ALABAMA PUBLIC FINANCE Matt.adams@raymondjames.com 1-800-753-6619 - - PowerPoint PPT Presentation

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Discussion Materials Confidential | January 2017 Matt Adams, Managing Director ALABAMA PUBLIC FINANCE Matt.adams@raymondjames.com 1-800-753-6619 205-802-4275 (direct) 30 YEAR AAA TAX EXEMPT RATES SINCE SEPTEMBER 20, 2016 3.50 3.25 3.00

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Discussion Materials Confidential | January 2017

ALABAMA PUBLIC FINANCE 1-800-753-6619

Matt Adams, Managing Director Matt.adams@raymondjames.com 205-802-4275 (direct)

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30 YEAR AAA TAX EXEMPT RATES SINCE SEPTEMBER 20, 2016

1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 30 Year Tax Exempt Rates

Since Pricing on September 20, 2016 30 Year = +0.73%

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LOCAL REVENUES FOR BOE ISSUERS IN ALABAMA

Board’s of Education in Alabama are primarily funded on the local level by either sales

taxes or ad valorem taxes.

Ad valorem taxes may be levied on a county wide or district wide basis.
If levied by the County, a county wide election would be needed to levy additional

taxes (not to be confused with renewing existing taxes) to support additional debt.

If levied district wide, an election would be needed in the district.
Ad valorem tax increases may require legislative action in Montgomery to provide

Constitutional authority for a tax.

Sales taxes may be levied by the City and used for educational purposes.
A sales tax would need to be approved by a vote of the City Council.
Generally, no referendum would be needed for an increase of sales taxes by the

City Council.

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SUMMARY OF LOCAL REVENUES

Summary of Local Revenues Tax 2011 2012 2013 2014 2015 25.6 Mill City-Levied Tax(1) $15,178,026 $15,366,054 $14,760,692 $15,251,785 $16,050,047 15.1 Mill District Tax 8,877,207 9,050,362 8,979,548 9,527,092 9,460,339 3.15 Mill City-Levied Tax(1) 1,873,923 1,916,271 2,476,889 2,551,013 1,977,561 8.2 Mill Countywide Tax 4,897,769 4,549,147 4,878,238 5,168,975 5,139,433 1/12 of 30% of $0.03 Sales Tax 275,656 242,894 269,736 310,193 299,706 Total $31,102,581 $31,124,728 $31,365,103 $32,809,058 $32,927,086

(1) The Special Taxes pledged for payment of the principal of and interest on the 2016 Warrants.

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COVERAGE ANALYSIS WITH AD VALOREM TAX

Debt Service Coverage Analysis – Ad Valorem Taxes Tax Existing Debt Service New Debt Service Total Tax Received in 2015 Debt Coverage Short of 1.50x coverage 28.75 Mill City-Levied Tax(1) $4,399,425 $4,000,000 $18,027,608 2.14x n/a 15.1 Mill District Tax

4,000,000 9,460,339 2.36x n/a 8.2 Mill Countywide Tax

4,000,000 5,139,433 1.28x 860,567

(1) The Special Taxes pledged for payment of the principal and interest on the 2016 Warrants.

Debt Service Coverage Analysis with Operating Cost – Ad Valorem Taxes Tax Existing Debt Service New Debt Service Operating Cost Total Tax Received in 2015 Debt Coverage Short of 1.50x coverage 28.75 Mill City-Levied Tax(1) $4,399,425 $4,000,000 $8,000,000 $18,027,608 1.09x $6,571,529 15.1 Mill District Tax

4,000,000 8,000,000 9,460,339 0.78x 8,539,661 8.2 Mill Countywide Tax

4,000,000 8,000,000 5,139,433 0.43x 12,860,567

(1) The Special Taxes pledged for payment of the principal and interest on the 2016 Warrants.

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AD VALOREM TAX OVERVIEW

Ad valorem taxes are levied at different assessment ratios of the fair market value

depending on the type of property.

Property in Alabama is divided into four classes of property:
Class I – Utilities
Class II – Business and Commercial (and all other property not otherwise

classified)

Class III – Agricultural, forest and single-family owner occupied residential property
Class IV – Motor Vehicles (individual use)
Generally, millage levied must be authorized by the Constitution of the State of

Alabama.

County wide ad valorem taxes are levied and split on an ADM basis, while district ad

valorem taxes stay in the district in which they are levied.

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HOW MUCH ADDITIONAL MILLAGE OR SALES TAX WOULD BE NEEDED?

Ad Valorem Tax Increase Example

Approximate Value of 1 Mill Debt Service Operations Total (not including coverage) Millage Needed with no coverage Millage Needed with 1.2x coverage Millage Needed with 1.5x coverage $626,954 $4,000,000 $8,000,000 $12,000,000 19.14 22.97 28.71

Sales Tax Increase Example

Approximate Value of 1₵ Debt Service Operations Total (not including coverage) Increase Needed with no coverage Increase Needed with 1.2x coverage Increase Needed with 1.5x coverage $3,007,752 $4,000,000 $8,000,000 $12,000,000 3.99₵ 4.79₵ 5.99₵

A 20 mill increase on a $300,000 house equals $600 annually.