Special Board Meeting

001whoever has her volume up please lower it down i think that's what's causing the feedback please check your devices now here in the board room is your volume down it's off mine is off as well well remember travis is your volume down it's off okay so i'm not sure where you got this coming from all right um we will go ahead and proceed with the uh land acknowledgement board of trustees alum rock union elementary school district does hereby acknowledge that the district schools and facilities sit on the traditional lands of the alone people and the board of trustees further acknowledges with respect and reverence the maloney people tribe of the san francisco bay area for their stewardship of these lands all right moving on to item 2.1 we have discussion approval of the process for

002interviewing and selecting financial advisor firm um dr brower believed uh jess was going to help us facilitate this process yes and i wanted to have mr chang to give a little bit of a background and context so that way we can proceed with the process mr chang sporting that 49ers thank you uh dr bara and good evening um board of trustees um just to give a uh background um as you may recall we issued an rp for financial advisor um fortunately we received uh six proposals which we're very happy about um and which leads us to this board meeting um and uh we have asked um one representative from each firms to witness um the board's decision on how to establish the process and also to witness the orders in which the firms will be

003interviewed and with that i'd like to thank jess who's going to be facilitating this process thank you good evening board president quintero members of board superintendent bower and members of staff uh my name is jess cerna i am previously was previously the interim assistant superintendent of human resources and have been asked to facilitate tonight's process again i want to thank you for coming this evening and for participating in the process this evening also we want to thank you for your patience given the set of circumstances we're all having to deal with giving our our environment here so let me go through the process that's been established and recommended to select firm first of all the name of all six firms have been placed in a container in an envelope here and they and the names

004will be drawn from that envelope to determine the order of presentation uh the first firm that has been drawn will remain in the boardroom the other five firms will will have a waiting area for you uh down the hall and in the two conference room both in academic services um the first form uh again the first one drawn will remain here each firm will have a total of 15 minutes for their presentation those 15 minutes will consist of a five-minute presentation and then 10-minute question and answer period each board member has submitted their questions to ensure that there's no duplication of questions each board member will ask one question after each firm is interviewed each board member will submit their respective scores and they're being submitted onto an automated system and spreadsheet and that friction

005will timestamp those scores the scoring will be scale will be a scale from one to ten one being the least desirable 10 being the most desirable in the event of a tie the board will rescore the firms that have tied the firm receiving the highest score will be selected as the finalists the finals will be subject to a thorough background investigation should that background investigation fail the runner-up of the scoring system will be the next firm background checked that is the process that will be utilized this evening or any questions from the board some staff see none i guess the next business is to select the order is that correct yes okay i think we said patty out of here was going to draw the names um number two capital public finance public planet california

006financial services is um okay so if the first firm that was selected can have a seat at the table here addie will show you where the waiting areas are and for the first firm if you wish to have your colleagues joining you at this time this would be the time to have them join you before they start i'll go ahead and ask for a motion from the uh board to adopt the process i'll prove it i have a motion to adopt the process motion to drop the possible motion by charlotte second second second uh yes is there any discussion no discussion from the board any members of the public wishing to speak on item 2.1 all right so you know public comment then we'll go for a vote all the all those in favor i'll

007i'll go ahead and call call row um uh as i see literally uh hi travis hi from uh with um the eyes of my vote in the affirmative the motion passed unanimously to interview potential firms and selection of the desired firms public comment do you have any public comment on item 2.02 all right see no public comment we'll go ahead and move on to the actual interview process just to remind you from the clock you'll see it on the screen there's a five minute for your presentation and then each board member will go through the q a period which will you have ten minutes total to answer five questions great well thank you for uh this process and having me here this evening and my name is adam bauer at least we know you won't

008be forgetting my last name this evening um and so no relationship no relationship that's why i say that really clear so i'm the one person you're going to talk to that has wanted to be in this industry in this job since i was in junior high school my parents were both in the business my step-dad started off as an underwriter and then became county treasurer task collector my mom headed up a redevelopment agency i later became an intern at the treasurer tax collector's office one of the things that you probably know is that a lot of school district transactions get priced through the county treasurer's office one of the things that bothered me at a very early age was that the school deals would price at higher interest rates and have higher fees and i

009knew that then that this was an area that i wanted to be in we are one of the firms to help change that but in junior high school my parents would bring home bond documents i would review them for edits and then they would teach me deal structure and so i like i've told you been on a long path towards wanting to be here before you this evening and uh as we get into the presentation here tell you a little bit about the firm we're a california based firm we have an office in irvine and san francisco and then we have representative offices meaning home offices in hawaii and washington our firm was established in 1966 of all the firms i've seen here tonight we uh there's not many that were established before the 80s

010we've been doing this and only this since 1966 we do not do demographic studies we do not do the political work we don't want to show up in the newspaper doing something that's contrary to one of our clients interests so we solely focus on this we do this 60 to 70 hours a week exactly what you're asking us to do here today phil and olap is a founding member of nema national association of missile advisors we look to set industry standards and also help some of the smaller firms that don't have the resources understand how to operate their business in this regulatory environment just before covet i was in chicago meeting with the national association there talking about how to comply with standards and also spoke with the securities exchange commission to bless you the

011securities and exchange commission about things to look for with financial advisors as well we offer both school district and overall industry um overall municipal industry i think that's important because i learn things from our water practice that i can then apply towards school districts and we have found it to be very helpful every friday i have a call with my business partners and we talk about what each of our clients has experienced i will share this meeting with them on this friday but that's tomorrow so what makes feeling all that different other than a guy that's wanted to do this since junior high school and that is uh experience integrity service i've already told you we were established in we do only one thing but the integrity i will tell you when not to do

012something whether it's go for a geo by measure whether it is now is the right time to be in the market or what kind of structure should be looking at we pride ourselves when our clients tell stories about when we told them not to do something and that's hard to do for a lot of consultants they are you're on a path you want to get something done so we really make a real source of pride out of that service most consulting firms are designed to be just in time consulting we have designed ourselves so that we do 80 of what's predictable ahead of time that way when your situation gets complicated or you have a uniqueness we already have that foundation i'm not making an associate stay there all night trying to figure out what

013what the solution is we set that baseline up and then we can have an intelligent calm conversation about what we're trying to resolve what that also does is if i can get you things before your deadline then you have time to look at it and process it versus just having to react and get it on a board agenda so we take a lot of pride in being early the other thing with the 80 20 the service component here that i'm talking about it allows me to be in front of you a lot more by having that base of information i'm able to be out with our clients several days a week i also want to make sure you know cell phone is on the cover of this um that is available 24 7. my family

014knows how important this is and we always make that a priority when someone gives us a call so this is just a with a lack of time i have 48 seconds here this is a kind of an example of that 80 20 we put a lot of thought into making sure we can deliver services ahead of time our team intentionally has overlapped these are jason and annika i work with them so much on so many different transactions we have our own language i can say i need a little this district a little that district a lot of this one and they both know exactly what i mean when everyone else in the room is very confused about what we're talking about so we have a very cohesive team here these three people are owners we

015are an employee-owned firm we've designed our firm for the long term and um all the people listed on this side are owners of film and olaf and associates finally might i not only do the financial advisor i also work in the education programs i do the usc rozier school of education public finance class access big mac has gone cash and i'm out of time the next phase of the process will be the question and answer phase uh each board member will ask one question there'll be a total of uh 10 minutes allocated for this portion of the um the process i just want to remind board members after you've completed the questioning of the firm and submit your scores to the system okay thank you all right um we'll go ahead and get started with

016uh word by president thumb unmute myself here okay am i being heard yes okay very good okay uh thank you very much mr president uh mr bauer uh you know from from the personal experience you talked about i i think that this question is very pertinent in light of possible increases in interest rates in the future could you tell us about some of the ways your firm could help mitigate the interest rate risk for the district on issued bonds yes so what you've seen most recently is a flattening of the yield curve so being able to issue some of the longer term debt that you have still access to is certainly something that you still can do now if that yield curve starts to shift where those longer term rates go up we want to

017then try to advance some of that principle and try to make sure we don't have it in the long term but right now in this market it still can make economic sense to issue some longer term debt lock in rates on that flat yield curve i mean not that much difference between year one and your 30 according to historical standards and so that's one example where in this market we get those longer term bonds sold and then we can layer in shorter term bonds two three four years from now when rates are higher and that yield curve might be steeper so that's one example of some advanced planning to make sure we can lock in as low rates as possible the other thing is you have several refinancings that you can take advantage of right

018now what we would encourage you to do is look at doing those all in one series but what you saw in some of those proposals where folks charge like 50 for each additional series we don't do that we have a maximum of 15 000 per additional series so your transaction be about 55 000 versus more than hundred thousand for some of those other proposals that we saw here but take advantage of multiple issuances at once lower your cost of issuance issue those longer-term bonds why the yield curve is flat and then when the yield curve rises which it hasn't done yet still flat then we issued a shorter term bond and fill in that difference so i think that could be a strategy to execute on a rising interest rate environment or remember one more

019thing we could work to get your rating upgraded if we can get those ratings upgraded we could also put ourselves in a tranche that allows for lower interest rates that's another thing to do there number two pres uh president quintero number two isn't my question did you want me to ask my question your question okay my question is number three um over the past several years arusd has made substantial progress in bringing stability accountability and transparency back to the district how would you approach the role of financial advisor with this recent progress in mind our goal would be to highlight that that we have already done and set up a process that documents a very thorough steps forward we have it's we're working with another district right now that's been through something very similar montebello

020unified school district we we came in about two years ago and we have worked with them to before we even start a transaction we've done a due diligence meeting to kind of get everything out there that we need to make sure we disclose because the last thing you want to do is miss something in your disclosure and it looks like we're trying to hide something or we're not being transparent with bond investors so we want to make sure that your finance team has everything that might be relevant to a transaction get that in those disclosure documents what we also do is document the path so if there's ever a situation where the sec says we should look at these folks again the d.a says we should look at these folks what we're able to do

021is say look when this when the district issued its most recent round of debt they took a very deliberate process and so we document that to demonstrate that along the way or uh welcome mr bauer my question is and you talked a little bit about it how will you help our district increase our ratings as we work with the bonds program so you're so it's going to be a process what um you are moody's they are more open smp is worried about headline risk they put in their report even if you improve unless you can show extraordinary levels of reserves they are still going to be concerned and limit you on upgrades so i think part of our path is to say s p we're going to show you but we're not going to work

022with you for a while we're going to focus on fitch and moody's show that we have a history of doing really well with them and then over time come back to smp and say we'd really like to work with you again we need you to be reconsider these things but right now what they're worried about they they as to me just say in the report you could do a number of very good things but we're worried about headline risk we don't want our investors focused on getting hurt by headline risk so we're going to continue to keep these ratings low communities and fitch now keep them keep them moving up focus on s p down the road all right uh remember travis um i guess i'm gonna award it a little bit different but so

023like taxpayers are going to pay for the bond investing and let's call it the profits how much of that money comes back to the community um because actually if you were to patronize us like we're doing business with you we kind of expect them or the firms to do business with us in the future and also that means telling employees to stimulate their dollars to you how would you go about that so i think if i could say back to you i think it's hard for me to hear you um how do we make sure we get the lowest cost to provide the most for the community is that what you're asking exactly so what we're going to what we need to give an opportunity to work with you once i if you really look

024at the fee structures of all the proposals received ours is very low and so we lead by example we we we get hired and we show the other attorneys and everyone else in that transaction we mean it when we need your fees low because we've already committed and made our fees low so that that's one piece of it the other thing is we we do 100 we did 100 i think 125 transactions last year and so we have our own database of fees that we can show the other consultants and say if you want to work in this district we can show you what they should be for a like type transaction so i think those that's really important but the other thing is even more important than that is making sure we get the

025lowest interest rates and we can do that through another way another number of ways as we work with your ratings look at competitive sales where we bid those out in the market and get the underwriter that wants to bid on that day the lowest cost and then we can also work with the on a negotiated basis while we're working up that um rating schedule and make sure that we um negotiate the terms with them as well one of the things we want to do is set up a process for underwriters that they bid fees in advance once they've been working on a transaction oftentimes it's even though we can set up a whole lot of comps and things like that they know that they've established a relationship with that district we want to negotiate those

026fees in advance so that if you want to get hired here put your best bid forward and then um also we would also want them to show not only does the fee have to be good but they have to show us examples of pricing similar debt well so their fee and have a price is very important all right my question is last one this round and the question is has your firm ever been the subject of or been involved in an investigation that resulted from your work with the client i couldn't hear that sorry has your firm ever been the subject of or been involved in investigation that resulted from your work with the client no all right thank you for your uh uh participation in the interview process uh jess will let us know

027what the next steps are president quintero when um i'm not sure exactly when the current applicant will exit the room and the new one will come in but when we have empty an empty room there i have a question uh jess is going to go ahead and let us know about that can you ask your question again be loud a little bit louder please is the question whether can there be a follow-up question is that what i think that's appropriate no that's not the that's not i have a question but i'm i'm wondering when the the current applicant will exit the room and the new one will come in and maybe in between that time i can ask my question okay because you won't ask a question when the applicants win the interview yes correct

028okay well thank you for your time thank you thank you mr brown out of the board now that you've concluded the first interview of the first first uh firm you can submit your scores to that system that you have all right before we do that process can i ask my question before that process give me a second let uh let him uh exit the room okay i'll let you know right now capital public financing is the next one capital public financing but give us a second because he wants to ask something before they come in all right ask away well i know the last time we were able to um not submit our questions until the end to the spreadsheet um i know for me that's helpful because um you know i like to take

029all of the applicants in context and i don't want any one firm to be at a disadvantage or an advantage for going first or last i like to get the the big picture and then be able to take that all into consideration before i submit my votes so as we did in the past are we able to submit at the at the very end okay so you're going to keep track of your scores yes yeah they'll be scored they just won't be submitted and then in the event yeah because it allows us to compare yeah as we're moving along yeah because i mean sometimes we hear something from the first applicant that maybe is an advantage or a disadvantage just by virtue of being first and then when we hear the other candidates maybe that

030you know puts things into context for me at least so that would be helpful all right so unless anybody has some concerns we have consensus that that'll be the process and you'll hit submit when you feel comfortable hitting submit as long as it's before you leave tonight okay thank you very much [Laughter] i like that better uh all right the next uh next step here bye thank you so much sir thank you welcome can you clarify which um applicant this one is yeah uh capital public financing in mexico okay thank you thank you okay just to restate um you have a total of 15 minutes for your presentation the first five minutes will be for your introduction of your firm the last 10 minutes are allocated to answer questions of the board members there will

031be five questions again 10 minutes maybe again the clock you will say to kind of gauge your time in terms of your responses okay and the time will begin when you begin speaking uh good evening my name is jeff small of capital public finance group i very much appreciate you inviting me into your community tonight to talk about our firm and how we may partner with your school district we really appreciate your very open and transparent process frankly i think that is very refreshing to us so thank you very much and we appreciate the opportunity you have received a handout it basically provides some easy to follow information that's in our proposal and gives a guide to talk about um how we may work together um in a partnership i think the most important thing

032to us is having a high ethical standard and although a lot of folks use that word they don't really define what that means to them so i'd like to spend just a minute and tell you that to us that means doing things the right way that means being open it means being transparent it means looking under every rock and getting to the truth because when you find the truth you find the right decision and as a municipal advisor we are obligated to be a fiduciary just like a board member so we are very focused on finding out what that truth is and and let the truth speak for itself and let decisions be made based on that truth you will not find capital pfg manipulating numbers to find an asset to get you know to

033a certain result um the numbers are what they are we look at data we are creative um and again by looking at the truth and doing all the hard work we will get to the best answer for the district we believe in part of having a high ethical standard as being clear and it's been concise and all of our communication if you hire us we'll be clear and concise so that you can follow it and make informed decisions that are in the best interest of your community we are here as a municipal advisor to minimize your costs maximize funds for your projects so that that comes first the fact that you need a municipal advisor or an underwriter we are we're just a cost so what we are trying to do in this partnership is

034align district goals and objectives they could be transparency they can be openness they could be funding your facility program matching those goals with our fiduciary duty that we are required to provide you under you know our the securities and exchange commission rules which is really to get you the best costs knowledge and experience it's important to know that capital pfg we are a batik firm we have three registered municipal advisors i'm a registered municipal advisor representative principal and i'm a licensed attorney to practice law as a petite firm what we're trying to do is provide a customized approach to fit your needs not all public agencies are alike we want to work with you based on your business ethics and how you do business and then provide a financing plan and objectives that that fit

035your plan but that takes a lot of time and looking under every rock takes time so you're not going to find us having as many deals as some of the big firms but don't mistake that with lack of experience our firm has a lot of experience we've worked in 140 communities as a financial advisor we've undertaken over 250 bond issues for school districts over 4.1 million dollars in my 17 years at capital pfg my partners and i have worked together for over 20 years that's a lot of longevity that we bring we don't have we've never been sued individually or as a company we've never had any disciplinary action or regulation taken against us so that is our pride that is our truth that's what we can deliver um in this partnership i've been doing

036this for over 30 years working with school districts as a financial advisor over that time i've probably issued about 8 billion worth of debt probably 800 transactions so even though we're a boutique firm we're very experienced our firm was awarded two times the far west uh deal of the year by the bond buyer so we have our work has been has been recognized by that national news industry news newspaper we use very sophisticated software to model any type of bond that this school district would ever want to issue we we can do that we have the financial soft financial subscriptions to current market data which allows us to figure out how to price a bond how to compare a bond how to see if if we're getting a big good deal if another district that

037issue bonds got a good deal how can we take that information on a comparative basis and bring it back to alum rock and determine what can we do better how can we improve this um so it's a personalized approach um again every dollar spent on on us is a dollar that can't be spent on the district um so we take that very very seriously um as far as bond pricing we just don't take anything that's given to us um we're not shy we we will negotiate with with underwriters with our friends it's business and we are trying to deliver the lowest cost to the district um and we have the technical expertise to do that i don't know if i have more time or time's up okay next portion of the process will be the

038question and answer period where you'll get five questions one from each board member or a total of 10 minutes okay all right uh where was president obama okay thank you mr president uh you know based on uh you know the experience you alluded to in your presentation i think this question is pertinent uh in light of possible increases in interest rates in the future could you tell us about some of the ways your firm could help mitigate the interest rate risk for the district on issued bonds today we receive bids on a it's called a forward pricing we have a bond that that cannot be refinanced today on a tax on a tax-exempt basis we were curious about being able to being reporting back to the school board does it make sense to walk in

039a taxable rate now and convert to a tax-exempt rate in two or three months that came across excellent there was very little cost differential between doing that forward financing today and waiting a few months however the further out in time you go and for the district you have bonds that are callable in 2023 and 2025. um it it it it just may not be as cost effective you do lose a lot of savings what we deliver to the school board is here is here's what a refinancing looks like on a tax exempt basis here's what it looks like if you want to lock in the rates today and we measure those savings and and loss of savings using using our computer system that we have and we can very very clearly communicate the options to

040you the cost of benefits of each and provide you with a recommendation for you to consider all right thank you yes thank you so my question is over the past several years arusd has made substantial progress in bringing stability accountability and transparency back to the district how would you approach the role of financial advisor with this recent progress in mind your outlook is stable so i would believe and i've looked at your auto report your fund balances your your general fund reserves i think they're quite good i could see you getting upgraded in the very near future if your financial performance continues i would want to go through all of your financial policies and make sure that the reserve policies the debt management policies that you've got a good cyber security policies everything is in

041place and the policies are written in such a way that the district can actually implement and not fail to implement and actually use to report back to your community that really could make a a notch up indifference to get you to that double a3 level but again i think a lot of it is going to have to do with the good work that you're already doing just continuing that and being able to demonstrate that to the rating agencies but that will happen on the natural but i do think that financial policies are key thank you board member uh welcome uh so how will you help our district increase our ratings as we work with the bonds program well i had it i had a situation this about a year ago for sierra college they gave

042the district a very high bond rating and i was reading the report i thought to myself you know what this bond rating should be higher and the the report they want to release the rating and i basically said no i want to appeal this rating because this district should have a high rating and and the way that that came about was being able to have the awareness to understand what those metrics are and not just let the rating go by without saying hey i think that i think that this should be a higher rating so again it goes back into having the integrity to look under every rock to if if you have to work there until 10 o'clock at night to figure out just you're figuring out the truth you don't want the rating

043agency just to upgrade you without having the proper factual background that would be a big no-no but i think it's just really doing the hard work and being able to bring out that story and listening and and being aware thank you all right uh where were travis that kind of answers my question the way he answered it can you do what happened i should ask your question exactly okay uh how much okay the taxpayers are going to pay for the bond and the investors are going to collect profits so how much of that money comes back to the community well every dollar in interest that is paid is money that is leaking out of the community so ideally for every dollar you borrow you repay one dollar now we know that that's not possible okay

044but we do know that there are ways to structure financings um that will help keep as much money in the community as possible and one thing that we do when we enter these pricings with these underwriters a lot of times and and my a lot of my colleagues do this when we price a bond we don't want it refinanced we want to make sure that we are getting the lowest possible rate today and if that bond never gets financed because the rate is too low that's good but a lot of firms i mean they've had the numbers it's just churn for insurance they're they're establishing a higher higher it's called a coupon interest rate say five percent getting a premium up front and having a call date that's pretty soon now it sounds good well

045you can call it early well do you really need to refinance bonds would you refinance your house if you had a you know two and a half percent mortgage no so it's selling the bonds it's negotiating for the long term not just so in a couple years i can come back and refinance it again all right thank you um has your firm ever been the subject of or been involved in an investigation that resulted from your work with the client never not not our firm nor our employees thank you um that concludes the questions next are canon and if you'll just wait in the conference room thank you hmm foreign this feels like the first time i back to the schools this year and visiting the classrooms and you know it's just different everybody is

046it that you're more excited to see the children i am yeah i think so yeah and that's like seeing all of you it's makes me happy welcome to alum rock thank you for having us okay okay welcome back um again to remind you uh you have a total of 15 minutes for the presentation the first five you'll be dedicated to the presentation to the board last 10 will be dedicated to questions and answers clock is up on the screen there and uh you may be uh just cognizant of the time okay thank you thank you well thank you so much uh for having us and good evening members of the board district staff my name is blake bean i'm one of the managing principals at k n public finance and i would serve as the

047primary advisor to the district if we're fortunate enough to get selected my role working with school districts across the state is to help them develop long-term long-term funding plans and also coordinate our internal resources to ensure that each district is getting the right kind of quantitative analysis and support throughout each bond endeavor joining me tonight as part of our team is my colleague nedco nadev and i'll pass him the mic good evening it's wonderful to be in front of you and have an opportunity to partner with uh leadership staff the community in helping your bond program get back up and running again uh my name is ned connective i've been with uh k m for over 15 years now and been fortunate enough for that time uh to execute virtually every financial instrument at the

048disposal of california municipalities uh most relevant to you a number of large complex successful uh geo bond programs uh i have a mathematical background so kind of naturally gravitate to the quantitative analytic side of our work which in particular in this context means kind of a heavy duty modeling that goes into informing a healthy well thought out long range plan of finance that will help the district accomplish uh uk objectives and set the stage for the successful implementation of your bond program and ultimately rewarding the trust of your constituents as the son of a life-long educator i'm a fervent zealot for quality public schooling i'm excited to in some small way help the district deliver that to your community and then other important members of our team that are not here with us tonight um

049yvonne hall who provides quantitative and technical support within our team dan cox is our in-house pricing expert larry long manages our annual continuing disclosure practice and then jesse pacilli provides transactional support we appreciate the opportunity to speak with you tonight and look forward to learning more about the district's funding needs and discussing bond financing strategies that help get the district's program on track our team is active in the local area currently serving a number of your local school districts most nameably san jose unified is an ongoing client that i work directly with milpitas unified school district and also morgan hill unified school district to name a few in addition to the local school districts we serve we also serve as the municipal advisor to the county of santa clara and have for the last 16

050years in addition to a number of other local cities and local agencies beyond our regional experience we work with a significant number of school districts throughout the state to help develop and implement long-range funding plans as a testament we have been ranked as the number one municipal advisor in california education four out of the last five years based on the par amount of bonds sold and that's a that's a statistic that we can't just make up that it's actually posted and something that's reported out by refinitive uh is to resource that from as one of the larger municipal advisory firms in the state we do have a large depth of staff and firm resources that we dedicate to each client engagement and just as a demonstration i think the the six having six registered municipal

051advisors as part of our proposed team to the district i think speaks to that really bringing in people and ensuring that the district is able to get a vast amount of thought and quick action in order to meet timelines and deadlines and then lastly our team has first-hand experience working with school districts who have experienced a challenged past within their bond program and through our concerted collective effort working with district staff and boards we've been able to successfully help to re-establish a strong rate of credit rating profile to successfully issue bonds for project funding we have identified and helped uh refinance outstanding bonds uh to generate savings both to taxpayers and districts general fund and we've also helped to establish collaborative relationships with county agencies we look forward to sharing more this evening and facilitating

052a discussion of how uh of how the district can move forward with its bond program into a promising direction and we welcome questions from the board all right uh we'll go ahead and get started with board vice president trump okay thank you mr president uh you know in uh i think that in in today's environment with the recent market news i think this question is pertinent in light of possible increases in interest rates in the future could you tell us about some of the ways your firm could help mitigate the interest rate risk for the district on issue bonds yeah i'll start with that and pass it over to you nico um yeah mitigate interest rate risk um how do we go about that um you know really we we look at what the financing

053plan is as a whole um the most impacted by interest rate risk is refinancing of outstanding bonds and so to the extent that there's an opportunity to mobilize quickly and bring something back in front of the board for the board's consideration to take action we would do that we've seen interest rates over the first month of 2022 jump by over half a percentage point or 50 basis points that is directly eating away potential savings with refund with refinancing opportunities and we know this district does have a prime refunding uh that could save district taxpayers millions of dollars and so to the extent we were selected uh we would most certainly look to uh work with district staff on a quick time timetable and bring something back to uh the board for consideration in order to

054hedge against further interest rate movements we are anticipating an additional uh four to five uh fed hikes throughout the course of the year which will directly impact interest rates among other market movements that a firmware size would bring the level of resources that can really help the district hit the ground running and you really get motoring to to next point um and i think generally speaking even though there's only so much you can do to manage weight interest rate risk uh in the context of uh new borrowings uh not necessarily view interest rate risk as as the the tail wagging the dog uh you um there's tax reasons and uh policy just good governance reasons uh not to over borrow prematurely um so in that context um there's only so much you're gonna do yeah

055i think that that's right i think it's really differentiating the the the impact that it would have on a refinancing versus really allowing the needs and the timing of cash flow demands to drive the new money issuance so to the extent those needed to be separated and not on the same timetable that would be part of the discussion in order to mitigate that interest rate risk versus combining them all together into a single financing where there is some cost effectiveness and efficiencies there but if there's to my colleague's point if the new money issuance if the timing and the spend down of that issuance is not all mapped out then we would advise the district in that case to proceed with a refinancing that is directly impacted by interest rate movements and not prematurely go

056to market with a new money issuance from either j or i if a plan a full fully developed plan was not in place the board member thank you uh okay um over the past several years arusd has made substantial progress in bringing stability accountability and transparency back to the district how would you approach the role of financial advisor with this recent progress in mind the district has done a phenomenal job over the last several years and we've tried our best to do our homework just to appreciate just a small component of that and i think through the course of our efforts we have uh if if we were assigned that important role as financial advisor we would look to carry on that commitment that is made to making sure that the district gets its bond

057program not only back to a point where it's issuing bonds and doing some of the projects that were committed to voters but also reestablishing a credit rating profile that is more representative of a strong district like this than what it currently is over the last five years the ratings have slipped and there is room for improvement and uh i can be you know more more specific with exact areas that we would focus on um and maybe and maybe that's worthwhile i think that with rating agencies um standard imports is three notches below moody's uh that is not a normal that's a split rating and that is not a usual circumstance that we see within school districts and frankly if i know if i may be so bold i think that s p has been overly

058punitive to the district in rating over the last several years and so i would advise if if we're you know again so fortunate to be selected i would advise staff to meet with smp in conjunction with other financing team members and put together a compelling argument about the progress that has been made starting at the governance level policy level and on down um as to why the district is not a triple b rated district it should be in the a the a rated category most certainly and then we'll backfill that with some of the some of the other components about the district's budget mitigation plan um about efforts to start discussions about hard topics like school consolidation um and then also of course potentially refinancing the outstanding lease off the books um with the 2010

059issues just to remind you we have less than five minutes and three more questions all right i think we kept going i guess one important implication of restored credit profile it has a very direct impact on cost of borrowing as you're looking to take the next steps on potentially on both measure j and on to get into measure i thank you um and you actually answered uh part of my question so how will you help our district increase our ratings as we work with the bonds program so if you want to add anything else with what you've shared to be honest it's a great question i'm glad you asked it it's something we have spent a tremendous amount of time on because it it stuck out to us as an area that really um uh

060stands for improvement i think you may hear from some that there's certain strategies to actually shy away from s p and not use them for future financings we have considered that and we look at it a little bit differently i think that we look at any future financing for the district as an opportunity to meet with s p and really full court press with a great back story about why the district should get back to its previously rated uh levels instead of where it sits at today remember travis the taxpayers are going to pay the bond and the investors are going to collect uh the interest of the profits how much of that money comes back to the community to the community again uh kind of splitting up that component into two parts um from

061a refinancing perspective uh that money goes back directly to the community um there's not an obligation that the district has to do a refinancing of older outstanding bonds it's a fiscal stewardship issue and i think that that um speaks volumes to uh the new leaf that the district is really turning to really demonstrate um uh where it's at today and so um i think that that would be an important component in terms of the new money bonds uh our goal is still to secure the lowest borrowing cost possible which also impacts taxpayers and minimizes the return to investors and so that's what we always strive for uh when issuing new debt and going to market i think what one important aspect um kind of is an example of the interplay between some of that some

062of those dynamics is on the measure j side for example where um there is 71.5 million of remaining authorization but because the structure of the existing series a and c mainly uh the bulk of that capacity is in the years beyond 2040. so that kind of limits how much uh how much funding can be readily accessed uh with just current interest bonds you can get more uh you know it's about 15 million with a structure that's uh comprised only of current response uh adding capital appreciation bonds to the mix uh can secure another 12 for a total of about 27 million so that's a status quo uh there are avenues to free up additional capacity one of them being the refinancing that we've been talking about the series a bonds can be refunded for considerable

063savings in the current market it's at the mercy of the market so uh that would free up capacity and potentially bump up those estimates i i was just mentioning what can be readily accessed um i i think you you hear from um others tonight that uh good suggesting that uh you replicate the measure i approach and go back to the voters to reapprove um potentially the remaining portion of measure j so kind of recognizing that there is uh considerable potential upside uh to some of those strategies uh in our mind the most prudent approach was to kind of lay out a base a solid kind of baseline game plan um that doesn't rely on uh that doesn't hinge on a good interest rate fortune or further voter support at this juncture actionable plan could be

064implemented based on everything that's in place today all right has your firm ever been the subject of or been involved in an investigation that resulted from your work with the client no all right thank you that's the that's the extent of our questions next is california financial services thank you so much it was a pleasure thank you all uh california financial services financial services ugh [Music] okay in the meantime i can tell that since the last meeting we had you all put a lot of time and effort to streamlining this and making sure it goes smoothly so thank you [Music] all right [Music] hi how are you welcome to allah thank you yeah thank you thank you oh y'all okay welcome back again you have 15 minutes allocated for your time first five minutes is

065dedicated to a presentation that you'll be given to reward the last 10 minutes will be dedicated to questions and answers be mindful of the time clock in front of you there make sure you are able to answer all five questions okay thank you thank you is this going to go up on this can you can you guys see the screen i'm looking at it yeah so are we ready to go yeah whenever we read wonderful good evening i'm grateful for the opportunity to introduce you to my firm california financial services or cfs before i begin i do want to recognize and complement the board and staff for their commitment to transparency in the process since my time is short i will rely on notes to make sure i hit all the important points my name

066is steve gald if selected cfs will staff the project with two municipal financial advisors my name is steven gald and i'll be the district's primary contact i've been supporting school districts for over 20 years and worked and i've worked on a diverse basket of clients including big and small urban and rural and programs that utilize all the different types of financings i will be supported by jesse landry who's here with me who has over 12 years of experience working with school districts including supporting some of the most diverse funding programs in the state two important points about our team first jesse and i have the capabilities and the expertise to provide all the services you've requested this may be in contrast to some of the other teams that interview who have one senior person supported

067by someone who's much more junior or firms that may just provide to you just a long list of people who may in certain instances work on your pro your project secondly our municipal advisor team is supported by a deep bench of non-municipal financial advisor experts these experts include past school district cbo's state funding experts cpas and school auditors one of the things that makes california financial services unique is we focus specifically on public school districts early on we identified the challenges faced by public school districts were unique and we committed to develop expertise specifically to target those challenges we have continued this focus for 32 years though this approach limits the number of bond transactions we can manage in a single year we remain committed our our singular focus on the school community allows us

068to bring forward a broader array of expertise to our clients we have experts in all the major funding sources of for school projects and our team works with our clients to design and implement comprehensive comprehensive funding programs that best meet their goals for clients this often means turning over every stone when looking for funding sources and evaluating funding sources and providing robust pre and post issuance engagement with staff board as well as the community in recent years post-issuance engagement has become an even bigger priority for districts in fact we currently provide post-issuance engagement for many more districts than we provide issuance advising services for in addition to general obligation bonds over the last 32 years we have worked with our clients to identify and implement solutions in the area of state grant funding redevelopment pass-through

069financing developer mitigation and melloroos districts sometimes these these solutions include the issuance of debt long and short-term debt and sometimes they do not we are committed to provide the best solution to our clients independent of how it affects issuance volume or timing this discipline is reflected in our process our processes can be broken down into five components built on a recognition there are no typical programs and that our primary role is to educate our clients and empower them to make effective decisions we start every project with a comprehensive program evaluation striving to understand the goals of the district their resources and challenges our evaluation is much broader than just simply analyzing the district's bonding capacity once we understand the district's goals and constraints we develop options that balance the various trade-offs often faced by school

070districts once funding options are developed we endeavor to educate the district staff and the board focusing specifically on information that you will need to make good decisions once a strategy is approved we apply our years of experience to implement the solution in the best way possible with particular focus on execution and engagement though no two programs are alike our experience teaches us that often the issuance of debt is the easy part the real challenges are managing the trade-offs that must be made in a way that so stakeholders feel it reflects their priorities thank you for giving us this opportunity i speak for the entire firm when i say we are excited to be part of the alum rock team all right we'll go ahead and proceed to the questions uh border vice president bomb yes

071yes give me a second here okay very well uh thank you for your presentation oh i'll get into you know a meaty part of uh the business here in light of possible increases in interest rates in the future could you tell us about some of the ways your firm could help mitigate the interest rate risk for the district on issued bonds sure great question i'll go ahead and handle that so i think there's there's a few ways that we would help mitigate that risk i think um one of the first would be uh to be able to develop a strategy for the district to increase its credit credit rating with the the credit rating agencies we know that there was a uh a couple decreases in those ratings back in 2017 to the moody's and

072standard and poor's ratings for the district's credit the positive is is that when we look through the um through the metrics that affect the district the district's av the other the other financial characteristics of the district you're in a pretty good spot um most of the reason the rationale for those downgrades back in 2017 and 2019 were related to some of the past district management practices and some of the internal controls being prepared so we've seen that the district has made great strides in developing some of those policies and and really focusing in on some of those internal controls so what about one of our thoughts on how we can help the district's interest rate environment moving forward is to be able to increase that credit rating through an engagement process that involves those credit

073rating agencies and through the bond enhancement uh the bond insurers that would also be included on the bonds that get issued so what we would recommend is that the district rather than waiting until the next time it needs to issue bonds that we engage in that process right now and the reason why we think that's important to do now is that by providing them the information showing them the progress we've made we'll be able to identify if there's any additional things that these rating agencies are looking for and it'll give us an opportunity opportunity to address those prior to that bond issuance so that way we're not waiting around we'll be able to capture the market in a timely manner while interest rates are a little bit lower and also have that process rolling where

074we can get a higher credit rating for the district and and just to state that credit rating is very important because that directly impacts the cost of borrowing for the district and that ultimately directly impacts the taxes that your your community is paying and the amount of facilities that you can fund for those projects thank you over the past several years arusd has made substantial progress in bringing stability accountability and transparency back to the district how would you approach the role of financial advisor with this progress in mind i think that this ties in well with what jesse had began to discuss as it relates to the rating agencies i think at this point um when we had reviewed the information and watched several your board meetings and and the actions that are being taken

075i think the good news here is many of the concerns that both the public as well as the rating agencies and county has had you are well on your way to remedying and putting in processes uh both policies and practices that that support good decision making so now really what it is as a for as your financial advisor it's really plugging in or helping you advocate to the important uh stakeholders so in this case uh jesse mentioned the first two the first one the first group there are rating agencies these are agencies that we go to and ask them to provide independent insight and kind of a score on your bonds the second one are liquidity providers or bond insurers and then the third one which jesse didn't get into is really the county what

076we would recommend and what we would do on your behalf is immediately um start the process of creating and telling your story um proactively reaching out to each one of these um these uh agencies and and and companies before you needed to access the market walking them through the myriad of things that you've done as well as potentially doing a full review of what your current policies and practices are and try to help you identify are there any holes in there that are that these agencies and these folks are going to really zoom in on are there small changes small things that we can do maybe taking something from practice and just simply converting it to a policy that puts you in the best position possible again i think that at this point we've got

077a pretty good story to tell as your financial advisor we would take seriously our responsibility to tell it [Music] how will you help our district increase our ratings as we work with the bonds program well i i did cover some of that already so you know maybe i'll talk about some of the other engagement processes that we would see would be important um you know i think you know as steve talked about what our process involves is is really looking at the district's overall program because we can't make decisions about bonds in isolation when we decide that we're going to issue bonds we really want need to look at the whole picture we need to look at work with your construction manager and understand what the timing and drawdown schedules and expenditures look like so

078we can develop a plan that actually works for you and this is important because your the district has a ton of options available right now you have you know over 200 million dollars in authorization right now from uh measure uh jay and i that are out there but really the question is how do you best access that what we don't want to have is a situation where the district's issuing all the money that it can and and the money's just sitting in the bank not our you know in the taxpayers are paying for that money and then we're not utilizing those for projects so as steve mentioned our first step is really just looking peeling back and looking at the big picture stepping back so we can see how do we combine transactions are there

079opportunities for us to put refundings and new money transactions together in order to save the district on cost of issuance and save the district on having lower interest costs so it's really for us is an opportunity to look at the big picture and build a structure and build a plan and it's not a plan that we build today and it's set in stone it's a plan that we come back to and we looked at time and time and as it relates to the rating agencies this is the type of forethought and planning that radiating agencies want to see they don't want to see a program that's reactive they don't want a program that you know they don't want to see districts that say i'm going to issue 10 million dollars of bonds because i can

080issue those bonds they want to see that you went through the process of identifying exactly what the needs are and that you can quickly move from the issuance of debt into the expenditure for projects so i think again it's really just a matter of putting your getting your story together and then making sure that the rating agencies know it but understanding that it's going to be a process you know they're not going to upgrade you all the way to the top for the first time thank you remember travis oh you kind of touched on mine but uh the taxpayers are going to pay for the bond and for the and the investors are going to going to collect the interest or profits how much of that money come comes back to the community so how

081much of the money comes back to the community generally speaking i'll ask answer in one context generally speaking even with low with a lower rating we get very good interest rates as public school districts in the market general obligation bonds are very very secure for investors so we use a term repayment ratio which is the ratio of how much money the community gets in projects versus how much the money the community pays in payments over time generally speaking even with your current rating you should be able to achieve somewhere around a one seven or a one eight repayment ratio as we which means for every dollar of projects the community over the life of the bonds will pay about you know one dollar and eighty cents or one dollar and seventy five cents as we

082move forward with kind of rehabilitating your credit um we would expect to be able to compress that down to like a 1-5 or even a 1-4 depending on market conditions i think what the critical part for our what our clients have found to be the most critical part isn't so much the what's the dollars and sense of it when engaging with the community it really is what are the projects and do the projects meet the needs of the community in a timely manner and can it be tied back to the amount of money so if i build a school or if i build a if i build a classroom am i paying 1.6 times for that classroom it's an effective classroom that's doing what it's supposed to do versus paying 1.6 maybe for professional services

083charges or something like that and it's really again it's engaging with the community both pre and post issuance to make sure they they're seeing that connection between the money you folks are raising the taxes they're paying and then the benefit that's going to the student all right uh here's the last question has your firm ever been the subject of or been involved in an investigation that resulted from your work with clients no we have not and and maybe i'll uh i'll use our extra time if possible maybe to just continue on with what steve had talked about um you know our goal as far as the uh you know how much goes towards the project our goal in this when it's really boiled down our goal is to get as much money uh from that

084that's coming from the taxpayers to put that towards projects we want to see as much money as possible be put towards the projects and that's what our plan is it's not a plan that's going to have as many bond issuances as possible it's going to have as few bond issuances as possible because that's going to help us with those fixed costs and it's going to help us put the district in a situation where it can put money directly over in projects rather than putting money towards interest or putting money towards financial services arrangements things like that so when we take on this fiduciary role it really is a responsibility that we view ourselves as an extension of the board an extension of staff and we take a responsibility that that we need to be able

085we need to be doing things and developing the plan that fits your community and that fits the board that you guys can stand up here and be proud of all right uh thank you that's the extent of the questions uh the next is isom thank you very much thank you uh mr president can i um motion for a 10-minute break now that i mean we've interviewed four of six firms and i think it might be good to you know allow staff and trustees to have a small break sure let's go for seven minutes okay does that sound good okay is it undoable or do we need a ten minute no seven is good that's very very precise somebody with the door okay so who's come excuse me who's compiling the physics [Music] uh i think

086i heard the phone going off my phone somebody's dinging oh um you're not here right um that's so true [Music] but i told them today i can't um [Music] this weekend you're having some time off from football no there's still the super bowl is that the sunday no it's next sunday it's next right my husband and i are into we didn't even know the niners were playing what's happening but then we were in a too so we're in a blur anyways right now that happened for my husband who claims that he's not into sports right so he was totally into watching the whole thing and now he's soccer because mexico won last night right nice that they're getting ready for the cup everybody get the summer okay i gotta watch i gotta follow that [Laughter]

087thank you very much i i was talking to somebody that whoever the yeah we're talking about soccer we're in free time whoever in the program got a couple seconds why i don't know more about soccer we're gonna have our own little mini cup in alberta yeah what's the point i'll share with the world next thursday i'm looking forward to that so it's in qatar you went all the way to south africa don't be shy you say maybe never say never you never know that's true in november all right 729 not sure president there he is he's coming back send it to you hello hello how are you how are you i was just greeting you guys that's all go ahead and take care of that all right at 7 29 we're going to go ahead

088and reconvene our meeting tonight we brought some booklets and people like those as well thank you so much i apologize to those online you know if this is then do i need to be closer to the microphone or if it's good he will tell you okay oh yeah i'm quite short thank you patricia [Music] okay welcome back um again just to remind you you have a full 15 minute for your presentation the first five minutes are allocated to a presentation to the board and the last 10 minutes are dedicated to questions and answers be mindful of the time clock and make sure that you get to all of the questions okay thank you all right thank you very much did we start now i'm just making sure the timer is working okay so hi uh

089we are with isom advisors my name is mikiko sato and i have been working with california school districts too since uh and my name is jeff pickett also with isom advisors uh been working with california school districts since 2000 awesome and just with the time constraint i'm going to walk through the presentation and jeff will take most of the questions so first of all thank you so much for the opportunity to present tonight um the first slide up here um is a brief overview of our firm so we are a full service planning campaign and financial advisory firm and we've been the leading financial advisor to school districts since 2011 based on the number of financing we work throughout california we've listed some of our local clients in the bay area there billow you'll notice

090that we work with many of your neighboring school districts but we also wanted to point out that we have worked with some school districts that have gone through some grand jury reports financial hardship so we have a lot of experience working with them as well i know there's a lot of ways to slice and dice this but we like to look at the number of general obligation bond financings for california school districts and by that metric we have been the leader in this field every in every year since 2011. um up and including 2021. so what's the key to our success we are a consulting firm so our biggest asset is our staff um you can see on this slide slide three that we show our staff as spokes we are a team and what

091makes us unique is that all of us are dedicated to working with california school districts um and all of us have 10 plus years of experience working with california school districts one thing we also pride ourselves on is that the people who interview are also the people who are going to be working with you so jeff and i will be your main context moving forward i also wanted to highlight brian moore in the brown circle on the bottom he has experience working with standard and poor's and so when we work with credit challenge school districts he steps in and helps school districts frame and tell their credit story most effectively and then finally you know what we notice when reviewing your bond program is that this community is incredibly supportive of the district over time

092and i think it's very important as your municipal advisor is that we rebuild that maintain it and garner it because that's going to give you access to further funding moving forward um you know we pride ourselves on our honesty and integrity sorry am i i didn't move forward in my notes um you know we are um very proud of that and we haven't um you know had any settlements with the sec for questionable practices um we also understand the need for a transparent process not just in the selection of the financing team but in the implementation of the bond program moving forward and then finally long-term partner long-term plan you know some financial advisor will come in and say we have the plan for you this is how you implement it but that's not how

093we operate part of our success is that we work with the school district you know without knowing your capital facility needs we can't design a bond program without knowing what's affordable for your community we can't design a bond program so we work with the district and the people who are knowledgeable about about alum rock to build a program that works specifically or to your district something that is dynamic and tailored so that it reflects your community's values okay very quick so i know that we are not the low-cost proposal that you're considering tonight but hopefully in this very short presentation we were able to convey that we have a lot of experience working with california school districts and specifically also with clients with school districts in the bay area that have experienced some financial challenges

094and difficulties in their past and so we we know all the works as it takes to make sure especially as you're moving forward with your bond program again to make sure that you have a transparent and responsible fund program and then local firm and local experience both jeff and i live in the bay area we can zoom down here you know we talked about the transparent process that would involve a lot of presentations to the boards your bond oversight can lead to your to um your community members you're a short drive down the 280 or the 680 um to come and meet with you and i'm finally implementing responsible and transparent bond programs um as i mentioned you know to maintain and garner community support that's the main thing is so that this bond program

095reflects the needs of your community and the values of your community i hope you're okay thank you all right so i have 15 minutes do you want to add anything i just want to say uh with the last couple seconds here that you know if you look at our client list and you ask us about our client list many of them have stayed with us for the 10 years that we've been around they're all long-term clients and there's a reason to stick with us because we do a good job and we work closely with them all right uh we'll proceed to the questions portion of these are you here uh board vice president obama okay thank you mr president so uh thank you for your presentation i'm going to start off with a question that

096you know gets to the heart of the matter in many ways in light of possible increases in interest rates in the future could you tell us about some of the ways your firm could help mitigate the interest rate risk for the district on issued bonds yeah i'd love to address that's a great question because everyone's uh concerned about that these days whether you're a homeowner or a bond issuer are rising um that's going to be a fact going forward it looks like and what i'd like to point to is what we talked about right in the beginning and actually throughout our presentation the amount of experience we have the number of financings we do what that gives us is pricing power in the industry and it gives us sway with the underwriting to bond underwriting

097and financial firms that you're going to work with the banks that you're going to work with that are helping set those interest rates we talk and work very closely with them um we have a lot of pricing power when they go to set the interest rates we can say you know what we're in the market this week with three other transactions we know where interest rates should be we think you need to tighten up your interest rates your rates you need to do a little bit better and because we work with them so closely and because we know the market um honestly we often get our way and i was gonna just ask that you know one of the important ways to set the stage correctly or well in the beginning is to go through

098a competitive process to select your underwriter and that really you know lets them know that they need to perform and um and also ask them to report back about the pricing results [Music] board member yes thank you um over the past several years arusd has made substantial progress in bringing stability accountability and transparency back to the district how would you approach the role of financial advisor with this recent progress in mind well i think that's where um you know the initial we could see the initial month the initial few months first few months is just working with your management team and the board and even the community to make presentations to show you what we want to do what we have planned and then of course work with you as makiko's mentoring does that work

099for you guys what what do you need when do you need your money building that trust and taking the time to build that trust i think it's important not rushing into it financing not rushing into selling bonds just because we need to even if interest rates are rising we're going back to the last question we want to take the time to do this the right way in a transparent way it's going to take working with the rating agencies and trying to bring back um you know a strong credit rating to the district and that's where we mentioned brian moore who gives us tremendous insight in that process all right thank you um and speaking of raising um our our rates how will you help our district increase our ratings as we work with the bonds

100program i do see on page 11 that you address that any other ways that you will be helping to increase our district ratings working directly with the district management and building the story figuring out what has happened in the past and we've obviously done our reading we've done our research and we know from an outsider's perspective but it'd be good to work with the superintendent and the assistant super superintendents to figure out from your perspective what is going on how do we stem you know you've had declining enrollment that's obviously the big uh way you get your funds is how many students you put in the seats a lot of school districts are dealing with that and we work with a lot of school districts and go before credit rating agencies with districts have done

101that and then we show the credit rating agencies a plan going forward how are you going to mitigate that loss what are you going to do primarily on the expense side going forward because you're losing the revenues i'm just gonna add that you know i think it's important that you frame the discussion with the reading agency that you're not just responding to their question but you're able to tell your story your way um and then also you know we work with a lot of different types of school districts and sometimes we get the county office of vet involved they're at the table and they're they're also supporting the district um and you know saying what they're doing to make sure that the district is financially strong and um and stable thank you all right uh

102board member charles the fact the taxpayers are going to pay for the bond and the investors are going to collect the interest or profits how much of that money will come back to the community well i think you know the community you mentioned earlier was very supportive of these students i think the way you show the community is getting what they're what they voted for as you show them the new buildings the new facilities or the rehab abilities facilities how's that impacting the students that's how the community gets back what they're putting into your bond program better classrooms better educational environment for the students i think the key is that we want to make sure that the interest rates are set competitively initially so that you are getting good market interest rates and then we

103continue to monitor your bond program for instance i'm sure other others have shared this already but you do have opportunities to refund some of your bonds to generate taxpayer savings for your taxpayer you know right now based on the current interest rate environment um and so i think those are the key and also you know tying back to some of your other questions too you know making sure that the ratings are as strong as they can be um you know we work with you closely to make that plan that credit plan um to make sure that taxpayers um are yeah not overpaying for these bonds and we also want to be mindful of the tax rate impact to your community um you know every community is different their tax rate threshold is you know different

104um and so we want to make sure and work with the board and the community to make sure that whatever how restructuring the bonds meets their ability to you know pay pay so that's an important part of our job as well all right um has your firm ever been the subject of or been involved in an investigation resulted from your work with a client i no all right thank you for that very prompt and direct response all right that concludes the extent of the questions that we have for you um thank you for your participation um jess will go ahead and uh explain what's the next one [Music] i'm sorry i didn't i didn't quite hear you about president i think we have one more firm oh yes uh dale scott is next thank you

105thank you thank you for having us uh um you oh thank you thank you you so much [Music] so she's gonna be safe okay welcome back um again just to remind you you have a minutes allocated for your uh total presentation the first five minutes it's for presentations of the board and last 10 minutes are allocated to questions and answers a total of five questions just be mindful of this time okay thank you all right all right ready to begin good evening uh board members superintendent um my name is mark farrell i'm with company i apologize that she couldn't be here tonight he has had a previously scheduled vacation with his wife so i'm here in instead i've been with dale scott for 10 years and 20 years in the industry working with school districts

106on general general obligation bond programs cops trans cfds you name it um and so thinking about bond programs and bond program successes and there's a couple different ways to look at it and financial advisors a lot of times we'll talk about the number of elections that they've won or the number of bond financings they've worked on and we've definitely had our share their 250 elections over 1500 financings and i'm sure you've heard a lot about that tonight from from uh some of the other firms that have sat here but i'd like to maybe take a little bit of different tech and think about the future and think about another real critical component of success and that is having your community feel that your bond program is successful and so what i bought in this presentation

107are some examples of information that we help our clients put together to help communicate the bond program successes to your community so the citizens bond oversight committee obviously plays the role of the watchdog for the community making sure that the district is spending its proceeds only on the board for bond approved project or voter approved projects but that community that committee is also in a unique position to be able to share information with the community and so in the first tab your presentation the cdoc mailer we've put together a couple examples for you of uh reports mailers that we designed with the bond oversight committee members to be mailed to all households in the district we've got example from santee school district down in san diego county and then another for evergreen school district just

108down the road and both of them have a little bit of a different style the santee report is a little bit more numbers focused evergreen is a little more project focused with more photos but the important thing is yeah as that independent oversight committee having regular communication go out to them to your community can really establish and maintain credibility in your bond program and when you go back out to the community in the future having that kind of background information coming from that citizens oversight committee on a regular basis can really be beneficial so in addition to kind of ongoing constant communications you may have kind of ad hoc good news that you want to share with with the community so in the second tab kind of appropriately named press release we've got a sample

109press release from east siding and high school district last year they financed a series of bonds saved the community 15 million dollars save taxpayers 15 million dollars and so obviously one we want to get that news out to the community to make sure that they're and knowing that the school district is being goods towards the taxpayer dollars so we work with our clients when those types of things happen to put together press releases and make sure that those get in kind of the local media outlets we've also noticed that a lot of clients don't really have robust information about their bond program on their website and so in the web content tab i've got a couple examples of uh pages we've helped design for palm springs unified and yuba community college district and again if

110the district isn't putting out that information about the bond program and your community is going to get that second and third hand and the information that they have may not really be accurate and so the pieces we've designed oops forgot to advance my slides here the pieces we've designed are just you know to help supplement the information that the school district will put out you know the photos of the different projects and the status of the different projects and then the last section is a little bit unique and it's an article from inc magazine it's about a project for jefferson houston union high school district for affordable uh staff housing we developed the financing plan for jefferson high to fund the project it's about a hundred over a hundred units of affordable rental housing and

111the district has gotten quite a bit of positive press for that project i think one of the things that's important to us is that really and demonstrates one of the goals that we have working with our clients is really to help put together programs that advance the educational vision of school districts and so i wanted to kind of share some of these these kind of ideas and it's a little bit of how we think differently about school district bond programs and holistically about the bond programs we don't just focus on making sure the transactions of success or the election is a success but really try to build long-term success for the district um so your community understands what you're doing so the next time you go out for a bond election or parcel tax election

112they're already in support of you all right uh we're going to go ahead and proceed with questions to this point we'll start off with what vice president trump yes thank you mr president uh you know um you know thank you for your presentation and you know especially your work with uh you know some of our neighboring districts and i'll get to one of the um most important uh affairs of the matter in light of possible increases in interest rates in the future could you tell us about some of the ways your firm could help mitigate the interest rate risk for the district on issued bonds well um you know the hard part when when richmond bonds is school district uh it's been very difficult to time the market first and foremost when a school district

113issues issuing bonds it should really i think be driven by what your project needs are and the timing of your projects um one of the rules with issuing bonds is you need to spend those proceeds within about three years of issuance so we have to be careful about trying to let's say issue too many bonds too early to take advantage of interest rates if you realistically can't spend those proceeds within that three year time period one of the things we tend to look at too for for our school district clients especially when issuing general obligation bonds is we do a lot of our bond sales of what's called a competitive sale process that's where we as the financial advisor would structure the financing and then essentially put it out to bid and allow every investment

114bank in the world to to submit a bid to buy your bonds on that particular day we actually just did a financing for clexco unified school district earlier this week very similar ratings as uh as alumrock they got six different bids investment banks the two uh the the winning bid and the cover bid the difference between interest rates was point zero zero zero four percent so four ten thousandth of a percentage point the third place bid was .05 percent higher and the sixth bid was point three percent higher and so you don't necessarily know what investment bank is going to provide you the best deal on any day if you go the negotiated sale route but with the competitive sale you you at least know that that winning bid that winning bidder is giving you

115the best interest rate on that day all right next question is board member thank you over the past several years arusd has made substantial progress in bringing stability accountability transparency back to the district how would you approach the role of financial advisor with this recent progress in mind i think one of the things that really goes to the the five minutes i just spent talking about providing information to the community throughout the entire bond program so utilizing the bond oversight committee and not just to have them you know review and put together a report that sits on the shelf but actually get that information out to the community i think it's also important in your school board meetings when we are presenting information about about the finance things to make sure we're disclosing all of

116the information about the financing that the district might undertake as well as providing different options i know for example you know in looking at bond refinancings and there's a trend to do a lot of taxable advantage fundings today and while that may be good for a school district i think a lot of times not all the information is shared with the school district you know what's the cost of doing the taxable advanced refunding versus waiting a year two years three years down the road where you could do that refinancing as a tax exempt current refunding and so we want to make sure we're providing you all of that information providing that to the board in an open board meeting so that your community also is aware of that information and then the board can make

117the decision that's best for the district having all that information so how will you help our district increase our rating as we work with the bonds program sure you know i think it's very difficult for a financial advisor to change your rating i think looking at the the district's finances i've done quite a bit of you've improved your fund balance quite a bit and that's really one of the big things that the rating agencies look at they look at your spending they look at your fund balances and that trend over time and you know working with some of your neighboring districts you know we know that the economy and the demographics here support higher ratings than the district has um you've had you know double a category ratings in the district prior and so really

118one of the big things that they're going to look at is is your financial performance and so we can help present your finances in the best light but you know looking at where you are today and you've got about a 16 fund balance on restricted fund balance which is much improved from where it was when the rating agencies downgrade you downgraded you and i think it actually would warrant an upgrade just looking at that but if you also look at your multi-year projection in 2023 and 24 that fund balance is projected to drop to seven percent so i think it would be very difficult for the rating agency to upgrade your rating just looking at that so we'd have to be able to present the story to the rating agency of well this is the

119fund balance on paper but here's the plan that the district has to manage the potential uh decline in revenue from declining enrollment for the loss of federal funding et cetera to help tell that story so it's not just looking at a seven percent ending fund balance on the page but knowing that the board is already thinking about what changes need to be made to keep that fund balance more stable taxpayers are going to going to pay for the bond and the investors are going to collect the interest or profits so how much of that money will comes back to the community well i just there's a couple ways to to look at that i mean one i mean the community is getting the bond money for the project so obviously um that is the number

120one thing that the community is getting if you look at the interest that you're going to pay on the bond you know one of the things we look at very carefully and monitor our abilities to refinance bonds in order to reduce interest rates in the future and 100 percent of those savings go back to to the community and lower their tax bills and so the price release for example that we did for for eastside that 15 million dollars in savings and so you know touching again earlier on what i talked about with the different types of refundings you know we'll do that analysis we present that to uh staff and to the board and then the board can decide if you know with our recommendation what's kind of the most appropriate timing to do those

121types of refinancing uh and then lastly you know the the bonds that the district sell you know can be purchased by people in the community so potentially they can own uh some of the bonds and and you know they would be earning the interest uh on the on the bonds that you sell right um we close off with last question which is has therefore remember been the subject of or been involved in an investigation that resulted from your work with the client uh no from our work with clients now all right thank you very much that's the extensive question okay i'm assuming the boards in the process of submitting their scores um once that has been completed uh so we'll calculate the scores we're going to have the firms wait out there until the calculation

122is complete so they're not here in here while that calculation is being done so once that calculation is done we'll invite all the firms back and then board president um ditto you can announce kind of who was the leading finalist we're going to be able to show that here right uh thank you yes [Music] hmm [Music] oh there it is um mmm uh foreign um uh um hmm you perfect oh hmm um what huh uh um no things have changed significantly in terms of communication different information a lot more about what we used to do i've been in our house living in our house for 21 years and so i can't see how this could change in front of communicating to the public in the backspace [Music] well some [Music] marketplace yes if you want

123him to put it on some oh um resultation sure out there that's part of the transparency are the are the results up there on the screen oh here we go they're going to be shared right now and zoom oh okay thank you all right so now we're at item 2.02 and with uh the second component which is this election of the desired firm um at this point is there any further discussion from the board the scores are pretty much what they are unless there's uh some pressing issue that you want to raise it's information that was not available to us for some reason president quintero yes um i'm not sure if it's possible the way we have it set up now or at some point are we gonna also show the individual ratings for the

124um for each trustee or only this cumulative score just just in the interest of transparency um i believe that they were all pulled from the individual scores that we all sent and this is a result of that so uh the same thing last time yeah are we are we able to pull out all the other spreadsheets or is this uh just all the raw numbers like yeah there you go so if you look at your individual strengths that's where i'm showing the individuals oh i see can we scroll it across oh if you look at zoom they're there yeah can we scroll it all the way across [Music] okay that's it just to make sure that we it's all transparent and everyone can see thank you also thank you uh since i have my mic

125open here thank you to all of our team for as trusted alluded to earlier for making this a very transparent very smooth um process and i mean it's a testament to the work of the whole team here so thank you everyone all right further comments from the board yes i think i have my hand up mr president all right uh just the question on the format of the scores uh i i take it that this is an average of all the the scores that we gave for each firm as opposed to a sort of like a a total number uh you know based on josephus indicating that that is correct okay uh further comments from the word um i'm just wondering now uh since we read it do we say it out loud um i

126know that visually it's there do we voice the outcomes maybe or just uh appoint the firm that clearly do we mention any of that or we just uh at this point if in your comments you want to disclose what it it's it's been uh broadcast live uh on youtube it's been recorded for for everybody to see okay so at this point i think the public can see it's been recorded in multiple forms and it'll all be reported through our actions if i can add them to my comments that's okay um so i i do want to voice congratulations to everybody for coming you know thank you for taking the time to do the interview and go through this transparent process as we've mentioned many times and just for those that might not be able to

127see um i do want to say del scott and company incorporation were the ones that got the most votes uh as an average um but i do want to thank uh everyone for doing your homework and preparing for this interview uh tonight for the comments from the board no no um yet we have to take action so given that uh uh president i don't know if you saw my hand uh president keith you're gonna speak go ahead and i'll old or how do you wanna give me a quick second so given the fact that we uh see the deal scott i received a 4.32 score um i am asking for a motion from the board to move move along with the process that was outlined at the beginning of the process so um motion two

128movements a motion from board member charlie's second second from board member uh comments uh board member yeah i i thank trustee pham or vice president fam for uh clarifying about the uh the nature of the scoring as we have it here and my understanding is that this is the average per question for each of them and i'm not quite sure i just want to make sure again to make sure we don't skip over anything can we confirm that the total number of points received is in fact in line with these averages because i'm i wasn't exactly a math major so i'm i'm not 100 sure that an average score necessarily correlates with the total score and my understanding is that we um will select on the total number of points for each candidate so that

129it may align i'm just not sure mathematically if that's necessarily the case so i don't know maybe going back to the to that other screen or if jose could just confirm that the average score actually correlates with um the total score all right that's a fair question and i'm sure it will help us avoid issues later on exactly sure if we square that all the way so i do appreciate the question we're all we're in the middle of a we have a motion and a second on the floor the vote hasn't been taken so now's the time to go ahead and clarify that um if you see on your screen uh we'll remember right i don't know yeah i can see um so is each so this is one candidate right this is the what

130we're looking at is field men roll up and associates yes that's correct correct they're the first ones to present so i'm not i think i'll say how how challenging would it be to um instead of showing the averages or in addition to showing the averages to show the totals for each candidate or or even if dr bauer or the board wants to entertain me the question that i'm asking is it is it our understanding that we are selecting based on the total number of points as opposed to the average score per answer um well we'll pose it to the body right now we'll get that clarification on the spot are are you looking for a total raw number of points are you looking for the highest average at the end of the day i'm assuming

131that you're looking for the ones who got the highest whether it's average or raw number correct exactly and so if uh and so the the i'm getting a consensus of yes from here in the room uh board member fam can you clarify your position and then make your comments yes so so what i i was going to do online with the trustee batehorano's uh question there uh in reference you know in july we use a total number of points as opposed to an average so the thing is i can i can see where you know uh in order to avoid any illegal inconsistencies it would be a lot more transparent and easily understandable to use a total of points as opposed to an average point all right well we have council here and they can

132let us know if we have to hold for use the same process as we did back in the summer um or is there any difference it's the same we use the same we we use the same what the same process the same process sir we use the same process but i i'm if i remember correctly whether it was for the appointment of um trustees or the selection of attorneys we've always gone with the total number um as the number and and more specific i think for this particular process i would want to ensure that what we messaged out to the firms and to the public whatever that was that someone can review that aligns with what we are about to vote on so maybe we may have used a different process in the past although

133i don't think we did but i think it's more important what did we say for this particular process to the public and to the firms about what would determine the um selection so that that process was outlined right here on the spot amongst us and so jess would remind us did your comments say highest number or highest score was the highest score highest score i believe that was did we send any communication out to people or or was it no the process was decided here uh at the beginning of the board meeting and they're very transparent and because i believe they're actually calculating as we speak so we might be able to get both so i think i mean we're able to do both getting ready to respond to your question trustee they're crunching the

134numbers so thank you okay but in the case that they are they do end up different it sounds like we did confirm that mr serna um the decision that we made was the point the highest number of points was what we agreed upon i guess we can go back and check the video later on oh the average no and if that is the case points so we have points score and average if that's the case then maybe we we might need legal counsel to help us sort what that actually means if if the number crunchy shows that it's the same thing then all this move obviously yeah let's go ahead and they're right now crunchy numbers so that way we don't have to get right unless the highest number and the average unless there's a

135tie yeah of the highest the highest is the highest [Music] you all right so with that uh what the number is p and crunch uh we came back and the results are the same the the well not the same but the highest score uh was received by dale scott company with 180 points so it correlates with the highest average so thank you for those questions i think they helped us clarify and avoid any issues oh okay all right um further comments from the board uh just to mr president just to thank you know uh thank all the firms for participating in uh putting and putting in a uh very good effort tonight all right for the comments all right um yeah i'd like to add to those comments thank you all for participating i think

136everybody came very difficult process to uh have to decide amongst well-qualified firms uh thank you for all your engagement and let's go ahead and move forward with the vote i'll go ahead and call [Music] call you as i see you initially um board member hi board member travis hi all right myself voting i in the affirmative uh we have unanimous the motion thank you i'm going to go ahead and adjourn this meeting at 8 29. thank you good night oh we were gonna tell the firm we're gonna have the firm come back in and yeah let them know oh yes yes so we can't we can't adjourn yet we can't uh we we can adjourn we could just let them know that yeah okay for the decision do you want me to um shut down

137this um the zoom um crosstaking dead or whatever okay so i'll just shut it down