SR-08-14-2012-7BID
City of
Santa Monica'
City Council Report
City Council Meeting: August 14, 2012
Agenda Item: 7° B
To: Mayor and City Council
From: Gigi Decavalles- Hughes, Director of Finance
Subject: Ordinance Setting the FY 2012 -13 Tax Rate for the 2012 Library General
Obligation Refunding Bonds ,
Recommended Action
Staff recommends that the City Council adopt the attached ordinance setting the FY
2012 -13 tax rates for the 2012 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
currently has one outstanding general obligation bond issue. The bonds were originally
issued in 2002 for construction, improvement, and remodeling of the Main Library and
branch libraries. The bonds were refunded in May 2012, resulting in debt service
savings. Staff requests that Council adopt the attached ordinance setting the FY 2012-
13 rate at $.006059 per $100 of assessed valuation.
Background
From FY 1990 -91 through FY 2001 -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
rates also included the 2002 Library Bonds. The 1998 refunded bonds were paid off in
2010 and are no longer included in the tax calculation. In May 2012, Council approved
issuance of the 2012 bonds to refund the 2002 bonds.
Discussion
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. In order to take advantage of the current low interest rate environment,
all outstanding 2002 funds were refunded by issuance of 2012 Library General
1
Obligation Refunding Bonds in May 2012. The debt service savings over the ten -year
life of the refunded bonds is estimated to be over $2 million, or approximately $200,000
per year. This will result in a lower tax rate each year.
Staff has calculated the total FY 2012 -13 property tax rates for the 2012 refunding
bonds to be $.006059 per $100 of assessed valuation. The FY 2012 -13 assessed
values used to calculate the rates are based on preliminary assessed value information
from the Los Angeles County Assessor. Final assessed values were not available at
the time of this report. Any differences between preliminary and final values should be
minor and will be accounted for in next year's rate calculations.
Attachment A provides further detail on the calculations.
Financial Impacts and Budget Actions
The tax revenue generated from the Library Bonds tax rate should be sufficient to cover
FY 2012 -13 debt service requirements of approximately $1.6 million. Both the revenues
and the expenses are already included in the FY 2012 -13 Adopted Budget.
Prepared by: David Carr, Treasury Administrator
Approved:
�or Gigi Decavalles- Hughes
Director of Finance
Attachments:
A. Calculation of Tax Rates
B. Ordinance
Forwarded to Council:
Rod Gould
City Manager
ATTACHMENT A
CALCULATION OF TAX RATES
Calculation of the FY 2012 -13 property tax rates are as follows:
FY 2012 Bonds
$1,522,605 Net Requirements for FY 2012 -13
($63,717) Projected Unsecured Property Tax revenues for
------- - - - - -- FY 2012 -13*
$1,458,888 Projected net debt service requirements to be financed
by a levy on secured property for FY 2012 -13
$1,458,888
$24,078,862,961 ** /$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 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.
For bonds, such as the 2012 bonds approved by voters after January 1, 1989, total assessed
value in the City is used to calculate the tax rate.
Assessed values are based on preliminary information from the Los Angeles County Assessor and
have been adjusted to reflect projected delinquent parcels.
Reference Ordinance No.
2405 (CCS).