Mayor/Council Summer Recess August 22, 2023
AGENDA REPORTTO:Jestin D. JohnsonFROM:Erin Roseman City Administrator Director of FinanceSUBJECT: Fiscal Year 2023-24 Tax Levy For Voter Approved IndebtednessDATE:July 24, 2023City Administrator Approval Date: RECOMMENDATION Staff Recommends That The City Council Adopt A Resolution Fixing The Rate Of Property Tax And Levying The Tax On Real And Personal Property In The City Of Oakland For Fiscal Year 2023-24 For Voter-Approved Indebtedness. EXECUTIVE SUMMARY Adoption of the proposed resolution will permit the City of Oakland (the “City”) to collect the Fiscal Year 2023-24 (“FY23-24”) property tax revenues for the payment of the City’s voter approved outstanding general obligation (“GO”) bonds debt service and Police and Fire Retirement System (“PFRS”) obligations. The City must annually set property tax levy rates, based on the assessed valuation subject to taxation, and must inform the County of Alameda (the “County”) of these rates by August 31st for inclusion on the stated year’s property tax bill. If the estimated GO bond rates need to be adjusted to reflect the actual figures for the assessed valuation, the City Administrator or his designee will be authorized to make the necessary adjustments. This resolution is submitted during the Summer Recess in order to calculate the property tax levy rates using FY23-24’s assessed valuation figures, which become available in early August, and meet the County’s August 31st deadline for submitting these rates for inclusion on this year’s property tax bill. BACKGROUND / LEGISLATIVE HISTORY The proposed resolution has been prepared pursuant to California Government Code and Article VIII, Section 802, of the Oakland City Charter, setting the FY23-24 property tax rate for voter-approved indebtedness. Article XIIIA of the California Constitution (Proposition 13) precludes the adoption of a City-wide property tax rate. A County-wide one percent (1%) property tax rate is assessed by Alameda County and apportioned to cities and special districts in accordance with State law. Pursuant to California Government Code Section 5403, the City may levy a tax in an amount sufficient to pay estimated principal and interest on an upcoming issuance of bonds which is Jestin Johnson (Aug 4, 2023 10:53 PDT)
8/4/2023
Jestin D. Johnson, City AdministratorSubject: Fiscal Year 2023-24 Tax Levy For Voter Approved Indebtedness Date: July 24, 2023 Page 2 Mayor/Council Summer Recess August 22, 2023
expected to have payments due before the proceeds of the next succeeding tax will be available. ANALYSIS AND POLICY ALTERNATIVES The Citywide priority advanced by this recommended policy action meets the goal of a responsive, trustworthy government. For the City’s outstanding GO bonds, the required property tax levy rates are calculated annually based on the year’s debt service obligations and assessed valuation figures. The City’s General Obligation Bonds, Series 2023 are anticipated to be sold in the fall of 2023. Principal and interest on such bonds will become due within FY2023-24 but actual amounts are not available until the sale of the bonds – after the setting of the levy. As such, estimates for the Series 2023 Bonds are included in the calculation of the FY2023-24 indebtedness. For FY2023-24, the property tax levy rate required to fund the City’s continuing obligations and indebtedness to PFRS is 0.1483%. For the City’s FY2023-24 voter-approved indebtedness, the rates in Table 1 are estimated to satisfy the debt service obligations of the indicated GO bond series and obligations and indebtedness to PFRS. Table 1: Property Tax Rates Bond Issue Property Tax Rates$128,895,000GeneralObligationRefundingBonds,Series 2015A 0.0034% $26,500,000 General Obligation Bonds, Series 2017C (Measure DD) 0.0014% $62,735,000 General Obligation Bonds, Series 2017A-1 (Measure KK) 0.0023% $55,120,000 General Obligation Bonds, Series 2017A-2 (Measure KK) 0.0041% $140,010,000 General Obligation Bonds, Series 2020B-1 (Measure KK) 0.0040%$44,880,000 General Obligation Bonds, Series 2020B-2 (Measure KK) 0.0056% $64,260,000 General Obligation Refunding Bonds, Series 2020 0.0018%$198,645,000 General Obligation Bonds, Series 2022C-1 (Measure KK) 0.0132% $101,345,0001General Obligation Bonds, Series 2023A (Measure U)0.0171%1$52,580,0001General Obligation Bonds, Series 2023D (Measure KK)0.0023%1Police and Fire Retirement System obligations 0.1483% Total Levy Rate 0.2035%11Preliminary estimate. The estimated levy rate is in compliance with the City’s Debt Management Policy, and at the time of sale, the Series 2023 Bonds will be structured to maintain compliance with the policy. In the event of any changes to the County’s assessed valuation data, the proposed resolution allows the City Administrator or his designee to approve any necessary adjustments in the Jestin D. Johnson, City AdministratorSubject: Fiscal Year 2023-24 Tax Levy For Voter Approved Indebtedness Date: July 24, 2023 Page 3 Mayor/Council Summer Recess August 22, 2023
property tax levy rates for the indicated general obligation bonds prior to the County’s preparation of the tax bills. The City Council will be notified of any significant changes to the rates estimated in this report. FISCAL IMPACT Adoption of this resolution will allow the City to levy and collect the FY23-24 property tax revenues of approximately $46.4 million, which are included in the FY 2023-2025 Adopted Policy Budget, for the payment of debt service on the City’s outstanding general obligation bonds and $124.6 million for the payment of Police and Fire Retirement System obligations. The property tax rate calculations can be found in Attachment A. PUBLIC OUTREACH / INTEREST This item did not require public outreach other than the required posting on the City’s website. COORDINATION This report was prepared by the Finance Department and the legislation has been reviewed by the City Attorney’s Office. SUSTAINABLE OPPORTUNITIES Economic: Essential City services that serve the public greatly rely upon revenues generated from the voter-approved special tax measures. Environmental: There are no direct environmental impacts associated with the City Council action requested in this report. Race & Equity: To the extent authorized by the individual measure, the funding provided from tax levies can be used to support Oakland’s equity goals and objectives, including programs and services to Oakland’s vulnerable population and communities of color. Some voter approved measures, other than the general obligation bond measures, provide a mechanism for the exemptions from parcel tax to qualifying low-income households, senior household, affordable housing projects and certain religious organizations and schools.
Jestin D. Johnson, City AdministratorSubject: Fiscal Year 2023-24 Tax Levy For Voter Approved Indebtedness Date: July 24, 2023 Page 4 Mayor/Council Summer Recess August 22, 2023
ACTION REQUESTED OF THE CITY COUNCIL Staff Recommends That The City Council Adopt A Resolution Fixing The Rate Of Property Tax And Levying The Tax On Real And Personal Property In The City Of Oakland For Fiscal Year 2023-24 For Voter-Approved Indebtedness. For questions regarding this report, please contact Dawn Hort, Assistant Treasury Administrator, at (510) 238-2994. Respectfully submitted, ERIN ROSEMAN Director of Finance Finance Department Reviewed by: Dawn Hort, Assistant Treasury Administrator Treasury Bureau Prepared by: Max Kumar, Investment and Operations Manager Treasury Bureau Attachment A: General Obligation Bonds Levy Calculations for Fiscal Year 2023-24 Attachment A
Bond DescriptionFund NumberSeries 2015A(Refunding)6064Series 2017C(Measure DD) 6322Series 2017A-1(Measure KK) 6330Series 2017A-2(Measure KK) 6331Series 2020B-1(Measure KK) 6332Series 2020B-2(Measure KK) 6333Series 2020(Refunding) 6334Series 2022C-1(Measure KK) 6335Series 2023(Measure U)Series 2023(Measure KK)GOBTOTALCash available for debt service as of 6/30/2023Cash held by Treasury 2,829,411 584,181 1,353,533 1,039,956 2,354,705 445,812 2,869,415 7,087,871 - - 18,564,885Cash held by Trustee4,890 466 515 1,613 891 2,110 2,386 1,808 125,000 30,000 169,679Total cash as of 6/30/2023 2,834,301 584,647 1,354,048 1,041,569 2,355,596 447,922 2,871,801 7,089,679 125,000 30,000 18,734,564Debt service payments through12/31/2024DS payments forFY 2023-24 5,501,175 1,448,431 2,239,056 4,132,780 3,932,700 4,956,517 5,800,027 10,442,650 1,342,575 635,342 40,431,253DS payment for7/15/2024 1,317,338 403,966 1,119,528 547,140 1,966,350 225,722 454,475 7,053,700 13,087,742 1,314,500 27,490,460DS payment for12/31/2024 - - - - - - - - - --Bank and Bond expenses forFY 2023-24 9,000 8,500 8,500 8,500 8,500 8,500 8,000 8,500 12,750 12,750 93,500Total debt service through12/31/20246,827,513 1,860,897 3,367,084 4,688,420 5,907,550 5,190,739 6,262,502 17,504,850 14,443,067 1,962,592 68,015,213Total DS Shortfall3,993,212 1,276,250 2,013,036 3,646,851 3,551,954 4,742,817 3,390,701 10,415,171 14,318,067 1,932,592 49,280,650Add: Reserve of DS at6.00% 330,071 86,906 134,343 247,967 235,962 297,391 348,002 626,559 80,555 38,1212,425,875Add: Projected delinquencies, unsecured roll at 3.70% 21,499 2,212 3,655 6,523 6,560 5,522 9,466 23,673 - -79,110Less: Unitary Tax collected as ofFY 2022-23 (1,473,039) (153,196) (247,471) (447,804) (447,804) (377,098) (2,274,373) - - -(5,420,785)Balance to be levied on tax roll2,871,742 1,212,171 1,903,564 3,453,537 3,346,672 4,668,632 1,473,796 11,065,403 14,398,622 1,970,712 46,364,850Assessed Valuation (1)84,031,476,087 84,031,476,087 84,031,476,087 84,031,476,087 84,031,476,087 84,031,476,087 84,031,476,087 84,031,476,087 84,031,476,087 84,031,476,087 84,031,476,087Secured tax rate (2)0.0034% 0.0014% 0.0023% 0.0041% 0.0040% 0.0056% 0.0018% 0.0132% 0.0171% 0.0023% 0.0552%Prior year's secured tax rate 0.0125% 0.0013% 0.0021% 0.0038% 0.0038% 0.0032% 0.0055% 0.0138% 0.0000% 0.0000%0.0461%Variance-0.0091% 0.0001% 0.0002% 0.0003% 0.0002% 0.0024% -0.0037% -0.0006% 0.0171% 0.0023%0.0091%Note: Totals may not add up due to rounding.Delinquency CalculationUnsecured roll (Net AV plus 4,641,991,893 4,641,991,893 4,641,991,893 4,641,991,893 4,641,991,893 4,641,991,893 4,641,991,893 4,641,991,893 4,641,991,893 4,641,991,893 4,641,991,893Prior year's tax rate0.0125% 0.0013% 0.0021% 0.0038% 0.0038% 0.0032% 0.0055% 0.0138% 0.0000% 0.0000% 0.0461%581,043 59,783 98,786 176,288 177,309 149,245 255,837 639,811 - - 2,138,102Prior year's delinquency rate, 3.70% 3.70% 3.70% 3.70% 3.70% 3.70% 3.70% 3.70% 3.70% 3.70% 3.70%Projected delinquencies, unsecured 21,499 2,212 3,655 6,523 6,560 5,522 9,466 23,673 - - 79,110Projected Unitary Tax CalculationUnitary Tax for FY 2022-231,473,039 153,196 247,471 447,804 447,804 377,098 2,274,373 - - - 5,420,785(1) AV is net of 1.71% in secured roll delinquencies.(2) Expected Unitary Tax Revenue for FY 2023-24 not factored into the secured tax rate given the uncertainty of the value of receipt; it will be taken into account for FY 2023-24 tax roll once the monies from the County are received.
Levy Calculations for Fiscal Year 2023-24General Obligation BondsCity of Oakland