (2) ratify a transfer of $352,101.45 from Special Assessment District Fund (Fund 425) to the General Fund (Fund 101) to reclassify business license tax revenue received in Fiscal Year 2022-2023 (requires a four-fifths vote).
BACKGROUND
A special assessment is a compulsory levy imposed on certain properties to defray part, or all, of the cost of a specific improvement or service deemed to primarily benefit those properties. Special assessment districts are formed by vote of property owners within a defined benefit area. The City currently administers five Special Assessment Districts on behalf of property owners including W. Washington Landscape Maintenance District #1, W. Washington Landscape Maintenance District #2, W. Washington Landscape Maintenance District #3, Landscape Maintenance District #1, and Higuera Street Landscape/Lighting District.
Property owners in each of the established districts pay for the annual maintenance and administration costs through an assessment on their annual property tax bills administered by Los Angeles County. Every year, the City Council takes action to confirm the Engineer’s Reports and approve the assessments for each district. The Engineer’s Report includes the expenditure detail for the upcoming year for each district. Ultimately, the Council holds public hearings and adopts resolutions confirming and levying the annual assessments for each district. The City pays for the costs associated with each district upfront and is reimbursed for these expenditures from the special property tax assessments collected by the Los Angeles County Assessor’s Office and transmitted to the City.
The following is a list of the City Council’s resolutions approving or confirming the Engineer’s Report for the Landscaping Maintenance Assessment District No. 1 and Higuera Street Landscape/Lighting District from 2017 - 2023:
The funds for the special assessment districts are held in Special Assessment District Fund 425.
DISCUSSION
During the budget process for Fiscal Year 2025-2026, it was discovered that the annual budget transfer from the Special Assessment District Fund (Fund 425) to the General Fund (Fund 101) to reimburse the City for expenditures associated with Landscape Maintenance District #1 (42516543) and Higuera Street Landscape/Lighting District (42516545) not been made since Fiscal Year 2016-2017. From Fiscal Year 2017-2018 to Fiscal Year 2023-2024, the City received funds for both Assessment Districts from property owners and provided the necessary landscape maintenance services. However, the City’s General Fund was not reimbursed for the costs incurred to provide these services. As a result, the Fund Balance for Fund 425 has continued to grow since Fiscal Year 2017-2018. The ACFR for Fiscal Year 2023-2024 states the assets of Fund 425 to be $1,164,633 as of June 30, 2024.
To reimburse the City for expenditures made from the General Fund on behalf of the Landscape Maintenance District #1 (42516543) and Higuera Street Landscape/Lighting District (42516545) from Fiscal Year 2017-2018 through Fiscal Year 2023-2024, the City needed to transfer a total of $426,395 from Fund 425 to Fund 101.
A breakdown of the City’s approved expenditures for Landscape Maintenance District #1 (42516543) and Higuera Street Landscape/Lighting District (42516545) from Fiscal Year 2017-2018 through Fiscal Year 2023-2024 is provided below:
While examining Fund 425, staff also discovered that a city business license tax penalty payment received in Fiscal Year 2022-2023 in the amount of $352,101.45 had mistakenly been posted to Fund 425. All business license tax revenue and associated tax penalties are general fund revenues and as such should be posted to the City’s General Fund (Fund 101).
City staff prepared accounting entries to reimburse the City for Fund 425 expenses and to correct the misallocation of City business tax revenue to Fund 425. Since the amounts of the corrections exceed the City Manager’s Budget Authority, the transfers between Funds must be approved by the City Council.
Staff recommends the City Council ratify a transfer of $426,395 from Fund 425 to the Fund 101 for special assessment district-related maintenance expenses (requires a four-fifths vote) and ratify a transfer of $352,101.45 from Fund 425 to the Fund 101 to correct the misallocation of City business license tax revenue in Fiscal Year 2022-2023 (requires a four-fifths vote).
FISCAL ANALYSIS
As a result of the two transfers, the General Fund balance increased by $778,496.45 and the City’s Special Assessment District Fund Balance was reduced accordingly. The transfers and their impact to the fund balance are reflected in the Proposed Budget for Fiscal Year 2025-2026 presented to City Council on May 12, 2025.
Going forward, Finance staff will make the transfers from Fund 425 to Fund 101 for expenditures of Landscape Maintenance District #1 and Higuera Street Landscape/Lighting District on an annual basis.
ATTACHMENTS
None.
MOTIONS
That the City Council:
1. Ratify a transfer of $426,395 from Special Assessment District Fund (Fund 425) to the General Fund (Fund 101) for special assessment district-related maintenance expenses (requires a four-fifths vote); and
2. Ratify a transfer of $352,101.45 from Special Assessment District Fund (Fund 425) to the General Fund (Fund 101) to reclassify business license tax revenue received in Fiscal Year 2022-2023 (requires a four-fifths vote).