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Home My WebLink AboutItem 12c - Fiscal Year 2024-25 Tax Levies on General Obligation BondsResolution No. 7588 Fiscal Year 24-25 Tax Levies On General Obligation Bonds August 20, 2024 Page 1 of 3 DATE: August 20, 2024 TO: Honorable Mayor and City Council FROM: Henry Chen, Interim Administrative Services Director SUBJECT: RESOLUTION NO. 7588 DETERMINING THE AMOUNT OF REVENUE TO BE RAISED FROM PROPERTY TAXES FOR FISCAL YEAR 2024-25 TO PAY FOR THE DEBT SERVICE ON THE 2021 GENERAL OBLIGATION REFUNDING BONDS (SERIES BOND MEASURE A AND SERIES POLICE STATION PROJECT) CEQA: Not a Project Recommendation: Adopt SUMMARY The City has two General Obligation Bonds supported by voter-approved levies. In 2021, these bonds were refinanced into the 2021 General Obligation Refunding Bonds (Series Bond Measure A and Series Police Station Project). 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 2024-25 are estimated to generate tax revenue of $417,800 and $331,600 for the 2021 General Obligation Refunding Bonds (Series Bond Measure A and Series Police Station Project), 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. 7588 determining the amount of revenue to be raised from property taxes for Fiscal Year 2024-25 to pay for the debt service on the 2021 General Obligation Refunding Bonds (Series Bond Measure A and Series Police Station Project). BACKGROUND Two General Obligation Bonds were issued by the City, which were supported by voter- approved levies. The Series 2011 issuance was to fund the building of a grade separation at the intersection of Santa Anita Avenue and the Gold Line right-of-way alignment; the Series 2001 General Obligation Bonds were used to finance the construction of the City’s police station. Resolution No. 7588 Fiscal Year 24-25 Tax Levies On General Obligation Bonds August 20, 2024 Page 2 of 3 The issuance of Series 2001 General Obligation Bonds were 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 levies upon taxable property within the City. Both Bonds are payable 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. In 2021, with the interest rates near historical lows due to the COVID-19 pandemic, conditions provided another opportunity to refinance both Series 2011 and 2012 of the General Obligation Bonds. A private placement with Sterling Bank (subsequently acquired by Webster Financial) was done to refinance both the 2011 and 2012 Series General Obligations Bonds. The transaction closed on November 23, 2021, and the private placement will yield roughly $840,000 in savings 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 2024-25. The levy rate for Series 2021 General Obligation Refunding Bonds (Series Bond Measure A) is 0.002204%, in comparison to 0.003018% last year; the tax rate for the 2021 General Obligation Refunding Bonds (Series Police Station Project) is 0.001549% versus 0.002040% for the prior year. The rates for both issues decreased due to the increase in the City’s property assessed valuation for FY2025-26 of 4.54%. With these rates, a home valued at $1,000,000 would pay $22.04 in taxes for the Series Bonds Measure A Bonds, and $15.49 for the Series Police Station Project Bonds, as part of their annual property tax payments. Last year, the rates were $30.18 and $20.40, respectively; therefore, even with an increase in assessed valuation, most property owners will experience a small savings on their bills. Resolution No. 7588 Fiscal Year 24-25 Tax Levies On General Obligation Bonds August 20, 2024 Page 3 of 3 The FY 2024-25 debt service payments for the Series Bonds Measure A Bonds total $523,700, of which, $479,000 represents Principal and $44,700 is Interest. For the Series Police Station Project Bonds, the total amount due in FY 2024-25 is $408,300, including $373,000 for Principal and $35,300 for Interest. ENVIRONMENTAL ANALYSIS The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), and it can be seen with certainty that it will have no impact on the environment. FISCAL IMPACT No General Fund costs are incurred through this action. The rates established for Fiscal Year 2024-25 are estimated to generate tax revenue of $471,800 and $331,600 for the 2021 General Obligation Refunding Bonds (Series Bond Measure A and Series Police Station Project), 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 2024-25. RECOMMENDATION It is recommended that the City Council determine this action does not constitute a project under CEQA; and adopt Resolution No. 7588 determining the amount of revenue to be raised from property taxes for Fiscal Year 2024-25 to pay for the debt service on the 2021 General Obligation Refunding Bonds (Series Bond Measure A and Series Police Station Project). Attachments: Exhibit “A” – Calculation of Tax Rate Resolution No. 7588 Exhibit “A” Calculation of Tax Rate General Obligation Bonds Balance Available (1) 7-01-24 2023-24 Assessed Valuations Estimated Tax Revenue Debt Service (2) % Tax Rates 2022-23 (3) 2021 Series Measure A $555,400 $21,407,635,713 $471,800 $523,700 0.002204% 2021 Series Police Station $470,100 $21,407,635,713 $331,600 $408,300 0.001549% (1) Excess fund balance is included to ensure that positive cash balance is available for the debt service payments on August 1, 2024. (2) Per debt service schedule below. (3) For comparison, the levy rate from last year was 0.003018% and 0.002040% for Series 2021 General Obligation Refunding Bonds (Series Bond Measure A and Series Police Station Project), and their first-year levy rates were 0.006621% and 0.009657% in 2011 and 2001, respectively. DEBT SERVICE PAYMENT SCHEDULE: 2021 G.O. Bond Series Measure A 2021 G.O. Bond Series Police Station Principal $479,000 $373,000 Interest $44,700 $35,300 Total $523,700 $408,300 RESOLUTION NO. 7588 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DETERMINING THE AMOUNT OF REVENUE TO BE RAISED FROM PROPERTY TAXES FOR FISCAL YEAR 2024-25 TO PAY FOR THE DEBT SERVICE ON THE 2021 GENERAL OBLIGATION REFUNDING BONDS (SERIES BOND MEASURE A AND SERIES POLICE STATION PROJECT) WHEREAS, in a special election held on November 2, 1999, City of Arcadia voters approved the issuance of General Obligation Bonds Series 2001 in the principal of $8 million for the construction of a police facility; the 2001 Bonds were defeased by the issuance of General Obligation Bonds Series 2012 on November 6, 2012; the 2012 Bonds were defeased by the issuance of General Obligation Refunding Bonds (Series Police Station Project) on November 23, 2021 and property taxes are to be raised for the principal and interest payments of the indebtedness through tax levy; and WHEREAS, in the general municipal election held on April 11, 2006, City of Arcadia voters approved the issuance of General Obligation Bonds Series 2011 in the principal of $8 million for the construction of a grade separation, which is located at the intersection of Santa Anita Avenue and the Foothill Extension of the Metropolitan Transit Authority Gold Line; the 2011 Bonds were defeased by the issuance of General Obligation Refunding Bonds (Series Bond Measure A) on November 23, 2021 and property taxes are to be raised for the principal and interest payments of the indebtedness through tax levy. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS. SECTION 1. The following is the amount of revenue necessary during Fiscal Year 2024-25 to pay for the authorized debt service on the above-described Bonds: 1