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 Obligation Bonds 7 Estimated Costs of Issuance 12 Rating Approach 13 Next Steps 14 2
Introduction and Overview San Diego Unified plans to move forward with both refunding general obligation 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
Summary of Assumptions Item Assumption • 6.21% actual growth in FY 2014-15, 6.06% actual growth in FY 2015-16, and Assessed Value 5% projected growth for every year thereafter • 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 Refunding GO Bonds Structuring refunded • Issued as Current Interest Bonds (“CIBs”) only • 10-Year call feature • Issued as CIBs within the window of savings created by the refunding • 10-Year call feature Prop. S • New money for the construction, reconstruction, rehabilitation, or New Money GO replacement of school facilities, including the furnishing and equipping Bonds Structuring of school facilities, or the acquisition or lease of real property for school facilities • $66.70 per $100,000 of A.V. with Prop. MM Bonds through 2031 and Maximum Tax Rate $60.00 per $100,000 of A.V. thereafter 4
Historical and Projected Assessed Value (1) $350 14.00% 13.00% Projected Growth Historical Growth 12.00% $300 11.14% 10.90% 10.00% 9.33% 8.37% 8.72% $250 Total A.V. ($ In Billions) 8.19% 8.91% 8.00% 7.98% 8.38% 6.21% $200 6.06% Growth Rate 6.00% 5.78% 5.44% 5.00% 3.97% 3.94% 4.00% $150 3.26% 2.47% 2.00% $100 0.21% 0.02% 0.00% -0.15% -0.83% $50 -2.00% -1.94% $0 -4.00% 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. 5
Debt Service and Tax Rate Reserve Existing Projected Projected Adjusted A.V. Total Prop. MM/S Prop. S Fiscal Existing Prop. S Excess / A.V. % Property Cumulative Secured and Tax Funds Refunding Series J Year Prop. MM Net Debt (Deficient) (8) Increase Taxes Reserve Unsecured A.V. (1) Rate (2) Available (3) Savings (6) Debt Service (7) Ending Debt Service Service (4)(5) From Prior Generated 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 (1) Data provided by County Auditor-Controller for FY 2015-16 (report dated 7/31/2015). Adjusted to account for exemptions. (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. (3) Includes annual cash balance of $7 million, and approximately $13 million for Fiscal Year 2015-2016. (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. (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. (6) Preliminary as of 1/29/2016; Interest offset by escrow receipts through 7/1/2019; subject to change. (7) Preliminary as of 1/29/2016; Interest offset by capitalized interest through 5/11/2019; subject to change. (8) If positive, excess deposited into Reserve; if negative, deficiency withdrawn from Reserve. 6
Refunding Opportunity Proposition MM Estimated Par to Issue Par Oustanding Proposed Prop. S Bonds are to be structured within the area where be Refunded 1999 Series A 48,339,765.50 - savings are achieved from the Prop. MM/S Refundings 2000 Series B 18,730,000.00 - 2004 Series B-1 14,245,000.00 - Analysis of Debt Service for Refunded Bonds 2004 Series D-1 126,310,000.00 - 2005 Series E-2 117,985,000.00 140,000,000 2005 Series C-2 123,995,000.00 - 2005 Series D-3 7,700,000.00 - 120,000,000 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 - 100,000,000 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 80,000,000 Proposition S Estimated Par to Issue Par Oustanding 60,000,000 be Refunded 2009 Series A 126,279,457.45 73,168,837.40 2009 Series B 38,840,000.00 - 40,000,000 2010 Series C 112,548,275.25 - 2010 Series D-1 16,130,000.00 - 20,000,000 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 Refunding Debt Service Savings 2016 Series I 99,999,240.65 Totals 714,361,353.85 73,168,837.40 Prop. MM Refundings (1) Prop. S Refunding (1) *Highlighed fields indicate refunding opportunities Net PV Savings: $30,001,435.73 Net PV Savings: $12,876,976.26 % savings of refunded bonds: 19.48% % savings of refunded bonds: 11.61% (1) Estimated and subject to change. Assuming current interest rates and market conditions. 7
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