Wasco Union High School District CLICK TOand EDIT MASTER Bond Process Opportunity for November 2016 Measure STYLE TITLE Government Financial Strategies Presented by Lori Raineri April 14, 2016 2016 Government Financial Wasco Union Highcommentary School District - Page 1 Presentation materials provided for Strategies distribution at the meeting. Please see meeting record for verbal and discussion.
Agenda u Timeline and Process for Potential of New Bond Measure u Pro-Forma New Measure Financial Plan Wasco Union High School District - Page 2
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) Wasco Union High School District - Page 3
Timeline and Process Overview of Process for a General Obligation Bond Measure 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) Development of a Bond Financing Plan: Understanding of Taxing and Bonding Capacity and Assumptions Evaluation of Voter s Opinions: - Analytical, Independent Survey - Hired Through RFP - Using Data from Both the Facilities Needs and GO Bond Plan GO Bond Facilities Project List GO Bond Measure Ballot Language Governing Board Decides Whether to Call for GO Bond Election Election Date Public Engagement Process to Be Determined Wasco Union High School District - Page 4
Timeline and Process Overview of Process for a General Obligation Bond Measure 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) Development of a Bond Financing Plan: Understanding of Taxing and Bonding Capacity and Assumptions Evaluation of Voter s Opinions: - Analytical, Independent Survey - Hired Through RFP - Using Data from Both the Facilities Needs and GO Bond Plan GO Bond Facilities Project List GO Bond Measure Ballot Language Governing Board Decides Whether to Call for GO Bond Election Election Date Public Engagement Process to Be Determined Wasco Union High School District - Page 5
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 Wasco Union High School District - Page 6
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. Wasco Union High School District - Page 7
Timeline and Process for New Measure Overview of Process for a General Obligation Bond Measure 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) Development of a Bond Financing Plan: Understanding of Taxing and Bonding Capacity and Assumptions Evaluation of Voter s Opinions: - Analytical, Independent Survey - Hired Through RFP - Using Data from Both the Facilities Needs and GO Bond Plan GO Bond Facilities Project List GO Bond Measure Ballot Language Governing Board Decides Whether to Call for GO Bond Election Election Date Public Engagement Process to Be Determined 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. Wasco Union High School District - Page 8
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 Wasco Union High School District - Page 9
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. Wasco Union High School District - Page 10
Timeline and Process for New Measure Overview of Process for a General Obligation Bond Measure 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) Development of a Bond Financing Plan: Understanding of Taxing and Bonding Capacity and Assumptions Evaluation of Voter s Opinions: - Analytical, Independent Survey - Hired Through RFP - Using Data from Both the Facilities Needs and GO Bond Plan GO Bond Facilities Project List GO Bond Measure Ballot Language Governing Board Decides Whether to Call for GO Bond Election Election Date Public Engagement Process to Be Determined Wasco Union High School District - Page 11
Public Information and Engagement 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)? Wasco Union High School District - Page 12
A School Bond is a Community Endeavor Wasco Union High School District - Page 13
Takeaways From Recent Bond Measures California School Revenue Measures Jun. 2008 Nov. 2008 Jun. 2010 Total % Pass Total % Pass Total % Pass School 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% Nov. 2010 Jun. 2012 Nov. 2012 Total % Pass Total % Pass Total % Pass School 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% Jun. 2014 Nov. 2014 Combined Total Total % Pass Total % Pass Total % Pass School 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). Wasco Union High School District - Page 14
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) Wasco Union High School District - Page 15
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 Wasco Union High School District - Page 16
$21.6 vs. $31.6 Million in Currently Bonding Capacity/ Outstanding Bonds $80,000,000 Available Bonding Capacity Refinancing Measure C and New Issuance Reduces Available Bonding Capacity Actual Projected $70,000,000 Bonding capacity $60,000,000 $50,000,000 $40,000,000 $31,550,000 in remaining bonding capacity with no action on Measure C $21,580,000 in remaining bonding capacity after Measure C refi & new money issue Outstanding Bonds - Measure C Outstanding Bonds - Refi. Measure C w/ New Issue $30,000,000 $20,000,000 $10,000,000 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Fiscal Year Beg Jul 1 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. Wasco Union High School District - Page 17
Pro Forma Max. 55% G.O. Bond Plan - No Action Relative to Measure C u New Measure Bonds Issued as Single Series Wasco Union High School District - Page 18
Projected Tax Levies $30 / $100,000 AV Tax Levy per $100,000 of AV $40 Projected Tax Levies Adhere to $30 Maximum Allowable Tax Levy Requirement $35 Maximum allowable projected tax levy of $30/$100,000 of AV $30 $25 $20 $15 Projected Tax Levies $10 Maximum: Average: Minimum: $30.00 $29.96 $29.91 $5 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Fiscal Year Beg July 1 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. 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Wasco Union High School District - Page 19
Stable Tax Rate è Payments Grow w/proj. AV Revenue $4,200,000 Tax Revenue Available for Debt Service Increases with Growth in AV Total AV $14,000,000,000 $3,600,000 $12,000,000,000 $3,000,000 $10,000,000,000 $2,400,000 Total AV $8,000,000,000 $1,800,000 $6,000,000,000 $1,200,000 $4,000,000,000 $600,000 Projected tax revenue $2,000,000,000 $0 $0 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 Fiscal Year Beg July 1 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. Wasco Union High School District - Page 20
$29.2 Million For Needs Achievable Issuance/ Net Collection $33,000,000 $30,000,000 $27,000,000 $24,000,000 $21,000,000 $18,000,000 $15,000,000 $12,000,000 $9,000,000 $6,000,000 $30,800,000 $30.8 Million Issuance Supported by Projected Tax Revenue Bond Proceeds Analysis - Conservative Assumptions Series 2017 Bond Issuance Amount $30,800,000 Underwriter's Discount ($820,000) Bond Insurance ($485,000) Other Costs ($125,000) Interest & Sinking Fund ($135,000) Cash for Projects $29,235,000 Debt Service $73,676,265 Debt Service to Principal Ratio 2.39 : 1 Total $30,800,000 ($820,000) ($485,000) ($125,000) ($135,000) $29,235,000 Conservative Assumptions Underwriter'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 $73,676,265 2.39 : 1 $3,000,000 Series 2017 $0 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 Fiscal Year Beg July 1 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. Wasco Union High School District - Page 21
Bonding Capacity Sufficient Bonding Capacity/ Outstanding Bonds $70,000,000 There is Sufficient Remaining Bonding Capacity for a $30.8 Million Bond Measure, to be Issued in One Series Actual Projected $60,000,000 Bonding capacity $2,600,000 remaining bonding capacity $50,000,000 $40,000,000 $30,000,000 Measure C Issuances: $15,500,000 - Series A $7,000,000 - Series B $31,550,000 in remaining bonding capacity $30,800,000 new measure issuance $20,000,000 $10,000,000 Outstanding Bonds - New Measure Outstanding Bonds - Measure C $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fiscal Year Beg Jul 1 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. Wasco Union High School District - Page 22
Pro Forma Max. 55% G.O. Bond Plan - With Refi. & Additional Measure C Bonds u New Measure Bonds Issued Over Three Series Wasco Union High School District - Page 23
$33 Million Available for Projects Issuance/ Net Collection $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $11,500,000 $34.5 Million Issuance Supported by Projected Tax Revenue Bond Proceeds Analysis - Conservative Assumptions Series 2017 Series 2019 Series 2021 Total Bond Issuance Amount $11,500,000 $11,500,000 $11,500,000 $34,500,000 Underwriter'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) $0 Cash 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 $69,300,545 Debt Service to Principal Ratio 1.79 : 1 1.95 : 1 2.29 : 1 2.01 : 1 Conservative Assumptions Underwriter'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 $4,000,000 $2,000,000 Series 2019 Series 2021 Series 2017 $0 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 Fiscal Year Beg July 1 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. Wasco Union High School District - Page 24
Tax Levies Still Within $30 Limit Tax Levy per $100,000 of AV $40 Projected Tax Levies Adhere to $30 Maximum Allowable Tax Levy Requirement $35 Maximum allowable projected tax levy of $30/$100,000 of AV $30 $25 $20 $15 Projected Tax Levies $10 Maximum: Average: Minimum: $29.92 $29.87 $29.76 $5 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Fiscal Year Beg July 1 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. 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 Wasco Union High School District - Page 25
Bonding Capacity Sufficient Bonding Capacity/ Outstanding Bonds $80,000,000 $70,000,000 There is Sufficient Remaining Bonding Capacity for a $34.5 Million Bond Measure, to be Issued in Three Series over Four Years Bonding capacity Actual Projected $620,000 remaining bonding capacity $60,000,000 $50,000,000 $40,000,000 $21,580,000 in remaining bonding capacity after Measure C refi & new money issue ($31,550,000 before) $11,500,000 Issuance $11,500,000 Issuance $11,500,000 Issuance $30,000,000 Measure C Issuances: $15,500,000 - Series A $7,000,000 - Series B $20,000,000 $9,500,000 Issuance $10,000,000 Outstanding Bonds - New Measure Outstanding Bonds - Measure C $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Fiscal Year Beg Jul 1 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. Wasco Union High School District - Page 26
Sample Nov. 2016 Bond Election Schedule DATE ITEM RESPONSIBILITY Completed March 2016 Completed Tuesday, April 5, 2016 Thursday, April 14, 2016 TBD TBD Initial demographic/financial research and analysis to determine funding potential of tax base. Bond counsel selection process - develop list of potential firms, obtain fee quotes, and select firm. Board Agenda Deadline: Information presentation regarding status of Measure C, potential new bond measure, and public engagement process delivered for Board agenda packet. Board Meeting: Information presentation regarding status of Measure C, potential new bond measure, and public engagement process. Public opinion survey firm selection process - develop list of potential firms, obtain proposals, and select firm. Public opinion survey questionnaire developed, survey conducted, and results analyzed. Govt. Financial Strategies Govt. Financial Strategies District Gov t. Financial Strategies District Staff Gov t. Financial Strategies District Staff Govt. Financial Strategies District Survey Firm Gov t. Financial Strategies District Staff To be Determined Public engagement process. Further Information: District Govt. Financial Strategies Thursday, May 12, 2016 Wednesday, May 18, 2016 May 19, 2016 - June 1, 2016 Tuesday, May 31, 2016 Thursday, June 9, 2016 Friday, August 12, 2016 Tuesday, November 8, 2016 Board Meeting: Presentation of public opinion survey results. Board Workshop: Presentation regarding potential bond measure facilities and financial plan. Development of bond resolution and related documents. Board Agenda Deadline: Bond resolution and related documents delivered for Board agenda packet. Board Meeting: Board considers resolution calling for election. Statutory deadline for providing adopted resolution to County of Kern (at least 88 days prior to election). Election Day. Survey Firm District Staff Govt. Financial Strategies District Staff Bond Counsel District Staff Govt. Financial Strategies Bond Counsel District Staff School Board Bond Counsel District Staff District Staff District Voters Wasco Union High School District - Page 27
Any Questions? Wasco Union High School District - Page 28
For Reference u Additional Information Regarding General Obligation (G.O.) Bonds Wasco Union High School District - Page 29
2/3 vs. 55% Voter Approval G.O. Bonds Subject 55% Voter Approval Two-Thirds Voter Approval Board Approval Required To Place Measure on Ballot Allowable Election Dates Maximum Projected Tax Rates/Levies Bonding Capacity (i.e. Maximum Bonds Outstanding) Audits Oversight Committee Two-thirds Primary or general election, regularly scheduled local election, or statewide special election For unified district, $60 per $100,000 of assessed value; for union district, $30 per $100,000 of assessed value 2.5% of assessed value for unified districts and 1.25% of assessed value for union districts Independent financial and performance audits must be conducted annually If election is successful, Board must establish independent citizens oversight committee within 60 days of Board adoption of resolution declaring election results Majority Any Tuesday that is not the day before or the day after a State holiday, or within 45 days of a regularly scheduled election No projected maximum tax rate 2.5% of assessed value for unified districts and 1.25% of assessed value for union districts None specifically required 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 Wasco Union High School District - Page 30