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SR-08-13-2013-7DCity Council Meeting: August 13, 2013 Agenda Item: 7D To: Mayor and City Council From: Gigi Decavalles- Hughes, Director of Finance Subject: Ordinance Setting the FY 2013 -14 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 2013 -14 tax rates for the 2012 Library general obligation bonds. Executive Summary The City Council is required by ordinance to annually set 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. They were refunded in May 2012, resulting in debt service savings. Staff requests that Council adopt the attached ordinance setting the FY 2013 -14 rate at $.005504 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, and FY 2012 -13 was the first year of debt service on these 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 1 branch libraries. In order to take advantage of the low interest rate environment, all outstanding 2002 bonds were refunded by issuance of 2012 Library General Obligation Refunding Bonds in May 2012. Staff has calculated the total FY 2013 -14 property tax rates for the 2012 refunding bonds to be $.005504 per $100 of assessed valuation. The decrease from the prior year rate of $.006059 per $100 of assessed valuation reflects the FY 2013 -14 assessed valuation increase. The FY 2013 -14 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 2013 -14 debt service requirements of $1,534,980. Both the revenues (account number 01274.404660) and the expenditures (account number 01274.555300) are included in the FY 2013 -14 Adopted Budget. Prepared by: David Carr, Assistant City Treasurer Approved: `• Director of i.t - Attachments: A. Calculation of Tax Rates B. Ordinance 2 Forwarded to Council: Rod Gould City Manager ATTACHMENT A CALCULATION OF TAX RATES Calculation of the FY 2013 -14 property tax rates are as follows: FY 2012 Bonds $1,473,911 ($55,013) Less $1,418,898 $1,418,898 $25,780,015,481 ** /$100 Net Requirements for FY 2013 -14 Projected Unsecured Property Tax revenues for FY 2012 -13* Projected net debt service requirements to be financed by a levy on secured property for FY 2012 -13 Tax Rate of $:005504 . m * 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. 2433 (CCS)