Lay Facilities Committee Finance Subcommittee Update January 9, 2013

Lay Finance Subcommittee Update Fact Finding Meetings 12/7/12 Meeting with Bond Counsel and District Representatives Reps from Squire Sanders / Stieffel Nicolaus Steve Shergalis and Scott Gainer - BOE 1/4/13 - Meeting with representatives from OSFC, Regency Construction, Hammond Construction Lay Finance Sub-Committee is comprised of community members.

Summary of Findings / Observations (1 of 2) The committee discussed “Plan C” costs with Regency Construction. It was concluded that a comprehensive project will likely cost $180-$200MM. This will facilitate a solid renovation/new build. The committee reviewed line-by-line the $206MM funding plan for “Plan C”. We identified $140MM of firm funding, excluding grants, donation, OSFC. While OSFC funding is not considered firm, staying in alignment with program guidelines for co-funding (~$20MM) makes sense.

Summary of Findings / Observations (2 of 2) The District capacity for raising funds through a voted bond will decrease by $60MM in Despite the short-term funding gap, a long-term facilities master plan is a critical need. By establishing phases (HS/MS/Elementary) – elements of the master plan could be completed as funding becomes available. Any new alternative(s) need to be approved by the Board of Education by the end of May This timeline will allow for a November 2013 bond issue.

FINANCING REVIEW

District Debt Capacity The District has very little debt - $7.4 MM Estimated assessed property valuation is $1.106BB. This should be updated on or around December 17 th. General debt limit - 9% of Assessed Valuation: $99MM-$7MM (current) = $92MM Limits are determined by State law

Special Needs Designation Debt limit with special needs designation - $150.8 MM Special Needs – provision of ORC 133 that allows as District to exceed 9% debt limit based on specific criterion. The District will qualify for special needs designation in 2013 but not likely in The assessed valuation would have to grow by more than 11% in 2014 to remain in special needs – not likely – debt capacity restricted to 9%. An bond issue in 2014 would be limited to $92MM

How Much Money Can Likely Be Raised With A Voted Bond? The District could request voter approval of up to $150MM. Based on prior discussions, there was a desire to keep millage in the range of 6.0 mills 1 mill can raise about $20.7MM (5%, 36 years) 6.0 mills = $124 million Approx $184 per $100,000 (est)  Bonds would likely be issued in increments during the project phases  The interest rate would be the prevailing rate at the time of issuance  The millage would adjust to ensure that the right amount of tax revenue was received for debt service 2013 Ballot Initiative

Alternate Forms of Financing Non Voted Alternate Forms of Financing – Tax Anticipation Notes (TANS) District can borrow up to 50% of expected tax revenues for 10 years $1MM annual Permanent Improvement (PI) tax revenues would support $8.5MM TANs – Lease Certificates of Participation (COPs) Capitalize projected future PI tax revenues or other revenues without incurring bonded debt Can amortize COPs over 30 years $1MM annual PI tax revenues would support $15.7MM COPs at 5% over 30 years. – The District will pay off the 2003 Energy Conservation Bonds in This will free up $660,000 in PI tax revenues to pay debt service. Improvement funds must be available for ongoing repairs

Plan C Funding Evaluation Lay Committee Adjustments for Firm Dollars Type of Funding Project ScopePlan CLay Finance Comment Voted Bond IssueEducational Facilities – New and Renovation $130.6$124.0Changes in assessed property valuation. Assumes 6.0 mills or less. COPS LoanEducational Facilities – New and Renovation $32.0$16.0Not comfortable with $2.0mm annual debt service – limit to $1.0mm Ohio School Facilities Funding Educational Facilities$22.6$0.0 PH I/IIFunding remains viable – but certainty would not be known for 5-10 years. Permanent Improvement Fund Network Operating Center$2.0$0.0Not related to Master Plan – just do it Private FoundationLearning Communities K-3$6.0$0.0Funds will be difficult to obtain Private DonationsStadium, Pool, Auditorium$10.0$0.0Funds will be difficult to obtain Career Tech Partner Funding Career Tech$3.0$0.0No firm commitment from partners Districts. Career Tech work remains important part of scope. Total $206.2$140.0 There is a potential funding gap to complete a comprehensive master plan with one ballot issue.

Current District Finances Scott Gainer- CFO District’s five-year forecast was filed October 2012 Based on forecast – next operating levy is likely to be on 3-year cycle (2014). Labor is major cost driver for school districts CH-UH will enter contract negotiations in Expected pressure on wages. Transparency is important. Under this current scenario, there will likely be back- to-back issues (bond & operating)

OSFC Funding Current Status - ELPP The District is currently in the Expedited Local Partnership Program (ELPP). The ELPP program allows a district to begin executing an approved master plan and receive credit for locally funded construction. The District executed an agreement with the OSFC on August 20, The agreement established a master plan and locked in co- funding at 14% (State). The agreement must be updated annually if there is no ballot issue prior to August 2013.

Ohio School Facilities Commission Funding Classroom Facilities Assistance Program - CFAP Funds are committed to the local district when the state approves the project for CFAP. There is no specific timetable for when CHUH would be approved for CFAP. CH-UH is in the 86 th percentile – ranked 524. There is no specific timetable for funding approval – likely not before The state’s most recent CFAP approvals are listed below: State portion

Master Plan Adjustments Timeline to Meet November Ballot The process to significantly amend the Master Plan for a new ELPP agreement will take a minimum of two months. There is a significant amount of work that needs to take place between OSFC and CHUH. The work of this committee will likely generate significant changes. February – April -> Work with consultant to update Master Plan Option May – Final Master Plan Option (approved by BOE) June – July 2013 – OFSC issues resolution to accept Master Plan – CHUH BOE adopts Resolution of Acceptance – OFSC approval of Master Plan August 2013 – Execute new ELPP Agreement – BOE files for November ballot September – November – Bond Campaign November – Election Day 2013

Project Cost Discussion Regency Construction provided a cost breakdown (percentage) for each facility. The estimates includes both hard and soft costs. Contingencies were estimated at 7% for renovation and 5% - new. All detail is available within the project costs sheets provided in the Lay Committee binders Regency walked through the buildings with architects and revised the original OSFC estimates based on a more critical analysis Swing Space – all construction was designed to move kids off sites while construction is in progress. Safety was primary consideration

Project Cost Discussion Major Takeaways The cost of a project in CHUH is likely to be $180mm-$200mm. There is not a likely alternate configuration or consolidation that will significantly reduce the cost of a comprehensive plan that meets OSFC Standards The CHUH master plan would be considered a “solid renovation” The characteristics of CHUH that impacts costs are – age of facilities, multiple additions, inadequate systems, size of district, need for swing space, unknowns regarding sites and building renovation

Finance Committee Guidance The District needs to establish a Facility Master Plan that garners community support. The combination of a voted bond in 2013 Bond and a COPS loan could raise $140mm. The District would have the capacity to start Phase I and II of a plan. Items such as stadium upgrades would not be priority items.

Finance Committee Guidance Stay in the ELP program, maintaining a pathway for State co-funding (14%). There would be no specific timetable for Phase 3 – elementary schools, but a plan would be in place when funds become available. If the District is approved for CFAP, debt limit restrictions are removed. High Level Timeline Complete High School and Middle School Beyond 2020 Receive CFAP Approval, Bond Initiative ($40- $50MM), Complete Elementary Schools