Refunding Bonds and Proposition S New Money General Obligation Bonds - - PowerPoint PPT Presentation

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Propositions MM/S General Obligation Refunding Bonds and Proposition S New Money General Obligation Bonds February 9, 2016 Table of Contents Item Page Introduction and Overview 3 Assessed Valuation 5 Refunding and New Money General

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SLIDE 1

February 9, 2016 Propositions MM/S General Obligation Refunding Bonds and Proposition S New Money General Obligation Bonds

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SLIDE 2

Table of Contents

2

Item Page Introduction and Overview 3 Assessed Valuation 5 Refunding and New Money General Obligation Bonds 7 Estimated Costs of Issuance 12 Rating Approach 13 Next Steps 14

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SLIDE 3

Introduction and Overview

 San Diego Unified plans to move forward with both refunding general

  • bligation bonds (“GO Bonds”) and new money GO Bonds
  • Refunding GO Bonds – Proposition MM

− 2006 Refunding Series F-1 − 2006 Refunding Series G-1

  • Refunding GO Bonds – Proposition S

− 2009 Series A

  • New Money GO Bonds – Proposition S

− Proposition S passed on November 4, 2008, authorizing a not-to-exceed amount of $2.1 billion − Blended tax rate with Proposition MM: $66.70 per $100,000 of Assessed Value (“A.V.”)  Finance Team

  • Bond Counsel – Orrick, Herrington & Sutcliffe LLP
  • Disclosure Counsel – Norton Rose Fulbright US LLP
  • Municipal Advisor – KNN Public Finance
  • Proposition MM refundings and Proposition S new money– J.P. Morgan, Siebert

Brandford Shank & Co., L.L.C., and Morgan Stanley & Co.

  • Proposition S refunding – Stifel, Nicolaus & Company and Goldman, Sachs & Co.

 Underwriter Selection Process

  • Request for Information was distributed to the District’s pool of Underwriters to aid

in the process of Underwriter selection for the GO Bonds

3

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SLIDE 4

Summary of Assumptions

4

Item Assumption Assessed Value

  • 6.21% actual growth in FY 2014-15, 6.06% actual growth in FY 2015-16, and

5% projected growth for every year thereafter Refunding GO Bonds Structuring

  • Refunding Maturities with a 3% or greater Present Value savings
  • Savings are proportional to estimated A.V. revenue constraint
  • Term of refunding bonds to match the term of the bonds being

refunded

  • Issued as Current Interest Bonds (“CIBs”) only
  • 10-Year call feature
  • Prop. S

New Money GO Bonds Structuring

  • Issued as CIBs within the window of savings created by the refunding
  • 10-Year call feature
  • New money for the construction, reconstruction, rehabilitation, or

replacement of school facilities, including the furnishing and equipping

  • f school facilities, or the acquisition or lease of real property for school

facilities Maximum Tax Rate

  • $66.70 per $100,000 of A.V. with Prop. MM Bonds through 2031 and

$60.00 per $100,000 of A.V. thereafter

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SLIDE 5

Historical and Projected Assessed Value(1)

5

0.02% 2.47% 7.98% 10.90% 8.37% 8.19% 8.38% 8.72% 8.91% 13.00% 11.14% 9.33% 5.44%

  • 0.83%
  • 1.94%

0.21%

  • 0.15%

3.97% 6.21% 6.06%

3.94% 5.78% 3.26%

5.00%

  • 4.00%
  • 2.00%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% $0 $50 $100 $150 $200 $250 $300 $350 Growth Rate Total A.V. ($ In Billions)

Annual Growth Rate 10-Year Avg. Growth Rate (3.94%) 15-Year Avg. Growth Rate (5.78%) 5-Year Avg. Growth Rate (3.26%) Projected Growth Rate (5.00%)

(1) Total A.V. includes Local Secured, Stated Secured, and Unsecured A.V. figures net of all Other Exemptions. Homeowners' Exemption is included.

Projected Growth Historical Growth

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SLIDE 6

Debt Service and Tax Rate Reserve

6

Fiscal Year Ending Adjusted Secured and Unsecured A.V.(1) Projected A.V. % Increase From Prior A.V. Tax Rate(2) Projected Property Taxes Generated Total Funds Available(3) Existing

  • Prop. MM

Debt Service Existing

  • Prop. S

Net Debt Service(4)(5)

  • Prop. MM/S

Refunding Savings(6)

  • Prop. S

Series J Debt Service(7) Excess / (Deficient)(8) Cumulative Reserve

2016 154,727,587,363 6.06% 0.06670% 103,203,301 116,399,954 90,469,684 25,828,506 534,036 530,000 105,800 54,191,576 2017 162,463,966,731 5.00% 0.06670% 108,363,466 115,363,466 107,971,070 7,290,000 1,069,793 1,065,000 107,188 54,298,764 2018 170,587,165,068 5.00% 0.06670% 113,781,639 120,781,639 112,182,845 6,270,000 1,071,393 1,070,000 2,330,187 56,628,950 2019 179,116,523,321 5.00% 0.06670% 119,470,721 126,470,721 110,288,268 13,742,150 1,070,393 1,065,743 2,444,953 59,073,903 2020 188,072,349,487 5.00% 0.06670% 125,444,257 132,444,257 114,643,818 15,241,950 1,669,343 1,666,950 2,560,882 61,634,786 2021 197,475,966,962 5.00% 0.06670% 131,716,470 138,716,470 119,526,668 16,241,950 1,674,593 1,673,150 2,949,295 64,584,081 2022 207,349,765,310 5.00% 0.06670% 138,302,293 145,302,293 108,845,193 30,604,950 2,168,593 2,163,750 5,856,993 70,441,074 2023 217,717,253,575 5.00% 0.06670% 145,217,408 152,217,408 110,895,363 32,789,350 2,133,013 2,132,000 8,533,708 78,974,782 2024 228,603,116,254 5.00% 0.06670% 152,478,279 159,478,279 125,888,325 25,087,600 3,076,050 3,072,400 8,506,004 87,480,786 2025 240,033,272,067 5.00% 0.06670% 160,102,192 167,102,192 130,036,600 32,949,800 3,149,925 3,146,900 4,118,817 91,599,603 2026 252,034,935,670 5.00% 0.06670% 168,107,302 175,107,302 134,444,425 33,249,800 4,328,175 4,323,400 7,417,852 99,017,455 2027 264,636,682,454 5.00% 0.06670% 176,512,667 183,512,667 138,615,725 37,129,800 1,369,425 1,367,800 7,768,767 106,786,222 2028 277,868,516,576 5.00% 0.06670% 185,338,301 192,338,301 142,279,325 25,999,800 1,368,925 1,367,300 24,060,801 130,847,023 2029 291,761,942,405 5.00% 0.06670% 194,605,216 201,605,216 141,038,425 29,949,800 18,354,175 18,351,050 30,620,116 161,467,139 2030 306,350,039,525 5.00% 0.06670% 204,335,476 211,335,476 81,395,000 80,429,800 601,750 598,050 49,514,376 210,981,515 2031 321,667,541,502 5.00% 0.06670% 214,552,250 221,552,250 61,640,000 88,176,038 3,335,000 3,334,800 71,736,413 282,717,928 2032 337,750,918,577 5.00% 0.06000% 202,650,551 209,650,551

  • 127,601,138

3,998,300 3,994,350 82,053,364 364,771,291 2033 354,638,464,506 5.00% 0.06000% 212,783,079 219,783,079

  • 127,600,225

4,000,400 3,996,400 92,186,854 456,958,145 2034 372,370,387,731 5.00% 0.06000% 223,422,233 230,422,233

  • 127,600,225
  • 102,822,008

559,780,153 2035 390,988,907,118 5.00% 0.06000% 234,593,344 241,593,344

  • 127,605,225
  • 113,988,119

673,768,272 2036 410,538,352,473 5.00% 0.06000% 246,323,011 253,323,011

  • 127,605,225
  • 125,717,786

799,486,058 2037 431,065,270,097 5.00% 0.06000% 258,639,162 265,639,162

  • 127,600,225
  • 138,038,937

937,524,995 2038 452,618,533,602 5.00% 0.06000% 271,571,120 278,571,120

  • 127,601,700
  • 150,969,420

1,088,494,416 2039 475,249,460,282 5.00% 0.06000% 285,149,676 292,149,676

  • 127,604,525
  • 164,545,151

1,253,039,567 2040 499,011,933,296 5.00% 0.06000% 299,407,160 306,407,160

  • 170,178,463
  • 136,228,697

1,389,268,264

(2) Property tax rate on Propositions MM and S are $66.70 per $100,000 on a combined basis. Tax rate declines to $60.00 per $100,000 beginning in 2032. (1) Data provided by County Auditor-Controller for FY 2015-16 (report dated 7/31/2015). Adjusted to account for exemptions. (8) If positive, excess deposited into Reserve; if negative, deficiency withdrawn from Reserve. (3) Includes annual cash balance of $7 million, and approximately $13 million for Fiscal Year 2015-2016. (7) Preliminary as of 1/29/2016; Interest offset by capitalized interest through 5/11/2019; subject to change. (6) Preliminary as of 1/29/2016; Interest offset by escrow receipts through 7/1/2019; subject to change. (5) For the purposes of this tax rate analysis worksheet, KNN has assumed the District will receive the full interest subsidy payments from the Federal Government. (4) Interest payments through 1/1/16 for the Election of 2008, 2014 Series F GO bonds are offset by capitalized interest of $880,883.34; Debt service payments through 7/1/2021 for the Election of 2008, 2015 Series H GO bonds are offset by capitalized interest of $4,322,962.15.

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SLIDE 7
  • Prop. MM Refundings(1)

Net PV Savings: $30,001,435.73 % savings of refunded bonds: 19.48%

Refunding Opportunity

7

Issue Par Oustanding Estimated Par to be Refunded 1999 Series A 48,339,765.50

  • 2000 Series B

18,730,000.00

  • 2004 Series B-1

14,245,000.00

  • 2004 Series D-1

126,310,000.00

  • 2005 Series E-2

117,985,000.00 2005 Series C-2 123,995,000.00

  • 2005 Series D-3

7,700,000.00

  • 2006 Series F-1

144,960,000.00 91,335,000.00 2006 Series G-1 117,705,000.00 62,650,000.00 2012 Series R-1 65,434,441.70

  • 2014 Series R-3

192,130,000.00

  • 2015 Series R-4

172,505,000.00

  • Totals

1,150,039,207.20 153,985,000.00 Issue Par Oustanding Estimated Par to be Refunded 2009 Series A 126,279,457.45 73,168,837.40 2009 Series B 38,840,000.00

  • 2010 Series C

112,548,275.25

  • 2010 Series D-1

16,130,000.00

  • 2010 Series D-2

20,000,000.00

  • 2012 Series R-2

56,869,830.00

  • 2012 Series E

149,998,824.05

  • 2014 Series F

11,925,000.00

  • 2014 Series G

50,000,726.45

  • 2015 Series H-1

2,150,000.00 2015 Series H-2 29,620,000.00 2016 Series I 99,999,240.65 Totals 714,361,353.85 73,168,837.40 Proposition MM Proposition S

*Highlighed fields indicate refunding opportunities (1) Estimated and subject to change. Assuming current interest rates and market conditions.

  • 20,000,000

40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000

Analysis of Debt Service for Refunded Bonds

Refunding Debt Service Savings

Proposed Prop. S Bonds are to be structured within the area where savings are achieved from the Prop. MM/S Refundings

  • Prop. S Refunding(1)

Net PV Savings: $12,876,976.26 % savings of refunded bonds: 11.61%

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SLIDE 8

Propositions MM/S Tax Rates

8

Please note that in any year where the tax rate exceeds the maximum of $66.70, amounts from the Reserve will be used to “buy down” the tax rate so that the levy does not exceed $66.70

$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Estimated Tax Rates (per $100,000 of A.V.)

Propositions MM/S Tax Rate Analysis After Refunding

Tax Rate After Refundings Savings Max Tax Rate $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Estimated Tax Rates (per $100,000 of A.V.)

Propositions MM/S with New Money Layered In

Tax Rate After Refundings New Money Bonds Max Tax Rate

Savings are proportional to estimated A.V. revenue

  • constraint. The CIBs can

be issued to “fill” in the tax rate gap made from the savings achieved through the refunding and new debt service can be issued in it’s place.

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SLIDE 9

2016 GO Bonds Plan of Finance(1)

9

(1) Preliminary and subject to change

  • Prop. MM

Refunding of

  • Prop. MM

Refunding of

  • Prop. S

Refunding of

  • Prop. S

New Money Total Series F-1 (CIBs) Series G-1 (CIBs) Series A (CIBs) Series J (CIBs) Sources Par Amount $81,125,000.00 $55,535,000.00 $147,255,000.00 $41,060,000.00 $324,975,000.00 Net Premium $13,648,374.25 $9,477,424.80 $18,930,175.35 $4,907,094.80 $46,963,069.20 Total $94,773,374.25 $65,012,424.80 $166,185,175.35 $45,967,094.80 $371,938,069.20 Uses Refunding Escrow Deposits $94,268,509.34 $64,668,195.08 $165,292,542.44 $0.00 $324,229,246.86 Project Fund $0.00 $0.00 $0.00 $41,060,000.00 $41,060,000.00 Capitalized Interest Fund $0.00 $0.00 $0.00 $4,542,990.55 $4,542,990.55 Cost of Issuance $259,385.11 $177,564.89 $449,950.00 $236,200.00 $1,123,100.00 Underwriter's Discount $243,375.00 $166,605.00 $441,765.00 $123,180.00 $974,925.00 Contingency $2,104.80 $59.83 $917.91 $4,724.25 $7,806.79 Total $94,773,374.25 $65,012,424.80 $166,185,175.35 $45,967,094.80 $371,938,069.20

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SLIDE 10

1-Jul Principal Coupon Yield Interest Total Debt Service 1-Jul Principal Coupon Yield Interest Escrow Receipts Net Debt Service 2016 2,245,000 2.00% 0.46% 676,886 2,921,886 2016

  • 721,755

721,755

  • 2017

220,000 3.00% 0.57% 5,622,050 5,842,050 2017

  • 6,042,600

6,042,600

  • 2018

225,000 4.00% 0.76% 5,615,450 5,840,450 2018

  • 6,042,600

6,042,600

  • 2019

235,000 5.00% 0.87% 5,606,450 5,841,450 2019

  • 6,042,600

6,042,600

  • 2020

250,000 5.00% 0.98% 5,594,700 5,844,700 2020 1,355,000 5.00% 0.98% 6,042,600

  • 7,397,600

2021 260,000 5.00% 1.09% 5,582,200 5,842,200 2021 1,420,000 5.00% 1.09% 5,974,850

  • 7,394,850

2022 3,015,000 5.00% 1.22% 5,569,200 8,584,200 2022 1,495,000 5.00% 1.22% 5,903,850

  • 7,398,850

2023 2,935,000 5.00% 1.38% 5,418,450 8,353,450 2023 1,565,000 5.00% 1.38% 5,829,100

  • 7,394,100

2024 8,225,000 5.00% 1.52% 5,271,700 13,496,700 2024 1,645,000 5.00% 1.52% 5,750,850

  • 7,395,850

2025 9,015,000 5.00% 1.66% 4,860,450 13,875,450 2025 1,730,000 5.00% 1.66% 5,668,600

  • 7,398,600

2026 15,940,000 4.00% 1.97% 4,409,700 20,349,700 2026 1,815,000 4.00% 1.97% 5,582,100

  • 7,397,100

2027 C 405,000 5.00% 1.96% 3,772,100 4,177,100 2027 C 1,885,000 5.00% 1.96% 5,509,500

  • 7,394,500

2028 C 425,000 5.00% 2.09% 3,751,850 4,176,850 2028 C 1,980,000 5.00% 2.09% 5,415,250

  • 7,395,250

2029 C 93,265,000 4.00% 2.36% 3,730,600 96,995,600 2029 C 2,080,000 4.00% 2.36% 5,316,250

  • 7,396,250

2030

  • 2030

C 2,165,000 5.00% 2.23% 5,233,050

  • 7,398,050

2031

  • 2031

C 35,705,000 4.00% 2.61% 5,124,800

  • 40,829,800

2032

  • 2032

C 45,300,000 4.00% 2.72% 3,696,600

  • 48,996,600

2033

  • 2033

C 47,115,000 4.00% 2.77% 1,884,600

  • 48,999,600

Totals 136,660,000 65,481,786 202,141,786 Totals 147,255,000 91,781,555 18,849,555 220,187,000 1.48 1.50 Repayment Ratio Repayment Ratio

  • Prop. MM Refunding Bonds (CIBs)
  • Prop. S Crossover Refunding Bonds (CIBs)

Estimated Debt Service

10 Estimated coupon rates 10-year call feature: 7/1/2026

C = Callable

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SLIDE 11

1-Jul Principal Coupon Yield Interest Capitalized Interest Net Debt Service Prop.MM/S Savings Excess 2016 530,000 2.00% 0.05% 187,134 187,134 530,000 534,036 4,036 2017 1,065,000 3.00% 0.57% 1,556,100 1,556,100 1,065,000 1,069,793 4,793 2018 1,070,000 4.00% 0.76% 1,524,150 1,524,150 1,070,000 1,071,393 1,393 2019 860,000 4.00% 0.87% 1,481,350 1,275,607 1,065,743 1,070,393 4,649 2020 220,000 4.00% 0.98% 1,446,950

  • 1,666,950

1,669,343 2,393 2021 235,000 4.00% 1.09% 1,438,150

  • 1,673,150

1,674,593 1,443 2022 735,000 5.00% 1.22% 1,428,750

  • 2,163,750

2,168,593 4,843 2023 740,000 4.00% 1.38% 1,392,000

  • 2,132,000

2,133,013 1,013 2024 1,710,000 5.00% 1.52% 1,362,400

  • 3,072,400

3,076,050 3,650 2025 1,870,000 5.00% 1.66% 1,276,900

  • 3,146,900

3,149,925 3,025 2026 3,140,000 4.00% 1.97% 1,183,400

  • 4,323,400

4,328,175 4,775 2027 C 310,000 5.00% 1.96% 1,057,800

  • 1,367,800

1,369,425 1,625 2028 C 325,000 5.00% 2.09% 1,042,300

  • 1,367,300

1,368,925 1,625 2029 C 17,325,000 4.00% 2.36% 1,026,050

  • 18,351,050

18,354,175 3,125 2030 C 265,000 5.00% 2.23% 333,050

  • 598,050

601,750 3,700 2031 C 3,015,000 3.00% 2.91% 319,800

  • 3,334,800

3,335,000 200 2032 C 3,765,000 3.00% 2.97% 229,350

  • 3,994,350

3,998,300 3,950 2033 C 3,880,000 3.00% 3.02% 116,400

  • 3,996,400

4,000,400 4,000 Totals 41,060,000 18,402,034 4,542,991 54,919,043 54,973,278 1.34 Repayment Ratio

  • Prop. S New Money (CIBs) - Series J

Estimated Debt Service

11 Estimated coupon rates 10-year call feature: 7/1/2026 New Money Debt Service Issued within the Refunding Savings

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SLIDE 12

Estimated Costs of Issuance(1)

12

(1) Figures are estimates and are subject to change. (2) Unspent contingency is returned to the debt service fund.

  • Prop. MM

Refundings of

  • Prop. S

Refunding of

  • Prop. S

New Money Total Payable Services Interested Party Series F-1/G-1 (CIBs) Series A (CIBs) Series J (CIBs) at Closing (Based on $137 million issuance) (Based on $150 million issuance) (Based on $40 million issuance) Bond Counsel Orrick, Herrington & Sutcliffe LLP $196,000.00 $210,000.00 $85,000.00 $491,000.00 Reimbursable Expense Orrick, Herrington & Sutcliffe LLP 5,000.00 5,000.00 5,000.00 15,000.00 Disclosure Counsel Norton Rose Fulbright US LLP 67,000.00 67,000.00 67,000.00 201,000.00 Reimbursable Expense Norton Rose Fulbright US LLP 1,000.00 0.00 0.00 1,000.00 Rating Agency Moody’s 60,000.00 60,000.00 26,000.00 146,000.00 Rating Agency Fitch Ratings 60,000.00 60,000.00 26,000.00 146,000.00 Rating Agency Kroll Bond Rating Agency 30,000.00 30,000.00 13,000.00 73,000.00 Costs of Issuance Custodian Union Bank 1,250.00 1,250.00 1,250.00 3,750.00 Escrow Agent Union Bank 1,250.00 1,250.00 0.00 2,500.00 Printer Imagemaster 2,500.00 2,500.00 2,500.00 7,500.00 Dissemination Agent Digital Assurance Certification 2,500.00 2,500.00 2,500.00 7,500.00 Paying Agent County of San Diego 1,500.00 1,500.00 1,500.00 4,500.00 Verification Agent Grant Thornton 2,500.00 2,500.00 0.00 5,000.00 Travel Expense SDUSD 300.00 300.00 300.00 900.00 Contingency(2) 6,150.00 6,150.00 6,150.00 18,450.00 Total Cost of Issuance $436,950.00 $449,950.00 $236,200.00 $1,123,100.00 Underwriter's Discount $3.00 per Bond $3.00 per Bond $3.00 per Bond $409,980.00 $441,765.00 $123,180.00 $974,925.00

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SLIDE 13

Rating Approach

 Return to Moody’s, Kroll, and Fitch rating agencies  SB 222 - Statutory lien to protect bond holders

  • Signed by Governor and effective January 1, 2016

 Special Revenues Bankruptcy Opinion  AB 1200 - State control of distressed schools

  • Ongoing discussions:

− Growing AV with County collecting and holding pledged money − Secure Economic Base - strategic location and diverse employment − Strong fiscally responsible management with good labor relationships

13

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SLIDE 14

Next Steps for San Diego Unified

14

Date Description Tuesday, February 09, 2016 Board Approves Prop.MM Refunding and Prop.S New Money Resolutions Tuesday, February 09, 2016 60-day Validation Period begins for Prop. S Series J Wednesday, February 17, 2016 Kick-Off Meeting Tuesday, March 22, 2016 County Board approval of Certified Bond Resolution and Paying Agent Agreement for Prop.S Series J TBD Rating Agency Presentations Tuesday, April 12, 2016 Board approves Prop.S New Money Resolution, bond documents, BPA, and POS for Prop.MM/S Refundings and Prop. S Series J Saturday, April 09, 2016 60-day Validation Period ends for Prop.S Series J Week of April 18 Price Prop.MM Refunding Week of April 18 Price Prop.S Refunding Week of May 2 Price Prop.S Series J Week of May 16 Closing for Prop.MM/S Refundings and Prop.S Series J Wednesday, June 01, 2016 Prop.MM Refunded Bonds Redemption Notice Distributed Friday, July 01, 2016 Prop.MM Refunded Bonds redeemed Monday, July 01, 2024 Prop.S Refunded Bonds redeemed

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SLIDE 15

Questions and Answers

15