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West Contra Costa USD 2014 General Obligation Refinancing Summary 2014-15 Tax Rate Resolution Presentation to the Board of Education August 13, 2014.

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Presentation on theme: "West Contra Costa USD 2014 General Obligation Refinancing Summary 2014-15 Tax Rate Resolution Presentation to the Board of Education August 13, 2014."— Presentation transcript:

1 West Contra Costa USD 2014 General Obligation Refinancing Summary Tax Rate Resolution Presentation to the Board of Education August 13, 2014

2 I Refunding Summary

3 Refunding Objectives Met  Refinanced existing bonds at lower interest rates.  Lowered debt service to achieve savings for taxpayers and satisfy State refunding law.  Applied savings to help the District meet the tax rate targets for 2002 Measure D and 2005 Measure J in , and assuming 4% annual AV growth. West Contra Costa USD 2014 General Obligation Refunding Bonds | 2

4 2014 Refunding Results 3 Presentation to the West Contra Costa Unified School District Board of Education | page  The bonds refinanced:  All $24.6 million of 2002 Series C current interest bonds  All $59.0 million of 2005 Series A current interest bonds  $1.65 million of 2002 Series C capital appreciation bonds  The refunding generated $10.3 million in cashflow savings, equal to $9.6 million present value savings or 11.1% of the refunded principal & accreted value of the bonds.  The refunding used only current interest bonds – no capital appreciation bonds. Sources Bond Principal $ 77,460,000 Bond Premium $ 11,021,721 Total $ 88,481,721 Uses Escrow Deposit $ 87,620,976 Costs of Issuance $ 860,745 Total$ 88,481,721 Statistics All-in TIC3.68% Total Bonds Refunded $ 85,315,782 Savings $ 10,305,384 PV Savings $ 9,602,567 PV Savings %11.10%

5 Excellent Market Timing  The lack of supply in the primary markets for municipal bonds have driven interest rates lower in recent months.  Municipal interest rates have increased since the District priced its bonds on July 24 due to improving economic news. West Contra Costa USD 2014 General Obligation Refunding Bonds | 4 Board of Education Meeting Pricing Date July 24

6 2014 Bond Investors  The 2014 transaction received significant interest from a large group of investors, as summarized below. West Contra Costa USD 2014 General Obligation Refunding Bonds | 5

7 2014 Pricing Compared to Prior Transactions  The District has priced General Obligation bonds in , which can be compared to the pricing of the 2014 bonds.  The table below shows spreads to the AAA GO Index to the pricing of the bonds.  The 2014 Bonds priced favorably with lower spreads compared to the prior transactions in every maturity. West Contra Costa USD 2014 General Obligation Refunding Bonds | 6 Maturity Spread to MMD AAA GO Index by Financing (in basis points) Note: Spread is to stated yield. Differences in coupons affect yield comparisons.

8 2014 Bond Pricing Improvements  The large investor demand allowed the pricing of the bonds to be improved in a series of adjustments from the pre-pricing scale. The largest adjustments benefitted the District by 9 basis points. West Contra Costa USD 2014 General Obligation Refunding Bonds | 7 Pre-pricing7/23/2014Order Period7/24/2014Final7/24/2014 MaturityYieldSpreadChangeYieldSpreadChangeYieldSpreadTot. Change 8/1/ %0.15%0.00%0.70%0.15%-0.03%0.67%0.12%-0.03% 8/1/ %0.18%0.00%1.06%0.18%-0.04%1.02%0.14%-0.04% 8/1/ %0.20%0.00%1.42%0.20%-0.06%1.36%0.14%-0.06% 8/1/ %0.27%0.00%1.73%0.27%-0.04%1.69%0.23%-0.04% 8/1/ %0.33%0.00%2.03%0.33%-0.04%1.99%0.29%-0.04% 8/1/ %0.38%0.00%2.29%0.38%-0.02%2.27%0.36%-0.02% 8/1/ %0.45%0.00%2.52%0.45%-0.04%2.48%0.41%-0.04% 8/1/ %0.50%0.00%2.69%0.50%0.00%2.69%0.50%0.00% 8/1/ %0.60%-0.05%2.85%0.55%0.00%2.85%0.55%-0.05% 8/1/ %0.65%-0.05%3.00%0.60%0.00%3.00%0.60%-0.05% 8/1/ %0.70%-0.05%3.15%0.65%-0.04%3.11%0.61%-0.09% 8/1/ %0.75%-0.05%3.28%0.70%-0.04%3.24%0.66%-0.09% 8/1/ %0.75%-0.05%3.36%0.70%-0.03%3.33%0.67%-0.08% 8/1/ %0.75%-0.05%3.43%0.70%-0.03%3.40%0.67%-0.08% 8/1/ %0.75%-0.05%3.50%0.70%-0.03%3.47%0.67%-0.08% 8/1/ %0.75%-0.05%3.57%0.70%0.00%3.57%0.70%-0.05% 8/1/ %0.73%-0.03%3.63%0.70%-0.03%3.60%0.67%-0.06% 8/1/ %0.70%0.00%3.68%0.70%-0.03%3.65%0.67%-0.03% 8/1/ %0.70%0.00%3.73%0.70%-0.02%3.71%0.68%-0.02%

9 Comparable Transactions Pricing  The pricing of the bonds priced better than the Sweetwater Union HSD, which carried an A1/A+ underlying rating with BAM bond insurance. West Contra Costa USD 2014 General Obligation Refunding Bonds | 8 Pricing Date:7/24/147/16/147/15/14 Par (000s):$77,620$82,270$100,325 Issuer:West Contra Costa USDSweetwater Union High School DistrictPoway Unified School District Insurance:--BAM-- Ratings:Aa3/A+/A+A1/A+Aa2/AA- CallAug 1, par Sale Type:Negotiated (Piper Jaffray)Negotiated (Mitsubishi UFJ)Negotiated (Stifel) Principal Date:1-Aug Spread to MatParCouponYieldSpreadParCouponYieldSpreadWCCUSDParCouponYieldSpreadWCCUSD , , , , (0.09) 2, (0.03) , , (0.09) 3, (0.03) , , (0.10) 3, (0.02) , , (0.07) 3, (0.02) , , (0.05) 4, , , (0.02) 4, , , (0.01) 5, , , , , , (0.04) 6, , , (0.07) 6, , , (0.08) 7, , , (0.05) 14, , , (0.04) 15, , , , , , , ,

10 Costs of Issuance Summary 9 Presentation to the West Contra Costa Unified School District Board of Education | page  Total costs of issuance and underwriter’s discount was $857,665 for the transaction. Professional ServiceFee Underwriter's Discount $ 406,665 Bond Counsel $ 140,000 Disclosure Counsel $ 85,000 Financial Advisor $ 100,000 Paying & Escrow Agent $ 3,000 Verification Agent $ 2,000 Printing $ 3,000 S&P Rating $ 35,000 Fitch Ratings $ 38,000 Moody's Rating $ 35,000 Miscellaneous $ 10,000 Total $ 857,665 Note: Does not include $3,080 of rounding.

11 2014 Refunding Impact on Tax Rate Management West Contra Costa USD 2014 General Obligation Refunding Bonds | 10  After the refunding, both 2002 Measure D and 2005 Measure J are projected to meet tax rate targets through 2017 under a 4% assessed value growth scenario.  Tax rate targets for fiscal year 2018 and beyond will need to be addressed in the future, depending on growth rates in assessed value.

12 II Tax Rate Resolution

13 2002 Measure D & 2005 Measure J 12 Presentation to the West Contra Costa Unified School District Board of Education | page  The 2014 Bonds refinanced a portion of the outstanding 2002 Measure D and 2005 Measure J Bonds for debt service savings.  Both of the Measures are expected to be at the tax rate target of $60.00 per $100,000 through the fiscal year, assuming a 4.0% AV growth rate.  2005 Measure J has remaining new money capacity, but is constrained by the tax rate target.  The resolution provides for the levy of the $60.00 tax rate for these two measures.

14 2010 Measure D & 2012 Measure E 13 Presentation to the West Contra Costa Unified School District Board of Education | page  2010 Measure D and 2012 Measure E have new money capacity available for the District.  The District currently estimates that $85 million in bonds from each of these series will be issued in March  Funds will need to be available to pay for debt service on the bonds when issued.  The resolution provides for the levy of the $48.00 tax rate for these two measures.

15 1998 Measure E & 2000 Measure M 14 Presentation to the West Contra Costa Unified School District Board of Education | page  1998 Measure E and 2000 Measure M have no remaining bonding capacity  Remaining debt service on the 1998 Measure E bonds results in a tax rate below the target tax rate of $26.40, even with no AV growth.  2000 Measure M debt service is expected to be at the target tax rate of $55.60 per $100,000 of assessed value until 2018, when debt service declines from $15.1 million on an annual basis to $6.1 million.  The resolution provides for the levy of the $55.60 tax rate for the 2002 Measure M program.  The County will calculate the required levy for 1998 Measure E.

16 Tax Rate Resolution Summary 15 Presentation to the West Contra Costa Unified School District Board of Education | page MeasureNew MoneyTax RateNotes 1998ENon/aTo be set by County. Current estimate of $ MNo$ DNo$60.00Target of 2014 refunding bonds. 2005JNo$60.00Target of 2014 refunding bonds. 2010DYes$48.00Assumes new money issuance in EYes$48.00Assumes new money issuance in 2015.

17 III. Long-Range Tax Management

18 Long-Range Tax Outlook 17 Presentation to the West Contra Costa Unified School District Board of Education | page  The District’s long-term outlook on tax rates is dependent on the assumed growth of its assessed valuation.  In addition, certain measures have Stabilization Funds on hand that would serve to mitigate lower than expected growth rates.  Following charts show revenues at growth rates between 0% and 6% versus debt service expenditures. Debt service above a revenue line means County will have to set tax rates above the District’s target rate at that particular assessed value growth rate. Debt service below a revenue line means the County can maintain (or be under) the District’s target rate at that particular assessed value growth rate.

19 1998 Measure E (non-Prop. 39) Presentation to the West Contra Costa Unified School District Board of Education | page Measure E Summary Authorization$40.0 million Issued$40.0 million Currently Outstanding$23.6 million Remaining Authorization$0 Target Tax Rate$26.40 per $100K AV

20 2000 Measure M (non-Prop. 39) Presentation to the West Contra Costa Unified School District Board of Education | page Measure M Summary Authorization$150.0 million Issued$150.0 million Currently Outstanding$100.1 million Remaining Authorization$0 Target Tax Rate$55.60 per $100K AV

21 2002 Measure D Presentation to the West Contra Costa Unified School District Board of Education | page Measure D Summary Authorization$300.0 million Issued$300.0 million Currently Outstanding$246.2 million Remaining Authorization$0 Target Tax Rate$60.00 per $100K AV

22 2005 Measure J Presentation to the West Contra Costa Unified School District Board of Education | page Measure J Summary Authorization$400.0 million Issued$322.4 million Currently Outstanding$318.8 million Remaining Authorization$77.6 million Target Tax Rate$60.00 per $100K AV

23 2010 Measure D Presentation to the West Contra Costa Unified School District Board of Education | page Measure D Summary Authorization$380.0 million Issued$100.0 million Currently Outstanding$127.8 million Remaining Authorization$280.0 million Target Tax Rate$48.00 per $100K AV

24 2012 Measure E Presentation to the West Contra Costa Unified School District Board of Education | page Measure E Summary Authorization$360.0 million Issued$85.0 million Currently Outstanding$85.0 million Remaining Authorization$275.0 million Target Tax Rate$48.00 per $100K AV


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