HomeMy WebLinkAbout2014_07_16 Special Meeting Agenda Packet1
AGENDA
SPECIAL MEETING
SARATOGA CITY COUNCIL
JULY 16, 2014
SPECIAL MEETING – 4:45 P.M. – ADMINISTRATIVE CONFERENCE ROOM,
13777 FRUITVALE AVENUE
CALL MEETING TO ORDER – 4:45 P.M.
REPORT ON POSTING OF AGENDA
(Pursuant to Gov’t. Code 54954.2, the agenda for this meeting was properly posted on
July 15, 2014)
COMMUNICATIONS FROM COMMISSIONS & PUBLIC
ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS
Any member of the public will be allowed to address the City Council for up to three (3)
minutes on matters not on this agenda. The law generally prohibits the council from
discussing or taking action on such items. However, the Council may instruct staff
accordingly regarding Oral Communications under Council Direction to Staff.
COUNCIL DIRECTION TO STAFF
Instruction to Staff regarding actions on current Oral Communications.
1. Resolution to Establish Property Tax Levy for Debt Service Payments on the
Library General Obligation Bonds
Recommended Action:
Adopt the attached resolution that sets the property tax levy rate to provide for the
Library General Obligation Bond's debt service payment at $.0070 per $100 of
Assessed Valuation.
ADJOURNMENT
In accordance with the Ralph M. Brown Act, copies of the staff reports and other
materials provided to the City Council by City staff in connection with this agenda are
available at the office of the City Clerk at 13777 Fruitvale Avenue, Saratoga, CA 95070.
Note that copies of materials distributed to the City Council concurrently with the posting
of the agenda are also available on the City Website at www.saratoga.ca.us. Any
materials distributed by staff after the posting of the agenda are made available for public
review at the office of the City Clerk at the time they are distributed to the City Council.
2
In Compliance with the Americans with Disabilities Act, if you need assistance to
participate in this meeting, please contact the City Clerk at 408/868-1269. Notification
24 hours prior to the meeting will enable the City to make reasonable arrangements to
ensure accessibility to this meeting. [28 CFR 35.102-35.104 ADA title II]
Certificate of Posting of Agenda:
I, Crystal Bothelio, City Clerk for the City of Saratoga, declare that the foregoing agenda
for the meeting of the City Council was posted and available for public review on July
15, 2014 at the City of Saratoga, 13777 Fruitvale Ave., Saratoga, CA 95070 and on the
City’s website at www.saratoga.ca.us.
Signed this 15th day of July 2014 at Saratoga, California.
Crystal Bothelio, City Clerk
SARATOGA CITY COUNCIL
MEETING DATE: July 16, 2014 AGENDA ITEM:
DEPARTMENT: Finance & Administrative Services CITY MANAGER: Dave Anderson
PREPARED BY: Anthony McFarlane DIRECTOR: Mary Furey
SUBJECT: Resolution to Establish Property Tax Levy for Debt Service Payments on the Library
General Obligation Bonds
RECOMMENDED ACTION
Adopt the attached resolution that sets the property tax levy rate to provide for the Library General
Obligation Bond's debt service payment at $.0070 per $100 of Assessed Valuation.
REPORT SUMMARY
Background
In March 2000, the citizens of Saratoga approved the issuance of $15,000,000 of General Obligation
(GO) Bonds to pay for improvements to the Saratoga Community’s Library Building.
GO Bonds are tax-exempt debt obligations secured by the City’s statutory authority to levy ad valorem
taxes on real and personal property located within city boundaries for payment of the bond’s principal,
interest, and administrative expenses. The County of Santa Clara collects the GO Bond levy along with
property taxes, and subsequently remits the assessments to the City. The City in turn, dispenses payments
on behalf of the bond debt. The City does not receive revenue for this administrative obligation, nor
expend any City funds for the bond debt.
The General Obligation Bonds were issued in May of 2001, and debt service payments began in February
2002. At the time the GO Bonds were issued, competitive interest rates ranged between 5 and 6%. With
interest rates falling to historic lows in 2011, and with the GO Bonds becoming eligible for redemption, it
was financially advantageous for the City to refund the outstanding bond debt. Therefore, the 2001 Series
General Obligation Bonds were refunded on August 1, 2011 saving the City’s residents $2,677,041 in
interest over the remaining twenty years of the bond term.
Discussion
For the purpose of assessing a levy to the City’s property owners to fund debt service payments, the
County of Santa Clara requires local jurisdictions to adopt a resolution each year which establishes the
annual tax levy rate. The tax levy rate may adjust from year to year due to ongoing increases in property
values (resulting in higher tax receipts) and decreasing annual debt service payments due on the bonds.
Santa Clara County’s Auditor-Controller’s Office does not provide a secured assessed valuation report for
the upcoming fiscal year until days before the tax levy rate is due to the County on August 1st. This
timing does not leave sufficient time for the Council to approve the levy based on actuals. Therefore, a
property tax assessed value estimate from the Assessor’s most recent Secured Property Roll Growth
Comparison report is used to prepare the tax rate calculation.
In prior years, the City’s tax levy rate was structured to yield an amount approximately equal to the fiscal
year’s debt service, however with rising property tax growth, receipts surpassed debt service payments
each year, and the Debt Fund reserves grew to significantly exceed debt service payment requirements.
For the last five years, the property tax levy calculation was structured to provide slightly less than debt
service payments to reduce this reserve balance. And with the bond refunding, the levy rate was again
lowered. Now, with property values on the rise, the levy rate is being lowered even further for next year,
with the intent to continue reducing the Debt Fund reserve on a slow but steady pace.
Fiscal Year 2014/15 Bond Payments
There are two debt service payments each year: principal and interest in August, and interest only in
February. This means that at a minimum, the year-end Debt Service Fund Balance Reserve should
provide sufficient funding for the August debt service payment, as payment is required prior to property
tax levy remittance to the City. The estimated FY 2013/14 ending fund balance is $894,000, the August
debt service payment is approximately $700,000.
Scheduled principal and interest debt service payments are shown on the debt schedule attached to this
report.
Fiscal Year 2014/15 Calculation
The Library bond’s principal and interest debt service requirements for FY 2014/15 are shown below:
Debt Service – Principal $ 495,000
Debt Service – Interest 393,285
Debt Service – Fees 1,700
Total Debt Service $ 889,985
The Tax Assessor’s roll as of June 1, 2014 lists the City of Saratoga’s assessed valuation under the
Current Assessor’s Working File (CAWF) Roll for FY 2014/15 at $12,133,048,482. The required
property tax levy is then subsequently determined by dividing the annual recovery amount per $100 of
estimated assessed valuation:
Property Tax Levy Calculation:
Debt Service recovery amount $ 889,985
Divided per $100 of estimated valuation $ 121,133,048
Fully Funded Property Tax Levy Rate: .007347
However, with the intent to reduce the Debt Service Fund’s Fund Balance Reserve at a slow but steady
pace, staff recommends the Property Tax Levy Rate be set lower than the rate calculated above for full
debt service funding. Lowering the current rate to .0070 (rate rounded to 4 decimals per Assessor) will
result in total tax assessment receipts of approximately $848,000, thereby reducing the current Fund
Balance Reserve by an estimated $42,000. With this reduction, current budget estimates project the
Reserve would be lowered to approximately $852,000 at FY 2014/15 year-end. A gradual decrease is
intended to prevent upward swings in the tax rate levy at a later date.
On the property tax bill, this assessment is equivalent to $70 per $1,000,000 of assessed valuation. The
tax levy is designated specifically for funding the annual debt service requirements of the voter approved
General Obligation Bond, with the tax revenue receipts included in the City’s operating budget, within the
Library Bond Debt Service Fund.
For historical reference, the following schedule displays the City’s adopted annual property tax levy rates
since first assessed in FY 2001/02:
Library General Obligation Bond
Tax Levy Rate History
Fiscal Year Rate
2001/02 0.01673
2002/03 0.01650
2003/04 0.01210
2004/05 0.01484
2005/06 0.01170
2006/07 0.00955
2007/08 0.01130
2008/09 0.01040
2009/10 0.00940
2010/11 0.00940
2011/12 0.00880
2012/13 0.00800
2013/14 0.00740
2014/15 0.00700
FISCAL IMPACT
With the adoption of the property tax levy rate of .0070, debt service payments will be funded by tax
assessments and excess prior year assessment receipts; debt service payments would not fiscally impact
city operations.
ALTERNATIVE ACTION
The Council could choose to approve an alternative property tax levy rate, or to not approve a tax levy
rate. If the property tax levy is not approved, supplemental funds would not be collected by the Santa
Clara County Tax Assessor for the debt service related to the Library General Obligation Bond, and the
debt service payments would be funded from City reserves, or result in default.
FOLLOW UP ACTION
The Finance & Administrative Services Director will send a certified copy of the adopted resolution
setting the property tax levy for the Library General Obligation Bond no later than August 1st to:
Mu-Hua Cheng
County of Santa Clara
Controller-Treasurer Department
70 West Hedding Street, East Wing, 2nd Floor
San Jose, CA 95110-1705
ADVERTISING, NOTICING AND PUBLIC CONTACT
Pursuant to Government Code 54954.2, this item was properly posted as a City Council agenda item and
included in the packet made available on the City’s website in advance of the meeting. A copy of the
agenda packet is also made available at the Saratoga Branch Library each Monday in advance of the
Council meeting.
ATTACHMENTS
A: General Obligation Bond Debt Service Schedule
B. Resolution authorizing the Tax Rate Levy for the General Obligation Bonds and report the levy rate
to the Santa Clara County Tax Collector.
Attachment A
August August February Fiscal Year Bond
Fiscal Interest Annual Interest Interest Annual Debt Principal
Year Rate Principal Payment Payment Interest Service Balance @ YE
Refunded Bond Issuance dated August 1, 2011 11,995,000
2011/12 2.00%- - 228,211 228,211 228,211 11,995,000
2012/13 2.00%455,000 208,518 203,968 412,485 867,485 11,540,000
2013/14 2.00%485,000 203,968 199,118 403,085 888,085 11,055,000
2014/15 2.00%495,000 199,118 194,168 393,285 888,285 10,560,000
2015/16 2.00%500,000 194,168 189,168 383,335 883,335 10,060,000
2016/17 3.00%475,000 189,168 182,043 371,210 846,210 9,585,000
2017/18 3.00%485,000 182,043 174,768 356,810 841,810 9,100,000
2018/19 4.00%500,000 174,768 164,768 339,535 839,535 8,600,000
2019/20 4.00%525,000 164,768 154,268 319,035 844,035 8,075,000
2020/21 4.00%545,000 154,268 143,368 297,635 842,635 7,530,000
2021/22 3.00%565,000 143,368 134,893 278,260 843,260 6,965,000
2022/23 4.00%580,000 134,893 123,293 258,185 838,185 6,385,000
2023/24 4.00%610,000 123,293 111,093 234,385 844,385 5,775,000
2024/25 4.00%630,000 111,093 98,493 209,585 839,585 5,145,000
2025/26 3.50%655,000 98,493 87,030 185,523 840,523 4,490,000
2026/27 3.50%685,000 87,030 75,043 162,073 847,073 3,805,000
2027/28 3.70%705,000 75,043 62,000 137,043 842,043 3,100,000
2028/29 4.00%730,000 62,000 47,400 109,400 839,400 2,370,000
2029/30 4.00%760,000 47,400 32,200 79,600 839,600 1,610,000
2030/31 4.00%790,000 32,200 16,400 48,600 838,600 820,000
2031/32 4.00%820,000 16,400 - 16,400 836,400 -
TOTAL PAYMENTS 11,995,000 2,601,993 2,621,686 5,223,678 17,218,678
Total Bond Principal payments 11,995,000
Total Bond Interest payments 5,223,678
Total Cost of Bond Issuance 17,218,678
City of Saratoga
2011 General Obligation Bond
Debt Schedule
Attachment B
RESOLUTION NO. _____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA
ESTABLISHING THE FY 2014/15 PROPERTY TAX LEVY ASSESSMENT RATE
FOR DEBT SERVICE PAYMENTS ON THE
LIBRARY GENERAL OBLIGATION BOND
WHEREAS, in March 2000, the citizens of Saratoga approved an increase in their
property tax rate to pay for the debt service and other expenses of the general obligation bonds
for construction of the Library, and
WHEREAS, the general obligation bonds were originally sold on April 24, 2001, and
WHEREAS, the general obligation bonds were refunded on August 1, 2011, and
WHEREAS, it is necessary for the City Council of the City of Saratoga to establish an
annual property tax levy rate to provide funds for debt service payments and related expenditures
during the fiscal year,
NOW, THEREFORE, BE IT RESOLVED that the FY 2014/15 Property Tax Levy rate for
debt service on the Library General Obligation Bonds be established at $.0070 per $100 of
assessed valuation.
The above and foregoing resolution was passed and adopted at an adjourned meeting of the
Saratoga City Council held on the 16th day of July 2014 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Emily Lo, Mayor
City of Saratoga
ATTEST:
____________________________
Crystal Bothelio, City Clerk
City of Saratoga