SR-081407-7B~-
City of
Santa Monica
City Council Report
City Council Meeting: August 14, 2007
Agenda Item:
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Ordinance Setting the FY2007/08 Tax Rate for the 1990 and 2002 Library
General Obligation Bonds
Recommended Action
Staff recommends that the City Council adopt the attached ordinance setting the
FY2007/O8 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. Staff requests that Council adopt the attached
ordinance setting the FY2007/O8 rates at $.009809 per $100 of assessed valuation for
the 2002 bonds and $.003316 per $100 assessed valuation for the 1990 bonds.
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Discussion
Background
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 FY2007/O8 to be
$.003316 per $100 of assessed valuation for the 1990 Bonds (refinanced in 1998) and
$.009809 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. Attachment 1 provides further detail on the
calculations.
Budget/Financial Impact
The tax revenue generated from the Library bonds tax rates should be sufficient to
cover FY2006/07 debt service requirements of approximately $2.5 million. Both the
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revenues and the expenses are already included in the FY2007/08 budget, so no
budget action is required by this report.
Prepared by:
David Carr, Principal Budget Analyst-Investments
Approved:
Carol Swindell
Director of Finance
Forwarded to Council;
ATTACHMENTS:
Attachment 1: Calculation of Tax Rates
Attachment 2: Ordinance
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ATTACHMENT1
CALCULATION OF TAX RATES
Calculation of the FY 2007-08 property tax rates are as follows:
1998 Bonds
$493,549 Net Requirements for FY 2007-08 (Debt Service)
(21,220) Projected Unsecured Property Tax
----------- revenues for FY 2007-08`
$472,329 Projected net debt service requirements to be
financed by a levy on secured property for FY 2007-08
472, 329
14,245,000,722 *' / $100 Tax Rate of $:003316 r
FY 2002 Bonds
$2,023,750 Net Requirements for FY 2006-07 (Debt Service)
(90,317) Projected Unsecured Property Tax
----------- revenues for FY 2007-08'
$1,933,433 Projected net debt service requirements to be
financed by a levy on secured property for FY 2007-08
$1,933.433
$19,711,641,863 ** / $100
Unsecured revenues are calculated applying the prior year secured tax rate to current year
assessed valuation of unsecured property.
" Per Proposition 87, the assessed value amount used to calculate the tax rate is different depending on
whether the bonds were approved by voters before or after January 1, 1989 so that redevelopment agencies.
do not receive revenues resulting from these tax override rates to pay debt service on General Obligation
bonds approved by the voters.
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, 1989, 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\$TAFF REPORTS\Library Bonds\Library Bonds 0708-1
Reference
Ordinance No. 2237
(CCs).