west contra costa usd 2014 general obligation refinancing summary 2014-15 tax rate resolution...
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West Contra Costa USD2014 General Obligation Refinancing Summary2014-15 Tax Rate Resolution
Presentation to the Board of EducationAugust 13, 2014
I. 2014 Refunding Summary
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 2014-15, 2015-16 and 2016-17 assuming 4% annual AV growth.
West Contra Costa USD 2014 General Obligation Refunding Bonds | 3
2014 Refunding Results
4Presentation 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 TIC 3.68%
Total Bonds Refunded $ 85,315,782
Savings $ 10,305,384
PV Savings $ 9,602,567
PV Savings % 11.10%
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2.00
2.05
2.10
2.15
2.20
2.25
2.30
2.35
2.40
MMD AAA GO Index - 10 Year
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 | 5
Board of Education Meeting
Pricing DateJuly 24
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 | 6
Fidelity Funds Vanguard FundsGoldman Sachs
Asset ManagementAlliance Bernstein
$12,400,000 $11,235,000 $8,985,000 $8,175,000
American Century Eaton Vance Northern TrustStandish Mellon
Asset Management
$5,400,000 $4,780,000 $4,585,000 $4,430,000
Wells FargoAsset Mangement
Deutsche Asset Management
Columbia Asset Management
American Family Mutual Insurance Company
$3,240,000 $2,575,000 $2,125,000 $1,775,000
Cincinatti Financial Corporation
Chilton Capital Management
JP Morgan Payden & Rygel
$1,625,000 $1,425,000 $1,295,000 $1,000,000
2014 Pricing Compared to Prior Transactions
The District has priced General Obligation bonds in 2011-13, 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 | 7
Maturity 2011 2012 2013 20141 35 - 12 - 2 60 - 10 - 3 - - 25 12 4 - - 35 14 5 - - - 14 6 - - - 23 7 - - - 29 8 - - 48 36 9 129 106 58 41
10 131 114 68 50 11 132 113 79 55 12 137 120 83 60 13 134 120 88 61 14 143 120 93 66 15 142 120 98 67 16 142 - 90 67 17 - - 90 67 18 - - 90 70 19 - - 90 67 20 - 115 90 67 21 119 - - 68
Spread to MMD AAA GO Index by Financing(in basis points)
Note: Spread is to stated yield. Differences in coupons affect yield comparisons.
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 | 8
Pre-pricing 7/23/2014 Order Period 7/24/2014 Final 7/24/2014Maturity Yield Spread Change Yield Spread Change Yield Spread Tot. Change
8/1/2017 0.70% 0.15% 0.00% 0.70% 0.15% -0.03% 0.67% 0.12% -0.03%8/1/2018 1.06% 0.18% 0.00% 1.06% 0.18% -0.04% 1.02% 0.14% -0.04%8/1/2019 1.42% 0.20% 0.00% 1.42% 0.20% -0.06% 1.36% 0.14% -0.06%8/1/2020 1.73% 0.27% 0.00% 1.73% 0.27% -0.04% 1.69% 0.23% -0.04%8/1/2021 2.03% 0.33% 0.00% 2.03% 0.33% -0.04% 1.99% 0.29% -0.04%8/1/2022 2.29% 0.38% 0.00% 2.29% 0.38% -0.02% 2.27% 0.36% -0.02%8/1/2023 2.52% 0.45% 0.00% 2.52% 0.45% -0.04% 2.48% 0.41% -0.04%8/1/2024 2.69% 0.50% 0.00% 2.69% 0.50% 0.00% 2.69% 0.50% 0.00%8/1/2025 2.90% 0.60% -0.05% 2.85% 0.55% 0.00% 2.85% 0.55% -0.05%8/1/2026 3.05% 0.65% -0.05% 3.00% 0.60% 0.00% 3.00% 0.60% -0.05%8/1/2027 3.20% 0.70% -0.05% 3.15% 0.65% -0.04% 3.11% 0.61% -0.09%8/1/2028 3.33% 0.75% -0.05% 3.28% 0.70% -0.04% 3.24% 0.66% -0.09%8/1/2029 3.41% 0.75% -0.05% 3.36% 0.70% -0.03% 3.33% 0.67% -0.08%8/1/2030 3.48% 0.75% -0.05% 3.43% 0.70% -0.03% 3.40% 0.67% -0.08%8/1/2031 3.55% 0.75% -0.05% 3.50% 0.70% -0.03% 3.47% 0.67% -0.08%8/1/2032 3.62% 0.75% -0.05% 3.57% 0.70% 0.00% 3.57% 0.70% -0.05%8/1/2033 3.66% 0.73% -0.03% 3.63% 0.70% -0.03% 3.60% 0.67% -0.06%8/1/2034 3.68% 0.70% 0.00% 3.68% 0.70% -0.03% 3.65% 0.67% -0.03%8/1/2035 3.73% 0.70% 0.00% 3.73% 0.70% -0.02% 3.71% 0.68% -0.02%
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 | 9
Pricing Date: 7/24/14 7/16/14 7/15/14
Par (000s): $77,620 $82,270 $100,325
Issuer: West Contra Costa USD Sweetwater Union High School District Poway Unified School District
Insurance: -- BAM --
Ratings: Aa3/A+/A+ A1/A+ Aa2/AA-
Call Aug 1, 2024 @ par Aug 1, 2024 @ par Aug 1, 2024 @ par
Sale Type: Negotiated (Piper Jaffray) Negotiated (Mitsubishi UFJ) Negotiated (Stifel)
Principal Date: 1-Aug 1-Aug 1-Aug
Spread to Spread to
Mat Par Coupon Yield Spread Par Coupon Yield Spread WCCUSD Par Coupon Yield Spread WCCUSD
2015 1,120 3.00 0.25 0.14 740 3.00 0.16 0.05
2016 1,260 3.00 0.48 0.17 240 3.00 0.36 0.05
2017 2,000 4.00 0.67 0.12 1,400 3.00 0.81 0.21 (0.09) 2,780 4.00 0.58 (0.03) 0.15
2018 3,110 5.00 1.02 0.14 1,550 4.00 1.16 0.23 (0.09) 3,105 5.00 0.91 (0.03) 0.17
2019 3,270 5.00 1.37 0.15 1,730 4.00 1.53 0.25 (0.10) 3,460 5.00 1.27 (0.02) 0.17
2020 3,435 4.00 1.69 0.23 1,910 4.00 1.84 0.30 (0.07) 3,850 5.00 1.54 (0.02) 0.25
2021 2,280 4.00 1.99 0.29 2,115 5.00 2.14 0.34 (0.05) 4,265 5.00 1.87 0.05 0.24
2022 2,360 5.00 2.27 0.36 2,340 5.00 2.39 0.38 (0.02) 4,705 5.00 2.15 0.12 0.24
2023 2,465 5.00 2.48 0.41 2,585 5.00 2.61 0.42 (0.01) 5,170 5.00 2.35 0.14 0.27
2024 2,575 5.00 2.69 0.50 2,840 5.00 2.81 0.50 0.00 5,665 5.00 2.53 0.19 0.31
2025 2,690 5.00 2.85 0.55 3,110 5.00 3.01 0.59 (0.04) 6,195 5.00 2.74 0.29 0.26
2026 4,485 5.00 3.00 0.60 12,080 5.00 3.20 0.67 (0.07) 6,755 5.00 2.89 0.34 0.26
2027 4,705 5.00 3.12 0.62 15,050 5.00 3.32 0.70 (0.08) 7,355 5.00 2.98 0.34 0.28
2028 4,935 5.00 3.24 0.66 16,375 5.00 3.41 0.71 (0.05) 14,290 4.00 3.31 0.59 0.07
2029 5,170 5.00 3.33 0.67 16,805 5.00 3.49 0.71 (0.04) 15,320 4.00 3.39 0.59 0.08
2030 5,425 5.00 3.40 0.67 16,430 4.00 3.46 0.59 0.08
2031 5,690 5.00 3.47 0.67
2032 5,975 5.00 3.57 0.70
2033 6,270 5.00 3.60 0.67
2034 6,570 5.00 3.65 0.67
2035 4,210 5.00 3.71 0.68
Costs of Issuance Summary
10Presentation 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 Service Fee
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.
2014 Refunding Impact on Tax Rate Management
West Contra Costa USD 2014 General Obligation Refunding Bonds | 11
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.
2015 2016 2017 2018 $-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Total Net Debt Service for 2002 Measure D
Rev. and Funds on Hand w/ 4% AV Growth
2015 2016 2017 2018 $-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Total Net Debt Service for 2005 Measure J
Rev. and Funds on Hand w/ 4% AV Growth
II. 2014-15 Tax Rate Resolution
2002 Measure D & 2005 Measure J
13Presentation 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 2016-17 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.
2010 Measure D & 2012 Measure E
14Presentation 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 2015.
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.
1998 Measure E & 2000 Measure M
15Presentation 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.
2014-15 Tax Rate Resolution Summary
16Presentation to the West Contra Costa Unified School District Board of Education | page
Measure New Money Tax Rate Notes
1998E No n/a To be set by County. Current estimate of $12.07.
2000M No $55.60
2002D No $60.00 Target of 2014 refunding bonds.
2005J No $60.00 Target of 2014 refunding bonds.
2010D Yes $48.00 Assumes new money issuance in 2015.
2012E Yes $48.00 Assumes new money issuance in 2015.
III. Long-Range Tax Management
Long-Range Tax Outlook
18Presentation 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.
1998 Measure E (non-Prop. 39)
Presentation to the West Contra Costa Unified School District Board of Education | page
19
1998 Measure E SummaryAuthorization $40.0 million Issued $40.0 million Currently Outstanding $23.6 millionRemaining Authorization $0Target Tax Rate $26.40 per $100K AV
2015
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
2041
2042
2043
2044
2045
2046
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Total Net Debt Service for 1998 Measure E Rev. w/ 4% AV Growth
2000 Measure M (non-Prop. 39)
Presentation to the West Contra Costa Unified School District Board of Education | page
20
2000 Measure M SummaryAuthorization $150.0 million Issued $150.0 million Currently Outstanding $100.1 millionRemaining Authorization $0Target Tax Rate $55.60 per $100K AV
2015
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
2041
2042
2043
2044
2045
2046
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
Total Net Debt Service for 2000 Measure M Rev. and Funds on Hand w/ 4% AV Growth
2002 Measure D
Presentation to the West Contra Costa Unified School District Board of Education | page
21
2002 Measure D SummaryAuthorization $300.0 million Issued $300.0 million Currently Outstanding $246.2 millionRemaining Authorization $0Target Tax Rate $60.00 per $100K AV
2015
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
2041
2042
2043
2044
2045
2046
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
Total Net Debt Service for 2002 Measure D Rev. and Funds on Hand w/ 4% AV Growth
2005 Measure J
Presentation to the West Contra Costa Unified School District Board of Education | page
22
2005 Measure J SummaryAuthorization $400.0 million Issued $322.4 millionCurrently Outstanding $318.8 millionRemaining Authorization $77.6 millionTarget Tax Rate $60.00 per $100K AV
2015
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
2041
2042
2043
2044
2045
2046
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
Total Net Debt Service for 2005 Measure J Rev. and Funds on Hand w/ 4% AV Growth
2010 Measure D
Presentation to the West Contra Costa Unified School District Board of Education | page
23
2010 Measure D SummaryAuthorization $380.0 million Issued $100.0 millionCurrently Outstanding $127.8 millionRemaining Authorization $280.0 millionTarget Tax Rate $48.00 per $100K AV
2015
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
2041
2042
2043
2044
2045
2046
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
Total Net Debt Service for 2010 Measure D Rev. w/ 4% AV Growth
2012 Measure E
Presentation to the West Contra Costa Unified School District Board of Education | page
24
2012 Measure E SummaryAuthorization $360.0 million Issued $85.0 millionCurrently Outstanding $85.0 millionRemaining Authorization $275.0 millionTarget Tax Rate $48.00 per $100K AV
2015
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
2041
2042
2043
2044
2045
2046
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
Total Net Debt Service for 2012 Measure E Rev. w/ 4% AV Growth