School Facilities Financing

Transcription

1 School Facilities Financing October 17, 2017 JON GORES MANAGING DIRECTOR (206)

2 2 Discussion Topics Capital Facilities Financing Tax Rate Projections

3 3 Capital Financing Options Types of School District Bonds Voted Unlimited Tax General Obligation Bonds (UTGO) Non-voted Limited General Obligation Bonds (LGO) Voter approved bonds are (UTGO) Repaid with property taxes Approved with a 60% yes vote, 40% validation 5% Debt Capacity = $3,074,698,543* $26,936,770 (Outstanding Debt) = $126,798,157 Non-voted bonds are (LGO) Repaid with existing revenue Can t be used for new construction 3/8 of 1% Debt Capacity = $3,074,698,543 $3,111,770 = $8,418,350 * Preliminary 2018 Bond Assessed Value

4 4 Capital Financing Options Capital Projects Levy (no debt limit) Simple majority Two to six year collection No interest cost Bonds are the primary method used by Washington School Districts to finance the local share of capital projects because Cash is generated upfront Payments can be spread over time Districts have some control over taxpayer impacts

5 5 District s Current Debt The District has one outstanding Unlimited Tax General Obligation Bond (UTGO) issue: UTGO Bonds, 2010 All of the District s voter approved UTGO Bonds will be repaid on or before December 1, 2022

6 6 Historical Bond Tax Rates Over the past 14 years the District s bond tax rate has ranged from $2.23 in 2004 to $1.62 in Year Historical Bond AV Bond Levy Rate/$ ,170,087,965 $ ,318,986,927 $ ,567,966,218 $ ,899,812,179 $ ,457,753,418 $ ,582,882,455 $ ,386,053,542 $ ,614,362,931 $ ,487,266,474 $ ,198,623,263 $ ,344,025,867 $ ,484,972,166 $ ,620,704,588 $ ,898,380,375 $1.62

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

8 8 Tax Rate Planning Interest Rates 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 1.50% (150 basis points).

9 9 Tax Rate Planning Bond Rating A higher bond rating results in lower interest rates. Assumption: Aa1 (with State Guarantee) Aa3 District Rating (Pending) A Guide to Bond Ratings Moody s Investors Service Founded 1860 Highest Quality Lowest Quality Aaa Aa1, Aa2, Aa3 A1, A2, A3 Baa1, Baa2, Baa3 NR (Nonrated)

10 10 Tax Rate Planning Bond Rating (continued) Bond raters consider the local economy, District finances, and other factors Assumption: Aa1 (with State Guarantee) Aa3 District Rating (Pending) Financial Performance Governmental Factors The Rating Economy Debt Factors Debt Factors Economy

11 11 Tax Rate Planning Assessed Value Year Historical Bond AV New Construction Bond Levy Rate/$1000 % change 2000 $834,370,632 $1.27 N/A ,669,645 $28,714,390 $ % ,600,270 31,822,265 $ % ,056,769,261 36,090,890 $ % ,170,087,965 48,775,326 $ % ,318,986,927 57,003,934 $ % ,567,966,218 82,815,138 $ % ,899,812, ,204,617 $ % ,457,753, ,841,005 $ % ,582,882,455 75,452,510 $ % ,386,053,542 62,155,252 $ % ,614,362,931 29,021,779 $ % ,487,266,474 32,967,071 $ % ,198,623,263 26,402,196 $ % ,344,025,867 32,985,909 $ % ,484,972,166 42,326,298 $ % ,620,704,588 33,087,316 $ % ,898,380,375 51,889,552 $ % 2018* 3,074,698,543 42,309, % * Preliminary value 5 year Compound Annual Growth Rate ( ): 6.94% 10 year Compound Annual Growth Rate ( ): 2.26% 11

12 12 Tax Rate Planning Assessed Value (continued) 4,000,000,000 Historical Assessed Value and Levy Rates for Bonds $4.50 Bond Assessed Value 3,000,000,000 2,000,000,000 1,000,000,000 $3.38 $2.25 $1.13 Bond Levy Rate (per $1,000 AV) 2018* '- $ Historical Bond AV Bond Levy Rate/$1000

13 13 Tax Rate Planning Assessed Value (continued) Projected Assessed Value Growth Final 2017: 10.6% growth Preliminary 2018: 6.1% growth Projected : 3.0% annual growth : 2.0% annual growth An individual s taxes will be based on the assessed value for their property Higher assessed values will lower the District s bond tax rates (but not the overall payment ) New construction vs. increase in value of existing property

14 14 Tax Rate Planning Bond Structure State law gives Districts great flexibility in determining bond structures Options Level Debt Level Tax Rate Stepped Level Tax Rate

15 15 Level Debt Results in level annual payments for the life of the bonds Debt Service 1,600,000 1,400,000 1,200,000 1,000, , , , , $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 Tax Rate New Debt Tax Rate

16 16 Level Tax Rate Attempts to result in a level annual tax rate over the life for the bonds * Debt Service 1,600,000 1,400,000 1,200,000 1,000, , , , , $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 Tax Rate New Debt Tax Rate * Based on assessed value projections.

17 17 Stepped Level Tax Rate Allows for the issuance of future bonds

18 Bond Tax Rate Summary 18 Interest Rates: Current rates plus 150 basis points Bond Rating: Aa1 State Guarantee District Rating: Aa3 (Pending) Timber Assessed Value: Constant at 5 Year Average Assessed Value Growth: Final 2017: 10.6% growth; Preliminary 2018: 6.1% annual growth Projected : 3.0% annual growth Projected : 2.0% annual growth Scenario #31 Authorization Amount $76,000,000 Bond Sale Dates and Amounts June 1, 2018 $38,000,000 December 1, 2019 $38,000,000 Total Tax Rates Actual 2017 $5.38 Projected Final Maturity 2039 Interest Cost ($000s) $56,554,000 Term 20 Years

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21 21 Tax Rate Comparison State School Tax M&O Levy Rate Enrichment Levy Rate Total Yelm SD - School Tax Rates Enrichment Levy Rate M&O Levy Rate State School Tax *2018 levy rate based on preliminary AV 21

22 22 Tax Rate Comparison District Assessed Value (2) ($) Bonds ($) M&O ($) Capital ($) Trans. ($) Total ($) Centralia School District No ,732, Griffin School District No ,000,864, Tenino School District No ,514, Rainier School District No ,692, Rochester School District No ,005,136, Olympia School District No ,379,468, Yelm School District No. 2 2,383,116, North Thurston School District No. 3 10,676,320, Tumwater School District No. 33 4,847,840, (1) 2017 Bond Assessed Value does not include TAV. (2) Thurston County values only. Thurston County School Districts 2017 Total Tax Rates (1) 22

23 23 Tax Rate Comparison District Assessed Value (2) ($) Bonds ($) M&O ($) Capital ($) Trans. ($) Total ($) Peninsula School District No ,334,740, Fife School District No ,865,098, Eatonville School District No ,245,336, Steilacoom Historical School District No. 1 2,814,914, Yelm School District No ,146, Clover Park School District No ,373,464, White River School District No ,605,638, Puyallup School District No. 3 13,852,497, Sumner School District No ,663,553, University Place School District No. 83 3,123,123, Bethel School District No ,969,022, Dieringer School District No ,763,366, Carbonado School District No ,691, Orting School District No ,233,887, Auburn School District No ,015, Tacoma School District No ,882,718, Franklin Pierce School District No ,557,220, (1) 2017 Bond Assessed Value does not include TAV. (2) Pierce County values only. Pierce County School Districts 2017 Total Tax Rates (1) 23

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