High School Facilities Improvements

2014

OUSD High Schools are Aging

BUILT 1964

50 YEARS OLD

BUILT 1966

48 YEARS OLDBUILT 1973

41 YEARS OLD

BUILT 1953

61 YEARS OLD

Repairs to High Schools Critical• Parsons estimates $199 million in repairs

– Projected to need $260 million in ten years• 12 buildings need major repair or

demolition– Will be 36 buildings in ten years

• 92 “temporary”buildings haveoutlived useful lives

Impact of Facilities Decay• Student academic growth inhibited• Staff retention adversely impacted• Community resource underutilized• Property values negatively impacted

Previous Bond Measures

March 2004 ($200 million) 48.9% yes voteNov 2004 ($196 million) 54.6% yes vote

Unique Opportunity to Act…Now• Energy from site master planning activities• Visibility from improvements in

surrounding school districts• Low interest rates• Unique skill set of current leadership

Santa Ana Unified

Placentia-Yorba Linda Unified

Tustin Unified SFID 2002-1

Los Alamitos Unified SFID #1

Saddleback Valley Unified

Garden Grove Unified

Tustin Unified SFID 2008-1

Brea Olinda Unified

Tustin Unified 21012

Newport Mesa Unified

Laguna Beach Unified

Capistrano Unified SFID #1

Orange Unified

$77.49

$62.03

$42.92

$41.84

$32.65

$31.35

$24.37

$23.65

$19.00

$18.90

$16.94

$11.71

$0.00

Competition• Other Orange County communities currently levy taxes

related to general obligation bonds as an investment in their schools

Select Orange County Unified School Districts 2012-2013 Tax Rates

Prop 39 Bonds

• Prop 39 passed November 2000• Allows school construction bonds with voter

approval of 55%

Prop 39 Election

• Regularly scheduled election• Detailed Project List• Maximum $60 per $100,000 assessed

valueAssessed Value Max Annual Tax Monthly

$300,000 $180 $15

600,000 360 30

1,000,000 600 50

How much will property value increaseas a result of improved schools?

Prop 39 BOC• Prop 39 requires Bond Oversight Committee• At least seven members

– “active in business organization”– “active in a senior citizens’ organization”– “active in a bona fide taxpayers’ organization”– parent or guardian of an

enrolled child– no district employees, vendors,

contractors or consultants

Prop 39 BOC

• Purpose– Inform the public concerning bond

expenditures• Responsibilities

– Review and Report onproper expenditures

– Advise public ondistrict compliancewith requirements

Bond Basics• General obligation bonds are structured based on projections of:

– District project needs• Project cash flow vs. timing and amount of bond sales

– Authorization amount• Principal amount of bonds approved by District voters• Usually split up into several issuances based on project needs

– District assessed value (“AV”)• Projected AV growth has a significant effect on the bond issuance schedule and

amounts

– Tax rates• Tax rate ≈ debt service ÷ AV• Based on AV, bond issuance schedule and issuance amounts

– Municipal bond interest rates• Function of:

– National and international financial market factors– District credit ratings– Bond structure, e.g. bond type, financing term, tax status and redemption feature

Types of General Obligation Bonds

• General obligation bonds are generally issued as either current interest bonds or capital appreciation bonds– Current interest bonds (“CIBs”)

• Interest paid semiannually• Principal paid at maturity

– Capital appreciation bonds (“CABs”)• Interest paid at maturity• Principal paid at maturity

Annualized Growth Rates: Lowest Rolling Averages:1-year: 0.06 % 3-year: -0.72 %5-year: 0.46 5-year: 0.4610-year: 4.04 10-year: 4.0015-year: 4.98 15-year: 4.9820-year: 4.02 20-year: 4.0225-year: 5.00 25-year: 5.00

Growth Statistics

-

5

10

15

20

25

30

35

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

AV

($ B

illio

ns)

Fiscal Year

District Total AV

Orange Unified School District AV• District AV growing again after recent real estate decline

(1) Source: California Municipal Statistics, Inc.; Data from 1984 to 2013.

FY Total AV (1)

1984 5,640,618,851$ 1985 6,176,521,702 9.50 %1986 6,866,518,365 11.171987 7,534,006,985 9.721988 8,253,491,161 9.551989 8,953,272,550 8.481990 9,922,681,718 10.831991 11,056,134,508 11.421992 11,969,843,413 8.261993 12,701,618,844 6.111994 12,961,782,205 2.051995 12,816,309,020 -1.121996 12,901,876,825 0.671997 13,129,638,107 1.771998 13,479,650,827 2.671999 14,152,629,727 4.992000 15,409,525,117 8.882001 16,597,662,928 7.712002 17,723,489,960 6.782003 18,793,818,430 6.042004 19,985,449,794 6.342005 21,420,374,760 7.182006 23,308,734,152 8.822007 25,378,248,083 8.882008 27,309,125,732 7.612009 28,536,462,843 4.492010 28,023,466,959 -1.802011 27,636,013,478 -1.382012 27,923,280,855 1.042013 27,939,202,793 0.06

Annual% Change

Issue Issue Date ProceedsSeries A September 2014 124,000,000$ Series B September 2016 124,000,000 Series C September 2018 124,000,000

Total 372,000,000$

Prospective Issuance Schedule (1)

$-

$15

$30

$45

$60

$75

$90

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

Tax

Rate

(Per

$10

0,00

0 of

AV)

Fiscal Year

Projected Tax Rates

Series A Series B Series C

Bond Illustration• Authorize a new tax in the amount of $60 per $100,000 of AV utilizing 25-year

financings

(1) Issuance schedule for illustrative purposes only. Actual amounts and dates will be tailored to the District’s facility needs.

Term Proceeds25 Years $372,000,00030 Years $402,000,000

Financing Term Sensitivity

High Schools First

• Reasonable project management scope• Ultimately impact all OUSD students• High visibility within communities• Quality high schools have significant

requirements (science rooms, performing arts buildings, athletic facilities, etc)

IMAGINE