The City Council annually levies an assessment on land and improvements covering the Downtown Parking Maintenance District debt service. Although Proposition 218 requires a new methodology for assessment of the District’s operation and maintenance costs, the City may allow the existing method of assessing for the bonded indebtedness to continue as an ad valorem property tax. For FY 2002/2003, staff is recommending that the Parking Maintenance District assessment rate for the ad valorem component be ($.0521) per $100 of assessed valuation. (The assessment rate for last fiscal year was $.054.)

Since 1964, the City Council has annually levied an assessment for the debt service requirements associated with the acquisition of land for parking facilities. A separate assessment is levied to cover maintenance, operation, and construction of improvements for the City’s Downtown Parking Maintenance District parking facilities. Both of these assessments have been ad valorem based on the value of each property within the district boundaries. Proposition 218, passed by California voters in 1996, only affects the operation and maintenance component of the Parking District. The existing method of assessing for the bonded indebtedness component can legally continue as an ad valorem assessment. The debt service represents approximately one-fourth of the Parking District’s cost, or $72,800.

The bonded indebtedness portion of the assessment will be completely retired in the year 2003. Once retired, property owners will be assessed for only the operations and maintenance costs by separate assessment.

This action is consistent with the City of Sunnyvale’s Fiscal Sub-element Goal 7.1C.1c: "Generally, the method of financing selected for debt retirement should be based on who will benefit and who should pay for the cost of improvements."

The Downtown Parking Maintenance District consists of approximately 70 parcels in Sunnyvale’s downtown area. Over 90% of the Parking Maintenance District consists of commercial businesses.

Staff used the Downtown Parking Maintenance District’s total assessed valuation for FY 2001/2002 to calculate the ad valorem tax rate. The District’s total assessed valuation for FY 2001/2002 is $139,908,039. The County Assessor’s Office is unable to provide staff with the District’s FY 2002/2003 total assessed valuation at this time.

Approval of the debt service component of the Parking Maintenance District assessment will generate approximately $73,000 for FY 2002/2003 to pay bonded indebtedness of $72,800 and the County administrative service charge of $182.00. The County service charge is a new charge imposed by the County for the administration of the bond issue and represents .25% of the debt service.