West Contra Costa USD Presentation to the Facilities Subcommittee November 13, 2012.

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Presentation transcript:

West Contra Costa USD Presentation to the Facilities Subcommittee November 13, 2012

2012 Measure E Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 1  Last week, District voters approved 2012 Measure E by a vote of 64% in favor.  Provides District with the authority to sell bonds up to the maximum authorized amount within certain limitations.  Legal limitations include the intended use of proceeds, the planned pace of expenditure, and the projected tax impact at time of issue.  The District will also want to implement the program in a way that is consistent with the basic principles of prudent debt management and of the larger bond program’s long-term health.  Local taxpayers to make repayment on any bonds legally issued.

District Bond Program  2012 Measure E is part of a long-term, ongoing bond program of the District.  Since 1998, the District has invested more than $1 billion of state and local bond money in improvements to its facilities.  During the early part of last decade, the District was spending more than $100 million per year on facility improvements.  The District made plans to slow its program dramatically in the wake of the worldwide financial crisis of  2010 Measure D and 2012 Measure E represent efforts by the District to re-envision its bond program in a more deliberate way. Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 2

Projected Issuance Schedule  While the sizing of each series of bonds will be made at the time of issuance, current plans call for the District to issue 2012 Measure E bonds (in conjunction with previously authorized bonds) in regular installments over the next eight years (to fund project over ten years). Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 3 Note:The table above is based on pro-forma analysis of the finance team and has not been formally approved by the Board of Education.

Sizing Decisions  As in the past, decisions regarding the sizing of each issue will be made by the Board of Education at the time of each issuance based on a number of sometimes competing interests.  Borrow in alternate years to fund projects over the coming three years.  Pursue sizings and structures that maintain flexibility and provide the likelihood of continued access to bond funds over time.  Structure debt service to meet tax rate targets in initial years, stay within tax rate targets throughout, and leave room for future bonds.  Recognize that the early years are when a bond program is typically most flexible but also most uncertain. Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 4

Max-Out Bonds  One theoretical possibility is for the District to issue as many 2010 Measure D bonds and as many 2012 Measure E bonds as possible within currently estimated tax rate constraints. Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 5 Maximum 2010 Measure D Bond Proceeds: $168 million Maximum 2012 Measure E Bond Proceeds: $242 million

Program Acceleration  Any decision to accelerate issuance should be made considering costs as well as benefits.  There are clear advantages to selling bonds earlier in the year.  Acceleration of series sizing will not necessarily accelerate the program as a whole and will decrease program flexibility.  Program flexibility might prove a valuable tool in the event of sluggish tax base growth or increases in interest rates.  At some point the District may want to use the 2012 Measure G bond proceeds to stabilize tax rates on prior bond measures. Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 6

Series A Bonds  Discussions are currently underway regarding the sizing, timing, and repayment structure of the Series A Bonds.  Analysis of project cash flows – both for projects currently underway and planned.  Preference to issued bonds in July (though cash flow issues may required an earlier sale).  Depending on timing issues and expense of acceleration of sizing, there may be some advantage to issuing bonds in  Proposed sizing are expected to be presented to the Facilities Subcommittee and approved by the Board during the first quarter of Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 7

Bonding Capacity Waiver  Issuance of any bonds under 2012 Measure E will depend on the District’s ability to achieve a waiver of the statutory bonding capacity limit from the State Department of Education.  The District currently has bonds outstanding beyond its 2.5% capacity.  The District has been able to issue bonds under recent bond measures under waivers from the Department of Education specific to each bond measure.  The language for 2012 Measure E made specific reference to the District’s plans to apply for a bonding capacity waiver.  The District plans to prepare an application for consideration by the Department of Education at their scheduled meeting on March 13th and March 14th. Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 8

Waiver Request  The District should give strong consideration to requesting a waiver for these bonds at or above the 5% waiver requested in connection with the 2010 Measure D Bonds.  The District is currently bonded to 3.24% of its assessed value.  A 5% waiver would create room for the issuance of an additional $433 million in bonds (the District has $718 million in authorized but unissued bonds).  Tax base growth might allow for an increase in $50 million.  Each year, the District repays approximately $20 million in principal amount. Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 9

Waiver Strategy  There are a number of benefits to building community outreach into the District’s waiver application process.  In the past, bonding capacity waivers have been routinely approved by the State Board.  In recent years, however, there has been evidence that the political environment has been changing (and is continuing to change).  We believe that evidence of local community support can be a powerful counter-weight to potential opposition. Presentation to the West Contra Costa Unified School District Facilities Subcommittee | page 10