ccfc 2013 annual conference · (1) 4 to 1 ratio of total debt service to principal; (2) call option...

1© 2013 Dannis Woliver Kelley

This training is provided for educational, compliance and loss-prevention purposes only and, absent the express, prior agreement of DWK, does notcreate or establish an attorney-client relationship. The training is not itself intended to convey or constitute legal advice for particular issues orcircumstances. Contact a DWK attorney for answers to specific questions.

© 2013 Dannis Woliver Kelley

CCFC 2013ANNUAL CONFERENCE

How to Use Bond Funds CreativelyWhile Complying with Legal Requirements

Marilyn J. Cleveland, Dannis Woliver KelleySamuel R. Santana, Dannis Woliver Kelley

NOVEMBER 4-6, 2013, SACRAMENTO, CA

© 2013 Dannis Woliver Kelley 2

OVERVIEW

Part 1 Legal Requirements for Use of Bond Funds

Part 2 Using Bond Funds



Part 1: Legal Requirements

Permissible uses of bond funds

Restrictions on uses of bond funds

Case Study


Part 2: Creative Use Of Bond Funds

CABs

New Legislation

Technology Endowments

Refunding Bonds

Case Study



Part 1: Legal Requirements


Restrictions on Uses of Prop. 39 Bond Funds



Permissible Uses of Bond Funds

• Prop. 46 (2/3rds voter approval)

• Prop. 39 (55% voter approval):


Permissible Uses of Bond Funds

• Operating vs. Capital Expenses─ District operating expenses may not be financed

with bonds.

─ California Attorney General Opinion.



Case Study

• Using Prop. 39 Bond Proceeds for Project Administrative Costs.


Part 2: Creative Use Of Bond Funds



Capital Appreciation Bonds







Capital Appreciation Bonds –New Legislation

• Assembly Bill No. 182 (Buchanan) amends Education Code and Government Code provisions relating to bonds as follows:

(1) 4 to 1 ratio of total debt service to principal;

(2) Call option for CABs maturing more than 10 years after their date of issuance;

(3) Agenda item when CABs are proposed along with publicly noticed resolution for at least 2 consecutive meeting agendas; and

(4) CIBs may have a maturity that is greater than 30 years, but not greater than 40 years, if certain requirements met.



Technology Endowments


Refunding Bonds

• Most commonly issued to achieve interest cost savings.

• Market conditions are conducive to resulting in cost savings.



1 General Obligation bonds maturing in 20 years are used in compiling this index. The 20-bond index has an average rating equivalent to the Aa2 from Moody’s and AA from Standard & Poor.Source: Bloomberg


Case Study: Using Bond Funds to Provide General Fund Relief

• Existing lease obligations (“COPs”) were paid off, resulting in over $7 million in savings per year.

─ Unrestricted rental income of approximately $4.7 million per year has been freed up for other purposes.

─ Developer fees of approximately $2.5 million per year is available for other capital uses.



Savings to District’s Taxpayers

• Existing bond debt service was reduced by $12.82 million.

• For the taxpayer, annual savings are expected to average $1.69 per $100,000 of AV.

• The median assessed value for a single family home is $355,120 – so the typical homeowner will pay $6.01 less per year.


Marilyn J. Cleveland(415) [email protected]

Samuel R. Santana(562) [email protected]

ccfc 2013 annual conference · (1) 4 to 1 ratio of total debt service to principal; (2) call option...

Documents