School Facilities Financing October 17, 2017 JON GORES MANAGING DIRECTOR (206) 389-4043 JGORES@DADCO.COM
2 Discussion Topics Capital Facilities Financing Tax Rate Projections
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 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 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 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 2017. Year Historical Bond AV Bond Levy Rate/$1000 2004 1,170,087,965 $2.23 2005 1,318,986,927 $2.05 2006 1,567,966,218 $1.76 2007 1,899,812,179 $1.55 2008 2,457,753,418 $1.25 2009 2,582,882,455 $1.29 2010 2,386,053,542 $1.43 2011 2,614,362,931 $1.64 2012 2,487,266,474 $1.69 2013 2,198,623,263 $1.91 2014 2,344,025,867 $1.79 2015 2,484,972,166 $1.69 2016 2,620,704,588 $1.68 2017 2,898,380,375 $1.62
7 Tax Rate Planning Assumptions for Tax Rate Planning: Interest Rates Bond Rating Assessed Value Bond Structure
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 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 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 Tax Rate Planning Assessed Value Year Historical Bond AV New Construction Bond Levy Rate/$1000 % change 2000 $834,370,632 $1.27 N/A 2001 881,669,645 $28,714,390 $1.19 5.7% 2002 959,600,270 31,822,265 $1.11 8.8% 2003 1,056,769,261 36,090,890 $0.95 10.1% 2004 1,170,087,965 48,775,326 $2.23 10.7% 2005 1,318,986,927 57,003,934 $2.05 12.7% 2006 1,567,966,218 82,815,138 $1.76 18.9% 2007 1,899,812,179 121,204,617 $1.55 21.2% 2008 2,457,753,418 174,841,005 $1.25 29.4% 2009 2,582,882,455 75,452,510 $1.29 5.1% 2010 2,386,053,542 62,155,252 $1.43-7.6% 2011 2,614,362,931 29,021,779 $1.64 9.6% 2012 2,487,266,474 32,967,071 $1.69-4.9% 2013 2,198,623,263 26,402,196 $1.91-11.6% 2014 2,344,025,867 32,985,909 $1.79 6.6% 2015 2,484,972,166 42,326,298 $1.69 6.0% 2016 2,620,704,588 33,087,316 $1.68 5.5% 2017 2,898,380,375 51,889,552 $1.62 10.6% 2018* 3,074,698,543 42,309,789 6.1% * Preliminary value 5 year Compound Annual Growth Rate (2013-2018): 6.94% 10 year Compound Annual Growth Rate (2008-2018): 2.26% 11
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* 2017 2016 2015 2014 '- $0.00 2006 2005 2004 2003 2002 2001 2000 Historical Bond AV 2013 2012 2011 2010 2009 2008 2007 Bond Levy Rate/$1000
13 Tax Rate Planning Assessed Value (continued) Projected Assessed Value Growth Final 2017: 10.6% growth Preliminary 2018: 6.1% growth Projected 2019-2020: 3.0% annual growth 2021-2044: 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 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 Level Debt Results in level annual payments for the life of the bonds Debt Service 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000-2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 Tax Rate New Debt Tax Rate
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 1,000,000 800,000 600,000 400,000 200,000-2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 $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 Stepped Level Tax Rate Allows for the issuance of future bonds
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 2019-2020: 3.0% annual growth Projected 2021-2044: 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 2018 5.18 2019 4.30 2020 4.30 2023 3.01 2025 3.02 2030 3.01 2035 3.02 Final Maturity 2039 Interest Cost ($000s) $56,554,000 Term 20 Years
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21 Tax Rate Comparison 2017 2018 2019 2020 2021 2022 State School Tax 1.99 2.81 2.81 2.81 2.81 2.81 M&O Levy Rate 3.76 3.66 0.00 0.00 0.00 0.00 Enrichment Levy Rate 0.00 0.00 1.50 1.50 1.50 1.50 Total 5.75 6.47 4.31 4.31 4.31 4.31 Yelm SD - School Tax Rates 7.00 5.25 3.50 Enrichment Levy Rate M&O Levy Rate State School Tax 1.75 0.00 2017 2018 2019 2020 2021 2022 *2018 levy rate based on preliminary AV 21
22 Tax Rate Comparison District Assessed Value (2) ($) Bonds ($) M&O ($) Capital ($) Trans. ($) Total ($) Centralia School District No. 401 50,732,819 0.0000 2.7136 0.0000 0.0000 2.7136 Griffin School District No. 324 1,000,864,725 1.4332 2.3353 0.5436 0.0000 4.3121 Tenino School District No. 402 910,514,134 0.0000 3.1968 1.3562 0.0000 4.5529 Rainier School District No. 307 468,692,285 1.2325 3.5347 0.0000 0.0000 4.7672 Rochester School District No. 401 1,005,136,125 1.4284 3.7858 0.0000 0.0000 5.2142 Olympia School District No. 111 8,379,468,129 1.8639 3.0663 0.3266 0.0000 5.2569 Yelm School District No. 2 2,383,116,448 1.6216 3.7612 0.0000 0.0000 5.3828 North Thurston School District No. 3 10,676,320,420 2.1156 3.4700 0.0000 0.0000 5.5856 Tumwater School District No. 33 4,847,840,149 2.7111 3.1751 0.0000 0.0000 5.8862 (1) 2017 Bond Assessed Value does not include TAV. (2) Thurston County values only. Thurston County School Districts 2017 Total Tax Rates (1) 22
23 Tax Rate Comparison District Assessed Value (2) ($) Bonds ($) M&O ($) Capital ($) Trans. ($) Total ($) Peninsula School District No. 401 11,334,740,424 0.3643 2.0863 0.0000 0.0000 2.4506 Fife School District No. 417 2,865,098,351 1.1666 2.8432 0.3696 0.0000 4.3793 Eatonville School District No. 404 1,245,336,053 1.2992 3.6655 0.0000 0.0000 4.9647 Steilacoom Historical School District No. 1 2,814,914,557 2.5220 2.6146 0.0000 0.0000 5.1366 Yelm School District No. 2 461,146,767 1.6216 3.7612 0.0000 0.0000 5.3828 Clover Park School District No. 400 5,373,464,783 1.4888 4.3905 0.0000 0.0000 5.8794 White River School District No. 416 2,605,638,989 2.4535 3.4279 0.0000 0.0000 5.8814 Puyallup School District No. 3 13,852,497,174 2.0658 3.7898 0.0722 0.0000 5.9277 Sumner School District No. 320 6,663,553,496 2.3245 3.3088 0.4285 0.0000 6.0618 University Place School District No. 83 3,123,123,708 2.3054 3.8153 0.2049 0.0000 6.3256 Bethel School District No. 403 9,969,022,839 1.6524 4.4116 0.4527 0.0000 6.5167 Dieringer School District No. 343 1,763,366,498 1.9842 3.5751 0.9796 0.0000 6.5389 Carbonado School District No. 19 80,691,978 0.5642 6.0381 0.0000 0.0000 6.6023 Orting School District No. 344 1,233,887,464 3.1291 3.5240 0.0000 0.0000 6.6531 Auburn School District No. 408 854,015,690 2.6539 3.7505 0.3386 0.0000 6.7430 Tacoma School District No. 10 21,882,718,200 2.5248 3.9637 0.4611 0.0000 6.9496 Franklin Pierce School District No. 402 3,557,220,226 1.1104 5.1787 2.0150 0.0000 8.3041 (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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