Disclaimer: Provided for distribution in advance of the meeting. Please see Board minutes for Q&A and verbal commentary. Cambrian School District Report on Taxpayer Savings from Measure G Bond Refinancing Government Financial Strategies inc. Presented by Lori Raineri and Stacie Frerichs October 3, 2013
Tonight s Agenda Bond Sale Results - The Series A 2003 bonds met the threshold for refinancing Tax Levy Savings Update of District s General Obligation Bond Portfolio Summary Cambrian School District - Page 2
Bond Sale Government Finance Officers Association recommended Best Practice: Competitive Bid - Bids accepted until Tuesday, August 27, 2013 at 9:05 AM. i-deal Bidding Platform - Used on the day of sale to accept bids but also provides advance notification to potential bidders - Underwriters notified are those who subscribe to i-deal and those whom we have identified. Notification provides access to the Preliminary Official Statement, bid specifications, purchase contract and a bid form (no longer used by bidders) - Posting in The Bond Buyer newspaper s competitive sale calendar - Flexible Bidding Parameters More competition è better results for the District Cambrian School District - Page 3
Score Card CAMBRIAN SCHOOL DISTRICT (Santa Clara County, California) 2013 General Obligation Refunding Bonds Sale Date of Tuesday August 27, 2013, 9:05 a.m. Pacific Time Government Financial Strategies inc., Sacramento, Financial Advisor Lowest True Interest Cost (TIC%) Award Basis Par Amount: $11,510,000.00 Dated Date: September 17, 2013 Delivery Date: September 17, 2013 First Interest Payment: January 1, 2014 Serial Bond Due Dates: July 1, 2014 through 2026 First Call Date: July 1, 2022 at par S&P Rating: "AA-" Approximate COMPETITIVE BIDDING RESULTS Difference in True Interest Cost Present Value Bid # Name of Bidder (TIC%) From Winning Bid 1 Morgan Stanley & Co, LLC 3.190688% n/a 2 BMO Capital Markets 3.198991% $6,995 3 Hutchinson, Shockey, Erley & Co. 3.390573% $165,947 Note: subsequent to the bidding for the current interest bonds, the winning bid was restructured, changing the TIC to 3.212262%. Cambrian School District - Page 4
Result: $1.14 Million Taxpayer Savings Debt Service $2,250,000 $1.14 Million in Total Taxpayer Savings is $203,000, or 21% More Than the $937,000 Presented to the Board $2,000,000 $1,750,000 Debt Service Post-Refi Callable Bonds Debt Service - Non-Callable Bonds Refinancing savings $1,500,000 $1,250,000 $1,000,000 $750,000 $500,000 $1.14 Million in total savings equates to a present value savings of $915,000, $168,000 more than the $747,000 presented to the Board $250,000 $0 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Fiscal Year Beg July 1 The callable portion of the Series B Bonds were not refinanced as savings did not meet the refinancing threshold. Board presentation occurred on August 1, 2013. Cambrian School District - Page 5
Projected Annual Tax Levy Savings: $1.51 Tax Levies per $100,000 of AV $36 $32 Refinancing the Callable Portion of the Series A Bonds is Projected to Reduce Tax Levies by an Average of $1.51 from 2014-15 Through 2025-26 Actual Projected Tax Levy Savings Post-Refi Tax Levies $28 $24 $20 $16 $12 $8 The refinancing occurred after 2013-14 tax levies were set; therefore, taxes collected but not needed for 2013-14 debt service will be applied to reduce 2014-15 tax levies $4 $0 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 Fiscal Year Beg July 1 Tax levies based on assumed AV increases of 3% for 2014-15, & 4% annually thereafter for net local secured, while all other AV types are assumed to remain unchanged. Tax rates and savings are per $100,000 of assessed value. An estimated savings of $1.24 per $100,000 assessed value was presented at the August 1, 2013 board meeting. Cambrian School District - Page 6
Not Just About Amount, But Liberty Cambrian School District - Page 7
A Bond Issue is Made Up of Many Bonds NEW ISSUE S&P Rating: AA- DTC BOOK-ENTRY ONLY See RATING herein In the opinion of Kronick, Moskovitz, Tiedemann & Girard, a Professional Corporation, Sacramento, California, Bond Counsel, based upon an analysis of existing statutes, regulations, rulings, and court decisions and assuming, among other things, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excludable from gross income for federal income tax purposes and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See LEGAL MATTERS - Tax Matters herein. $11,510,000 CAMBRIAN SCHOOL DISTRICT (SANTA CLARA COUNTY, CALIFORNIA) 2013 GENERAL OBLIGATION REFUNDING BONDS DATED: Date of Delivery DUE: July 1, as shown below The Cambrian School District (Santa Clara County, California) 2013 General Obligation Refunding Bonds (the Bonds ) are issued by the Cambrian School District (the District ) to (i) refund certain outstanding general obligation bonds of District, and (ii) pay costs of issuance of the Bonds. See PLAN OF REFUNDING herein. The Bonds are payable from the proceeds of ad valorem property taxes which the Board of Supervisors of Santa Clara County are obligated to levy and collect on behalf of the District without limitation as to rate or amount on all taxable property in the District (except for certain personal property which is taxable at limited rates) for the payment of the Bonds. See "SECURITY AND SOURCE OF PAYMENT " herein. The Bonds are being issued as fully registered bonds, without coupons, and when delivered will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Bonds. Individual purchases of the Bonds will be made in book-entry-only form and only in authorized denominations, as described in this Official Statement. So long as Cede & Co. is the registered owner of the Bonds, payments of principal of and interest on the Bonds will be made by the Paying Agent to DTC for subsequent disbursement to DTC Participants who will remit such payments to the Beneficial Owners of the Bonds. See THE BONDS DTC Book-Entry Only herein. Interest on the Bonds is first payable on January 1, 2014, and semiannually thereafter on January 1 and July 1 of each year. The Bonds are subject to redemption prior to maturity. See THE BONDS Redemption Provisions. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT INTENDED TO BE A SUMMARY ALL INFORMATION RELEVANT TO AN INVESTMENT IN THE BONDS. INVESTORS SHOULD READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. CAPITALIZED TERMS USED ON THIS COVER PAGE NOT OTHERWISE DEFINED WILL HAVE THE MEANINGS SET FORTH HEREIN. MATURITY SCHEDULE Maturity Date Principal Maturity Date Principal July 1 Amount Interest Rate Yield July 1 Amount Interest Rate Yield 2014 $ 685,000 3.000 % 0.250 % -- -- -- -- 2015 570,000 3.000 0.550 2021 $ 910,000 5.000 % 2.780 % 2016 620,000 3.000 0.750 2022 990,000 3.000 3.000 2017 665,000 3.000 1.150 2023 1,055,000 5.000 3.250 C 2018 720,000 3.000 1.600 2024 1,150,000 3.500 3.500 2019 770,000 4.000 2.100 2025 1,225,000 4.000 3.750 C 2020 835,000 5.000 2.450 2026 1,315,000 4.000 4.000 C = Yield to call on July 1, 2022 at par. The Bonds will be offered when, as and if executed and delivered and received by the underwriter for the Bonds, subject to the approval as to their legality by Kronick, Moskovitz, Tiedemann & Girard, a Professional Corporation, Sacramento, California, Bond Counsel. It is anticipated that the Bonds, in definitive form, will be available for delivery through the facilities of DTC in New York, New York on or about September 17, 2013. This Official Statement is dated August 27, 2013 Cambrian School District - Page 8
Updated Debt Portfolio General Obligation Bonds, November 2002 Election, Measure G, $20,975,000 Ratio of Principal Debt Service Ratio of Debt Total Debt Debt Service Paid & to be Paid & to be Service to Outstanding Final Refinancing Bond Issuance - Issuance - Total Service at to Principal for Repaid as of Repaid as of Principal as of Principal as of Maturity Able to Next Call Callable Next Call Candidate as of Series Type New Money Refinancing Issuance Issuance Orig Issuance Sep 17, 2013 Sep 17, 2013 Sep 17, 2013 Sep 17, 2013 Year Call? Date Principal Premium Sep 17, 2013 A 2003 B 2005 CIBs $15,105,000 $0 $15,105,000 $25,249,716 1.67 to 1 $3,250,000 $9,041,914 2.78 to 1 $0 2013 n/a n/a $0 n/a n/a (1) CABs $419,912 $0 $419,912 $1,570,000 3.74 to 1 $419,912 $1,570,000 3.74 to 1 $419,912 2028 No n/a $0 n/a No CIBs $2,215,000 $0 $2,215,000 $3,497,783 1.58 to 1 $2,215,000 $3,497,783 1.58 to 1 $1,745,000 2025 Yes Jul 1, 2015 $1,560,000 0% No CABs $3,235,032 $0 $3,235,032 $14,085,000 4.35 to 1 $3,235,032 $14,085,000 4.35 to 1 $3,235,032 2035 No n/a $0 n/a No 2013 Rfg CIBs $0 $11,510,000 $11,510,000 n/a n/a $11,510,000 $15,065,829 1.31 to 1 $11,510,000 2026 Yes Jul 1, 2022 $4,745,000 0% No (1) $20,974,944 $11,510,000 $32,484,944 $44,402,499 2.12 to 1 $20,629,944 $43,260,526 2.10 to 1 $16,909,944 $6,305,000 (1) Series A CIBs maturing from 2014-2026 refinanced by Series 2013 Refunding Bonds. Cambrian School District - Page 9
Post Game Analysis Following a competitive process, bond underwriters from throughout the US were invited to bid on the District s bonds, the District received 3 bids for its Series 2013 General Obligation Refunding Bonds. This high level of bidder participation is due, in large part, to the District s credit rating of AA-. The competitive bid process showed a dollar difference of $165,947 on a present value basis, between the winning bid submitted by Morgan Stanley & Co. LLC., and the last place bid. After restructuring to smooth debt service, the bonds true interest cost ( TIC ) is 3.21%. The first and second place bids were just under $7,000 apart. $1.14 Million in taxpayer savings, equating to an average annual tax levy savings of $1.51 per $100,000 of Assessed Value. Cambrian School District - Page 10
Tomorrow will be a Better Day Questions? Thank you! Cambrian School District - Page 11