2007-2008 Capital Financing North East ISD Unlimited Tax School Building Bond Series 2007A
Jan 05, 2016
2007-2008Capital Financing
North East ISD Unlimited Tax School Building Bond Series 2007A
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Teach
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, Learning, Leading
Capital Financing
Capital Financing in San Antonio
Construction Considerations
Debt Structure Considerations
Debt Structure Challenges
Concerns: Tax Rate
Underwriters
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Teach
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, Learning, Leading Managing NEISD
Capital Financing
Source: NEISD Finance
May 2007 Election:
North East ISD taxpayers authorize $498M in bonds
San Antonio taxpayers authorize over $2B in bonds for construction since May 2006
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Teaching, Learning, Lead
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Issuer Election Date Result AmountHarlandale ISD 05/13/2006 Carried $52,800,000
Somerset ISD 05/13/2006 Defeated $13,200,000
Southwest ISD 05/13/2006 Carried $62,000,000
Judson ISD 11/07/2006 Carried $59,600,000
Judson ISD 11/07/2006 Carried $100,000,000
Judson ISD 11/07/2006 Carried $64,700,000
Judson ISD 11/07/2006 Carried $12,000,000
South San Antonio ISD 11/07/2006 Defeated $37,200,000
Northside ISD 05/12/2007 Carried $692,670,000
North East ISD 05/12/2007 Carried $498,049,000
City of San Antonio 05/12/2007 Carried $550,000,000
South San Antonio ISD 05/12/2007 Carried $37,2000,000
TOTAL BOND ELECTION $2,142,219,000
Bond Authorization San Antonio
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Sale Date Par Amount Issuer Issue Description Series Bid TypeCoupon
Type
6/26/2006 $ 49,996,000 Schertz-Cibolo-Univ City ISDUnlimited Tax School Building Bonds
Series 2006 N Fixed
8/10/2006 $ 19,295,000 Bexar Co (Southside) ISDUnlimited Tax School BuildingBonds
Series 2006 A N Fixed
8/10/2006 $ 37,935,000 Bexar Co (Southwest) ISD School Building Bonds Series 2006 N Fixed
8/15/2006 $ 15,000,000 Schertz-Texas General Obligation Bonds Series 2006 N Fixed
8/17/2006 $ 52,495,000 Bexar Co (Harlandale) ISDUnlimited Tax School Building Bonds
Series 2006 N Fixed
8/28/2006 $ 6,265,000 Bexar Co (Southside) ISD Unlimited Tax Bonds Series 2006 - B N Fixed
10/19/2006 $ 74,869,000 Schertz-Cibolo-Univ City ISDUnlimited Tax School Building Bonds
Series 2006 A N Fixed
11/9/2006 $243,940,000 San Antonio City-Texas Cert of Oblig & Ref Imp Bonds Series 1& 2 N Fixed
12/12/2006 $ 2,535,000 Lakeside Wtr Ctl & Imp Dt #2-C Unlimited Tax Bonds Series 2007 C Fixed
2/15/2007 $ 3,000,000 Bexar Co (Alamo Heights) ISD School Building Bonds Series 2007 N Fixed
3/8/2007 $ 2,165,000 Lakeside Wtr Ctl & Imp Dt #2-B Unlimited Tax Bonds Series 2007 C Fixed
3/9/2007 $124,205,000 Bexar Co (Northside) ISDSchool Building & Refunding Bonds
Series 2007 N Fixed
4/18/2007 $240,779,000 Bexar Co (Judson) ISDUnlimited School Building& Reg Bonds
Series 2007 N Fixed
5/2/2007 $100,000,000 Bexar Co (Northside) ISDUnlimited Tax SchoolBuilding Bonds
Series 2007 A NVariable-
Short
6/19/2007 $ 24,065,000 Bexar Co (Southwest) ISD School Building Bonds Series 2007 N Fixed
N = negotiated; C = competitive
Bond Issuance Information
Total: $ 996,554,000
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Teach
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Increasing Costs
Source: NEISD Finance
San Antonio Construction Capacity
Rising labor Costs
Rising material Costs
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Increase in National Non-residential Buildings
Source: Bureau of Labor Statistics – www.bls.gov
0%
5%
10%
15%
20%
25%
30%
35%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Increase from 1997
Pre
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May
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Teaching, Learning, Lead
ingHistorical Material Cost Data (National Averages)
Annual % Change
Δ Change Bond
Program
Annual % Change
Δ Change Bond
Program
Annual % Change
4 Yr % Change
Annual % Change
05 - 06 03 - 06 04 - 05 03 - 05 03 - 04 00 -04 02 - 03
2 Asphaltic Concrete 3" SY 7.60$ 8.6% 34.5% 7.00$ 17.6% 23.9% 5.95$ 5.3% 15.5% 5.65$ 0.9% 5.60$ Rebar A615 Grade 60 TON 2,250.00$ 26.3% 71.5% 1,781.00$ 37.6% 35.7% 1,294.00$ 1.4% 38.1% 1,312.00$ 0.3% 1,316.00$ 6 x 6 WWMesh Concrete Reinforcing CSF 64.00$ 24.3% 80.3% 51.50$ 39.2% 45.1% 37.00$ 4.2% 13.8% 35.50$ 4.4% 34.00$ Concrete 3000 PSI CY 95.50$ 7.3% 24.0% 89.00$ 11.3% 15.6% 80.00$ 3.9% 15.9% 77.00$ 1.3% 76.00$ 8" CMU Backup SF 7.30$ 5.8% 18.7% 6.90$ 3.0% 12.2% 6.70$ 8.9% 19.6% 6.15$ 2.5% 6.00$ Brick STD SF 12.75$ 4.9% 17.0% 12.15$ 3.4% 11.5% 11.75$ 7.8% 17.5% 10.90$ 5.3% 10.35$ Steel Bar Joist 30' TON 2,050.00$ 17.1% 57.7% 1,750.00$ 32.1% 34.6% 1,325.00$ 1.9% 0.0% 1,300.00$ 5.5% 1,375.00$ Structural Steel (SA) TON 2,600.00$ 18.2% 53.0% 2,200.00$ 27.2% 29.5% 1,729.00$ 1.8% 10.3% 1,699.00$ 3.3% 1,644.00$ Metal Deck 2" SF 9.00$ 11.1% 74.8% 8.10$ 54.3% 57.3% 5.25$ 1.9% 18.2% 5.15$ 7.1% 4.81$ W18 x 35 LF 47.50$ 6.7% 41.8% 44.50$ 30.9% 32.8% 34.00$ 1.5% 17.2% 33.50$ 3.1% 32.50$ W18 x 50 LF 65.50$ 8.3% 44.0% 60.50$ 31.5% 33.0% 46.00$ 1.1% 17.9% 45.50$ 3.4% 44.00$ 3/4" Plywood / Wall CDX SF 1.63$ 16.8% 5.8% 1.96$ 28.1% 27.3% 1.53$ 0.6% 5.6% 1.54$ 2.7% 1.50$ 2 X 8 Treated Lumber MBF 1,750.00$ 112.1% 122.9% 825.00$ 5.1% 5.1% 785.00$ 0.0% 35.9% 785.00$ 34.6% 1,200.00$ 3 1/2" Unfaced Insulation 15" SF 0.69$ 15.0% 32.7% 0.60$ 9.1% 15.4% 0.55$ 5.8% 14.6% 0.52$ 2.0% 0.51$ 1" Fireproofing Beams SF 1.27$ 0.8% 5.0% 1.28$ 1.6% 5.8% 1.26$ 4.1% 2.4% 1.21$ 6.1% 1.14$ EIFS 2" Insulation SF 9.35$ 0.5% 13.3% 9.30$ 5.7% 12.7% 8.80$ 6.7% 17.3% 8.25$ 3.1% 8.00$ 3' x 7' Insulated Steel Door EA 480.00$ 63.8% 43.3% 293.00$ 5.4% 12.5% 278.00$ 17.0% 14.5% 335.00$ 3.1% 325.00$ 1/4" Glass Tempered Tinted SF 17.20$ 5.2% 14.7% 16.35$ 2.8% 9.0% 15.90$ 6.0% 40.1% 15.00$ 2.7% 14.60$ Acumin Storefront SF 25.50$ 2.0% 8.5% 25.00$ 4.2% 6.4% 24.00$ 2.1% 9.1% 23.50$ 2.2% 23.00$ Class A 2 X 2 Ceiling Suspended SF 1.40$ 2.2% 19.7% 1.37$ 11.4% 17.1% 1.23$ 5.1% 24.2% 1.17$ 0.8% 1.18$ Gym Wood Floor 25/32" Maple # 2 SF 9.40$ 12.6% 21.3% 8.35$ 1.8% 7.7% 8.20$ 5.8% 15.5% 7.75$ 6.2% 7.30$ VCT 12 X 12 1/16" SF 1.75$ 3.6% 14.4% 1.69$ 4.3% 10.5% 1.62$ 5.9% 14.9% 1.53$ 2.7% 1.49$ Sound Panels 1 1/2" Dacron Alum. Frame SF 9.85$ 2.6% 4.8% 9.60$ 0.5% 2.1% 9.55$ 1.6% 4.9% 9.40$ 0.5% 9.35$ VWC Medium WGT 10-24 oz SF 1.60$ 0.0% 7.4% 1.60$ 1.9% 7.4% 1.57$ 5.4% 17.2% 1.49$ 4.2% 1.43$ Paint Drywall 2 Coats Spray SF 0.33$ 0.0% 10.0% 0.33$ 3.1% 10.0% 0.32$ 6.7% 18.5% 0.30$ 3.4% 0.29$ Liquid ChalkBoard 4' X 12' EA 575.00$ 0.0% 10.6% 575.00$ 4.2% 10.6% 600.00$ 15.4% 11.1% 520.00$ 14.0% 605.00$ Toilet Partition Phenolic Floor/Clg EA 1,250.00$ 4.2% 13.6% 1,200.00$ 6.7% 9.1% 1,125.00$ 2.3% 12.5% 1,100.00$ 4.8% 1,050.00$ 30' Aluminum Flagpole EA 1,625.00$ 7.1% 12.1% 1,750.00$ 9.4% 20.7% 1,600.00$ 10.3% 3.0% 1,450.00$ 3.6% 1,400.00$ Fire Extinguisher 10# Dry Chemical EA 88.00$ 0.0% 19.7% 88.00$ 19.7% 19.7% 73.50$ 0.0% 0.0% 73.50$ 0.0% 73.50$ Walkway Cover 12' SF 29.00$ 7.4% 20.8% 27.00$ 10.2% 12.5% 24.50$ 2.1% 16.7% 24.00$ 2.1% 23.50$ Ductwork Insulation Frk Vapor Barrier 2" SF 3.43$ 3.3% 13.6% 3.32$ 3.4% 9.9% 3.21$ 6.3% 18.0% 3.02$ 4.1% 2.90$ Ductwork Insulation Board Frk VB 2" SF 10.45$ 5.0% 13.6% 9.95$ 2.6% 8.2% 9.70$ 5.4% 18.3% 9.20$ 4.5% 8.80$ Duckwork Galvanized Steel LB 5.85$ 4.5% 19.6% 5.60$ 7.7% 14.5% 5.20$ 6.3% 20.9% 4.89$ 6.5% 4.59$ Duckwork Stainless Steel LB 8.55$ 11.0% 30.3% 7.70$ 10.0% 17.4% 7.00$ 6.7% 18.6% 6.56$ 5.8% 6.20$ PVC Schedule 40 10' 3 Hangers LF 17.90$ 3.5% 4.4% 17.30$ 1.4% 0.9% 17.55$ 2.3% 14.0% 17.15$ 3.0% 16.65$ PVC Schdule 80 LF 18.65$ 0.0% 18.65$ 0.5% 18.75$ -$ -$ 3" Cleanout Floor EA 233.00$ 22.0% 30.9% 191.00$ 2.7% 7.3% 186.00$ 4.5% 5.7% 178.00$ 1.7% 175.00$ Urinal EA 655.00$ 3.1% 12.0% 635.00$ 3.3% 8.5% 615.00$ 5.1% 12.8% 585.00$ 1.7% 575.00$ Wire 600 Volt THW Solid # 12 CLF 52.50$ 1.9% 14.1% 51.50$ 6.2% 12.0% 48.50$ 5.4% 15.5% 46.00$ 3.4% 44.50$ 3/4" EMT - 15' H Conduit w ith fittings LF 5.13$ 2.6% 25.1% 5.00$ 13.9% 22.0% 4.39$ 7.1% 20.6% 4.10$ 5.7% 3.88$ 3/4" Rigid Galv. Steel Conduit w /fittings LF 9.76$ 2.7% 25.9% 9.50$ 15.2% 22.6% 8.25$ 6.5% 19.6% 7.75$ 4.0% 7.45$ 3/4" PVC Schedule 40 in Concrete Slab LF 2.92$ 3.5% 16.3% 2.82$ 5.2% 12.4% 2.68$ 6.8% 22.4% 2.51$ 4.6% 2.40$ Pull Box NEMA 1 - 8" x 8" x 4" EA 79.00$ 2.6% 13.7% 77.00$ 2.7% 10.8% 75.00$ 7.9% 21.0% 69.50$ 5.3% 66.00$ 600 AMP Copper Bus Duct Plug-In Indoor LF 201.00$ 3.6% 8.6% 194.00$ 2.1% 4.9% 190.00$ 2.7% 5.0% 185.00$ 1.1% 183.00$
10.5% 26.7% 11.4% 16.4% 5.0% 15.7% 4.4%
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2006 20032005 2004
Median Construction Cost (R.S. Means)
5
Div. Trade / Building Material U/M
2002
3
15
16
6
7
8
9
10
26.7%
03-06
2000 to 2004 …3.9% / Yr
1996 to 2000 … 3.2% / Yr
2003 to 2006 …8.9% / Yr
10.5%
05-06
15.7%
00-04
11.4%
04-05
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Teaching, Learning, Lead
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Campus Bid Cost (sq. ft.)
Campus Bid Cost(sq. ft.)
Stone Oak ES … Bid – 9/26/1995 $78.90 Blattman ES … Bid – 3/14/2002 $119.58
May ES … Bid – 2/15/1996 $82.48 Beard ES … Bid – 3/28/2002 $113.37
Longs Creek ES … Bid – 4/30/1996 $80.91 Ward ES … Bid – 4/11/2002 $98.50
Myers ES … Bid – 5/15/1996 $76.40 Judson ES … Bid – 7/10/2002 $108.12
Huebner ES … Bid – 5/28/1996 $79.20 Ott ES … Bid – 3/4/2003 $112.40
Steubing ES … Bid – 7/15/1996 $79.38 Hatchett ES … Bid – 4/2/2003 $112.52
Carson ES … Bid – 5/20/1997 $77.95 Canyon Parkway ES ... Bid – 1/29/2004 $150.07
Michael ES … Bid – 1/29/1998 $84.79 Wilderness Oak ES … Bid – 1/29/2004 $153.82
Castle Hills ES …Bid – 3/10/1999 $102.29 Bulverde Creek ES … Bid – 2/3/2004 $123.08
Raba ES … Bid – 3/30/1999 $97.35 Steubing Ranch ES … Bid – 2/3/2004 $107.87
Burke ES … Bid – 4/27/1999 $94.83 Krueger ES … Bid – 3/9/2004 $121.93
Hardy Oak ES … Bid – 5/5/1999 $101.09 Mead ES … Bid – 8/15/2004 $150.78
Wetmore ES … Bid – 12/7/1999 $94.85 Fisher ES … Bid – 1/11/2005 $134.95
Lewis ES … Bid – 6/15/2000 $105.06 Wanke ES … Bid – 2/15/2005 $139.89
Roan Forest ES … Bid – 9/5/2000 $101.70 Murnin ES … Bid – 3/15/2005 $138.19
Royal Ridge ES … Bid – 11/1/2000 $92.33 Driggers ES … Bid – 1/12/2006 169.48
Rhodes ES … Bid – 12/5/2000 $116.30 Aue ES … Bid – 2/2/2006 $141.90
Nichols ES … Bid – 1/23/2001 $103.89 Potranco ES … Bid – 10/12/2006 $166.14
Fairlawn ES … Bid – 4/26/2001 $110.85 Babcock South ES … Bid – 11/09/2006 $146.94
Elementary School Construction Cost Analysis
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Teach
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, Learning, Leading Debt Structure
Considerations
Source: NEISD Finance
Inflation of construction costs needs to be addressed
Secure lowest cost of borrowing and achieve District goals
Take advantage of historically low interest rates and flat yield curve environment
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Historical 10 Year Treasury Curve vs Outstanding NEISD Bond Issuance
1.00%
3.00%
5.00%
7.00%
9.00%
11.00%
13.00%
15.00%
Jan-
62
Jun-
63
Nov-
64
Apr-6
6
Sep-
67
Feb-
69
Jul-7
0
Dec-
71
May
-73
Oct-7
4
Mar
-76
Aug-
77
Jan-
79
Jun-
80
Nov-
81
Apr-8
3
Sep-
84
Feb-
86
Jul-8
7
Dec-
88
May
-90
Oct-9
1
Mar
-93
Aug-
94
Jan-
96
Jun-
97
Nov-
98
Apr-0
0
Sep-
01
Feb-
03
Jul-0
4
Dec-
05
May
-07
Yiel
d (%
)
Current Yield at 7/6/07 - 5.19%Highest - 15.65% at 9/28/1981Lowest - 3.10% at 6/13/2003
Average - 6.61%
Series 2005TIC Yield = 4.51%Series 2005 REF
TIC Yield = 4.52%
Series 2007TIC Yield = 4.12%
Series 1999TIC Yield = 4.97%
Series 1985-D,ETIC Yield = 8.82%
Series 1997 TIC Yield = 5.15%
Series 2004TIC Yield = 4.52%Series 2004 REF
TIC Yield = 3.72%
Series 2000TIC Yield = 5.62%
TRSY versus true interest cost (TIC) Yield
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Teach
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, Learning, Leading Debt Structure
Considerations
Maintain tax rates to achieve the desired tax savings on the average valued home
Minimize costs associated with bond issuance
Consider possible need for additional bonds for growth in 2010 and 2013
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Teach
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Challenges
Keeping debt in the 30 year time range
Keeping I&S tax rate below $.50
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Teach
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Challenges
Match the maturity of technology and equipment bonds to their useful life $54 million for technology $11.2 million for buses
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Teaching, Learning, Lead
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One Sale or Two Sales?
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One sale of $498,049,000
Minimize interest rate risk
Every .1% change in interest rates will cost approximately $4.5 million
A 1% change in rates will cost an additional $45 million
Proposed Bond Issuance
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Teaching, Learning, Lead
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One sale of $498,049,000 Will allow additional interest earnings on bonds
of $17.5 - $20 million for construction
Maintain tax ratesTo achieve the desired estimated tax savings on
the average valued home will cost taxpayers capitalized interest
Proposed Bond Issuance
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Teach
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IssuanceCapitalized Interest:
When Initial tax rate does not cover initial debt payments.
Create additional funds to cover initial debt
payments in order to maintain desired tax rate.
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Teach
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, Learning, Leading Proposed Bond
IssuanceExample:
Borrow $110,000Purchase $100,000 assetMake initial loan payments with additional
$10,000Additional $10,000 will be paid over the life of
the loan
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Teach
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Sale Summary One Sale Two Sales
$40M Interest Earnings $20M Interest Earnings[$23.5M] Capitalized Interest [$4.5M] Capitalized Interest
[$.2M] Issuance Cost
$16.5M in Net Earnings $15.3M in Net Earnings[$15.3M] Change in Interest Rate of .34%
$0
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Concerns: Tax Rate
Source: NEISD Finance
Assumptions Prior to Bond Election
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Teaching, Learning, Lead
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2006-2007
Estimated2007-2008
Estimated2008-2009
Increase in Value 7% 7%Average Taxable Valueof Residences $138,351 $148,036 $158,398
Tax Rate per $100 of valuation $1.6690 $1.4029* $1.4012**
Taxes Due on Average Residence $2,309 $2,077 $2,219
Increase (Decrease) in Taxes ($232) ($90)
*M&O Tax rate of $1.03 was used in estimate with an I&S Tax Rate of $.3729**M&O Tax rate of $1.03 was used in estimate with an I&S Tax Rate of $.3712
Estimated Effect on Taxpayer Prior to Election
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Teach
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Taxpayers
Source: NEISD Finance
Changes in assumption after election
Average taxable home value increased not by 7% but by 11%
M&O tax rate increased by $.01
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Teaching, Learning, Lead
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Current 2006-2007
Estimated2007-2008
Estimated2008-2009
Increase in Value 11% 10%Average Taxable Valueof Residence
$138,642” $153,715 $169,087
Tax Rate per $100 of valuation $1.6690 $1.3895* $1.3474**
Taxes Due on Average Residence $2,314 $2,136 $2,278
Decrease in Taxes from 06-07 ($178) ($36)
“Current value*M&O Tax rate of $1.04 used in estimate with an I&S Tax Rate of $.3495**M&O Tax rate of $1.04 used in estimate with an I&S Tax Rate of $.3074
Effect on Taxpayers After Election
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Teaching, Learning, Lead
ingNorth East ISD Average Value of New
Single Family Residential Properties Tax Year 2007*
Number of Parcels 3,320
Average Market Value $221,213
Average Taxable Value** $206, 213
*Houses built after January 1, 2006**Value net of $15,000 homestead exemption
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Teaching, Learning, Lead
ingNorth East ISD Average Value of Existing Single Family Residential
Properties*Tax Year Tax Year Value 2006 2007 Increase
Number of Parcels 104,595 104,905
Average Market Value $148,963 $163,821 9.97%
Average Value Net of10% Value Cap Loss $147,429 $160,910 9.14%
Average Taxable Value** $132, 429 $145,910 10.18%
*Houses built before January 1 2006**Value net of 10% value cap loss and $15,000 homestead exemption
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Teaching, Learning, Lead
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2007-2008Estimated2008-2009
Increase in Value 10% 10%Average Taxable Value of Existing Residence $145,910 $160,501
Tax Rate per $100 of valuation $1.4029* $1.4029*Taxes Due on Average Existing Residence $2,047 $2,252
Decrease in Taxes from 06-07 ($262) ($57)
*M&O Tax rate of $1.04 used in estimate with an I&S Tax Rate of $.3629
Average Value of Existing Single Family Residential Properties
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Concerns: Tax Rate
Source: NEISD Finance
What tax rate?
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Teach
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Sale Summary One Sale One Sale
Tax Rate 2008 $.3495 Tax Rate 2008 $.3629
$40M Interest Earnings $40M Interest Earnings[$23.5M] Capitalized Interest [$6.1M] Capitalized Interest
$16.5M in Net Earnings $33.9M in Net Earnings
I&S increase of $.0405 I&S increase of $.0539
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Recommendation Negotiated Bond Sale
In order to structure debt to maintain tax rate for dollar savings to North East taxpayers
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Underwriters
RBC Dain RauscherBanc of AmericaBear StearnsFirst Southwest CompanyThe Frost National BankMorgan Keegan & Co., Inc.SAMCO Capital Markets
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Tax Rate Tax Rate06-07 General (M&O) $1.3600 $1.360007-08 General (M&O) $1.0400* $1.0400*
Change in Tax Rate ($0.3200) ($0.3200)
06-07 Debt Service (I&S) $0.3090 $0.309007-08 Debt Service (I&S) $0.3495* $0.3629*
Change in Tax Rate $0.0405 $0.0539
06-07 Total Tax Rate $1.6690 $1.669007-08 Total Tax Rate $1.3895* $1.4029*
Change in Tax Rate ($0.2795) ($0.2661)
Preliminary 2007-2008 Tax Rates
Source: NEISD Finance
*Estimated
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Concerns: Tax Rate
Source: NEISD Finance
What tax rate?
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Questions?