F:\FINANCE\ADMIN\Staff
Reports\Library Bonds Tax Override 04-05.doc
Council Meeting: September 14,
2004 Santa
Monica, CA
TO: Mayor and City Council
FROM: City
Staff
SUBJECT: Ordinance Setting the FY 2004/05 Tax Rate for
the 1990 and 2002 Library General Obligation Bonds
INTRODUCTION
This report recommends that the City Council adopt
the attached ordinance setting the FY 2004/05 tax rates for the 1990 and 2002
Library General Obligation Bonds.
BACKGROUND
On April 10, 1990, the City issued $4.5 million in General Obligation Bonds to acquire property adjacent to the Main Library to meet immediate parking needs and for future library expansion. On June 25, 1998, the City refunded a portion of the 1990 bonds at a lower interest rate resulting in a lower tax override rate assessed to local property owners. On August 27, 2002, the City issued $25 million in additional voter approved General Obligation bonds for construction, improvement, and remodeling of the Main Library and branch libraries. The annual debt service on all Library-related General Obligation bonds is payable from annual overrides on the Property Tax levy.
Annually, the City sets the override rates for property taxes. From FY 1990/91 through FY2001/02 the tax override rate was set on the annual debt payment for the 1990 Library Bonds (refinanced in 1998). FY 2002/03 was the first year that tax rate included the 2002 Library Bonds. The rate set for the FY2002/03 bonds was the same methodology as the 1990 bonds. However, due to a change in State law (Proposition 87) the 2002 Library Bonds require a different tax rate setting methodology to be used. As a result of the methodology used, the tax rate set for FY2002/03 was too high. The tax rate for FY2003/04 was correctly set.
The County Tax Assessor has now provided the
information necessary to calculate the over collection FY2002/03 which was
$661,803. The Redevelopment Agency
received the over collection and will pay that amount to the City which will be
applied to the 2002 Library Bond payments for FY2004/05.
The Finance Department has calculated the total
property tax overrides for FY2004/05 to be $.003427 per $100 of assessed valuation
for the 1990 Bonds (refinanced in 1998) and $.008072 per $100 of assessed
valuation for the 2002 bonds. The 2002
bond payments are reduced by $.004289/$100, or 34.75%, to reflect the one-time
credit from the RDA. Attachment 1
provides details of the tax rate calculation.
BUDGET/FINANCIAL IMPACT
There is no budget change resulting from adoption of
the attached ordinance. The tax revenue
generated from the Library bonds tax rates is already included in the FY2004/05
budget.
RECOMMENDATION
It is recommended that the City Council introduce and
adopt the attached ordinance setting the FY 2004/05 tax rates for all
Library-related General Obligation bonds as follows:
1)
$.003427 per $100 of
assessed valuation for the 1990 Bonds (refinanced in 1998).
2)
$.008072 per $100 of
assessed valuation for the 2002 Bonds
Prepared by: Steve Stark, Director of Finance
Janet
Shelton, Budget Manager
David
Carr, Principal Budget Analyst-Investments
Attachments: Calculation of Tax Rate