Best Practices: Are You Submitting Your Annual Report Properly?

Unfortunately, the answer may be no. We often see beautiful, detailed reports on everything our districts accomplished last year. And while those reports are a vital, wonderful tool for communicating with stakeholders, they usually don’t meet the requirements of the law.

So, what do you have to put in your annual report? The guidelines herein are the basis required by California law; your district may have additional, specific requirements. Additional details or requirements on the annual report may be found in your Management District Plan (Plan) or contract with your local jurisdiction.

Time Frame
The annual report should be submitted to the City or County 2-3 months prior to the start of the fiscal year to which it applies. Be sure the applicable fiscal year (the upcoming year) is indicated in the report. All required items in the report should be forward looking; it is a prospective planning report, not a reflective report on activities. Past activities can be included in addition, but be sure all required elements are also in your annual report.

Required Elements
There are six elements of an annual report as required by California law. Although the answer to many of the elements is often “no change,” it is important to ensure that they are all addressed in the report.

Any proposed changes in the boundaries of the district or benefit zones.
Ideally, this section will describe the boundaries and indicate whether there are any changes proposed. Even if there are no changes, be sure to include a statement that there are no changes.

The improvements and activities to be provided.
In other words, what do you plan on doing this year? This can simply be copied from the Management District Plan. Any amendments to the language in the Plan should be minor.

The estimated cost of the improvements and activities.
Alternatively stated, the budget for the upcoming year. The Management District Plan should include a budget; be sure that your proposed allocations are within the confines of the Plan. Some Plans allow for a small variance (typically 10-15%) between line items each year; if any variance is proposed, ensure it is compliant with the Plan.

The assessment rate.
This item is commonly omitted from annual reports. Even if there is no change to the assessment rate, it must be included in the report.

Surplus or deficit to be carried over.
The amount of any assessment funds to be carried over, including the reserve fund.

Non-Assessment sources of funding.
This line item has become increasingly important. Property-based districts that have been formed or renewed after 2012 should have in their Plans a “general benefit” amount. It is important to demonstrate non-assessment funding meeting or exceeding that amount. Tourism and business districts do not have a “general benefit” amount, but if their programs generate benefits to any non-assessed businesses, some non-assessment funds should be reported.

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