SR-203-001-03 (7)
F:\FINANCE\ADMIN\Staff Reports\Library Bonds Tax Ovefride 04-05.doc
Council Meeting: September 14, 2004 Santa Monica, CA
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Ordinance Setting the FY 2004/05 Tax Rate for the 1990 and 2002 Library
General Obligation Bonds
INTRODUCTION
This report recommends that the City Council adopt the attached ordinance setting the
FY 2004/05 tax rates fOf the 1990 and 2002 Library General Obligation Bonds.
BACKGROUND
On Apfil 10, 1990, the City issued $4.5 million in Genefal 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 overfide 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 femodeling of the Main
Library and branch libraries. The annual debt service on all Library-related Genefal
Obligation bonds is payable from annual overrides on the Property Tax levy.
DISCUSSION
Annually, the City sets the override fates for property taxes. From FY 1990/91 through
FY2001/02 the tax override 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
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the 2002 Library Bonds. The rate set for the FY2002/03 bonds was the same
methodology as the 1990 bonds. However, due to a change in State law (Proposition
87) the 2002 Library Bonds require a different tax rate setting methodology to be used.
As a result of the methodology used, the tax rate set for FY2002/03 was too high. The
tax rate for FY2003/04 was correctly set.
The County Tax Assessor has now provided the information necessary to calculate the
over collection FY2002/03 which was $661,803. The Redevelopment Agency received
the over collection and will pay that amount to the City which will be applied to the 2002
Library Bond payments for FY2004/05.
The Finance Department has calculated the total property tax overrides for FY2004/05
to be $.003427 per $100 of assessed valuation for the 1990 Bonds (refinanced in 1998)
and $.008072 per $100 of assessed valuation for the 2002 bonds. The 2002 bond
payments are reduced by $.004289/$100, or 34.75%, to reflect the one-time credit from
the RDA. Attachment 1 provides details of the tax rate calculation.
BUDGET/FINANCIAL IMPACT
There is no budget change resulting from adoption of the attached ordinance. The tax
revenue generated from the Library bonds tax rates is already included in the
FY2004/05 budget.
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RECOMMENDATION
It is recommended that the City Council introduce and adopt the attached ordinance
setting the FY 2004/05 tax rates for all Library-related General Obligation bonds as
follows:
1) $.003427 per $100 of assessed valuation for the 1990 Bonds (refinanced in
1998).
2) $.008072 per $100 of assessed valuation for the 2002 Bonds
Prepared by:
Steve Stark, Director of Finance
Janet Shelton, Budget Manager
David Carr, Principal Budget Analyst-Investments
Attachments:
Calculation of Tax Rate (Attached)
Ordinance - See adopted Ordinance No. 2138 (CCS)
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ATTACHMENT 1
CALCULATION OF TAX RATES
Calculation of the FY 2004-05 property tax rates are as follows:
1998 Bonds
$418,294
Net Requirements for FY 2004-05 (Debt Service
less prior year adjustments)
(11,940)
Projected Unsecured Property Tax
revenues for FY 2004-05"
$406,354
Projected net debt service requirements to be
financed by a levy on secured property for FY 2004-05
406.354
11,857,948,007 .... 1$100
=1,,~SitI'i\'<<t~7ia_~1;:'.iJ'~jl
j'j!L~ .k. .,.", . . .i;iM!j'~E~it> ' ".t!JIf:,,,~:;,,,,,<:;:!,,,:jit
FY 2002 Bonds
Baseline
$2,012,451
Net Requirements for FY 2004-05 (Debt Service
less prior year adjustments)
(107,817)
Projected Unsecured Property Tax
revenues for FY 2004-05"
$1,904,634
Projected net debt service requirements to be
financed by a levy on secured property for FY 2004-05
(661.803)
FY 2002-03 overpayment to RDA to be reimbursed by RDA
1,242,831
Projected net debt service requirements to be
financed by a levy on secured property for FY 2004-05
$1.242.831
$15,397,441,252 .... 1$100)
=1.M.m!:I~II:1iBf.Wi'0\1~!iil
!~"...,. i,'..~.' ,,:tcf'ft "~.,)<l'",, ,. .,' ._.~;:,..^,,;j\ih,1Jlw',,!\
.. Unsecured revenues are calculated applying the prior year secured tax rate to current year assessed valuation
of unsecured property.
.... Reflects total City secured assessed value for FY 2004-05 adjusted to reflect projected delinquent parcels.
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