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HomeMy WebLinkAbout2002-07-15 City Council (10)City of Polo Alto C ty Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE:JULY 15, 2002 CMR: 332:02 SUBJECT:ADOPTION OF RESOLUTION ORDINANCE NECESSARY FOR BOND FINANCING OF IMPROVEMENTS AND FIRST READING OF THE DEVELOPMENT AND COMMUNITY, FACILITY RECOMMENDATION Staff recommends that Council: Adopt the "Resolution of the City of Palo Alto determining that the public interest and necessity demand the. acquisition and development of certain municipal improvements (City libraries and community center project); and their financing through the issuance of General Obligation bonds. Introduce for first reading the "Ordinance of the City .of Palo Alto Ordering the Submission of a Proposition of IncurringBonded Debt to the Qualified Voters of the City of Palo Alto at the Special Municipal Election to be Held on November 5, 2002, for the Purpose of the Acquisition, Construction, and Improvement of Library and Community Center Facilities." BACKGROUND At its June 17 meeting, the City Council directed staff to prepare a bond measure for the November 2002 ballot to improve and expand the Children’s Library and the Mitchell Park Library and Community Center. The estimated costs to design, construct, and finance the facilities were $47.8 million. The estimated cost for property owners (should the bond measure be passed by voters) was $27 per $100,000 of assessed valuation. In a subsequent meeting, staff provided information to Council regarding an additional $1.3 million in staffing costs (3 FTE’s over 5 years) to manage, supervise and support the construction effort. By adding these positions, the total cost of the project to be financed is $49.1 million. CMR:332:02 Page 1 of 4 DISCUSSION To move forward with a General Obligation (GO) bond election in November 2002, Council must pass the attached resolution (Attachment A) and perform a first reading of the attached ordinance (Attachment B). Required by law, the resolution determines the public interest and necessity of the desired community facility improvements and financing those improvements through GO bonds. Likewise, the reading and passing (on August 5 Council agenda) of an Ordinance submitting to voters the proposition of incurring bonded debt at the next special municipal election is required. It is important to note that Section 2 of the attached Ordinance contains language for the ballot proposition. In addition to a rationale for the proposed projects, this language includes a provision for a citizen oversight committee. Incorporated in the resolution and ordinance is a maximum authorization of $49.1 million. This includes all design, Public Works project management staffing, construction and financing (e.g. legal, financial advisor, rating agency) costs. If voters approve this authorization, it cannot be exceeded, but expenditures can be less. Interest expense on the bonds, a critical component of annual debt service payments and the annual assessment per $100,000 of property value, will be determined on the date of the sale of bonds. A bond sale typically occurs just prior to the beginning of construction, which is expected to occur in 2004. RESOURCE IMPACT Based on a $49.1 million authorization and an estimated interest rate of 6.1 percent, annual debt service of $3.8 million over 30 years can be expected. This translates into an average annual cost of around $28 per $100,000 of assessed value. Based on the median assessed value of $285,000 for a single family home, the homeowner would incur an additional $80 tax annually to pay for the community facility improvements outlined in the bond measure. POLICY IMPLICATIONS This recommendation is consistent with existing City policies and Council direction. TIMELINE 2002 July 15 August 5 Council Approves Resolution Determining Public Interest and Necessity of Community Facility Improvements Council Adopts Ordinance Ordering Submission of a Proposition of Incurring Bonded Debt to Qualified Voters CMR:332:02 Page 2 of 4 August 9 Resolution and Ordinance due at County August 14 County due date for submitting arguments for and against a measure August 21 City Attorney’s impartial analysis due Submission of rebuttal arguments in favor and against measure due November 5 Election Day ENVIRONMENTAL REVIEW The projects that could be funded by General Obligation bonds were the subject of environmental review by Council. On June 10, Council adopted a Resolution certifying adoption of a: "Mitigated Negative Declaration for the Mitchell Park Library and Community Center Project Pursuant to the California Environmental Quality Act. On June 24, Council adopted a Resolution certifying adoption of a: "Mitigated Negative Declaration for the Children’s Library Project Pursuant to the California Environmental Quality Act. ATTACHMENTS Attachment 1: Attachment 2: Resolution of the City Council of the City of Palo Alto Determining that the Public Interest and Necessity Demand the Acquisition and Development of Certain Municipal Improvements and their Financing through the Issuance of General Obligation Bonds (City. Libraries and Community Center Project) Ordinance of the City Council of the City of Palo Alto Ordering the Submission of a Proposition of Incurring Bonded Debt to the Qualified Voters of the City of Palo Alto at the Spceial Municipal Election to be Held on November 5, 2002, for the Purpose of the Acquisition, Construction and Improvement of Library and Community Center Facilities CMR:332:02 Page 3 of 4 PREPARED BY:~SACCI)~O’ Deputy Director DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: ~CB~rvices EMILY HARRIS ON Assistant City Manager CMR:332:02 Page 4 of 4 ATTACHMENT 1 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALO ALTO DETERMINING THAT THE PUBLIC’ INTEREST AND NECESSITY DEMAND THE ACQUISITION AND DEVELOPMENT OF CERTAIN MUNICIPAL IMPROVEMENTS AND THEIR FINANCING THROUGH THE ISSUANCE OF GENERAL OBLIGATION BONDS (CITY LIBRARIES AND COMMUNITY CENTER PROJECT) WHEREAS, the City is authorized to issue general obligation bonds to finance municipal improvements pursuant to certain provisions of the California Government Code, including Article i, commencing with Section 43600, of Chapter 4 of Division 4 of Title 4 and including Article 4.5, commencing with Section 53506, of Chapter 3 of Part 1 of Division 2 of Title 5 (collectively, the "Bond Law"); WHEREAS, the City intends to issue its general obligation bonds (the "Bonds") under and pursuant to the Bond Law to finance (i) the renovation and expansion of the City’s Children’s Library, (ii) the renovation of the Secret Garden adjoining the Children’s Library, (iii) the demolition of the City’s Mitchell Park Library, and the acquisition and construction of a new, expanded library in its place, (iv) the demolition of the City’sMitchell Park Community Center, and the acquisition and construction of a new, larger community center to take its place, and (v) related landscaping and parking improvements (together, the "City Libraries and Community Center Project"); and WHEREAS, in order to initiate proceedings under the Bond Law to provide for the financing of the City Libraries and Community Center Project, the City Council must make certain findings and determinations. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION i. Declaration of Necessity to Issue Bonds. The public interest and necessity demand,and it is the intention of the City Council to require,the acquisition, construction and improvement of the City Libraries and Community Center Project and to issue the Bonds to finance the cost thereof, subject to completion of the proceedings required by the Bond Law. 020711 sm 0053075 SECTION 2. Maximum Amount. The estimated cost of the City Libraries and Community Center Project is not to exceed $49,100,00.00. Said estimated costs include provision for legal or other~ fees, and other costs and expenses, which are incidental to or connected with the authorization, issuance and sale of the Bonds. SECTION 3. Findings. The City Council hereby finds and determines that the costs of the City Libraries and Community Center Project require an expenditure by the City greater than the amount allowed for it by the annual tax levy of the City. The principal amount of the Bonds will not exceed the estimated cost set forth above for the City Libraries and Community Center Project. SECTION 4. Issuance of the Bonds. This Resolution is adopted, and the Bonds, if approved by two-thirds of all qualified voters on the issuance of the Bonds, are to be issued pursuant to the Bond Law. SECTION 5. Effective Date. This Resolution shall take effect upon its adoption by two-thirds of all members of the City Council of the City. // // // // // // // // 020711 sm 0053075 2 The foregoing resolution was adopted meeting of the City Council held on July 15, following vote: INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: at a regular 2002, by the City Clerk APPROVED AS TO FORM: City Attorney Jones Hall A Professional Law Corporation By: Bill Madison Bond Counsel Mayor APPROVED: City Manager Director of Administrative Services 020711 sm 0053075 3 ATTACHMENT 2 ORDINANCE NO. ORDINANCE OF THE CITY COUNCI--~ ~F THECITY OF PALO ALTO ORDERING THE SUBMISSION OF A PROPOSITION OF INCURRING BONDED DEBT TO THE QUALIFIED VOTERS OF THE CITY OF PALO ALTO AT THE SPECIAL MUNICIPAL ELECTION TO BE HELD ON NOVEMBER 5, 2002,FOR THE PURPOSE OF THE ACQUISITION, CONSTRUCTION AND IMPROVEMENT OF LIBRARY AND COMMUNITY CENTER FACILITIES The Council of the City of Palo Alto does ORDAIN as follows: SECTION I. The Council hereby finds as follows: (a) On July 15, 2002, the City Council adopted, by a two-thirds vote of all its members, a resolution entitled "Resolution of the City Council of the City of Palo Alto Determining That the Public Interest and Necessity Demand the Acquisition and Development of Certain Municipal Improvements and Their Financing Through the Issuance of General Obligation Bonds (City Libraries and Community Center Project)" (the "Resolution of Necessity"). (b)In order to provide for the issuance by the City of its general obligation bonds to finance the improvements described in the Resolution of Necessity, it is necessary for the City Council to pass an ordinance ordering the submission of the proposition of incurring bonded indebtedness for such purpose to the qualified voters of the City at a special municipal election. (c)The City Council desires to submit said ballot measure to the qualified voters of the City at the special election to be held in the City on November 5, 2002, and to consolidate the bond election with other elections held within the City on that date. SECTION 2. Call for Election. The City Council hereby orders that there be submitted to the qualified voters of the City a proposition on incurring a bonded debt (the "Bonds")~ for the purpose set forth in this Resolution, at the special election to be held on November 5, 2002. SECTION 3. Ballot Proposition. The City Council hereby submits to the qualified voters of the City, at the special election to be held on November 5, 2002, a proposition on issuing the Bonds in substantially the following form: 020711 sm 0053076 "MEASURE __: To improve library and community services for children by expanding Children’s Library to provide needed space and safety repairs; rebuilding and expanding the Mitchell Park Library and Community Center for all community users; and, to meet current health and safety codes by making plumbing, heating, ventilation, and lighting system upgrades to 50-year-old systems in all three facilities, shall the City of Palo Alto issue $49.1 million in bonds, subject to independent citizen oversight and annual audits?" SECTION 4. Object and Purpose of Bonds. The object and specific purpose of issuing the Bonds is (i) the renovation and expansion of the City’s Children’s Library, (ii) the renovation of the Secret Garden adjoining the Children’s Library, (iii) the demolition of the City’s Mitchell Park Library, and the acquisition and construction of a new, expanded library in its place, (iv) the demolition of the City’s Mitchell Park Community Center, and the acquisition and construction of a new, larger community center to take its place, and (v) related landscaping and parking improvements (the "City Libraries and Community Center Project"), and the proceeds of the Bonds may only be applied to that purpose. SECTION 5. Estimated Cost of City Libraries and Community Center Project. The estimated cost of theCity Libraries and Community Center Project is $49,100,000.The estimated cost includes legal or other fees, and other costsand expenses, which are incidental to or connected with the authorization, issuance and sale of the Bonds. SECTION 6. Principal Amount of Bonds. The amount of the principal of the Bonds shall not exceed $49,100,000. SECTION 7. Maximum Interest Rate. The maximum rate of interest to be paid on the Bonds shall be 12% per annum. SECTION 8. Issuance and Sale of Bonds.The City proposes to acquire, construct and develop the City Libraries and Community Center Project and to issue and sell the Bonds pursuant to Article I, commencing with Section 43600, of Chapter 4 of Division 4 of Title 4 of the California Government Code, or Article 4.5, commencing with Section 53506, of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, in one or more series, in the maximum amount and for the objects 020711 sm 0053076 2 and purposes set forth above if two-thirds of all qualified voters voting on the proposition set forth above vote in favor thereof. The Bonds will be general obligations of the City payable from and secured by taxes levied and collected in the manner prescribed by~ laws of the State of California. All of the Bonds are to be equally and ratably secured, without priority, by the taxing power of the City. SECTION 9. Consolidation;Manner of Conducting Election. The bond election hereby called for November 5, 2002, is hereby ordered consolidated with any other election to be held within the City on said date. The election shall be held and conducted, election officers appointed, voting precincts designated, ballots printed, polls opened and closed, ballots counted, and returned, returns canvassed, results declared, and all other proceedings incidental to and connected with the’ election shall be regulated and done in accordance with the provisions of law regulating the election as specified herein. The Board of Supervisors of Santa Clara County and the Santa Clara County Clerk, Elections Division, are hereby requested to order the consolidation of the municipal election hereby called with any other election to be held within the City on said date. SECTION i0.Procedure for Voting on Proposition. Ballots for the election shall be provided in the form and in the number provided by law. Voters shall be provided an opportunity to vote for or against the proposition ontheballot, in accordance with pro6edures to be adopted bytheauthorized officers of the County charged with conductingtheelection. SECTION Ii.Accountability Requirements.Inaccordance with Sections 53410 and 53411 of the California Government Code, the City Council hereby adopts the following accountability requirements relating to the Bonds: (a)A separate account shall be created and held by the City, into which the proceeds of the Bonds are deposited. (b)The chief fiscal officer of the City shall file a report with the City Council no later than November I, 2003, and at least once a year thereafter, showing the amount of Bond proceeds collected and expended, and the status of the project to be financed from the proceeds of the Bonds. 020711 sm 0053076 SECTION 12.Estimated Tax Rate°Pursuant to Elections Code sections 9400 and 9401, the best estimate from official sources of the tax rate required to be levied to fund the bond issue is $28.00 per $i00,000.00. SECTION 13.Publication of Ordinance.This Ordinance shall be published once a week for 2 weeks in the Palo Alto Weekly, a newspaper published less than 6. days a week in the City. The first of said publications shall, in either event, be within 15 days after the adoption of this Ordinance. SECTION 14.Effective Date. This Ordinance shall become effective immediately upon its adoption by two-thirds vote of all the members of this Council. // // // // // // // // // // // 020711 sm 0053076 4 The foregoing ordinance was introduced at a regular meeting of the City Council held on July 15, 2002, and was adopted at a regular meeting of the City Council held on August 5, 2002, by the following vote: INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: City Attorney Jones Hall A Professional Corporation By: Bill Madison Bond Counsel Mayor APPROVED: City Manager Director of Administrative Services 020711 sm 0053076