HomeMy WebLinkAboutStaff Report 337-10TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER
DATE: AUGUST 2, 2010
REPORT TYPE: CONSENT
DEPARTMENT: ADMINISTRATIVE
SERVICES
CMR: 337:10
SUBJECT: Adoption of Resolution Establishing Fiscal Year 2010-11 Property Tax
Levy of $17.11 per $100,000 of Assessed Valuation for the City of Palo
Alto's General Obligation Bond Indebtedness (Measure N)
RECOMMENDATION
I) Adopt a resolution (Attachment A) approving the establishment of the Fiscal Year 201 0-11
property tax levy of $17.11 per $100,000 of Assessed Valuation for the City of Palo Alto's
Meas\U'e N General Obligation Bond (First Series).
BACKGROUND
On November 4, 2008, City voters passed Meas\U'e N which gave the City authority to issue a
maximum amount of $76,000,000 million of General Obligation bonds (the "Bonds") for capital
improvements to the Mitchell Park, Downtown, and Main libraries and to the Mitchell Park
community center. The City successfully sold the first of two Bonds to provide $58.5 million in
funds for Mitchell Park Library, Mitchell Park Community Center, and Downtown Library
construction costs as well as design costs for the Main Library. The Bonds were p\U'chased by
Citigroup Global Markets, Inc: on June 9, 2010 and with a closing on June 30, 2010. The True
Interest Cost for the Bonds came in at 4.207 percent, which is 1.22 percent lower than the City
originally projected in 2008. As a result, the City estimated it could realize up to $14.5 million in
cumulative interest payment savings over 30 years for the first series of 30-Year Bonds. Both
Standard and Poor's (S &P) and Moody's awarded their highest credit ratings, Triple A, to the Bonds.
DISCUSSION
Debt service payments on the newly issued bonds are paid through ad valorem taxes on all taxable
land and improvements (both sec\U'ed and unsec\U'ed assessment roll) within the City. Staff is
seeking Council approval of the attached resolution (Attachment A) which authorizes the placement
of an ad valorem property tax levy in the amount of $0.01711 per $100 or $17.11 per $100,000 in
Assessed Valuation (A V) for the sec\U'ed tax roll and $0 per $100 in A V for the unsec\U'ed tax roll.
A house with an assessed value of $1 million, for example, would see an annual assessment of
$171.10 on their property tax bill. Ultimately, the levy applies to both taxable secured and unsecured
CMR: 337:10 Page 1 of2
property. According to the County, however, the levy only applies to the secured property tax roll in
the first year. In following and subsequent years a levy will be placed on unsecured property.
It is important to note that the $17.11 assessment is for the first series of bonds and that a second
series of bonds will be issued for construction costs on the Main Library. The assessment for the
. second series will likely appear in the 2012-13 property tax year.
FISCAL IMPACr
The first series bond issuance resulted in 2011 calendar year debt service expenditure of
approximately $3.5 million and Council approval ofthc attached resolution will result in ad valorem
tax levy revenue of the same amount. Again, property owners will see a levy of$17.ll per $1 00,000
of A V on their 2010-11 property tax statement.
ENVIRONMENTAL REVIEW
There is no environmental review required for this report.
ATTACHMENTS:
Attachment A: Resolution of the Council of the City of Palo Alto Establishing the Fiscal Year
2010-11 Propelty Tax Levy of$17.11 per $100,000 of Assessed Valnation for the
City's General Obligation Bond Indebtedness (Measure N Library Projects)
Attachment B: ('Jeneral Obligation Bonds, Election of 2008, Series 2010 Tax Rate Calculation
Based on 20 I 0-11 Assessed Values
PREPARED BY: /~ d
YAN
DEP ARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL: fe "" LMJ:zo
JAMES KEENE . r City Manager
CMR:337:10 Page 2 of2
ATTACHMENT A
** NOT YET APPROVED **
Resolution No. ---
Resolution of the Council of the City of Palo Alto Establishing
the Fiscal Year 2010-11 Property Tax Levy of $17.11 per
$100,000 of Assessed Valuation for the City's General
Obligation Bond Indebtedness (Measu:e N Library Projects)
WHEREAS, at the City of Palo Alto's ("City") general election held on November 4,
2008, more than two thirds of voters approved Measure N, authorizing the issuance of general
obligation bonds in the amount not to exceed $76,000,000 (the "Authorization") to fund
construction of a new Mitchell Park Library and Community center and renovation and
improvements to Downtown and Main libraries; and
WHEREAS, pursuant to the Authorization, the City issued one series (Series 20 lOA)
of general obligation bonds in June 2010 that yielded $58.5 million for project needs; and
WHEREAS, the City is obligated to levy ad valorem taxes on all property within the
City subject to taxation by the City, without limitation on rate or amount (except with respect to
certain personal property which is taxed at limited rates), for the payment of the debt service on
the Bonds; and
WHEREAS, the City is obligated to direct the County of Santa Clara to collect such
ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment
of debt service on the Bonds; and
WHEREAS, the amount of the annual ad valorem tax levied by the City to repay the
Bonds is determined by the relationship betweon the assessed valuation of taxable property in the
City and the amount of debt service due on the bonds.
NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as
follows:
SECTION I. Pursuant to the Authorization, an ad valorem property tax is hereby
established to be levied on all land and improvements in the City of Palo Alto during fiscal year
2010-2011 in the amount of $0.01711 per $100 in assessed value for the secured and utility tax
roll and 0.0 per $100 in assessed value for the unsecured tax roll based on the calculations set
forth in the attached Exhibit "A".
SECTION 2. The City's Director of Administrative Services shall cause a
certified copy of this Resolution to be delivered to the Auditor of the County of Santa Clara for
entry in the assessment book of the respective sums in dollars and cents
II
If
100726 sh 8161348
** NOT YET APPRQVED **
SECTION 3. The Council finds that this is not a project under the California
Environmental Quality Act and, therefore,.no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Sr. Deputy City Attorney City Manager
Director of Administrative Services
100713 sh 8261348 2
Attachment B
City of Palo Alto
General Obligation Bonds, Election of 2008, Series 2010
Tax Rate Calculation Based on 2010-11 Assessed Values
A) 2010-11 Taxable secured assessed valuation of the City
2010-11 Semi-annual debt service requirement
Total 2010-11 annual debt service payment
County Administration Fee (0.25% of Principal & Interest)
B) Total 2010-11 annual debt service requirement
12010-11 secured tax rate per $100 of secured assessed value (Line BIA*100)
February 1, 2011
August 1, 2011
2010-11 secured tax rate per $100,000 of secured assessed value (Line B/A*100,000)
S:\ASO\Treasury\T Narsyan\Dabt Service\2010 General Obligation (Library) Bonds\GO Tax Rate Calculation. xis
$ 20,460,699,520.00
$
$
1,471,355.02
2,020,164.38
3,491,539.40
8,726.65
3,500,268.25
0.01711 I
17.11
7127120102:44 PM