HomeMy WebLinkAboutItem 2c - Debt Service on 2011 and 2012 General Obligation Bonds
DATE:August 1, 2017
TO:Honorable Mayor and City Council
FROM:Hue C. Quach, Administrative Services Director
Shannon Huang, Financial Services Manager/City Treasurer
SUBJECT:RESOLUTION NO. 7177DETERMINING THE AMOUNT OF REVENUE
TO BE RAISED FROM PROPERTY TAXES FOR FISCAL YEAR 2017-18
TO PAY FOR THE DEBT SERVICEON THE 2011AND 2012GENERAL
OBLIGATION BONDS
Recommendation: Adopt
SUMMARY
The City has two General Obligation Bonds supported by voter approved levies. The
Series 2011 issuance wasto fund the grade separation at the intersection of Santa
Anita Avenue and the Gold Linetracks;the General Obligation Bonds Series 2012 are
refunding bonds, replacing the Series 2001 General Obligation Bonds, which were used
to finance the construction of the City’s police station. Annually, the City Council is
required to adopt a resolution to establish the supplemental taxes collected to make
debt service paymentsfor the outstanding General Obligation Bonds.The rates
established for Fiscal Year 2017-18are estimated to generate tax revenue of $568,600
and $398,700for the 2011 and 2012 General Obligation Bonds, respectively, and will
be paid directly by property owners as part of their annual property tax bills. It is
recommended that the City Council adopt Resolution No.7177determining the amount
of revenue to be raised from property taxes for Fiscal Year 2017-18to pay for the debt
service on the 2011 and 2012 General Obligation Bonds.
BACKGROUND
The issuance of Series 2001 General ObligationBonds wasapproved in a special
election held on November 2,1999;the Series 2011 issuance was approvedby the
votersin the April 11, 2006,election. More than two-thirds of the votes cast were in
favor of the agreed indebtedness with the principal andinterest payable from taxes
levied upon taxable property within the City.
Resolution 7177Fiscal Year17-18Tax Levies
on General Obligation Bonds
August 1, 2017
Page 2of3
In 2012, the bond market provided an opportunity to refinance the Series 2001 General
Obligation Bonds. General Obligation Bonds Series 2012 were issued on November 6,
2012,solely for the refunding of the Series 2001Bonds,providing savings of
approximately $1 million for taxpayers over the life of the bonds.
Both of the 2011 and 2012 Bonds are payable entirely byad valorem property taxes
levied on behalf of the City and collected by Los Angeles County.
Each year,a resolution must be adopted by the City Council to determine the amount of
revenue required to be raised from property taxes to pay for the debt service on the
General Obligation Bonds. This information is the basis for establishing tax rates, which
are forwarded to Los Angeles County and will be applied to properties within the City’s
boundary.
DISCUSSION
A separate schedule (Exhibit “A”) illustrating the calculation of the tax rate is attached to
provide detail of the debt service payments, the assessed valuations, beginning
balances, estimated expenditures,and the proposed tax rate for Fiscal Year 2017-18.
The levy rate for Series 2011 General Obligation Bonds is 0.003627% in comparison to
0.004014%last year,and the tax rate for theSeries 2012 General Obligation Bonds is
0.002543% versus 0.002803%fromthe prior year. The reduction in the assessed tax
rates is due to the overall 6.84% increase ofthe City’s property assessed value for
Fiscal Year 2017-18and the higher beginning fund balance due to the more than
expected tax collection in Fiscal Year 2016-17.A home valued at $750,000 would pay
$27.20in taxes for the 2011 Series Bonds and $19.07for the 2012 Series Bonds as
part of their annual property tax payments.
The FY 2017-18debt service payments for the Series 2011 General Obligation Bond
totals $595,120,ofwhich,$320,000represents Principal and $275,120as Interest. For
the Series 2012 General Obligation Bond, the total amount due in FY2017-18is
$415,675,including $270,000 for Principal and $145,675asInterest.
Resolution 7177Fiscal Year17-18Tax Levies
on General Obligation Bonds
August 1, 2017
Page 3of3
FISCAL IMPACT
No General Funds costs are incurred through this action. The rates established for
Fiscal Year 2017-18are estimated to generate tax revenue of $568,600and $398,700
for the 2011 and 2012 General Obligation Bonds, respectively,and will be paid directly
by property owners as part of their annual property tax bills. These tax revenues will be
addedto each bond fund’s existing fund balances for debt service payments occurring
in Fiscal Year 2017-18.
RECOMMENDATION
It is recommended that the City Council adoptResolution No.7177determiningthe
amount of revenue to be raised from property taxes for Fiscal Year 2017-18to pay for
the debt serviceon the 2011and2012General Obligation Bonds.
Attachments: Exhibit “A”–Calculation of Tax Rate
Resolution No. 7177
Exhibit “A”
General Balance
2017-18Estimated Debt
Obligation Available % Tax Rates
Assessed Tax Service
Bonds(1)2017-18(3)
valuationsRevenue(2)
7-01-17
Series 2011$495,100$15,676,471,562$568,600$595,1200.003627%
Series 2012$367,800$15,676,471,562$398,700$415,6750.002543%
(1)Excess fund balance is included to ensure that positive cash balance is available
for the debt service payments on August 1, 2018.
(2)Per debt service schedule below.
(3)For comparison, the levy rate from last yearwas 0.004014% and 0.002803% for
Series 2011 and 2012 General Obligation Bonds, and their first year levy rates
were 0.006621% and 0.009657% in 2011 and 2001, respectively.
DEBT SERVICE PAYMENT SCHEDULE:
2011 G.O. Bond2012 G.O. Bond
Principal$320,000$270,000
Interest$275,120$145,675
Total$595,120$415,675