1. Facilities Funding Options Committee Report May 22, 2012

2. Committee Purpose To identify and research options that are currently available to fund capital projects. To identify and research possible new options for raising revenue to fund capital projects. To identify methods to reduce construction costs.

3. Committee Members Richard Hazen – Committee Chair and Board Trustee Ray Fleming – Board Trustee Levi Green – Board Trustee David Caver – Deputy Superintendent Dea Baldwin – Community Member Todd Etheredge – Community Member and Local Government Official Tray Traxler – District Comptroller

4. Meetings The committee would like to extend special thanks to the following for their assistance: Bill Inman – Local Businessman Sarah Johnson – Area 3 Advisory Council Member Neel Shah – Local Businessman All meetings were opened to the public and meeting minutes were posted on the District website.

5. Invited Guests As part of its work, the committee invited a number of business, industry, community and government leaders to attend various sessions and offer commentary on best directions for the committee to consider. They were: Rick Ott and Chuck Saylors – M.B. Kahn Construction Ronnie Malphrus – Deputy Administrator, Jasper County Gary Pope and Margaret Pope – Pope Zeigler LLC

6. Invited Guests (cont’d) David Jameson – President, Aiken Chamber Brian Tucker – President, North Augusta Chamber Will Williams – Director, Aiken County EDP Jane Page Thompson – Local Businesswoman Clay Killian – County Administrator, Aiken County Ronnie Young – Chairman, Aiken County Council Scott Singer – Member, Aiken County Council Richard Johnson, Jr. – Community Member Reginald Barner – Local Businessman

7. Sample Discussion Starters Is “curb appeal” a factor when trying to market Aiken County? What are the pros and cons of a penny sales tax for school capital projects? Can Aiken County Schools share in Aiken County’s capital projects sales tax? What are the perceptions of the district’s operations and how can we improve our image?

8. Guests’ Comments Develop district-business partnerships. Curb appeal DOES matter! Sales tax preferable to property tax. Sense of ownership missing by the larger community. Very little negative feedback regarding the quality of education. Focus on really critical needs, not something for all. Energizing the public will take considerable effort. Look at renovations vs. new buildings. Communicate more effectively with the public.

9. Guests’ Comments (cont’d) Instruction in schools generally of high value. Concerned about having a safe, healthy learning environment. ACCTC very important to attracting new businesses. Develop strategies for marketing Aiken schools. Become as efficient as possible in our operations. Keep the legislative delegation and other elected officials informed of activities. Facilities are a symbol of our community’s image towards itself.

10. Funding Options Referendum to exceed the 8% debt limit Share the county’s penny sales tax revenue Develop partnerships to share facilities Seek Sponsors and Donors Seek Federal Grants Pay current debt service off faster Do Nothing

11. Funding Options (cont’d) Develop a lease-purchase or installment-purchase program Pursue a district penny sales tax (currently only allowed in 20 SC counties) Pursue an Education Capital Improvement penny sales tax

12. Available Options Referendum to exceed 8% debt limit: Would require a public vote. Any ballot question regarding this option would be on an even year with the earliest possible vote in 2014. Would require millage increase and add to tax bills of all property types. Previously received poorly by community.

13. Available Options (cont’d) Share of County’s Penny Sales Tax: Would provide a fraction of needed funds. Would require local governments’ acceptance as well as voter approval. Generates approximately $18 - $20 million per year. District would share collections with the County and municipalities. The next phase could commence, if voters approve, in 2020.

14. Available Options (cont’d) Partnerships: Shared facilities may be limited in scope. Sponsorships / Donors: Would likely provide only a fraction of needed funds. Federal Grants: Very long process with current funding designed more for the needs of disadvantaged communities.

15. Available Options (cont’d) Pay Off Debt Service Faster: Would require increase over current debt service millage. Current annual bond issue payoff is 5 years. More of a short term solution. Is at the Board’s discretion, does not require voter approval.

16. Available Options (cont’d) Pay Off Debt Service Faster: (Continued) 4 Year Payoff Would provide additional $6 million over 5 years. Millage would increase to 35 mills. Additional cost to taxpayers per $100,000 of $14 on primary residences, $21 on 6% property. 3 Year Payoff Would provide additional $17 million. Gradual millage increase to 47 mills within 3 years. Additional cost per $100,000 of $62 on primary residences, $93 on 6% property. 2 Year Payoff Would provide additional $34 million. Gradual millage increase to 61 mills within 5 years. Additional cost per $100,000 of $118 on primary residences, $177 on 6% property.

17. Available Options (cont’d) Do Nothing: In time, most or all of the proceeds from bond issuances would be obligated for cyclic maintenance projects such as HVAC and roofing projects. Little funding would be available for major additions, expansions, and renovations of facilities. No funds would be available for construction of new schools. At the current pace, proposed construction/renovation phases at AHS, RSM K-12, and NAHS would conclude around year 2030 (assuming all dollars are not allocated for cyclic maintenance).

18. Available Options (cont’d) Do Nothing: Provides no resolution to current issues related to growth, curb appeal, age of buildings, and/or ensuring quality learning environments. Could impact future issues related to community, corporate and household growth. Could negatively affect property values and ability to attract industry. Could negatively affect future student performance.

19. Currently Unavailable There were a number of options discussed that are not currently available to Aiken School District that are part of South Carolina law. They are: Lease-Purchase/Installment-Purchase: Allowed school districts to finance new construction outside of the 8% legal debt limit without referendum. District Penny Sales Tax: Aiken County is not one of the 20 counties included in the state legislation. Educational Capital Improvement Sales and Use Tax: Aiken County currently does not meet a $7 million dollar minimum in local accommodations tax revenue. Only two counties/districts qualify. Note: All three options could change through legislative mandate.

20. Currently Unavailable (cont’d) Lease-Purchase/Installment-Purchase: Under a lease-purchase arrangement, a non-profit entity would finance construction/renovation projects then lease property back to the school district. Payments were from operations. Under an installment-purchase arrangement, a non-profit entity would finance construction/renovation projects. With each annual installment, the school district’s equity in the facility/project increased until reaching 100% with the final installment. Payments were allowed from operations or debt service revenue. (“Greenville Plan”) Both the lease-purchase and the installment-purchase allowed districts to fund construction/renovations in excess of the 8% debt limit without going for referendum.

21. Currently Unavailable (cont’d) District Penny Sales Tax: Would require change in legislation that would allow Aiken to impose the penny sales tax. Would require a public vote after legislation passed. Any ballot question regarding this option would be on an even year with the earliest possible vote in 2014. Would provide an estimated $18 - $20 million annually. Funding would, in part, result from non-residents who make purchases within the County. May impose for up to 7 years.

22. Currently Unavailable (cont’d) Education Capital Improvement Penny Sales Tax: Would require change in legislation that would allow Aiken to impose the penny sales tax. Would require a public vote after legislation passed. Any ballot question regarding this option would be on an even year with the earliest possible vote in 2014. Would provide an estimated $18 - $20 million annually. Funding would, in part, result from non-residents who make purchases within the County. May impose for up to 15 years.

23. Best Options for Addressing Funding Needs Education Capital Improvement Penny Sales Tax* District Penny Sales Tax* Exceed the 8% debt limit Pay off debt service faster * option currently not available to Aiken County Schools

24. Recommendations Receive public comment at a work study or special called meeting regarding the findings and recommendations of the Facilities Funding Committee. Present overview of facilities needs and available options to the legislative delegation with the hope of gaining support for changes to the Education Capital Improvement Penny Sales Tax legislation. The School Board’s Communications Committee should place emphasis on communicating the facilities plan to the public, once a plan has been developed.

25. Questions and Comments