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COEUR DALENE SCHOOL DISTRICT NO. 271 Bond & Levy Planning - - PowerPoint PPT Presentation
COEUR DALENE SCHOOL DISTRICT NO. 271 Bond & Levy Planning - - PowerPoint PPT Presentation
COEUR DALENE SCHOOL DISTRICT NO. 271 Bond & Levy Planning October 24, 2016 Michael Keith Eric Heringer Nick Miller Vice President Managing Director Hawley Troxell Ennis & Hawley LLC 208-344-8564 208-344-8577 208-388-4849
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Bonds – What are they? Bonds are debt School districts in Idaho can issue General Obligation Bonds. These bonds are:
Repaid with property taxes Approved with 2/3rds super majority vote
Bonds are the primary method used by Idaho School Districts to finance capital projects because:
Cash is generated up front Payments can be spread over time – typically 20 years but can be up to 30 years Districts have some control over taxpayer impacts School bonds typically qualify for “Levy Equalization” subsidy payments from the State The District has $21,435,000 of bonds currently outstanding with a final maturity of 9/15/2025
Bonded Debt Capacity
Idaho School Districts legal debt limit is 5% of Full Market Value The District currently has $495 million of remaining legal debt capacity
Overview of property tax levies for Idaho Schools
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Special Plant Facilities Levy (Plant Levy)
A Plant Levy provides another tool for capital repair and replacement Levy certified each year - “pay as you go” No interest cost Lower voter threshold (55% or 60%) than bond Up to ten year maximum term Construction cash flow challenges for large projects The District currently does not have a Plant Levy Typically for General Fund expenditures, no restriction on use for facility needs Levy certified each year Simple Majority (50% plus 1) approval Up to two year authorization The District has a Supplemental M&O Levy in the amount of $15,000,000 for Fiscal Year 2017
Supplemental Maintenance and Operation Levy (Supplemental M&O) Overview of property tax levies for Idaho Schools - continued
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The District has two series of bonds with a total par outstanding of $21,435,000. An overview of the two outstanding issues are as follows:
Bond Issue Ratings/Credit Enhancement Amount Outstanding Coupons Final Payment Call Feature Series 2012A (Aa2/Aa1) ISBG 1,435,000 2.00-4.00% September 15, 2017 None Series 2012B (Aa2/Aaa) ISBG/CEP 20,000,000 2.00-5.00% September 15, 2025 September 15, 2022 Total Outstanding Debt (as of 10/01/2016) 21,435,000
$- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Coeur d'Alene School No. 271
Series 2012A Series 2012B
Review Existing Debt
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Rate per $1,000 Fiscal Year Bond Plant
- Suppl. M&O
Emergency Tort/Judgment/Other Total 2010 0.18163 0.00000 0.85682 0.04412 0.02414 1.11 2011 0.16144 0.00000 0.97720 0.00000 0.36418 1.50 2012 0.06434 0.00000 1.72542 0.00000 0.38900 2.18 2013 0.42010 0.00000 1.87163 0.00000 0.03637 2.33 2014 0.38938 0.00000 2.01984 0.06883 0.03706 2.52 2015 0.37063 0.00000 1.63110 0.09341 0.01045 2.11 2016 0.36975 0.00000 1.84873 0.14820 0.00906 2.38 2017(e) 0.56700 0.00000 1.73600 0.00000 0.01000 2.31
(e) Expected levy rate.
Review of Historical Property Tax Levies
1.11 1.50 2.18 2.33 2.52 2.11 2.38 2.31 0.00000 1.00000 2.00000 3.00000 4.00000 2010 2011 2012 2013 2014 2015 2016 2017(e) Rate per $1,000
Coeur d'Alene Historical Tax Levy Rates
Bond Plant
- Suppl. M&O
Emergency Tort/Judgment/Other
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1.85 2.38 2.82 2.84 3.19 4.22 4.24 4.24 4.42 4.35 4.75 5.05 5.20 5.45 5.82 0.00000 1.00000 2.00000 3.00000 4.00000 5.00000 6.00000 Rate per $1,000
Fiscal Year 2016 Data
Bond Plant
- Suppl. M&O
Emergency Tort/Judgment/Other
Comparative Tax Rates (Other Idaho School Districts)
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The affordability of a bond proposal is often determined by the taxpayer impact of the bond. The key factors that determine the tax rate necessary to repay Idaho School Bonds are:
- Interest Rates
- Taxable Assessed Value
- Bond Rating
- Additional Revenue Sources (Levy equalization from State)
- Bond Sale Timing
- Bond Sale Structure
- Future Levy Plans
- Construction Inflation
Future Bond and Levy Planning – Things to Consider
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Interest Rates
Future bond planning will be impacted by interest rates in the municipal bond market.
- For planning purposes, we typically add between 0.50% to 1.00% cushion over currently available interest rates.
Future Bond and Levy Planning - continued
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% Oct-06 Oct-08 Oct-10 Oct-12 Oct-14 Oct-16 Interest Rates
Historical Interest Rates
20-Year AAA MMD 1.50% 2.00% 2.50% 3.00% 3.50% Oct-15 Feb-16 Jun-16 Oct-16
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Market Values – Coeur d’Alene School District No. 271
The 20-year compound growth rate for the District’s Taxable Market Value (applicable to Bonds) is 5.80%.
(*) September values per Idaho Tax Commission. Includes URA value.
Fiscal Year Net Taxable Value(*) % Growth URA Value 2017 8,072,188,418 8.09% 567,849,670 2016 7,468,005,468 5.95% 632,586,324 2015 7,048,488,443 7.80% 563,998,874 2014 6,538,316,012 2.43% 524,990,510 2013 6,383,368,405
- 7.57%
491,249,422 2012 6,906,253,248
- 7.09%
550,930,461 2011 7,433,223,896
- 12.47%
578,102,728 2010 8,491,895,357
- 8.76%
645,043,237 2009 9,307,491,106
- 4.20%
588,581,660 2008 9,716,010,439 13.61% 427,936,551 2007 8,552,024,223 47.09% 265,375,396 2006 5,814,216,659
- - -
148,987,956
Future Bond and Levy Planning - continued
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Idaho School Bond Levy Equalization Subsidy is a direct payment to the District based on an index created from the following factors:
Market value per support unit (50% of formula)
Unemployment rate in the County (25% of formula)
Per capita income in the County (25% of formula)
Levy Equalization
Index Factor Subsidy 1.50 or greater No subsidy 1.00 to 1.50 Minimum 10% of Interest Cost Below 1.00 Portion of Principal and Interest paid The subsidy has been in place for over ten years and the Idaho Legislature has continued to fund this program even in difficult economic times.
Fiscal Year Index Factor % of P&I 2017 1.2959 Minimum 2016 1.3036 Minimum 2015 1.3044 Minimum 2014 1.3102 Minimum 2013 1.3489 Minimum 2012 1.3598 Minimum 2011 1.3868 Minimum 2010 1.4040 Minimum 2009 1.4987 Minimum 2008 1.5100 None 2007 1.2493 Minimum 2006 1.1954 Minimum
Future Bond and Levy Planning - continued
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Goal of Analysis: Evaluate future Bond & Plant Levy capabilities without increasing the District’s total property tax levy rate. Planning Assumptions:
The District’s Taxable Market Value increases (grows) at the following rates: Fiscal Year 2018- 2020 2.00% Fiscal Year 2021 & after 1.00%
Existing Supplemental M&O Levy is increased to $16,000,000 for the foreseeable future.
Future Bonds qualify for 10% interest subsidy.
Interest rates are as of 10/17/2016, plus 0.50% planning cushion.
Levy Planning Goals and Planning Assumptions
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Our initial planning model provides for the following funding scenarios without an increase in the District’s total property tax levy rate above the current levy rate of $2.31 per $1,000 of net market value:
Levy Planning Summary
Bond Amount Bond Repayment Term Supplemental Levy Amount Tax Rate Impact Total Bond Costs (1) Net Interest Cost
- f Bond
Potential timing for next Bond without a Tax Rate Increase Scenario 1 $26 million Bond 15 years $16.0 million (increase by $1.0M) No Change $ 31,816,430 $ 5,816,430 2020 Scenario 2 $31 million Bond 15 years $16.0 million (increase by $1.0M) No Change $ 37,920,655 $ 6,920,655 2021 Scenario 3 $38 million Bond 15 years $16.0 million (increase by $1.0M) No Change $ 47,808,080 $ 9,808,080 2022 Scenario 4 No Bond Shorten existing 2012 bond by 3 years (pay off in 2022) $16.0 million (increase by $1.0M) No Change Save $700,000 of Interest Cost 2019 (1) Net of Bond Levy Equalization
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Tax Levy Projections
$- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
$2.31 Combined Supplemental and Bond Levy
$16M Supplemental Levy for Existing Debt Service Bond Sale ($38.0M) Revenue at $2.31 (1)
(1) Assumes market value growth as follows , 2018-2020 - 2.00%, 2021 & After - 1.00%.
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The following table calculates the maximum annual Plant Levy amount that could be authorized at 55% or 60% voter approval rate assuming a 2017 Plant Levy election.
Plant Levy Voter Approval Required 55% 60% September 2016 Taxable Market Value (“TAV”) (includes URA Value) $ 8,640,038,088 8,640,038,088 Bond & Plant Combined rate limit $ 0.200% 0.300% Maximum combined Bond & Plant Levy $ 17,280,076 25,920,114 Less: Outstanding debt collection for 2018 $ (2,075,000) (2,075,000) Plant Levy “capacity” (annual levy) $ 15,205,076 23,845,114 Estimated tax rate increase at “capacity” $1.43 per $1,000 $2.43 per $1,000
Levy Planning Analysis
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Historical Idaho Bond and Levy Election Statistics
64% 53% 31% 25% 0% 20% 40% 60% 80% 100% March May August November % Approved
Idaho Bond Election Passage History By Election Date Since 2011
# of Elections March May August
November 25 17 13 8
91% 84% 76% 100% 0% 20% 40% 60% 80% 100% March May August November % Approved Idaho Supplemental Election Passage History By Election Date Since 2011
March May August November # of elections 171 113 21 12
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Historical Idaho Bond and Levy Election Statistics – continued (Multi Question Ballots)
Since 2011, 18 elections have been held by 14 different school districts. Of the 18 elections, 13 passed all of the ballot questions presented; two passed at least one; and three failed all of the ballot questions. The three failed elections since 2011were all by Wendell School District, who attempted similar questions three times. Election Date Issuer Election Type Par Amount % Yes Pass/Fail 5/17/2016 Kimberly SD No. 414 G.O. Bond $14,000,000 67.56% Pass 5/17/2016 Kimberly SD No. 414 Plant Facility Levy $300,000 70.44% Pass 3/10/2015 Butte SD No. 111 G.O. Bond $330,000 81.44% Pass 3/10/2015 Butte SD No. 111 Plant Facility Levy $65,000 82.84% Pass 3/10/2015 Butte SD No. 111
- Supp. M&O
$160,000 77.94% Pass 3/10/2015 Challis SD No. 181 Plant Facility Levy $50,000 73.72% Pass 3/10/2015 Challis SD No. 181
- Supp. M&O
$400,000 70.23% Pass 3/10/2015 Post Falls SD No. 273 G.O. Bond $19,500,000 79.32% Pass 3/10/2015 Post Falls SD No. 273
- Supp. M&O
$4,655,000 80.74% Pass 8/25/2015 Wendell SD No. 232 G.O. Bond $1,600,000 57.63% Fail 8/25/2015 Wendell SD No. 232 Plant Facility Levy $250,000 58.33% Fail
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2017 Election Timelines Election Date
(1)
Deadline for Filing with County Clerk March 14, 2017 January 23, 2017
(2)
May 16, 2017 March 27, 2017
(3)
August 29, 2017 July 10, 2017
(2)
November 7, 2017 September 8, 2017
(3)
(1) Election dates for school district property tax levy questions (bonds, plant and supplemental levies) are the 2nd Tuesday in March, 3rd Tuesday in May, last Tuesday in August and the Tuesday after the 1st Monday in November. (2) March and August elections require filing more than 50 days prior to the election. (3) May and November elections of even number years, require filing more than 60 days prior to the election date (odd number years require 50 days).
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Options to Move Forward
Election Dates Options Considerations March 2017 $15M Supplemental only
- Difficult to fund needed bus
upgrades, curriculum adoption March 2017 $16M Supplemental only
- Items above funded
March 2017 $15/16M Supplemental & $26/31/38M Bond
- No increased levy rate
- Takes advantage of low interest
rates
- Limits risk of construction
inflation
- Economies of scale for election
effort
- Risk of jeopardizing
Supplemental passage
- May/August elections available
before certification May/August 2017 (Following Successful Supplemental Election) $26/31/38M Bond
- Able to levy starting in 2018
- No risk of jeopardizing
Supplemental passage
- Minimize risk of interest
rate/construction cost increase
- Additional election effort