(Goddard Schools) April 25, 2017 Bond Issue Election ...
Sedgwick County, Kansas Unified School District No. 265 (Goddard Schools) April 25, 2017 Bond Issue Election Finance Bullets
With a capital improvement budget of $51,000,000, the total proposed bond issue size will be not-toexceed $52,000,000. The balance of the proceeds would be for required financing Costs of Issuance and for Capitalized Interest during construction to keep the first budget levy from “bubbling” due to the timing and approximately 16 months of interest in the first levy.
Today’s interest rates, estimated conservatively at 3.5% for the 17-year bond, are near their lowest levels of the past 50 years. Low interest rates make the cost of repayment of a bond issue more affordable. Similar quality and length bond issues have sold at average rates below 3% recently.
Current state finance formula allows31% additional state aid to pay 31% of the project cost and interest on the proposed bonds. The total state aid benefit (both principal and interest) is an estimated State aid Aid is based on the District’s wealth per pupil as compared to $23,879,000. The percentage of state other Kansas school districts and can change based on these factors in future years. These are tax monies that can be brought back from Topeka to the benefit of our children, area and community. 31%31% State Aid
State Aid
$52,000,000 Bond Principal x 31%
=
$16,120,000
$25,031,475 Estimated Interest x 31%
=
$ 7,759,757
Total Principal & Interest $77,031,475 x 31% = $23,879,757
With State of Kansas financial challenges, this state aid program may not be offered in the future, however, it is believed that bonds approved under current law will be grandfathered and continue to receive the promised state aid.
Goddard USD 265 is a growing district. The assessed valuation in 06-07 was $187,946,140. The current assessed valuation (not including motor vehicles) is $252,295,748. This 10-year tax base growth of more than $64 million represents average annual growth of 3.4%. To be conservative in our Plan of Finance, we have assumed future growth of only 1% per annum.
Growth in the USD 265 tax base has allowed the District to control and actually lower the total mill rate for education. The required mill rate in the 2010-2011 school year was at 70.835 mills. This year's estimated total mill rate is at 59.91 mills--a reduction of nearly 11 mills from 2010. With bond approval, the total mill rate will still be significantly below what was required at the start of the decade.
Goddard USD 265 has previously issued bonds which will be retired in 2029 (12 years). These bonds require a levy of 18.51 mills in the current 2016-2017 budget.
The Plan of Finance is to “wrap” the proposed new bonds around our existing debt to create a financing where one consistent mill levy will retire all bonds (both existing and proposed). Based on the above conservative assumptions, a total mill rate of 20.41 mills will provide adequate resources to retire all bonds. As we are levying 18.51 mills this year, the net increase to local taxpayers will be an estimated 1.9 mills (20.41 less the current 18.51 mills).
A mill is $1 of tax on each $1,000 of assessed valuation of property in the District. A net increase of 1.9 mills represents added taxes of $21.85 per year ($1.82 per month) on a $100,000 home in Goddard USD 265.
With today’s low interest rates, and perhaps a last chance to take advantage of the 31% state aid program to help retire the bonds, the cost of improving Goddard Schools may never be more affordable!
Goddard U.S.D. No. 265 $52,000,000 Bond Issue Tax Effect Type of Property
Estimated Assessed Valuation
$100,000 Home*
$
$150,000 Home*
Proposed Bond Net Tax Increase at 1.90 Mills Yearly
Monthly
11,500
$ 21.85
$ 1.82
$
17,250
$ 32.78
$ 2.73
$200,000 Home*
$
23,000
$ 43.70
$ 3.64
160 Acres Dryland Farm**
$
9,423
$ 17.90
Yearly Cost/Acre $ 0.11
160 Acres Irrigated Farm**
$
15,995
$ 30.39
Yearly Cost/Acre $ 0.19
160 Acres Pasture**
$
1,329
$
Yearly Cost/Acre $ 0.02
$50,000 Commercial Prop.***
$
12,500
$ 23.75
$ 1.98
$100,000 Commercial Prop.*** $
25,000
$ 47.50
$ 3.96
*
2.53
For taxing purposes, residences are assessed at 11.5% of their fair market value.
** For taxing purposes, agricultural property is assessed at 30% of use or productivity value and not as a percentage of fair market value.
*** For taxing purposes, commercial property is assessed at 25% of fair market value. YOU ARE ENCOURAGED TO DETERMINE THE ESTIMATED TAX IMPACT ON YOUR PROPERTY BY FINDING THE ASSESSED VALUATION ON YOUR TAX STATEMENT AND MULTIPLYING THE ASSESSED VALUATION TIMES .0019 (1.90 MILLS).
Tax-Exempt Interest Rate Market Trends
Rate
30-Year Historical Bond Buyer 20-Bond Index January 1987 - January 5, 2017
11.00% 10.00% 9.00%
8.00% 7.00% 6.00% 5.00% 4.00%
3.00% 2.00%
This repo rt was prepared fro m data believed to be reliable but no t guaranteed by us witho ut further verificatio n o r investigatio n, and do es no t purpo rt to be co mplete. It is no t to be co nsidered as an o ffer to sell o r a so licitatio n o f an o ffer to buy the securities o f the entities co vered by this repo rt. Opinio ns expressed are subject to change witho ut no tice. Geo rge K. B aum & Co mpany may act as a principal fo r its o wn acco unt o r as agent fo r ano ther perso n, in co nnectio n with the sale o r purchase o f any security which is subject in this repo rt. No thing co ntained in this repo rt is intended and sho uld no t be co nstrued as tax, acco unting o r legal advice; Geo rge K. B aum & Co mpany do es no t pro vide tax, acco unting o r legal advice.
With a capital improvement budget of $51,000,000, the total proposed bond issue size will be not-toexceed $52,000,000. The balance of the proceeds would be for required financing Costs of Issuance and for Capitalized Interest during construction to keep the first budget levy from “bubbling” due to the timing and approximately 16 months of interest in the first levy.
Today’s interest rates, estimated conservatively at 3.5% for the 17-year bond, are near their lowest levels of the past 50 years. Low interest rates make the cost of repayment of a bond issue more affordable. Similar quality and length bond issues have sold at average rates below 3% recently.
Current state finance formula allows31% additional state aid to pay 31% of the project cost and interest on the proposed bonds. The total state aid benefit (both principal and interest) is an estimated State aid Aid is based on the District’s wealth per pupil as compared to $23,879,000. The percentage of state other Kansas school districts and can change based on these factors in future years. These are tax monies that can be brought back from Topeka to the benefit of our children, area and community. 31%31% State Aid
State Aid
$52,000,000 Bond Principal x 31%
=
$16,120,000
$25,031,475 Estimated Interest x 31%
=
$ 7,759,757
Total Principal & Interest $77,031,475 x 31% = $23,879,757
With State of Kansas financial challenges, this state aid program may not be offered in the future, however, it is believed that bonds approved under current law will be grandfathered and continue to receive the promised state aid.
Goddard USD 265 is a growing district. The assessed valuation in 06-07 was $187,946,140. The current assessed valuation (not including motor vehicles) is $252,295,748. This 10-year tax base growth of more than $64 million represents average annual growth of 3.4%. To be conservative in our Plan of Finance, we have assumed future growth of only 1% per annum.
Growth in the USD 265 tax base has allowed the District to control and actually lower the total mill rate for education. The required mill rate in the 2010-2011 school year was at 70.835 mills. This year's estimated total mill rate is at 59.91 mills--a reduction of nearly 11 mills from 2010. With bond approval, the total mill rate will still be significantly below what was required at the start of the decade.
Goddard USD 265 has previously issued bonds which will be retired in 2029 (12 years). These bonds require a levy of 18.51 mills in the current 2016-2017 budget.
The Plan of Finance is to “wrap” the proposed new bonds around our existing debt to create a financing where one consistent mill levy will retire all bonds (both existing and proposed). Based on the above conservative assumptions, a total mill rate of 20.41 mills will provide adequate resources to retire all bonds. As we are levying 18.51 mills this year, the net increase to local taxpayers will be an estimated 1.9 mills (20.41 less the current 18.51 mills).
A mill is $1 of tax on each $1,000 of assessed valuation of property in the District. A net increase of 1.9 mills represents added taxes of $21.85 per year ($1.82 per month) on a $100,000 home in Goddard USD 265.
With today’s low interest rates, and perhaps a last chance to take advantage of the 31% state aid program to help retire the bonds, the cost of improving Goddard Schools may never be more affordable!
Goddard U.S.D. No. 265 $52,000,000 Bond Issue Tax Effect Type of Property
Estimated Assessed Valuation
$100,000 Home*
$
$150,000 Home*
Proposed Bond Net Tax Increase at 1.90 Mills Yearly
Monthly
11,500
$ 21.85
$ 1.82
$
17,250
$ 32.78
$ 2.73
$200,000 Home*
$
23,000
$ 43.70
$ 3.64
160 Acres Dryland Farm**
$
9,423
$ 17.90
Yearly Cost/Acre $ 0.11
160 Acres Irrigated Farm**
$
15,995
$ 30.39
Yearly Cost/Acre $ 0.19
160 Acres Pasture**
$
1,329
$
Yearly Cost/Acre $ 0.02
$50,000 Commercial Prop.***
$
12,500
$ 23.75
$ 1.98
$100,000 Commercial Prop.*** $
25,000
$ 47.50
$ 3.96
*
2.53
For taxing purposes, residences are assessed at 11.5% of their fair market value.
** For taxing purposes, agricultural property is assessed at 30% of use or productivity value and not as a percentage of fair market value.
*** For taxing purposes, commercial property is assessed at 25% of fair market value. YOU ARE ENCOURAGED TO DETERMINE THE ESTIMATED TAX IMPACT ON YOUR PROPERTY BY FINDING THE ASSESSED VALUATION ON YOUR TAX STATEMENT AND MULTIPLYING THE ASSESSED VALUATION TIMES .0019 (1.90 MILLS).
Tax-Exempt Interest Rate Market Trends
Rate
30-Year Historical Bond Buyer 20-Bond Index January 1987 - January 5, 2017
11.00% 10.00% 9.00%
8.00% 7.00% 6.00% 5.00% 4.00%
3.00% 2.00%
This repo rt was prepared fro m data believed to be reliable but no t guaranteed by us witho ut further verificatio n o r investigatio n, and do es no t purpo rt to be co mplete. It is no t to be co nsidered as an o ffer to sell o r a so licitatio n o f an o ffer to buy the securities o f the entities co vered by this repo rt. Opinio ns expressed are subject to change witho ut no tice. Geo rge K. B aum & Co mpany may act as a principal fo r its o wn acco unt o r as agent fo r ano ther perso n, in co nnectio n with the sale o r purchase o f any security which is subject in this repo rt. No thing co ntained in this repo rt is intended and sho uld no t be co nstrued as tax, acco unting o r legal advice; Geo rge K. B aum & Co mpany do es no t pro vide tax, acco unting o r legal advice.
