CITY COUNCIL REGULA MEETING AGENDA PACKET _Revised_ 6-2-26

Page 7 of 11 The current annual assessment of $389.56 per parcel is no longer sufficient to maintain district improvements at prior service levels. Current revenue supports reduced maintenance, payment of County assessment fees, and City administration fees, but it does not fund the capital repair and replacement work necessary to preserve and restore key infrastructure. The district’s capital repair and replacement anticipated year-end fund balance is approximately $17,300. The reserve is inadequate to address significant near-term capital needs, including: • irrigation system replacement; • tree and shrub replacement; • mulch replenishment; • fence repair and painting; and • basic landscape rehabilitation. In recent years, water service to the district has been shut off due to persistent irrigation leaks, resulting in widespread landscape decline. Many trees and shrubs have died or are in poor condition due to the lack of irrigation. Restoring even minimal landscape quality will require a functioning irrigation system to support plant replacement and ongoing maintenance. Increasing costs for capital improvements, electricity, water, and maintenance, including weed management, which now accounts for approximately 40 percent of the annual district budget, continue to strain the district’s financial capacity. Current-year costs for basic maintenance, water, and electricity are projected at approximately $35,800, leaving insufficient funds to replenish the reserve. Total estimated capital and improvement needs over the next decade are approximately $800,000, including: • irrigation system replacement; • landscape restoration; • major fence repairs;and • state-mandated fire mitigation improvements. A Proposition 218 process is currently underway to raise assessments to a sustainable level. However, if the Proposition 218 property owner ballot proceeding does not pass, staff will need to further reduce maintenance, and property owners should expect continued deterioration of the district's landscape and infrastructure. Landscape Maintenance District 1994-1, Oak Tree Farm LMD 1994-1, established in 1994, provides for the maintenance of open space areas, entry features, decorative lighting, firebreaks, trees, shrubbery, groundcover, and irrigation systems within the Oak Tree Farm subdivision. The current annual assessment of $617.41 per parcel is sufficient to fund reduced maintenance services, including County assessment fees, City administration fees, and minor improvements. However, it is not sufficient to fund critical capital repairs, irrigation system Page 72 of 617