PALM SPRINGS UNIFIED SCHOOL DISTRICT Facilities Study Session O.E. 13 May 10, 2016 Presented by Julie Arthur, Executive Director of Facilities Planning & Design 1

Agenda  Review November 10, 2015 Study Session  Bond Projects and Funds  Redevelopment Projects and Funds  District Administration Center Funding Opportunities  Community Facilities District proposal  Potential New Project Discussion 2

November 10, 2015 Board Study Session Review Projects Approved Cost:Type of funding RMHS Video Scoreboard ‘loan’ $ 90,000Redevelopment Finchy solar panel enhancement 160,000Redevelopment LED Marquees High Schools (5)250,000Redevelopment Cielo Vista Charter Master Plan 25,000 Developer fees Raymond Cree MS Roofing design300,000Redevelopment Finchy ES parking lot design100,000Redevelopment Redevelopment Total: $ 925,000 CCHS Solar panels & roofing 500,000Bond Bond Total: $ 500,000 3

Measure E Bond Project Update DescriptionStatus District Service Center Tenant ImprovementComplete Rancho Mirage High School exterior restroomComplete District-wide phone system and bandwidthOn-going Cathedral City High School Theater upgradesOn-going District-wide swimming pool at CCHSBid awarded Solar & roofing at CCHS for poolIn design Edward Wenzlaff Education CenterComplete PSHS auditorium renovation and seismic upgrades Under construction Raymond Cree Middle chiller plant and cooling tower replacementComplete Agua Caliente Elementary renovationSubmitted to DSA 4

Measure E Bond Project Update DescriptionStatus District-wide fire and security alarm upgradesOn-going Rancho Mirage K – 8 (Elementary #19)In design PSHS snack bar and field house renovation99% complete Raymond Cree MS restrooms renovations85% complete Raymond Cree MS 8 classroom permanent (District-wide portable replacement) Bid awarded Bubbling Wells Elementary parking lot expansion 99% complete District-wide heating and air conditioning replacements- Proposition 39 funding In design Cree Middle roof replacementIn design District-wide roof replacements and re-roofingNo action 5

Measure E Bond Project Update DescriptionStatus Desert Springs Middle modernizationNo action Nellie Coffman kitchen renovationNo action Cielo Vista portable replacementNo action CCHS band and choir upgradesNo action District-wide reconfigure site layouts, parking, etc.No action Land purchase – Elementary Schools #20, 21, & 22No action Land purchase – Middle School #6No action Land purchase – High School #5No action Karen Street Elementary DHS (Elementary 17)No action 6

ProjectThrough 6/30/15 FY 16FY 17 Budget Increase/ Project Total Aqua Caliente Elementary Renovation $ 902,389 $2,504,829 $30,592,782 $ 34,000,000 Bella Vista Elementary 29,288,796 11, ,300,031 Bond Cost 84,302 22,340 22, ,142 Bubbling Wells Parking Lot 17,670514,101 $ 116,468648,239 CCHS Theater 139, , ,740 DHSHS Dug-Outs 1,230,3805, ,236,377 District Service Center 8,397, ,397,316 District Wide Phones – VOIP 2,700,779398,917400,304 3,500,000 DW Fire/Intrusion 414,789 1,085,211 1,500,000 Total Page 1 $ 43,176,151 $ 5,078,640 $ 31,015,586$ 116,468 $79,386,845 Measure E Bond Cash Flow Summary 7

ProjectThrough 6/30/15 FY 16FY 17 Budget Increase/ Project Total DW Playground $ 12,449,540 $ $ 12,449,979 Ed Wenzlaff Education Center 11,972, , ,542,217 Farrell Landscape 4,763 45,237 50,000 Nellie Coffman Middle Modernization 6,403,255 9, ,000 6,427,490 PSHS Fieldhouse & Concessions 2,534,2572,708, ,000 5,482,384 PSHS Performing Arts Bldg 6,372,016 25,940 6,397,956 PSHS Auditorium $ 2,082,495 $ 13,603,982 1,313,523 $17,000,000 Total Page 2 $ 41,819,067 $16,962,436 $1,313,523 - $ 255,000 $ 60,350,026 Measure E Bond Cash Flow Summary 8

ProjectThrough 6/30/15 FY 16FY 17Budget Increase/ Decrease Project Total PSUSD Pool at CCHS 280,816 3,719,184 -2,000,000 6,000,000 Pool Solar and Roof Project 050,000450,000500,0001,000,000 Rancho Mirage High School 78,601, , ,062,850 RCMS Chiller 2,005,878 3,073, ,000 5,159,746 RCMS 8 Classroom Permanent Building 176,121500,0002,523,8792,000,000 5,200,000 RCMS RR Upgrades 186,726 1,813, ,0002,100,000 Service Center – T. I. 248,817 3,751, ,965,647 Total Page 3 $ 81,499,580$ 13,369,137$ 2,973,879$ 4,645,647 $102,488,243 Measure E Bond Cash Flow Summary 9

10 ProjectThrough 6/30/15 FY 16 Current Year FY 17 Next Year Budget Increase/ Decrease Project Total Totals Page 1 $ 43,176,151 $ 5,078,640$ 31,015,586 $ 116,468 $ 79,386,845 Total Page 2 41,819,06716,962,4361,313, ,000 60,350,026 Total Page 3 81,499,58013,369,1372,973,8794,645,647102,488,243 Totals Project Costs$166,494,798 $ 35,410,213$ 35,302,988$ 5,017,115$ 242,225,114 Revenues & Fund Balance FY 15FY 16FY 17Increase/ Decrease State Revenues $ 68,517,341 $ 4,344,778$1,865,889 Interest as of 6/30/152,221,360120,000 Cash as of 6/30/15 Expenses & Revenues 6/30/16 Expenses & Revenues 6/30/17 Budget Increase/ Decrease Cash Flow Balance Cash Balance 6/30/15$ 72,301,599 Cash Estimate 6/30/16(30,945,435)41,356,164 Cash Estimate 6/30/17($35,302,988)($3,151,226)$2,901,950

Redevelopment Project Update DescriptionStatus District-wide classroom furniture replacementOn-going Cathedral City HS Dinah Shore Drive fencing, to be included with pool projectIn design Technology - devices for students and staffIn process Vista Del Monte Cell TowerUnder construction District Administration CenterDSA approved Minor Capital Projects - $200,000 per yearOn-going Desert Hot Springs Black Box Theater UpgradesComplete High and middle school athletic scoreboard replacement Complete 11

Redevelopment Project Update DescriptionStatus PSHS and CCHS softball batting cagesComplete Phase II Energy Conservation –Lighting & HVAC upgrades at 10 schools Complete Energy Conservation – HVAC ground unit replacements-SSES, LES, BWES, TBPES & JCESComplete Palm Springs High School PaintingComplete District office intrusion alarm upgrade and repairComplete Farrell Site – Community Liaison Team Room furnitureComplete PSHS – Ramon Road landscape improvementsComplete Cathedral City Elementary Playfield Drainage ProjectComplete 12

Redevelopment Fund Summary ProjectFY 16 Budget FY 17 Next Year Project Total *Technology $ 2,000,000 $ 4,000,000 *General Maintenance & Operations 3, 754,702 3,800,000 7,554,702 *Airlinks towers 128, ,000 *TIS PO's + Edom Hill 69, ,000 *Olinger Lease 67, , ,475 *Suitt Lease 113, , ,413 Minor Capital Projects 247,220200,000447,220 PSHS and CCHS Batting cages 56,069 Athletic Scoreboards 54,043 Rancho Mirage HS Video Scoreboard 90,000 Cathedral City HS Video Display 85,758 Total Page 1 $ 6,665,680 $ 6,697,000 $ 13,362, *Reoccurring costs paid for by Redevelopment funds – total = 6,697,000

Redevelopment Project Update ProjectFY 16 Budget FY 17 Next Year Project Total District Administration Center$ 1,000,000$ 8,622,776 $ 9,622,776 Climatec Phase II HVAC Project 346,933 DHS HS Black Box theater 872 VDM Cell Tower 565,260 Consultant for Purchasing/Facilities 107,34391,632198,975 RCMS Roof Design 200,000100, ,000 KF Solar Panel Enhancement60,000100,000160,000 KF Parking Review and Design0100,000 LED Marquees for High Schools - 250,000 Legal Matters/Consultant Costs 1,000,000 Reserves for On-going payments5,000,000 Total Page 2 $ 8,280,408 $9,264,408 $17,544,816 14

Redevelopment Project Update “A great empire has 15 ProjectFY 16 Budget FY 17 Next Year Project Total Totals Page 1$6,665,680$6,697,000$13,362,680 Total Page 2 8,280,4089,264,408$17,544,816 Totals Project Costs$14,946,088$15,961,408$30,907,496 Revenues & Fund Balance FY 16 FY 17 Actual & Estimated Annual Revenues 8,437,9408,000,000 15,437,940 Net Change($ 6,508,148)($7,961,408) Projected Fund Balance Cash Balance 7/1/15$17,144,152 Less FY 16 Project Budgets(6,508,148)10,606,004 Less FY 17 Project Budgets ($7,961,408)$ 2,644,596

Project Discussion - Redevelopment Available redevelopment funds: Projected fund balance for 2017$ 2,644,596 **2017 Facilities Planning project allotment 1,303,000 $ 3,947,596 New Projects for Consideration: Cost: 1) Use the $100,000 of Finchy parking lot design funds for district-wide traffic and parking lot review $0 2) MSWD matching water grants 285,000 3) *Hold remaining Redevelopment funds 3,662,596 Total: $ 3,947,596 * Funds may be required for repairs to sell District office buildings and new District Administration Center **2017 Facilities Planning allotment is formulated by Redevelopment annual amount of $8,000,000 less district reoccurring costs of $6,697,000 = $1,303,000 16

District Administration Center Funding Opportunities 17 District Administration Center construction is scheduled to use surplus property sale funds, but the funds may take 1 to 2 years to receive. The District could move forward with the construction to resolve the following issues:  Construction costs escalating at 2 to 5 percent each year  Potential annual rent payments upon close of escrow on 980 and 1000 properties of $608,000 (50,678 s.f. * $1 per foot for 12 months)  Passage of State School Construction Bond in November 2016 could flood the market with projects waiting for school funding which will drain the pool of good contractors resulting in higher costs as the bid pool declines

District Administration Center Funding Opportunities 18 Upfront funds are required to start construction and bridge the funding gap until the surplus properties close escrow and the District receives the funds Options:  1) Bond Anticipation Notes (BAN)  2) Use Redevelopment funds and borrow from Developer fee funds  3) Leaselease Back Construction and financing, or  4) Wait until surplus properties are sold (1 to 2 years)

District Administration Center Funding - $20 million 19 1) Bond Anticipation Notes (BAN)  Pros  Loan cost is.07 %  Repayment plan up to 5 years  Repayment with sale of surplus property  Allows construction to begin in the next 3 to 4 months  Cons  Loan interest can only be paid back by Redevelopment or General Funds  Public perception of using bond funds for District Administration Center

District Administration Center Funding 20 2) Use Redevelopment $10 mil and borrow $10 mil of Developer fee funds  Fiscal Services annually borrows $20 million out of redevelopment funds to ensure positive cash flow in the event of late payments by the State. They borrow the funds each July and pay it back the following June.  New state funding (LCAP & LCFF) regulations allow for timely payment by the state to the district  According to the Director of Fiscal Services, the district cash flow balance has only been negative for one month in the last 36 months. The balance was negative $4 mil in November 2015 and back above $18 mil in December This negative amount was due to retro salary payments last fall. Cash flow was positive the next month and every month since.  Recommended to reduce borrowed amount by fiscal services to $10 mil *Cash flow balance provided by Director of Fiscal Services 5/2/16

District Administration Center Funding 21 2) Use Redevelopment $10 mil and borrow $10 mil of Developer fee funds  Pros  Low cost interest rate as County interest rate is less than one percent (.07%) on Developer fee fund loan  Repayment with sale of surplus property  Allows construction to begin in the next 3 to 4 months  Cons  Loan is short term and must be paid back within 12 months  Loan interest can only be paid back by Redevelopment or General Funds  If the District dips below general fund cash flow of more than $10 mil, District will need to borrow short term funds at a cost of 2%

District Administration Center Funding Opportunities 22 3) Leaselease Back Construction and financing  Pros  Repayment plan up to 30 years  Repayment with sale of surplus property  Allows construction to begin in the next 3 to 4 months  Cons  Loan cost is 4%  Loan interest can only be paid back by Redevelopment or General Funds

District Administration Center Funding Opportunities 23 4) Wait until surplus properties are sold  Pros  Loan cost is zero  Repayment with sale of surplus property  Cons  Construction cost escalation could increase by 2 to 5% each year possibility higher  State School Bond initiative passes in November 2016, market could be flooded with school projects  Payment of rent for use of buildings will cost $608,000 each year  Rent will be paid using Redevelopment fees which means less funds for the construction project

District Administration Center Funding Opportunities 24 Loan Cost for Two Years Repayment Timeframe in Years Restricted Funds for Repayment Other out of pocket costsTotal Costs Option 1 - BAN$280,0005Yes$50,000$330,000 1 Option 2 - Inter- district funds01Yes0 $70,000 2 Option 3 - LLB$1,600,000 1 to 30Yes0$1,600,000 3 Option 4 - On hold00No$2,000,000$2,000, Bond sale costs 2 Interest on $10 mil at County rate of.07% 3 Lease payments years 3 & 4 4 Escalation Costs of 2% on $25 mil for 4 years

Elementary and Middle Schools Shade Issues Shade structure survey revealed the following results:  Of the 14 elementary schools surveyed, 7 schools have shade structures in the kinder area (5 metal, 3 fabric)  4 elementary schools have fabric structures in the primary playgrounds  4 elementary schools have fabric structures in the playing fields  Of the 5 middle schools, only 1 has a 18 X 18 fabric shade structure (JWMS)  Total district wide fabric shade structures – 16  Total district wide metal shade structures

26 AN EXAMPLE OF FABRIC SHADE STRUCTURE ISSUES

Elementary and Middle Schools Shade Issues Cont.  PSUSD Shade structures have been paid for by various means such as fund raising activities, grants or district funds  Fabric shade covers last 3 to 5 years, replacement of fabric covers is under the Maintenance and Operations budget  Replacement cost of the fabric shade covers between $5,000 and $7,000  M & O spends roughly $20,000 per year to replace fabric of District supplied shade structures, school must pay to replace fabric of PTO and grant paid structures  Zero maintenance cost on metal shade structures and last 20 years  Middle schools need larger shade structures for PE classes 27

Elementary and Middle Schools Shade Issues Cont.  Next steps  Determine a district standard for elementary and middle schools for shade structures  Review middle school physical education shade needs  Meet with school principals to establish locations  Prioritize schools based on current amount of existing shade structures  Provide budget estimates including fabric versus metal shade structures and prioritization schedule at fall 2016 Facilities Study Session 28

Community Facilities District (CFD)  The Zimmerman Group representing Global Investment and Development, has submitted a proposal to finance school fees for the Ivey Ranch development through a community facilities district (CFD)  What is a CFD? According to the authors of The XYZs of California School District Debt Financing, a CFD is a specified geographic area where bonds are payable and secured by voter-approved special taxes levied under the Mello-Roos Community Facilities Act of 1982 The Mello-Roos Act authorized the creation of a community facilities district, the levying of a special tax for 30 years and the issuance of Mello-Roos bonds 29

Community Facilities District (CFD) Goal of Global Investment’s CFD is to provide an alternate method of mitigating the impacts of Global’s project on the school facility needs by:  Offer a financing mechanism for the project’s school fee requirement  Provide funding in excess SB 50 statutory level 1 school fees currently at $3.48  Proposed amount is 140% of 2015 level 1 rate at $3.36 which equals $4.70 per s.f.  Developer to pay for the cost of forming the CFD, initial deposit of $25,000  Increased fees collected in the amount of $1,704,545 over a 7 year period 30

Community Facilities District (CFD)  These fees do not cover the district administrative staff costs or monitoring of the CFDs over the 30 years  SB 50 statutory level 1 school fees currently at $3.48, if fees raise or the District qualifies for Level 2 (tbd) or Level 3 ($6.84), the District is locked into the $4.70 rate  First in line for funding after CFD Bond Issuance is the costs of issuing bonds, bond counsel fees, appraisal fees, reimbursement of Developer CFD deposit, funding a reserve amount, capitalized interest and underwriter discount for the bonds  The district is second in line to receive funds for all units the bonds were issued  Risk is present but it is minimal Direction required: Shall staff open negotiations with developer and bring back more information? 31

Project Discussion - Bond New Series D bond funds of up to $100 mil (conditional on refunding of Measure E Series B) Projects for Consideration: Cost: Funding 1) Rancho Mirage K – 8 $ 73,000,000 Bond 2) *Prop 39 HVAC and Lighting projects 1,900,000 Bond 3) Districtwide HVAC projects 2,887,000Bond 4) Raymond Cree Middle Roof Replacement 2,500,000Bond 5) James Workman Middle roof repair 1,956,000Bond 6) Rancho Mirage Elementary roof repair 585,000Bond 7) Palm Springs High Field Restroom 525,000Bond 8) Districtwide HVAC, roof, parking lot 7,000,000Bond repairs and shade structures 9) Desert Hot Springs new elementary land 2,000,000Bond 10) Contingency 7,647,000Bond Total: $100,000, *matching funds from CEC for 75% of each project

Staff Recommendations: Option 2 (using $10 mil of Redevelopment and if necessary borrow $10 from developer fees) for District Administration Funding New Series D bond projects Redevelopment funds of matching $285,000 in MSWD grants and hold $3,662,595 for rent and other unforeseen district office requirements CFD discussions with Global Investments Determine shade options for elementary and middle schools for fall 2016 Facilities Study Session 33

The last slide….. Other projects or needs for discussion? Thank you for your time 34