GHAD MEETING AGENDA PACKET5-19-26

Page 2 of 4 reserve funds within the GHADs can help offset repair costs. Without the GHADs, landslides could threaten homes and critical infrastructure within each neighborhood, with limited funding options available to mitigate the damage. GHADs are formed when a geotechnical investigation associated with neighborhood development identifies hillside areas as unsuitable for housing due to underlying geologic conditions that would be costly for a developer to address. These areas are then set aside as open space. The developer is required to construct drainage infrastructure and related improvements designed to reduce the likelihood of landslides and address the impact should a landslide occur. Formation of a GHAD also requires a Plan of Control that identifies the drainage infrastructure to be monitored and maintained and estimates the cost of that work. The Plan of Control also recommends the establishment of a reserve account, funded by the developer, to be used if damage occurs. The City Council serves as the Board of Directors for each GHAD and is responsible for overseeing district funding to ensure assessments are used only as prescribed in the Plan of Control. The Board must also authorize annual assessment increases based on the Engineer’s Reports. Under California Proposition 218, approved by voters in November 1996, assessment increases must follow the escalation clause in each Plan of Control and are limited to no more than two percent each year. To proceed with the annual assessment process, the Board must: 1. Convene as the Board for the Laurel Creek, Moller Ranch, Lemoine Ranch, and Oak Tree Farm GHADs; 2. Adopt a resolution approving the Engineer's Reports for each GHAD and declaring the Board's intention to levy assessments within each GHAD for the cost of operating and maintaining the district improvements; 3. Set June 16, 2026, as the date for the public hearing to consider protests regarding the proposed assessments; and 4. Direct the Clerk of the Districts to mail a notice of the public hearing to the owners of real property located within each GHAD. DISCUSSION Annual assessments may be adjusted each year based on the Construction Cost Index (CCI) for the San Francisco Bay Area, as published by Engineering News-Record (ENR), a nationwide construction industry publication. Staff recommends a two percent increase for each GHAD for fiscal year (FY) 2026/27. The table below identifies: (A) the number of parcels within each GHAD subject to assessment; (B) the proposed assessment amount for the coming year; (C) the projected total revenue; (D) the anticipated operating expenses; (E) the excess revenue to be deposited into reserve accounts; and (F) the total current fund reserve. The reserve amounts assume significant hillside slope repairs may be needed once every 10 years. Page 4 of 30