Refunding Bonds Series SR-1 March 22, 2016 Proposition S, Series A - PowerPoint PPT Presentation

2016 General Obligation Refunding Bonds Series SR-1 March 22, 2016

Proposition S, Series A Bonds  The District in 2009 issued Proposition S Convertible Capital Appreciation Bonds in the principal amount of $73,168,837.40 (“the 2009 Bonds”).  The 2009 Bonds do not pay current interest but compound the interest until July 1, 2019, at which time they have a “conversion value” of $133,330,000 and the District begins paying current interest semi-annually of 6.00% on the conversion value.  The 2009 Bonds are subject to prepayment on July 1, 2024. Current 2009 Bonds Debt Service Period Ending Principal Coupon Interest Compounded Interest Debt Service 7/1/2016 - - - - - Conversion Date 7/1/2017 - - - - - 7/1/2018 - - - - - 7/1/2019 - - - - - 7/1/2020 - - 7,999,800.00 - 7,999,800.00 7/1/2021 - - 7,999,800.00 - 7,999,800.00 7/1/2022 - - 7,999,800.00 - 7,999,800.00 7/1/2023 - - 7,999,800.00 - 7,999,800.00 7/1/2024 C - - 7,999,800.00 - 7,999,800.00 7/1/2025 C - - 7,999,800.00 - 7,999,800.00 7/1/2026 C - - 7,999,800.00 - 7,999,800.00 7/1/2027 C - - 7,999,800.00 - 7,999,800.00 7/1/2028 C - - 7,999,800.00 - 7,999,800.00 7/1/2029 C - - 7,999,800.00 - 7,999,800.00 7/1/2030 C - - 7,999,800.00 - 7,999,800.00 Callable on 7/1/2031 C 19,846,628.70 6.00% 7,999,800.00 16,318,371.30 44,164,800.00 7/1/2024 7/1/2032 C 25,883,208.70 6.00% 5,829,900.00 21,281,791.30 52,994,900.00 7/1/2033 C 27,439,000.00 6.00% 3,000,000.00 22,561,000.00 53,000,000.00 73,168,837.40 104,827,500.00 60,161,162.60 238,157,500.00 Conversion Value of $133,330,000 2

2016 G.O. Refunding Bonds Series SR-1  Due to current low interest rates and the July 1, 2024 prepayment date, the 2009 Bonds may be “advance refunded” for savings. This means the District will issue Refunding Bonds in advance of when the bonds are subject to redemption and deposit the funds in escrow to pay all interest payable on the bonds when due and the conversion value of $133,330,000 on the redemption date of July 1, 2024. Escrow Requirement for the 2009 Bonds Period Ending Interest Principal Redeemed Compound Int Redeemed Total 7/1/2016 - - - - 1/1/2017 - - - - 7/1/2017 - - - - 1/1/2018 - - - - 7/1/2018 - - - - 1/1/2019 - - - - 7/1/2019 - - - - 1/1/2020 $3,999,900.00 - - $3,999,900.00 7/1/2020 $3,999,900.00 - - $3,999,900.00 1/1/2021 $3,999,900.00 - - $3,999,900.00 7/1/2021 $3,999,900.00 - - $3,999,900.00 1/1/2022 $3,999,900.00 - - $3,999,900.00 7/1/2022 $3,999,900.00 - - $3,999,900.00 1/1/2023 $3,999,900.00 - - $3,999,900.00 7/1/2023 $3,999,900.00 - - $3,999,900.00 1/1/2024 $3,999,900.00 - - $3,999,900.00 Interest payable to 7/1/2024 $3,999,900.00 $73,168,837.40 $60,161,162.60 $137,329,900.00 7/1/24 call date $39,999,000.00 $73,168,837.40 $60,161,162.60 $173,329,000.00 Conversion Value of $133,330,000 3

2016 G.O. Refunding Bonds Series SR-1 The Refunding Bonds are current interest bonds with interest payments due each  July and January. In order not to raise taxes to pay the current interest, the District will need to fund capitalized interest on the Refunding Bonds until the July 1, 2019 “Conversion Date” at which time the taxes that would have paid the current interest on the 2009 Bonds will be used to pay the current interest on the Refunding Bonds. The Board needs to determine the size of the refunding issue and that funding this  capitalized interest as part of the cost of the refunding is reasonable. 2016 G.O. Refunding Bonds, Series SR-1 Preliminary Debt Service (1) Period Ending Principal Coupon Yield Interest Total Debt Service CAPI Net Debt Service Capitalized 7/1/2016 - - - 952,177.08 952,177.08 952,177.08 - Interest to 7/1/2017 - - - 6,013,750.00 6,013,750.00 6,013,750.00 - Conversion 7/1/2018 - - - 6,013,750.00 6,013,750.00 6,013,750.00 - Date 7/1/2019 - - - 6,013,750.00 6,013,750.00 6,013,750.00 - 7/1/2020 1,315,000.00 5.00% 0.82% 6,013,750.00 7,328,750.00 - 7,328,750.00 7/1/2021 1,380,000.00 5.00% 0.95% 5,948,000.00 7,328,000.00 - 7,328,000.00 7/1/2022 1,450,000.00 5.00% 1.13% 5,879,000.00 7,329,000.00 - 7,329,000.00 7/1/2023 1,525,000.00 5.00% 1.32% 5,806,500.00 7,331,500.00 - 7,331,500.00 7/1/2024 1,600,000.00 5.00% 1.48% 5,730,250.00 7,330,250.00 - 7,330,250.00 7/1/2025 1,680,000.00 5.00% 1.67% 5,650,250.00 7,330,250.00 - 7,330,250.00 7/1/2026 1,765,000.00 5.00% 1.85% 5,566,250.00 7,331,250.00 - 7,331,250.00 Callable 7/1/2027 C 1,850,000.00 5.00% 2.01% 5,478,000.00 7,328,000.00 - 7,328,000.00 7/1/2028 C 1,945,000.00 5.00% 2.11% 5,385,500.00 7,330,500.00 - 7,330,500.00 7/1/2029 C 2,040,000.00 5.00% 2.18% 5,288,250.00 7,328,250.00 - 7,328,250.00 7/1/2030 C 2,145,000.00 5.00% 2.26% 5,186,250.00 7,331,250.00 - 7,331,250.00 7/1/2031 C 35,385,000.00 4.00% 2.70% 5,079,000.00 40,464,000.00 - 40,464,000.00 7/1/2032 C 44,895,000.00 4.00% 2.79% 3,663,600.00 48,558,600.00 - 48,558,600.00 7/1/2033 C 46,695,000.00 4.00% 2.84% 1,867,800.00 48,562,800.00 - 48,562,800.00 145,670,000.00 91,535,827.08 237,205,827.08 18,993,427.08 218,212,400.00 (1) Preliminary and subject to change 4

2016 G.O. Refunding Bonds Series SR-1  Sources and Uses and Escrow Cash Flow Refunding Bonds, Series SR-1 (CIBs) (1) Capitalized Interest Cash Flow Escrow Cash Flow Other Cash Sources Interest (2) Date Principal Net Receipts Net Receipts Flows (3) Par Amount $145,670,000.00 7/1/2016 934,339.00 17,838.60 952,177.60 - - Net Premium $18,292,545.85 1/1/2017 2,942,985.00 63,889.25 3,006,874.25 - - Tax Rate Reserve Contribution $5,553,834.30 7/1/2017 2,952,157.00 54,718.42 3,006,875.42 - - Total $169,516,380.15 1/1/2018 2,960,423.00 46,452.38 3,006,875.38 - - 7/1/2018 2,970,192.00 36,682.98 3,006,874.98 - - Uses 1/1/2019 2,981,330.00 25,544.76 3,006,874.76 - - Refunding Escrow Deposits $149,891,290.30 7/1/2019 2,993,553.00 13,321.31 3,006,874.31 - - Capitalized Interest Fund $18,734,979.00 1/1/2020 - - - 3,999,900.00 3,999,900.00 Cost of Issuance $449,950.00 7/1/2020 - - - 3,999,900.00 3,999,900.00 Underwriter's Discount $437,010.00 1/1/2021 - - - 3,999,900.00 3,999,900.00 Contingency $3,150.85 7/1/2021 - - - 3,999,900.00 3,999,900.00 Total $169,516,380.15 1/1/2022 - - - 3,999,900.00 3,999,900.00 7/1/2022 - - - 3,999,900.00 3,999,900.00 1/1/2023 - - - 3,999,900.00 3,999,900.00 7/1/2023 - - - 3,999,900.00 3,999,900.00 1/1/2024 - - - 3,999,900.00 3,999,900.00 7/1/2024 - - - 137,329,900.00 137,329,900.00 18,734,979.00 258,447.70 18,993,426.70 173,329,000.00 173,329,000.00 Capitalized Interest Escrow payments for payments for 2009 Bonds Refunding Bonds (1) Preliminary and subject to change (2) Interest rates of SLGS range from 0.27% - 0.89% 5 (3) Escrow cash flow is a preliminary indication from Escrow Bidding Agent. Securities and respective interest rates currently unavailable.

Savings  The cash flow savings will start with the Conversion Date year 2019-20 and extend through the years to July 1, 2033, the original maturity date of the 2009 bonds.  By utilizing Refunding Bond proceeds and tax rate reserve funds to pay interest on the refunding bonds to July 1, 2019, the District can issue the refunding bonds as Current Interest Bonds instead of Capital Appreciation Bonds and project that the tax rate necessary to pay the Proposition MM and S bonds after the issuance will not exceed $66.70/$100,000. Preliminary Savings (1)(2) Prior Debt Refunding Debt Capitalized Refunding Net Present Value to Date Savings Service Service Interest Cash Flow 5/4/2016@2.461% 7/1/2016 - 952,177.08 952,177.08 - - - 7/1/2017 - 6,013,750.00 6,013,750.00 - - - 7/1/2018 - 6,013,750.00 6,013,750.00 - - - 7/1/2019 - 6,013,750.00 6,013,750.00 - - - 7/1/2020 7,999,800.00 7,328,750.00 - 7,328,750.00 671,050.00 617,181.00 PV of savings from cash flow 14,520,677.34 7/1/2021 7,999,800.00 7,328,000.00 - 7,328,000.00 671,800.00 603,283.16 Less: Tax Rate Reserve -5,553,834.30 7/1/2022 7,999,800.00 7,329,000.00 - 7,329,000.00 670,800.00 588,208.55 Plus: Contingency 3,150.85 7/1/2023 7,999,800.00 7,331,500.00 - 7,331,500.00 668,300.00 572,269.26 7/1/2024 7,999,800.00 7,330,250.00 - 7,330,250.00 669,550.00 559,847.25 Net PV Savings 8,602,268.95 7/1/2025 7,999,800.00 7,330,250.00 - 7,330,250.00 669,550.00 546,710.77 Conversion Value 133,330,000.00 7/1/2026 7,999,800.00 7,331,250.00 - 7,331,250.00 668,550.00 533,121.49 % of Conversion Value 6.45% 7/1/2027 7,999,800.00 7,328,000.00 - 7,328,000.00 671,800.00 523,124.35 7/1/2028 7,999,800.00 7,330,500.00 - 7,330,500.00 669,300.00 509,047.85 7/1/2029 7,999,800.00 7,328,250.00 - 7,328,250.00 671,550.00 498,810.03 7/1/2030 7,999,800.00 7,331,250.00 - 7,331,250.00 668,550.00 485,077.34 7/1/2031 44,164,800.00 40,464,000.00 - 40,464,000.00 3,700,800.00 2,566,542.63 7/1/2032 52,994,900.00 48,558,600.00 - 48,558,600.00 4,436,300.00 2,996,733.47 7/1/2033 53,000,000.00 48,562,800.00 - 48,562,800.00 4,437,200.00 2,920,720.17 238,157,500.00 237,205,827.08 18,993,427.08 218,212,400.00 19,945,100.00 14,520,677.34 (1) Preliminary and subject to change; (2) Due to the difference in interest rates on the Refunding Bonds and the interest rates obtained by investing funds in the escrow, the negative 6 arbitrage on escrowed funds invested to the redemption date is estimated at $6,611,827.24