2021 Long Range Facilities Planning Committee - Meeting 5 May 10, 2021 - White ...
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2021 Long Range Facilities
Planning Committee
Meeting 5
May 10, 2021
WELCOME FROM YOUR SUPERINTENDENT
FRANK MOLINAR
Superintendent
AGENDA
● WELCOME
● CHARGE AND NORMS REVIEW
● FINANCIAL CAPACITY
PRESENTATION
● TRE
● MR. MOLINAR EXPLAINS CAPACITY
● MOCK TABLE VOTE
Dr. Lizzy Asbury
Facilitator
lizzy@transcend4.com
940.595.0251
CHARGE TO THE COMMITTEE
The WSISD Long Range Facilities Planning Committee is charged by the Board
of Trustees to:
● prioritize the needs of ALL WSISD students and make decisions that will
enable all Brewer Bears to receive a premier education;
● represent the expectations and values of the community;
● use facts, data and financial resources to make informed decisions that
will foster a culture of excellence in WSISD;
● rely on the Master Facilities Plan during collaboration and decision-
making; and
● recommend a program that meets WSISD’s building capacity needs for
the foreseeable future, extends the life of facilities where possible, and
empowers all Brewer Bears to be innovators and leaders of tomorrow.
HOUSEKEEPING
• All relevant materials and information will be distributed to you
as handouts.
• Due to time constraints, no breaks have been scheduled. Please
take care of your personal needs on your own.
• The WSISD leadership team is here to serve you and to be a
resource. Ask questions.
• Your attendance at every meeting will help yield optimum results
for this committee and your community.
GROUND RULES • Only one speaker at a time • Respect the person who is speaking • Listen with a desire to contribute & learn • Engage in the ENTIRE meeting
Q&A PROCESS ● Each table will discuss the information presented and select one question to ask. ● Unanswered questions or concerns will be placed on the ‘parking lot’ to be answered later via email or website post.
CONSENSUS & GRADIENTS OF AGREEMENT
DYNAMICS OF GROUP DECISION-MAKING
CONSENSUS BUILDING MODEL
Contacts
Nick Bulaich
777 Main Street
Suite 1525
Fort Worth, Texas 76102
817.332.9710
nick.bulaich@hilltopsecurities.com
Bond Committee Presentation
May 10, 2021 White Settlement Independent School DistrictPresentation Topics
Texas ISD Bond FAQs & Bond Structuring Variables
Pages 3 – 8
Historical Tax Exempt Interest Rates: Bond Buyer’s 20 Yr. Index
Page 9
White Settlement ISD Historical Tax Base
Page 10
Bond Election Tax Base Assumptions
Page 12
Summary of November 2021 Bond Election
Page 13
Member FINRA / SIPC / NYSE
13
© 2021 Hilltop Securities Inc.Texas ISD Bond Frequently Asked Questions
What is a Bond?
▪ A school bond is similar to a home mortgage. It is a contract to repay
borrowed money over time with a fixed, tax-exempt interest rate.
▪ Bonds are approved/authorized by voters and later sold by a school
district to lenders/underwriters to raise funds to pay for the costs of
construction, acquisitions, renovations and equipment.
▪ Bond authorizations can be sold as one bond issuance or multiple
issuances over a several year period.
▪ Almost all school districts in Texas utilize voted bonds to finance new
facilities and major renovation projects.
Member FINRA / SIPC / NYSE
14
© 2021 Hilltop Securities Inc.Texas ISD Bond Frequently Asked Questions
How are the Bonds Repaid?
▪ A school district has two components to its total tax rate: the Maintenance
and Operations (“M&O”) tax rate and the Interest and Sinking Fund (“I&S”)
tax rate.
▪ The district levies an annual I&S tax rate against the taxable property in the
District to make their bond payments. The Interest and Sinking Fund
(“I&S”) tax rate can only be levied for repayment of voted bonds.
▪ The State Attorney General will not approve a bond issue that is projected to
result in an I&S tax rate above $0.50 in any year that the bonds are
outstanding using the current tax base at the time of bond issuance (“AG Fifty
Cent Test”). A district can pledge funds in order to ensure passage of the
Fifty Cent Test.
Member FINRA / SIPC / NYSE
15
© 2021 Hilltop Securities Inc.Texas ISD Bond Frequently Asked Questions
What is the Term/Payback Period of a Bond?
▪ Depending on the projects being financed with a bond issue, a
school district bond will typically have a term of between 20 and 30
years (maximum legal term is 40 years).
▪ The District has issued 25-year, 30-year and 40-year bonds for new
money projects in the past.
Member FINRA / SIPC / NYSE
16
© 2021 Hilltop Securities Inc.Bond Structuring Variables
Term
▪ Shorter term results in lower interest rate but higher annual payments;
therefore higher tax rate impact
▪ Longer term results in higher interest rate but lower annual payments;
therefore lower tax rate impact
▪ Do not want the term of the bond issue to exceed the useful life of the
project(s) being financed
▪ For WSISD’s bond issue, we are assuming a 33-year term that allows the
final 10 years of principal to be ‘wrapped around’ the District’s existing
debt payments.
17 Member FINRA / SIPC / NYSE
© 2021 Hilltop Securities Inc.Texas ISD Bond Frequently Asked Questions
What will the Interest Rate Be?
▪ The interest rate is not finalized until bonds are sold, which takes place after the
passage of a bond election.
▪ School districts can borrow money at lower, tax exempt interest rates meaning
that the interest earned by the investor is not subject to federal income taxes.
▪ Texas School District bond issues also qualify for the State Permanent School
Fund Guarantee (“PSF”).
– The PSF allows for the bonds to receive a “AAA” rating, which is the highest possible
credit rating.
– The combination of the PSF Guarantee, the District’s strong financial position and the
District’s underlying ratings of “A+” and “A” from Fitch and Standard & Poor’s,
respectively means WSISD’s bonds will be priced at the lowest available interest rates
at the time of issuance.
Member FINRA / SIPC / NYSE
18
© 2021 Hilltop Securities Inc.Bond Structuring Variables
Interest Rates
▪ Interest rates are not finalized for a bond issue until the day the bond
issue is sold. Earliest date would be a little over one month after a
successful election.
▪ Interest rates have risen somewhat over the last few months but are still
very low from a historical perspective.
▪ Always use interest rate assumptions that are higher than current interest
rates to give a ‘cushion’ if interest rates rise from the time the bond
election is called to the time the bonds are issued.
▪ For WSISD’s bond issue, we are assuming a 4.10% interest rate
which is 0.65% over current interest rate market.
19 Member FINRA / SIPC / NYSE
© 2021 Hilltop Securities Inc.Historical Tax Exempt Interest Rates: Bond Buyer’s 20 Yr. Index
20 Member FINRA / SIPC / NYSE
© 2021 Hilltop Securities Inc.Bond Structuring Variables
Tax Base
▪ Tax base assumptions must be made when issuing tax supported
bonds that have a term from 2 to 40 years.
▪ When tax base goes down, same tax rate from prior year produces
fewer dollars; tax base goes up, same tax rate produces more dollars
▪ Goal is to produce tax base assumptions that are realistic yet
conservative
21 Member FINRA / SIPC / NYSE
© 2021 Hilltop Securities Inc.White Settlement ISD Historical Tax Base and Growth
Fiscal Year Tax Base Growth Rate
2011 $1,454,550,356
2012 1,522,490,977 4.67%
2013 1,674,324,923 9.97%
2014 1,482,538,214 -11.45%
2015 1,479,795,594 -0.18%
2016 1,568,651,154 6.00%
2017 1,601,436,882 2.09%
2018 1,728,097,857 7.91%
2019 1,959,674,098 13.40%
2020 2,288,990,048 16.80%
2021 2,441,049,398 6.64%
WSISD’s Tax Base has an average annual growth rate of 5.31% over the past 10 years.
SOURCE: Tarrant Appraisal District
Member FINRA / SIPC / NYSE
22
© 2021 Hilltop Securities Inc.White Settlement ISD Tax Base Assumptions
Because school districts issue long term bonds to pay for their large capital expenditures,
tax base assumptions are used to structure the issuance of any new authorization in order to
calculate/project the I&S tax rate going forward.
If WSISD’s tax base grows at a slower than the projected rate, the District can
use the following tools to help manage the I&S tax rate:
▪ Use excess I&S fund balance
▪ Take advantage of any bond refinances
▪ Delay the issuance and/or structure any new debt Member FINRA / SIPC / NYSE
23
© 2021 Hilltop Securities Inc.November 2021 $115,000,000 Bond Election
Assumptions:
1. $115 million assumed to be issued in February of 2022; assumes current interest rates plus 0.65% with a 33-year term
2. Assumes tax base growth of 4% 2022-2031, 1.50% 2032-2036, 1% in 2037-2045 and no growth thereafter.
3. Assumes WSISD utilizes a total of approximately $4.45 million of excess I&S fund balance to offset tax rate impact in years 2025-2029.
Member FINRA / SIPC / NYSE
24
© 2021 Hilltop Securities Inc.Tax Rate Calculation
Tax Ratification Election
2021-2022
25Table Talk Q&A Process
MOCK TABLE VOTE
TELLING THE STORY….
LIKES & WISHES
Offer up any
Likes and
Wishes to
assist us in
improving
each meetingNEXT MEETING INFORMATION
Monday, May 24th
5:30pm Dinner
6pm-8pm Meeting
Brewer High School
CafeteriaYou can also read
