Measure K-14
Bond Issuance
Update
GROVERBEACH.ORG
Kristin Eriksson, Assistant City Manager
Nick Szamet, Administrative Services Director
General Obligation Bond Background
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• On November 4, 2014, Measure K-14 was placed on the Grover Beach ballot for voter approval asking:
• MEASURE K-14: To reconstruct and resurface deteriorating residential and major streets in order to enhance safety for pedestrians, bicyclists and drivers; improve emergency vehicle response times and commute times, promote local economic and job growth; improve disabled access to sidewalks and street drainage to avoid flooding, shall the City issue $48 million of bonds at tax-exempt interest rates to fund a new street and related improvements, subject to guaranteed annual audits and a citizens’ oversight committee?” • A 2/3rds (66.6%) Yes vote was required for passage. 68.02% of those voting voted Yes for the passage of Measure K-14
• Prior Bond Sales
• $5 million Series 2015
• $8 million Series 2016
• $15 million Series 2017
• $10 million Series 2022
Note: Remaining bond funds are expected to be expended no later than June 30, 2027, necessitating a new bond issue to continue the street replacement project to enter into new Construction Contracts.
Tax Rate Statement to Voters
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A Tax Rate Statement prepared by A. M. Peche’ & Associates that was in the November 2014 County Elections Guide estimated that the tax rate per $100,000 of assessed value (AV) would be:
• 1) the best estimate of the tax rate after the first sale of bonds was $24.43 • 2) the best estimate of the tax rate after the last sale of bonds was $147.34 • 3) the best estimate of the highest tax rate was $147.34 • 4) the best estimate of the average tax rate was $77.66 The estimates are not binding upon the City as factors such as timing of bond sales, amounts of bonds sold, interest rates when bonds are sold, and growth in the assessed valuation will affect the tax rates. The actual tax rates are set by the County Auditor Controller and can vary from estimates in the Tax Rate Statement.
What Affects Tax Rates
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• Factors that affect the tax rates
• The par amount of bonds
• Interest rates when the bonds are issued
• The assessed value of the City
• Planning for bond issuances
• Since planning for the election in 2013-14, and subsequent bond sales in 2015, 2016, 2017 and 2022, City Staff and Peche & Associates have used a conservative 2 ½% AV growth rate for projections
• With the AV exceeding the 2 ½% growth rate, the actual tax rates affecting taxpayers are lower than anticipated
Growth In AV and Actual Tax Rates
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The progression of the actual Tax Rate per $100,000 of AV is:
2015-16 $24.00
2016-17 $34.31
2017-18 $51.35
2018-19 $85.00
2019-20 $85.00
2020-21 $85.00
2021-22 $85.00
2022-23 $95.00
2023-24 $95.00
2024-25 $90.00
2025-26 $85.00
Average Tax Rate thru 2025-26 is $74.06
Fiscal Assessed Percent
Year Valuation Increase
2015-16 1,465,324,529 5.21%
2016-17 1,548,746,463 5.69%
2017-18 1,627,337,660 5.07%
2018-19 1,730,925,741 6.37%
2019-20 1,816,621,652 4.95%
2020-21 1,901,510,870 4.67%
2021-22 1,962,334,679 3.20%
2022-23 2,089,068,965 6.46%
2023-24 2,204,816,722 5.54%
2024-25 2,323,290,141 5.37%
2025-26 2,456,475,342 5.73%
Effect of Tax Rates on Taxpayers
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• In November 2021 during the Council approval of $10 million Series 2022 Bonds (issued in January 2022) the Staff Report stated:
• 2022-23 Tax Rate was estimated to be $99.05 (Actual Tax Rate was $95) • Based on the proposed $5 million Series 2026 Bond the following is projected:
• 2026-27 the Tax Rate is estimated to be $93.78
• The Tax Rates are set by the County Auditor Controller but, if projections are correct, the City can issue the new Series 2026 Bonds at a tax rate that was below that estimated and actual tax rate for the Series 2022 Bonds for 2022-23. This is the benefit of the actual increase in AV over the conservative 2 ½% growth rate used when planning for the election and all bond issues
• Resolution of Issuance before the
Council tonight authorizes Staff to
move forward with the bond issuance
with a par amount of $5 million
• The Notice of Intent will be published
in the Bond Buyer on May 28th
• The Official Statement and Official
Notice of Sale will be posted on
IPREO, a website for Municipal
Competitive Sales
• The Competitive Sale of Bonds is
expected to take place on June 16th. The Closing of the 2026 Bonds is expected to take place on June 30th
Steps to Bond Sale
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Recommendation
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Adopt the Resolution authorizing the issuance and sale of not to exceed $5,000,000 principal amount of General Obligation Bonds for Measure K-14 street repairs and authorizes actions related to the issuance of the General Obligation Bonds
Questions and Comments
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