Capital Facilities Planning September 22, 2016 J ON G ORES M ANAGING - - PowerPoint PPT Presentation

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Capital Facilities Planning September 22, 2016

JON GORES MANAGING DIRECTOR (206) 389-4043

JGORES@DADCO.COM

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Tax Rate Planning Assumptions

• Interest Rates
• Bond Rating
• Assessed Value
• Bond Structure

SLIDE 3

2

• A. Interest Rates
• Lower interest rates result in lower tax rates for bonds.
• Interest rates are determined when bonds are actually sold.
• Assumption: Future Bond Sales Current rates plus 1.50 % (150 basis points).

Tax Rate Planning

SLIDE 4

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• B. Bond Rating
• A higher bond rating results in lower interest rates.
• Assumption:

Aa1 (with State Guarantee) A1 District Rating (Pending)

Tax Rate Planning

A Guide to Bond Ratings

Moody’s Investors Service – Founded 1860 Highest Quality Aaa Aa1, Aa2, Aa3 A1, A2, A3 Baa1, Baa2, Baa3 Lowest Quality NR (Nonrated)

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• C. Assessed Value

Tax Rate Planning

5 year Compound Annual Growth Rate (2011-2016): 5.10% 10 year Compound Annual Growth Rate (2006-2016): 5.81%

Year Historical Bond AV New Construction % change Growth rate due purely to NC 2000 579,027,136 N/A N/A 2001 651,444,356 12.5% N/A 2002 651,305,503 9,945,138 0.0% 1.5% 2003 665,611,005 15,782,166 2.2% 2.4% 2004 694,963,894 18,914,073 4.4% 2.8% 2005 733,462,367 16,844,170 5.5% 2.4% 2006 754,409,960 12,118,467 2.9% 1.7% 2007 827,397,472 16,859,920 9.7% 2.2% 2008 864,502,067 25,144,040 4.5% 3.0% 2009 913,997,719 26,548,975 5.7% 3.1% 2010 1,003,619,337 46,959,794 9.8% 5.1% 2011 1,035,210,155 20,330,859 3.1% 2.0% 2012 1,060,405,502 16,734,751 2.4% 1.6% 2013 1,183,051,891 13,970,343 11.6% 1.3% 2014 1,263,782,988 32,805,780 6.8% 2.8% 2015 1,303,155,564 25,819,374 3.1% 2.0% 2016 1,327,550,736 17,326,649 1.9% 1.3%

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Tax Rate Planning

• C. Assessed Value (continued)
• Projected Assessed Value Growth

̶ Final 2015: 3.12% growth ̶ Final 2016: 1.87% growth ̶ Projected 2017-2043: 1.50% annual growth

• An individual’s taxes will be based on the assessed value for their property
• Higher assessed values will lower the District’s tax rates (but not the overall

payment )

• New construction vs. increase in value of existing property

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• D. Bond Structure
• State law gives Districts great flexibility in determining bond structures
• Options:

̶ Level Debt ̶ Level Tax Rate ̶ Stepped Level Tax Rate

Tax Rate Planning

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Scenario #33 #34 #35 #36 Authorization Amount $64,900,000 $64,900,000 $69,300,000 $69,300,000 Bond Sale Dates and Amounts $28,820,000 $29,370,000 $30,980,000 $31,350,000 June 1, 2017 December 1, 2018 $29,290,000 $30,000,000 $31,500,000 $32,030,000 December 1, 2019

• Bond Tax Rates

Projected 2018 $3.03 $2.71 $3.25 $2.90 2019 3.03 2.71 3.25 2.90 2020 3.03 2.71 3.25 2.90 2025 3.03 2.71 3.25 2.89 2030 3.03 2.71 3.25 2.90 Total Interest Cost $42,827,000 $57,208,000 $46,041,000 $61,061,000 Final Maturity 2038 2043 2038 2043 Term 20 years 25 years 20 years 25 years Interest Rates: Future bond sales current plus 150 basis points Bond Rating: Aa1 State Guarantee District Rating: A1(pending) Assessed Value Growth: Final 2015: 3.12% growth; Final 2016: 1.87% growth; Projected 2017-2043: 1.50% annual growth

Bond Tax Rate Summary

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Rating: Interest Rates: Assessed Value Increases at: Actual 2015 Actual 2016 2017-2036 Issue 1 Issue 2 Total Bonds Issued: 6/1/17 12/1/18 Issue Size: $28.82M $29.29M $58.11M Deposit To Capital Proj Fund $32.45M $32.45M $64.90M Term (years): 19.5 20.0 Year Bond AV Bond AV Growth Rate Prior Debt 2017 2018 Total New Bonds Debt Service Fund Incr/ (Decr) Total Bond Levy Prior Debt 2017 2018 Total New Bonds Debt Service Fund Incr/ (Decr) Total Bonds Year 2000 579,027 N/A 1,171 1,171 2.12 2.12 2000 2001 651,444 12.51% 1,329 1,329 2.04 2.04 2001 2002 651,306

• 0.02%

1,350 1,350 2.07 2.07 2002 2003 665,611 2.20% 1,383 1,383 2.08 2.08 2003 2004 694,964 4.41% 1,409 1,409 2.03 2.03 2004 2005 733,462 5.54% 1,320 1,320 1.80 1.80 2005 2006 754,410 2.86% 1,347 1,347 1.79 1.79 2006 2007 827,397 9.67% 1,297 1,297 1.57 1.57 2007 2008 864,502 4.48% 1,266 1,266 1.46 1.46 2008 2009 913,998 5.73% 1,450 1,450 1.59 1.59 2009 2010 1,003,619 9.81% 1,467 1,467 1.46 1.46 2010 2011 1,035,210 3.15% 1,414

• 1,414

1.37 1.37 2011 2012 1,060,406 2.43%

• 2012

2013 1,183,052 11.57%

• 2013

2014 1,263,783 6.82%

• 2014

2015 1,303,156 3.12%

• 2015

2016 1,327,551 1.87%

• 2016

2017 1,347,464 1.50%

• 2017

2018 1,367,676 1.50%

• 3,942
• 3,942

197 4,139

• 2.88
• 2.88

0.14 3.03 2018 2019 1,388,191 1.50%

• 1,983

2,096 4,079 122 4,201

• 1.43

1.51 2.94 0.09 3.03 2019 2020 1,409,014 1.50%

• 2,056

2,168 4,223 42 4,265

• 1.46

1.54 3.00 0.03 3.03 2020 2021 1,430,149 1.50%

• 2,109

2,220 4,329 4,329

• 1.47

1.55 3.03

• 3.03

2021 2022 1,451,601 1.50%

• 2,143

2,250 4,393 4,393

• 1.48

1.55 3.03

• 3.03

2022 2023 1,473,375 1.50%

• 2,172

2,286 4,458 4,458

• 1.47

1.55 3.03

• 3.03

2023 2024 1,495,476 1.50%

• 2,207

2,321 4,528 4,528

• 1.48

1.55 3.03

• 3.03

2024 2025 1,517,908 1.50%

• 3,218

1,377 4,595 4,595

• 2.12

0.91 3.03

• 3.03

2025 2026 1,540,677 1.50%

• 3,286

1,377 4,662 4,662

• 2.13

0.89 3.03

• 3.03

2026 2027 1,563,787 1.50%

• 3,353

1,377 4,730 4,730

• 2.14

0.88 3.02

• 3.02

2027 2028 1,587,244 1.50%

• 3,036

1,767 4,803 4,803

• 1.91

1.11 3.03

• 3.03

2028 2029 1,611,052 1.50%

• 2,159

2,715 4,875 4,875

• 1.34

1.69 3.03

• 3.03

2029 2030 1,635,218 1.50%

• 2,199

2,751 4,950 4,950

• 1.34

1.68 3.03

• 3.03

2030 2031 1,659,747 1.50%

• 2,233

2,790 5,023 5,023

• 1.35

1.68 3.03

• 3.03

2031 2032 1,684,643 1.50%

• 2,270

2,832 5,102 5,102

• 1.35

1.68 3.03

• 3.03

2032 2033 1,709,912 1.50%

• 2,305

2,873 5,178 5,178

• 1.35

1.68 3.03

• 3.03

2033 2034 1,735,561 1.50%

• 2,344

2,911 5,254 5,254

• 1.35

1.68 3.03

• 3.03

2034 2035 1,761,594 1.50%

• 2,384

2,946 5,330 5,330

• 1.35

1.67 3.03

• 3.03

2035 2036 1,788,018 1.50%

• 2,427

2,988 5,415 5,415

• 1.36

1.67 3.03

• 3.03

2036 2037 1,814,839 1.50%

• 5,492

5,492 5,492

• 3.03

3.03

• 3.03

2037 2038 1,842,061 1.50%

• 5,576

5,576 5,576

• 3.03

3.03

• 3.03

2038 2039 1,869,692 1.50%

• 2039

Total Debt Service $47,826 $53,111 $100,937 Total Interest $19,006 $23,821 $42,827 Bond Yield 3.72% 4.03%

Run Date: 9.2.16

Prosser School District No. 116

Scenario 33: February 2017 Election, $64.9 million, 20 yr Term, Modernization/Addition at the High School and the elementaries

Calculation Factors Tax Rate Impact: A1 Moody's Rating

• Bond Tax Rate in 2018 = $3.03 per $1,000 AV

Assessed Value Summary ($000's) Levy Amount Detail ($000's) Levy Rate Detail

• Bond Tax Rate Increase Impact on $150,000 home = $454.5

Current Rates plus 150 bps

• School Tax Rate in 2018 = $6.13 per $1,000 AV

3.12% 1.87% 1.50% NOTES:

• DSF buildup 2018-2020

SLIDE 10

9 Total Project Cost: State Funding Assistance: Bond Authorization Amount: $64,900,000.00 3.03 Assessed Gross Property Monthly Value of Tax Increase Gross Property for Bonds Increase 25% 28% 33% 39.6% $100,000 $303.00 $25.25 $227.25 $218.16 $203.01 $183.01 200,000 606.00 50.50 454.50 436.32 406.02 366.02 250,000 757.50 63.13 568.13 545.40 507.53 457.53 300,000 909.00 75.75 681.75 654.48 609.03 549.04 350,000 1,060.50 88.38 795.38 763.56 710.54 640.54 500,000 1,515.00 126.25 1,136.25 1,090.80 1,015.05 915.06 NOTE: Bonds After Allowing for Income Tax Deduction Federal Income Tax Bracket Qualified homeowners may apply for a senior exemption. Please contact your County Assessor for details.

Prosser School District No. 116

TAX IMPACT ANALYSIS

Scenario 33: February 2017 Election, $64.9 million, 20 yr Term, Modernization/Addition at the High School and the elementaries

Estimated 2018 Tax Rate (Bonds Only) (per $1,000 assessed value): Net Tax Increase from

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Rating: Interest Rates: Assessed Value Increases at: Actual 2015 Actual 2016 2017-2036 Issue 1 Issue 2 Total Bonds Issued: 6/1/17 12/1/18 Issue Size: $29.37M $30.00M $59.36M Deposit To Capital Proj Fund $32.45M $32.45M $64.90M Term (years): 24.5 25.0 Year Bond AV Bond AV Growth Rate Prior Debt 2017 2018 Total New Bonds Debt Service Fund Incr/ (Decr) Total Bond Levy Prior Debt 2017 2018 Total New Bonds Debt Service Fund Incr/ (Decr) Total Bonds Year 2000 579,027 N/A 1,171 1,171 2.12 2.12 2000 2001 651,444 12.51% 1,329 1,329 2.04 2.04 2001 2002 651,306

• 0.02%

1,350 1,350 2.07 2.07 2002 2003 665,611 2.20% 1,383 1,383 2.08 2.08 2003 2004 694,964 4.41% 1,409 1,409 2.03 2.03 2004 2005 733,462 5.54% 1,320 1,320 1.80 1.80 2005 2006 754,410 2.86% 1,347 1,347 1.79 1.79 2006 2007 827,397 9.67% 1,297 1,297 1.57 1.57 2007 2008 864,502 4.48% 1,266 1,266 1.46 1.46 2008 2009 913,998 5.73% 1,450 1,450 1.59 1.59 2009 2010 1,003,619 9.81% 1,467 1,467 1.46 1.46 2010 2011 1,035,210 3.15% 1,414

• 1,414

1.37 1.37 2011 2012 1,060,406 2.43%

• 2012

2013 1,183,052 11.57%

• 2013

2014 1,263,783 6.82%

• 2014

2015 1,303,156 3.12%

• 2015

2016 1,327,551 1.87%

• 2016

2017 1,347,464 1.50%

• 2017

2018 1,367,676 1.50%

• 3,532
• 3,532

177 3,708

• 2.58
• 2.58

0.13 2.71 2018 2019 1,388,191 1.50%

• 1,778

1,876 3,654 110 3,764

• 1.28

1.35 2.63 0.08 2.71 2019 2020 1,409,014 1.50%

• 1,843

1,940 3,783 38 3,821

• 1.31

1.38 2.68 0.03 2.71 2020 2021 1,430,149 1.50%

• 1,894

1,986 3,880 3,880

• 1.32

1.39 2.71

• 2.71

2021 2022 1,451,601 1.50%

• 1,922

2,014 3,936 3,936

• 1.32

1.39 2.71

• 2.71

2022 2023 1,473,375 1.50%

• 1,949

2,045 3,994 3,994

• 1.32

1.39 2.71

• 2.71

2023 2024 1,495,476 1.50%

• 2,508

1,550 4,057 4,057

• 1.68

1.04 2.71

• 2.71

2024 2025 1,517,908 1.50%

• 2,565

1,550 4,114 4,114

• 1.69

1.02 2.71

• 2.71

2025 2026 1,540,677 1.50%

• 2,625

1,550 4,175 4,175

• 1.70

1.01 2.71

• 2.71

2026 2027 1,563,787 1.50%

• 2,689

1,550 4,239 4,239

• 1.72

0.99 2.71

• 2.71

2027 2028 1,587,244 1.50%

• 2,756

1,550 4,305 4,305

• 1.74

0.98 2.71

• 2.71

2028 2029 1,611,052 1.50%

• 2,739

1,630 4,369 4,369

• 1.70

1.01 2.71

• 2.71

2029 2030 1,635,218 1.50%

• 1,948

2,485 4,434 4,434

• 1.19

1.52 2.71

• 2.71

2030 2031 1,659,747 1.50%

• 1,982

2,519 4,500 4,500

• 1.19

1.52 2.71

• 2.71

2031 2032 1,684,643 1.50%

• 2,015

2,557 4,572 4,572

• 1.20

1.52 2.71

• 2.71

2032 2033 1,709,912 1.50%

• 2,048

2,591 4,639 4,639

• 1.20

1.52 2.71

• 2.71

2033 2034 1,735,561 1.50%

• 2,081

2,624 4,705 4,705

• 1.20

1.51 2.71

• 2.71

2034 2035 1,761,594 1.50%

• 2,119

2,661 4,781 4,781

• 1.20

1.51 2.71

• 2.71

2035 2036 1,788,018 1.50%

• 2,156

2,693 4,849 4,849

• 1.21

1.51 2.71

• 2.71

2036 2037 1,814,839 1.50%

• 2,191

2,734 4,925 4,925

• 1.21

1.51 2.71

• 2.71

2037 2038 1,842,061 1.50%

• 2,225

2,772 4,997 4,997

• 1.21

1.50 2.71

• 2.71

2038 2039 1,869,692 1.50%

• 2,267

2,804 5,070 5,070

• 1.21

1.50 2.71

• 2.71

2039 2040 1,897,738 1.50%

• 2,301

2,848 5,149 5,149

• 1.21

1.50 2.71

• 2.71

2040 2041 1,926,204 1.50%

• 2,342

2,884 5,227 5,227

• 1.22

1.50 2.71

• 2.71

2041 2042 1,955,097 1.50%

• 5,302

5,302 5,302

• 2.71

2.71

• 2.71

2042 2043 1,984,423 1.50%

• 5,381

5,381 5,381

• 2.71

2.71

• 2.71

2043 2044 2,014,189 1.50%

• 2044

Total Debt Service $54,473 $62,095 $116,568 Total Interest $25,108 $32,100 $57,208 Bond Yield 3.98% 4.33%

Run Date: 9.2.16

Assessed Value Summary ($000's) Levy Amount Detail ($000's) Levy Rate Detail

• Bond Tax Rate Increase Impact on $150,000 home = $406.5

Current Rates plus 150 bps

• School Tax Rate in 2018 = $5.81 per $1,000 AV

3.12% 1.87% 1.50%

Prosser School District No. 116

Scenario 34: February 2017 Election, $64.9 million, 25 yr Term, Modernization/Addition at the High School and the elementaries

Calculation Factors Tax Rate Impact: A1 Moody's Rating

• Bond Tax Rate in 2018 = $2.71 per $1,000 AV

NOTES:

• DSF buildup 2018-2020

SLIDE 12

11 Total Project Cost: State Funding Assistance: Bond Authorization Amount: $64,900,000.00 2.71 Assessed Gross Property Monthly Value of Tax Increase Gross Property for Bonds Increase 25% 28% 33% 39.6% $100,000 $271.00 $22.58 $203.25 $195.12 $181.57 $163.68 200,000 542.00 45.17 406.50 390.24 363.14 327.37 250,000 677.50 56.46 508.13 487.80 453.93 409.21 300,000 813.00 67.75 609.75 585.36 544.71 491.05 350,000 948.50 79.04 711.38 682.92 635.50 572.89 500,000 1,355.00 112.92 1,016.25 975.60 907.85 818.42 NOTE: Bonds After Allowing for Income Tax Deduction Federal Income Tax Bracket Qualified homeowners may apply for a senior exemption. Please contact your County Assessor for details.

Prosser School District No. 116

TAX IMPACT ANALYSIS

Scenario 34: February 2017 Election, $64.9 million, 25 yr Term, Modernization/Addition at the High School and the elementaries

Estimated 2018 Tax Rate (Bonds Only) (per $1,000 assessed value): Net Tax Increase from

SLIDE 13

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Rating: Interest Rates: Assessed Value Increases at: Actual 2015 Actual 2016 2017-2036 Issue 1 Issue 2 Total Bonds Issued: 6/1/17 12/1/18 Issue Size: $30.98M $31.50M $62.48M Deposit To Capital Proj Fund $34.65M $34.65M $69.30M Term (years): 19.5 20.0 Year Bond AV Bond AV Growth Rate Prior Debt 2017 2018 Total New Bonds Debt Service Fund Incr/ (Decr) Total Bond Levy Prior Debt 2017 2018 Total New Bonds Debt Service Fund Incr/ (Decr) Total Bonds Year 2000 579,027 N/A 1,171 1,171 2.12 2.12 2000 2001 651,444 12.51% 1,329 1,329 2.04 2.04 2001 2002 651,306

• 0.02%

1,350 1,350 2.07 2.07 2002 2003 665,611 2.20% 1,383 1,383 2.08 2.08 2003 2004 694,964 4.41% 1,409 1,409 2.03 2.03 2004 2005 733,462 5.54% 1,320 1,320 1.80 1.80 2005 2006 754,410 2.86% 1,347 1,347 1.79 1.79 2006 2007 827,397 9.67% 1,297 1,297 1.57 1.57 2007 2008 864,502 4.48% 1,266 1,266 1.46 1.46 2008 2009 913,998 5.73% 1,450 1,450 1.59 1.59 2009 2010 1,003,619 9.81% 1,467 1,467 1.46 1.46 2010 2011 1,035,210 3.15% 1,414

• 1,414

1.37 1.37 2011 2012 1,060,406 2.43%

• 2012

2013 1,183,052 11.57%

• 2013

2014 1,263,783 6.82%

• 2014

2015 1,303,156 3.12%

• 2015

2016 1,327,551 1.87%

• 2016

2017 1,347,464 1.50%

• 2017

2018 1,367,676 1.50%

• 4,236
• 4,236

212 4,448

• 3.10
• 3.10

0.15 3.25 2018 2019 1,388,191 1.50%

• 2,134

2,250 4,384 132 4,516

• 1.54

1.62 3.16 0.09 3.25 2019 2020 1,409,014 1.50%

• 2,215

2,325 4,540 45 4,585

• 1.57

1.65 3.22 0.03 3.25 2020 2021 1,430,149 1.50%

• 2,270

2,386 4,657 4,657

• 1.59

1.67 3.26

• 3.26

2021 2022 1,451,601 1.50%

• 2,297

2,428 4,726 4,726

• 1.58

1.67 3.26

• 3.26

2022 2023 1,473,375 1.50%

• 2,339

2,457 4,795 4,795

• 1.59

1.67 3.25

• 3.25

2023 2024 1,495,476 1.50%

• 2,370

2,499 4,869 4,869

• 1.58

1.67 3.26

• 3.26

2024 2025 1,517,908 1.50%

• 3,457

1,481 4,938 4,938

• 2.28

0.98 3.25

• 3.25

2025 2026 1,540,677 1.50%

• 3,532

1,481 5,013 5,013

• 2.29

0.96 3.25

• 3.25

2026 2027 1,563,787 1.50%

• 3,606

1,481 5,087 5,087

• 2.31

0.95 3.25

• 3.25

2027 2028 1,587,244 1.50%

• 3,259

1,906 5,165 5,165

• 2.05

1.20 3.25

• 3.25

2028 2029 1,611,052 1.50%

• 2,319

2,922 5,241 5,241

• 1.44

1.81 3.25

• 3.25

2029 2030 1,635,218 1.50%

• 2,358

2,962 5,320 5,320

• 1.44

1.81 3.25

• 3.25

2030 2031 1,659,747 1.50%

• 2,401

2,999 5,400 5,400

• 1.45

1.81 3.25

• 3.25

2031 2032 1,684,643 1.50%

• 2,442

3,040 5,482 5,482

• 1.45

1.80 3.25

• 3.25

2032 2033 1,709,912 1.50%

• 2,480

3,084 5,564 5,564

• 1.45

1.80 3.25

• 3.25

2033 2034 1,735,561 1.50%

• 2,520

3,130 5,650 5,650

• 1.45

1.80 3.26

• 3.26

2034 2035 1,761,594 1.50%

• 2,568

3,167 5,734 5,734

• 1.46

1.80 3.26

• 3.26

2035 2036 1,788,018 1.50%

• 2,606

3,215 5,821 5,821

• 1.46

1.80 3.26

• 3.26

2036 2037 1,814,839 1.50%

• 5,904

5,904 5,904

• 3.25

3.25

• 3.25

2037 2038 1,842,061 1.50%

• 5,992

5,992 5,992

• 3.25

3.25

• 3.25

2038 2039 1,869,692 1.50%

• 2039

Total Debt Service $51,408 $57,108 $108,516 Total Interest $20,428 $25,613 $46,041 Bond Yield 3.98% 4.33%

Run Date: 9.2.16

Prosser School District No. 116

Scenario 35: February 2017 Election, $69.3 million, 20 yr Term, New High School and Add/Mod Elementaries

Calculation Factors Tax Rate Impact: A1 Moody's Rating

• Bond Tax Rate in 2018 = $3.25 per $1,000 AV

Assessed Value Summary ($000's) Levy Amount Detail ($000's) Levy Rate Detail

• Bond Tax Rate Increase Impact on $150,000 home = $487.5

Current Rates plus 150 bps

• School Tax Rate in 2018 = $6.35 per $1,000 AV

3.12% 1.87% 1.50% NOTES:

• DSF buildup 2018-2020

SLIDE 14

13 Total Project Cost: State Funding Assistance: Bond Authorization Amount: $69,300,000.00 3.25 Assessed Gross Property Monthly Value of Tax Increase Gross Property for Bonds Increase 25% 28% 33% 39.6% $100,000 $325.00 $27.08 $243.75 $234.00 $217.75 $196.30 200,000 650.00 54.17 487.50 468.00 435.50 392.60 250,000 812.50 67.71 609.38 585.00 544.38 490.75 300,000 975.00 81.25 731.25 702.00 653.25 588.90 350,000 1,137.50 94.79 853.13 819.00 762.13 687.05 500,000 1,625.00 135.42 1,218.75 1,170.00 1,088.75 981.50 NOTE: Bonds After Allowing for Income Tax Deduction Federal Income Tax Bracket Qualified homeowners may apply for a senior exemption. Please contact your County Assessor for details.

Prosser School District No. 116

TAX IMPACT ANALYSIS

Scenario 35: February 2017 Election, $69.3 million, 20 yr Term, New High School and Add/Mod Elementaries

Estimated 2018 Tax Rate (Bonds Only) (per $1,000 assessed value): Net Tax Increase from

SLIDE 15

14

Rating: Interest Rates: Assessed Value Increases at: Actual 2015 Actual 2016 2017-2036 Issue 1 Issue 2 Total Bonds Issued: 6/1/17 12/1/18 Issue Size: $31.35M $32.03M $63.38M Deposit To Capital Proj Fund $34.65M $34.65M $69.30M Term (years): 24.5 25.0 Year Bond AV Bond AV Growth Rate Prior Debt 2017 2018 Total New Bonds Debt Service Fund Incr/ (Decr) Total Bond Levy Prior Debt 2017 2018 Total New Bonds Debt Service Fund Incr/ (Decr) Total Bonds Year 2000 579,027 N/A 1,171 1,171 2.12 2.12 2000 2001 651,444 12.51% 1,329 1,329 2.04 2.04 2001 2002 651,306

• 0.02%

1,350 1,350 2.07 2.07 2002 2003 665,611 2.20% 1,383 1,383 2.08 2.08 2003 2004 694,964 4.41% 1,409 1,409 2.03 2.03 2004 2005 733,462 5.54% 1,320 1,320 1.80 1.80 2005 2006 754,410 2.86% 1,347 1,347 1.79 1.79 2006 2007 827,397 9.67% 1,297 1,297 1.57 1.57 2007 2008 864,502 4.48% 1,266 1,266 1.46 1.46 2008 2009 913,998 5.73% 1,450 1,450 1.59 1.59 2009 2010 1,003,619 9.81% 1,467 1,467 1.46 1.46 2010 2011 1,035,210 3.15% 1,414

• 1,414

1.37 1.37 2011 2012 1,060,406 2.43%

• 2012

2013 1,183,052 11.57%

• 2013

2014 1,263,783 6.82%

• 2014

2015 1,303,156 3.12%

• 2015

2016 1,327,551 1.87%

• 2016

2017 1,347,464 1.50%

• 2017

2018 1,367,676 1.50%

• 3,773
• 3,773

189 3,962

• 2.76
• 2.76

0.14 2.90 2018 2019 1,388,191 1.50%

• 1,897

2,007 3,904 117 4,021

• 1.37

1.45 2.81 0.08 2.90 2019 2020 1,409,014 1.50%

• 1,966

2,075 4,041 40 4,082

• 1.40

1.47 2.87 0.03 2.90 2020 2021 1,430,149 1.50%

• 2,016

2,125 4,141 4,141

• 1.41

1.49 2.90

• 2.90

2021 2022 1,451,601 1.50%

• 2,049

2,157 4,205 4,205

• 1.41

1.49 2.90

• 2.90

2022 2023 1,473,375 1.50%

• 2,084

2,181 4,265 4,265

• 1.41

1.48 2.89

• 2.89

2023 2024 1,495,476 1.50%

• 2,676

1,654 4,330 4,330

• 1.79

1.11 2.90

• 2.90

2024 2025 1,517,908 1.50%

• 2,739

1,654 4,393 4,393

• 1.80

1.09 2.89

• 2.89

2025 2026 1,540,677 1.50%

• 2,806

1,654 4,459 4,459

• 1.82

1.07 2.89

• 2.89

2026 2027 1,563,787 1.50%

• 2,874

1,654 4,528 4,528

• 1.84

1.06 2.90

• 2.90

2027 2028 1,587,244 1.50%

• 2,940

1,654 4,594 4,594

• 1.85

1.04 2.89

• 2.89

2028 2029 1,611,052 1.50%

• 2,923

1,739 4,662 4,662

• 1.81

1.08 2.89

• 2.89

2029 2030 1,635,218 1.50%

• 2,076

2,659 4,735 4,735

• 1.27

1.63 2.90

• 2.90

2030 2031 1,659,747 1.50%

• 2,116

2,688 4,804 4,804

• 1.27

1.62 2.89

• 2.89

2031 2032 1,684,643 1.50%

• 2,151

2,728 4,879 4,879

• 1.28

1.62 2.90

• 2.90

2032 2033 1,709,912 1.50%

• 2,185

2,767 4,952 4,952

• 1.28

1.62 2.90

• 2.90

2033 2034 1,735,561 1.50%

• 2,229

2,796 5,025 5,025

• 1.28

1.61 2.90

• 2.90

2034 2035 1,761,594 1.50%

• 2,266

2,834 5,100 5,100

• 1.29

1.61 2.90

• 2.90

2035 2036 1,788,018 1.50%

• 2,297

2,881 5,178 5,178

• 1.28

1.61 2.90

• 2.90

2036 2037 1,814,839 1.50%

• 2,337

2,915 5,252 5,252

• 1.29

1.61 2.89

• 2.89

2037 2038 1,842,061 1.50%

• 2,380

2,953 5,332 5,332

• 1.29

1.60 2.89

• 2.89

2038 2039 1,869,692 1.50%

• 2,420

2,993 5,413 5,413

• 1.29

1.60 2.89

• 2.89

2039 2040 1,897,738 1.50%

• 2,457

3,035 5,492 5,492

• 1.29

1.60 2.89

• 2.89

2040 2041 1,926,204 1.50%

• 2,500

3,074 5,574 5,574

• 1.30

1.60 2.89

• 2.89

2041 2042 1,955,097 1.50%

• 5,659

5,659 5,659

• 2.89

2.89

• 2.89

2042 2043 1,984,423 1.50%

• 5,744

5,744 5,744

• 2.89

2.89

• 2.89

2043 2044 2,014,189 1.50%

• 2044

Total Debt Service $58,158 $66,277 $124,436 Total Interest $26,808 $34,252 $61,061 Bond Yield 3.98% 4.33%

Run Date: 9.2.16

Assessed Value Summary ($000's) Levy Amount Detail ($000's) Levy Rate Detail

• Bond Tax Rate Increase Impact on $150,000 home = $435

Current Rates plus 150 bps

• School Tax Rate in 2018 = $6 per $1,000 AV

3.12% 1.87% 1.50%

Prosser School District No. 116

Scenario 36: February 2017 Election, $69.3 million, 25 yr Term, New High School and Add/Mod Elementaries

Calculation Factors Tax Rate Impact: A1 Moody's Rating

• Bond Tax Rate in 2018 = $2.9 per $1,000 AV

NOTES:

• DSF buildup 2018-2020

SLIDE 16

15 Total Project Cost: State Funding Assistance: Bond Authorization Amount: $69,300,000.00 2.90 Assessed Gross Property Monthly Value of Tax Increase Gross Property for Bonds Increase 25% 28% 33% 39.6% $100,000 $290.00 $24.17 $217.50 $208.80 $194.30 $175.16 200,000 580.00 48.33 435.00 417.60 388.60 350.32 250,000 725.00 60.42 543.75 522.00 485.75 437.90 300,000 870.00 72.50 652.50 626.40 582.90 525.48 350,000 1,015.00 84.58 761.25 730.80 680.05 613.06 500,000 1,450.00 120.83 1,087.50 1,044.00 971.50 875.80 NOTE: Bonds After Allowing for Income Tax Deduction Federal Income Tax Bracket Qualified homeowners may apply for a senior exemption. Please contact your County Assessor for details.

Prosser School District No. 116

TAX IMPACT ANALYSIS

Scenario 36: February 2017 Election, $69.3 million, 25 yr Term, New High School and Add/Mod Elementaries

Estimated 2018 Tax Rate (Bonds Only) (per $1,000 assessed value): Net Tax Increase from

SLIDE 17

16

2016 Bond Assessed Value 1,327,550,736 $ Statutory Capacity Rate 5.000% Total Statutory Capacity 66,377,537 $ Less: Outstanding Voted Debt

• $

Less: Outstanding Non-Voted Debt1

• Plus: Debt Service Fund Balance
• $

Remaining Capacity 66,377,537 $ 2016 Bond Assessed Value 1,327,550,736 $ Statutory Capacity Rate 0.375% Total Statutory Capacity 4,978,315 $ Less: Outstanding Non-Voted Debt

• Remaining Capacity

4,978,315 $

1 As of September 1, 2015

Non-Voted Debt Capacity

Prosser School District No. 116

Voted Debt Capacity

Prosser School District No. 116

SLIDE 18

17

Unused Capacity Date Assessed Valuation Debt Capacity (5%

• f AV)

2017 2018 Amount Percent 12/1/2016 1,327,551 66,378 66,378 100.0% 12/1/2017 1,347,464 67,373 31,350 36,023 53.5% 12/1/2018 1,367,676 68,384 30,130 32,025 6,229 9.1% 12/1/2019 1,388,191 69,410 29,880 31,765 7,765 11.2% 12/1/2020 1,409,014 70,451 29,550 31,425 9,476 13.5% 12/1/2021 1,430,149 71,507 29,155 31,020 11,332 15.8% 12/1/2022 1,451,601 72,580 28,710 30,565 13,305 18.3% 12/1/2023 1,473,375 73,669 28,205 30,065 15,399 20.9% 12/1/2024 1,495,476 74,774 27,080 30,065 17,629 23.6% 12/1/2025 1,517,908 75,895 25,830 30,065 20,000 26.4% 12/1/2026 1,540,677 77,034 24,445 30,065 22,524 29.2% 12/1/2027 1,563,787 78,189 22,915 30,065 25,209 32.2% 12/1/2028 1,587,244 79,362 21,235 30,065 28,062 35.4% 12/1/2029 1,611,052 80,553 19,480 29,980 31,093 38.6% 12/1/2030 1,635,218 81,761 18,475 28,970 34,316 42.0% 12/1/2031 1,659,747 82,987 17,375 27,875 37,737 45.5% 12/1/2032 1,684,643 84,232 16,180 26,680 41,372 49.1% 12/1/2033 1,709,912 85,496 14,885 25,380 45,231 52.9% 12/1/2034 1,735,561 86,778 13,475 23,980 49,323 56.8% 12/1/2035 1,761,594 88,080 11,950 22,465 53,665 60.9% 12/1/2036 1,788,018 89,401 10,310 20,820 58,271 65.2% 12/1/2037 1,814,839 90,742 8,540 19,050 63,152 69.6% 12/1/2038 1,842,061 92,103 6,630 17,145 68,328 74.2% 12/1/2039 1,869,692 93,485 4,575 15,095 73,815 79.0% 12/1/2040 1,897,738 94,887 2,370 12,890 79,627 83.9% 12/1/2041 1,926,204 96,310

• 10,525

85,785 89.1% 12/1/2042 1,955,097 97,755

• 5,445

92,310 94.4% 12/1/2043 1,984,423 99,221

• 99,221

100.0% 12/1/2044 2,014,189 100,709

• 100,709

100.0% 12/1/2045 2,044,402 102,220

• 102,220

100.0% 12/1/2046 2,075,068 103,753

• 103,753

100.0% 12/1/2047 2,106,194 105,310 105,310 100.0% 12/1/2048 2,137,787 106,889 106,889 100.0%

SLIDE 19

Prosser School District Total Tax Rate Comparison

18

(1) Bond Assessed Value does not include TAV. (2) Benton County Values Only.

Benton County School Districts 2015 Assessed Values with 2016 Total Tax Rates(1)

District Assessed Value(2) ($) Bonds ($) M&O ($) Capital ($)

• Trans. ($)

Total ($) Paterson School District No. 50 522,634,883 0.3071 0.4258

• 0.7329

Prosser School District No. 116 1,251,251,631

• 3.0199
• 3.0199

Finley School District No. 53 481,035,177

• 3.8471
• 3.8471

Richland School District No. 400 6,965,829,888 1.5602 3.3129

• 4.8731

Grandview School District No. 200 63,059,356 3.1805 1.8632

• 5.0437

Kennewick School District No. 17 7,117,559,137 1.7000 3.4535

• 5.1535

Kiona-Benton School District No. 52 609,913,029 1.3592 4.2635

• 5.6227

Klickitat County School Districts 2015 Assessed Values with 2016 Total Tax Rates(1)

District Assessed Value(2) ($) Bonds ($) M&O ($) Capital ($)

• Trans. ($)

Total ($) Roosevelt School District No. 403 163,612,929

• 0.3667
• 0.3667

Glenwood School District No. 401 35,659,316

• 2.1468
• 2.1468

Goldendale School District No. 404 1,130,375,050

• 2.2372
• 2.2372

Lyle School District No. 406 310,647,876

• 2.3166
• 2.3166

Klickitat School District No. 402 36,252,303

• 2.3306
• 2.3306

Trout Lake School District No. 400 147,644,930

• 2.5991
• 2.5991

White Salmon School District No. 405 892,627,185 0.3876 2.4633

• 2.8509

Prosser School District No. 116 76,299,105

• 3.0199
• 3.0199

Centerville School District No. 215 164,092,975

• 2.3460

0.8439

• 3.1899

Bickleton School District No. 203 448,477,474 3.0504 0.3274

• 3.3778

(1) Bond Assessed Value does not include TAV. (2) Klickitat County Values Only.

SLIDE 20

Prosser School District Total Tax Rate Comparison

(1) Bond Assessed Value does not include TAV. (2) Yakima County Values Only.

19

Yakima County School Districts 2015 Assessed Values with 2016 Total Tax Rates(1)

District Assessed Value(2) ($) Bonds ($) M&O ($) Capital ($)

• Trans. ($)

Total ($) Mount Adams School District No. 209 154,375,727

• 1.0065
• 1.0065

Mabton School District No. 120 178,951,680

• 1.4529
• 1.4529

Sunnyside School District No. 201 1,262,953,670

• 1.6284
• 1.6284

Toppenish School District No. 202 621,862,689 0.9905 1.9703

• 2.9608

Bickleton School District No. 203 8,837,568 2.7777 0.2950

• 3.0727

Wapato School District No. 207 608,835,485 2.0531 1.6014

• 3.6545

Union Gap School District No. 2 426,185,943 1.7598 2.3459

• 4.1057

Zillah School District No. 205 396,663,725 1.8908 1.9603 0.3151

• 4.1662

West Valley School District No. 208 2,520,836,155 1.7049 2.7364

• 4.4413

Selah School District No. 119 1,491,160,745 1.1635 3.6142

• 4.7777

Granger School District No. 204 292,428,458 2.6331 2.1679

• 4.8010

Yakima School District No. 7 4,549,346,826 1.6816 3.1252

• 4.8068

Highland School District No. 203 480,010,199 1.8738 3.1259

• 4.9997

Grandview School District No. 200 697,198,482 2.4860 1.8632 0.6945

• 5.0437

Naches School District No. 3 821,655,015 1.8146 3.3968

• 5.2114

East Valley School District No. 90 1,385,354,035 2.5199 3.2951

• 5.8151

SLIDE 21

20

2017 Special Election and Resolution Filing Dates

The 2017 special election dates and ballot resolution filing deadlines pursuant to the Revised Code of Washington (“RCW”) are listed below for your information.(1) These are the dates permitted under current law, which are subject to change by the Legislature.

(1) This data is for informational purposes only and does not take the place of local, state or federal laws. Specific RCW information can be found at: http://www.secstate.wa.gov/elections/election_laws.aspx. (2) Some dates may have been adjusted to reflect the business day prior to actual resolution filing date, according to RCW 29A.04.330, if falling on a weekend. (3) Applies to both mail and absentee ballots. Absentee ballots are required to be mailed no later than 18 days prior to the election date. RCW 29A.40.070 Source: Washington Secretary of State’s Office, Elections and Voting website.

ELECTION DATE RESOLUTION FILING DEADLINE (2) APPROXIMATE DATE BALLOTS ARE MAILED (3) February 14, 2017 December 16, 2016 January 27, 2017 April 25, 2017 February 24, 2017 April 7, 2017 August 1, 2017 (Primary) May 12, 2017 July 14, 2017 November 7, 2017 (General) August 1, 2017 October 20, 2017

SLIDE 22

Neither this material nor any of its contents may be disclosed, sold, or redistributed, electronically or otherwise, without prior written consent of Davidson Companies. The information presented herein is based on public information we believe to be reliable, prevailing market conditions, as well as our views at this point in time. We make no representation or warranty with respect to the accuracy or completeness of this material. Past performance is not necessarily indicative of future results. Davidson Companies does not assume any liability for any loss which may result from the reliance by any person upon such material. We make no representations regarding the legal, tax, regulatory, or accounting implications of entering into a Transaction. Required Disclosure Pursuant to MSRB Rule G-23: An underwriter’s primary role will be to purchase as principal, or arrange for the placement of the securities in a commercial arm’s length transaction with the issuer, and may have financial and other interests that differ from those of the issuer. In its capacity as underwriter and not as financial advisor, an underwriter may provide incidental financial advisory services at the issuer’s request, including advice regarding the structure, timing, terms and other similar matters concerning the issuance. However, an underwriter does not assume any financial advisory or fiduciary responsibilities with respect to the issuer.