Ayla Burchfield. Patty Fountain Tracy Cotterill Ed Husmann Cindy Buoy

Transcription

1 Roll Call Board Members Present Russ Sumpter Patty Fountain Tracy Cotterill Ed Husmann Cindy Buoy Board Members Absent Sultan School District No. 311 Minutes of Study Session Board Meeting February 4, 2016 Sultan Elementary School Library 501 Date Street, Sultan, WA 7:00 PM Superintendent Present Dan Chaplik Student Rep Absent Ayla Burchfield Visitors Present: Calei Vaughn, Mark Vaughn, Norena Addington, Dianna Lucas, Angela Atkinson, Rob Tutor, Sean Gossett, AnnMarie Bunch, Dave Cotterill Staff Present: Dave Moon, Dan Baller Call to Order Public Input Agenda Chairman Russ Sumpter called the special meeting to order at 7:00 pm. There was no public input. There were no changes to the agenda. Study Session: D.A.Davidson & Foster/Pepper Jon Gores from D.A. Davidson presented an overview of the financial aspects of the bond process. Jim McNeill with Foster Pepper discussed the role of the bond attorney in the purchase and management of school bonds. Throughout and following the discussion, there were questions from both the board of directors and from the audience. The discussion is available via audio minutes on the district website. Select Board of Directors, Board Minutes, Board Minutes, Audio Minutes, Minutes. The Bond Tax Rate Planning Information from D.A. Davidson:

2 Sultan School District No. 311 Bond Tax Rate Planning February 4, 2016 JON GORES MANAGING DIRECTOR (206)

3 1 Discussion Topics Election Results Bond Sale History Tax Rate Projections

4 2 Washington State Election Results School Districts Only Source: Washington Secretary of State: Election and Voting website and individual County Auditor websites

5 3 Voting Patterns Bond Issues Passed per Year-Statewide (Years 1993 through 2015 Inclusive) Schools Only Source: State of Washington, Office of Superintendent of Public Instruction

6 4 Planning a Bond Financing The Participants Architect provides cost projections based on the project scope Underwriter provides financial planning and ultimately buys the bonds for resale to investors Bond Counsel prepares documents and provides a legal opinion Financial Advisor represents the District during negotiations with the Underwriter County Treasurer is the District s treasurer and takes receipt of the bond proceeds

7 UTGO Bond Sale History 1995 UTGO & Ref 1998 UTGO 1998A UTGO 2002 UTGO Ref 2008 UTGO Ref Bond Amount $4,200,000 $3,810,000 $1,300,000 $2,385,000 $4,040,000 $2,115,000 Dated June 1993 July 1995 Jan April 1998 Oct Feb Election Date March 9, 1993 May 16, 1995 Nov. 4, 1997 Feb. 3, 1998 n/a n/a % Yes Votes 67.19% 62.39% 61.60% 62.50% n/a n/a Final Maturity Purpose Modernize the Middle School $1,000,000 New Bonds for additions to the High School. Refunding of the 1985 and 1990 Bonds Improvements to the Elementary School Improvements to the High School Refunding of the 1993 Bonds and 1995 Bonds Refunding of the 1998 Bonds and 1998A Bonds

8 6 Bond Proposition PROPOSITION 1 SULTAN SCHOOL DISTRICT NO. 311 BONDS TO RENOVATE, IMPROVE AND CONSTRUCT SCHOOL FACILITIES The Board of Directors of Sultan School District No. 311 adopted Resolution No , concerning a proposition to improve safety and infrastructure, and relieve overcrowding. This proposition would authorized the District to: renovate and expand Sultan High School (including constructing classroom and gymnasium additions and performing arts center for school and community use), make health, safety and educational improvements at District Elementary Schools and Middle School, and construct an Educational Support Services Center; issue no more than $47,769,229 of general obligation bonds maturing within 25 years; and levy annual excess property taxes to repay the bonds, all as provided in Resolution No Should this proposition be: Approved. Rejected

9 7 Tax Rate Planning Assumptions Interest Rates Bond Rating Assessed Value Bond Structure

10 8 A. Interest Rates Tax Rate Planning Lower interest rates result in lower tax rates for bonds. Interest rates are determined when bonds are actually sold. Assumption: Future Bond Sales Current rates plus 2.0 % (200 basis points).

11 9 B. Bond Rating Tax Rate Planning A higher bond rating results in lower interest rates. Assumption: Aa1 (with State Guarantee) A1 District Rating (Pending) A Guide to Bond Ratings Moody s Investors Service Founded 1909 Highest Quality Lowest Quality Aaa Aa1, Aa2, Aa3 A1, A2, A3 Baa1, Baa2, Baa3 NR (Nonrated)

12 10 B. Bond Rating (continued) Tax Rate Planning Bond raters consider the local economy, District finances, and other factors. Assumption: Aa1 (with State Guarantee) A1 District Rating (Pending) Governmental Factors Financial Performance Economy The Rating Debt Factors

13 11 Tax Rate Planning C. Assessed Value Year Historical Bond AV % Change 2007 $1,219,672, % ,440,414, % ,480,358, % ,331,820, % ,215,440, % ,078,240, % ,755, % ,548, % ,052,620, % 2016* 1,132,753, % *Preliminary 5 year Compound Annual Growth Rate ( ): -0.8% 10 year Compound Annual Growth Rate ( ): 1.4%

14 12 C. Assessed Value (continued) Tax Rate Planning Actual Growth -0.8% 5yr Avg. Annual Growth Rate

15 13 C. Assessed Value (continued) Tax Rate Planning Projected Assessed Value Growth Final 2015: 8.20% growth Preliminary 2016: 7.60% growth Projected : 2.00% annual growth An individual s taxes will be based on the assessed value for their property Higher assessed values will lower the District s tax rates (but not the overall payment ) New construction vs. increase in value of existing property

16 14 Increases in Property Values Will Not Increase School District Tax Collections Changes in property values don t change the amount of taxes authorized Local school taxes can only be increased by a vote of the people Changing property values will change tax rates, but not tax collections Year Home Value Tax Rate Tax Bill XYZ School District Home Value 2014 $100,000 $5.00/$1,000 $500 Assume a 20% increase in Assessed Value for XYZ School District #1: 20% increase 2015 $120,000 $4.17/$1,000 $500 #2: 10% increase 2015 $110,000 $4.17/$1,000 $459 #3: 30% increase 2015 $130,000 $4.17/$1,000 $542

17 15 D. Bond Structure State law gives Districts great flexibility in determining bond structures Options: Level Debt Level Tax Rate Stepped Level Tax Rate Tax Rate Planning

18 Bond Tax Rate Summary 16 Interest Rates: Future bond sales current plus 200 basis points Bond Rating: Aa1 State Guarantee District Rating: A1 (pending) Assessed Value Growth: Final 2015: 8.20% growth; Preliminary 2016: 7.60% annual growth; Projected : 2.00% annual growth Bond Structure: Level Tax Rate Scenario #10 Authorization Amount $47,769,229 Bond Sale Dates and Amounts Bond Tax Rates June 2016 December 2017 Actual 2015 Projected Overall Tax Rate Increase over 2015 Overall Tax Rate $23,890,000 $23,890,000 $0.27 $0.25 $2.40 $2.40 $2.40 $2.41 $2.40 $2.13 Total Interest Cost $45,283,000 Final Maturity 2042 Term 25 years

19 17 Sultan School District No. 311 TAX IMPACT ANALYSIS Scenario 10: $47.7 million bond election in Spring 2016, 25 yr Term Total Project Cost: State Funding Assistance: Bond Authorization Amount: $47,769, Estimated 2017 Tax Rate Increase over 2015 Tax Rate (Bonds Only) (per $1,000 assessed value): $2.13 Assessed Gross Property Monthly Value of Tax Increase Gross Net Tax Increase from Bonds After Allowing for Income Tax Deduction Federal Income Tax Bracket Property for Bonds Increase 25% 28% 33% 39.6% $100,000 $ $17.75 $ $ $ $ , , , , ,000 1, NOTE: Qualified homeowners may apply for a senior exemption. Please contact your County Assessor for details.

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21 19 Total Tax Rate Comparison 2015 Assessed Values with 2015 Total Tax Rates District Assessed Capital Bonds ($) M&O ($) Value (1) ($) Projects ($) Trans. ($) Total ($) Index School District No ,444, Stanwood-Camano School District No ,059,651,413 (2) Mukilteo School District No. 6 13,872,516, Northshore School District No ,844,852,938 (2) Sultan School District No ,012,084, Edmonds School District No ,605,425, Lake Stevens School District No. 4 4,040,952, Monroe School District No ,384,261, Arlington School District No. 16 3,271,932, Lakewood School District No ,810,981, Everett School District No. 2 14,541,841, Darrington School District No ,551, Marysville School District No. 25 6,113,437, Granite Falls School District No ,172,141, Snohomish School District No ,563,206, (1) 2015 Bond Assessed Value does not include TAV (2) Snohomish County values only Snohomish County School Districts

22 20 Selling the Bonds 2015 Bond Distribution-Who Buys Your Bonds (Bank Qualified Issues) 2015 Bond Distribution-Who Buys Your Bonds (Non-Bank Qualified Issues) 2% 10% 20% 68% Bank Portfolio Bank Trust Retail Money Manager 25% 5% 2% 3% 40% 10% 10% 5% Broker-Dealer Bank Trust Bond Fund Bank Portfolio Insurance Money Manager Municipalities Retail

23 Neither this material nor any of its contents may be disclosed, sold, or redistributed, electronically or otherwise, without prior written consent of Davidson Companies. The information presented herein is based on public information we believe to be reliable, prevailing market conditions, as well as our views at this point in time. We make no representation or warranty with respect to the accuracy or completeness of this material. Past performance is not necessarily indicative of future results. Davidson Companies does not assume any liability for any loss which may result from the reliance by any person upon such material. We make no representations regarding the legal, tax, regulatory, or accounting implications of entering into a Transaction. Required Disclosure Pursuant to MSRB Rule G-23: An underwriter s primary role will be to purchase as principal, or arrange for the placement of the securities in a commercial arm s length transaction with the issuer, and may have financial and other interests that differ from those of the issuer. In its capacity as underwriter and not as financial advisor, an underwriter may provide incidental financial advisory services at the issuer s request, including advice regarding the structure, timing, terms and other similar matters concerning the issuance. However, an underwriter does not assume any financial advisory or fiduciary responsibilities with respect to the issuer.

24 With no further items to discuss, Chairman Sumpter adjourned the board meeting at 8:20pm. Cyd Leahy Recording Secretary Russ Sumpter, Chairman Dan Chaplik, Superintendent