Legal Requirements for School Bonds C.A.S.H. Local Workshop Planning for 2016 Local Bond Success September 22, 2015 and September 29, 2015 Presented by:

Legal Requirements for School Bonds

C.A.S.H. Local WorkshopPlanning for 2016 Local Bond

SuccessSeptember 22, 2015

and September 29, 2015Presented by:

Daniel M. Maruccia

And Megan E. Macy

Overview of Topics

Bonds – Big Picture, Baby Steps

Your Team

Bond Election Campaigns

New Developments in the Law

Bonds: Big Picture, Baby Steps

Steps to Voter Authorization of Debt Issuance

1. Establish definitive list of projects.

2. Order election, consolidate, send notice to elections official.

3. Ballot arguments and rebuttals.

4. County Counsel’s impartial analysis of ballot measure.

5. Tax Rate Statement.

6. Public examination period.

7. Sample ballot and voter pamphlet.

8. Election.

9. Certification of election results. 3

Pre-Election Team

• Internal Team:

– Superintendent

– Chief Business Official

– Facilities Director

– District Counsel

• Consultants:

– Bond Counsel

– Financial Advisor

• Third Parties:

– County Treasurer/Auditor

4

Responsibilities of Bond Counsel

Primary Roles and Responsibilities

• Supervise Bond Proceedings and perform Due Diligence review

• Draft Legal Documents

• Examine Disclosure Documents

• Obtain Government Approvals

• Coordinate Execution of Documents

• Render Final Opinion5

Bond Election Campaigns

Bond Election Campaigns

• Prior to Prop. 39– Required a 2/3 Vote

– 40% of Measures Failed to Pass

• Prop. 39 Bond Elections (since 2001)

– Consolidated with Statewide Election

– 55% Vote Requirement

– Accountability Requirement (Oversight Committee)

6

Prop 39 Bonds

What are Prop 39 Bonds?

• Prop 39 Bonds are issued to finance construction, rehabilitation, or replacement of school facilities.

• 55% majority vote required to pass measure.

• Citizen’s Oversight Committee must monitor expenditure of proceeds.

7

Bond Election Campaigns

Upcoming Deadlines for June 7, 2016, and November 8, 2016 Election• No later than March 11, 2016* (for June Election)

and August 12, 2016* (for November Election):

– Establish Definitive List of Projects;

– Consolidate Election;

– Order and Specifications to County Elections Official

*LAST DAY; Project List and Resolution should ideally be adopted earlier.

8

Establish Definitive List of Projects

9

Order Election, Consolidate, Send Notice to Elections Official

Resolution must be received by County Elections Official at least 88 days prior to the election.

10

Ballot Arguments and Rebuttals

11

Tax Rate Statement

12

Election, and Certification of Results

Regular, statewide elections for 2016:

• June 7

• November 8

13

Reimbursement Resolution

District may reimburse itself from bond proceeds for certain costs it has incurred ahead of issuance.

14

Education Code section 7054

The Rule:

“No school district or community college district funds, services, supplies, or equipment shall be used for the purpose of urging the support or defeat of any ballot measure or candidate”(Ed. Code, § 7054.)

15

Bond Election Campaigns

Dos and Don’ts of Bond Campaigns

DON’TS

• No Advocacy

• No use of Public Funds

16

Bond Election Campaigns

Dos

• Allow use under Civic Center Act

• Allow contributions by employees to employee organizations

• Allow district officers to present information and answer questions

17

Bond Election Campaigns

Polling

A school district may hire and pay for public polling and other information gathering services to help determine potential support for a measure prior to calling the election.

18

Bond Election Campaigns

Campaign Consultants – Best Practices

• A school district cannot hire a campaign consultant, however, a campaign committee can hire and supervise a campaign consultant.

• Campaign consultant cannot be paid by school district.

• Underwriter, Financial Advisor, or other bond team member should not provide campaign consultant services.

19

Changes to State Law

AB 182 – Effective January 1, 2014

• Places limits on CABs:– 4:1 Debt to Repayment Ratio

– Reduces Maximum Interest to 8%

– Limits Maturity to 25 Years

– Requires 10 year Optional Call

– New Accountability Requirements

20

TAKE-AWAYS

Questions

22

23

Megan Macy Daniel MarucciaPartner [email protected]@lozanosmith.com

One Capitol Mall, Suite 640Sacramento, CA 95814T 916.329.7433 | F 916.329.9050

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