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Home My WebLink About2021-04-12 City Council Agenda Packet (2) Board of Directors Public Improvement Corporation 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION ON THE CITY’S WEBSITE. Monday, April 12, 2021 Special Meeting 5:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available on the City’s website on the Thursday 11 days preceding the meeting. ***BY VIRTUAL TELECONFERENCE ONLY*** CLICK HERE TO JOIN Meeting ID: 362 027 238 Phone:1(669)900-6833 Pursuant to the provisions of California Governor’s Executive Order N-29-20, issued on March 17, 2020, to prevent the spread of Covid-19, this meeting will be held by virtual teleconference only, with no physical location. The meeting will be broadcast on Cable TV Channel 26, live on YouTube at https://www.youtube.com/c/cityofpaloalto, and Midpen Media Center at https://midpenmedia.org. Members of the public who wish to participate by computer or phone can find the instructions at the end of this agenda. To ensure participation in a particular item, we suggest calling in or connecting online 15 minutes before the item you wish to speak on. 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 the Palo Alto Public Improvement Corporation's Fiscal Year 2020 Annual Financial Report Adjournment 2 April 12, 2021 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION THE CITY’S WEBSITE. Public Comment Instructions Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1. Written public comments may be submitted by email to city.council@cityofpaloalto.org. 2. Spoken public comments using a computer will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom-based meeting. Please read the following instructions carefully. A. You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure you are using a current, up-to-date browser: Chrome 30+, Firefox 27+, Microsoft Edge 12+, Safari 7+. Certain functionality may be disabled in older browsers including Internet Explorer. B. You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. C. When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. D. When called, please limit your remarks to the time limit allotted. E. A timer will be shown on the computer to help keep track of your comments. 3. Spoken public comments using a smart phone will be accepted through the teleconference meeting. To address the Council, download the Zoom application onto your phone from the Apple App Store or Google Play Store and enter the Meeting ID below. Please follow the instructions B-E above. 4. Spoken public comments using a phone use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 362 027 238 Phone:1(669)900-6833 City of Palo Alto (ID # 12120) Palo Alto Public Improvement Corporation Staff Report Report Type: Action Items Meeting Date: 4/12/2021 City of Palo Alto Page 1 Summary Title: FY 2020 PIC Annual Financial Report Title: Approval of Fiscal Year 2020 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 2020 Annual Financial Report for the Palo Alto Public Improvement Corporation. Background The PIC is a nonprofit corporation formed by the City in 1983, allow ing 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). The 30-year borrowing or True Interest Cost (TIC) is 4.1 percent. 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 Aven ue parking garage. Rinconada Library was used as the leased property/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 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. The 30-year borrowing or True Interest Cost (TIC) on the tax-exempt and taxable COPs is 3.5 percent and 4.3 percent. After the issuance of the FY 2020 PIC Annual Financial Report or in March/April 2021, the City issued ($101.5 million plus $6.5 million premium) COPs for the construction of the new Public Safety Building (PSB). City Hall was used as the leased property/collateral during the PSB construction and, upon completion of the PSB, the newly build PSB will be used as the leased property for these tax- exempt COPs. The 30-year borrowing or True Interest Cost (TIC) is 2.13 percent. 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, 2020, total outstanding debt principal on the COPs equaled $45.8 million as follows: COP Description Principal Outstanding (millions) Fiscal Year Debt will be Retired 2018 Capital Improvement (2002B Refinance and Golf Course) $ 8.8 2048 2019 California Ave. Parking Garage $ 37.0 2049 Total COPs $ 45.8 Staff recommends that the Board of Directors of the Palo Alto Public Improvement Corporation (PIC) approve the fiscal year 2020 financial statement for the PIC. City of Palo Alto Page 3 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 n o 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 2020 Annual Financial Report PALO ALTO PUBLIC IMPROVEMENT CORPORATION (A Component Unit of the City of Palo Alto) Annual Financial Report For the Year Ended June 30, 2020 Certified Public Accountants Attachment A Attachment A - 1 Table of Contents Page Attachment A Attachment A - 2 Management’s Responsibility for the Financial Statements Auditor’s Responsibility Opinions Attachment A Attachment A - 3 Other Matters Required Supplementary Information Attachment A Attachment A - 4 Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments. Attachment A Attachment A - 5 Attachment A Attachment A - 6 Attachment A Attachment A - 7 Attachment A Attachment A - 8 Attachment A Attachment A - 9 Attachment A Attachment A - 10 Government-wide Statements: Fund Financial Statements: Debt Service Fund Attachment A Attachment A - 11 Restricted Net Position Restricted Fund Balance Leases Attachment A Attachment A - 12 Attachment A Attachment A - 13 Attachment A Attachment A - 14 Attachment A Attachment A - 15 Attachment A Attachment A - 16