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
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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
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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)