SR-07-14-2015-7CCity Council Meeting: July 14, 2015
To: Mayor and City Council
From: Gigi Decavalles- Hughes, Director of Finance
Subject: Ordinance Setting the FY 2015 -16 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 2015-
16 tax rate 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
recommends Council adopt the attached ordinance setting the FY 2015 -16 rate at
$.004699 per $100 of assessed valuation.
Background
On August 27, 2002, the City issued $25 million in voter - approved General Obligation
bonds for construction, improvement, and remodeling of the Main Library and 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.
Discussion
Staff calculated the total FY 2015 -16 property tax rates for the 2012 refunding bonds to
be $.004699 per $100 of assessed valuation. The FY 2015 -16 assessed values used to
calculate the rates are based on the budgeted assessed value increase of 4 %. Final
assessed values were not available at the time of this report and will not be available until
1
approximately August 1, 2015. The cancellation of the August 11, 2015 Council meeting
does not allow time to use the final assessed value numbers and still meet the deadline
set by the County to submit the tax rate. Any differences between preliminary and final
values should be minor and will be accounted for in next year's rate calculations. The
change from the prior year rate of $.004916 per $100 of assessed valuation primarily
reflects the estimated FY 2015 -16 assessed valuation increase as well as a slight
decrease in the scheduled debt service obligation from the prior year.
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 2015 -16 debt service payments of $1,433,050. Both the revenues (account number
01274.404660) and the expenditures (account number 01274.555300) are included in the
FY 2015 -16 Adopted Budget.
Prepared by: David Carr, Assistant City Treasurer
Approved:
Forwarded to Council:
Gigi Decavalles -Hu es Rick Cole
Director of Finance City Manager
Attachments:
A. Calculation of Tax Rates
B. Ordinance
.
ATTACHMENT A
CALCULATION OF TAX RATES
Calculation of the FY 2015/16 property tax rates are as follows:
FY 2012 Bonds
$1,391,320 Net Requirements for FY 2015/16
($44,148) Less Projected Unsecured Property Tax revenues for FY 2014/15*
$1,347,172 Projected net debt service requirements to be financed by a levy
on secured property for FY 2015 -16
$1,347,172
$28,670,782,748 ** /$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. 2488
(CCS)