HomeMy WebLinkAboutStaff Report 1915City of Palo Alto (ID # 1915)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 7/18/2011
July 18, 2011 Page 1 of 2
(ID # 1915)
Summary Title: Establishing GO Bond Tax Levy
Title: Adoption of Resolution Establishing Fiscal Year 2011-12 Secured and
Unsecured Property Tax Levy for the City of Palo Alto’s General Obligation Bond
Indebtedness (Measure N)
From:City Manager
Lead Department: Administrative Services
Recommendation
1)Adopt a resolution (Attachment A) approving the establishment of the Fiscal Year 2011-
12 property tax levy of $15.51 per $100,000 in Assessed Value (AV) for the secured and
utility tax roll and $17.11 per $100,000 in AV for the unsecured tax roll for the City of
Palo Alto’s Measure N General Obligation Bond (First Series).
Background
On November 4, 2008, City voters passed Measure 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 series of 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
purchased by Citigroup Global Markets, Incorporated on June 9, 2010 with a closing on June 30,
2010. The True Interest Cost for the Bonds was 4.207 percent, which was 1.22 percent lower
than the City originally projected in 2008. As a result, the City estimated savings of up to $14.5
million in cumulative interest costs over 30 years for the first series of 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 secured and unsecured 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 $0.01551 per $100 or
$15.51 per $100,000 in AV for the secured tax roll; and $0.01711 per $100 or $17.11 per
$100,000 in AV for the unsecured tax roll. In comparison, prior years secured and unsecured tax
levy was $17.11 and $0, respectively, per $100,000 of AV. According to the County,the General
Obligation tax levy applies to the unsecured AV at the beginning of the second assessment year,
July 18, 2011 Page 2 of 2
(ID # 1915)
resulting in secured tax levy declining by 9.3 percent compared to the 2010-11 tax levy. The
County’s methodology is that the prior year’s secured tax rate becomes the current year’s
unsecured tax rate.
A house with an assessed value of $1 million, for example, would see an annual assessment of
$155.10 on their property tax bill. It is important to note that the secured and unsecured tax
levy of $15.51 and $17.11 assessment, respectively, is for the first series of bonds and that a
second series of bonds will be issued for construction costs on the Main Library.
Resource Impact
The first series bond issuance results in 2012 calendar year debt service expenditure of
approximately $3.5 million and Council approval of the attached resolution will result in ad
valorem tax levy revenue of this approximate amount. Again, secured and unsecured property
owners will see a levy of $15.51 and $17.11 per $100,000 of AV on their 2011-12 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 Fiscal Year
2011-12 Property Tax Levy for the City's General Obligation Bond Indebtedness (PDF)
·Exhibit A: General Obligation Bonds, Election of 2008, Series 2010 Tax Rate Calculation
Based on 2011-12 AV (PDF)
Prepared By:Tarun Narayan, Senior Financial Analyst
Department Head:Lalo Perez, Director
City Manager Approval: James Keene, City Manager
Not Yet Approved
110711 jb 0130806 1
Resolution No. _____
Resolution of the Council of the City of Palo Alto Establishing
the Fiscal Year 2011-12 Property Tax Levy of $15.51 Per
$100,000 of Secured and $17.11 Per $100,000 of Unsecured
Assessed Valuations for the City’s General Obligation Bond
Indebtedness (Measure 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 2010A)
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 between 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 1. 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
2011-2012 in the amount of $0.01551 per $100 in assessed value for the secured and utility tax
roll and $0.01711 per $100 in assessed value for the unsecured tax roll based on the calculations
set forth in the attached Exhibit "A".
SECTION 2. The City’s Director of Administrative Services shall cause a
certified copy of this Resolution to be delivered to the Auditor of the County of Santa Clara for
entry in the assessment book of the respective sums in dollars and cents
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Not Yet Approved
110711 jb 0130806 2
SECTION 3. The Council finds that this is not a project under the California
Environmental Quality Act and, therefore, no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ __________________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ __________________________________
Senior Asst. City Attorney City Manager
__________________________________
Director of Administrative Services / CFO
A)Assessed Valuations (AV)
1 )2011-12 Taxable Secured Assessed Valuation (AV)20,969,870,384$
2 )2011-12 Taxable Unsecured AV 1,569,246,039$
3 )Less: Estimated Delinquency 4.11%(64,496,012.20)
4 )Net Taxable Unsecured AV 1,504,750,026.80
B)Tax Levy Requirement
2011-12 Debt Service Payments
5 )February 1, 2012 1,247,534.38$
6 )August 1, 2012 2,247,534.38
7 )Total Calendar Year 2012 Debt Service Payment 3,495,068.76
8 )Deficit Balance on Property Tax Revenue from Prior Year Levy 5,301.56
9 )Sub-total 3,500,370.32
10 )Santa Clara County Administration Fee (0.25% of Principal & Interest)8,750.93
11 )Total 2011-12 Annual Debt Service Requirement 3,509,121.25
C)Secured and Unsecured Tax Rate
12 )2011-12 Unsecured Tax Rate per $100 of Unsecured AV (Prior Year's Secured Tax Rate)0.017110$
13 )2011-12 Unsecured Tax Rate per $100,000 of Unsecured AV 17.11$
14 )2011-12 Estimated Revenue from Unsecured AV (line 4 divide by 100 times by line 12)257,462.73$
15 )2011-12 Estimated Revenue from Secured AV (line 11 minus line 13)3,251,658.52
16 )Total 2011-12 Annual Debt Service Requirement 3,509,121.25$
17 )2011-12 Secured Tax Rate per $100 of Secured AV (line 14 divided by line 1*100)0.01551$
18 )2011-12 Secured Tax Rate per $100,000 of Secured AV (line 14 divided by line 1 times 100,000)15.51$
Exhibit A
City of Palo Alto
General Obligation Bonds, Election of 2008, Series 2010
Tax Rate Calculation Based on 2011-12 Assessed Values