HomeMy WebLinkAbout11-12-2015 Work Session Minutes/
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Work Session
Board 0fTrustees
Coeur d'AlePe/Idaho
Thursday, November 12,2016
12:00 noon
i Call \oOrder
Chairman McBride called the meeting to order at 11:45 a.m. He thanked Eric Heringer from PiperJaffray for all
his support and efforts made in our behalf for the victory of passing the bond. He also recognized Nicholas Miller
from Hawley TmxoUfor being inattendance,
U. Roll Call
Chairman Brian McBride present
Vice Chairman Paul Jenkins present
Treasurer Amy Landers present
Trustee Jeff Bird present
Trustee Greg Calder present
Ui Welcome Visitors and De|emadiona
Others in attendance were Chief Financial Officer April Burton, Rocky Mountain Middle School Vice Principal
Thomas Kennedy, Deputy Superintendent MarjeanMcConnell, Superintendent Charles Shaoke#. EhcH*hnger.
Danielle Quade, Nicholas Miller, Chelsea Porter, Scott StraUbhar, and Board Clerk Mary Mortenson.
IV, Items for Discussion
A. Bond Issue Plannina—Chairman McBride turned the meeting over toEric Heringer,PiperJuffrayand
Nicholas Miller, Hawley Troxell.
Mr. Hahngmrdistributed adocument, Bond Sale Planning, November /2, 20/5toall inattendance. The key
points were:
° Bond Election Planning assumptions lists the details of the bond that were prepared and accepted by the
board and proposed for the November 2O15bond election.
" This plan also includes future Supplemental maintenance and operation levy allowances for 2017 or 2018 as
needed.
~ Market value growth assumption io4.O0Y6annual growth.
" With the passing of the Novernber Bond, the District property tax levy rate will increase from $5.45 to $5.80
per $1,000. This increase allows for flexibility and includes supplernental levy increase,
° Selling the bonds will be impacted by interest rates and the municipal bond market; interest rates have been
increasing recently. Short term rates will increase more rapidly than long term rates,
° In the tax collection cycle, it is best to sell bonds in March 15, 2016 which will be paid back by September
15,2033,
° |fthe bonds are entirely sold and interest rates are locked in, the money will h*invested and start earning
interest throughout the three year construction timeframe. This could be advantageous when short term
interest rates increase.
° If the bonds are sold as a split sale, there Could be potentially $1.96 million saved in interest costs; however,
ifinterest rates increase, potential savings Could belost inmsplit sale.
° For the split sale consideration, locking ininterest cost isbest for longer bond maturities, Also allows
additional flexibility to manage levy rates and be able to fine tune our bond payments.
" Bond payments Would start inSeptember, ifthe bonds are sold inMarch.
^ The top priority arid recmmendation is tolock inthe interest rate arid mmdmizeinterest rates vs. taking the
chance nninterest rates increasing with the split sale scenario,
° The interest cost has decreased from 3.35% at pre-election to Current cost of 3.21 %, which lowers the net
bond repayment cost byover $1 million.
* |nv*o\om interested in bond funds include insurance Casualty companies, money manogernentcompanies,
" |tiatairtoauuumem4Y6ma4mtva|ueOmwthuverUma�thiumiUapo*dupthempaymnnip|on,
° Currently, the 2OD8bonds ($22million) are costing 6.n0%interest. |twould b*best Varefinance the 2009
bonds with APR m/2.40%attoday's rate. Approximately $2million could besaved.
° When refinancing abond et the short term rate, the money goes into anescrow account and iainvested by
short term treasury securities until the call date, the date it can be redeemed to pay back the investors
(2010). Having money in an escrow account for three years earns interest; the more it earns, the less You
have itput in.
^ Refinancing iobest when short term rates increase and long term rates remain low; halso gives the
opportunity ofrestructuring the payment schedule.
° Proposal of adopting a Bond Resolution authorizing bond sale is subject to parameters, and delegate
authority tocomplete the bond sale NSuperintendent and Business Manager,
Nicolas Miller, Hawley TmxnUhanded Out the dooumen\Role ofBond Counsel Joint School District No, 93(o
everyone in attendance. He shared a brief history of bonds and bond Counsel services provided by their firm.
The key points ofthe discussion were:
° Delegation authority is divided among both the financial arid the legal bond counsel entities. The
underwriter sells the bonds tothe inveok`ns, tracks the interest rates and ensures payments are mode. Bond
counsel provides the legal opinion to the investors and guarantee the legal validity of the bonds,
° Bond Counsels need kobelisted inthe "Red Book" (ubelegal bond advisors, Hawley TmxaUhas been
listed since 1985. They are the largest Idaho firm with a Red Book listing and the leading Bond Counsel for
public schools.
" Approvals are needed to issue bonds. Reimbursement Resolution allows the district to reimburse itself for
expenses paid out prior to receiving the monies from the bond sale. This relates to hard costs, i.e,,
excavation or demolition vs, soft costs, i.e., architect's fees which can always be reimbursed regardless if
the District adopts this resolution. When YOU adopt the Reimbursement Resolution it states that you plan on
spending money on the project within 18 months prior to receiving the proceeds from the bond.
° Bond resolution is the contract showing the rates with the bond holders. In July 2014 a bill was passed that
states that a district or any municipal governing body could delegate authority to a member of the governing
body or chief executive or chief financial officer authorizing the issuance of bonds. This gives the
underwriter the flexibility to fine-tUne the bond sale before going to market and allows the Board to delegate
bond authority to the superintendent and the financial officer jointly with the power to determine the date of
sale of the bonds, without any requirement of Board approval. Items to be delegated Would include interest
rates and the structure of the bonds and allows for certain parameters to be set. Certain limitations would
apply.
`
After the bonds are issued, there are two areas of continuing compliance: Tax exempt bond compliance
(IRS) and Information disclosure compliance (Securities Exchange Commission). |fthe district |aselected for
a routine IRS audit, all legal documents would need to be submitted to ensure there would be no change in
the bond's tax exempt status, All municipal bond offering documents arid disclosure agreements are
required to be filed with the SEC to remain in compliance. It is very technical and important that we monitor
ou/discloaumagnaementyaaequiredbytheMunicipuUUoaCunhnuing0oo|ooumConperation(MCDC)
Initiative.
' EMMA2008—Electronic Municipal Market Access — provides free public access tocredit ratings for
municipal securities. This is a great resource for investors, bond holders, and is easy to use. Every firno
there is a bond issued, there is a bond agreement; it is important to state arid disclose all the facts of each in
order babecompliant. The underwriters are fined when not found incompliance,
^
The SEC regulation states there must be a clear dividing line between who the underwriter is and who the
financial affairs advisors are and their respective responsibilities. The underwriter works for both sides and
does not owe any fiduciary duty with the client and needs tobatransparent, Apricing advisor can assist
with strategic bond planning, manage the levy mte, end owe fiduciary duty, but does not sell the bonds.
Working with oprioing advisor is not necessary, but could beawise choice in proposing and advising afair
coxnpnnmahonfor the brokers and knowledge of the market, Their fee should b*negotiated and be
Mrs. Burton informed the Board the docurrient Bond Issuance FIrocess Legal Issues is located or) tile Resource
tab oil BoardBook.
Chairman McBride recessed the meeting at 1:54p.m, The meeting reconvened at 6:04 p.m. He introduced Scott
StraLibliar from Hummel Architects.
Scott Straubhmr,Hummel Architects discussed the dmelinefor the new high school, including the programming,
designing, and construction, The key points were:
^ T he schedule to complete this project is as first proposed when the bond resolution was written, providing
ample time at each stage of project; hn*mver, it can take only between 22'24 months to build a high muhuoi
" Our prograrurning processes includes discussing the construction processes with the board, Constituents
and administrators ushzflow You Would like Your spaces defined. This period also allows for tile
infrastructure requirements ofthe project habeplanned.
° Shortening the time for the construction process call increase liabilities, Le., problems arising from the
County or utility companies, Due to previous discussion on certain entities and requirements, it Could be
possible to expedite the building timeline, Determining how much of a customized high school You want will
affect the building timeline.
° To design the high school that You feel is the best design, communicate with your science teachers to help
design the labs needed for their classes or the band and art departments for their input on tile flow of the
fine arts wing orinclude community outreach.
° Brad McKinsey who has acted as the owner's repmomn1aUve, understands conot'oction� however, ho is
neither aConstruction Manager nor General Contractor.
° The negotiated architect's fee will include Hummel Architects and Alderson Karst & Mitre Architects firms, all
the engineers, (beathoo| |ighUng, meohonioe|, structural, e|mctriom|. HVAC components, landscape design,
etc., kitchen and furniture, fixtures and equipment costs (F,F and E costs). Inspections are done by a
specialized company. The civil engineering would not be included in the fees, but is in the budget, These
items will beabout 2O96ofthe construction cost.
~ Construction delivery method recommended would be the Construction Manager/General Contractor
(CM/GC),This allows tile entire process tobehandled inone contract, Selection iamade bythe owner of
the project based on qualifications, not price, The CM/GC would be involved in the design process, The
CM/GC Would manage the bid process and then serve as the General Contractor during the construction
phase. Construction Manager's role helps to schedule projects and estimate costs and consult with the
architects. At the firne the guaranteed maximum price is locked in and a contract is Submitted, the General
Contractor role then will take the reins ofthe building project,
" This allows the owner to pick who they want to work with though the selection process and then negotiate
the CM/GC cost, profit and overhead will be. Making them part of the team will be beneficial if You wish to
expedite the project. While the architects are designing, the CM/GC could be working oil the side work, i.e.,
utility work and getting those projects under contract.
° Other construction contracting options include Design/Bid/BUild (Traditional method), Construction Manager
(CM oversees design process and construction and owner handles bidding process), and Design/BUild
(Design and construction are handled inesingle conhuoV.
° To use the CM/GC a Construction Manager License is required and must have the ability to bond the
project,
°
Hummel's Current design includes a few desired designs and flow models from other high school plans. The
design process includes all the desirable options and then piece ittogether.
°
Hiring local contractors and engineers to build the high school is best, when we have increased the tax levy
from Our community hobuild this school.
°
Encouraging community outreach ieimportant.
°
The high school building will betwo stories and iehandicap accessible.
°
Using the CM/GC design helps to save time by letting the owner tearn with the contractor to look at ways to
expedite the design and construction Schedules. The CM/GC will be chosen by the Request for QLl@IifiCati0n
(RFO)process and will need {abathe first step. Hummel can provide eokap-by-a$»plist ufwhat needs to
b*done throughout the coining months.
K( Boan]Tmini/m
Board training Was diSCUssed along with the bond information presented.
N. Call for KnendaItems for U000miuqMeednna
& Work Session Wednesday, November 18,2Q15 CANCELED
B. Regular Meeting - Wednesday, December 9, 2015 - District Board Room 7:00 p.m.
C� Work Session - Wednesday, January 6'2016 - Discovery Elementary 11:30am,
D. Regular Meeting ' Wednesday, January 13'201R'District Board Room 7:OOpm.
E. Work Session Wednesday, Jenumry27'2Bi6'Falls Valley Elementary 11:50om.
Ni Adinummeni
Chairman McBride adjourned the meeting otO:4yp.m.
� �
< (
APPROVED:.J\
Chairman
c �
ATTESTED: //��/^ `�' � '~- ~( Clerk
Bond Sale Planning
November 12, 2015
Eric Herina0er
Managing Director
208-344-8577
eric.a.heringer@pjc.com
Piped affra-k7
BLIond- Election Planning Assumptions
ell� i
BO:rd. AM-10"ID-gE $63.5 million
I-ri te-f-Q I I
CE � 71/23/2015 - plus 0.509/0 cushion
a-im-n-
Re- 1 1 /Years
-Z
'10% of average annuall prindpal il teres'
E7-Maliza'--on Subsid-v-
,C -U 4-
w
e Proposed bond debt-seryice * as hoed, ea Dc u -01 x st:
St l-
-rbonds & other levies
F-1"ti zlre- -Sup D-. lemn ten- talM&-O levies- Initial increase in
an.,gal rate every 22 years
am' 4.00% annual. growt-h
- - k u�� -rowt- Assume I 0-1(-?�
77—
--ax Rate imvact:
pror)ertv f e
D�)rO in-rease ove- Fisca'Year 2016 total Distrid aX levv fa�
in tota' rae &'$�.80 pe-- LOOO.
y 501 14" Historical Incerest Rates
Historical Interest Rates
AAAMINAS
9 3
N T
OV -13
Bond Cost Summa
Ty
True interest Cost "Rate):
e:-
_est Cost
F-r-oiected LeVy Equalization:
et Interest Cost:
Flus, _1 rincipal
Equals: TINIet Bond Repayment Cost:
Pipefaffray
7/23/2015
Pre -Election
3,35%
$25fO90,000
(177f718,000)
T,372f 000
63,50QN0
$701872,000
11 / 10;` 2 0 1,55
Update
3,21%
$23,3554,625
-17;370925
,98371_vi
6 37 5 0 Q, F -I 0 50,
$691483,70-0
--tre bond author�
lization now
hoc --k 5n interest rates and avoid interest rate risk.
-onstruction schedule showsJuIv 2019 as -projected com-oletion cj-a'-,--,
I L %
eannings on construction proci-
Maximize interesL eeds:
(S63,500,000 x 0.50%) x 1.5 per imidpoin-It47; ()0f)
Y
a e now !/:, in Ma-rch 201 (7)
L
Lock interes-L cosf- on lon-D7-st maturities now (2029-'�10�iq,
xi Save _r
app- xmatelv $1.96million. of interest cos -6t assuming no c-h-aln.—ge- in
A-
in 1-n-Qt'rates.
n �zjno/�,
ar's terest earnings on $31 .75 milb ort '$ 60k
.oss cd one J e IITI I
ffiteres'rates would have to go up by 0.81% over ext t Ar- Beynex-y-o et
� t
,-.!-.--ak-eears
.
1 -k -Low s additional flexibility to manage levy rate wifn more yeea, Iy3aX_-,,
I
vlalue and Lev -v Equalization
Bonneville o, 93
Existing and Proposed Debt Service
$63.5M Split Sale Option
Refunding Candidate: $21,950,000 Series 2009, Maturing 2019-2028
Average Coupon: 5.06%
Call Date & Price: 3/15/2019 at par
Series 2009 Refunding Debt Service
Savings as of 11/9/2015
2016
4,838,538
(79,731)
4,758,806
2017
4,835,038
(164,863)
4,670,175
2018
4,831,313
(165,563)
4,665,750
2019
4,837,063
(166,61.3)
4,670,450
2020
4,838,888
(166,588)
4,672,300
2021
4,836,938
(166,088)
4,670,850
2022
4,833,538
(166,488)
4,667,050
2023
4,833,750
(165,100)
4,668,650
2024
4,833,750
(164,950)
4,668,800
2025
4,832,475
(164,725)
4,667,750
2026
4,832,150
(161,800)
4,670,350
2027
4,587,275
(164,425)
4,422,850
2028
4,586,350
(162,750)
4,423,600
2029
3,470,350
3,470,350
2030
3,455,350
3,455,350
2031
3,465,000
3,465,000
Totals
72,747,763
(2,059,681)
70,688,081
Piperjaffray
Bond Sale Schedule:
Piperjailfray
Review finor plan with the Board -
W,
-'-,D93 sD
u'✓mits ISBG application and returns disclos-u-n- data req.....—
-4-0-dav elect-lon protest period expires
A) a
Distn" uf first draft of the Preliminary Official Sfl-f
te tement
Re -e -v-- Certificate of Eligibility in ISBG
Reard Meeting
gular Boa
Aclopt Bonl& Resol-Ilition authorizinj�,� Jbon.- sale S,11,bi-e- ti-
varametpr-, and delegate authorih 4- co!,.�,zm- IPI. 0KI'd 561-
y "0 CC
g -t-J
mnntendent and Btisire ss Mango-er
0 1/25
-iicr A
hcrencv, Meeting
Ratt
Radnc,
Re-ei -%!-e Bonci S
Post- Prelim�nary Official :'Statement
Pre -pricing -meeeting
z.
Hof- Bonds (lock interest rates
C ose Bonds (District receives money',
Piperjailfray
H TV
ROLE OF BOND COUNSEL
JOINT SCHOOL DISTRICT NO. 93
Nicholas G. Miller
S.C. Danielle Quade
Cheisea Porter
- awley'll-roxell'
nmi�.'!er@ha,,.,N/leyt,r-oxe�'w!,,com
dquade Cq,,h,--Ajvie-,(troxe:.com
c!)-orter. hawieytroxeE.cormi
7ST 6.1
A. Role of Bond Caunse�
A. independent Legal Expert
EA. "Red Book" Listing
C. Unique Legal Concern With Public Bonds
D. Services
E.ection, Question
I Board ren4
r
,4. Discicosure—Origmai and" Contir,--ing
S. TA -Exempt Bond -Regulations—At Issuance an� --corkwing
6-eatting Presentation
7,
1ep! Opinion
B. Hawley Troxell Overview
9 1Ned Book Listing Since 1985
* I Seven Full -Time Professionals In Plublic Finance
6 3. Leading Bond Counsel For Public Schools
.—CF -Ina Russea.
Hawley., Troxeli Staffii.-
On rommilmtment to Idaho Schoo;s
Legislation Dralf—Lecd
Drafted SB 1238,2007 — Clarified Levy Equi aiizantion Coverage Fs
Refunding Bonds
-- Drafted HB 210, 2007 — Debt Capacity- increase
— Co-authored HB 470,2008 —Reduce Urban Renevvra,� impact
— Draf-ted, SB 1 '54.2009 - 2 -Tier State Guarant- Prcgra.
04ra-l"Led H B 2! S. 2013 — Overhaw Schocoll Bo.rrld' —Added :3 5"Aw
_Arrmy
Deiegat
Drafted H B 562 20 14 -- Authoriiicn
zed Pr.
vW&
u. Approvals Needed to Issue Scrrh.
Reso'ution
Reimbursemem%. I
S- Ilk I
Bond Resolution
ra
i—I or to 201 A rtra Df
'ive E ctive �
L
Delegation A!te.r?. ff e Ldy 2S 4
HE3 562 2014 Legislature
57-235. BONDS -- DELEGATION AUTHORITY (1) Whenever the govern.; ng 'D C-C'y 0' ar-y pubk
body shafl, deems it advisable to issue bonds under its lzolful aUtont ; then, subject 7-c v e c�`
Such authority, the governing body may, adelegate to a mem., ber of the governing body or --o --�e c-ief
execzu!tive officer or chief financial officer of the public body. in accordance vvm spedil"ic instruct'.cns
and proccedures adopted by the governing body in a resoludan or ordinance aiuthorz!.��-.g --he
issuance of bonds, the determination of any or all of the 191ond8 ig:
a) The rate of interest on the bonds:
coniditions on which and. the prices at which the boncs may bbe reed.,Ieeme�-
_,c'
-cThe existence and amount of any caFkahzed interest or res ervelFun�s,-
(d) The price at which the bonds shah be SCMI..
The -
perirci-pal aniount and, denominations of the boil, S. -
The amount of principai maturing in each year,
�g) Thie dates upon vvhich principa." and interest shaii -be pal�-;
(h) The MMINKS and amou-ints of the bonds b. rehinded. T any; and
C 0- The terms A any contract tc Pprovide credit enhancement of e bonds.
""M 9: OF EICONDS AND RELATEED DOCUMEN7S:
DELEGATION AUTHOR-ITY,
PUrSUant to Section 57-235, Idaho Code, as amended, th-e Board
hereby delegates to the Delegated Officer, the District's Superntendenz
and the Finance DirectonthEe power to make the foflowing
determinations on the date of sale of the Bonds, without any requ-,"rerY)c1T---i--
that the members of the and meet to approve sudin determ�n�tis-rs-,
�jq�ct to the limitations provided.
Key Limitations to Estabiish:
Neyv' Money Bonds:
�€ efundinng Bonds:
i
Set nterest 7ka-7:e �Zap
Set Savi ings
"ance
Contmulng Complo
After Bonds Are lssued,Two Areas of Continuing
a A. Tax-ExeMPt Bond Compliance
Pnoficy Mandated by internal Reve-mue Sere,
Designed -o Ma' e Surg- Bond -s' emar
,or Distrik... L K , I'- _ i �-
cyll-
Exem-
A 'optedr Policy in 20
Distfric-t- a
%eonti rn th rill Compliance, contlt
is EA. InOrmation Disclosure Compliance
--- L Driven by Securiti EA Exchange Commission, not IRS
--- 11. Disclosure Agreements Signed for Bond Issiues si--- ce � - 5--i
:3. EMMA since 2009
Pt SEEC initiative; Still playing out:
SEICC Swictioris 22 Underwritirill Firms for Frmickhrit PkirdQ30 Elock OfVim. hys
Whlsh_rjgtons C.C.—(Newsfile Corp. -- September 30, 20 i T, --e Secur-t-Jes and =xz';�ge
Commission today annolunced enforcement actions against :22 mur idppa!
Or Jolations ir- !-T-,,-ufni6pa,. ' ond offferings. The actionns are 'r -he second roui.rd cy! Tings agairov-
underwriters kund-er -z.-he rh�-n----ipakes
; - - i -- --
nta. 'al
, - g iprogra'm ta-rgev g mater�----sstate m en-,ts anc s s cn� S ...
t mv se!.F-reporz d
ry;u,licictaii bo-nid g dociuments.
F,
A
Continuing Compliance,.,
p
Now A
d -I iz 1 11^ Recommend District- have a Disciosure. oH-cy in
the MAmint
T;
A-HhRm-i . a. n k Yo, u f!
e Questions?,