Boise Independent School District Bond Planning October 10, 2016 Eric Heringer Managing Director 208-344-8561 [email protected]

Michael Keith Vice President 208-344-8564 [email protected]

MINNEAPOLIS | BOISE | CHICAGO | LONDON | LOS ANGELES | NEW YORK | PORTLAND | SAN FRANCISCO | SEATTLE | ZURICH

Bond Election History Prior Bond Elections Year

Amount

1991

$

Approval Rate

22,660,000

75.00%

1996

44,000,000

70.50%

2006

94,020,000

70.45%

Year

Refinanced

Interest Cost Saved

1993 2002

1983, 1989 & 1991 Bonds 1996 Bonds

2003

1993 Bonds

2,218,000

2012 2014

2002 & 2006 Bonds 2007 Bonds

4,270,000 1,150,000

Total Savings

$10,166,000

Prior Bond Refinancings

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Not Available 2,528,000

Overview of District’s Bonds The District currently has three series of bonds, with a total principal amount outstanding of $58,375,000. Details of the bonds are shown below. Outstanding Debt CUSIP No. 097437 Credit Enhancement

Bond Issue

Amount Outstanding

Final Payment

2007 G.O. Bonds

None

1,040,000

August 1, 2017

2012B G.O. Ref. Bonds (06)

None

46,095,000

August 1, 2023

2014 G.O. Ref. Bonds (07)

None

11,240,000

August 1, 2024

Total Debt Outstanding (9/15/2016)

58,375,000

The annual debt service requirements are illustrated below (calendar year).

Boise SD No. 1 (as of 9/15/2016) (excludes 2016) 15,000,000 10,000,000 5,000,000 0 2017

2018

2019 2014 Ref

2

2020 2012B Ref

2021

2022 2007 Ref

2023

2024

Historical Tax Rate Goal The District has historically tried to maintain a constant tax rate for its bond levy.

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Fiscal Years

Bond Tax Rate

1992 - 1996

$0.52 per $1,000

1997 - 2010

$0.62 per $1,000

2011

$0.65 per $1,000

2012 - 2016

$0.70 per $1,000

Overview of Voted Levies Bond Levy      

School districts in Idaho can issue General Obligation Bonds. Bonds are repaid with property taxes (bond levy). Approved with 2/3rds super majority vote. Limited use of funds based on ballot title. Payments can be spread over time – typically 20 years but can be up to 30 years. School Bonds typically qualify for “Levy Equalization” subsidy payments from the State.

Special Plant Facilities Levy (SPFL)    



Provides funding for capital repair and replacement, can be authorized up to 10 years. “Pay as you go”. No interest cost. Typically lower voter threshold.  55% if Bond & Plant less than 0.2%  60% if Bond & Plant less than 0.3%  66% if Bond & Plant greater than 0.3% Helps fund capitol needs of the District but cannot be used for operations.

Supplemental Maintenance and Operations (M&O) Levy  

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Supplemental M&O Levies are typically for General Fund expenditures. Approved with 50% plus 1.

Overview of District’s Bonds – Debt Capacity Section 33-1103, Idaho Code limits bonded indebtedness for Idaho School Districts to 5% of the Full Market Value. Based on data from the Idaho Tax Commission, Ada County, and the District, the mathematical calculation of legal debt capacity for the Boise School District is as follows:

Debt Capacity Calculation September 2016 Full Value

Total Debt Capacity @ 5% Less: Principal Outstanding Remaining Debt Capacity

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$23,253,286,205 x 5% 1,162,664,310 (58,375,000) $1,104,289,310

Things to consider for Bond and Levy Planning The affordability of a bond proposal is often determined by the taxpayer impact of the bond. The key factors that determine the tax rate necessary to repay Idaho School Bonds are:       

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Taxable Assessed Value Interest Rates Bond Rating Additional Revenue Sources (Levy equalization from State) Bond Sale Timing Bond Sale Structure Future Levy Plans

Net Taxable Values The District’s most recent 20-year compound growth rate was 4.10%

Historical

Fiscal Year 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Net Taxable Value 18,247,273,037 16,851,098,096 15,800,150,918 14,267,198,722 13,323,511,672 13,523,659,300 14,754,396,259 16,878,995,776 18,451,421,721 17,726,544,777 15,293,168,791 13,829,803,673

% Growth 8.29% 6.65% 10.74% 7.08% -1.48% -8.34% -12.59% -8.52% 4.09% 15.91% 10.58% ---

* Values do not include URA value

Boise School District No. 1 Net Taxable Values 20,000,000,000 15,000,000,000 10,000,000,000 5,000,000,000 0

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Urban Renewal Market Values The value of the various urban renewal areas (URAs) within the District are currently NOT available to support the District’s existing bonds: • However, the value of the URAs WILL be available to support future bonds; • Furthermore, the expiration date of the URAs will “transfer” the value back to the District, making them available to support the existing bonds. Fiscal Year 2017 Urban Renewal Market Values

Name of URA District

Central District River-Myrtle District Westside Downtown District 30th Street (2012) River Front East (2012) Total

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Value of URA District

295,650,093 404,873,328 156,459,822 32,816,221 27,191,890 916,991,354

Fiscal Year that URA value As % of District's "transfers" to School Market Value District for Existing Bonds 1.62% 2.22% 0.86% 0.18% 0.15% 5.03%

2019 2026 2027 2012 2012

Historical Municipal Bond Interest Rates 20-Year AAA MMD (6-Month History) 2.75% 2.55% 2.35% 6.00%

2.15% 1.95% 1.75% Apr-16

Interest Rates

5.00%

Jun-16

Aug-16

Oct-16

4.00%

3.00%

2.00%

1.00%

0.00% Oct-06

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20-Year AAA MMD

Oct-08

Oct-10

Oct-12

Oct-14

Oct-16

Future Bond Planning Planning Assumptions:

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Election Date:

March 2017

Bond Sale Dates:

Spring 2017 – Sale #1 Fall 2020 – Sale #2

Repayment Term:

20 years (each bond)

Future Market Value Growth:

No Growth

Bond Levy Equalization Subsidy:

10% of Interest Cost (Minimum)

Interest Rates:

Add 0.75% cushion for 2017 Bond Sales Add 1.00% cushion for 2020 Bond Sales

District’s Bond Rating:

Aa1 (Moody’s)

Analysis Summary

Net Interest Cost

Total Property Tax Tax Rate Impact Collections (1)

Mkt Value Growth Needed for no tax rate increase

Bond Amount

Bond Sale Dates

Final Maturity

Scenario 1 (Base Case)

$172.5 million Bond

2017: $90 million 2020: $82.5 million

2037 2040

No Change $ (Remain at $0.70)

244,549,000

$

72,049,000

N/A

Scenario 2

$100 million Bond

2017: $100 million

2037

$0.07 drop $ (Decline to $0.63)

140,883,000

$

40,883,000

N/A

Scenario 3

$135 million Bond

2017: $90 million 2020: $45 million

2037 2040

$0.05 drop $ (Decline to $0.65)

195,000,000

$

60,000,000

N/A

Scenario 4

$210 million Bond

2017: $105 million 2020: $105 million

2037 2040

$

299,366,000

$

4.00% annual 89,366,000 growth thru FY 2022

$155 million Bond

2017: $90 million 2020: $65 million

2037 2040

$0.03 drop $ (Decline to $0.67)

221,028,000

$

66,028,000

$2.0 million Permanent Supplemental M&O Levy

N/A

N/A

Scenario 5

(1) Net of Bond Levy Equalization (2) Collection of Permanent Supplemental M&O Levy through 2040

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$0.10 Increase (Increase to $0.80)

$0.11 Increase (Increase to $0.78)

$

46,000,000

(2)

$

-

4.00% annual growth thru FY 2022

Bond Levy Structure – Illustration of Scenario 1 bond structure $172.5 Million Bond Election (March 2017) $16,000,000

Levy for Existing Debt Service Sale #1 ($90M) Sale #2 ($82.5M) Revenue at $0.70

$14,000,000

$12,000,000

$10,000,000

$8,000,000

$6,000,000

$4,000,000

$2,000,000

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2040

2039

2038

2037

2036

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

$-

2017 Election Timeline

Election Date(1)

Deadline for Filing with County Clerk

March 14, 2017

January 23, 2017(2)

(1) Election dates for school district property tax levy questions (bonds, plant and supplemental levies) are the 2nd Tuesday in March, 3rd Tuesday in May, last Tuesday in August and the Tuesday after the 1st Monday in November. (2) March and August elections require filing more than 50 days prior to the election.

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