001she is the senior vice president for piper sandler and we also have us with us today mr bill davis and he's the managing director over there at piper assembly these are the folks that are going to be helping us out with our foreign finance well many thanks i appreciate you guys erica i will turn it over to you we have a microphone on that end so that way we can all hear you good afternoon thank you again for making to meet with us to discuss this refunding issue um so my name is erica coombs um i'm with paper sandler i've been in this business since 2005. i know phil's been in this business first yes since 80s so we mainly work with school districts and issuers in arizona throughout arizona and so it's our pleasure
002to um to be here this afternoon so we had prepared some information uh in regards to the refunding and so we'll just okay great so we'll just go to page three so i mean the district has does have bond issues outstanding and so those show up on the secondary property tax rate so there's the primary and the secondary and the bonds and the overrides are part of the secondary um the last election was in 2010 and that was for 16 million uh so this is still paying off those bonds and looking at a bond issue you could think of it similar to a mortgage um so in a mortgage you most of the time have a monthly um principal and interest payment that you make with a bond issue you've got two one in january
003and then one in july um so in this bond promise it's you're repaying the investor over a specific period of time and for school districts that's 20 years or shorter and that's by statute um they they're we're still on page three um so looking at there's a specific date that you make those payments and that's july 1st that's the first day of your fiscal year and there's a specific rate just like your mortgage has a rate so does each year of the bond issue has a specific rate and those are paid by specific revenues and that's the property taxes property taxes for anyone with us within the district's boundaries i mentioned the last time the districts went out for a new money bond issue was in 2010 and those bonds were last issued in 2013
004um and so one of the things that you can do with the bond just like a lot of people have refinanced their mortgage because rates have been lower that's why we're here today and so there are two bond issues um that have savings um and so we're going to discuss those with you today so uh so yeah so now we'll go back to page four and any time that you've got questions please feel free to stop me we can go back and forth within the presentation um but yeah we'll just go through those so now we're on page four and that's just looking at selecting a financing team um so obviously you want to work with um with representatives that have the same interests as the district uh so our firm's been in arizona for
005since the 80s and bill and i have been working with school districts through our whole careers um as well as your bond council so you guys worked with gus rosenfeld and they're the same thing they've been in working with school districts for many many decades if not maybe a century for gus rosenfeld so we have a lot of experience working on general obligation bond issues and that's the type of this financing so it's paid by property taxes um and we definitely understand um the market and um being able to provide seamless service to the district and make it like turnkey so that's those are our goals um so going to page five just looking at what's the district's role in the financing um so obviously there are schools and objectives and if you are going
006out for a new money issue you may have projects that you want completed by a certain period of time for a refunding most of that time will have a goal or a target for savings and so that will be in our bond resolution which would be part of the documents that would be presented to the board for the action item related to this refunding another district school is disclosure so there's um a bond investor wants to be able to get timely information so the district you know you have your capper or annual report that's prepared every year um and that's got lots of information that would fulfill that requirement obviously overseeing the borrowing costs is important and then being a liaison for the poor so that's the some of the district's role in opinions are
007there in this adequate disclosure area are there other things besides the kafir that would be that an investor might request from our district um so in your three prior bond issues you have a continuing disclosure agreement and that's what you're promising to the investor every year and most of the time that information will be in your annual and annual report or cafer and a lot of times it's related to the district assessed value and so that's determined by the county assessor that i mean you know when you get your property tax bill you don't get to say how much it goes up or down as much as you want to um and that's for every property within the district and so that's the assessed value is an important the major taxpayers so they want to
008see have those changed um and they may look at that from now or in the past and then tax collections so a lot of times you'll include the percentages of um is there any default and a lot of times for school districts that number is probably 95 and then every year it gets larger so after a year or two it's like 98 98 percent um so they want to look at the delinquency so i mean those would be some of the main ones yeah i mean as eric mentioned most of the information you know can be found in your cafe but the issues that erica mentioned you know sometimes overlapping debt is is another disclosure requirement and your capital might not have that you know so that's county or any municipalities that are within the
009district boundaries their debt just those types of things would also be included in that disclosure all of which can be found in this offering document it gets prepared was prepared for your new money transactions you know potentially if it's if these refunding bonds are sold in capital markets another offering document would be prepared and include all of that and i mean we help clients all the time so if for some reason the audit doesn't include that information we know where all the source data is so that's something that we sometimes will help clients with um and so yes so now we will go to slide six so for any financing um whether it's a voter approved new money bond issue or refinancing these bond issues come up to the board and so the bond resolution
010is one of the big documents that's part of that packet uh that that would be part of the board meeting packet uh and that is um giving authorization to move forward and so for refunding some of the provisions in that are and not to exceed dollar amount for the bonds that fee to be issued and that would be in a new money fund issue as well um as i suggested before there's a minimum savings threshold so the general government finance officers association recommends three percent we've included six percent in the draft resolution but what based on current market rates we are double that so it's it's a lot larger but um normally you would see at least three percent sometimes you would see five in this case we just suggested six percent for that resolution
011uh and then it has terms of the bonds so in a refunding most of the time you would want the structure to be the same so the last issue of the refunding bond issue in this case it's 2031. we're not trying to extend those bonds out to 20 40. um so that's that's one of the parameters we have a maximum rate that's on it that we include in the resolution and it's also providing authority for the district administration to do all the little things that have to happen um between before pricing at pricing and post pricing for closing and when the funds are deposited um so yeah so that would be the main yeah i might add that erica mentioned you know that bonds are similar to mortgages which they are but they're different too
012and you know most of our mortgages we could choose to prepay and refinance them at any time anytime you want bonds are sold with what's called prepayment provisions and the bonds the new money bonds that you've sold today have what's called a call date where you know the district has promised via contract to the investors that you can't pre-pay them prior to a certain date and time in this case it's july 1 2022. so that's the district's option but it has value okay so what we're looking at now is as we approach july 1 2022 potentially exercising that option and the reason that we have these minimum savings thresholds is to make sure that the district is most bang for the buck for for that option so you know you haven't had the ability to
013do it previously now we're coming up to that date and then anytime after this date those same bonds are callable but as we approach july 1 2022 these minimum dollar amounts and minimum savings percentages are important to have in that resolution so that if and when you do adopt that resolution you know that there are certain parameters that had a minimum you're going to achieve before any refunding costs are sold so that kind of protects you as a board and it also ensures that the district's going to get sufficient value for exercising this option and trying to achieve those interest cost savings yeah just a question on that and we kind of addressed this when we got together a few weeks ago um when you say that the recommendation is about a three percent savings
014that would just be a minimum so that's the best practice i would say right and i'm assuming that's in excess of the cost of refund yes that's correct um why as a district would we not want to do two percent if it's just ultimate savings to the taxpayer no that's a really good question i mean i think and maybe there you know there could very well be circumstances where you'd want to do that and we've clearly worked with issuers that have done that um there's a couple levels i think you know to sell bonds whether it's new money bonds or refunding bonds you have to hire professionals and and you're going to pay fees to bring those professionals in to work for you so we're going to make money and sometimes at two percent you
015know maybe we make more money than the district saves why do we want to do that right so so it kind of is a on a certain level you know you want to look at like you know it might save the taxpayers money but who's benefiting the most and we try to make sure that the district received the most benefit um when you get to a call to another situation where you might want to consider that is that if all of our bonds you know we're looking at 7122 if all of our bonds when returning in 23-24 you'd say well if we don't exercise this option today every month that goes by we're losing the opportunity to save any interest expense and pretty soon these bonds are going to return to glasgow so maybe there's
016a situation where two percent makes a lot of sense you know here our bonds go out quite a ways and so if you don't exercise i mean if the market blows up on us you know we'll be back to you saying we may want to consider waiting and just hoping that the market comes back um you know but because you still have time maybe to exercise that option and still achieve some savings and i mean another parameter since we're talking about property taxes if the two percent threshold didn't really move the needle on the tax rate maybe that's not a reason i mean that you know that should be playing into it as well so on the next page page seven so our firm is looking at two options so the district previously has had
017negotiated sales um we are looking at two options and which option is going to be determined to be used it's going to be based on which one has the estimated lowest borrowing cost and so you know that the markets move so your stock right your portfolios like they're every every day are changing so so i mean we're in those same markets with bond issues and in the private placement it's working with one buyer and most of the time that's a bank or if it's a shorter deal if it's five years or less it might be a county treasurer so those would be the two options that we've seen before um looking at rates i mean it's pretty close between a negotiated sale and a private placement and so we're going to continue to monitor that
018between now and looking into the new year um we we do have someone that works specifically on private placements and so we had conversations with them after we had met with the district initially and he had given me some ranges um and we talked to a few more banks originally i've worked reached out to one specific bank in arizona um and so the indication is that the private placement there's a little a slight advantage on um on the on the borrowing rate right now so but we are going to continue to monitor that we're going to be able to maneuver and shift to whichever type of sale that is best for the district some of the advantage of just working with one investor is right now the district's submitting information on a portal it's called
019emma and that has to be shared by february 1st every year when you're working with one specific buyer or investor or purchaser they they probably just their requirements are um i would say are condensed because instead of having thousands of investors to appease with information it's one and most of the time it's um looking they want the tax rate the av um the delinquency rate and um and then the capper or the audit or whichever whatever however the issuer issues um there also are less requirements for it so normally with a negotiated sale the district worked on like a 150 plus page offering document and that was giving the investor information to make a decision do you want to buy these bonds do you not want to buy these bonds this is your source document
020to make that decision for this one for the banks it might be a small package of just some because they're a little more sophisticated they're um we're not looking out to every single person that maybe has a child schwab account who may want to have these bonds in their portfolio um so there's also so there's no offering document provided and there's also no rating so most of the time in a negotiated sale you would go to one of the three major rating agencies and that's an additional expense um and they and they would rate the bonds um and so that would be that would be included in the offering document so that that adds a little bit more time in this case you know we can't close this bond issue before april 1st um because
021we have a 90-day window from that from that july 1st payment um but but those are just there's i would say less requirements and maybe less time invested on the district administration working using a private placement versus a negotiated sale um like our firm what we're gonna make is the is doesn't change so i mean we're we're gonna provide the information and the data and it's going to be based on having the lowest barring cost like that's our goal so now we'll go into section two um and so you've got your three outstanding bond issues and the bonds you can see um phillip references this call date these bonds are callable any interest payment date so they're available right now these bonds from 2012 had a 7 122 call date so these are going to
022be probable the next year and so we're looking at these bonds and then these bonds that are all callable now this maturity we're going to continue to monitor if there are not savings in that 2023 maturity we're not going to include it so we're only going to include maturities that have savings um so when i we get done numbers run a month or two ago this one it was just slightly negative in the savings so we didn't include that but right now we're seeing statements so we're including it um and then these last bonds that were issued in january 2013 you can see they have this 2023 call date those bonds based on federal regulation we they would be have to be issued on a taxable basis so the rates are higher and um i
023mean most of the almost all all the time i'm gonna say waiting for the call date um you're gonna see more benefit unless the market drastically changes so we know that the fed may end up start doing maybe one or two rate hikes mid to the end of 2022 but um we would it would right now the savings it should be something that the district thinks about when the actual bonds are called and as bill suggested it's an option so you could you could look at that option in spring of 2023 or you could look at that option at a later date this the option is still going to be there and really it's going to be a function as it is today i think the column under the coupon is what you really want
024to look at because that's what the interest rate the district's paying today on these outstanding bonds so whether you know we're looking at these the 2010 and the 2012 series today to refinance that series 13 is those that coupon interest rate if interest rates are lower than that it may make sense to refinance if they're not if there will be no benefit to calling those bonds the numbers on the next page really measure the interest cost savings between these two coupon columns on these callable maturities to highlight maturities versus where we think the bonds we sold today and that's what really kicks out yeah and um so this is this is a based on private placement so this is based on um estimated rates from from banks um currently uh so as we get closer
025we'll be sending out a package to the to a number of things and we'll have a due date for them to provide us a proposal uh so i mean these numbers are going to continue to change between between now and mid-february when we end up having actually receiving those bids in uh but based on this information you can see um if rates change you can see what would happen to the savings so if we end up getting right now we're saying the all in true interest cost so that's all costs included estimated costs included everything in there would be 1.6 um and then if you look at the average cash flow savings that would be each year what what the savings would be and that ends up being around three cents a year on the
026bond tax rate um and then looking at the net present value savings that's around 1.14 million and that ends up being 14.4 percent so that's more than twice the amount that we have in the resolution currently and you can kind of just do the simple math you know 10 of the outstanding principal amount would be in the 790 000 range you know if you divide that by five to get to our two percent you can see it's kind of like professionals probably make more than your district does at that point this doesn't make a whole lot of sense and with these numbers too and i think even one of the points that eric made earlier the estimated annual cash flow savings at 137 000. that's an estimated direct reduction in the property tax level so
027the property tax rate would be adjusted down by about three percent per year or three cents per year because you just don't have to pay that interest anymore i just want to give this straight yet um we you know on on page nine uh we've got 911.185 million dollars uh in in total bonds outstanding and that our car amounts for refunding are significantly less than that why is that different so when you look at if i understand the question if you look at these bonds here on the far i know that those are not included but but this says we've got 11.185 in the funds that we're planning to refund we're refunding 7.92 million right unless i'm not reading this right i'm seeing 2 million on these bonds and so if you add up the
028two you know if you have the numbers at the bottom there you can see what's outstanding not all of which there's a 520 that's non-column and then this 2023 maturity they may not include because there's gonna save so what we presented um on the on the next two pages on 11 and 12 are two um scenarios the first one this one you can see we're taking the savings close to equal every year so you can see your this is the district's current outstanding debt service you can see it's increasing a little bit um so next year will be 1.184 million or 85 million and then but in 2032 by the last year it's closer to 1.7 so that's the current structure of the district side i know that you you all probably have a minute
029to take a look at this there's a lot of numbers on this page so i might just take a second to kind of summarize what we're trying to show here um it's what we typically call a tax rate analysis page you know it's where we're going to look at a district's outstanding debt and then try to determine the impact that that has on your property tax rate how affordable it is so what we do here under column two is you know we look at this historical assessed values because again that's the base from which your property tax rate is set and then we make some projections on that and you can see here we made 2.4 a 2.4 growth assumption all of these numbers down here are preliminary but we think it's fairly reasonable and
030and again as the math works out over here's the tax rate these numbers are important you know if they vote if they go faster the tax rate is going to come down more if they don't go up as fast the tax rates can be higher we look at your current outstanding debt then you know the impact that the refunding has used to be what erica was just saying you know basically a single map you take out the old bonds plug in the new bonds and this is the differential and the point that eric is making too is that when you look at your current debt you know it's been at just over a million dollars last several years it's growing up to be north of 1.1 and if nothing changes you know by 2032 it
031would be just under 1.7 so kind of just file that away because when everything gets to the next page you know it should show you another option but to keep that same pattern again just whatever we can generate this refund gives you the opportunity to restructure if you will and you can keep the same kind of growing annual debt service and get this level annual segment or yeah yeah so this is the and most of the time i would say a majority of the issuers end up looking at annual savings um but in this case i mean knowing that the district it's been over a decade since the district's looking looked at looking for a bond election and there may be capital needs in the future and so um any new debt that you have
032would be layered into this and so i mean it's it it's least worth a discussion to see on the next page we kind of leveled that out so that the savings you can see change every year so that the end goal ends up being that service is around 1.26 5 million now i mean the there's still that long bond issue that this goes out one more year and so these this isn't going to change i mean this can be changed when it's refunded um but in this case it would be 1.2 265 and then it would go to 1.7 um yes and i think when we're advising clients on the refund you know you kind of look at what eric has mentioned earlier you want to maximize your savings you want to achieve the lowest
033possible interest rate but at the same time you want to think about well what's the future look like in three or five years are we going to go back to the voters and maybe sell new bonds or need new capital facilities and that's where this you know you can kind of we don't know we haven't really no idea what might occur three or five years from now but you know you have plans and so as eric mentioned if you sell new bonds into this structure your existing debt structure that that service is just going to be added to that so that that's just a given that's going to happen no matter what um but you can see the impact of the tax rate you know there's about a four cent differential based on these estimates
034if you add bonds into that that differential is going to increase if in this refinance you decide no let's let's restructure and go to a more level structure well that gives you the opportunity to feather that new debt in here without having as big of an increase or 29 30 cents today and you might be able to incorporate some of that debt new debt without having as much of an impact entry on the tax rate as it would have if you don't throw structure so you know i mean the good thing is you've got this option there's savings under both scenarios this may give you some flexibility for the future and that's structured in the offering as far as the impact on the tax rate as to whether we would go equal year by year
035or this increasing this is basically your the district's decision so we would we would sell the bonds with either structure or combination thereof to the investor or investor so we would structure the principle to accomplish one or the other or something in between and i mean we would have we should have the 20 next year's assessed value by the time we're actually putting the package in front of banks and so we will have one we'll be able instead of adjusting 2.4 whatever it ends up being or is expected to be we can adjust that number so between now and i would say for the first week or two of february we would just need to fine-tune what what the end product is is preferred am i reading this right that 2032 you'll see a quite
036substantial jump a one-year jump in order to accomplish that while leveling out or yes that's correct and if you go back in the section to the first um the first page page and i you can see on page nine in the far right hand column under that series 2013 you see that final maturity of 2032 that's what's causing that now as erika mentioned you know when we get into the spring 2023 you might have the ability to refinance that or you know say let's just say three years from now you go back to the voters and you're going to be selling some new money bonds and you want to restructure that single maturity you haven't refinanced it yet because rates are high but at that point maybe you want to restructure so that you can
037layer those yeah and i'll just share um if we assume a four percent interest rate for a 10 million dollar level issued debt that's going to add worse to the tax rate um just for the interest so i mean you know depending on what happens in the district needs um i mean there i mean the tax rate is going to go up with the bond election uh but i you know i think you know talking about the needs and what that value is um i mean if and when that time comes we can work with the district to to make sure that we're trying to structure the sales with the needs and the timing of the projects um to have those aligned the best with the least amount of impact but there will be some
038impact i mean the last the last section is just we've got a draft calendar together uh so we've got the fourth study session today if the district wants to move forward um we would be back here or i would be back here on next tuesday for the board meeting with the resolution and other documents and then you can see on this timetable um that you know around the second week of february is when we would receive the responses back from the bank and then we would send those term sheets out at the end of third week of january so that would really third week of january i mean we can do some tweaking um once the bank's chosen uh if we need to we have that ability um but an ideal world we would be
039comfortable with the structure um by that time third week in january just a couple couple points i think with regards to the timing federal law basically as eric has mentioned does not allow us to refinance these bonds federal tax law does not allow us to refinance these bonds until 90 a 90-day window prior to that july 1 2022 call so we're looking at april 5th or april 6th and so that's what this kind of schedule is designed to to get to and try to lock that rate as early as we can have a closing in early april and then call bonds on attack exam basis so correct me if i'm wrong though we can refinance it earlier but we lose our tax exempt status on the bond that's right and to do it earlier so
040you have to sell them taxable which means the interest rate's higher which means your savings goes way down which is really why we weren't here six months ago or 12 months ago because it just didn't make sense or as much sense you know you kind of have to look at the market too one last real quick point and we can address your question i just wanted to point out that the savings that you're seeing the estimated savings they're estimated number one based on current interest rates but their net of all fees so so what you're seeing incorporates our fees bond council fees all of the costs of issuing bonds have been incorporated in their net savings just going back to the proposed refunding exhibits um erica both of the ones presented here are based on
041private placement and some previous ones you had negotiated sale is that because you you believe that the private placement right now is the most advantageous okay i mean whatever structure we come up with like what you're seeing in um 9 and 11 aren't gonna change just i mean the principal structure may change a little bit depending on the couponing um yeah and so there's a lot of detail between and eric has touched on it very well i think between say a private placement and a negotiated sale as eric mentioned your previous three bond issues have been sold via negotiated sale which is by and large the you know the process the method from which most bonds are sold um one of the reasons that the private placement works stable is two um the the dollar
042amount and the final term to maturity 2031 so we're kind of within a 10-year window makes sense to commercial banks who happen which is number two to kind of be in the market for high quality tax incent paper but most banks aren't willing to buy beyond seven or ten years so that's kind of why it makes sense today whereas you know if you're selling new money bonds with a 20-year maturity we'd be talking negotiated sales so on a different topic i want to make sure i have this right in my head as long as our assessed valuation goes up higher than the 2.4 that you're projecting my savings also increase with that or am i wrong the assessed value is directly tied to the tax rate but doesn't really impact the savings it just it
043impacts the savings on like taxpayers time saving exactly okay so we've assumed three basically this 2.4 which is about your five-year average that ends up being no matter how much if it increases 2.4 that's three cents rounded for two decimal points the whole time if your assessed value grows double that the whole time then maybe in 2030 and 2031 it would be two cents instead of three cents you know the assessed value sometimes can be um cumbersome or hard to understand too it's like so there's there's really two parts of that assessed value growth one is property appreciation and so you know there's no development there's no new houses or no new commercial development if the assessed value goes up means that everybody's property or most everybody's property just increased in value right now maybe
044my property value went up but if everybody's dead on the same kind of percentage my tax bill would be exactly the same because again our target is that debt service levy right i mean it's you've got the county you've got cities you've got special districts you've got mmo you've got secondary tax rate and all that stuff but if there's no growth our tax bill doesn't change because the levy in theory is the same the other piece of it though is growth and that basically just adds additional pieces to the pie and so if if the growth outpaces appreciation if the levy doesn't change you know our collective tax bills might go down just because you've got other people stepping in with new property they're taking a slice of that pie to pay that same level
045seven and they're making sense so and i'm just thinking so five six years down the road when we do go out for bonding what does that look like for our taxpayers well so there's and again you use if you go back to that page one of those property tax rate analysis we can make some assumptions and try to get pretty close to what that number is going to look like the way we do it is we we try to assume reasonable assessed value assumptions here absolutely yeah i mean that's where the statute limits so they want to look at your 10 year average um so i mean that's the maximum you can project right so it's really kind of a function of what happens here and then ultimately this annual debt service is the other
046piece of that equation and so if you add in um say as erica's example you know you assume four percent on 10 million interest alone is a year right and that's approximately three or four percent yeah based on some of these earlier assessed values now if that assessed value grows it's gonna be less in terms of tax rate it's still going to be that 40 000 that's still part of the levee but it has you know if you have a bigger base a bigger foundation so to speak then it's not four cents for three so that's kind of how the math works so you know we just but you know when you if you think about 2010 you know this board this report went to the voters the voters said yes and they they granted
047the authorization and then it was really over the course of three years right that the board made decisions to sell bonds and so in theory that same thing could happen you know if you have an election in 24 maybe the bonds are sold over a two or three or four year period you have up to 10 years to sell a voter authorization so depending on the capital needs if you can kind of visualize you know your question if you if you got if you asked voters for 10 and you needed all 10 right away well you sell it all right away because that's what your capital needs were but if you ask the voters of 25 but you only needed five or ten you know you'd sell it in the pieces when you need it
048to meet your capital needs yeah i think i think um one of the concerns we've all had at least in part is that we've had so much we've had tremendous growth recently who knows whether that'll continue i'm sure it will at what rate who knows but we just don't want to get into a situation where what we do today potentially affects our ability to grow in the future and it looks like it will be fine but that's that's certainly something at least when i walk in here i just want to make sure that we're not you know shooting ourselves in the foot so to speak because if we have to it's fairly realistic that in the next six to ten years we would have to do something right um and it may be substantial so
049i mean you can see your debt and in the next basically decade is going to be paid off so i mean depending on you know where you want the tax rate to end up being or the maximum debt service that you're targeting but i mean there's a lot of flexibility and i mean most of the time in a voter information pamphlet it's drafted so that you have that flexibility because it the authorization is good for a decade so so so the potential good news is five or six years down the road if we did have to move into some new debt we're four or five years out from retiring this portion that's right so that's the good that's how i see is that correct yeah no i mean you know it has you know from
050a 30 000 foot level you're in a really good position flexibility-wise you know um it's not a big district you don't have a huge assessed value you know the tax rate's not that high though it's really not but to your point when you're selling new bonds say four or five years from now you can look out to 2033 2035 you're still really short on the yield curve you know and again our advice is always try to shorten the principal amortization as much as you can because irrespective of where interest rates are that's going to reduce your interest cost all right it's those dollars that don't go to bricks and mortar they don't know the kids it's just interesting steps right you know we all pay it on mortgages and you know the only downside of
051doing a refunding right now that i can see is that you're gonna exercise that option so we're gonna you know you've got this option coming up on 712. for your outstanding this first one is callable right now the series 2012. it comes up on 7122 and then you've got another option we sell bonds today it's possible that the banks could give us some repayment provisions another potential benefit of a private placement because we never get that in the capital markets or you would pay for it be expensive is that you may lose that payment option on these bonds that would sell to refinance but again you know because typically the call protection is 10 years as your previous sponsor had so we've got a final maturity targeted in 2031 we won't change that so it's
052not like you've been giving up anything except you are going to exercise that option and that's why we think it's important to make sure you get as much as you can in terms of safety it's hard for me to imagine that long-term interest rates are going to go on a lot lower yeah i agree with you so we'll never probably get here at what point do you like this rate once you find the applicable investor we think we're going yeah so normally with the banks um 45 days is about the length of time they're comfortable to give us the give us the rate and and then have a closing date 45 days so we're targeting the end of february so that's a little over between 30 and 45 days so that's we would get the
053proposals and from the banks if we need to do some negotiating with them or maybe some of them are giving us different prepayment options and we want to discuss that with um with the district um and then we would come back to them um and then we would finalize numbers and the and all of that information and then my other question is and i believe i know this answer so we're really doing this to benefit the taxpayer the net result really does not affect the school because all the savings goes back to the tax base yeah and a good thing to know we can help write some um factual information to share in a press release or um yeah so we'll make sure that that you've got that information so that you can share that
054with the community so greg that all nets out in our books that we're just not taking in an additional 130 000 a year so you're not having to spend that out in interest so that's right okay yeah it's just it's just a net savings to the taxpayer because we're going to pay work okay we don't want teachers to think we have an extra 137 000 let's just hope even though there's no direct benefit to the district with this i mean we also have to think about over it i mean we would go out six seven years on an override the fact that we have saved the taxpayer here will make selling the override a heck of a lot easier even if we're not top and bottom right then we've saved them 600 000. sure any
055other questions or information we can provide uh you you touched on a little bit you you don't know or you're estimating that there probably won't be any movement from the fed on interest rates between now and february i mean there's so many factors and the interesting interesting thing with the banks is they have their own cost of capital funds that they determine um and so i mean you know sometimes they can be very aggressive in submitting bids because they just want bonds in their portfolio uh so i mean that's what we're hoping um hoping for that we get some some really low bids from the banks and and if for some reason we don't then uh then we will pivot to the capital markets and do a negotiated sale what kind of booths are you
056getting now i mean so we've been quoted just looking talking with our our our desk who does private placements all the time he had quoted me 1.35 to 1.5 and so in this proposal we had assumed 1.45 but i mean like i said before the banks have their own cost of funds they're gonna be in a new year um just like i mean it's going to be an oven flow but currently that's the range that we're that we're hearing from it's going to be interesting to watch margaret you know the volatility's been oh yeah yeah yeah and you know in some ways that can help us because if if you if we see that volatility especially you know kind of the market correction kind of direction um there's oftentimes complex quality and that brings interest
057rates down you know people jumping into the treasury market are high grade unis and i don't know you know it's hard to say fed seems to be you know i don't know i'll just say keep your finger yes well when you have inflation doing what it's doing it's hard to no no yeah that's the magic word can you hold your breath it's too long well the good news is we're only like two months you know this is right well yeah drew you know yep good point so on this timetable based on what you have put here you'll submit a bond resolution and supporting documents to lust by in two days yes and we've been working on that okay draft but those will include your recommendation on minimum savings yes so as suggested before we have
058in there right now six percent or 550 000 so that's what what's with what's in the draft right now um and that can be changed up until when we're in the board meeting on tuesday if if there's a preference to make it different but that's what we've just suggested so the resolution is what we call kind of a parameters resolution and it's going to describe as erika just mentioned you know the minimum savings in terms of both the percentage of par and and again it's just for draft purposes of putting a floor of six percent or like 550 000 which is about half of what we're seeing right now but it's up to you all i mean the danger of going like well let's just say 10 and 750 000 or something the dangers if
059the market moves away before we can execute we've got to come back to the board and ask for a change in that parameter if we're you know for instead of 10 we're at 9 you see that so if you try to set those parameters we're going to go out there and try to nail this 14 you know and try to achieve the most savings we can um we can also set it up and say look if we keep the 14 percent and or the six percent of the 550 000 but if we get close to that we you know come back and have a conversation too so and we did receive the resolution today and it is 37 pages of invigorating i guess i just maybe i'm looking at this thing too simplistically it just
060seems to me that we set a minimum savings six percent and for some reason it fell below that um then we got to start all over again uh as opposed to offering the taxpayers at three percent benefit yeah how many times can we refinance this this you get this one bite of these i mean as bill suggested some of these banks have shorter prepayment provisions and if they're if there is and then let's say in five or six years rates end up being lower than they are right now um but uh i mean there would be that option i mean i think i mean if you want us to share what if it was three percent savings what that would look like because if it's not even attended each year on i mean i think
061you just want to think about that um and i think we've seen five percent before so i think six percent is not i mean we're cutting more than half of what we're seeing now so i mean i think it yeah um let's see maybe a place to look at this if you go to page section two paper's hand in that bottom left-hand corner you know this is kind of what we call a sensitivity analysis we're going to say that what happens if rates go up to what happens we can see that you know we lose what is that 100 000 for every 20 basis points which is you know point two or twenty percent of one percent um so you know theoretically if i'm doing my math right multiply that times five and you know
062if you use one percent and use five hundred thousand i mean it's possible you know but if we lose 500 000 from from today's estimates then we believe in that you know five or six percent rain you know so i don't know maybe we want to go down to five percent or something like that you know that gives us a little bit of flexibility but you know the other thing that we would probably want to do is have a conversation i mean it's the market fault and you know we could have some explosion between now and february or later march but sometimes you know the market calms down then too so you know even though we want to try to get this accomplished by early april there's nothing that says we can't do this in
063june you know if we have some big market event so just say let's just go back and let's work you know because we hate to be pricey there's a you know a little bit kind of terrible environment [Music] we hate to play the market but you know i mean if we have a 911 for example we're going to have to do this you know everybody just kind of have to wait for about three months you know something you know you just never know but even the initial covet outbreak right you know it was maybe a four to six week period that was touching so yeah but i mean i mean we're still saving a million dollars even if it goes up 20 basis points but i mean since you did this thing back in october
064to this december it's gone upset on your estimates yeah it's gone from 1.53 to 1.60 so keep it up and he will continue to monitor and keep the district informed on what we're seeing okay i mean i i i fingers crossed i don't want to be here six percent first lucky okay my name is great presentation you managed to keep my attention for an hour straight so that was an accomplishment alone i mean we're grateful to be here in front of you and um i mean this this is our this is where we get our you know our excitement every day is working on this stuff so yes so you're giving me a christmas present well thank you very much i i'm learning something as we go and uh any further questions here okay good
065um it hasn't been brought up or touched all right i think i already know the answer um we're not refinancing any of the series c bonds which have a call date of 23 correct are we better off waiting another year and refinancing the whole kit and caboodle or looking at refinancing over the upcoming year no that's a good question um it you know by not doing anything now you have a lot of interest rate risk on the table on your side of the table because if interest rates go up over the course of the next year the savings are going to go down and because you've got the option on you know these the 2010 bonds are callable right now and so every month that goes by you know you're losing the potential to save
066on interest cost but when 7122 hits then every month it goes by you're losing the potential to save money on those bonds on the series 2012 bonds so you know if we knew where interest rates were going to be a year from now you know maybe we can make the analysis and say yes it's better to wait but because we don't know i would say no it's better to just act now you're going to come back there's some just marginal costs of island savings so like let's just say that we're here a year from now talking about refinancing the 2020 the 2013 bonds there's a marginal cost of issuance savings but the interest rate risk is much greater in my opinion the potential for losing you know savings is much greater than that cost efficiency
067it's a great question though yeah yeah i would agree i would agree with that um and and that 2013 bond issue would probably be in the same situation where i mean it might even lend itself more to have to be a private placement because they'll be around 3.5 million outstanding um and i mean you know depending on the districts what their look you know we can look at structuring and then um i mean but i think it as we suggested before not having an official statement not having a rating there's less uh issuance expenses and i mean we could easily do what we're doing now monitoring which market makes sense but knowing that that bond issue is um you know half the size of the current one the other thing to kind of keep an
068eye on too is that if you look at that coupon column for the 2013 bonds you can see that those excuse me coupon interest rates are much lower you know the last what five maturities have that three percent coupon so you know even with our all ntic estimate of 1.6 you know that differential which is where we get our savings right is much smaller even you know to four percent or you know three and a half so the potential to generate a whole lot of savings in your terminal on that series 2013 smallers because those could buy interest rates which you should be you know pleased about right because it's not costing a whole lot of interest today okay thank you very much appreciate it i will see you next tuesday i've got another school
069board meeting otherwise i'd come down here but thank you thank you thank you very much like