8/14/2019 Deferred Financing-BOC Presentation Aug 19 2009-FINAL
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Bond Oversight Committee
August 19, 2009
8/14/2019 Deferred Financing-BOC Presentation Aug 19 2009-FINAL
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Program Status
131 New K-12 Schools By 2012/13 80 New K-12 Schools Completed
65 K-12 Additions By 2012/13 59 Completed
21, 028 Modernization Projects By 2011 18,511 Completed
90 Schools On A Multi-Track Calendar In 2009-2010
u ay n ergar en mp emen e s r c w e
5 MW+ Of Renewable Energy Installed This Fiscal Year
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Assessed Value Forecast
900,000
$ Millions
700,000
800,000
400,000
500,000
,
200,000
300,000
-
100,000
Fiscal Year Ending June 30
Low Forecast Baseline Forecast High Forecast
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General Themes Tax Rate vs. Tax Bill
Tax Rate = Debt Service
When new bonds are issued the amount of Debt Service
Assessed Value
increases
When Debt Service oes u OR
When AV goes down, the Tax Rate Increases
However, the actual tax bill for a parcel owner may either goup or down, depending on that propertys AV change
Tax Bill = Tax Rate x Property Assessed Value
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Debt Service and Tax Rate vs. Tax Bills
Exam le not real data
Effect of Assessed Value decreasing on tax rate(sample data
Year 1 Debt Service $700,000,000 = 0.0015028 Tax RateAssessed Value $465,806,005,470
Each Tax Bill de ends on the AV for an individual ro ert
Year 2 Debt Service $700,000,000 = 0.0017582 Tax Rate
Assessed Value $398,124,791,000
If a Assessed Value of a parcel goes down (sample data):
If arcels Assessed Value remains the same:
. ,
Year 2 Tax Rate 0.00175824 X AV $207,500 = $365 Debt Service
Year 1 Tax Rate 0.00150277 X AV $250,000 = $376 Debt Service
Year 2 Tax Rate 0.00175824 X AV $250,000 = $440 Debt Service
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Process for G.O. Bond Tax Assessments
Voters pass a G.O. bond authorizing District to issue debt
District issues bonds according to requirements of theconstruction program
District reports planned debt issuance to County
Count calculates tax rate each ear based on
Debt Service requirement
Aggregate assessed valuation in LAUSD boundaries
Count calculates tax due on each arcel as Tax Rate x AV
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Debt Service and Tax Rate
Projected Debt Service
$1,112$1,200
$963
$901$859
$1,000
($Mil)
$697
$778 $779$781$786$782$673
$600
$800
Deb
tService
$400
talProjected
$200
T
FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15
Fiscal Year
Previous Forecast Debt Service (with Q) Current Forecast Debt Service
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Economic Impacts On Bond Issuance
Projected Issuance At Time Of Measure Q Election Projected Issuance After Beacon Baseline
$3,500
$4,000
$4,500$Millions
$3,500
$4,000
$4,500
$Millions
$1,500
$2,000
$2,500
$3,000
$1,500
$2,000
$2,500
,
$0
$500
$1,000
$0
$500
$1,000
Fiscal YearMeasure K Bonds Measure R Bonds Measure Y Bonds Measure Q
Fiscal YearMeasure K Measure R Measure Y Measure Q
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Cash Shortfall Status
Planned issue of $3.9 billion In K, R, & Y Bonds In FY 09-10
By Spring 2010, state applications for $800 Million will bepending apportionment for new construction projects
Currently state is not apportioning, but issuing unfunded
approvals
20+ large construction projects remaining to bid
Approximately $1.0 B in construction value
Average size = $50M
Next award anticipated in August 2009
17 between now and June 2010
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Funding Strategy Deferred Payment Plan
$5.0
$ in Billions $800M represents construction
contracts for approximately 17
projects
0.8 0.90.8$4.5
Financed +
$3.5
. Est. Costs
State CashGap
3.9 3.9 3.9$3.0State Bond
Local Bond
$2.0
.
Required
Available
Financing
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Cash Shortfall Approach / Options
Generate $3.9 Billion In K, R, & Y bonds in FY 09-10
Secure $1.1 Billion from State as soon as possible
Interim fundin a roach o tions endin state funds:
1.) Use Certificates of Participation (COPs) financing to
ensure cash availability, OR
2.) Use 3rd party financing for projects to defer payments
until State $ received, OR
3.) Delay project awards until state funds are certain andtiming known
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Option #1-Deferred Financing Details - COPs
COPs issuance backed by future bond issuance
10-year or longer COPs term with ability to pay early
Does not count against 2.5% debt limit on G.O. bonds
Advantages:
Can obtain Board authorization for COPs without issuin
Can issue COPs only AS NEEDED to fund projects
,
the COPs are never issued and there is no additional
financing cost
Issue: District capacity to issue COPS
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Option # 2 3rd Party Financing for Contracts
Third-party financing via 17406 Lease-Leaseback
-year ease erm w pre-paymen op on
17406 entity would include financing component
Contractor to submit proposal with financing component
Security for debt is future bond issuance in 2015
In event state funds are not realized
Mostly future Measure R / Y
Could need Measure Q if ALL awards with deferred
payment
In reality, debt will likely be paid off by receipt of state funds
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Program Impact of Financing
Either financing option comes with financing cost
Award contracts in near-term favorable market conditions
Financin cost ma be miti ated b bid savin s in current
market
issuance
Measure R or Y cash forecast to be available in 2015
Financed approach maintains school opening schedule and
timely completion of program
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Option #3 Delay Contract Awards
Delay contract awards until state match is certain
Could mean 1-2 year (or more) delay in school openings
Cost to children still on multi-track and Concept 6ca en ars
Likely increase in bid prices due to future escalation
Additional cost of program / project management due to
extension of program
Economic / jobs impact of delaying $1 billion of contracts
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Next Steps
Targeted rollout of financing program for Sept/Oct RFPs
Board action on Sept. 22 requesting action to approve
Parallel path / backup plan for third-party financing
Industry forum with contractors and financing entities
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Questions????
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Bond Impact on Tax Bills
LAUSD issued estimates as required by Prop 39 requirements
Indicated increase in debt service resulting in increasing taxrates
Best efforts at estimate made prior to bond election
Global economic crisis and serverit of housin crunch has
exceeded pre-election forecasts
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