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City Council Report
City Council Meeting: September 12, 2006
Agenda Item: 1-A
To:
Mayor and City Council
From:
Steve Stark, Chief Financial Officer
Subject:
Ordinance Setting the FY2006/07 Tax Rate for the 1990 and 2002 Library
General Obligation Bonds
Recommended Action
This report recommends that the City Counci I adopt the attached ordinance setting the
FY2006/07 tax rates for the 1990 and 2002 Library general obligation bonds.
Executive Summary
The City Council is required to annually set, by ordinance, property tax rates to generate
funds to pay the debt service on voter-approved general obligation bonds. The City has
two outstanding general bond issues related to the Main Library (1990 and 2002
issues). Current law requires separate tax rates to be set for each bond issue
depending on the date of the bonds. This report requests Council adoption of the
attached ordinance setting the FY 2006-07 rates at $.010615 per $100 of assessed
valuation for the 2002 bonds and $.004164 per $100 assessed valuation for the 1990
bonds.
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Discussion
Backqround
On April 10, 1990, the City issued $4.5 million in General Obligation Bonds to acquire
property adjacent to the Main Library to meet immediate parking needs and for future
library expansion. On June 25, 1998, the City refunded a portion of the 1990 bonds at a
lower interest rate resulting in a lower tax rate assessed to local property owners. On
August 27, 2002, the City issued $25 million in additional voter approved General
Obligation bonds for construction, improvement, and remodeling of the Main Library and
branch libraries.
The Finance Department has calculated the total property tax rates for FY2006/07 to be
$.004164 per $100 of assessed valuation for the 1990 Bonds (refinanced in 1998) and
$.010615 per $100 of assessed valuation for the 2002 bonds.
Previous Council Actions
From FY 1990/91 through FY2001/02 the tax rate was set on the annual debt payment
for the 1990 Library Bonds (refinanced in 1998). FY 2002/03 was the first year that tax
rate included the 2002 Library Bonds (see Attachment 1).
Budqet/Financiallmpact
The tax revenue generated from the Library bonds tax rates should be sufficient to
cover FY 2006/07 debt service requirements of approximately $2.55 million. Both the
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revenues and the expenses are already in eluded in the FY2006/07 budget, so no
budget action is required by this report.
Prepared by:
David Carr, Principal Budget Analyst-Investments
Approved:
Forwarded to Council:
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Steve Stark
Chief Financial Officer
mont Ewell
ity Manager
ATTACHMENTS:
Attachment 1 :
Attachment 2:
Calculation of Tax Rates
Ordinance
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ATTACHMENT 1
CALCULATION OF TAX RATES
Calculation of the FY 2006-07 property tax rates are as follows:
1998 Bonds
$581,266
Net Requirements for FY 2006-07 (Debt Service
less prior year adjustments)
(22,821)
Projected Unsecured Property Tax
revenues for FY 2006-07*
$558,445
Projected net debt service requirements to be
financed by a levy on secured property for FY 2006-07
558.445
13,411,712,896 ** /$100
=ITax Rate of $.004164
FY 2002 Bonds
$2,105,523
Net Requirements for FY 2006-07 (Debt Service
less prior year adjustments)
(98,929)
Projected Unsecured Property Tax
revenues for FY 2006-07*
$2,006,594
Projected net debt service requirements to be
financed by a levy on secured property for FY 2006-07
$2,006.594
$18,903,694,936 ** /$100)
=lTax Rate of $.010615
* Unsecured revenues are calculated applying the prior year secured tax rate to current year
assessed valuation of unsecured property.
** Per AS 1290, the assessed value amount used to calculate the tax rate is different depending on
whether the bond were approved by voters before or after January 1, 2000.
Since 1998 bonds are the refunding of bonds approved by the voters prior to January 1, 1990, the
assessed value used to calculate the tax rate consists of the total assessed value of parcels outside
redevelopment project areas plus the base year value of parcels in redevelopment project areas.
For bonds such as the 2002 bonds approved by voters after January 1, 1990, total assessed value
in the City is used to calculate the tax rate.
Assessed values have been adjusted to reflect projected delinquent parcels.
F:\Budget\Share\ST AFF REPORTS\Library Bonds 0607 -1.xls