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Overview

On March 3, 2020, 62.1% of voters approved Measure F, authorizing the District to issue up to $7.5 million in General Obligation (GO) Bonds at an estimated tax rate of $30 per $100,000 of taxable property
The District sold its first two series of bonds in June 2020 and April 2022, issuing $2.5 million in Series A and another $2.5 million in Series B, respectively
Interest rates increases and slowing tax base growth since the approval of Measure F left limited projected tax revenues within the $30 estimated tax rate, requiring care in structuring the third and final series of Measure F GO Bonds
As planning for Measure F projects solidified throughout last year, market volatility persisted with interest rates materially higher than when prior bond series were issued
After an unsuccessful pricing attempt in October, on December 18, 2024, the Series C Bonds ‘closed’ and funds were deposited with Sonoma County to fund projects and the District’s Debt Service Fund to prepay initial interest payments for the bonds
Despite inflation concerns placing upward pressure on interest rates, a strong A+ rating and the hard work of the Administration allowed the District to sell the remaining series of Measure F at levels which should allow for efficient repayment, keeping tax rates reasonably within the estimates provided to voters

Election of 2020, Series C GO Bonds

West Side Union School District

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Documentation

The District’s Bond Counsel, Jones Hall PLC, prepared documentation required to conduct the sale of the Series C Bonds, including:
A resolution placing a tax on the 2024-25 roll in anticipation of Series C Bonds
A resolution authorizing the issuance of bonds Series C Bonds
The Preliminary Official Statement used to market the Series C Bonds
Closing certificates and agreements to memorialize the terms negotiated for the District’s Series C Bonds
After the successful completion of the bond pricing process on Wednesday, December 4, 2024, Bond Counsel finalized all documents and, on Wednesday, December 18, 2024, funds were transferred, bonds released to buyers and the issuance closed
An electronic version of all final documents has been provided to the District and other members of the financing team

Election of 2020, Series C GO Bonds

West Side Union School District

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Ratings

On September 20, 2024, the Superintendent and the finance team conducted a conference call with rating analysts from S&P Global Ratings (S&P) to review the credit strengths of the District
After a review of the District, the community it serves, the fund balance and a number of other updates shared during the call, S&P affirmed the District’s “A+” rating
Despite the broader economic uncertainty, the District’s track record of sound fiscal management allowed for the affirmation with a stable outlook
Among the credit strengths noted were:

An informal fund balance target of 20%
Conservative management team and budget practices
A stable tax base allowing for Basic Aid status
Comparably favorable local wealth levels
Limited and manageable debt burdens

Election of 2020, Series C GO Bonds

West Side Union School District

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PRELIMINARY & FINAL PRICING CURRENT INTEREST BONDS RATES

Spread to MMD reflects the differential to the benchmark Thomson Reuters Municipal Market Data index, a hypothetical yield scale for “AAA” rating issuances

PRELIMINARY & FINAL PRICING CAPITAL APPRECIATION BONDS RATES

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Structuring & Strategy

The Preliminary Official Statement was released to the public on Tuesday, October 22, 2024, detailing the proposed bond issuance and providing potential buyers with information on the District’s finances and taxbase
Given the District’s strong “A+” rating, the proposed bond sale was well-positioned despite a persistent upward trend in interest rates and uncertain market tone
Given limited tax capacity, a combination of current interest bonds (paying interest semiannually) and capital appreciation bonds (which defer interest to maturity) were proposed to mange the required tax rate in the initial years of repayment
To entice a broader pool of potential buyers, longer-dated current interest bond maturities were bundled into a “term” bond, targeting institutional investors
A goal of minimizing the use of capital appreciation bonds was also targeted, as such deferred interest payments tend to be more costly due to interest compounding
On Monday, October 28, 2024, with building election uncertainly, it was hoped that bonds could be priced, setting interest rates the following morning before after a minor rate recovery
Ultimately, however, the desired rate levels could not be achieved to justify locking in a deal at that time
It was determined to postpone the bond pricing until after the election, in hopes that clarity would settle interest rates at lower levels, allowing for fewer capital appreciation bonds and lower cost of borrowing

Election of 2020, Series C GO Bonds

West Side Union School District

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FINAL ORDER MONITOR

INITIAL PRICING ATTEMPT ORDER MONITOR

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Pricing

With the presidential election outcome settled, markets began a period of modest interest rate reductions and by December 3, 2024, longer term rates had improved by 0.25%, setting an environment where it seemed viable to achieve interest rate goals
After a call on December 3^rd to discuss improved interest rates, it was determined that if markets opened with a stable tone on the following morning, another attempt to price the Series C Bonds would be made
As the order period progressed, interest from professional retail institutions – which was lacking in the October 22^nd pricing attempt – resulted in strong order flow with most bond maturities seeing over-subscription
Given the demand exceeding the bonds offered, the underwriter, Raymond James & Associates, was able to slightly improve the yields for most of the bonds offered by an additional 0.02% to 0.05%
At the close of the order period, only one maturity, 2025 had no orders – but the underwriter was able to take this small balance into its inventory for future placement with a slight improvement in the yield
Cumulatively, the pricing saw $5.27M in retail orders for the Series C Bonds, including $545,000 in small direct retail orders
The True Interest Cost (TIC), or blended yield for all maturities, of the Series C Bonds is 4.38%

Election of 2020, Series C GO Bonds

West Side Union School District

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FINAL COSTS OF ISSUANCE

Underwriting Discount was paid from premiums generated on the sale of bonds and will not reduce the available project proceeds
Amounts identified as Contingency will be released to fund projects within 90 days

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Issuance Costs

Total Series C Bond issuance-related legal, consultant and ancillary costs were $117,366.12, excluding $7,633.88 held in contingency
Underwriter compensation was $12.00 per $1,000 bond, totaling just under $30,000
All expenses were paid from bond proceeds; no General Fund resources were required to complete the transaction
Amounts held in contingency will be returned to the District for deposit to the Project Fund, providing added funding for projects
Other than annual Paying Agent fees (which are payable from the tax collections) and compliance-related reporting fees, no other fees are expected in connection with the Series C Bond issuance

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West Side Union School District

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HISTORICAL MUNICIPAL MARKET DATA

MUNICIPAL BOND YIELDS - MMD

Prepared by Raymond James & Associates

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Closing

On December 18, 2024, the Underwriter transferred proceeds net of their compensation to fund deposits to the Debt Service Fund, the Cost of Issuance Account and Series C Project Fund
$2,371,279.80 was transferred to the Project Fund held by Sonoma County for anticipated project expenditures
$122,221.59, generated from Net Original Issue Premiums, was deposited the Debt Service Fund to prepay interest expense on the Bonds through February 1, 2026, and a portion of interest due August 1, 2026
The deposit to the Debt Service Fund and estimated tax levy submitted to the County for 2024-25 allowed for additional principal repayments during the initial repayment period, improving the overall efficiency of and reducing the interest expense for the Series C Bonds
After confirmation of the transfer of funds, the Paying Agent released the bonds to the Depository Trust Company and the transaction was complete
Repayment schedules for the Series C Bonds and all other outstanding bonds of the District have been transmitted to the County for calculation of tax levies in future years

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West Side Union School District

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BOND MEASURE PROJECITON

Assumes maximum annual tax base growth of 5.0% for secured property

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Summary & Tax Rate

The District’s strong financial position allowed for maintenance of a strong rating of “A+”, placing the District in a very good position to access the financial markets despite underlying volatility
Despite such markets, the District was able to conduct the sale of the bonds during a period of reasonably low interest rates on longer-term bonds where most of the principal was offered and took advantage of limited competing supply
The tax rate in support of Series C Bonds is expected to peak in 2039-40 at $29.97 per $100,000 of assessed value, assuming annual tax base growth of 5.0%
The net repayment ratio – or cost to taxpayers – for each dollar borrowed with the Series C Bonds is 2.08 to 1, net of funds deposited to the Debt Service Fund
The total term of the Series C Bonds is 27 years, with tax levies ending in 2051, two years sooner than Series B and what was originally planned
Overall, for the entirety of Measure F, the final maturity will be 2053, two years shorter than estimates provided to voters – and the total repayment for all Measure F bonds came in at $14.4 million, very near to what was shared with voters in 2020 (only roughly $100,000 over those estimates)
With all Measure F series issued, the District has all of the GO Bond funds for projects in hand, and will work to complete the projects over the next year or so

Election of 2020, Series C GO Bonds

West Side Union School District

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MEASURE F - TAX RATE PROJECTION

Prepared by Eastshore Consulting LLC

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Bond Program Maintenance

Like the District’s other GO Bonds, the Series C Bonds have certain legal requirements, including:
Annual SEC Rule 15c2-12 disclosures (“Continuing Disclosure”)
Annual CDIAC reports pursuant to SB 1029
Compliance with IRS requirements related to tax-exempt bond proceeds
Periodic arbitrage rebate calculations
Eastshore Consulting will assist the District in complying with SEC Rule 15c2-12 and SB 1029 requirements – and will provide training of District staff to ensure future compliance
Additionally, refinancing (“refunding”) opportunities will be available to the District, which may be able to reduce taxes for certain outstanding bonds by taking advantage of shorter terms and lower interest rates
Refinancing of the Election of 2020, Series A GO Bonds is allowable commencing August 1, 2028
Refinancing of the Election of 2020, Series B GO Bonds is allowable commencing August 1, 2030
Refinancing of the Election of 2020, Series C GO Bonds is allowable commencing August 1, 2034

Election of 2020, Series C GO Bonds

West Side Union School District

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