Capital Expenditure Recap - PowerPoint Presentation

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Capital Expenditure RecapRefinance Discussion

September 8, 2015Anna PimentelDirector, Fiscal ServicesJamie MetcalfAsst. in Training – Director, Fiscal ServicesKen ForrestChief Business Officer

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Capital Expenditure Accounting

2In accordance with Government Fund Accounting and the California K-12 Standardized Account Code Structure (SACS) the District utilizes a number of different funds to account for Capital Expenditures.

Fund 14 Deferred Maintenance Fund

The Deferred Maintenance Fund is used to account separately for State apportionments and the District's contributions for deferred maintenance purposes (Education Code Sections 17582-17587) and for items of maintenance approved by the State Allocation Board.

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3Fund 21 Building FundThe Building Fund exists primarily to account separately for proceeds from the sale of bonds (Education Code Section 15146) and may not be used for any purposes other than those for which the bonds were issued. In addition, it accounts for proceeds received from the issuance of certificates of participation for the purpose of funding land acquisition and school facility construction projects.

Fund 25 Capital Facilities Fund

The Capital Facilities funds are used to account for and report financial resources that are restricted, committed, or assigned to the acquisition or construction of major capital facilities and other capital assets (other than those financed by proprietary funds and trust funds).

Capital Expenditure Accounting

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4Fund 35 School Facilities FundThe School Facilities Fund is established pursuant to Education Code Section 17070.43 to receive apportionments from the 1998 State School Facilities Fund (Proposition lA), the 2002 State School Facilities Fund (Proposition 47), or the 2004 State School Facilities Fund (Proposition 55) authorized by the State Allocation Board for new school facility construction, modernization projects, and facility hardship grants, as provided in the Leroy F. Greene School Facilities Act of 1998 (Education Code Section 17070 et seq.)

Capital Expenditure Accounting

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5Fund 40 Special Reserve Fund for Capital Outlay Projects The Special Reserve Fund for Capital Outlay Projects exists primarily to provide for the accumulation of General Fund monies for capital outlay purposes (Education Code Section 42840).

Fund 48 Mello-Roos CFD #1

Fund 49 Mello-Roos CFD #2 The Mello-Roos Capital Project

Funds are used

to account for capital projects financed by the Community Facilities Districts that are considered component units of the District under generally accepted accounting principles.

Capital Expenditure Accounting

Revenue/Expenditures Tracked In These Two Funds Internally – Reported To State/County As Combined Fund 49 As Required By SACS

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CFD’s

Often Not Clearly Understood 6The Mello-Roos Community Facilities Act of 1982 (the “Act” or “Mello-Roos” – named after its authors, the late former State Senator Henry Mello and former Assemblyman Mike Roos) is an enormously flexible tool placed at the disposal of local governmental agencies* within the State to help them finance needed community facilities and services through the levy of voter approved special

taxes.

The

powers the Act can confer through the formation of a community facilities district (“CFD”) are, at the most basic level, the legal authority to levy and collect a special tax, to use that revenue to finance specified facilities and services, and to borrow money (by issuing bonds or incurring other debt) to assist with financing the facilities

.

Details of our two CFD’s are provided in this presentation in an attempt to provide some clarity surrounding Mello-Roos taxes.

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CFD #1 -- Fund 49

7Community Facilities District No. 1 (Vacaville)Description of Ballot Question:

Shall Community Facilities District No. 1 of the Travis Unified School District incur an indebtedness and issue bonds in the maximum aggregate principal amount of fifteen million ($15,000,000) with interest at a rate or rates not to exceed the maximum interest permitted by law at the time of sale of bonds, the proceeds of which will be used to finance the acquisition of sites and facilities, the construction of school support facilities, the acquisition of equipment, and such modifications and additions to existing facilities as are necessary to meet student population needs within the boundaries of CFD No. 1; shall special tax payable solely from the lands within Community Facilities District No. 1 with a maximum rate and method of apportionment as provided in Resolution 8, 1989-90, which is incorporated herein, pay the principal of and interest on such bonds be levied; and shall the appropriate limit of said Community Facilities District No. 1 be established in the amount of fifteen million dollars ($15,000,000) annually.

(Election was held 5/8/1990.)

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CFD # 1 -- Fund 49

8 The

authorized

facilities

which

are

being

paid

for

by

the

special

taxes,

and

by

the

money

received

from

the

sale

of

bonds

which are

being

repaid

by

the

special

taxes,

to

the

extent

that

financing

is

available

are

:



Construction

of

an e

lementary

school.



Renovation

and/or

expansion

of

facilities

at

Golden

West

Middle

School

.



Renovation

and/or

expansion

of

facilities

at

Vanden

Senior

High

School

.



Addition

of

student

capacity

at

Cambridge

Elementary

School.



Renovation

and/or

expansion

of

facilities

at

Travis

Elementary

School

.



Purchase

of

school

buses,

land

and/or

improvements.



Construction

and/or

expansion

of

related

support

facilities.

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CFD #2 -- Fund 48

9Community Facilities District No.2 (Gold Ridge)Description of Ballot Question:

Shall

the Travis Unified School District incur an indebtedness and issue bonds in the maximum aggregate principal amount of not to exceed $150,000,000 with interest at a rate or rates not to exceed the maximum interest rate permitted by law at the time of sale of such bonds on behalf of Community Facilities District No.2 (Gold Ridge) (the “CFD”), the proceeds of which bonds will be used to acquire and/or construct certain facilities and pay for the costs of issuing the bonds and related expenses; shall a special tax payable solely from lands within the CFD be levied annually, commencing in the District’s fiscal year 1998-99 upon lands within the CFD to pay for the principal and interest upon such bonds and certain services and pay the costs of the District in administering the CFD; and shall the annual appropriations limit of the CFD be established in the amount of $75,000,000?

(Election held 10/13/1998.)

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CFD # 2 -- Fund

48 10

The

authorized facilities which are being paid for by the special taxes, and by the money received from the sale of any bonds which will be repaid by the special taxes, to the extent that financing is available, are:



Elementary

, Middle, and High School facilities to serve students

coming

from residential units constructed within the boundaries of CFD No. 2



Support

facilities to include but not limited to,

administration

, food service, maintenance,

and

transportation to serve students coming from residential units constructed within the boundaries of CFD No. 2.

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11CFD Expenditure Summary By Year Combined -- Fund 49

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12CFD No. 1 has a bond authorization of $15 million and does not have a set term. At the time, the CFD Act did not require that the term be specified.

 

CFD No. 2 has a bond authorization

of $150

million with a maximum term of 40 years

.

Additionally

, the rate and method of apportionment of the special tax has a parcel-specific 30-year term.    

CFD Additional Notes

Combined --

Fund 49

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13Outstanding Debt

Possible Interest Savings?

The 2006

Certificates of Participation (COPs)

were issued on April 26, 2006 in the amount of $24,520,000

.

The 2006 COPs

were issued for the purpose of acquiring land for one new school, construction

of improvements

to expand and modernize Vanden High School and construction of a

new elementary school if/when needed

and additional facilities for 7th and 8th grade students

.

Approximately $22,770,000

of the outstanding 2006 COPs are eligible for refunding. The 2006 COPs

have an

average interest rate of 4.94%. The 2006 COPs have a final maturity date

on September

1, 2036 and may be called on September 1, 2016.

We are working with to obtain expert advice concerning our outstanding debt.

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14Outstanding Debt

Possible Interest Savings?

The 2007

Certificates of Participation (COPs)

were issued on July 11, 2007 in the amount of $12,995,000

.

The 2007 COPs

were issued for the purpose of refunding certificates of participation issued by

the District

in 1997 (1997 COP). Approximately $9,350,000 of the 2007 COPs are outstanding

, but

only $3,910,000 are eligible for

refunding.

The

refundable

2007 COPs

have an average interest rate of 4.91%. The refundable 2007 COPs have a

final maturity

date on September 1, 2027 and may be called on September 1, 2017.

At this time the

economics of an

advanced refunding

of the 2007 COP does not achieve the threshold of savings which we

would recommend

pursuing.

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15Outstanding Debt

Possible Interest Savings?

Current interest rates, coupled with the District’s credit rating, provide the District with

a favorable

opportunity to refinance approximately $22,770,000 of the 2006 COPs

.

Based on conservative

assumptions, we estimate that the District would receive annual savings

of approximately

$90,000 or over $2 million between now and September 1, 2036, the

final maturity

date of the 2006 COP

.

On

a net present value basis, the savings equate

to approximately

$1.45 million or 6.4% of the COPs being refunded. The savings are net

of the

earnings on the reserve fund investment.

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16Refinancing Comments

2006

COP was

issued with the intention that

CFD #2

would be the source

of

repayment.

2007

COP was

issued with the intention that

CFD #1 would be the source of repayment.

Should the refinancing be authorized and executed the Board would be provided with options for the use of the savings such as:

1

)

Reduce

the CFD

taxes.

2

)

Use

the savings for

projects.

3

) C

ombination

of 1 &

2.

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172006-2016 Capital Expenditures Including Bond Proceeds

Where have our capital funds been invested?

Since 2006 there have been 33 separate projects, some still in progress.

Total expenditures to date including Bond Proceeds has been $35,472,191.

Every school has seen some improvements or repairs.

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182006-2016 Capital Expenditures Including Bond Proceeds

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192006-2016 Capital Expenditures Including Bond Proceeds

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20Despite these expenditures our capital needs remain significant.

Currently the District has sufficient capacity, as shown by the next slide, however this may change in the future as development continues.

As a result we will be working with Capitol | PFG to develop a

 more comprehensive bond plan

to

reflect the capital needs and priorities contained in the facilities master

plan currently in development..

 

2006-2016 Capital Expenditures Including Bond Proceeds

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21School Facility Utilization

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In order to have an idea of what it takes to build or remodel our school facilities it is helpful to see the current estimated costs.

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School Cost Estimates

August 2015

We are currently conducting a facilities needs analysis and anticipate this being ready for discussion early 2016.

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23So tonight we are asking for permission to proceed with an analysis of our refinancing potential and a comprehensive bond plan.Thank You

Permission To Proceed

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Questions?

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