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Community Corner

WCCUSD responds to bonds questions 2

1.          What are the annual payments?

 

The combined annual net debt service for the 2010 authorization (including both Series A and Series B) will be around $10 million in 2014 and 2015. After the initial two years, the combined annual net debt service obligations drop to approximately $6.5 million to leave room for future series of bonds. The District’s intention is to structure debt service obligations for the 2010 program as a whole to meet its $48 tax rate target assuming reasonable growth in assessed value moving forward. Similar to the 2010 authorization, the 2012 authorization will have debt service obligations of approximately $10 million in 2014 and 2015. After the initial two years, the combined annual debt service obligations drop to approximately $4.0 million to leave room for future series of bonds. The District’s intention is to structure debt service obligations for the 2012 program as a whole to meet its $48 tax rate target assuming reasonable growth in assessed value moving forward.

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2.          How much bond money is currently in some sort of account such as the Country Treasurer? How much interest is earned per year?

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As of June 30, 2013, the District had $70,967,588 with the County Treasurer. The District earned $370,616 of interest income in fiscal year 2012/2013.

 

3.          What is the maximum amount of bonds the district can sell? How is that amount computed?

 

The amount of bonds issued per series is based on a number of factors including expected capital project needs over the next two years and tax rate targets under the various authorizations. The District also aims to leave flexibility in the future to issue additional bonds without deferred debt service structures. The maximum amount of bonds the District can issue at this time is significantly higher than what the District is currently planning for the next series of bonds.

 

4.          When will all bond sales which are currently authorized actually be sold? Is there a schedule?

 

The 2010 Measure D and 2012 Measure E bond programs are likely to be issued over a ten to twelve year period. The financing plans call for issuances of $125 million combined from both authorizations on an every other year basis. The actual issuances will depend on a number of factors including expected capital project needs and future tax base growth (Which will impact projected tax rates and bonding capacity).

 

 

 

 

 

 

5.          What committees will discuss the bond sale?

 

The District discusses its bond sales in a number of public forums such as the District’s Board of Education meetings, the District’s Facilities Subcommittee meetings, and the Citizens’ Bond Oversight Committee meetings.

 

6.          When will the board vote on the bond sale?

 

The District’s Board of Education first discussed the upcoming bond sale at the September 11, 2013 meeting and authorized the sale of the bonds at the September 25, 2013 meeting.

 

7.          What will be the amount sold at this time?

 

The District is currently planning to sell $125 million in General Obligation bonds - $40 million under the 2010 Measure D authorization and $85 million under the 2012 Measure E authorization.

 

8.          Will there likely be a period when the bonds will be interest only?

 

The District is planning to begin repaying principal in 2014.

 

9.          How much will repayment of the bonds cost the average homeowner as measured in $100,000 per assessed value?

 

The County sets tax rates on the District’s bond program on an authorization (rather than a series) basis. The District structures the bonds with the aim at keeping the tax rates in connection with the 2010 Measure D and 2012 Measure E bond programs at $48 per $100,000 of assessed value per authorization – the tax target established at the time of each elections.  Actual future tax rates will depend on actual assessed values.

 

10.      When will the rest of the bonds be sold?

The 2010 Measure D and 2012 Measure E bond programs are likely to be issued over a ten to twelve year period. The financing plans call for issuances of $125 million combined from both authorizations on an every other year basis. The actual issuances will depend on a number of factors including expected capital project needs and future tax base growth (Which will impact projected tax rates and bonding capacity).

 

11.      Why is the district not selling all of the bonds now?

 

The 2010 Measure D and 2012 Measure E bond programs were developed with a ten to twelve year implementation period. The District’s current plan is to sell each series of bonds to meet capital expenditure needs over two years. By issuing the total amount of the authorization over multiple series of bonds, the District is able to adapt the bond program to changing circumstances such as growth or declines in assessed value.

 

12.      Interest rates have increased since the November 2012 election. Did the district anticipate that? What interest rate scenario did the district predict for the bond sales prior to the election? Please provide documentation.

 

In developing the 2012 Measure E bond program, the District assumed relatively conservative interest rate assumptions of 5.75% - despite the then historically low interest rate environment. These assumptions are documented on page four of the attached presentation. The District would like to point out that the bond program will evolve over time to adapt to changing circumstances such as tax base growth and interest rate environment.

 

13.      Currently what is the district expecting the interest rate to be when it sells the bonds for both the upcoming sale and the future sale?

 

Based on the information currently available to the District, it expects a blended borrowing rate of approximately 5.25% on the upcoming sale.




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