LOCAL SCHOOL DISTRICT FUNDING PROGRAM

GENERAL OBLIGATION AND SFID BONDS
COPS, LEASE REVENUE BONDS & LEASE-PURCHASE FINANCING
DEVELOPER FEES MITIGATION

GENERAL OBLIGATION AND SFID BONDS

As a financial advisor for California G.O. school bonds, California Financial Services  has developed considerable experience in the sale and issuance of traditional G.O. bonds and the more recent Proposition 39 G.O. bonds. CFS, however, still takes on 
the small and difficult situation client—even if a district has lost a previous election.  Through our proven planning-based approach, CFS strives to generate less expensive solutions to facility problems, a greater number of less expensive funding sources and better, taxpayer-friendly tax structures, to increase voter acceptance for a bond measure. Our thorough process addresses many of the possible public concerns about unexplored alternative methods of funding facility needs. CFS has also developed  materials and guidelines to aide School Districts in complying with the pre- and post-election requirements of Proposition 39 bonds.

CFS provides other assistance to fund all or a portion of the construction and acquisition costs at each school site, including the establishment of fair mitigation fees for new   homes, the selection of modestly priced architectural designs and long range planning for growth and modernization needs. Through the effective use of these tools, G.O. bond taxes can be reduced by 25% or more over the run-of-the-mill general obligation bond program, depending on the District and the projects involved.

CFS bankers work to structure tax repayment plans that reflect the growth rate and economic situation of each community, often producing a less expensive “tax rate,” and a more politically approvable result. CFS has provided a general obligation bond calculator on our website, at www.calschools.com, in order to calculate tax rates and repayment schedules for any District in the State of California.
 
CFS also maintains a special arrangement with UBS Investment Bank, Citigoup, Stone & Youngberg, and other firms for underwriting services that can be included in our contract. Such costs are usually included as part of CFS' master contract, but can be separated into multiple contracts at the District’s discretion.

COPS, LEASE REVENUE BONDS & LEASE-PURCHASE FINANCING

As a top ranked Certificates of Participation (COP) advisor, CFS has extensive experience with lease-backed financings such as COPs and Lease Revenue Bonds.  CFS' two lead bankers have a combined 45 years experience in the lease and municipal securities industry and have completed more than $3 billion of California COP and Lease Revenue Bonds throughout their careers, including over $2 billion at CFS.

Undertaking California COPs as small as $2.5 million and as large as $175 million, CFS has access to Capital Markets through large investment banks.  Due to special negotiated arrangements with UBS Investment Bank, Citigroup, Stone & Youngberg and other firms, CFS has access to highly respected municipal/capital markets, research groups, trading desks in New York and Los Angeles and support from California Public Finance Departments.  In addition, CFS can place or competitively bid loans to various investors/underwriters in its capacity as financial advisor, based on the client's preferred mechanism for generation local funding proceeds.


CFS can provide lease-purchase financing through its relationships with provider banks and institutions for amounts as small as $500,000 and as large as $2.5 million.  Lease-purchase financing bears a higher nominal interest rate, but has lower transaction costs than comparable COPs at a similiar size and term.  On occassion, they are the lowest cost of funds for small projects over short repayment terms.



DEVELOPER FEES AND MITIGATION

With the passage of SB-50 in November of 1998, the development community was made directly responsible for paying a 50% share equal to that of the School Facility Program's contribution of new school facility costs to house student growth caused by such development. While school districts cannot stop or delay development projects through the CEQA process, developer fees can, when justified by a “needs assessment,” exceed the statutory cap of $2.05 per square foot up to 50% of total costs in order to house growth students in match with State School Facility Program funds. Additionally, when State funds are not available, the fee can rise to 100% of the State School Facility Programs' construction cost subject to a future reimbursement to the developer of the State’s 50%—if and when funds become available. All fees must be paid at permit issuance.

In an effort to transfer developer fee liability to homeowners after escrow, most developers are willing to enter into voluntary mitigation agreements that can prove beneficial to developers and school districts alike. The developer can eliminate and/or fix its liability and arrange for more desirable payment terms (by deferring payments until after homes have been sold) other than as a direct, up-front development cost. The District can generate a stable tax revenue stream secured by a guarantee from a Mello-Roos Community Facilities District, revenue bond, or some other secure taxing mechanism that can result in greater total dollars for the District.

CFS has extensive experience in putting such District/developer agreements in place. When properly executed, these agreements can provide increased security for the District, while enhancing School District relations with the developer community.

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