HomeMy WebLinkAboutItem 11b - Annual General Obligation BondsResolution No. 7332 Annual General Obligation Bonds
August 18, 2020
Page 2 of 2
DATE: August 18, 2020
TO: Honorable Mayor and City Council
FROM: Hue C. Quach, Administrative Services Director
By: Henry Chen, Financial Services Manager/City Treasurer
SUBJECT: RESOLUTION NO. 7332 DETERMINING THE AMOUNT OF REVENUE
TO BE RAISED FROM PROPERTY TAXES FOR FISCAL YEAR 2020-21
TO PAY FOR THE DEBT SERVICE ON THE 2011 AND 2012 GENERAL
OBLIGATION BONDS
Recommendation: Adopt
SUMMARY
The City has two General Obligation Bonds supported by voter-approved levies. The
Series 2011 issuance funded the building of a grade separation at the intersection of
Santa Anita Avenue and the Gold Line right-of-way alignment; 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 payments for the outstanding
General Obligation Bonds. The rates established for Fiscal Year 2020-21 are estimated
to generate tax revenue of $621,000 and $444,000 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.
It is recommended that the City Council adopt Resolution No. 7332 determining the
amount of revenue to be raised from Property Taxes for Fiscal Year 2020-21 to pay for
the debt service on the 2011 and 2012 General Obligation Bonds.
BACKGROUND
The issuance of Series 2001 General Obligation Bonds was approved in a special
election held on November 2, 1999; the Series 2011 issuance was approved by the
voters in the April 11, 2006, election. More than two-thirds of the votes cast were in
favor of the agreed indebtedness with the principal and interest payable from taxes
levied upon taxable property within the City. Both the 2011 and 2012 Bonds are payable
Resolution No. 7332 Annual General Obligation Bonds
August 18, 2020
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entirely by ad valorem Property Taxes levied on behalf of the City and collected by Los
Angeles County.
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 2001, providing savings of approximately $1
million for taxpayers over the life of the bonds.
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
boundaries.
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 2020-21.
The levy rate for Series 2011 General Obligation Bonds is 0.003378%, in comparison to
0.003338% last year, and the tax rate for the Series 2012 General Obligation Bonds is
0.002415% versus 0.002347% for the prior year. The increase in the tax rates is due to
slight under collection of property taxes during Fiscal Year 2019-20 and the increased
debt service amounts due in Fiscal Year 2020-21. With these rates, a home valued at
$1 million would pay $33.78 in taxes for the 2011 Series Bonds and $24.15 for the 2012
Series Bonds as part of their annual property tax payments.
The Fiscal Year 2020-21 debt service payments for the Series 2011 General Obligation
Bond totals $594,000, of which $370,000 represents principal and $224,000 is interest.
For the Series 2012 General Obligation Bond, the total amount due in Fiscal Year 2020-
21 is $418,000, including $305,000 for principal and $113,000 for interest. The final
debt service payments for both the Series 2011 and 2012 General Obligation Bonds are
scheduled for August 2031.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under the California Environmental
Quality Act (“CEQA”), under Section 15061(b)(3) of the CEQA Guidelines, and it can be
seen with certainty that it will have no impact on the environment. Thus, this matter is
exempt under CEQA.
Resolution No. 7332 Annual General Obligation Bonds
August 18, 2020
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FISCAL IMPACT
No General Fund costs are incurred through this action. The rates established for
Fiscal Year 2020-21 are estimated to generate tax revenue of $621,000 and $444,000
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
added to each bond fund’s existing fund balances for debt service payments occurring
in Fiscal Year 2020-21.
RECOMMENDATION
It is recommended that the City Council determine that this project is exempt under the
California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7332
determining the amount of revenue to be raised from property taxes for Fiscal Year
2020-21 to pay for the debt service on the 2011 and 2012 General Obligation Bonds.
Attachments: Exhibit “A” – Calculation of Tax Rate
Resolution No. 7332
Exhibit “A”
Calculation of Tax Rate
General
Obligation
Bonds
Balance
Available
(1)
7-01-19
2020-21
Assessed
Valuations
Estimated
Tax
Revenue
Debt
Service
(2)
% Tax Rates
2020-21 (3)
Series 2011 $460,000 $18,384,704,572 $621,000 $594,000 0.003378%
Series 2012 $340,000 $18,384,704,572 $444,000 $418,000 0.002415%
(1) Excess fund balance is included to ensure that positive cash balance is available
for the debt service payments on August 1, 2020.
(2) Per debt service schedule below.
(3) For comparison, the levy rate from last year was 0.003338% and 0.002347% 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. Bond 2012 G.O. Bond
Principal $370,000 $305,000
Interest $224,000 $113,000
Total $594,000 $418,000