San Dieguito prepares for next Prop AA draw

The San Dieguito Union High School District board is scheduled to make several decisions on its second Prop AA bond draw in the coming months. The district plans to issue the second bond draw of $125 million in the spring.

From the first $160 million bond draw in 2013, several Prop AA projects have been completed or are in progress at all district schools: construction of Pacific Trails Middle School is under way for a fall opening in Pacific Highlands Ranch, the interim campus for Earl Warren Middle’s renovation is being built and a new weight room just opened at Torrey Pines High.

At its Feb. 5 meeting, the board will determine the method of sale, negotiated or competitive, and will consider awarding a contract to an underwriter.

As explained by Eric Dill, the district’s associate superintendent of business services, at the Jan. 15 meeting, a competitive sale is when an underwriter is not selected in advance and is awarded the bonds through a bid process on the day of sale. A negotiated sale is when an underwriter is selected in advance of the day of the bond sale and is active in structuring the bonds and reviewing all the legal and financing documents. This type of sale also gives flexibility in the sale date, allowing a “fall back” option if the conditions are not favorable on the sale day. The district had success issuing the first series of bonds via a negotiated sale in 2013.

Dill said the district issued requests for proposals for underwriters in preparation for a possible negotiated sale after the board’s December meeting. Proposals are being reviewed and a recommendation will be made at the Feb. 19 meeting.

At a board workshop March 5, the board will disclose the method of sale and the financing team, discuss the size and structure of the proposed bond series, go over a financial analysis of total costs and review projects that will be funded within the issuance.

The board is slated to authorize the issuance of bonds at the March 19 meeting, and the bond sale is expected to occur in April.

Dill said that the district will also look at changing board policies to mirror those in Assembly Bill 182, which passed after the $449 million Prop AA was passed. Many of the changes are for transparency and to help districts avoid a situation like Poway Unified’s, where the district’s long-term, 40-year capital appreciation bonds will end up costing taxpayers almost 10 times what was borrowed.

The final AB 182 legislation was less restrictive on the term of current interest bonds (allowing up to 40 years under government code) and included other requirements with the use of capital appreciation bonds — they must have a limited term of 25 years, be callable within 10 years and have a 4-to-1 maximum repayment ratio. AB 182 also requires several district disclosures such as the methods and reason for sale, financing team members, estimated costs and financial analysis of total costs.

Trustee John Salazar said he would like to see the district be more restrictive rather than less. He said he doesn’t like to hear about 40-year-terms or CABs at all.

Dill said the term and interest rate environment will be different from Poway’s and that they would plan to incorporate CABs as part of the program, but not the entire program.

The Prop AA Independent Citizens’ Oversight Committee also met last week on Jan. 21.

The committee ensures that all Prop AA funds are used in support of voter-approved projects, reviews cost-saving measures and performs annual audits.

The district is required to have at least seven members, who must include individuals from the business community, one active in a senior citizens organization, one member of a taxpayers organization, one member of a parent-teacher organization and one parent/guardian of a district student.

The Jan. 21 meeting was the end of the nine committee members’ two-year terms and all but one have decided to continue. Dill said that while they can continue with just eight members, they would prefer nine, so the district will seek applicants to fill that spot.

For information on the committee, visit sduhsd.net.