Bond Process and Opportunity for CLICK TO EDIT … · Facilities funding cash flow needs ......

Wasco Union High School District - © 2016 Government Financial Strategies

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Government Financial Strategies

Presented by Lori Raineri April 14, 2016

Wasco Union High School District

Bond Process and Opportunity for November 2016 Measure

Presentation materials provided for distribution at the meeting. Please see meeting record for verbal commentary and discussion.


Agenda

u Timeline and Process for Potential of New Bond Measure

u Pro-Forma New Measure Financial Plan


G.O. Bond Tax Rates

u Bond tax rate ≈ debt service ÷ assessed value u Each property in the District pays its pro rata share, based

on its individual assessed value (not market value)


Timeline and Process General Obligation Bond Measure Process Diagram

SHF 2/27/15

!

Evaluation of

Voter’s Opinions: - Analytical,

Independent Survey - Hired Through RFP - Using Data from Both the Facilities

Needs and GO Bond Plan

Election

Date

GO Bond Facilities Project List

Evaluation of Facilities Needs: Resulting Document Reflects

District’s Philosophy (ranging from list created by staff and community with cost estimates to a Facilities

Master Plan)

Public Engagement Process to Be Determined

Development of a Bond Financing Plan:

Understanding of Taxing and Bonding Capacity and Assumptions

GO Bond Measure Ballot

Language

Governing Board Decides Whether

to Call for GO Bond Election

Overview of Process for a General Obligation Bond Measure


Evaluation of Facilities Needs

u Facilities plan should guide facilities decisions u Some items to consider:

▶  Growth and/or modernization needs ▶  Community input ▶  Data needed ▶  Potential need for external assistance ▶  Range of results from a simple needs analysis to

facilities master plan

✔ Most appropriate process and result depends on district


Development of Bond Financing Plan

u Elements of Plan ▶  Tax Base Analysis ●  Historical and projected assessed value

▶  Bonding capacity (maximum bonds outstanding) ▶  Taxing capacity (maximum projected tax levy) ▶  Interest rate assumptions ▶  Facilities funding cash flow needs ▶  3-year Expenditure Reasonable Expectations Test

✔ Sound pre-election planning maximizes chances of successful post-election implementation.


Timeline and Process for New Measure

General Obligation Bond Measure Process Diagram

SHF 2/27/15

!

Evaluation of




Election

Date




Master Plan)





Language




✔ The facilities needs and bond financing plan are two inputs into the public opinion survey, which then inform the project list and ballot language.

✔ The survey is scientific, and therefore a reliable way to get public input.


Public Opinion Survey

u A professional independent public opinion survey may be conducted to determine: ▶ Whether a measure could be successful ▶ Elements of a measure crucial for success

● Include facilities, bond amount and messaging ▶ Recommended election date

u Should employ scientific based research methods u Survey likely voters

✔  Recommend selecting survey firm through an RFP/RFQ

process


Ballot Language, Project List, Tax Rate Statement, and Ballot Arguments

u Drafted by bond counsel with input from District, public opinion survey firm and financial advisor

u Board Resolution and Ballot Statement ▶  Education Code 5320 - 5329 ▶  Elections Code Section 13247 dictates 75 word limit

u Project List ▶  55% voter approval measure accountability feature as per

CA Constitution Article VIII A and Education Code 15264 - 15288

u Tax Rate Statement ▶  Elections Code 9400 et seq.

u Ballot Arguments ▶  Elections Code 9500 et seq.


Timeline and Process for New Measure General Obligation Bond Measure Process Diagram

SHF 2/27/15

!

Evaluation of




Election

Date




Master Plan)





Language





u The District is allowed to and should engage in sharing information with and receiving input from the public ▶  Public information, not campaigning ▶  Bond counsel will provide guidance

u Some items to think about: ▶  What does the public know about the condition and

suitability of the facilities? ▶  Does the public know about the District and how finances are

managed? ▶  Does the public know how good schools improve property

values? ▶  How do our traditional constituencies (students, parents,

staff) overlap with constituencies for bond measures (voters and property owners)?

Public Information and Engagement


A School Bond is a Community Endeavor


Takeaways From Recent Bond Measures

Elk Grove Unified School District

Election Analysis v2.xlsx (Table) 11/13/15 KW Page 1 of 1

California School Revenue Measures

Total % Pass Total % Pass Total % PassSchool Bond 55% 32 78% 92 92% 20 75%School Bond 2/3 14 50% 3 67% 0 ---School Parcel Tax 2/3 10 50% 21 81% 9 67%

Total % Pass Total % Pass Total % PassSchool Bond 55% 63 75% 34 74% 105 86%School Bond 2/3 0 --- 0 --- 1 100%School Parcel Tax 2/3 18 11% 13 69% 25 64%

Total % Pass Total % Pass Total % PassSchool Bond 55% 43 77% 112 81% 501 82%School Bond 2/3 1 100% 1 0% 20 55%School Parcel Tax 2/3 5 100% 8 100% 109 62%

Note: per California Local Government Finance Almanac (CaliforniaCityFinance.com).

Jun. 2014 Nov. 2014

Nov. 2012

Jun. 2008 Nov. 2008 Jun. 2010

Nov. 2010 Jun. 2012

Combined Total


Potential New Measure Financial Plan – Legal Constraints

u Taxing Capacity: limit on maximum projected tax levies ▶ For each 55% voter approval measure:

● $30 per $100,000 of assessed value for union districts – Education Code 15268✔

● $60 per $100,000 of assessed value for unified districts – Education Code 15270(a)

u Bonding Capacity: limit on amount of oustanding bonds ▶ For all measures combined

● 1.25% of total assessed value for union districts – Education Code 15268✔

● 2.5% of total assessed value for unified districts – Education Code 15270(a)


Pro Forma Max. 55% G.O. Bond Plan Scenarios

u No Action relative to Measure C u No Refinancing Now u No Issuance of Additional Measure C Bonds

u Refinancing Now and Additional Measure C Bonds Issued

✔ Bonding capacity is a significant consideration


$21.6 vs. $31.6 Million in Currently Available Bonding Capacity

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Bonding Capacity/ Outstanding Bonds

Fiscal Year Beg Jul 1

Refinancing Measure C and New Issuance Reduces Available Bonding Capacity

Outstanding Bonds - Measure C

Outstanding Bonds - Refi. Measure C w/ New Issue

Projected

Net local secured AV is assumed to increase 4% for 2016-17, & 5% annually thereafter, while all other types of AV are assumed to remain unchanged. Actual AV from Kern County Auditor-Controller's department. Assessed value is as of Aug 20 when AV becomes "certified." Outstanding bonds reflect maximum amount of bonds outstanding during that year and are from Official Statements.

Actual

$21,580,000 in remaining bonding

capacity after Measure C refi & new money

issue

Bonding capacity


capacity with no action on Measure C


Pro Forma Max. 55% G.O. Bond Plan - No Action Relative to Measure C

u New Measure Bonds Issued as Single Series


Projected Tax Levies ≤ $30 / $100,000 AV

$0

$5

$10

$15

$20

$25

$30

$35

$40

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

Tax Levy per $100,000 of AV

Fiscal Year Beg July 1

Projected Tax Levies Adhere to $30 Maximum Allowable Tax Levy Requirement

Projected tax levies calculated from assumed debt service from May 2017 sale, actual 2015-16 assessed value and assumed 4% net local secured growth for 2016-17, & 5% annually thereafter, while all other AV types are assumed to remain unchanged, and using Kern Co's 22 month debt service collection policy.

Maximum allowable projected tax levy of $30/$100,000 of AV

Projected Tax Levies

Maximum:

Average:

Minimum:

$30.00

$29.96

$29.91


Stable Tax Rate Payments Grow w/Proj. AVè

$0

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

$14,000,000,000

$0

$600,000

$1,200,000

$1,800,000

$2,400,000

$3,000,000

$3,600,000

$4,200,000

2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047

Total AV Revenue


Tax Revenue Available for Debt Service Increases with Growth in AV

Projected tax revenue

Notes: tax revenue based on assumed net local secured growth rate of 4% for 2016-17, & 5% annually thereafter, while all other types of AV are assumed to remain constant, and assumes a $30 annual tax levy per $100,000 of AV.

Total AV


$29.2 Million For Needs Achievable

$30,800,000

$0

$3,000,000

$6,000,000

$9,000,000

$12,000,000

$15,000,000

$18,000,000

$21,000,000

$24,000,000

$27,000,000

$30,000,000

$33,000,000

2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046

Issuance/ Net Collection


$30.8 Million Issuance Supported by Projected Tax Revenue

Series 2017

Notes: debt service is assumed based on "AAA" MMD rates as of Feb 29, 2016, plus 85bp for assumed "A+" rating of bonds, plus adjustments for potential rate increases prior to issuances +125bp (2017), +150bp (2019). Net local secured AV is assumed to increase 4% for 206-17, & 5% annually thereafter, while all other AV types are assumed to remain unchanged. Net collection assumes County reserve policy (first 10 months of following FY debt service) less assumed revenue. Assumed revenue = unitary revenue 3% of debt service + reserve collection [3.1% historical avg since 2008-09 ]) + other revenue (1% of debt service + reserve collection [1.2% historical avg since 2008-09]) + additional receipts (5% of debt service + reserve - prior reserve [6% historical avg since 2008-09]). Historic rates based on selected representative years due to skewing from deposits to debt service funds etc. Reserve collected by County applied to last payment.

Bond Proceeds Analysis - Conservative Assumptions

Series 2017Bond Issuance Amount $30,800,000Underwriter's Discount ($820,000)

Bond Insurance ($485,000)Other Costs ($125,000)

Total$30,800,000

($820,000)($485,000)($125,000)

Interest & Sinking Fund ($135,000)Cash for Projects $29,235,000

Debt Service $73,676,265Debt Service to Principal Ratio 2.39 : 1

Conservative AssumptionsUnderwriter's Discount - CIBs 1.75% (of issuance)

Underwriter's Discount - CABs 4.00% (of issuance)Bond Insurance - CIBs 0.60% (of debt service)

Bond Insurance - CABs 0.75% (of debt service)Other Costs $125,000

Values rounded

($135,000)$29,235,000

$73,676,2652.39 : 1

Conservative Assumptions(of issuance)(of issuance)(of debt service)(of debt service)


Bonding Capacity Sufficient

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018



There is Sufficient Remaining Bonding Capacity for a $30.8 Million Bond Measure, to be Issued in One Series

Outstanding Bonds - New Measure


Projected

Net local secured AV is assumed to increase 4% for 2016-17, & 5% annually thereafter, while all other types of AV are assumed to remain unchanged. Actual AV from Kern County Auditor-Controller's department. Assessed value is as of Aug 20 when AV becomes "certified." Outstanding bonds reflect maximum amount of bonds outstanding during that year and are from Official Statements. Note: this does not reflect the potential issuance of additional Measure C bonds.

Actual


capacity

Bonding capacity

$30,800,000 new measure

issuance

Measure C Issuances: $15,500,000 - Series A

$7,000,000 - Series B

$2,600,000 remaining bonding capacity


Pro Forma Max. 55% G.O. Bond Plan - With Refi. & Additional Measure C Bonds

u New Measure Bonds Issued Over Three Series


$33 Million Available for Projects

$11,500,000

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045

Issuance/ Net Collection


$34.5 Million Issuance Supported by Projected Tax Revenue

Series 2017

Notes: debt service is assumed based on "AAA" MMD rates as of Feb 29, 2016, plus 85bp for assumed "A+" rating of bonds, plus adjustments for potential rate increases prior to issuances +125bp (2017), +150bp (2019). Net local secured AV is assumed to increase 4% for 206-17, & 5% annually thereafter, while all other AV types are assumed to remain unchanged. Net collection assumes County reserve policy (first 10 months of following FY debt service) less assumed revenue. Assumed revenue = unitary revenue 3% of debt service + reserve collection [3.1% historical avg since 2008-09 ]) + other revenue (1% of debt service + reserve collection [1.2% historical avg since 2008-09]) + additional receipts (5% of debt service + reserve - prior reserve [6% historical avg since 2008-09]). Historic rates based on selected representative years due to skewing from deposits to debt service funds etc. Reserve collected by County applied to last payment.

Series 2019

Series 2021

Bond Proceeds Analysis - Conservative Assumptions

Series 2017 Series 2019 Series 2021 TotalBond Issuance Amount $11,500,000 $11,500,000 $11,500,000 $34,500,000Underwriter's Discount ($200,000) ($200,000) ($260,000) ($660,000)

Bond Insurance ($125,000) ($135,000) ($165,000) ($425,000)Other Costs ($125,000) ($125,000) ($125,000) ($375,000)

Interest & Sinking Fund $0 $0 ($110,000) $0Cash for Projects $11,050,000 $11,040,000 $10,840,000 $33,040,000

Debt Service $20,552,520 $22,406,609 $26,341,417 $69,300,545Debt Service to Principal Ratio 1.79 : 1 1.95 : 1 2.29 : 1 2.01 : 1

Conservative AssumptionsUnderwriter's Discount - CIBs 1.75% (of issuance)

Underwriter's Discount - CABs 4.00% (of issuance)Bond Insurance - CIBs 0.60% (of debt service)

Bond Insurance - CABs 0.75% (of debt service)Other Costs $125,000

Values rounded


Tax Levies Still Within $30 Limit

$0

$5

$10

$15

$20

$25

$30

$35

$40

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

20

41

20

42

20

43

20

44

20

45

20

46

Tax Levy per $100,000 of AV


Projected Tax Levies Adhere to $30 Maximum Allowable Tax Levy Requirement

Projected tax levies calculated from assumed debt service from May 2017 sale, actual 2015-16 assessed value and assumed 4% net local secured growth for 2016-17, & 5% annually thereafter, while all other AV types are assumed to remain unchanged, and using Kern Co's 22 month debt service collection policy.

Maximum allowable projected tax levy of $30/$100,000 of AV

Projected Tax Levies

Maximum:

Average:

Minimum:

$29.92

$29.87

$29.76


Bonding Capacity Sufficient

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023



There is Sufficient Remaining Bonding Capacity for a $34.5 Million Bond Measure, to be Issued in Three Series over Four Years

Outstanding Bonds - New Measure


Projected

Net local secured AV is assumed to increase 4% for 2016-17, & 5% annually thereafter, while all other types of AV are assumed to remain unchanged. Actual AV from Kern County Auditor-Controller's department. Assessed value is as of Aug 20 when AV becomes "certified." Outstanding bonds reflect maximum amount of bonds outstanding during that year and are from Official Statements.

Actual


capacity after Measure C refi & new money issue ($31,550,000

before)

Bonding capacity

Measure C Issuances: $15,500,000 - Series A

$7,000,000 - Series B

$620,000 remaining bonding capacity

$9,500,000 Issuance

$11,500,000 Issuance




Sample Nov. 2016 Bond Election ScheduleDATE ITEM RESPONSIBILITY

Completed Initial demographic/financial research and analysis to determine funding potential of tax base.

Govt. Financial Strategies

March 2016 Completed

Bond counsel selection process - develop list of potential firms, obtain fee quotes, and select firm.

Govt. Financial Strategies District

Tuesday, April 5, 2016

Board Agenda Deadline: Information presentation regarding status of Measure C, potential new bond measure, and public engagement process delivered for Board agenda packet.

Gov’t. Financial Strategies District Staff

Thursday, April 14, 2016

Board Meeting: Information presentation regarding status of Measure C, potential new bond measure, and public engagement process.


TBD

Public opinion survey firm selection process - develop list of potential firms, obtain proposals, and select firm.

Govt. Financial Strategies District

TBD Public opinion survey questionnaire developed, survey

conducted, and results analyzed. Survey Firm


To be Determined Public engagement process. Further Information:

District


Thursday, May 12, 2016

Board Meeting: Presentation of public opinion survey results.

Survey Firm District Staff

Wednesday, May 18, 2016

Board Workshop: Presentation regarding potential bond measure facilities and financial plan.

Govt. Financial Strategies District Staff

May 19, 2016 - June 1, 2016

Development of bond resolution and related documents. Bond Counsel District Staff


Tuesday, May 31, 2016

Board Agenda Deadline: Bond resolution and related documents delivered for Board agenda packet.

Bond Counsel District Staff

Thursday, June 9, 2016

Board Meeting: Board considers resolution calling for election.

School Board Bond Counsel District Staff

Friday, August 12, 2016

Statutory deadline for providing adopted resolution to County of Kern (at least 88 days prior to election).

District Staff

Tuesday, November 8, 2016

Election Day. District Voters


Any Questions?


For Reference

u Additional Information Regarding General Obligation (G.O.) Bonds


2/3 vs. 55% Voter Approval G.O. BondsSubject 55% Voter Approval Two-Thirds Voter Approval

Board Approval Required To Place Measure on Ballot

Two-thirds Majority

Allowable Election Dates Primary or general election, regularly scheduled local election, or statewide special election

Any Tuesday that is not the day before or the day after a State holiday, or within 45 days of a regularly scheduled election

Maximum Projected Tax Rates/Levies

For unified district, $60 per $100,000 of assessed value; for union district, $30 per $100,000 of assessed value

No projected maximum tax rate

Bonding Capacity (i.e. Maximum Bonds Outstanding)

2.5% of assessed value for unified districts and 1.25% of assessed value for union districts

2.5% of assessed value for unified districts and 1.25% of assessed value for union districts

Audits Independent financial and performance audits must be conducted annually

None specifically required

Oversight Committee If election is successful, Board must establish independent citizens oversight committee within 60 days of Board adoption of resolution declaring election results

None specifically required

Allowable Expenditures Construction, reconstruction, rehabilitation, or replacement of school facilities, including furnishing and equipping of school facilities, or the acquisition or lease of real property for school facilities

Acquisition or improvement of real property

Facilities List State Constitution requires a list of the specified school facilities project(s) to be funded

No requirement for a specific facilities list

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