Presented by:

Mindy Russell, Management Assistantmindy.russell@peoriaaz.gov Mary Jo Waddell, City Clerkmaryjo.waddell@peoriaaz.gov City of Peoria, AZ

Michael Cafiso, Esq.Greenburg Traurig LLPcafisom@gtlaw.com

Troy CorderPolicy Development Grouptcorder@policydevelopmentgroup.com

Mark Reader, Managing DirectorStone & Youngberg LLCmreader@syllc.com

Bond Election 101January 8, 2010GFOAz Quarterly TrainingChandler, AZ, 12:15 p.m. – 2:00 p.m.

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Topic and Speaker Introductions 12:15 - 12:20 Mindy Russell

Bonding Capacity Reminder for G.O. Bonds and Impact on 12:20 - 12:35 Mark ReaderDeclining Secondary Assessed Values

Bonding Capacity Reminder for HURF Bonds 12:20 - 12:35 Mark Reader

Bond Election Requirements - by Financing Alternative 12:20 - 12:35 Mark Reader

Recent Bond Election Statistics and Property Tax Law Changes 12:20 - 12:40 Mark Reader / Mike Cafiso

Election Call Requirements and Timeline(s) - Working Mary Jo Waddell/Closely with Clerks, Finance Directors and County Officials 12:40 - 12:50 Mike Cafiso

Voter Information Pamphlet Requirements 12:50 - 1:00 Mary Jo Waddell/Mike Cafiso

Election Legal Do's and Don’t's 1:00 - 1:15 Mike Cafiso

Election Strategies and Case Studies (Separate Power-Point) 1:15 - 2:00 Troy Corder

Questions/Answers 2:00 - 2:15 Mindy Russell

Topic Presenter(s)Est. Start Time

Agenda

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CITY OF AVONDALE, ARIZONAFiscal Year 2008/09 Direct Bond Debt,

Legal Limitation and Unused Borrowing Capacity

Water, Light, Sewer, Open Space, Public Safety,

Law Enforcement, Fire/Emergency Services,

General Municipal Purpose Bonds Streets/Transportation Facilities and Park Bonds

2008/09 Secondary Assessed Valuation $704,115,001 2008/09 Secondary Assessed Valuation $704,115,001

6% Limitation 42,246,900 20% Limitation 140,823,000

Direct Such General Obligation Less Direct Bonded Debt

to be Outstanding 1,665,000 to be Outstanding 11,785,000

Unused 6% Borrowing Unused 20% Borrowing

Capacity $40,581,900 Capacity $129,038,000

6%

20%

G.O. bonds are repaid with secondary property tax revenues

Bonding capacity impacted by changes in secondary assessed valuation and July 1 principal payments

General Obligation (G.O.) Bonding Capacity

4

Declining Assessed Valuations

The State of Arizona had seen double-digit growth in assessed valuation for many local governments from 2003-2007

Recently, this trend has slowed to single digit and double digit reductions or negative declines in assessed valuations in FYE 2009 and 2010 with FYE 2011 estimates forthcoming

Assessed Valuation Drives Access to Bond Dollars:

Voter approved authorization ≠ cash available now

Higher growth allows earlier issuance

Lower growth/decline hinders issuance and potentially impacts secondary tax rate policy objectives

$2.6 Million in lost capacity for every $10,000,000 reduction in assessed value

18-24 month catch-up with County Assessor’s valuation

5

Street & Highway User Revenue Bonding Capacity

(HURF Bonds)

"A" or Above 66.60% $6,500,000

"A" or Below 50.00% $4,900,000

Bond election required (Note: Not limited to November)

Generally successful as a result of no tax increase

Small number of elections due to HURF budget capacity constraints

(a) Credit rating of A or better by at least one nationally recognized credit rating agency

(b) Estimate assumes 5.75% interest rate, 15-year amortization, level debt service

City/Town Credit Rating (a)

HURF Revenues

Leverage Calculation

Bond Sizing Per $1,000,000 of HURF

Revenues (b)

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AZ City/Town Bond Election & Financing Alt. Summary

(a) Election permitted to be held on the First Tuesday after the First Monday in November of each year.

(b) Election permitted in March, May, September and November.

G.O. Bonds

(a)

HURF Bonds

(b)

Excise Tax Rev.

BondsI.D.

Bonds

CFD Bond

s

Lease Purchase/ COPs(Annual Approp.

)

Utility RevenueBonds &

WIFA(c)

GADA(d) USDA P3

Bond Election Required? Yes Yes No

No(petitio

n)

Yes (G.O.

Bonds) No MaybeMayb

e Maybe

Yes (GO

Bonds)

Type of Infrastructure

1. Streets & Roads (Transportation)

(20% or

6%)

(No

Grants)

2. Parks & Open Space

(20% or

6%)

(No

Grants)

3. Water & Wastewater Utilities (Acquisitions & Improvements)

(20% or

6%)

(Including Grants)

4. Electric & Gas (6%)

(No WIFA)

(No

Grants)

5. Police & Fire (Public Safety)

(20% or

6%)

(No

Grants)

6. Administrative Facilities (i.e., City Hall)

(6%)

(No

Grants)

(c) Election not required if population is less than 50,000.

(d) Election not required if population is less than 50,000.

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AZ City/Town Bond Election & Financing Alt. Summary

G.O. Bonds(a)

HURF Bonds

(b)

Excise Tax Rev. Bond

sI.D.

Bonds

CFD Bond

s

Lease Purcha

se/ COPs

(Annual

Approp.)

Utility Rev.

Bonds &

WIFA (c)

GADA(d) USDA P3

Bond Election Required? Yes Yes No

No (petition

)

Yes (GO

Bonds) No Maybe

Maybe Maybe

Maybe (GO Bonds

)

Type of Infrastructure

7. Libraries (6%)

(No

Grants)

8. Airport (20% or 6%)

(No

Grants)

9. Equipment / Technology (e)

(20%or 6%)

(e)

(No

Grants)

10. Economic Development

(6%)

(No

Grants)

11. Storm Drainage

(20% or 6%)

(Grants)

12. Solid Waste (6%)

(No Grants)

13. Sport Facilities (Professional)

(6%)

(a) Election permitted to be held on the First Tuesday after the First Monday in November of each year.

(b) Election permitted in March, May, September and November.(c) Election not required if population is less than 50,000.

(d) Election not required if population is less than 50,000. (e) Amortization Limited to Average Useful Life of Assets Being

Financed.

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AZ Counties Bond Election and Financing Alt. Summary

G.O. Bonds(15%)

HURF Bonds

Excise Tax Rev. Bond

sI.D.

BondsCFD

Bonds

Lease Purchase/ COPs

Special District

s(a)

Library

District

Jail Distric

tWIFA

(c)GADA

(d) USDA

Bond Election Required? Yes Yes No

No (Petition

)

Yes (GO

Bonds) No Maybe Yes Yes

Maybe

Maybe Maybe

Type of Infrastructure

1. Streets & Roads (Transportation)

(b)

(No

Grants)

2. Parks & Open Space

(No

Grants)

3. Water & Wastewater Utilities

(Pima

County WW

Only)

(Includes Grants)

4. Public Safety / Courts

(No

Grants)

5. Administrative Facilities

(No

Grants)

6. Libraries (No

Grants)

7. Equipment / Technology

(No

Grants)

8. Detention Facilities & Jails

(No

Grants)

9. Economic Development

(No

Grants)

(a) Includes Sanitary Districts, Domestic Water Improvement Districts and other similar Districts.

(b) County Highway Acceleration Financing Option Also Available.

(c) Election not required if population is less than 50,000.

(d) Election not required if population is lass than 200,000

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G.O. Bond Election Results-AZ School Districts

Class B School Improvement General Obligation Bond Election Results: 1999 - 2009

94%

6%

PASS

FAILED

Source: Stone & Youngberg, LLC

147 Issues = 5.3 B Authorization

9 Issues

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Debt Authorization Election Results: 2003 to 2009

Includes G.O. Bonds, Revenue Bonds and HURF Bonds (a)

87%

13%20 issues = $1.835 B

133 Issues = $7.510 BDebt Authorization

FAILED

PASSED

Source: Stone & Youngberg LLC

(a) Includes cities, towns, counties, special districts, and community college

districts. Does not include Arizona school districts.

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Recent Bond Election and Property Tax Law Changes

(Note: Does not include provisions specific to school districts)2009

2007

Bill No. Topic Section Page Content

HB 2360Ch. 140

Bond Pamphlets

35-454 1 Requires bond voter pamphlets to calculate the tax impact on an individual property owner as if the value of that property increased at 50% of the projected growth rate of the total SAV in the district. Requires bond voter pamphlets to state that the bonding authority requested exceeds the district’s Constitutional limit (if applicable).

2 Requires ballots for bond questions to state that issuing bonds will cause a property tax increase. (Note: This apparently does not apply to school districts because it contradicts specific ballot language in section 15-491.)

Bond Resolutions

35-455 3 Requires the call for a bond election to include the minimum number of years bonds may run, the current amount of bond debt and the Constitutional bond debt limit.

Refunding Bonds

35-473.01

4 Requires the weighted average maturity of refunding bonds to be at least 75% of the weighted average maturity of the bonds being refunded or else voter approval is required.

Final version: House engrossed bill

Bill No. Topic Section Page Content

HB 2784Ch. 258

Property Taxes

42-15001 4-5 Accelerates the reduction in the Class One assessment ratio so that it reaches 20% in FY 2012 instead of FY 2016.

Final version: Senate engrossed bill

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Recent Bond Election and Property Tax Law Changes

(Note: Does not include provisions specific to school districts)2006 Bill No. Topic Section Page Content

HB 2876Ch. 354

ElectionDate

16-204(Effective6/30/07)

42 Requires any election for an obligation that will require the assessment of secondary property taxes to be held in November, including bond and override elections.

Bond Elections

35-453(Effective6/30/07)

43 Eliminates the requirement that bond elections be called not less than 30 or more than 150 days before the election.

BondElection Information

35-454(Effective12/31/06)

44 Replaces current requirements for tax impact in voter pamphlets for bond elections with a new requirement to show the average annual impact and the total cost over the life of the bonds on a $250,000 home and commercial property valued at $2.5 million.

45 Requires all written information provided by the political subdivision pertaining to a bond election to include the estimated average annual tax rate.

Final version: Conference Engrossed Bill

Bill No. Topic Section Page Content

SB 1041Ch. 44

Bond Elections

35-454 27 Changes deadline for mailing voter information pamphlets for bond elections to 35 days before the election and requires mailing them to each household with an elector (instead of each elector or each household). Effective 4/5/06

13

Recent Bond Election and Property Tax Law Changes

(Note: Does not include provisions specific to school districts)

2005

Bill No. Topic Section Page Content

HB 2623Ch. 164

Bond Elections

35-454 6 Requires bond ballot questions to state that issuance of the bonds will result in an annual levy of property taxes. Effective 11/1/05.

HB 2779Ch. 302

Property Taxes

42-15001 7 Reduces the Class 1 (commercial and industrial property) assessment ratio from 25% to 20% in one-half percent increments over 10 years.

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Calendar For Calling and Holding Municipal Elections

Hire Consultants (by January/February)Investment BankerBond CounselFacilities Planning ProfessionalDemographers, Election Research Consultant, etc.

Educate Key Administrators (by February/March)Capital Financing AlternativesBond Basics• Practical Elements and Strategic Use• Election and Pamphlet RequirementsAZ Property Tax BasicsFinancial Policies for Debt and TaxesCommunity Outreach and Research Efforts• Demographic and Election Research Consultants• Formation of Political Action Committees (PACs)

Prepare a Capital Improvement Plan (March/April)Comprehensive in Scope and Easy to ReadCurrent and Long Range Needs (5+ Years through build-out)Reliable Cost Estimates with Contingencies and Inflation AdjustmentsRepair and Replacement Needs Scheduled and QuantifiedFunding Sources Identified and PrioritizedImpact on M&O Identified and Integrated with Long Term M&O Forecast

15

Calendar For Calling and Holding Municipal Elections

Form and Educate a Stakeholder Committee (by March)Council RepresentativesKey AdministratorsSite Personnel (administrators, certified and classified)Residential RepresentativesBusiness RepresentativesOther Community LeadersLocal Media

Stakeholder Committee Goals to Consider (by May)Recommend a CIP to Governing BoardBecome Educated with Enough Pertinent Facts to Assist Voters• District Long Range Plans for Bond and Override Elections• District Financial Policies on Debt and TaxesRecommend Use of Oversight Committee(s) for CIP, Elections, Debt and/or Taxes

Council Dissolves Stakeholder Committee, Community Members May form PAC

Council Calls for the Election (June/July)Justice Department Civil Rights Division, Voting Rights Section filing is madeRequest Arguments For/Against

Mail Publicity Pamphlet (September 28)

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Voter Information Pamphlet Requirements

See City of Peoria Voter Information Pamphlet

See copies of Arizona Revised Statutes

17

Election Do’s and Don’ts

ARS 9-500.14. Use of city or town resources or employees to influence elections; prohibitions

A. A city or town shall not use its personnel, equipment, materials, buildings or other resources for the purpose of influencing the outcomes of elections. Notwithstanding this section, a city or town may distribute informational reports on a proposed bond election as provided in section 35-454. Nothing in this section precludes a city or town from reporting on official actions of the governing body.

B. Employees of a city or town shall not use the authority of their positions to influence the vote of political activities of any subordinate employee.

C. Nothing contained in this section shall be construed as denying the civil and political liberties of any employee as guaranteed by the United States and Arizona Constitutions.