COEUR D’ALENE 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 michael.l.keith@pjc.com eric.a.heringer@pjc.com nmiller@hawleytroxell.com
Introduction Goal of Analysis and Table of Contents Goal of Analysis: Evaluate future Bond & Plant Levy capabilities of the Coeur d’Alene School District without increasing the District’s total property tax levy rate. Table of Contents Overview of property tax levies for Idaho schools.……….. 2-3 Review of existing debt………………………………………. 4 Review of historical tax levy rates………………………….... 5 Comparable school district tax levy rate data……………… 6 Future bond and levy planning……………………….....… . 7-10 Levy planning goals and assumptions ………….....…….... 11 Levy planning summary……………………………………... 12 Tax levy projections …………………………………………. . 13 Plant levy analysis……………………………………………. 14 Historical Idaho bond and levy elections statistics……….. 15-16 2017 school election dates and timeline…………………… . 17 Options to move forward …………………………………… 18 1
Overview of property tax levies for Idaho Schools 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 2
Overview of property tax levies for Idaho Schools - continued 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 Supplemental Maintenance and Operation Levy (Supplemental M&O) 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 3
Review Existing Debt 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: Amount Bond Issue Ratings/Credit Enhancement 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 Coeur d'Alene School No. 271 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Series 2012A Series 2012B 4
Review of Historical Property Tax Levies 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 Coeur d'Alene Historical Tax Levy Rates 4.00000 Rate per $1,000 2.52 3.00000 2.33 2.38 2.31 2.18 2.11 2.00000 1.50 1.11 1.00000 0.00000 2010 2011 2012 2013 2014 2015 2016 2017(e) Bond Plant Suppl. M&O Emergency Tort/Judgment/Other (e) Expected levy rate. 5
Comparative Tax Rates (Other Idaho School Districts) Fiscal Year 2016 Data 5.82 6.00000 4.75 5.05 5.20 5.45 5.00000 4.22 4.24 4.24 4.42 4.35 4.00000 Rate per $1,000 3.19 2.82 2.84 3.00000 2.38 1.85 2.00000 1.00000 0.00000 Bond Plant Suppl. M&O Emergency Tort/Judgment/Other 6
Future Bond and Levy Planning – Things to Consider 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 7
Future Bond and Levy Planning - continued 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. 3.50% 3.00% Historical Interest Rates 7.00% 2.50% 2.00% 6.00% 1.50% Oct-15 Feb-16 Jun-16 Oct-16 5.00% Interest Rates 4.00% 3.00% 2.00% 1.00% 20-Year AAA MMD 0.00% Oct-06 Oct-08 Oct-10 Oct-12 Oct-14 Oct-16 8
Future Bond and Levy Planning - continued 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%. Net Taxable Fiscal Year 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 (*) September values per Idaho Tax Commission. Includes URA value. 9
Future Bond and Levy Planning - continued Levy Equalization 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) Index Factor Subsidy Fiscal Year Index Factor % of P&I 1.50 or greater No subsidy 1.00 to 1.50 Minimum 10% of Interest Cost 2017 1.2959 Minimum Below 1.00 Portion of Principal and Interest paid 2016 1.3036 Minimum 2015 1.3044 Minimum The subsidy has been in place for over ten years and the Idaho Legislature has continued to fund this program even 2014 1.3102 Minimum in difficult economic times. 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 10
Levy Planning Goals and Planning Assumptions 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. 11
Levy Planning Summary 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: Potential timing Bond Repayment Supplemental Tax Rate Total Bond Net Interest Cost for next Bond Bond Amount Costs (1) Term Levy Amount Impact of Bond without a Tax Rate Increase $16.0 million $26 million Bond 15 years $ 31,816,430 $ 5,816,430 2020 Scenario 1 No Change (increase by $1.0M) $16.0 million Scenario 2 $31 million Bond 15 years $ 37,920,655 $ 6,920,655 2021 No Change (increase by $1.0M) $16.0 million Scenario 3 $38 million Bond 15 years $ 47,808,080 $ 9,808,080 2022 No Change (increase by $1.0M) Shorten existing 2012 bond by 3 $16.0 million Scenario 4 No Bond Save $700,000 of Interest Cost 2019 years (increase by $1.0M) No Change (pay off in 2022) (1) Net of Bond Levy Equalization 12
Recommend
More recommend
