East Pennsboro Area School District New Money Discussion January - - PDF document

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New Money Discussion

January 2, 2020

Prepared by: Brad Remig Managing Director & Garrett Moore Senior Analyst

East Pennsboro Area School District

HISTORICAL MMD CURVE ILLUSTRATION - SINCE JANUARY 1, 1998 SPOT ANALYSIS - 10 YEAR MMD - SINCE JANUARY 1, 1998 SPOT ANALYSIS - 10 YEAR MMD - SINCE JANUARY 1, 2018

MUNICIPAL MARKET UPDATE

December 20, 2019

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Year Range Average Current

Maturity Year Yield (%)

1.10 1.60 2.10 2.60 3.10 3.60 4.10 4.60 5.10 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Yield (%)

1.100 1.300 1.500 1.700 1.900 2.100 2.300 2.500 2.700 2.900

Yield (%)

Since 1/1/1998 Amount Date Min 1.210 8/28/2019 Max 5.370 5/18/2000 Average 3.168 n/a Current 1.450 12/20/2019 Since 1/1/2018 Amount Date Min 1.210 8/28/2019 Max 2.770 11/2/2018 Average 2.088 n/a Current 1.450 12/20/2019

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EAST PENNSBORO AREA SCHOOL DISTRICT SUMMARY OF OUTSTANDING INDEBTEDNESS 1 2 3 4 5 6 7 Bank Of America Integrity Bank First National Bank Fiscal G.O. Notes G.O. Note G.O. Note G.O. Bonds G.O. Bonds Total Year Series of Series of Series of Series of Series of Debt Ended 2011 2015 2017 [1][2] 2018 2019 Service 6/30/2020 235,303 413,225 268,378 664,131 309,429 1,890,466 6/30/2021 236,313 416,098 264,801 523,619 398,576 1,839,406 6/30/2022 237,136 661,224 523,931 398,488 1,820,778 6/30/2023 893,847 524,119 398,393 1,816,358 6/30/2024 893,443 524,056 398,293 1,815,791 6/30/2025 893,573 523,356 398,193 1,815,122 6/30/2026 893,214 522,131 398,093 1,813,437 6/30/2027 893,364 520,756 397,984 1,812,104 6/30/2028 918,156 516,456 1,434,613 6/30/2029 918,703 518,444 1,437,147 6/30/2030 917,985 524,100 1,442,085 6/30/2031 916,043 523,400 1,439,443 6/30/2032 917,670 522,500 1,440,170 6/30/2033 915,900 521,400 1,437,300 6/30/2034 915,900 520,100 1,436,000 6/30/2035 914,700 523,500 1,438,200 6/30/2036 917,200 521,600 1,438,800 6/30/2037 918,300 519,500 1,437,800 6/30/2038 918,000 522,100 1,440,100 6/30/2039 940,800 940,800 6/30/2040 940,300 940,300 6/30/2041 938,800 938,800 6/30/2042 936,300 936,300 6/30/2043 940,763 940,763 6/30/2044 937,013 937,013 6/30/2045 936,800 936,800 6/30/2046 939,900 939,900 6/30/2047 941,200 941,200 6/30/2048 940,700 940,700 6/30/2049 6/30/2050 Totals 708,751 829,323 5,661,841 14,414,657 18,223,122 39,837,693 8 9 10 11 12 13 14 Bank Of America Integrity Bank First National Bank Fiscal G.O. Notes G.O. Note G.O. Note G.O. Bonds G.O. Bonds Total Year Series of Series of Series of Series of Series of Local Ended 2011 2015 2017 [1][2] 2018 2019 Effort 6/30/2020 231,846 393,932 268,378 664,131 309,429 1,867,716 6/30/2021 232,841 396,671 264,801 523,619 398,576 1,816,507 6/30/2022 233,652 661,224 523,931 398,488 1,817,294 6/30/2023 893,847 524,119 398,393 1,816,358 6/30/2024 893,443 524,056 398,293 1,815,791 6/30/2025 893,573 523,356 398,193 1,815,122 6/30/2026 893,214 522,131 398,093 1,813,437 6/30/2027 893,364 520,756 397,984 1,812,104 6/30/2028 918,156 516,456 1,434,613 6/30/2029 918,703 518,444 1,437,147 6/30/2030 917,985 524,100 1,442,085 6/30/2031 916,043 523,400 1,439,443 6/30/2032 917,670 522,500 1,440,170 6/30/2033 915,900 521,400 1,437,300 6/30/2024 915,900 520,100 1,436,000 6/30/2025 914,700 523,500 1,438,200 6/30/2026 917,200 521,600 1,438,800 6/30/2027 918,300 519,500 1,437,800 6/30/2038 918,000 522,100 1,440,100 6/30/2039 940,800 940,800 6/30/2040 940,300 940,300 6/30/2041 938,800 938,800 6/30/2042 936,300 936,300 6/30/2043 940,763 940,763 6/30/2044 937,013 937,013 6/30/2045 936,800 936,800 6/30/2046 939,900 939,900 6/30/2047 941,200 941,200 6/30/2048 940,700 940,700 6/30/2049 6/30/2050 Totals 698,339 790,603 5,661,841 14,414,657 18,223,122 39,788,561 Principal*: 461,000 413,000 4,995,000 9,620,000 9,345,000 24,834,000 PE%: 2.88% 9.16% 0.00% 0.00% 0.00% PE% Status: Perm Perm Est Est Est CARF% : 50.97% 50.97% 50.97% 50.97% 50.97% Call Date: 8/15/2016 @ 101 Anytime Anytime 4/1/2024 10/1/2024 Purpose: Cur Ref 04A & Adv Ref 06 Cur Ref 09A New Money New Money New Money * Outstanding as of December 16, 2019 [2] Capitalized interest likely to be used in 2018 budget - amount to be determined. Debt Service Requirements Local Effort Requirements [1] Assumes $5 million drawn at settlement. Actual debt service will vary depending on draw until 12/31/18 facility expiration.

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East Pennsboro Area School District New Money Analysis January 2, 2020 I) Series of 2018 (Phase 1 Financing) Recap

• Phase 1 addresses the air quality conditions with cost estimates of $14.7 million
• The District still had approximately $2 million of remaining undrawn balance on its Series of 2017 Bank

Loan with FNB

• On November 13, 2018 the District issued its Series of 2018 Bonds with a par amount of $9,940,000
• The Bonds were sold with an S&P “A+” underlying credit rating which were then insured by MAC

resulting in an insured rating of “AA”

• The Bonds were sold with an arbitrage yield of 3.43%
• Additional funding of approximately $2.5 – $3.0 million needed to fully fund Phase 1 projects.

II) Series of 2019 (Phase 2 Financing) Recap

• Phase 2 mainly addresses the Elementary and High School renovations, and the Reynolds Phase 1B

projects currently estimated to be $16,226,307.

• All projects are term limited by the useful life of the project. Projects procured under Act 39

(ESCO/GESA projects) are further limited to the shorter of the useful life of the project or 20 years

• On May 14, 2019 the District issued its Series of 2019 Bonds with a par amount of $9,345,000
• The Bonds were sold with an S&P “A+” underlying credit rating which were then insured by MAC

resulting in an insured rating of “AA”

• The Bonds were sold with an arbitrage yield of 2.84%

III) Next Steps (2020 Financing)

• As part of the District’s financing plan, the District is contemplating issuing $15 or $20 million of

additional debt in 2020 to fund a portion (or the remaining balance) of the District’s Phase 1B, Phase 2, and possible Phase 3 Projects

• The $15 million option would likely be able to be issued under the District's existing Parameters
• Resolution. If the $20 million option is selected, a new parameters resolution could be required and will be

evaluated upon Board's decision on option selected

• 2021 Financing will likely need to be issued under a future parameters resolution if requested term is

beyond 2047.

IV) Timeline

December 19, 2019 Introduction of 2020 Borrowing Early January Call with rating agency (S&P) Mid-January Receive Credit Rating / Due Diligence Call Late January Price Series of 2020 (lock-in rates) Early March Settlement

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EAST PENNSBORO AREA SCHOOL DISTRICT

SUMMARY OF NEW MONEY OPTIONS ESTIMATED - FOR DISCUSSION PURPOSES ONLY 1 2 3 4 5 FINAL FINAL ESTIMATED ESTIMATED 2018 BONDS 2019 BONDS 2020 BONDS STEP 4 TOTAL Principal $9,940,000 $9,345,000 $15,000,000 $14,300,000 $48,585,000 $9,782,440 $3,000,000 $0 $0 $12,782,440 $0 $6,780,215 $15,507,281 $45,411 $22,332,907 $14,000,000 $14,000,000 $9,782,440 $9,780,215 $15,507,281 $14,045,411 $49,115,347 Yes Yes Yes No Timing December, 2018 June, 2019 March, 2020 June, 2021 BQ Status Bank Qualified Bank Qualified Non-BQ Non-BQ Term 20 years 29 years 28 years 28 years Structure Wrap Wrap Wrap Wrap Wrap $9,940,000 $2,380,000 $950,000 $14,300,000 $27,570,000 $3,200,000 $3,200,000 $3,200,000 $3,200,000 6 7 8 9 10 11 12 STEP 1 STEP 2 STEP 3 STEP 4 Fiscal Existing Actual Proposed Proposed Proposed Total Year Local Local Local Local Local Local Ending Effort Effort [2] Effort [2] Effort [1][2] Effort [1][2] Effort 6/30/2019 2,092,108 99,375 2,191,483 6/30/2020 894,156 664,131 309,429 1,867,716 6/30/2021 894,312 523,619 398,576 696,042 2,512,549 6/30/2022 894,875 523,931 398,488 657,200 476,667 2,951,161 6/30/2023 893,847 524,119 398,393 681,100 768,000 3,265,458 6/30/2024 893,443 524,056 398,293 679,500 764,900 3,260,191 6/30/2025 893,573 523,356 398,193 677,900 766,500 3,259,522 6/30/2026 893,214 522,131 398,093 681,200 767,700 3,262,337 6/30/2027 893,364 520,756 397,984 679,400 773,400 3,264,904 6/30/2028 918,156 516,456 677,600 1,150,900 3,263,113 6/30/2029 918,703 518,444 680,700 1,145,100 3,262,947 6/30/2030 917,985 524,100 678,700 1,143,400 3,264,185 6/30/2031 916,043 523,400 676,700 1,145,600 3,261,743 6/30/2032 917,670 522,500 674,700 1,146,600 3,261,470 6/30/2033 915,900 521,400 672,700 1,151,300 3,261,300 6/30/2034 915,900 520,100 675,600 1,149,700 3,261,300 6/30/2035 914,700 523,500 678,300 1,146,900 3,263,400 6/30/2036 917,200 521,600 671,000 1,147,800 3,257,600 6/30/2037 918,300 519,500 673,700 1,152,200 3,263,700 6/30/2038 918,000 522,100 676,200 1,145,200 3,261,500 6/30/2039 940,800 673,600 1,646,600 3,261,000 6/30/2040 940,300 675,900 1,645,800 3,262,000 6/30/2041 938,800 668,200 1,652,400 3,259,400 6/30/2042 936,300 2,321,800 3,258,100 6/30/2043 940,763 2,320,200 3,260,963 6/30/2044 937,013 2,325,600 3,262,613 6/30/2045 936,800 2,322,838 3,259,638 6/30/2046 939,900 2,321,488 3,261,388 6/30/2047 941,200 2,320,975 3,262,175 6/30/2048 940,700 2,321,075 3,261,775 6/30/2049 6/30/2050 6/30/2051 6/30/2052 6/30/2053 6/30/2054 6/30/2055 TOTAL 9,242,891 14,514,032 18,223,122 30,459,917 21,886,667 94,326,628 [2] Assumes no state reimbursement [3] Balance of Phase 1 projects funded with approximately $2 million remaining on 2017 Bank Loan Principal Amortized Within 20 years Note: All projects are term limited by the useful life of the project. Projects procured under Act 39 (ESCO/GESA projects) are further limited to the shorter of the useful life of the project or 20 years [1] Estimated based on current market rates. Actual Rates to be determined at time of pricing. SCENARIO 2: $15 MILLION BORROWING IN 2020 Phase 1 Project Fund [3] Phase 1B & 2 Project Fund Phase 3 Project Fund Issued Under Existing Parameters TOTAL Project Fund Budgeted Net Debt Service

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EAST PENNSBORO AREA SCHOOL DISTRICT

SUMMARY OF NEW MONEY OPTIONS ESTIMATED - FOR DISCUSSION PURPOSES ONLY 1 2 3 4 5 FINAL FINAL ESTIMATED ESTIMATED 2018 BONDS 2019 BONDS 2020 BONDS STEP 4 TOTAL Principal $9,940,000 $9,345,000 $20,000,000 $8,980,000 $48,265,000 $9,782,440 $3,000,000 $0 $0 $12,782,440 $0 $6,780,215 $15,558,035 $0 $22,338,250 $5,178,705 $8,821,295 $14,000,000 $9,782,440 $9,780,215 $20,736,740 $8,821,295 $49,120,690 Yes Yes Yes No Timing December, 2018 June, 2019 March, 2020 June, 2021 BQ Status Bank Qualified Bank Qualified Non-BQ Bank Qualified Term 20 years 29 years 28 years 28 years Structure Wrap Wrap Wrap Wrap Wrap $9,940,000 $2,380,000 $5,800,000 $8,980,000 $27,100,000 $3,200,000 $3,200,000 $3,200,000 $3,200,000 6 7 8 9 10 11 12 STEP 1 STEP 2 STEP 3 STEP 4 Fiscal Existing Actual Proposed Proposed Proposed Total Year Local Local Local Local Local Local Ending Effort Effort [2] Effort [2] Effort [1][2] Effort [1][2] Effort 6/30/2019 2,092,108 99,375 2,191,483 6/30/2020 894,156 664,131 309,429 1,867,716 6/30/2021 894,312 523,619 398,576 911,977 2,728,484 6/30/2022 894,875 523,931 398,488 1,106,425 299,333 3,223,052 6/30/2023 893,847 524,119 398,393 1,056,425 369,000 3,241,783 6/30/2024 893,443 524,056 398,293 1,047,225 368,600 3,231,616 6/30/2025 893,573 523,356 398,193 1,042,925 368,200 3,226,247 6/30/2026 893,214 522,131 398,093 1,038,425 372,700 3,224,562 6/30/2027 893,364 520,756 397,984 1,038,625 372,100 3,222,829 6/30/2028 918,156 516,456 1,038,425 748,800 3,221,838 6/30/2029 918,703 518,444 1,037,825 747,500 3,222,472 6/30/2030 917,985 524,100 1,041,725 740,700 3,224,510 6/30/2031 916,043 523,400 1,035,225 748,200 3,222,868 6/30/2032 917,670 522,500 1,038,325 744,900 3,223,395 6/30/2033 915,900 521,400 1,040,825 745,900 3,224,025 6/30/2034 915,900 520,100 1,037,825 751,000 3,224,825 6/30/2035 914,700 523,500 1,034,425 750,200 3,222,825 6/30/2036 917,200 521,600 1,035,525 748,600 3,222,925 6/30/2037 918,300 519,500 1,045,825 746,200 3,229,825 6/30/2038 918,000 522,100 1,035,525 747,900 3,223,525 6/30/2039 940,800 1,039,725 1,243,500 3,224,025 6/30/2040 940,300 1,038,225 1,247,500 3,226,025 6/30/2041 938,800 1,036,125 1,249,500 3,224,425 6/30/2042 936,300 2,287,825 3,224,125 6/30/2043 940,763 2,282,325 3,223,088 6/30/2044 937,013 2,288,925 3,225,938 6/30/2045 936,800 2,287,438 3,224,238 6/30/2046 939,900 2,282,550 3,222,450 6/30/2047 941,200 2,283,613 3,224,813 6/30/2048 940,700 2,285,288 3,225,988 6/30/2049 6/30/2050 6/30/2051 6/30/2052 6/30/2053 6/30/2054 6/30/2055 TOTAL 9,242,891 14,514,032 18,223,122 37,775,540 14,110,333 93,865,917 [2] Assumes no state reimbursement [3] Balance of Phase 1 projects funded with approximately $2 million remaining on 2017 Bank Loan SCENARIO 3: $20 MILLION BORROWING IN 2020 Principal Amortized Within 20 years Note: All projects are term limited by the useful life of the project. Projects procured under Act 39 (ESCO/GESA projects) are further limited to the shorter of the useful life of the project or 20 years [1] Estimated based on current market rates. Actual Rates to be determined at time of pricing. Phase 1 Project Fund [3] Phase 1B & 2 Project Fund Phase 3 Project Fund Issued Under Existing Parameters TOTAL Project Fund Budgeted Net Debt Service

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Date Par Coupon 2018 Bonds 2019 Bonds Remaining 10/1/2019 395,000 8.00% 320,000 75,000 10/1/2020 405,000 8.00% 185,000 5,000 215,000 10/1/2021 415,000 8.00% 190,000 5,000 220,000 10/1/2022 425,000 8.00% 195,000 5,000 225,000 10/1/2023 440,000 8.00% 200,000 5,000 235,000 10/1/2024 455,000 8.00% 205,000 5,000 245,000 10/1/2025 470,000 8.00% 210,000 5,000 255,000 10/1/2026 485,000 8.00% 215,000 5,000 265,000 10/1/2027 1,410,000 8.00% 625,000 125,000 660,000 10/1/2028 1,465,000 8.00% 645,000 130,000 690,000 10/1/2029 1,520,000 8.00% 665,000 140,000 715,000 10/1/2030 1,580,000 8.00% 685,000 145,000 750,000 10/1/2031 1,645,000 8.00% 710,000 150,000 785,000 10/1/2032 1,715,000 8.00% 735,000 155,000 825,000 10/1/2033 1,790,000 8.00% 765,000 160,000 865,000 10/1/2034 1,865,000 8.00% 795,000 170,000 900,000 10/1/2035 1,950,000 8.00% 830,000 175,000 945,000 10/1/2036 2,035,000 8.00% 865,000 180,000 990,000 10/1/2037 2,125,000 8.00% 900,000 190,000 1,035,000 10/1/2038 2,220,000 8.00% 625,000 1,595,000 10/1/2039 2,320,000 8.00% 650,000 1,670,000 10/1/2040 2,430,000 8.00% 675,000 1,755,000 10/1/2041 2,540,000 8.00% 700,000 1,840,000 10/1/2042 2,655,000 8.00% 735,000 1,920,000 10/1/2043 2,780,000 8.00% 765,000 2,015,000 10/1/2044 2,905,000 8.00% 800,000 2,105,000 10/1/2045 3,040,000 8.00% 840,000 2,200,000 10/1/2046 3,185,000 8.00% 880,000 2,305,000 10/1/2047 3,335,000 8.00% 920,000 2,415,000 Total 50,000,000 9,940,000 9,345,000 30,715,000 ALLOCATION OF PARAMETERS ADOPTED JUNE 15, 2017

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