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3 Stifel Nicolaus The Illinois K-12 Finance Resource Who we are: It’s pronounced Stee-fuhl Stifel Nicolaus is a national brokerage firm and a leader in Illinois bond underwriting with 24 offices in Illinois alone Stifel focuses on Illinois K-12 finance We provide full service financing from financial planning and referendum assistance to ultimately delivering the lowest cost financing on bond sales Expert resource on Illinois K-12 bond financing (Health Life Safety, General Obligation, Working Cash, etc.) including County School Facilities Sales Tax issues Stifel has created and produced a complimentary informational sales tax video for Illinois schools to help begin discussions on the topic in community forums We hope that your District will allow Stifel Nicolaus the opportunity to prove our ability to better serve your District the next time you are considering a bond financing
Citation preview
Illinois County School Facility TaxPublic Act 97-0542
Presentation to Piatt County Schools
February 13, 2014
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Presented by Stifel, Nicolaus & Co., Inc.
70 West Madison Street, Suite 2400, Chicago, Illinois 60602Telephone: 312/269-0329
501 North Broadway, St. Louis, Missouri, 63102Telephone: 314/342-2993
2101 Eastland Drive, Suite B, Bloomington, Illinois 61704Telephone: 309/661-0004
Kevin HeidSenior Vice President
Anne NobleSenior Vice President800-230-5151 [email protected]
Sean McCarthyFirst Vice President800-230-5151 x2737
Tom CrabtreeFirst Vice President800-230-5151 x8457
Jim BurgettFirst Vice President
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Stifel NicolausThe Illinois K-12 Finance Resource
Who we are: It’s pronounced Stee-fuhl Stifel Nicolaus is a national brokerage firm and a leader in Illinois
bond underwriting with 24 offices in Illinois alone Stifel focuses on Illinois K-12 finance We provide full service financing from financial planning and
referendum assistance to ultimately delivering the lowest cost financing on bond sales
Expert resource on Illinois K-12 bond financing (Health Life Safety, General Obligation, Working Cash, etc.) including County School Facilities Sales Tax issues
Stifel has created and produced a complimentary informational sales tax video for Illinois schools to help begin discussions on the topic in community forums
We hope that your District will allow Stifel Nicolaus the opportunity to prove our ability to better serve your District the next time you
are considering a bond financing
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Nontraditional Approach for Illinois Public Schools
Sales tax vs. Real Estate tax for school capital– Allows county voters to approve a sales tax to fund school facility
costs– 1% maximum in ¼% increments
Law went into effect October 2007
Law was based on similar law that is currently in place in every county in Iowa
Law was amended in August 2011– County Board no longer has to approve the tax
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Illinois County School Facility Tax Act:Election Results and Future Votes
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Counties where the CSFT has passed (18)
Counties where the CSFT failed in the November 2008 (X), April 2009 (X), February 2010 (X), November 2010 (X), April 2011 (X) Elections, March 2012 (X) Elections, November 2012 (X)Elections and (X)2013 Elections (41)
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Counties where the CSFT election is being discussed for March 2014 X
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Sales Tax Base:– Everything in the municipal and county sales tax base is included
in the tax base except for: Cars, Trucks, ATVs Boats & RVs Mobile homes Unprepared Food Drugs (including over-the-counter and vitamins) Farm Equipment and Parts Farm Inputs
Services are not taxed
– “If it is not currently taxed, it will not be taxed”
Low Impact on Key Business and Fixed Income Persons
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Use of Sales Tax Revenues
Uses of Sales Tax Ineligible UsesNew Facilities Direct Instructional Costs
Additions & Renovations Text BooksSecurity, Entrances, Safety, Disabled Access Buses
Ongoing Maintenance Detached Furniture & Fixtures
Architectural Planning Computers
Durable Equipment (non-moveable items) Moveable EquipmentFire Prevention and Life Safety Operating Costs
Land Acquisition Salaries and Overhead
Energy EfficiencyParking LotsDemolition
Roof Repairs
Refund Bonds or Abate Property Taxes Levied to Pay Bonds Issued for Capital
Purposes
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How to Use Sales Taxes Pay as you go capital projects
– Sales tax can be saved up over time Issue new bonds for current capital needs
– Support bonds with sales tax Retire existing debt issued for capital purposes
– Abate taxes – Refund qualifying debt
………Or any combination of the above Interest on money received on a monthly basis and reserved for bond payments or future
construction projects may be transferred to the General Fund…Education & Operation and Maintenance Fund
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Benefit to Property Taxes
Two Ways to Decrease Property Taxes
1. Reduce: A district can abate or decrease existing property taxes by using sales tax funds to pay off outstanding building bonds.
1. Property taxes reduced on residential, commercial and industrial properties
2. Avoidance: A district can avoid levying property taxes by using sales tax funds to pay for facility projects that would have been paid for with property taxes
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CSFT revenues are outside of aggregate extension base or GSA calculations
Alternate Revenue Bonds and Debt Certificates backed by CSFT revenues do not count against or require a debt service extension base “DSEB”
Impact of CSFT for Tax Capped Districts
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D R A F T
The Money Follows the
Student
1 2 3 4 5 6 7 8 9 10 11 12 13
County District2012 District Total
EAV (1)
% of EAV in
the County
(1)
2013-14 Housed
Enrollment
Estimated 2013-14 Housed Enrollment adjusted for
County Resident Students by EAV
(2) Percent of
Total
Adjusted Annual CSFT per
District (3)
Estimated Proposed Debt
Issuance with 1% Annual Growth in Sales Tax, 1.25x Coverage @ 5% Rate for 20 Years
(4)
Final Maturity of
Existing Debt
Fiscal Year 2014 Debt Service per
District from County Tax Rate
Sheet
Potential Abatement
Available Based on LESSER of CSFT Funds or FY 2014 Debt
Service
Effective Abatement $ Amount per
$100,000 House Value Based on
column 12Piatt Bement CUSD 5 $54,513,837 88% 401 341 11.8% $84,800 $916,052 12/1/2024 $223,010 $0.16 $51.85 Piatt Monticello CUSD 25 $218,561,465 95% 1,683 1,606 55.3% $399,382 $4,314,308 10/1/2020 $1,611,785 $0.18 $60.91 Piatt Atwood Hammond CUSD 39 $45,531,712 56% 416 233 8.0% $57,943 $625,924 12/1/2026 $392,705 $0.13 $42.42 Piatt Deland-Weldon CUSD 57 $51,464,712 57% 202 100 3.4% $24,868 $268,637 12/1/2015 $43,990 $0.05 $16.11 Piatt Cerro Gordo CUSD 100 $64,801,239 51% 617 392 13.5% $97,483 $1,053,057 12/1/2020 $354,074 $0.15 $50.14
Champaign Mahomet-Seymour CUSD 3 $274,078,469 0% 2,883 0 0.0% $0 $0 $1,703,390 $0.00 $0.00 DeWitt Blue Ridge CUSD 18 $121,399,113 36% 764 230 7.9% $57,197 $617,865 $527,238 $0.05 $15.70
Total $830,350,547 2,902 100% $721,673 $7,795,842Value of a Student $249
County School Facility TaxWorksheet for Piatt County Schools
Debt Capacity and Abatement Impact Per District
(4) Assumes 1% annual growth in sales tax
Prepared by Stifel Nicolaus & Company, Inc. For additional information please contact Tom Crabtree at 1-800-230-5151 ext. 8457January 13, 2014
(2) Enrollment of County resident students as reported by each district
(3) Based on County Sales Tax "CST" then multiplied by 4 to represent 1%, less vehicle estimate and 2% State Fee
(1) As reported by ISBE Annual Financial Reports and County
Calendar Year
Adjusted Net CSFT at 1% (1) % Change
2002 $506,321 N/A2003 $488,637 -3.49%2004 $517,084 5.82%2005 $594,450 14.96%2006 $1,237,197 108.12%2007 $596,795 -51.76%2008 $622,788 4.36%2009 $616,493 -1.01%2010 $709,843 15.14%2011 $725,102 2.15%2012 $721,673 -0.47%
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Local Sales Tax RatesCity Sales Tax Rate
Champaign* 9.00%Decatur* 9.00%Farmer City 6.25%Galena* 8.25%Galesburg* 8.50%Monticello 6.25%Peoria** 8.25-9.25%Springfield 8.50-9.50%Tuscola 7.75%*Includes new CSFT
Source: Illinois Department of Revenue
** Hospitality Improvement Zone Business District 9.25%, all other 8.25%
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How to Place Before Voters? School boards pass a resolution
When School Boards representing more than 50% of the resident student enrollment in the county adopt resolutions, the Regional Superintendent must certify the question to the County clerk
County Clerk will place on the ballot at the next regularly scheduled election
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Required Language on the Ballot
Ballot Language (cannot change): Shall a retailer’s occupation tax and a service
occupation tax (commonly referred to as a “Sales Tax”) be imposed in (name of county) at a rate of (insert rate) to be used exclusively for school facility purposes?
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Passing the Vote and Receipt of Revenues
Simple majority of votes cast needed to pass
After approval by the voters, the tax will be imposed
The ordinance and the election results must– Be certified by the County Clerk– Filed with the Illinois Department of Revenue
Money is received monthly beginning approximately four months after the tax goes into effect
The money follows the student
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Distribution of Sales Tax
2% withheld by IL Dept. of Revenue - Same as all sales taxes
Distributed by R.O.E. on a per resident-pupil basis
The money follows the student
Election Date Mar. 18, 2014 Nov. 4, 2014 Apr. 7, 2015
Pass Resolution (School Districts)
Dec. 30, 2013 Aug. 18, 2014 Jan. 20, 2015
Certify the Resolution (County Clerk)
No later than Jan. 9, 2014
No later than Aug. 27, 2014
No later than Jan. 29, 2015
Election Mar. 18, 2014 Nov. 4, 2014 Apr. 7, 2015
File with IL Dept. of Rev. to Enact Tax
No later than October, 2014
No later than April,1, 2015
No later than October,1, 2015
Sales Tax Goes into Effect Jan.1, 2015 July 1, 2015 Jan. 1, 2016
Regional Superintendent Receive Funds from State
Approximately 90 Days after Jan.1,
2015
Approximately 90 Days after July 1,
2015
Approximately 90 Days after Jan. 1, 2016
District Receives New Sales Tax Revenues
April 2015 October 2015 April 2015
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Timeline is Critical
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Keys to Success
Time is your most important asset – don’t waste it Unified support (as much as possible) for CSFT from all
districts ALL DISTRICTS must communicate the message about
what CSFT is and how it would benefit their district Someone has to take ownership and lead the effort Develop county-wide leadership and communication Putting the question on the ballot is not enough – must
EDUCATE voters – A LOT
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It’s Different Because…
Communication challenges Unfamiliar type of school funding Need to keep referendum from being
indentified with a single district Targeting of messages more important
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It’s Different Because…
Organization, Strategy are more complicated Politics more involved Coordinating multiple districts a challenge
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It’s Different Because…
Opposition more likely Sales tax referenda often attract organized
opposition County/cities/districts might oppose
referendum
Fundraising more challenging Especially if revenue to be used only for
property tax relief
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It’s Like a District Referendum…
Time is your most important asset – don’t waste it
Build foundation from community engagement – win before you begin
Develop community-wide leadership Unity among school districts/key
stakeholders Someone has to take ownership
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It’s Like a District Referendum…
Strong campaign leadership/doers not thinkers
District leadership commitment to helping with fundraising, grassroots effort and informational communications
Discipline – everyone works the plan Successful fundraising
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Pitfalls to Avoid
Opposition from a school district Lack of cooperation from districts No cat herder Not adhering to message Engaging opposition Inability to raise money No plan Deviation from the plan
Next Steps
Start talking NOW with community regarding facility needs – seek community input
Identify inter-district communication coordinator (“cat herder”)
Community support group organizes Develop purpose statements and pass resolutions Do not assume work ends after resolutions are
passed Talk about “what and why” CSFT 24/7
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Introductory Video
Below is a link to a 10 minute video that gives a non-technical introduction to the basics of the County School Facilities Sales Tax and how it has been used across the State.
http://youtu.be/BLN9yacb4dE
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Key Resources
Lynda K. GivenKyle Harding
Chapman and Cutler111 West Monroe StreetChicago, IL 60603-4080Phone: 312/[email protected]
Jane QuinlanRegional Superintendent – Champaign County
Regional Office of Education #9200 South Fredrick Street
Rantoul, IL 61866Phone: 217/893-3219
Gloria DavisSuperintendent
Decatur School District 61101 W. Cerro Gordo Street
Decatur, IL 62523217/424-3010
Jon KilgoreSuperintendent
Pontiac Twp HSD #901100 Indiana Ave.Pontiac, IL 61764
Jon KilgoreSuperintendent
Pontiac THSD #901100 East Indiana Ave.
Lincoln, IL 61764Phone: 815/844-6113
Gloria CrookRevenue Tax Specialist Department of Revenue
101 West Jefferson StreetSpringfield, IL 62702
217/785-5970
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Important Disclosures and CertificationsStifel, Nicolaus & Company, Incorporated (“Stifel”) is providing information for discussion purposes and is declaring that it has done so within the regulatory framework of MSRB Rule G-23 as an underwriter (by definition also including the role of placement agent) and not financial advisor, as defined therein, to the issuer for this proposed issuance of municipal securities. The primary role of Stifel, as an underwriter, is to purchase securities for resale to investors in an arm’s- length commercial transaction. Serving in the role of underwriter Stifel has financial and other interests that differ from those of the issuer. The issuer should consult with its own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent it deems appropriate.
These materials have been prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”) for the client or potential client to whom such materials are directly addressed and delivered (the “Issuer”) for discussion purposes only. All terms and conditions are subject to further discussion and negotiation. Stifel does not express any view as to whether financing options presented in these materials are achievable or will be available at the time of any contemplated transaction. These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Stifel to provide or arrange any financing for any transaction or to purchase any security in connection therewith. Where indicated, this presentation may contain information derived from sources other than Stifel. While we believe such information to be accurate and complete, Stifel does not guarantee the accuracy of this information. This material is based on information currently available to Stifel or its sources and are subject to change without notice. Stifel does not provide accounting, tax or legal advice; however, you should be aware that any proposed indicative transaction could have accounting, tax, legal or other implications that should be discussed with your advisors and /or counsel.
Stifel’s Public Finance Department has prepared the attached materials to provide you with general information (as that term is defined in the SEC’s Municipal Advisor Rule) and we are not providing you with any advice or making any recommendation concerning the structure, timing or terms of any issuance of municipal securities or municipal financial products. To the extent that we provide any alternatives, options, calculations or examples in the attached information, we are not intending to express any view that you could achieve those results in any municipal securities transaction and those alternatives, options, calculations or examples do not constitute a recommendation that you should effect any municipal securities transaction. Stifel does not act as your municipal advisor.
Stifel is providing information for discussion purposes and is declaring that it has done so within the regulatory framework of MSRB Rule G-23 as an underwriter (by definition also including the role of placement agent) and not as a financial advisor, as defined therein, to the issuer for this proposed issuance of municipal securities. The primary role of Stifel, as an underwriter, is to purchase securities for resale to investors in an arm’s- length commercial transaction. Serving in the role of underwriter Stifel has financial and other interests that differ from those of the issuer. The issuer should consult with its own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent it deems appropriate.
Additional information is available upon requestStifel, Nicolaus & Company, Inc., 501 N. Broadway, St. Louis, MO 63102
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This presentation contains proprietary information compiled by Stifel Nicolaus.
Reproductions can be made with permission from Stifel Nicolaus.
Please call Tom Crabtree for permission at1(800) 230 5151Extension 8457
THANKS