CITY OF SAN MATEO
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CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 4 Section Name: {{section.name}} Account Number: 10-2011 File ID: {{item.tracking_number}} TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Finance Department
MEETING DATE: June 03, 2024
SUBJECT:
Fiscal Year 2024-25 General Obligation Bond – Tax Rate Levy RECOMMENDATION:
Adopt a Resolution to levy the property tax rate of $0.0030 per $100 of assessed value, equating to $3.00 per $100,000 assessed value, for the voter-approved General Obligation Bond annual debt service payment.
BACKGROUND:
General Obligation Bonds (GO Bonds) are typically issued to finance government improvements benefiting the community as a whole. These obligations require 2/3rd voter approval and are secured by an annual tax levy on all assessed property within a jurisdiction. Due to the strength of this security pledge, General Obligation Bonds are typically the lowest cost form of public financing.
In 1999, voters approved a $35 million bond issue to finance construction of a new main library and improvements to the City’s branch libraries. These bonds were issued in two series, $12 million in 2000 (GO Bonds, Series 2000) and the remaining $23 million in 2004 (GO Bonds, Series 2004A). The total outstanding balance of these two bonds as of June 30, 2012 was $29.16 million. In February 2013, City Council authorized the refinancing of these two bond issues. General Obligation Refunding Bonds, Series 2013, were issued for $27.295 million and resulted in net present value savings of $8.4 million over the life of the remaining outstanding bonds. Correspondingly, starting in 2014, this refinancing reduced the annual assessment rate paid by property owners by approximately 20%.
An annual resolution is required to provide the County of San Mateo the authority to include this levy on the annual tax roll. The proposed tax levy for fiscal year 2024-25 is calculated to be $3.00 per $100,000 of assessed value. This represents a 47% reduction from the prior year levy of $5.70 per $100,000 of assessed value. The recommended reduction in the tax levy is due to actual growth in the City’s assessed value exceeding the projected growth in prior years. As a result, excess fund balance can be used to reduce tax levy.
The City’s total net taxable assessed valuation for fiscal year 2023-24 is $36.6 billion, compared to the prior year’s $34.6 billion. The levy rate for 2024-25 assumes a 3.5% increase in assessed value, bringing the total assessed value to $37.6 billion. This calculation of the tax levy is sufficient to meet debt service requirements as shown in Attachment 2.
As shown in Attachment 4, the outstanding principal of the GO Bonds, Series 2013, will be $11.37 million at the end of fiscal year 2024-25 and the final debt service payment will be made in fiscal year 2030-31.
BUDGET IMPACT:
The recommended General Obligation Bond tax rate of $0.0030 per $100 of assessed value for fiscal year 2024-25 is estimated to raise adequate funds to meet the annual debt service requirement for the General Obligation Refunding
CITY OF SAN MATEO
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Bonds, Series 2013, originally issued for library capital projects.
ENVIRONMENTAL DETERMINATION:
This GO Bond Tax Rate Levy is not a project subject to CEQA, because it is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4).)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 - Proposed Resolution
Att 2 - GO Bonds Debt Service Tax Rate Calculation
Att 3 - Historic GO Bonds Tax Rates
Att 4 - GO Bonds Debt Service Schedule
STAFF CONTACT
Karen Huang, Finance Director
[email protected]
(650) 522-7110