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SR 07-24-2018 7A City Council Report City Council Meeting: July 24, 2018 Agenda Item: 7.A 1 of 2 To: Mayor and City Council From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue Subject: Adoption of an Ordinance Setting the FY 2018-19 Tax Rate for the 2012 Library General Obligation Bonds Recommended Action Staff recommends that the City Council adopt the attached ordinance (Attachment A) setting the FY 2018-19 tax rate for the 2012 Library General Obligation Bonds. Executive Summary The City pays debt service on voter-approved general obligation bonds, one of which is the 2012 Library General Obligation Refunding Bonds. Each year, the City Council sets a tax rate that is added to property tax rates to generate funds to pay bond debt service. Tax rates change annually based on the scheduled debt service payment as well as changes in overall City-wide assessed property values. Staff recommends that Council adopt the attached ordinance setting the FY 2018-19 rate at $.003213 per $100 of assessed valuation. Discussion In August 2002, the City issued $25 million in voter-approved General Obligation bonds for construction, improvement, and remodeling of the City’s libraries. In May 2012, all outstanding 2002 funds were refunded by issuance of 2012 Library General Obligation Refunding Bonds in order to take advantage of lower interest rates. On an annual basis, staff calculates the recommended property tax rates based on changes in City-wide assessed valuation and the amount of the scheduled debt service payment for the year. Staff calculated the total FY 2018-19 property tax rates for the 2012 refunding bonds to be $.003213 per $100 of assessed valuation, a decrease of $.000551 per $100 of assessed valuation from the prior year. The FY 201 8-19 assessed values used to 2 of 2 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 B 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 2018-19 debt service payments of $1,272,650. Associated revenues (account number 01800004.400130) and expenditures (account number 01800004.570080) are included in the FY 2017-19 Adopted Biennial Budget. Prepared By: David Carr, Assistant City Treasurer Approved Forwarded to Council Attachments: A. Calculation of Rates B. Ordinance (Attachment B) ATTACHMENT B CALCULATION OF TAX RATES Calculation of the FY 2018/19 property tax rates are as follows: FY 2012 Bonds $1,161,625 ($43,582)Less $1,118,043 $1,118,043 $34,802,491,027** / 100 =Tax Rate of $.003213 * ** Unsecured revenues are calculated by applying the prior year secured tax rate to estimated 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. Net Requirements for FY 2018/19 Projected net debt service requirements to be financed by a levy on secured property for FY 2018-19 Projected Unsecured Property Tax revenues for FY 2018/19* ATTACHMENT A 1 City Council Meeting 7-24-18 Santa Monica, California ORDINANCE NUMBER ____ (CCS) (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA SETTING THE 2017/18 TAX RATE FOR THE LIBRARY GENERAL OBLIGATION BONDS WHEREAS, at the November 3, 1998 general election, by a favorable vote of more than two thirds of all the voters voting on the proposition, the issuance of General Obligation Bonds (the “2002 Bonds”) in the principal amount of $25 million was authorized for the purposes of construction, improvement, and remodeling of the Main Library and branch libraries; and WHEREAS, on July 23, 2002, the City Council adopted Resolution Number 9785 (CCS) (the “2002 Bond Resolution”), authorizing the issuance of such Bonds and such issuance and sale of the 2002 Bonds occurred in August 2002; and WHEREAS, on May 8, 2012, the City Council adopted Resolution Number 10674 (CCS) (the “2012 Bond Resolution”) authorizing issuance of City of Santa Monica General Obligation Refunding Bonds, Series 2012 (Library Improvements Project ) (the 2012 Bonds”) to refund the 2002 bonds in full; and 2 WHEREAS, the City Council of the City of Santa Monica is empowered and obligated to levy ad valorem taxes for the payment of the 2012 Bonds and the interest thereon, upon all property within the City subject to taxation by the City; and WHEREAS, in accordance with the 2012 Bond Resolution, the City Council is required to fix, levy and collect annually until all of the 2012 Bonds are paid or until there is a sum in the City Treasury set apart for that purpose sufficient to meet all sums coming due for principal and interest on said Bonds, a tax sufficient to pay the annual interest on the 2012 Bonds and such part of principal as the same shall become due; and WHEREAS, the taxes required to be levied and collected by the 20 12 Bond Resolution shall be in addition to all other taxes levied for City purposes, shall be collected at the time and in the manner as other City ad valorem taxes are collected, and shall be used for no purpose other than payment of the 2012 Bonds and accrued interest thereon. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS FOLLOWS: SECTION 1. The City Council hereby sets the Fiscal Year 2018/19 ad valorem Tax Rate for the City of Santa Monica General Obligation Refunding Bonds, Series 2012 (Library Improvements Project) at $.003213 per $100.00 of assessed value for property located within the City of Santa Monica. SECTION 2. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such 3 inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the Ordinance would be subsequently declared invalid or unconstitutional. SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall take effect upon adoption pursuant to Santa Monica Charter Section 619(c). APPROVED AS TO FORM: _________________________ LANE DILG City Attorney REFERENCE: Ordinance No. 2580 (CCS)