Peralta Community College District

1. Peralta Community College District Potential Tax Elections: Parcel Tax and General Obligation Bonds Presentation to the Board of TrusteesJune 12, 2018 PFM Financial Advisors LLC Public Financial Management, Inc. 50 California Street Suite 2300 San Francisco, CA 94111 415.982.5544 office 415.982.4513 fax pfm.com

2. I. General Information: Parcel Tax and Bond Measures

3. Types of Tax Elections • There are two types of tax elections that are commonly called by community college districts in California. • Parcel Tax: Voters are asked to authorize the District to levy a tax on property; typically the tax is established at a fixed rate and levied on a per parcel basis for a limited number of years; tax collections are typically used for operating costs; parcel taxes require two-thirds vote for approval. • General Obligation Bonds: Voters are asked to authorize the sale of bonds which spread the cost of capital assets over time; the sale of bonds obligates the County to levy a special property tax on an annual basis for bond repayment; bond proceeds are used to fund the repair, modernization, or construction of facilities; general obligation bonds require a 55% supermajority for approval.

4. Voter Material • Under each type of election, there is specific material that is required to be disclosed to voters. • Parcel Tax:Tax rate (typically a fixed amount per parcel); duration; any exemptions; allowable use of tax collections. • General Obligation Bonds: Amount of bonds to be issued; estimated cost of repayment (in terms of maximum and average projected tax rate); allowable use of bond proceeds (disclosed in an official project list).

5. Prior Tax Elections • To date, the District has held five successful tax measures. By any standard, passage rates have been very high.

6. Taxpayer Protections • For the District, each type of financing will feature specific taxpayer protections. • Parcel Tax:Voluntary oversight committee to review budgets and report to the public. • General Obligation Bonds: Statutorily required citizens bond oversight committee; annual financial and performance audits; projection that tax rates required to support bonds issued under a single measure won’t exceed $25 per $100,000 of assessed value required before any series of bonds can be issued.

7. Proposed Tax Measures • Based on respective needs assessments, a voter opinion survey, and input from various stakeholder groups, the District is considering placing two measures on the ballot in November. • Parcel Tax:A continuation of the current $48 per parcel tax to generate approximately $8 million per year in additional revenue for 8 years. • General Obligation Bonds: An $800 million bond measure to provide funds for the renovation, modernization, and construction of facilities over the next ten years.

8. II. Proposed Bond Sizing

9. Existing Bond Program • The District has been using bond proceeds to make facility improvements since 1993. • Voters have approved from separate bond measures (in 1992, 1996, 2000, and 2006) totaling more than $600 million. • The District has issued approximately $535 million of such bonds and has $65 million remaining to be issued. • The bond proceeds have been spent on authorized projects described to voters in the ballot materials for each separate measure. Oversight of expenditures has been provided by a citizens bond oversight committee. • In the current tax year, local taxpayers are paying $31.00 per $100,000 of assessed value to repay Peralta CCD bonds.

10. Facility Needs • The District has significant remaining facility needs. • Recently completed Facility Master Plan estimates the cost of current facility needs at more than $1 billion. • Such funds are necessary not only to rejuvenate outdated facilities but to provide students with new facilities matched to current educational standards. • This is an ongoing process – facilities age and need renovation; educational standards evolve and create the need for new facilities. • The District should be prepared to invest in its facilities on an ongoing and consistent basis.

11. Recommended Sizing • The finance team is recommending that the District consider a bond amount of $800 million. • The amount is reasonable given the size of the District’s tax base, Proposition 39 tax rate limitations, and standards of prudent debt management. • Voters are receptive to a bond measure of such size given the estimated tax rate impact of $25 per $100,000 of assessed value. • Matching such bond amount to our tax rate target requires that bonds be issued in series over an extended period of time.

12. Bond Issuance Schedule • The current financing plan calls for such bonds to be issued in series over time. • Note: The bond issuance schedule above has been prepared for modeling purposes. Actual issue dates and amounts will be adjusted to meet construction needs and tax rate and debt structure limitations.

13. Long-Term Financing Strategy • The proposed authorization represents one component of a broader, long-term financing strategy. • We want to invest in our facilities in an ongoing and consistent basis. • We want the pace of the program to reflect what is affordable to current taxpayers and what is fair to taxpayers over time. • We will continue to pursue additional sources of funds to reduce the burden of the program on District taxpayers. • We recognize that the District’s program will be implemented over time and that some flexibility will be necessary to account for changing cost estimates and funding priorities.

14. Debt Service Structure Revenues @ $25 tax rate We’ve built our models around the $25 per $100,000 of assessed value tax rate limitation and assuming that each series of bonds is repaid within thirty years of its issuance.

15. Proposed Timeline The District continues to move forward on a schedule to place a measure on the November ballot if the Board so desires.