Wednesday, July 21, 2021

7.20.21 Meeting Summary

Last night there were a few significant items that were discussed:
  • We approved an annual levy increase of 3.8% for the Diablo Estates at Clayton Benefit Assessment District (BAD).  This affects 24 parcels east of Regency Drive primarily on Seminary Ridge and Promontory Place. The levy is to cover maintenance, landscaping, drainage, etc. for these properties and was set up originally by the builder in order to have the costs for these particular parcels pay for themselves.  Self funding districts have been a preferable method of funding improvements as the assessments are levied on new developments as they are approved. 

    The reserve of the BAD has built up over time as it is also intended to cover replacement of long lived assets - the reserve increases each year and when it comes time to replace certain assets a sufficient fund balance has been accumulated.  This same practice occurs with HOAs as well, however with HOAs a reserve study is required not less frequently than once every three years.  The purpose of the reserve study is among other things, to assess the current remaining useful life of certain covered assets.  By doing this, it could inform how much of an increase in assessment is required to be fully funded.  Because the city manages the BAD, a reserve study is not needed and each year the assessment has been increased by CPI, or 4%, whichever is lower.  This is the maximum that the assessment can be increased.  Starting in 2012, the initial assessment was just north of $3K/parcel.  Now, the assessment is close to $4K/parcel.  If the homeowners in this subdivision desire, they could conduct a reserve study in order to validate the need for these assessments.  Without evidence suggesting it is not necessary, it is likely the city will continue to raise the assessment each year to the maximum extent allowable.

  • We heard an appeal of the Planning Commission decision to grant an extension of 1 year to the Olivia Project.  The specific section of the Clayton Municipal Code under which the Planning Commission granted an extension was 17.64.030 which reads in part:
Upon showing of good cause therefore, the Planning Commission may extend the period of a permit in which it is to be exercised, used or established, for a maximum of twelve (12) months at a time or as otherwise specified on the permit. 

It was made clear that the term "good cause" is not defined, and therefore the Council had discretion on what criteria is uses to determine if there was good cause, and whether the criteria was met.  The second clause of the sentence above states that even if "good cause" is shown, the extension "may" be granted.  In statutory construction, the word "may" indicates a discretionary action.  When legislators wish to require an action, the word "must" or "shall" is typically used, with the latter falling out of favor in recent times.

I made it clear that while previously some folks may have felt compelled to take actions at a project approval stage because of various legal requirements or potential penalties, none of that existed at the project extension stage and that any action take is based on each individual's choice.  I made a motion to grant the appeal and reject the 1 year extension.  Myself and Councilmember Diaz voted to reject the extension, however ultimately it was granted on a vote of 3-2.   The builder now has until March of 2023 to pull building permits.

  • We also discussed adopting a general fund reserve policy by which a certain percent of our reserves are designated for specific purposes.  Ultimately I did not think that the policy was specific enough and it would allow easier spending down of our reserves which I am opposed to.  As drafted, it also contemplated leaving near 50% of the reserve as undesignated, which I was concerned would then lead to calls to spend it as it didn't have a specific purpose.

    I suggested stronger language to provide more constraints around what were allowable uses, greater approval requirements than a simple majority to ensure full community support, and greater restrictions around the use of undesignated reserves.  This will be updated based on feedback and brought back to Council at a later time.