HomeMy WebLinkAbout2020-03-16 City Council Agenda Packet (2)
Palo Alto Public Improvement Corporation
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MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA
PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE.
DURING NORMAL BUSINESS HOURS.
Monday, March 16, 2020
Special Meeting
Council Chambers
6:00 PM
Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in
the Council Chambers on the Thursday 11 days preceding the meeting.
PUBLIC COMMENT
Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker
request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to
discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. Public comment may be addressed to the full City Council via email at City.Council@cityofpaloalto.org.
TIME ESTIMATES
Call to Order
Oral Communications
Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of
Oral Communications period to 30 minutes.
Action Items
1. Approval of Fiscal Year 2019 Palo Alto Public Improvement
Corporation's Annual Financial Report
Adjournment
City of Palo Alto (ID # 11009)
Palo Alto Public Improvement Corporation Staff Report
Report Type: Action Items Meeting Date: 3/16/2020
City of Palo Alto Page 1
Summary Title: FY 2019 PIC Annual Financial Report
Title: Approval of Fiscal Year 2019 Palo Alto Public Improvement
Corporation's Annual Financial Report
From: City Manager
Lead Department: Administrative Services
Recommendation
Staff recommends that the Board of Directors of the Palo Alto Public Improvement Corporation
(PIC) approve the Fiscal Year 2019 Annual Financial Report for the Palo Alto Public
Improvement Corporation.
Background
The PIC is a nonprofit corporation formed by the City in 1983, allowing the City to issue
Certificates of Participation (COPs) to fund capital improvements. The PIC, through a lease
structure, finances the acquisition, improvement, and construction of City facilities. The PIC
uses the lease payments by the City’s General Fund to pay the debt service on the COPs. On July
13, 1998, Council adopted a resolution establishing itself as the Board of Directors of the PIC.
The bylaws of the PIC require the Board of Directors of the Corporation to meet at least
annually and approve the annual financial report for the Corporation. Therefore, the City
Council is required to meet annually as the Board of the PIC.
In 1983 and 1998, the City of Palo Alto issued COPs to fund improvements to the Civic Center
and the Golf Course, respectively. In 2002, the Civic Center bonds were refinanced due to a
lower interest rate environment and COPs were issued to finance the construction of
commercial space adjacent to the new parking structure on Bryant/Florence Street. These
bonds (referred to as the Downtown Parking Improvement bonds or 2002B COP) were used to
build a two story above-ground structure of approximately 7,638 square feet which was leased
to a commercial tenant (Form Fitness Gym).
In fiscal year 2018, the City issued the 2018 Capital Improvement Project and Refinancing COPs
in the amount of $9 million to refinance the 2002B COPs ($0.6 million) and to finance
renovations for the Palo Alto Municipal Golf Course ($8.4 million). Fire Station 1 was used as
the leased property and collateral for these COPs since it had a market value closer to the COPs
City of Palo Alto Page 2
issuance amount. Besides the net present value savings of $0.2 million or 6.47 percent on the
2002B refunded bonds, an added benefit was to substitute the Civic Center with Fire Station 1
as the leased property/collateral. This provides flexibility to leverage the high value of the Civic
Center to finance future infrastructure COPs bond issuance (e.g. Public Safety building COPs).
In fiscal year 2019, the City issued the California Avenue Parking Garage tax exempt Series A
($26.8 million plus $4.9 million premium) and Taxable Series B ($10.6 million) COPs. These
bonds were issued to fund the construction of the new California Avenue parking garage.
Rinconada Library was used as collateral during the garage construction and, upon completion
of the garage, the newly build California Avenue Parking garage will be used as the leased
property/collateral for these COPs. To preserve greater operational flexibility to use this garage
facility over the life of the bonds (e.g. lease portion of the garage for private parking or other
commercial use), a portion of the bonds were issued as taxable bonds.
City of Palo Alto Page 3
Discussion
The attached financial statement shows the financial condition of the PIC. The debt service
payments have been made on time and all financial requirements have been met. At year-end,
June 30, 2019, total outstanding debt principal on the COPs equaled $46.3 million as follows:
COP Description
Principal
Outstanding
(millions)
Fiscal Year Debt
will be Retired
2018 Capital Improvement
(2002B Refinance and Golf Course) $ 8.9 2048
2019 California Ave. Parking Garage $ 37.4 2049
Total COPs $ 46.3
Staff recommends that the Board of Directors of the Palo Alto Public Improvement Corporation
(PIC) approve the fiscal year 2019 financial statement for the PIC.
Stakeholder Engagement
Staff works internally and coordinates with the City Auditor’s Office third party external auditor
Macias Gini & O’Connell LLP (MGO) to prepare this report.
Resource Impact
Approval of the Palo Alto Public Improvement Corporation’s financial statements will have no
resource impact.
Policy Implications
Approval of the Palo Alto Public Improvement Corporation’s financial statements is consistent
with prior Council policy direction and resolutions.
Environmental Review
This is not a project, as defined in Section 21065 of the California Environmental Quality Act
(CEQA).
Attachments:
• Attachment A Palo Alto Public Improvement Corporation Fiscal Year 2019 Annual
Financial Report
Attachment A
Page
Management’s Responsibility for the Financial Statements
Auditor’s Responsibility
Opinions
Other Matters
Required Supplementary Information
Basic Financial Statements - and Management’s Discussion and Analysis - for State and
Local Governments.
Government-wide Statements:
Fund Financial Statements:
Debt Service Fund
Restricted Net Position
Restricted Fund Balance