SR-506-002 (5)
, ~t:J~-ooz
GS.SES:JAS
Councll Meetlng. ebruary 28. 1984
.
Santa Monlca.
-M~,
Lftx>'s
Callforn1a
ll-~
TO:
Mayor and Clty Councll
FROM:
Clty Staff
fEr 2 ~ 1f1nl
SUBJECT:
INTRODUCTION
Report on Street Llght1ng
The Clty Councll at the January 17, 1984 Counell meetlng
requested that the staff 1) contact lnsurance earr1ers to
determlne If the lnstallatlon of street llghts would result 1n a
reductlon In lnsurance costs to property owners; 2) examlne any
other poss1ble real1zable benef1ts lncludlng tax beneflts WhlCh
owners may ga1n when street llghts are 1nstalled; and 3) provlde
tYPlcal
street 11ght1ng assessment costs for landlords and
tenants.
BACKGROUND
Insurance Benefits from ~treet Llght1ng.
Several
1eadlng lnsurance agents who each represent a number of
dlfferent lnsurance companles were contacted to determlne If the
presence of street llghtlng resulted 1n lower prem1ums for flre
and lor 11 a b 1 11 ty 1 n sur a n c e .
It should be noted that flre and
llab111ty lnsurance are the only types of lnsurance normally
carrled by owners of mult1-famlly dwel11ngs.
(There 15 also a
small amount of theft coverage of bU1ld1ng 1tems lncluded 1n the
1nsurance package). The 1nsurance agents stated that there are
no reduced premlums for f1re and llabll1ty 1nsurance due to the
presence of street 11ghts.
tl-F
FE8 28 Jf84
1
GS:SES:JAS .
Councll Meet1ng: bruary 28, 1984
s~ Mon,ea, Cal,fornl.
Other Real1zed Benef1t5.
Staff also contacted several mult1-fam1ly bUlld1ng owners and
requested lnformat1on regard1ng other benef1t5 Wh1Ch may accrue
If street 11ghts are present. A summary of the lnformat1on that
was obta1ned and verlfled 1S as follows:
A. Tax
Deduct1on.
The
tax
deduct10n for street llght
assessments or any other types of assessment 1S the same as
any expense ltem accord1ng to the IRS Informat1on ASSlstance
Off1ce.
The ult1mate cost sav1ngs to the owner 15 varlable
depend1ng upon the tax status of the owner.
B. Benef1ts 1n Property Values. Property values of rental sltes
depend pr1nc1pally on 1ncome stream generated, expenses and
locat1on.
Property value 1S reduced by deferred ma1ntenance
and advanced age. Realtors who spec1al1ze 1n rental property
state that there 1S no measurable 1ncrease 1n property value
when street llghts are lnstalled.
Th1S 1S not true for
slngle-fam1ly houslng and poss1bly duplexes and tr1plexes
where the presence of street llghts may result 1n 1ncreased
property value.
C. Vandallsm.
BUlld1ng owners were uncerta1n as to whether the
presence of streetllghtlng would reduce vandallsm.
It 1S not
clear whether most vandal1sm occurs at n1ght or whether
llght1ng would reduce the occurrences of vandall sm.
D. Indlrect Benef1ts. There are 1nd1rect benef1ts to resldents
and owners resultlng from street llghtlng such as 1mproved
2
GS:SES:JAS ~
Councll Meetlng~brUary 28, 1984
.
Santa Monlca, Callfornla
appearance of the nelghborhood and a percelved sense of
seCUrlty.
These lndlrect beneflts are not quantlflable wlth
respect to a lncrease 1n property value. espec1ally for
multl-fam1ly bUlldlngs.
Costs of Street Llght1ng
The POllCY establ1shed more than 15 years ago by the Clty Councll
and WhlCh has been used In at least 50 dlstrlcts Slnce then has
been for the Clty to pay 50%
of the cost of street llght
lnstallat10n ln resldentlal areas and assess the remalnlng 50% to
the property owners In accordance w1th the Improvement Act of
1911 (Cal1fornla Street and H1ghways Code).
The POllCY 1S to
assess 100% of the cost of the 1nstallat1on of street llghtlng to
the property owners In commerc1al and 1ndustrlal areas.
The typlcal assessment for the most recent street llghtlng
prOject (Berkeley Street - north of Wllshlre) lS $404.18 for each
60-foot lot. As prevlously descr1bed, thlS 15 for the property
owner1s 50% share of the lnstallatlon costs.
The annual cost lnclud1ng 1nterest (calculated at 7% for
lllustratlve purposes) for those owners who choose not to pay
cash for the assessment (about 50% of the owners on a tYPlcal
proJect), over a ten-year perlod are as follows for the above
referenced parcels:
1st year S 74.95
2nd year 65.87
3rd year 63.03
4th year 60.21
5th year 57.39
6th year 54.55
3
GS:SES:JAS .
Counc1l Meet1ng: bruary 28, 1984
s~ Mon,ea, Cal,forn,a
7th year 51.73
8t h year 48.89
9th year 46.07
lath year 43.23
Total $565.92
PROVISION FOR PASS THROUGH OF STREET LIGHTING A~SES~MENT COSTS TO
TENANTS
On February 9. 1984, the Rent Control Board adopted the attached
resolut1on
regard1ng
the pass through of street 11ght1ng
1nstallat1on costs to tenants. The Board declared lts support
of: a pass through of 70% of the property owner's assessment to
the tenants; a requ1rement that resldents resld1ng ln 2/3 of the
rental un1ts 1n a glven assessment dlstrlct slgn the lnlt1at1ng
petltlon; a cap on assessments passed through to anyone unlt;
and a proV1slon for ass1stance to low-1ncome tenants and
landlords.
However, lack1ng adequate support from Councll to
approve the 70% pass through, the Rent Board conveyed 1ts resolve
to pass through to tenants 100% of the 11ght1ng assessment costs
charged to an apartment bUlld1ng owner. The Board urged as well
a
cap
and asslstance to llm1ted 1ncome persons 1n thlS
eventua 11 ty.
Costs to Resldents of TYPlca1 Assessment Street L1ght1ng Projects
(10-year perlod/7% 1nterest)
For tYPlcal 4-unlt bUlldlng on a 60-foot lot
For 100% pass-through:
$565.92/(4 X 120) ~ $1.18 per month per un1t
For 70% pass-through:
.70 X $565.92/(4 X 120) ~ $0.83 per month per un1t
4
GS:SES:JAS ~
Councll Meetln~ebrUary 28, 1984
.
Santa Monlca, Callfornla
For a typlcal IO-unlt bUlldlng on a 60-foot lot
For 100% pass-through
$565.92/(10 X 120) = $0.47 per month per unlt
For 70% pass-through:
.70 X $565.92/(10 X 120) = $0.33 per month per unlt
Costs to Property Owners of TYPlcal Assessment Street Llghtlng
ProJects (lO-year perlod/7% lnterest)
For tYPlcal apartment bUlldlng on 60-foot lot regardless of
l1umber of urn ts
For 100% pass-through wlth
no vacancy factor
No cost
For 70% pass-through wlth
no vacancy factor
$1.42 per month
For 100% pass-through wlth
5% vacancy factor
$.24 per month
For 70% pass-through wlth
5% vacancy factor
$1.66 per month
PROCEDURES FOR IMPLEMENTING NEW STREET LIGHTING ASSESSMENT
DISTRICTS IN RENTAL AREAS
Once the Clty Councll and the Rent Control ~oard agree on a
POllCY for assessment of llghtlng constructlon costs to tenants
and provldlng for tenant-lnltlated street llghtlng proJects, the
followlng procedures are enVlsloned:
1. Renters and/or owners may request an lnltlatlng petltlon
from General Servl ces I staff.
2. Upon recelpt of petltlons from resldents representlng at
least 60% of the unlts from at least two contlguous blocks
of streets, the staff wlll do prellmlnary deslgn and
estlmate the cost of lightlng and make a report to City
Councll. (The staff belleves that because of the three-year
5
GS:SES:JAS .
Councll Meet1ng. ebruary 28, 1984
~a Monlea, Callforn,a
morator1um on new street 11ght1ng there wlll be a large
number of groups pet1t1onlng for street l1ght1ng.) Staff
proposes to assemble the pet1t1ons ln packages of not less
than ten blocks and not more than th1rty blocks 1n one
proJect.
Tn1s
wlll
ensure
t1mely
processlng
and
constructlon as well as ach1eve the beneflts of economy of
scale 1n construct1on cost to the Clty and res1dents.
3. C1ty Counc11 w111 evaluate the data, pass a Resolut1on
of Intent10n to 1n1t1ate the Assessment D1strlct. and set a
publ1e hearlng.
4. The staff w111 notlfy all property owners and resldents
of the t1me and date of the publ1C hear1ng and send each
owner an est1mated amount of assessment. For renters, staff
proposes that the notlce of publ1C hearlng be posted 1n each
bUlld1ng and conta1n an est1mated monthly unlt pass-through
amount Notlces w1ll be posted along the street as provlded
by State law.
5. Upon
conflrmatlon of the assessment, by the Clty
Coune1l, property owners would have 30 days 1n wn1ch to pay
the assessment 1n cash.
If the assessment 1S not pa1d In
full, the rema1n1ng amount 1S flnanced V1d the 1ssuance of
bonds and a l1en 1S placed on the property 1n that amount as
secur1ty for the bonds (as 1n all assessment dlstr1ets where
bonds are lssued).
6
GS:SES:JAS ~
Counc1l Meet1ng~bruary 28, 1984
s~ Monlea, Callfornla
6. The staff of the General Serv1ces Department and the
Rent Control Board have met and recommend that to s1mpl1fy
1mplementat1on of the tenant pass-through, the General
SerV1ces Department w1ll calculate the total costs over a
ten-yedr per10d and prov1de the costs to Rent Control.
($565.92 1nclud1ng 1nterest 1n the above example.) The Rent
Control Board w1ll then d1V1de the assessment by 120 months
and the number of unlts and author1ze a pass through, as
shown 1n the example.
The property owner w1ll necessarlly bear the full costs of
the 11ght1ng for any months a unlt lS vacant.
It 1S
conS1dered by the staff to be unfeas1ble to author1ze
redlstrlbutlon of these costs to other rental unlts ln the
bU1ld1ng,
PROVISIONS FOR PAYMENT OF ASSESSMENTS FOR THOSE OWNERS OR
RESIITENTS WHO ARE LOW-INCOME PERSONS,
For the past three years the Clty has used CDBG funds for
payment of assessments for s1dewalk repalr and street
llghtlng for those property owners who qual1fy. Tne 1ncome
llm1ts are:
1 person
2 persons
3 persons
4 persons
5 persons
6 persons
7 persons
8 or more
$15,250
17,400
19,550
21,750
23,100
24,450
25,850
27,200
These funds can be used for street llghtlng assessments.
7
GS:SES:JAS .
Counc1l Meet1 eDruary 28, 1984
~a Mon1ca, Cal1forn1a
FINANCIAL/BUDGET ANALYSIS
There
currently
1 S
$100,000
1 n
Account
No.
01-500-453-000-902 and an add1t1onal $100,000 proposed 1n
the $1 m1ll1on cap1tal cont1ngency fund ava1lable for the
1nstallat1on of street llghts upon pet1t1on from area
res1dents.
In the most opt1m1st1c C1rcumstance the General
Serv1ces Department can process and 1nstall no more than
$200,000 worth of street 11ght1ng 1n the rema1n1ng months of
th1S f1scal year.
RECOMMENDATIONS
It 1S recommended that the C1ty Counc1l approve the
1mplementat1on plan for street llght1ng as descr1bed and
establ1sh a P011CY on the percentage of assessment costs to
be passed through to renters. Adm1n1strat1ve cons1derat1ons
suggest a 100% pass through of costs to tenants would
fac1l1tate the actual 1nstallatlon of requested 11ght1ng.
However, lssues of equlty must be carefully cons1dered.
Prepared by: Stan SCholl, D1rector of General SerV1ces
Attachment. Resolut1on
8
.
.
SANTA MONICA RENT CONTROL BOARD
RESOLUTION ON RESIDENTIAL STREET LIGHTING IMPROVEMENTS
WHEREAS, tenants in many multi-family neighborhoods
desIre to have streetlighting provided in theIr neIghborhoods;
and
WHEREAS, the City has IndIcated that It cannot afford
to fInance such street lIghtIng in its entirety but that some
portion of the costs must be borne by landlords and/or tenants;
and
WHEREAS, the City has been approached by some tenants
who have indicated that they would sign a petition to have
street lights installed In theIr neIghborhoods and have also
indicated theIr willIngness to pay some portIon of the costs of
such installation; and
WHEREAS, the City has urged the Rent Control Board to
consider passing a portIon of the costs of tenant-InItIated
street lighting on to tenants;
NOW, THEREFORE, THE SANTA MONICA RENT CONTROL BOARD
RESOLVES TO SUPPORT THE CITY'S PASSAGE OF AN ORDINANCE
ESTABLISHING PROCEDURES WHEREBY TENANTS CAN PETITION FOR
INSTALLATION OF RESIDENTIAL STREET LIGHTING IMPROVEMENTS, AND
TO ASSIST IN THAT EFFORT BY ALLOWING SOME PASS~THROUGH OF THE
COSTS TO TENANTS SUBJECT TO THE FOLLOWING CONDITIONS:
1. That one or more tenants in two-thirds of the
rental units in any assessment area would have to sIgn a
petition in order to institute residential street lightIng
improvement proceedings; and
2. That the portion of street lightIng costs for
which a landlord is assessed would be passed through to
resIdents of the property to the extent and subject to the
limItations set forth below:
a) Seventy (70) percent of the cost would be
passed through to the tenants and the remaIning thIrty (30)
percent of the cost would be paId by the landlord;
b) Low income landlords and tenants would not be
charged any assessments and In such cases, the CIty would
provide funds for the entire cost of streetlightlng;
.
.
c) There would be a cap on the amount that any
one unit would be required to pay for street lighting;
d) The monthly cost passed through to the tenant
would be the total cost amortized over a period of ten years.
IF, HOWEVER, THERE ARE NOT SIX AFFIRMATIVE VOTES ON
THE CITY COUNCIL ENDORSING THE ABOVE STATED RESOLUTION,
THE RENT CONTROL BOARD HEREBY CONVEYS ITS RESOLVE TO
PASS THROUGH ONE HUNDRED (100) PERCENT OF THE ASSESSMENT
CHARGES NOT BORNE BY THE CITY TO TENANTS. THE RENT CONTROL
BOARD WOULD THEN ASK THE COUNCIL TO CONSIDER IMPLEMENTING THE
BOARD'S SUGGESTIONS CONCERNING LOW-INCOME TENANTS AND LANDLORDS
AND A PER-UKIT CAP.
Adopted and approved this
9th
day of February,
1984.
~~z~
I hereby certIfy that the foregoing resolution was
duly adopted by the Santa Monica Rent Control Board at a
regular meeting thereof held on February 9, 1984 by the
following vote of the Board:
AYES:
NOES:
ABSENT:
Boardmember:
Boardmember:
Boardmember:
Bauer, Lambert, Llpson, Nagler
None
Flnkel
Attest: ~ ) )
~ ~C;;;~cDH__
Sectetary ~o tl~- Bcfan1.
APPROVED AS TO FORM:
IJrLU~
Senior Atto'riley
-2-
(4987t)