PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Annual Financial Report
For the Year Ended June 30, 2023
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Annual Financial Report
For the Year Ended June 30, 2023
Table of Contents
Page
Independent Auditor’s Report ................................................................................................................... 1
Management’s Discussion and Analysis (Unaudited) .............................................................................. 3
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position ................................................................................................................... 5 Statement of Activities ....................................................................................................................... 6
Debt Service Fund Financial Statements:
Balance Sheet ..................................................................................................................................... 7 Statement of Revenues, Expenditures and Changes in Fund Balance ................................................ 8
Notes to the Basic Financial Statements .................................................................................................. 9
www.mgocpa.com Macias Gini & O’Connell LLP
2121 N. California Boulevard, Suite 750
Walnut Creek, CA 94596
1 Independent Auditor’s Report
The Honorable Mayor and
Members of the City Council of the
City of Palo Alto, California
Opinions
We have audited the financial statements of the governmental activities and the major fund of the Palo Alto Public Improvement Corporation (Corporation), a component unit of the City of Palo Alto, California (City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the Corporation’s basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the Corporation as of June 30, 2023, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards ge nerally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements sect ion of our report. We are required to be independent of the Corporation and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presenta tion of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control rel evant to the preparation and fair presentation of financial statements that are free from materia l misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Corporation’s ability to continue as a going concern for twelve months beyond the financial state ment date, including any currently known information that may raise substantial doubt shortly thereafter.
2 Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accorda nce with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal cont rol. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• exercise professional judgment and maintain professional skep ticism throughout the audit. • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures respons ive to those risks. Such procedures include examining, on a test basis, evidence regardi ng the amounts and disclosures in the financial statements.
• obtain an understanding of internal control relevant to the a udit in order to design audit procedures that are appropriate in the circumstances, but not f or the purpose of expressing an opinion on the effectiveness of the Corporation’s internal cont rol. Accordingly, no such opinion is expressed.
• evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate th e overall presentation of the financial statements.
• conclude whether, in our judgment, there are conditions or ev ents, considered in the aggregate, that raise substantial doubt about the Corporation’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governan ce regarding, among other matters, the planned scope and timing of the audit, significant audit findin gs, and certain internal control–related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States o f America require that the management’s discussion and analysis be presented to supplement the basic fi nancial statements. Such information is the responsibility of management and, although not a part of the ba sic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate op erational, economic, or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the meth ods of preparing the information and comparing the information for co nsistency with management’s res ponses to our inquiries, the basic financial statements, and othe r knowledge we obtained during ou r audit of the basic financial statements.
We do not express an opinion or provide any assurance on the in formation because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Walnut Creek, California
November 9, 2023
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Management’s Discussion & Analysis (Unaudited)
For the Year Ended June 30, 2023
3 The Palo Alto Public Improvement Corporation (Corporation), a c omponent unit of the City of Palo Alto (City), follows the provisions of Governmental Accounting Stand ards Board (GASB) Statement No. 34, Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments. The Corporation is controlled by the City and was organized to assist the City in financing public improvements. The Corporation issues debt and turns the proceeds of the debt over to the City under lease agreements that provide a revenue source for the re payment of this debt. The Corporation has three outstanding debts and has turned over the proceeds to the City, which pledged certain lease payments as collateral for this debt as discussed in Note 4 to the financial statements.
FINANCIAL HIGHLIGHTS
GASB Statement No. 34 requires the issuance of government-wide financial statements as well as fund financial statements. The governme nt-wide financial statements report the balance of the Corporation’s long-term debt while the individual fund statements do not.
In fiscal year 2018, the City issued 2018 Capital Improvement P roject and Refinancing Certificates of Participation (2018 COPs) in the amount of $9.0 million to refi nance the 2002B Downtown Parking Improvements Certificates of Par ticipation remaining balance of $0.8 million, and also to fund the Palo Alto Municipal Golf Course renovations.
In fiscal year 2019, the City issued the 2019 California Avenue Parking Garage tax exempt Series A and taxable Series B Certificates of Participation (2019A and 2019B COPs) in the amount of $26.8 million plus $4.9 million premium, and $10.6 million, respectively. Th e 2019A and 2019B COPs are issued to fund the construction of the new California Avenue parking garage.
In fiscal year 2021, the City issued the 2021 Public Safety Bui lding Certificates of Participation (2021 COPs) in the amount of $101.5 million plus $6.5 million premium. The 2021 COPs are issued to fund the construction of the new public safety building.
As of June 30, 2023, the Corporation has the following outstand ing debt: the 2018 COPs, 2019A and 2019B COPs, and 2021 COPs.
At the government-wide level, the interest and fiscal agent cha rges were $4.3 million for fiscal year 2023, a decrease of $0.5 million from th e prior year. The decrease i s mainly due to decrease of outstanding long-term debt. The interest on leases from the City of Palo A lto was $2.9 million, an increase of $1.2 million from the prior year. The increase is mainly due to the decrease in usage of cash and investments held by the Corporation for interest payments.
The Corporation ended fiscal year 2023 with total assets of $15 5.8 million, a decrease of $3.0 million from the prior year. Total assets consisted of $0.1 million in cash and investments, $0.8 million of lease interest receivable from the City of Palo Alto, and $154.9 mill ion of investment in leases to the City of Palo Alto. The total liabilities were $155.7 million, a decreas e of $1.5 million from the prior year. The decrease of assets and liabilities resulted from scheduled prin cipal and interest payments of the 2018 COPs, the 2019A and 2019B COPs, and the 2021 COPs.
As of June 30, 2023, the Corporation reported a
$0.1 million restricted net position.
At the fund level, the Corporation’s expenditures exceeded reve nues by $1.4 million due to interest payments of the 2021 COPs using cash and investments held by th e Corporation. As of June 30, 2023, the Corporation had one fund, the Debt Service Fund, which reported a $0.1 million restricted fund balance.
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Management’s Discussion & Analysis (Unaudited) (Continued) For the Year Ended June 30, 2023
4 OVERVIEW OF THE CORPORATION’S BASIC FINANCIAL STATEMENTS
The annual financial report is comprised of two parts:
1) Management’s discussion and analysis (this part),
2) The basic financial statements, which include the government-wi de and the fund financial statements, along with the notes to these financial statements.
The basic financial statements comprise the government-wide fin ancial statements and the fund financial statements. These two sets of financial statements provide two different views of the Corporation’s financial activities and financial positions, both short-term and long-term.
The government-wide financial st atements provide a long-term vi ew of the Corporation’s activities as a whole, and comprise the statement of net position and the state ment of activities. The statement of net position provides information about the financial position of t he Corporation as a whole, including all its long-term liabilities on the full accrual basis, similar to tha t used by corporations. The statement of activities provides information about all the Corporation’s rev enues and expenses on the full accrual basis, with the emphasis on measuring net revenues or expenses of the Corporation’s program. The statement of activities explains in detail the change in net position for the year.
The fund financial statements r eport the Corporation’s operatio ns in more detail than the corporate-wide statements and focus primarily on the short-term activities of the debt service fund. Fund financial statements measure only current revenues and expenditures; curr ent assets, liabilities and fund balances; and they exclude capital assets and long-term debt.
Together, these statements along with the notes to the financia l statements are called the basic financial statements.
DEBT ADMINISTRATION
The Corporation issues debt in the form of Certificates of Part icipation (COPs) to be repaid from future lease receipts from the City. Legally, these COPs issues are th e Corporation’s debt only; the City is liable only for the payment of the amounts set forth in the lease securing each debt issue.
As of June 30, 2023, the Corporation has the following outstand ing debt (excluding premium): 2018 COPs, 2019A and 2019B COPs, and 2021 COPs with outstanding prin cipal balances of $8.2 million, $35.0 million and $101.5 million, respectively.
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The economy of the City and its major initiatives for the comin g year are discussed in detail in the City’s Annual Comprehensive Financial Report.
CONTACTING THE CORPORATION’S FINANCIAL MANAGEMENT
These Basic Financial Statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the Corporation’s finances. Questions abo ut these financial statements should be directed to the Finance Department of the City of Palo Alto, 25 0 Hamilton Avenue, Palo Alto, CA 94301.
Assets
Cash held for operations 80,241 $
Cash and investments held by trustee 5,110
Lease interest receivable 825,747
Investment in leases to the City of Palo Alto 154,892,268 Total assets 155,803,366
Liabilities
Interest payable 825,747
Long-term debt:
Due in one year 3,433,253
Due in more than one year 151,459,015
Total liabilities 155,718,015
Net Position
Restricted for debt service 85,351 $
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Statement of Net Position
June 30, 2023
See accompanying notes to financial statements.
5 Expenses
Interest and fiscal agent charges 4,317,085 $
Program revenues
Interest on leases from the City of Palo Alto 2,853,990 Net program revenues (1,463,095)
General revenues
Investment earnings 16,276
Change in net position (1,446,819)
Net position, beginning of the year 1,532,170
Net position, end of the year 85,351 $
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Statement of Activities
For the Year Ended June 30, 2023
See accompanying notes to financial statements.
6 Assets
Cash held for operations 80,241 $
Cash and investments held by trustee 5,110
Lease interest receivable 825,747
Investment in leases to City of Palo Alto 154,892,268
Total assets 155,803,366 $
Deferred Inflows of Resources
Unavailable lease receipts from the City of Palo Alto 155,718,01 5$ Fund balance
Restricted for debt service 85,351
Total deferred inflows of resources and fund balance 155,803,366 $ Reconciliation of fund balance to net position
Fund balance restricted for debt service 85,351 $
Long-term receivables are not available to pay for current period expenditures and are considered unavailable on the governmental fund balance sheet 155,718,015 Some liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the Fund:
Interest payable (825,747)
Long-term debt due within one year (3,433,253)
Long-term debt due in more than one year (151,459,015)
Net position of governmental activities 85,351 $
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Balance Sheet
June 30, 2023
Debt Service Fund
See accompanying notes to financial statements.
7 Revenues:
Lease receipts from the City of Palo Alto:
Principal 860,000$
Interest 3,506,931
Other 218
Investments earnings 16,276
Total revenues 4,383,425
Expenditures:
Debt service:
Principal repayment 860,000
Interest and fiscal agent charges 4,970,244
Total expenditures 5,830,244
Net change in fund balance (1,446,819)
Fund balance, beginning of the year 1,532,170
Fund balance, end of the year 85,351 $
Reconciliation of net change in fund balance to change in net position Net change in fund balance - debt service fund (1,446,819) $ Amounts reported for governmental activities in the statement of activities are different because:
Repayment of bond principal is an expenditure in the governmental funds, but in the statement of net position the repayment reduces long-term liabilities. 860,000 Interest accrued on long-term debt and amortization of bond premium do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.
Change in interest payable 244,907
Amortization of bond premium 408,252
Some amounts reported in the statement of revenues, expenditures and changes in fund balances reflect the timing of collection of assets which are not includable as revenues on the statement of activities.
Lease receipt for bond principal repayment (860,000)
Lease receipt for interest payment (244,907)
Impact of bond premium amortization on lease receipt (408,252) Change in net position of governmental activities (1,446,819) $
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto)
Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended June 30, 2023
Debt Service Fund
See accompanying notes to financial statements.
8 PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Notes to the Basic Financial Statements
For the Year Ended June 30, 2023
9 NOTE 1 – DESCRIPTION OF REPORTING ENTITY
The Palo Alto Public Improvement Corporation (the Corporation) was incorporated in September 1983 under the General Nonprofit Corpor ation Law of the State of Cal ifornia to acquire, construct and lease capital improvement projects. The Corporation is exempt from fe deral income taxes under Section 501(c)(4) of the Internal Revenue Code. The Corporation provides financing of public capital improvements for the City through the issuance of Certificates of Participation (COPs), a form of debt which allows investors to partic ipate in a stream of future lea se payments. Proceeds from the COPs are used to construct projects which are leased to the City for lea se payments which are sufficient in timing and amount to meet the debt service requirements of the COPs.
The Corporation is an integral part of the City of Palo Alto, C alifornia (City). It primarily services the City and its governing body is composed of the City Council. Th erefore, the financial data of the Corporation has also been included as a blended component unit within the City’s annual comprehensive financial report for the year ended June 30, 2023.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
Government-wide Statements: The statement of net position and the statement of activities include the financial activities of the Corporation. Eliminations have been made to minimize the double counting of internal activities.
The statement of activities presents a comparison between direc t expenses and program revenues for each function of the Corporation’s activities. Direct expenses are t hose that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program.
Revenues that are not classifie d as program revenues, including investment earnings, are presented as general revenues.
Fund Financial Statements: The fund financial statements p rovide information about the Co rporation’s funds. The emphasis of fund financial statements is on major in dividual funds, of which the Corporation only reports one debt service fund.
(b) Major Fund
Major funds are defined as funds that have either assets, liabi lities, revenues or expenditures equal to ten percent of their fund-type total and five percent of the grand total. The Corporation has one fund which is reported as a major governmental fund in the accompanying financial statements as follows:
Debt Service Fund – This fund accounts for debt service payments on the Corporation’s long-term debt.
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
10 NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
(c) Basis of Accounting
The government-wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned ad expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.
Governmental funds are reported using the current financial res ources measurement focus and the modified accrual basis of accounting. Under this method, reven ues are recognized when measurable and available. The City considers revenues susceptible to accrual to be available if the revenues are collected within ninety days after year-e nd. Expenditures are recorded w hen the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and comp ensated absences, which are recognized as expenditures to the extent they have matured.
(d) Investment in Leases
Improvements financed by the Corporation are leased to the City for their entire estimated useful life and will become the City property at the conclusion of the lease on November 1, 2050. The Corporation therefore records the present value of the lease and considers the leased improvement to have been sold for this amount when leased.
(e) Net Position
The government-wide financial statements utilize a net position presentation. Net position is further categorized as net investment in capital assets, restricted and /or unrestricted. As of June 30, 2023, the entire net position was considered restricted.
Restricted Net Position – This category presents external restrictions imposed by credi tors, grantors, contributors or laws or regulations of other governments and re strictions imposed by law through constitutional provisions or enabling legislation.
(f) Deferred Inflows of Resources
A deferred inflow of resources is defined as an acquisition of net asset or fund balances applicable to a future reporting period and will not be recognized as an inflow of resources (revenue) until that time. On the governmental fund balance sheet, the lease receipts from th e City corresponding to the debt are recorded as deferred inflows of resources since the balances are not current financial resources.
(g) Fund Balances
At June 30, 2023, the Corporati on’s governmental fund’s fund ba lances include the following classification:
Restricted Fund Balance – includes amounts that can be spent only for the specific pur poses stipulated by external resource providers, constitutionally or through enabli ng legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers.
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
11 NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h) Estimates
The preparation of basic financial statements in conformity wit h accounting principles generally accepted in the United States of America requires management to make est imates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
NOTE 3 – CASH AND INVESTMENTS HELD BY TRUSTEE
(a) Interest Rate Risk
Interest rate risk is the risk that a change in market interest rates will adversely affect the fair value of an investment. Normally, the longer it takes an investment to reac h maturity, the greater will be that investment’s sensitivity to changes in market rates. Informatio n about the sensitivity of the fair values of the Corporation’s investments to market interest rate fluctuati ons is provided by the following table that shows the distribution of the Corporation’s investments by maturity:
Investment Type Amount Maturity Date
Money Market Mutual Fund 5,110 $ 22 days
Credit Risk
Generally, credit risk is the ri sk that an issuer of an investm ent will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rati ng by a nationally recognized statistical rating organization. As of June 30, 2023, the Corporation’s in vestments in money market mutual funds are rated AAAm by Standard & Poor’s.
(b) Fair Value Hierarchy
The City categorizes its fair value measurements within the fai r value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in an active m arket for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are sig nificant unobservable inputs. The Corporation’s investments in money market mutual funds are not subject to the fair value hierarchy.
(c) Investment Policy
The Corporation must maintain required amounts of cash and inve stments by trustee under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the Corporation fails to meet its obligation under these debt issue s. The California Government Code (Code) requires these funds to be invested in accordance with bond ind entures or State statutes. All these funds have been invested as permitted under the Code. The Investment Policy is described in detail in the City’s Annual Comprehensive Financial Report.
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
12 NOTE 3 – CASH AND INVESTMENTS HELD BY TRUSTEE (Continued)
The table below identifies the investment types that are author ized by the City’s Investment Policy. The table also identifies certain provisions of the City’s Investment Policy that address interest rate risk, credit risk and concentration of credit risk.
Maximum
Maturity
Minimum
Credit Quality
Maximum
Percentage
of Portfolio
Maximum
Investment in
One Issuer
U.S. Government Securities 10 years (*) N/A No Limit No Limit U.S. Government Agency Securities 10 years (*) N/A No Limit (A) No Limit Certificates of Deposit 10 years (*) N/A 20% 10% of the par value of
portfolio
Bankers Acceptances 180 days N/A 30% $5 m illion
Commercial Paper 270 days A-1 15% $3 m illion (B)
Local Agency Investment Fund N/A N/A No Limit $75 m illion per account
Short-Term Repurchase Agreements 1 year N/A No Limit No Limit City of Palo Alto Bonds N/A N/A No Limit No Limit
Money Market Deposit Accounts N/A N/A No Limit No Limit Mutual Funds N/A N/A 20% 10%
Negotiable Certificates of Deposit 10 years (*) N/A 10% $5 million Medium-Term Corporate Notes 5 years AA 10% $5 million
10 years (*) AA/AA2 40% No Limit
Supranational 5 years AA/AA2 20% 10% of the par
value of
portfolio
(A)
(B) The lesser of $3 million or 10% of outstanding commercial paper of any one institution. (*) The maximum maturity is based on the Investment Policy that is approved by the City Council and is less restrictive than the California Governmental Code.
Authorized Investment Type
California State and Municipal and other
49 State Issued Bonds
Callable and multi-step securities are limited to no more than 25% of the par value of the portfolio, provided that: 1) the potential call dates are known at the time of purchase, 2) the interest rates at which they "step- up" are known at the time of purchase, and 3) the entire face value of the security is redeemed at the call date.
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
13 NOTE 4 – CERTIFICATES OF PARTICIPATION
The Corporation’s long-term debt activities are presented below:
Balance Balance Amount due
July 1, 2022 Retirements June 30, 2023 in one year
Certificates of Participation
2018 Capital Improvement Project
2.20-4.22%, due 11/1/2047 8,380,000 $ 195,000 $ 8,185,000 $ 200,000 $ 2019 California Ave. Parking Garage
Series A & B
2.5%-5%, due 11/1/2048 35,720,000 665,000 35,055,000 690,000 2021 Public Safety Building
2%-5%, due 11/1/2050 101,505,000 - 101,505,000 2,135,000 Add: Unamortized Premium 10,555,520 408,252 10,147,268 408,253 Total 156,160,520 $ 1,268,252 $ 154,892,268 $ 3,433,253 $
On June 1, 2018, the City issued the 2018 Capital Improvement P roject and Refinancing Certificates of Participation (2018 COPs) in the amount of $9.0 million to full y refinance the 2002B COPs and to fund the renovation of the Palo Alto Municipal Golf Course. Princip al payments are due annually on November 1 and interest payments semi-annually at various rates on May 1 and November 1. The 2018 COPs are secured by lease revenues received by the Corporation from any City’s General Fund revenue source.
On March 21, 2019, the City issued the 2019 California Avenue P arking Garage tax exempt Series A and taxable Series B Certificates of Participation (2019A and 2019B COPs) in the amount of $26.8 million plus $4.9 million premium, and $10.6 million, respectively, for the construction of the new California Avenue Parking Garage. Principa l payments are due annually on N ovember 1 and interest payments semi-annually at various rates on May 1 and November 1. The 201 9A and 2019B COPs are secured by lease revenues received by the Corporation from any City’s General Fund revenue source.
On March 24, 2021, the City issued the 2021 Public Safety Build ing Certificates of Participation (2021 COPs) in the amount of $101.5 million for the construction of t he new public safety building. Principal payments are due annually on November 1 and interest payments semi-annually at various rates on May 1 and November 1. The 2021 COPs are secured by lease revenues rec eived by the Corporation from any City’s General Fund revenue source.
PALO ALTO PUBLIC IMPROVEMENT CORPORATION
(A Component Unit of the City of Palo Alto, California) Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2023
14 NOTE 4 – CERTIFICATES OF PARTICIPATION (Continued)
Future annual debt service on the outstanding debt is shown below:
For the Year
Ending June 30, Principal Interest Total
2024 3,025,000$ 4,880,641 $ 7,905,641 $ 2025 3,170,000 4,729,196 7,899,196 2026 3,335,000 4,569,845 7,904,845 2027 3,495,000 4,402,269 7,897,269 2027 3,675,000 4,226,077 7,901,077 2029-2033 21,250,000 18,233,120 39,483,120 2034-2038 25,660,000 13,783,387 39,443,387 2039-2043 29,775,000 9,618,640 39,393,640 2044-2048 34,540,000 4,801,870 39,341,870 2049-2051 16,820,000 545,216 17,365,216 144,745,000$ 69,790,261 $ 214,535,261 $
Events of Default and Acceleration Clauses
Generally, the Corporation is considered to be in default if th e Corporation fails to pay the principal of and interest on the outstanding long-term debt when become due and payable. If an event of default has occurred and is continuing, the principal of the long-term debt , together with the accrued interest, may be declared due and payable immediately.