Fremont City Council Meeting: 07/19/22 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Plans, Policies and Studies
SCHEDULED
Sponsors:
STAFF REPORT (ID # 4652) DOC ID: 4652
Updated: 7/14/2022 8:06 AM by Alberto Quintanilla Page 1 GENERAL OBLIGATION BONDS TAX RATE FOR FY 2022/23 - Adopt a Resolution Setting the Annual Tax Rate for Voter-Approved General Obligation Bonds Debt Service for Fiscal Year 2022/23 and Authorizing the County of Alameda to Collect and Enforce the Levy on Behalf of the City
Contact Persons:
Name: Mario Rosas David Persselin
Title: Budget and Treasury Analyst Finance Director
Div/Dept: Finance Department Finance Department
Phone: 510-494-4637 510-494-4631
E-Mail: [email protected] [email protected]
Executive Summary: In November 2002, Fremont voters approved Measure R, which authorized the City to issue $51,000,000 of general obligation bonds to fund fire station modernization and construction of other public safety projects. The City is obligated to annually levy ad valorem taxes upon all taxable properties within the City for the payment of the principal and interest for these bonds. This report recommends that the City Council adopt a resolution to establish the fiscal year 2022/23 tax rate at $0.0039 per $100 of assessed valuation (0.0039%) and request and authorize the County of Alameda to levy the tax at this rate on all taxable property within the City of Fremont.
BACKGROUND: At the City’s municipal general election held on November 5, 2002, voters approved Measure R authorizing the issuance of Fire Safety Project General Obligation Bonds in the not-to-exceed amount of $51,000,000 and an override property tax to pay debt service on the bonds. The California Constitution permits the voters to approve such taxes that override the general “1% of full cash value” limit on ad valorem property taxes to pay debt service on indebtedness used to acquire or improve real property. Measure R specified that the Fire Safety Project General Obligation Bonds proceeds be used to replace three older fire stations with new modern stations, to construct public safety training facilities, and to remodel and upgrade seven existing fire stations to current earthquake standards.
Three bond series totaling $51,000,000 have been issued: Series A for $10,000,000 on July 17, 2003, Series B for $25,000,000 on April 14, 2005, and Series C for $16,000,000 on February 11, 2009. The Series A, Series B, and Series C bond proceeds are now completely spent.
The Series A Bonds were subsequently refunded on May 10, 2012, resulting in a net present value savings of $923,368. The Series B Bonds were refunded on August 9, 2013, resulting in a net present value savings of $1,694,239. The Series C Bonds were refunded on August 23, 2017, resulting in a net present value savings of $3,023,539. The 2012 General Obligation Refunding Bonds and 2013 General Obligation Refunding Bonds were refunded on July 29, 2021, resulting in a net present value savings of $4,057,000. The savings will be passed along to the property owners through a decrease in the override tax levy needed to repay the bonds. Debt service payments on the bonds are due each year on February 1 and August 1.
Staff Report (ID # 4652) Meeting of July 19, 2022
Updated: 7/14/2022 8:06 AM by Alberto Quintanilla Page 2
The override tax levy applies to both secured and unsecured property and supplements the regular 1% property tax that pays for general city services. Each year, the Council sets the override tax rate to generate the taxes needed to service the bond principal and interest payments coming due in the next year, as well as the associated paying agent fees for The Bank of New York Mellon Trust Company, N.A., tax compliance reporting related to arbitrage calculation fees, and the property tax administration fee paid to the County of Alameda.
DISCUSSION/ANALYSIS: The override tax rate on secured and utility property is calculated by spreading the net tax levy over the value of the secured and utility assessment roll and rounding up to four decimals. California Revenue and Taxation Code Section 2905 specifies that the tax rate on unsecured property is the prior year’s secured tax rate (0.0041%). An adjustment to the secured tax roll to account for anticipated delinquencies of 4.5% is based on the City’s recent historical experience.
The detailed tax rate calculations are summarized below.
Description Assessed Value Tax Rate Amount
Debt service due 2/1/2023 and 8/1/2023 $2,666,350
County administration fee 6,666
Paying agent fees 1,700
Gross tax levy 2,674,716
Residual prior year tax collections (226,226)
Unsecured tax roll $ 3,952,762,273 0.0041% (162,063)
Net tax levy 2,286,426
Adjusted secured and utility tax roll $59,577,688,192 0.0039% $2,323,530
FISCAL IMPACT: This action will result in the collection of approximately $2,323,530 in secured property tax revenue which, when combined with $226,226 of residual prior year tax collections and approximately $162,063 of unsecured property tax revenue, will be sufficient to pay debt service due on the Fire Safety Project General Obligation Bonds in February and August 2023, paying agent fees, and the County’s annual administration fee.
By adopting the proposed resolution, the City Council authorizes the County of Alameda to levy and collect the override tax in addition to the regular 1% ad valorem tax and any other voter-approved override taxes. The taxes for the Fire Safety Project General Obligation Bonds will be billed on the regular property tax bills sent to property owners.
For a single-family home with a net assessed value of $500,000 the tax levy for the Fire Safety Project General Obligation Bonds will be $19.50 for Fiscal Year 2022/23.
ENVIRONMENTAL REVIEW: None required.
ATTACHMENTS:
• Draft Resolution FY 2022-23 GO Bond Tax Rate
Staff Report (ID # 4652) Meeting of July 19, 2022
Updated: 7/14/2022 8:06 AM by Alberto Quintanilla Page 3 RECOMMENDATIONS:
1. Establish the Fire Safety Project General Obligation Bonds tax rate of $0.0039 per $100 of assessed valuation (0.0039%) for Fiscal Year 2022/23.
2. Adopt a resolution requesting and authorizing the County of Alameda to levy a tax on all taxable properties in the City as a voter-approved levy with respect to the Fire Safety Project General Obligation Bonds.