HomeMy WebLinkAbout2013-03-11 City Council Agenda Packet (2)BOARD OF DIRECTORS
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
Agenda posted according to PAMC Section 2.04.070. A binder containing supporting
materials is available in the Council Chambers on the Friday preceding the meeting.
1 March 11, 2013
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DURING NORMAL BUSINESS HOURS.
Special Meeting
Council Chambers
March 11, 2013
7:00 PM
Call to ORDER
ORAL COMMUNICATIONS
ACTION ITEMS
1. Approval of 2011-12 Public Improvement Corporation Financial
Statement
ADJOURNMENT
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City of Palo Alto (ID # 3601)
Palo Alto Public Improvement Corporation Staff Report
Report Type: Action Items Meeting Date: 3/11/2013
City of Palo Alto Page 1
Summary Title: Public Improvement Corporation Board
Title: Approval of 2011-12 Public Improvement Corporation Financial
Statement
From: City Manager
Lead Department: Administrative Services
Recommendation
Staff recommends that the Board of Directors of the Public Improvement Corporation (PIC)
approve the 2011-12 financial statement for the Public Improvement Corporation.
Motion: Board of Directors of the Public Improvement Corporation (PIC) adopt the attached
2011-12 PIC Annual Financial Report
Background
The Public Improvement Corporation (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. In 1983 and 1998, the City of Palo Alto issued Certificates of Participation (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. The bylaws of the PIC require the Board of Directors of the Corporation
to meet at least annually and approve the financial statement for the Corporation. Therefore,
the City Council is required to meet annually as the Board of the PIC.
City of Palo Alto Page 2
The Downtown Parking Improvement bonds were used to build a two story above-ground
structure of approximately 7,638 square feet, which was leased to a commercial tenant, is the
only remaining COP. The Golf Course COP principal amount of $3.7 million was retired by a
private placement refinancing with JP Morgan Chase Bank. The City realized net present
savings of $239,000 or 6.47 percent on refunded bonds. The Civic Center bonds were issued to
undertake various improvements to the City’s existing Civic Center were paid off in 2012.
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, such as the maintenance of a
reserve, have been met. At year-end, June 30, 2012, total outstanding debt principal on the
COPs equaled $1.7 million as follows:
COP Description
Principal
Outstanding
(millions)
Year Debt will be
Retired
2002B Downtown Parking Improvements $1.7 2022
Total COP $1.7
Staff recommends that the Board of Directors of the Public Improvement Corporation (PIC)
approve the 2011-12 financial statement for the Public Improvement Corporation.
Resource Impact
Approval of the Public Improvement Corporation’s financial statement will have no resource
impact.
Policy Implications
Approval of the Public Improvement Corporation’s financial statement is consistent with prior
Council policy direction and resolutions.
Environmental Review
This is not a project for purposes of the California Environmental Quality Act
Attachments:
Attachment A: Public Improvement Corporation Fiscal Year 2012 Financial Statement
(PDF)
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Annual Financial Report
For the Year Ended June 30, 2012
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Table of Contents
Page
Independent Auditor's Report ................................................................................................................... 1
Management's Discussion and AnalYSis (Unaudited) .............................................................................. 3
Basic Financial Statements
Govel1l1uent-\\Tide Financial Statements:
Statelllent of Net Assets ...................................................................................................................... 5
Statelnent of Activities ....................................................................................................................... 6
Fund Financial Statements:
Balance Sheet ..................................................................................................................................... 7
Statement of Revenues, Expelldimres, and Changes in Fund Balance ............................................... 8
Notes to Basic Financial Statements ........................................................................................................ 9
The Honorable Mayor and
Members of the City Council of the
City of Palo Alto, Califomia
Independent Auditor's Report
We have audited the accompanying basic financial statements of the govel111nental activities and the
major fund of the Palo Alto Public Improvement Corporation (C011)oration), a component unit oftlIe City
of Palo Alto, as of and for the year ended June 30, 2012, as listed in the table of contents. These ftnancial
statements are the responsibility of the City's management. Our responsibility is to express opinions on
these ftnancial statements based 011 our audit.
We conducted our audit in accordance with the auditing standards generally accepted in the United States
of America. Those standards require that we plan and perf 01111 the audit to obtain reasonable assurance
about whether the ftnancial statements are free of material misstatement. An audit includes consideration
of illtemal control over financial reporting as a basis for designing audit procedures tila t are appropriate in
the circulllstances, but not for the pl1lpose of expressing an opinion on the effectiveness of the
Corporation's intemal control over fmancial reporting. Accordingly. we express no such opinion. An
audit also includes examining, 011 a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinions.
hl our opinion, the financial statements refened to above present fairly, in all matelial respects, the
financial position of the govenlluental activities and the major fund of the COlporation as of
June 30, 2012. and the results of its operations for the year then ended, in conformity with generally
accepted accounting principles in the United States of America.
Accounting principles generally accepted in the United States of Amelica require that the management's
discussion and analysis as listed in the table of contents be presented to supplement the basic ftnancial
statements. Such illfOlmation. although not a p311 of the basic tInancial statements, is required by the
Govennnental Accounting Standards Board, who considers it to be an essential part of financial rep0l1ing
for placing the basic financial statements in an appropriate operational, economic, or historical context.
We have applied celtain limited procedures to the required supplemellt31Y infolmation in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the infol111ation and comparing the infol1nation for
consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic ftnancial statements. We do not express an opinion
or provide any assurance on the infonnation because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Walnut Creek, Califomia
November 26,2012
www.mgucpa.conl
W"lnuf Cr""k
Sacramento
LA/Century CIty
SoaHI/)
This page left intentionally blank.
2
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit ofthe City of Palo Alto)
Management's Discussion & Analysis (Unaudited)
The Palo Alto Public Improvement Corporation (COlporation), a component unit of the City of Palo Alto
(City), follows the provisions of Govemmental AccOlmting Standards Board (GASB) Statement No. 34
(GASB 34), Basic Financial Statements -alld Management's Discltssion alld Ana~vsis -for State and
Local Governments.
The COlporation is controlled by the City of Palo Alto and was organized to assist the City in financing
public improvements. The COlporation issues debt and tU111S the proceeds of the debt over to the City
under lease agreements that provide a revenue source for the repayment of this debt. The Corporation has
tln'ee debt issues and has nImed the proceeds of these issues over to the City, which pledged celtain lease
payments as collateral for this debt as discussed in Note 4 to the tinancial statements.
FISCAL 2012 FINAl'VCIAL HIGHLIGHTS
GASB 34 requires the issuance of govemment-wide financial statements as well as fhud financial
statements. The govenullent-wide financial statements report the balance of the COlporation's 101lg-tenll
debt issues while the individual fund statements do not.
In fiscal year 2002. the COlporatioll issued its 2002A Civic Center Refinancing Celtificates of
Participation (COPs) in the amount of $3.5 million to refund its 1992 Civic Center Project COPs,
reducing debt selvice requirements by $372 thousand and producing an accouIlting gain of $137
thousand. The COlporation also issued its 2002B Downtown Parking Improvements COPs in the amount
of $3.6 million. In fiscal year 2005, a pmtial redemption was completed by placing excess const111ction
and debt selvice reselve funds into an escrow account to defease $900 thousand of the 2002B Downtown
Parking Improvements COPs.
During the fiscal year 2012, the City entered into a master lease-purchase agreement with JP Morgan
Chase Bank N.A. and the proceeds, together with the reselve fund, were used to redeem the 1998 Golf
Course Capital Improvements COPs. In addition, the 2002A Civic Center Refinancing COPs has been
paid off. As of June 30. 2012, the 2002B Downtown Parking Improvements COPs comprise the
Corporation's outstanding debt.
Interest expense and other fiscal agent charges on these COP issues were $146 thousand for tiscal year
2012, a decrease of $186 thousand over the prior year. The interest for leases on the assets securing these
COP issues was $224 thousand, a decrease of $73 thousand from the prior year. The interest 011 leases
from the City exceeded interest expense by $78 thousand, thereby resulting in an increase in net assets of
$80 thousand over the prior year.
The COlporation ended fiscal year 2012 with total assets of $1.9 million, a decrease of$4.2 million from
the prior year. Total assets consist of $251 thousand in cash and $1. 7 million ofleases receivable from the
City of Palo Alto. Total liabilities were $1. 7 million, a decrease of $4.3 million fi'om the prior year, and
included $162 thousand of cunent liabilities as well as $1.6 million oflong-tenn debt.
At the fund level. the Corporation's revenues exceed its expenditures by $2.1 million. As of
June 30,2012, the COlporation had one flmd, the Debt Selvice Fund, which repOlted a $251 thousand
flllld balance, reflecting a $1.0 decrease over the prior year, due to the payment to the escrow account to
redeem the 1998 Golf Course COPs.
3
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit ofthe City of Palo Alto)
Management's Discussion & Analysis (Unaudited)
OVERVIEW OF THE CORPORATION'S BASIC FINANCIAL STATEMENTS
The Basic Financial Statements are in two parts:
1) Management's discussion and analysis (this part),
2) The basic financial statements, which include the govemment-wide and tbe fund financial statements.
along with the notes to these fl11ancial statements.
The basic financial statements comprise the govenlluellt-wide financial statements and the fund tlllallcial
statements. These two sets of financial statements provide two different views of the C01poration's
financial activities and financial positions, both short-tel1u and long-tenn.
The govenlll1ent-wide tlnancial statements provide a long-tenn view of the C01poration's activities as a
whole, and comprise the statement of net assets and the statement of activities. The statement of net
assets provides infol111ation about the financial position of the C01poratioIl as a whole, including all its
long-tenn liabilities on the full accmal basis, similar to that used by c01poratiolls. The statement of
activities provides infonllation about all the C01poration' s i'evenues and expenses on the full accmal
basis, with the emphasis 011 measuring net revenues or expenses of the C01poration's program. The
statement of activities explains in detail the change in net assets for the year.
The nmd financial statements report the C01poration's operations in more detail than the c01porate-wide
statements and focus primarily on the sh01t-tel1l1 activities of the debt selvice nmd. Fund financial
statements measure only cunent revenues and expenditures; cutTent assets, liabilities and nllld balances;
and they exclude capital assets and long-tenn debt.
Together, these statements are called the basic ftnancial statements.
DEBT ADMINISTRATION
The COll)oration issues debt in the f01m of Certit1cates of Pm1icipation (COPs) for nlture lease receipts
fi:om the City of Palo Alto. Legally, these COPs issues are the COlporation's debt only; the City is liable
only for the payment of the amounts set f01111 in the lease securing each COPs issue.
The 1998 Golf Course COPs were redeemed and the 2002A Civic Center Reftnancing COPs were paid
off during the fiscal year 2012. As of June 30, 2012, the C011)oration has one outstanding debt for 2002B
Downtown Parking Improvement projects.
ECONO:MIC OUTLOOK AND MAJOR INITIATIVES
The economy of the City of Palo Alto and its major initiatives for the coming year are discussed in detail
in the City's Comprehensive Annual Financial Report.
CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT
These Basic Financial Statements are intended to provide citizens, taxpayers, investors, and creditors with
a general ovelview of the Agency's fInances. Questions about these Statements should be directed to the
Finance Department of the City of Palo Alto, 250 Hamilton Avenue, CA 94301.
4
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Statement of Net Assets
June 30, 2012
Assets:
Cash and investments held for operations $
Cash and investments held by tmstee
Investment in leases to City of Palo Alto
Total assets
Liabilities:
Interest payable
Long-tel111 debt:
Due in one year
Due ill more than OIle year
Total liabilities
Net Assets:
Restricted for debt selvice $
See accompanying notes to financial statements.
5
12,088
238,745
1,685,000
1,935,833
36,508
125,000
1,560,000
1,721,508
214,325
PALO ALTO PUBLIC IMPROVEMENT CORPORA nON
(A Component Unit of tbe City of Palo Alto)
Statement of Activities
For the Year Ended June 30, 2012
Expenses:
Interest and fiscal agent charges $
Program revenues:
Interest on leases from City of Palo Alto
Net program revenues
General Revenues;
Investment income
Change in net assets
Net assets, beginning of the year
Net assets, end of the year $
See accompanying: notes to financial statements.
6
145,946
224,249
78.303
1,867
80,170
134,155
214,325
PALO ALTO PUBLIC L'VIPROVEMENT CORPORATION
(A COlllPonent Unit ofthe City of Palo Alto)
Balance Sheet
Debt Service Fund
June 30, 2012
Assets:
Cash and investments held for operations
Cash and investments held by tl1lstee
Investment in leases to City of Palo Alto
Total assets
Liabilities and Fund Balance:
Lia bilities:
Defened revenue
Fund balance restricted for debt service
Total liabilities and fi.md balance
Reconciliation of fund balance to net assets:
Fund balance restricted for debt selvice
Accrual adjustment to remove detened revenue from the balance sheet
Some liabilities, including bonds payable. are not due and payable in the
the cunent period and therefore are not reported in the fi.lllds:
Interest payable
Long-tenll debt due within one year
Long-tenll debt due iUlllore than one year
Net assets of govenunental activities
See accompanying notes to financial statements.
7
$
$
$
$
$
$
12,088
238,745
1,685,000
1,935,833
1.685,000
250,833
1,935,833
250,833
1,685.000
(36,508)
(125,000)
(1,560,000)
214,325
PALO ALTO PUBLIC L''lPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Statement of Revenues, Expenditmes and Changes ill Fund Balance
Debt Service Fund
For the Year Ended JlUle 30, 2012
Revenues:
Lease receipts from City of Palo Alto:
Principal
Interest
Investment income from cash and investments
Total revenues
Expenditm'es:
Debt service:
Principal repayment
Interest and fiscal agent charges
Payment to bond reuUlding escrow
Total expenditmes
Excess of Revenues over Expenditures
Other Financing (Uses):
Payment to bond reumding escrow
Net change in ullld balance
Fund balance. beginning of the year
Flllld balance, end of the year
Reconciliation of net change in fund balance to net change in !let assets:
Net change in umd balances-total govemmental umds
Amounts repolted for govemmental activities in the statement of activities are different because:
Repayment of bond principal is an expenditure in the govel1lmentai umds.
but in the statement of net assets the repayment reduces long-tennliabilities,
Some amounts reported in the statement of revenues. expenditures and changes
in umd balances reflect the collection of an asset which are not includable as
as revenues on the statement of activities,
Change in defe11'ed revenue
Change ill interest payable
Change in net assets of govenuuental activities
See accompanying notes to financial statements,
8
$ 3,181,132
224,249
1.867
$
3,407,248
520,000
214,243
586,219
1.320,462
2,086,786
(3,103,781 )
(1,016,995)
1,267,828
250,833
$ (1,016,995)
$
4.210,000
(3,181,132)
68,297
80,170
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Notes to Basic Financial Statements
For the Year Ended JUlle 30, 2012
NOTE 1 -DESCRIPTION OF REPORTING ENTITY
The Palo Alto Public Improvement Corporation (the Corporation) was incorporated in September 1983
under the General Nonprofit COlJ)oratio11 Law of the State of Califomia to acquire, C011st111Ct allcllease
capital improvement projects, The Corporation is exempt from federal income taxes uncleI'
Sectio1l501(c)(4) of the Intemal Revenue Code, The COlJ)oratioIl provides financing of public capital
improvements for the City tlIl'ough the issuance of CertifIcates of Palticipation (COPs), a fonll of debt
which allows investors to participate in a stream of fumre lease payments, Proceeds from the COPs are
used to const111ct projects which are leased to the City for lease payments which are sufficient in tinting
and amount to meet the debt selvice requirements of the COPs.
The COlJ)oration is an integral part of the City of Palo Alto, It primarily selvices the City and its
govemillg body is composed of the City Council. Therefore, the financial data of the COlporation has also
been included as a blended component unit within the City's comprehensive annual tInancial report for
the year ended June 30, 2012.
NOTE 2 -SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
Govemmellt-wide Statements: The statement of net assets and the statement of activities include the
financial activities of the COIJ)oration. Eliminations have been made to minimize the double couIlting of
intemal activities.
The statement of activities presents a comparison between direct expenses and program revenues for each
function of the COlporation's activities. Direct expenses are those that are specifically associated with a
program or function and, therefore, are clearly identifiable to a particular function. Program revenues
include (a) charges paid by the recipients of goods or selvices offered by the programs, and (b) grants and
contributions that are restricted to meeting the operational or capital requirements of a particular program.
Revenues that are not classified as program revenues, including all taxes, are presented as general
revenues.
FIIII(/ Financial Statements: The fund financial statements provide illfonnation about the COlporation's
funds, Separate statements for each govenunental fund are presented. The emphasis of fund financial
statements is on major individual funds, each of which is displayed in a separate colullm.
(b) "Major Funds
Major funds are defined as funds that have either assets, liabilities. revenues or expenditures equal to ten
percent of their fund-type total and five percent of the grand totaL The COl})oration has one fund which is
reported as a major govel1l111ental fund in the accompanying financial statements:
Debt Service Fund -This fund accounts for debt selvice payments on the COlvoration's long-tenn debt
issues.
9
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit ofthe City of Palo Alto)
Notes to Basic Financial Statements
For the Year Ended J1Ule 30. 2012
NOTE 2 -SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Investment in Leases
Improvements financed by the COl1mratioll are leased to the City for their entire estimated useful life and
will become the City property at the conclusion of the lease. The Corporation therefore records the
present value of the lease and considers the leased improvement to have been sold for this alllount when
leased.
(d) Net Assets
The govemment-wide financial statements utilize a net assets presentation. Net assets are categorized as
restricted and unrestricted.
Restricted Net Assets -This categOlY presents extel1lal restrictions imposed by creditors, grantors,
contributors or laws or regulations of other goVel1l111ellts and restrictions imposed by law through
constitutional provisions or enabling legislation.
(e) Fund Balances
At June 30, 2012, the Corporation's govemmental fimds' fimd balances include the following
classification:
Restricted Fund Balallce -includes amounts that can be spent only for the specific pUl)Joses stipulated by
extel1lal resource providers. constitutionally or through enabling legislation. Restrictions may effectively
be changed or lifted only with the consent ofresolll'ce providers.
(1) Estimates
The preparation of basic fmancial statements ill confonnity with accoullting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
10
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A COml)Onent Unit ofthe City of Palo Alto)
Notes to Basic Financial Statements
For the Year Ended June 30. 2012
NOTE 3 -CASH AND INVESTMENTS HELD BY TRUSTEE
Under the provisions of the Corporation's COP issues, a Tmstee holds and invests the Corporation's cash.
(a) Interest Rate Risk
Interest rate risk is the risk that a change in market interest rates will adversely affect the fair value of an
investment. N0l111ally, the longer it takes an investment to reach mahlrity, the greater will be that
investment's sensitivity to changes iUlllarket rates. hlfonnatioll about the sensitivity of the fair values of
the Corporation's investments to market interest rate flUcnIations is provided by the following table that
shows the distribution of the Corporation's investments by matmity:
(b) Credit Risk
InYestment Type
U.S. Agency obligations:
Federal National Mortgage Association
Money Market Mutual Funds
Total Investments held by Trustee
$
$
Amollnt Maturity Date
23H70 122 days
13,163 28 days
250,833
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder
of the investment. This is measured by the assignment of a rating by a nationally recognized statistical
rating organization. The actual ratings as of June 30. 2012, for the investments in u.s. Agency
Obligations and Money Market MUnIal Funds are AAA and AAAm, respectively. as provided by
Moody's hlVestors Services.
(c) Investment Policy
The COlvoration must maintain required amounts of cash and investments with trustees under the tenns of
certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the
Corporation fails to meet its obligation under these debt issues. The Califomia Government Code requires
these funds to be invested in accordance with bond indentures or State statue. All these funds have been
invested as pennitted under the Code. The hlVestment Policy is described in detail in the City of Palo Alto
Comprehensive Annual Financial Report.
The table below identifies the investment types that are authorized by the City's hlVestment Policy. The
table also identifies certain provisions of the City's hlVestment Policy that address interest rate risk, credit
risk and concentration of credit risk. The table addresses investments of debt proceeds held by bond
tmstee that are governed by the provisions of debt agreements of the City rather than by the general
provisions of the City's investment policy.
11
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit ofthe City of Palo Alto)
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 3 -CASH AND Il'I'VESTMENTS HELD BY TRUSTEE (Continued)
Maximum
Maximum Minimulll Credit Percentage of
Authorized Investment Type Maturity Quality Portfolio
U.S. Govem1l1ent Securities 10 years N/A No Limit
U.S. Govenunellt Agency Securities (C) 10 years N/A No Limit (A)
Certificates of Deposit 10 years N/A 20%
Bankers Acceptances 180 days (D) N/A (D) 30%
Commercial Paper 270 days AAA 15%
Local Agency Investmellt Fund N/A N/A No Limit
Short-Tenll Repmchase Agreements 1 year N/A No Limit
City of Palo Alto Bonds N/A N/A No Limit
Money Market Deposit ACCOlUlts N/A N/A (E) No Limit
ivfutual Funds (F) N/A N/A 20%
Negotiable Certificates of Deposit 10 years N/A 10%
Medium-Tenn Corporate Notes 5 years AA 10%
Bonds of State of Califomia MlUlicipal
Agencies 10 years AAlAA,.2 10%
Maximum
IIlvestment in
One Issuer
No Limit
No Limit
10% of the par
value of
portfolio
$5 million
$3 million (B)
$50 million per
account
No Limit
No Limit
No Limit
10%
$5 million
$5 million
No Limit
(A) Callable and multi-step securities are limited to no more than 25% of the par value of the pOltfolio, provided
that: 1) the potential call dates are known at the time of pmchase, 2) the interest rates at which they "step-up"
are known at the time of purchase, 3) the entire face value of the seclU1ty is redeemed at the call date.
(B) The lesser of $3 million or 10% of outstanding commercial paper of anyone institution.
Debt Agreements:
(C) Utility Revenue Bonds 2002 Se11es A and 1999 Series A allow general obligations of states with a minimum
credit quality rating of A2/A by Moody's and Standard & Poor's.
(D) Utility Revenue Bonds 2002 Series A and 1999 Se11es A require a minimum credit quality rating of A-liP-l by
Moody's and Standard & Poor's and maturing after no more than 360 days. Utility Revenue Bonds 1995 limit
the maxinuuu maturity to 365 days.
(E) Water Revenue Bonds 2009 Series A, Utility Revenue Bonds 2002 Series A and 1999 Series A require a
minimum credit quality rating of AAAm or AAAm-G by Standard & Poor's.
(F) Utility Reyenue Bonds 2002 Series A, Golf PIC COP 1998, University Avenue Parking Bond 2001 and
University Avenue Parking Bond 2002 are allowed to invest in the Califomia Asset Management Program.
12
CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Notes to Basic Financial Statements
For the Year Ended June 30, 2012
NOTE 4 -CERTIFICATES OF PARTICIPATION
The COlj)oratioll's changes in long-tenn debt are presented below:
Balance Balance
June 30, 2011 Retirements June 30, 2012
Goyernmental At'tiyity Debt:
Certificates of Pal'tidpation
1998 Golf COUl'se $ 3,690,000 $ 3,690,000 $
2002A Civic Center Refinancing
2,00 -4,00%, due 03/01/2012 405,000 405,000
2002B Downtown Parking
Impl'oYemnts
4,55 -6,50%, due 03/01/2022 1,800,000 115,000 1,685,000
$ 5,895,000 $ 4,210,.000 $ 1,685,000
Cunent Portion
$
125,000
$ 125,000
hl August 1998, the COlj)oration issued the Golf Course Capital Improvements and Refinandng
Project Certificates of Participation, Series 1998, in the amount of $7.8 million to refund and
subsequently retire the 1978 Golf Course Lease Revenue Bonds issued by the City through the Palo Alto
Golf Course COlj)oration and to finance various improvements at the Palo Alto Public Golf Course,
including upgrading five failways and various traps, trees, and greens, cOllstmctillg new stonn drains
facilities, replacing the existing inigation system, upgrading the driving range, and installing new cart
paths, Under the tenns of the 1998 COPs, the COlj)oration transfened $473 thousand to an agent for the
Golf Course COlj)oratioll which used the funds to retire the 1978 Bonds. The 1998 COPs were secured by
lease revenues received by the Public Improvement COlj)oration from golf course revenues or other
unrestricted revenues of the City. On August 2, 201 L the City entered into a master lease-purchase
agreement with JP Morgan Chase Bank, N.A. Proceeds together with the COPs reserve fimd were
deposited into an escrow account to redeem all of the COPs in the aggregate amount of $3.7 million. At
June 30, 2012, the 1998 COPs were fiIlly redeemed.
On January 16, 2002, the COlvoration issued the 2002A Civic Center Refinancing Certificates of
Participation in the amount of $3.5 million to refillld the City's 1992 Civic Center Project Certificates of
Participation. Principal payments for the 2002A COPs are due annually on March 1 and interest payments
semi-annually on March 1 and September 1 and are payable from lease revenues from the City from
available fimds. During the year ended June 30, 2002, the 1992 Civic Center COPs were retired.
On January 16, 2002, the COlj)oration issued the 2002B Downtown Parking Improvements Certificates
of Participation ill the amount of $3.6 million to finance the constmction of certain improvements to the
non-parking area contained in the City's BlyantlFlorence Garage complex. Principal payments are due
anllually on March 1 and illterest payments semi-annually on March 1 and September 1 and are payable
from lease revenues received ii'om the City ii'om available fimds.
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CITY OF PALO ALTO
PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Notes to Basic Financial Statements
For the Year Ended JlUle 30, 2012
NOTE 4 -CERTIFICATES OF PARTICIPATION (continued)
The COPs are payable and secured by lease revenues received by the Public Improvement Corporation
from any City General FlUld revenue source.
Funtre allllual debt service on the 2002B COPs is expected to be provided by the lease receipts discussed
above, and is shown below:
For the Year
Ending June 30 Principal Interest Total
2013 $ 125,000 $ 109,525 $ 234,525
2014 130,000 101,400 231,400
2015 145,000 92,950 237,950
2016 150.000 83,525 233,525
2017 160,000 73.775 233.775
2018-2022 975,000 197,925 1,172,925
Total $ 1,685,000 $ 659,100 $ 2,344,100
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