Seabridge Community Facilities District No. 4

In December 2004, the City adopted Resolution No. 12,739, establishing CFD No. 4 and Ordinance No. 2677 to levy a special tax assessment to pay unfunded costs relating to the infrastructure and maintenance of Seabridge. (Att-01)

CFD No. 4 is a non-bonded district for services and maintenance with no sunset clause. Annual assessments can increase up to a maximum of 2 percent each year. (Ref-02)

The MOU between the City and the County includes an annual payment of $100,000 for the added value the Channel Islands Harbor provides to Seabridge property owners. (Ref-03)

The Grand Jury could not locate a budget expenditure related to the $100,000 the County receives annually for the added value the harbor brings to Seabridge. (Ref-04)

Proposition 218 was approved by State voters in November 1996 as “…a means of curbing perceived abuses in the use of assessments and property-related fees, specifically the use of these revenue-raising tools to pay for general governmental services rather than property-related services.” (Ref-05)

A Ventura County Star article, dated April 19, 2018, reported: “Currently, Seabridge residents pay $1.6 million every year to the District; half of that goes toward Harbor Patrol.” It further reported: “This past year, residents saw their Community Facilities District payments increased by 27 percent.” (Ref-06)

Over a period of three consecutive fiscal years, the Channel Islands Harbor Patrol’s (Harbor Patrol) budget increased 18 percent. Seabridge Community Facilities District No. 4

In fiscal year 2013-2014, the City budgeted $543,000 for Harbor Patrol services. The actual costs for that fiscal year were $678,000.

In fiscal year 2014-2015, the City budgeted $545,000 for Harbor Patrol services. The actual costs for that fiscal year were $654,000.

In fiscal year 2015-2016, the City budgeted $720,000 for Harbor Patrol services. The actual costs for that fiscal year were $736,000.

The City reported the 2015 CFD No. 4 budget showed some improper charges. The City later corrected its statement regarding improper charges by indicating the comment was referring to a Land Maintenance District and not CFD No. 4.

In September 2014, the City completed the CFD No. Seabridge at Mandalay Bay Evaluation of Reserve Fund report. The report showed a reserve-fund balance of $2.9 million. The report recommended a reserve-fund balance of $2.6 million, two times larger than CFD No. 4’s annual operating budget. (Att-02)

The Reserve Fund Summary includes costs related to County Harbor Patrol capital equipment, seawall and public walkways/docks, harbor entrance dredging, parks, landscaping, hardscaping, structures, and storm drain filters. (Att-02)

The Reserve Fund Summary states, “The Reserve Fund balance is supposed to be established for extraordinary or infrequently occurring expenses.” (Att-03)

The City increased reserve-fund assessments in the unlikely event that the Corps stopped providing dredging of the harbor entrance at no cost to the County.

In the history of Seabridge, the Corps has never charged for Channel Islands Harbor dredging services.

The reserve-fund report concluded, “If the Reserve Fund is able to rise next year; then, it would be appropriate [for the City and County] to consider a reduction in the annual fees or taxes.” This has not been done to date. The City is completing an updated evaluation of the CFD No. 4 reserve fund. (Att-03)

On February 13, 2018, Seabridge residents delivered a petition to the City requesting that a ballot measure entitled Ordinance Reducing Special Tax in Community Facilities District No. 4 be placed on the ballot for the November 6, 2018, general election. The City Council unanimously approved the petition. (Att-04) Conclusions C-01. The Grand Jury concluded there is no expenditure within the Channel Islands Harbor Patrol’s budget related to the $100,000 charged by the County annually to CFD No. 4. (FA-03, FA-04, FA-05) Seabridge Community Facilities District No. 4 3 C-02. The Grand Jury concluded that during a three-year period, the City underbudgeted for County services. As a result, CFD No. 4 reserve funds were used to address the budget shortfalls. (FA-06, FA-07, FA- 08) C-03. The Grand Jury concluded County Harbor Patrol – Capital Equipment, Parks Landscaping, Hardscaping and Structures and storm drain filters are ordinary and frequently occurring expenses and should not be paid using the CFD No. 4 reserve fund. (FA-12, FA-13) C-04. The Grand Jury concluded the City is collecting assessments from Seabridge residents for dredging services already provided by the Corps without charge. (FA-14, FA-15) C-05. The Grand Jury concluded that fluctuations in the City’s budget pass- through and shortfalls created a dependency on the CFD No. 4 reserve- fund account. This dependency prevented a reduction in the annual assessments. (FA-06, FA-07, FA-08, FA-10, FA-11, FA-13) C-06. Seabridge CFD No. 4 assessment has increased in recent years by as much as 27 percent. The Grand Jury concluded this is in conflict with the Seabridge MOU, which limits annual assessment increases to no more than 2 percent above the previous year. (FA-01, FA-02, FA-09,