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DEPARTMENT OF PUBLIC WORKS
COUNTY OF SANTA CRUZ

701 OCEAN STREET, ROOM 410, SANTA CRUZ, CA 95060

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County Service Areas

 Insurance / County Fees /
Requirements for Obtaining Road Work

FORMATION AND OPERATION OF COUNTY SERVICE AREAS (CSAs)

Purpose:

Service areas can be formed to provide residents in rural areas with services that are not generally provided by existing business or government agencies.  One of these services is road maintenance and operation.

Residents organize to form the service area and determine the benefit assessment rate that they wish to assess themselves to finance a specific service, such as road maintenance.  One of the major reasons to form a CSA is that it provides an effective mechanism to collect benefit assessments from all property owners in an area that benefits from the specific services provided.  The annual benefit assessment appears on each parcel's property tax bill.

Formation:

The outline below lists the steps involved in the formation process.  All times and fees are approximate and the actual times and fees will vary with the size and complexity of the service area.

1.       An organized group, such as a road association, submits a completed application and petition to the Local Agency Formation Commission (LAFCO) along with a sufficient deposit to cover the various charges and fees involved in the formation process.  The application and petition can be obtained from LAFCO on the third floor of the Government Center, Room 318‑D, phone number 454-2055.  The applicants shall also sign an agreement to indemnify, defend, and hold harmless the County, its employees and agents from and against any and all claims, demands, costs, liability, and actions in any way related to the formation and operation of the service area.  It is highly recommended that at least 2/3 of the affected property owners desire the formation of the service areas; having the initial support of a large portion of the residents will help to insure smooth operation of the service area in the future.

2.       Public Works researches the area and prepares a map and legal description of the proposed service area (cost based on staff time).  This step can be performed by a private consulting engineer if the residents desire to do so.  A separate agreement covering this work would be made between the engineer and the group desiring services and would reduce the amount of the deposit required with the application (three to four weeks)

3.       The map, description, application, and $2,250 initial deposit are submitted to LAFCO.  LAFCO reviews the proposed boundaries of the CSA to determine that all parcels that will benefit from the CSA are included and any that won't benefit are excluded.  LAFCO will advertise and hold a public hearing to determine the final CSA boundary.  LAFCO costs are based on time and expense charges.  Any monies remaining from the deposit will be deposited into the service area fund for use in future road repairs or other proposed services.  If costs exceed the initial $2,250 deposit, the service area will be billed for the remaining balance.  (three months)

4.       Public Works submits the LAFCO-approved boundary to the Santa Cruz County Board of Supervisors.  The Board will advertise and set a date for a public hearing on the formation of the service area.  After the hearing the service area is approved or the process terminated.  Concurrent with the CSA formation, Public Works will request the Board of Supervisors to initiate the benefit assessment rate proceedings in accordance with Proposition 218 ballot proceedings. (See page 3) (three to four weeks)

5.       Public Works submits the map and description as approved by the County Board of Supervisors to LAFCO for the State Board of Equalization (cost $300-$1,500 based on acreage).  LAFCO records the service area and forwards the necessary information and the filing fee to the State Board of Equalization (SBE).  After filing with the SBE, the formation process is complete.

A condition of the formation of a service area is that the roads must be open for all public use and that there can be no barriers, such as gates, on the road.

CSA Operation:

Public Works requests two authorized representatives be designated by the service area as liaisons.  These representatives will advise Public Works on all matters pertaining to their CSA operation.

Once a year, the CSA must hold a meeting to establish benefit assessment rates and a work program.  Based on the property owner’s wishes, the Board of Supervisors then sets the rates and approves an annual budget for the CSA.  The benefit assessments are collected on the regular property tax bill in December and April each year.

In November 1996, California voters approved Proposition 218, “The Right to Vote on Taxes Act.”  This measure states that a County service area must conduct a mailed ballot procedure and public hearing in order to set the initial rate and any proposed increases.  The mailed ballot procedure is conducted by the County, with the associated costs billed to the service area, including staff time for preparation of ballots and an engineer’s report, mailing, advertising and tallying of ballots.  Costs for an election vary, depending on the size of the service area, but would be a minimum of $500.

INSURANCE:

1.       Each service area may be accepted into the County Self‑Insurance Program, but only as it relates to the County's liability.  The charge will be based on the exposure to the County's insurance program and is included in the Departmental Overhead Rate.

OR

2.       All contractors performing work shall first submit a Certificate of Insurance acceptable to the Public Works Department showing a minimum coverage of $1,000,000 General Liability, $500,000 Automobile Liability and Worker's Compensation Insurance.

Each service area may obtain an insurance policy acceptable to the County covering both the County and the Road Association.  Cost of this policy will be paid out of the appropriate County service area budget.

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REQUIREMENTS FOR OBTAINING ROAD WORK:

1.       All contractors performing work shall possess a Class "A" General Engineering license issued by the State of California.

2.       All contractors performing work shall submit a Certificate of Insurance acceptable to the Public Works Department showing a minimum coverage of $1,000,000 Comprehensive or Commercial General Liability combined single unit, $500,000 Automobile Liability combined single unit per occurrence and Worker’s Compensation in the minimum statutory required coverage amounts.  All required Automobile and Comprehensive or Commercial General Liability insurance shall be endorsed to include the County of Santa Cruz and provide a 30-day prior written notice of cancellation.

3.       Contractors must pay prevailing wage pursuant to Section 1773 of the California Labor Code.

4.       Projects may not be split in order to circumvent the maximum dollar limits.

5.       Work with a value of up to $3,999 may be performed by a contractor after the work  is approved by the Public Works Department and a purchase order is issued.  The CSA shall submit an informal proposal to the County from a prospective contractor for consideration.  Contractors may use County Service Area Independent Contractor Agreement Form.

6.       Work with a value of $4,000 up to $9,999 is subject to informal bidding procedures, as specified by Public Contract Code 20150.  These types of projects require that the CSA submit the scope of work and a location map.  A request for proposals will be advertised in a newspaper of general circulation at least 24 hours prior to opening of the bids.  Once the bids are reviewed the CSA representative will be notified of the results.  Public Works will select the successful low bidder and issue a purchase order.  Once a purchase order has been issued, Public Works must authorize any changes to the scope of work.

7.       Projects equal to or in excess of $10,000 in value are subject to formal bid procedures and must have detailed plans and specifications approved by the Board of Supervisors prior to advertisement and solicitation of bids.  The detailed plans and specifications should be prepared by a private consulting engineer.  After review, Public Works will conduct the formal bid.  The lowest bidder will be awarded the contract upon final approval of the CSA.

Under emergency conditions, the CSA can hire a contractor to perform emergency work.  The CSA representative shall call Public Works and will be issued an emergency purchase order number within approximately one‑half hour.  Requests for after-hours or weekend emergency work should be submitted using our 24-hour road maintenance dispatch phone number, (831) 477-3999.  Calls to this number are routed through the Santa Cruz County Emergency Communications Center (911), to the CSA administrator, or the on-call Public Works supervisor. 

All work in service areas must be approved by the County prior to commencement of work.  Any work that is performed without prior approval cannot be paid using service area funds.  Please be advised that in order to have any work performed in a CSA, sufficient funding must be in place.

County Fees:

The following fees are charged by the County and are subject to change:

1.       Auditor/Controller charges l/2 of l percent of the gross revenue received by the CSA with a minimum charge of $125 and a maximum of $500 annually.

2.       Auditor/Controller charges 1 percent of benefit assessment revenue collected to cover collection efforts.

3.       Public Works currently charges 8.5 percent of the amount actually spent by the CSA to cover departmental overhead.

4.       In addition, a division overhead rate is charged when services such as Engineering, Survey or Road Maintenance crews are provided to the CSA by Public Works .  The current Division overhead rates range from 27.75 percent- 48.81 percent.

5.       Annually, each service area will be charged their prorated share of costs involved in updating and maintaining the computerized service charge system.

          6.       Each service area will be charged the current hourly rate for work requested by the service area such as special billings, research, field consultations and estimates.

Revised 6/03/2011 

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