20131001 BOSC SB449 HB3416
Legislative Update- SB 449 / HB 3416Prohibiting the Use of Capital Appreciation Bonds 0
Summary of SB 449 (Hinojosa) and HB 3416 (Flynn): •
During the last legislative session, SB 449 was filed by Senator Juan Hinojosa (McAllen) to prohibit the use of Capital Appreciation Bonds ("CAB") by Texas school districts and local governments and its companion bill, HB 3416, was filed by Representative Dan Flynn (Canton). These bills did not pertain to State Agencies or transportation issuers.
•
Working with Senator Hinojosa and Representative Flynn's representatives, the CAB bills were amended to permit the issuance of CABs if:
•!• Maximum CAB maturity was 20 years or less; and •!• CABs comprised no more than 20°/o of a district's total bond payments. •
On April 9, 2013, SB 449 passed the Senate by a vote of 28 ''Yeas" to 3 "Nays" but the bill later died in the House.
•
In response to Poway Unified School District and other California school districts issuing over $7.0 billion of CABs since year 2007, California has enacted legislation that limits CABs to a maximum term of 25 years and interest may not exceed 4X the principal amount.
•
With Representative Flynn also serving as Co-Chair of the House Transparency in State Agency Operations Committee and given the continuing media reports, CABs issued by school districts will continue to be reviewed.
r
•
Currendy, 607 Texas municipal issuers have CABs within their debt portfolios and on average; CABs comprise 5.71 °/o of the principal amount of bonds outstanding within these issuers.
•
For vanous reasons, CABs are heavily concentrated among a few issuers as the top 10 issuers of CABs comprise 51.34°/o of all CABs outstanding.
Issuer Name 1.) North Texas Tollway Authority 2.) Texas Transportation Commission 3.) Leander lSD 4.) Harris County-Houston Sports Authority 5.) Dallas, City of 6.) Texas Municipal Power Agency 7.) Houston, City of 8.) Wylie ISD 9.) Grand Prairie ISD 10 Ennis ISD
Maturi ValueofCABs $ 2,650,190,042 1,972,585,000 1,941' 110,000 1,091,684,922 686,995,000 575,810,000 447,470,000 380,825,000 341,310,000 334 635,000
Source: The Municipal Advisory Conncil of the State of Texas- As of January 31, 2013. ~--~~~~~~~--~~~--~--~--~--~~~----------------------------------_. 2
r
•
471 school districts currendy have CABs within their debt portfolios. However, the use of CABs is also concentrated within a few school districts as the top 5 users of CABs comprise 33.11 °/o of the total CABs in Texas school districts.
•
When the Top 10 school districts with CABs are removed, the CABs within the remaining 461 school districts represent an average of 0.12°/o of their total debt payments.
•
In order to determine how CABs are being used, the following needs to be considered: 1) 2) 3)
Percentage of CABs within debt portfolio; Dollar amount of CABs within debt portfolio; and Maturity date of CABs. -
-
-
Summary of CABs in Texas School Districts- Maturity Value of CABS --
-
TopS
Top 10
Top 50
43.65
~------~------~-------r------~------~--------~------~----~
0%
10%
20%
30%
40%
50%
60%
70%
80.07%
80%
90%
Source: The Municipal Advisory CoWlcil of the State of Texas- As ofJanuary 31, 2013. ~--~~~~~~--~~~~~--~----~~--~~~------------------------------------__.
3
A
School District
B Total Principal O utstandin
c Total Interest Outstandin
D Total Bond Payments Outstandin
E Total CAB Payments Outstandi
F Percentage of CAB Payments to Total Bond Pa ments
Principal To Interest Ratio
G
$ 2,615,180,050 495,162,050
70.91%
1 to 1.88
Wylie ISD
$ 1,705,960,057 264,080,995
$ 1,854,400,000
231,081,055
358,065,000
72.31%
1 to 1.14
Ennis ISD
146,096,847
246,618,803
392,715,650
343,390,000
87.44%
1 to 1.69
Grand Prairie ISD
476,159,830
484,590,389
960,750,219
333,355,000
34.70%
1 to 1.02
Frisco ISD
1,353,1 10,843
1,236,898,476
2,590,009,319
228,375,000
8.82%
1 to 0.91
Lewisville ISD
1,1 13,538,429
585,099,039
1,698,637,469
219,635,000
12.93%
1 to 0.53
Leander ISD
$ 909,219,993
Denton ISD
631,577,937
477,519,327
1,109,097,263
193,335,000
17.43%
1 to 0.76
Irving ISD
534,452,377
390,748,921
925,201,297
192,305,000
20.79%
1 to 0.73
White Settlement lSD
165,653,198
218,346,473
383,999,671
174,003,799
45.31%
1 to 1.32
DeSoto ISD
131,193,113
167,415,512
298,608,625
167,535,000
56.11%
1 to 1.28
Coppell ISD
174,797,888
214,141,815
388,939,704
164,180,000
42.21%
1 to 1.23
Rockwall ISD
347,903,257
366,319,508
714,222,766
155,965,000
21.84%
1 to 1.05
Mesquite ISD
369,567,822
198,192,646
567,760,469
151,685,000
26.72%
1 to 0.54
Prosper ISD
233,531,557
303,333,105
536,864,661
151,105,000
28.15%
1 to 1.30 1 to 0.76
Birdville ISD
203,760,361
154,342,390
358,102,751
137,375,000
38.36%
Grapevine-Colleyville ISD
345,235,467
270,930,881
61 6,166,348
128,490,000
20.85%
1 to 0.78
Cedar Hill ISD
132,074,111
187,261,182
319,335,293
110,195,000
34.51%
1 to 1.42
Crowley ISD
287,237,845
303,039,181
590,277,025
82,175,000
13.92%
1 to 1.06
80,080,000
1 to 0.69
Keller ISD
681,493,167
468,092,165
Duncanville ISD
146,497,100
131,614,500
1,149,585,333 278,111,600
66,590,000
6.97% 23.94%
Eagle Mountain-Saginaw lSD
569,717,951
477,206,000
1,046,923,951
58,305,000
5.57%
1 to 0.84
91,970,024
125,194,063
217,164,088
56,050,000
25.81% 7.57%
1 to 1.36 1 to 0.95
Anna lSD
1 to 0.90
Burleson ISD
307,661,943
293,447,747
601,109,690
45,525,000
Allen lSD
484,983,037
306,125,081
791,108,118
38,335,000
4.85%
1 to 0.63
Hurst-Euless-Bedford lSD
302,122,934
176,801,711
478,924,645
26,025,000
5.43%
1 to 0.59
Mansfield lSD
691,174,963
361,710,278
1,052,885,241
6,525,000
0.62%
1 to 0.52
Plano lSD
981,345,871
425,470,096
1,406,815,966
3,505,000
0.25%
1 to 0.43
Fort Worth ISD
672,514,995
228,969,786
745,000
0.08%
1 to 0.34
2,458,700,000
1,856,037,718
901,484,781 4,314,737,718
0.00%
1 to 0.75
491,235,000
220,238,709
711,473,709
0.00%
1 to 0.45
Dallas lSD McKinney lSD
Source: The Municipal Advisory Council of the State of Texas- As of August 31, 2013.
4
Total CAB Payments Outstanding Equals $38,335,000 Total Bond Payments Outstanding Equals $791,108,118
$40,000,000
Percentage of "CAB Payments to Total Bond Payments" Equals 4.85%
$35,000,000
....c
$30,000,000
I'll
~
e.....,
$25,000,000
~
~
"0
c 0
$20,000,000
-== $15,000,000 ~
c c
< $10,000,000 $5,000,000 $0
- - ----- - - ----
........
........ '-> ~
$5,000,000
~
"0
=
0
$4,000,000
-== $3,000,000 ~
=
. ~
~
"C
=
0
= -
$30,000,000
~
= = -. = ~
$30,000,000 $25,000,000
"C
= 0
-=== =
Summary of SB 449 (Hinojosa) and HB 3416 (Flynn): •
During the last legislative session, SB 449 was filed by Senator Juan Hinojosa (McAllen) to prohibit the use of Capital Appreciation Bonds ("CAB") by Texas school districts and local governments and its companion bill, HB 3416, was filed by Representative Dan Flynn (Canton). These bills did not pertain to State Agencies or transportation issuers.
•
Working with Senator Hinojosa and Representative Flynn's representatives, the CAB bills were amended to permit the issuance of CABs if:
•!• Maximum CAB maturity was 20 years or less; and •!• CABs comprised no more than 20°/o of a district's total bond payments. •
On April 9, 2013, SB 449 passed the Senate by a vote of 28 ''Yeas" to 3 "Nays" but the bill later died in the House.
•
In response to Poway Unified School District and other California school districts issuing over $7.0 billion of CABs since year 2007, California has enacted legislation that limits CABs to a maximum term of 25 years and interest may not exceed 4X the principal amount.
•
With Representative Flynn also serving as Co-Chair of the House Transparency in State Agency Operations Committee and given the continuing media reports, CABs issued by school districts will continue to be reviewed.
r
•
Currendy, 607 Texas municipal issuers have CABs within their debt portfolios and on average; CABs comprise 5.71 °/o of the principal amount of bonds outstanding within these issuers.
•
For vanous reasons, CABs are heavily concentrated among a few issuers as the top 10 issuers of CABs comprise 51.34°/o of all CABs outstanding.
Issuer Name 1.) North Texas Tollway Authority 2.) Texas Transportation Commission 3.) Leander lSD 4.) Harris County-Houston Sports Authority 5.) Dallas, City of 6.) Texas Municipal Power Agency 7.) Houston, City of 8.) Wylie ISD 9.) Grand Prairie ISD 10 Ennis ISD
Maturi ValueofCABs $ 2,650,190,042 1,972,585,000 1,941' 110,000 1,091,684,922 686,995,000 575,810,000 447,470,000 380,825,000 341,310,000 334 635,000
Source: The Municipal Advisory Conncil of the State of Texas- As of January 31, 2013. ~--~~~~~~~--~~~--~--~--~--~~~----------------------------------_. 2
r
•
471 school districts currendy have CABs within their debt portfolios. However, the use of CABs is also concentrated within a few school districts as the top 5 users of CABs comprise 33.11 °/o of the total CABs in Texas school districts.
•
When the Top 10 school districts with CABs are removed, the CABs within the remaining 461 school districts represent an average of 0.12°/o of their total debt payments.
•
In order to determine how CABs are being used, the following needs to be considered: 1) 2) 3)
Percentage of CABs within debt portfolio; Dollar amount of CABs within debt portfolio; and Maturity date of CABs. -
-
-
Summary of CABs in Texas School Districts- Maturity Value of CABS --
-
TopS
Top 10
Top 50
43.65
~------~------~-------r------~------~--------~------~----~
0%
10%
20%
30%
40%
50%
60%
70%
80.07%
80%
90%
Source: The Municipal Advisory CoWlcil of the State of Texas- As ofJanuary 31, 2013. ~--~~~~~~--~~~~~--~----~~--~~~------------------------------------__.
3
A
School District
B Total Principal O utstandin
c Total Interest Outstandin
D Total Bond Payments Outstandin
E Total CAB Payments Outstandi
F Percentage of CAB Payments to Total Bond Pa ments
Principal To Interest Ratio
G
$ 2,615,180,050 495,162,050
70.91%
1 to 1.88
Wylie ISD
$ 1,705,960,057 264,080,995
$ 1,854,400,000
231,081,055
358,065,000
72.31%
1 to 1.14
Ennis ISD
146,096,847
246,618,803
392,715,650
343,390,000
87.44%
1 to 1.69
Grand Prairie ISD
476,159,830
484,590,389
960,750,219
333,355,000
34.70%
1 to 1.02
Frisco ISD
1,353,1 10,843
1,236,898,476
2,590,009,319
228,375,000
8.82%
1 to 0.91
Lewisville ISD
1,1 13,538,429
585,099,039
1,698,637,469
219,635,000
12.93%
1 to 0.53
Leander ISD
$ 909,219,993
Denton ISD
631,577,937
477,519,327
1,109,097,263
193,335,000
17.43%
1 to 0.76
Irving ISD
534,452,377
390,748,921
925,201,297
192,305,000
20.79%
1 to 0.73
White Settlement lSD
165,653,198
218,346,473
383,999,671
174,003,799
45.31%
1 to 1.32
DeSoto ISD
131,193,113
167,415,512
298,608,625
167,535,000
56.11%
1 to 1.28
Coppell ISD
174,797,888
214,141,815
388,939,704
164,180,000
42.21%
1 to 1.23
Rockwall ISD
347,903,257
366,319,508
714,222,766
155,965,000
21.84%
1 to 1.05
Mesquite ISD
369,567,822
198,192,646
567,760,469
151,685,000
26.72%
1 to 0.54
Prosper ISD
233,531,557
303,333,105
536,864,661
151,105,000
28.15%
1 to 1.30 1 to 0.76
Birdville ISD
203,760,361
154,342,390
358,102,751
137,375,000
38.36%
Grapevine-Colleyville ISD
345,235,467
270,930,881
61 6,166,348
128,490,000
20.85%
1 to 0.78
Cedar Hill ISD
132,074,111
187,261,182
319,335,293
110,195,000
34.51%
1 to 1.42
Crowley ISD
287,237,845
303,039,181
590,277,025
82,175,000
13.92%
1 to 1.06
80,080,000
1 to 0.69
Keller ISD
681,493,167
468,092,165
Duncanville ISD
146,497,100
131,614,500
1,149,585,333 278,111,600
66,590,000
6.97% 23.94%
Eagle Mountain-Saginaw lSD
569,717,951
477,206,000
1,046,923,951
58,305,000
5.57%
1 to 0.84
91,970,024
125,194,063
217,164,088
56,050,000
25.81% 7.57%
1 to 1.36 1 to 0.95
Anna lSD
1 to 0.90
Burleson ISD
307,661,943
293,447,747
601,109,690
45,525,000
Allen lSD
484,983,037
306,125,081
791,108,118
38,335,000
4.85%
1 to 0.63
Hurst-Euless-Bedford lSD
302,122,934
176,801,711
478,924,645
26,025,000
5.43%
1 to 0.59
Mansfield lSD
691,174,963
361,710,278
1,052,885,241
6,525,000
0.62%
1 to 0.52
Plano lSD
981,345,871
425,470,096
1,406,815,966
3,505,000
0.25%
1 to 0.43
Fort Worth ISD
672,514,995
228,969,786
745,000
0.08%
1 to 0.34
2,458,700,000
1,856,037,718
901,484,781 4,314,737,718
0.00%
1 to 0.75
491,235,000
220,238,709
711,473,709
0.00%
1 to 0.45
Dallas lSD McKinney lSD
Source: The Municipal Advisory Council of the State of Texas- As of August 31, 2013.
4
Total CAB Payments Outstanding Equals $38,335,000 Total Bond Payments Outstanding Equals $791,108,118
$40,000,000
Percentage of "CAB Payments to Total Bond Payments" Equals 4.85%
$35,000,000
....c
$30,000,000
I'll
~
e.....,
$25,000,000
~
~
"0
c 0
$20,000,000
-== $15,000,000 ~
c c
< $10,000,000 $5,000,000 $0
- - ----- - - ----
........
........ '-> ~
$5,000,000
~
"0
=
0
$4,000,000
-== $3,000,000 ~
=
. ~
~
"C
=
0
= -
$30,000,000
~
= = -. = ~
$30,000,000 $25,000,000
"C
= 0
-=== =
