HomeMy WebLinkAboutStaff Report 8338
City of Palo Alto (ID # 8338)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 8/14/2017
City of Palo Alto Page 1
Summary Title: Establishing GO Bond Tax Levy
Title: Adoption of a Resolution Establishing Fiscal Year 2017-18 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
Adopt a resolution (Attachment A and Exhibit A) approving the establishment of the Fiscal Year
2018 property tax levy of $11.77 per $100,000 in Assessed Value (AV) for the secured and utility
tax roll and $12.90 per $100,000 in AV for the unsecured tax roll for the City of Palo Alto's
Measure N General Obligation Bond Library Bonds (First and Second 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 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 Bonds in two series to provide $76 million in
funds for the design and construction costs. Both Standard and Poor's (S&P) and Moody's
awarded their highest credit ratings, Triple A, to both series of Bonds.
On March 1, 2016, Council approved the decommissioning of the Library Bond Oversight
Committee and accepted a financial report showing approximately $3.0 million in project
savings (CMR: 6632). In addition, bond premium of $3.1 million could be used to redeem
and/or defease bonds. On June 6, 2016, Council authorized the use of $6.1 million of the
Series 2010A & 2013A General Obligation (Measure N) Bonds to defease and/or retire a portion
of outstanding bonds and to pay associated redemption costs (CMR: 6993). To maximize
savings to property owners the longest bonds were paid off; total savings of $11 million were
realized which includes $4.9 million in interest savings over time. Of the $11 million, $5.4
million will be saved through FY 2040 while $5.6 million will be saved from FY 2041 through FY
2044.
City of Palo Alto Page 2
Discussion
Debt service payments on these 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 and Exhibit A) which
authorizes the placement of an ad valorem property tax levy in the amount of $0.01177 per
$100 or $11.77 per $100,000 in AV for the secured tax roll; and $0.01290 per $100 or $12.90
per $100,000 in AV for the unsecured tax roll. In comparison, prior years secured and
unsecured tax levy was $12.90 and $14.77, respectively, per $100,000 of AV.
The assessment rate for FY 2017-18 is decreasing for both the secured and unsecured property
taxes. The rate decreases is attributable to the rise in the Assessed Valuation for properties
throughout Palo Alto by 7.8 percent, an increase of $2.5 billion. In addition, the rise in Assessed
Valuation during FY 2016-17, due to property sales and new construction, resulted in $0.4
million in excess collections which further reduced the FY 2018 annual assessment.
As for the unsecured property taxes, per the County of Santa Clara’s methodology, the prior
year’s secured tax rate becomes this year’s unsecured tax rate as a result this rate won’t benefit
from the coming year’s Assessed Value increase until FY 2018-19.
With the new assessment for FY 2018, a house with an assessed value of $1.0 million, for
example, would see an annual assessment of $117.70 on their property tax bill. In FY 2017, a
$1.0 million home had an assessment of $129.00.
Resource Impact
The bond issuances result in a 2018 calendar year debt service expenditure of approximately
$4.5 million and Council approval of the attached resolution will result in ad valorem tax levy
revenue of $4.1 million with the $0.4 million difference attributable to available funds on hand.
Again, secured and unsecured property owners will see a levy of $11.77 and $12.90,
respectively, per $100,000 of AV on their 2017-18 property tax statement.
Environmental Review
There is no environmental review required for this report.
Attachments:
Attachment A: Resolution Establishing FY 2017-18 Property Tax Levy
Exhibit A: General Obligation Bonds, Election of 2008, Series 2010 and 2013 Tax Rate
Calculation Based on 2016-17 AV
NOT YET APPROVED
170719 th 0140182 1
Resolution No.
Resolution of the Council of the City of Palo Alto Establishing Fiscal Year 2018 Property
Tax Levy of $11.77 Per $100,000 of Secured and $12.90 Per $100,000 of Unsecured
Assessed Valuations for the City’s General Obligation Bond Indebtedness (Measure N
Library Projects)
R E C I T A L S
A. 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.
B. Pursuant to the Authorization, the City issued two series (Series 2010A and
2013A) of general obligation bonds in June 2010 and June 2013 that yielded $75.8 million for
project needs.
C. 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.
D. 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.
E. 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.
The Council of the City of Palo Alto RESOLVES 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
2017-18 in the amount of $0.01177 per $100 in assessed value for the secured and utility tax
roll and $0.01290 per $100 in assessed value for the unsecured tax roll based on the
calculations set forth in the attached Exhibit "A".
SECTION 2. The City’s Director of Administrative Services shall cause a certified
copy of this Resolution to be delivered to the Auditor of the County of Santa Clara for entry in
the assessment book of the respective sums in dollars and cents.
NOT YET APPROVED
160718 jb 0131538 2
SECTION 3. The Council finds that this is not a project under the California
Environmental Quality Act and, therefore, no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ ______________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ ______________________________
City Attorney City Manager
______________________________
Director of Administrative Services
A) Assessed Valuations (AV)
1)2017-18 Taxable Secured Assessed Valuation (AV)32,512,568,702.00$
2)2017-18 Taxable Unsecured AV 1,922,170,300.00$
3 ) Less: Estimated Delinquency 0.00%-
4 ) Net Taxable Unsecured AV 1,922,170,300.00
5 ) Total Assessed Valuation (AV)34,434,739,002.00$
B) Tax Levy Requirement
5)2017-18 Debt Service Payments
6)2010 GO Bonds - February 1,2018 1,075,584.38$
7)2010 GO Bonds - August 1, 2018 2,300,584.38 3,376,168.76
8)2013 GO Bonds - February 1,2018 337,200.00$
9)2013 GO Bonds - August 1, 2018 752,200.00 1,089,400.00
10 )Total Calendar Year 2018 Debt Service Payments 4,465,568.76
11 ) Excess Funds on Hand Applied Toward Debt Service (400,000.00)
12 ) Sub-total 4,065,568.76
13 ) Santa Clara County Administration Fee (0.25% of Principal & Interest)10,163.92
14 )Total 2017-18 Annual Debt Service Requirement 4,075,732.68
C) Secured and Unsecured Tax Rate
15 )2017-18 Unsecured Tax Rate per $100 of Unsecured AV (Prior Year's Secured Tax Rate)0.01290$
16 )2017-18 Unsecured Tax Rate per $100,000 of Unsecured AV 12.90$
17 )2017-18 Estimated Revenue from Unsecured AV (line 4 divide by 100 times by line 12) 247,959.97$
18 )2017-18 Estimated Revenue from Secured AV (line 11 minus line 13) 3,827,772.71
19 )Total 2017-18 Annual Debt Service Requirement 4,075,732.68$
20 )2017-18 Secured Tax Rate per $100 of Secured AV (line 14 divided by line 1*100) 0.01177$
21 )2017-18 Secured Tax Rate per $100,000 of Secured AV (line 14 divided by line 1 times 100,000) 11.77$
Exhibit A
City of Palo Alto
General Obligation (GO) Bonds, Election of 2008, Series 2010 and 2013
Tax Rate Calculation Based on 2017-18 Assessed Values