Lodi Unified School DistrictConstruction Projects StatusBoard Study SessionAugust 19, 2008Prepared by: Douglas Barge Art HandY:\Business Services\Financial Modeling\Construction Planning\Waterfall - Round 7\B08-19-08 District Construction Projects Status.ppt

Executive SummaryAs with any program the Measure K Construction has evolved into its final stages. This evolution will require a change in strategy:Placing a greater focus on cash in conjunction with budgetRapid completion and filing of all applications and reports required for State fundingMore detailed reporting to the Board as part of project approval To relieve the current cash pressures the District would:Use existing capital project reservesMaintain original project start up schedulesRestructure existing COPs repayment strategiesRecapture balances from projects that are completed or nearing completionOther strategies outlined in the report

Table of ContentsDESCRIPTIONPAGE #Opening CommentsProblem StatementMeasure K ProjectsState ProjectsMeasure L ProjectsCash ProblemSolutionsRecommendationsAppendix 123 891011 - 1314 - 1718

i

Opening CommentsWith the passage of Measure K the District embarked upon an aggressive construction program to increase capacity within the system, get the District off of the M.T. calendar and modernize existing facilities. The program required the infusion of cash early in the program to be successful. This was accomplished with the sale of bonds and use of accumulated development fees. This infusion of cash was augmented by the States contribution to the programs. The States contribution would propel the program into the next phases of projects. In the past we have referred to this process as the Waterfall. The purpose of the Waterfall was to leverage the Districts cash position to allow for the rapid completion of the construction projects.

Now the District has entered the final phase of the Measure K program with the sale of the final series of bonds last year. This will be the Pond phase of the program. Dont fish until there is water in the pond. Water being cash, in this case.1

Problem StatementConstruction of new facilities within Measure K is slowing. The program has entered the Modernization phase. This phase of the program will rely heavily on State funding catching up with the needs of the District, or the program must be slowed to match available cash resources. It is now important that all Measure K projects be viewed closely in terms of available cash and not just in terms of budget. With the slowing economy and student population growth it may, also, be time to review the pace of the Measure L program. To be clear, the Waterfall program will still work for Measure L if there are supporting resources Developer Fees. Finally, the Tokay High and Lawrence repairs have been completed. That program was supported with Certificates of Participation (COPs). With the delays in State resources and cash needs of Measure K it is appropriate to revisit our strategies for repayment.2

Measure KWaterfall #7ii

Status of Measure K ProjectsSeveral projects have exceeded the original program budgets as previously outlined in Board reports: Tokay RepairsTokay ModernizationTokay AdditionLawrence RepairsLodi High AdditionLockeford Addition To complete these projects funding was diverted from other projects. Our Facilities Department estimates additional State resources will help backfill a portion of the additional cost. However, State funding has yet to arrive for most of these projects including Lodi High Repairs.3

How the Waterfall WorkedSTATE4

Moving to the Pond Will WorkSTATE5

What Have We Done?Three AdditionsSix New SchoolsCOMPLETEDMeasure KStateDev. Fees /Other$ 115,876 Podesta($1,609,533)NEW SCHOOL SITESGantnerRemaining(80,024)6$ 112,938 $ 0($1,689,557) Total Completed Total New Sites($ 99,083)($ 2,938) ($ 99,083) $ 0$ 0

How Are We Doing?LincolnMosherCURRENT PROJECTSMeasure KStateDev. Fees /OtherAdditions Four Schools$ 0$688,208FUTURE ADDITIONSMcNair2,759Woodbridge ($ 3,702)$3,914,1577$2,283,353$ 0 $ 1,716,630 Total Current $ 5,673,583($1,630,804)1,717,573

What Are We Going to Do? Modernizations - ContinuedLodi High$2,213,000 All the Others *REMAINING MODS.$ 124,015 801,299$2,025,422(4,322,519) ($2,109,519)$ 925,314$2,025,422 Total RemainingMeasure KState $ (714,577)$ 925,314$9,316,552 GRAND TOTAL8* Includes Lawrence Elementary & Tokay High School projects.Other Funds

STATE PROJECTSiii

Summary of State ProjectsTokay RepairsTokay Science AdditionsFunds Needed3,773,164PROJECTS9$5,950,896 Total State Projects$2,177,732

Measure L BondsFirst Seriesiv

CONSTRUCTION MEASURE LSummary of Sources Series 2007 Bonds1. Podesta Ranch2. Delta Sierra3. Morada4. Bear Creek5. K-6 & K-8 Sites6. Middle School Site7. High School (small)8. Safety9. Reserves

10. Total New SchoolsDescriptionDev. Fees$3,600,000

4,550,000

8,450,000

$16,600,000Project$22,900,0003,200,0003,200,00021,500,00026,190,0004,875,00016,900,000800,000 $99,565,000Measure L$10,300,0003,200,0003,200,00017,000,0008,545,0002,437,500

800,000 4,517,500 $50,000,000State$9,000,000

4,500,00013,095,0002,437,5008,450,000

$37,482,50010* May include Developer Fee Credits**

The Cash ProblemBut the Budget Worked?v

Problem Statement

McNair still faces cash shortage problems related to the City of Stockton which still owes the District an estimated $4,171,397. Because of the need to borrow resources from Lockeford to support the Lawrence repairs project pending receipt of State funding. The Lockeford addition needs $5,111,270 to move forward. Resources for purchase of future school sites have been moved to support other projects pending receipt of State funding. The various Tokay projects are waiting State funding.

Funding for Gantner is predicated on receipt of State funding and an agreement with the developers on fee credits.

The combined impact of these events has caused a budget and cash strain on the Districts construction program11

SampleSample of the Budget/Cash?Beginning Balance$500,000 Measure K500,000REVENUESBudgetActualCash500,000 Project$1,500,000$2,140,000$1,500,000EXPENSESState500,000Development Fees0200,00012$2,140,000 $ 1,001,000$ 0 ($499,000)($699,000) Total Completed BALANCE$ 801,000Other Revenues1,000(60,000)$1,000,000 0$300,000 500,00001,0000

Summary of Budget/Cash Needs13

Sheet1

LODI UNIFIED SCHOOL DISTRICT

Business Services

2007/08 CONSTRUCTION PROGRAM

PROBLEM STATEMENT

NEEDSCITY/

I.STATE CONST. FUNDS (Fund 35)MgmtBUDGETCASHSTATECOPS

A.Tokay - Repairs8861$2,177,732$2,177,732$8,259,862$1,038,302

B.Tokay - Science Addition89163,773,1643,773,1641,800,000

C.Total State Construction$5,950,896$5,950,896$10,059,862$1,038,302

II.MEASURE "K" (Fund 21)Mgmt

A.Modernizations

1. Lodi High$3,144,601$3,144,601$4,315,860

2. Tokay High2,363,3671,494,399

B.Repairs

1. Lawrence(354,941)232,941($586,975)

C.Additions

1. Lockeford5,111,2705,111,2703,500,000

2. Lawrence(247,397)(247,397)4,641,643

3. Bear Creek(228,843)(228,843)300,000

4. Lodi High1,189,390979,144500,000

D.New

1. McNair2,111,6612,111,6614,171,397

2. Gantner (site purchase)3,663,4703,663,4701,831,735

E.Total Measure "K"$16,752,578$16,261,246$19,260,635($586,975)

III.TOTAL PROJECTS$22,703,474$22,212,142$29,320,497$451,327

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Solutionsvi

Internal Project Re-AlignmentsMeasure KStateAmount69,825SOURCES14$ 447,641 Total Project Re-Alignments$ 714,577Others (513,505)Development Fee176,744

Certificates of Participation15 The State will be funding a major portion of the work on the Lawrence and Tokay projects. Funding by the State will be on a reimbursement model requiring the District to front the cash. To bridge cash needs, $13.5 Million of Certificates of Participation (COPs) were issued. The program was designed to allow for a payoff of the debt to be made at any time. State funds to be directed to payoff of the notes as soon as possible. Annual payments are being made from Routine Restricted Maintenance resources. After all of the State income is received the repayment will be reduced to approximately $244,000.

COPS DEBT16

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DESCRIPTIONMgmtCOPSPAYOFFLONG-TERM

A.COPS ISSUANCE$13,500,000

B.Permanent Debt8861

1. Lawrence Repairs($586,975)

2. Tokay Repairs - Original2,868,273

3. Tokay Repairs - Additional1,038,302

C.Re-Payment Pending State Income

1. Tokay Repairs$7,867,375

2. Lawrence Repairs2,313,025

D.TOTAL$13,500,000$10,180,400$3,319,600

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17Options for Funding Existing Obligations

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Today'sBudget /

Cash NeedsCash

$29,947,074

A.Contribution to Sanctuary / Bright from Future Dev. Fees$4,550,000

B.Maintain Project Timelines for Lodi High Modernization3,500,000

C.Lockeford - Follow Original Timelines3,400,000

D.Lincoln Tech - State Funding3,300,000

E.McNair Developer Fees4,500,000

F.Re-direct COPs & Adjust Annual Payment2,300,000

G.Developer Fees1,700,000

H.AB87 Reserves - General Fund1,014,061

I.State1,000,000

J.Developer Fee Credits1,800,000

K.Extend COPs Re-Payment2,883,013

$29,947,074$29,947,074

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2008/09 Fiscal YearDistrict Construction ProgramOptions For Funding Existing Obligations

Tab 2

ProjectsFundBudgetCash

Repairs

8861Tokay High35$2,177,732$2,177,732

8097Lawrence21232,034232,034

Modernization

8958Lodi High21

8961Tokay High21

Additions

8928Lodi High21

8911Lockeford21

8912Lawrence21

891635

8927Bear Creek High21

8933Bear Creek High22

$2,409,766$2,409,766

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RecommendationsIn recognition of the natural evolution for the Measure K Construction Program, all future project approvals will include: A financial plan included in the documentation requesting approval.A cash flow plan showing that cash will be available to support the project before there is a demand for the cash. Staff Recommends changes to the construction program as outlined in this report to cover cash needs pending receipt of State funding.18

viiThe End

AppendixState Funds - StatusMeasure L - DetailA1B1 B2

PageDescriptionviii

STATE CONSTRUCTION FUNDSStatusProjectCDEDSASABA1Fundinga. Bear Creek High b. Delta Sierra Science

c. Lawrence Addition d. Lockeford Addition e. Lodi High Mod f. Lodi High Addition

g. Morada Science h. Podesta Ranch i. Tokay HS Rehab & Modernization

j. Tokay HS Science A k. Elkhorn Mod

November 2008

January 2009

October 2008

2009

December 2008

December 2008

January 2009

November 2008

November 2008

January 2009

March 2009

Yes

Pending

Yes

Pending

Yes

Yes

Pending

Yes

Yes

Pending

Pending

Yes

Yes

Yes

Pending

Yes

Yes

Yes

Yes

Yes

Yes

PendingSeptember 2008

November 2008

September 2008

2009

October 2008

October 2008

November 2008

September 2008

September 2008

November 2008

January 2009

MEASURE L CONSTRUCTIONSummary of Future Bond Series1. K-8 School3. Elementary School4. Middle School5. Safety6. Reserves 7. Total 2nd SeriesDescription $4,650,0006,600,000

$11,250,000Costs$31,250,00028,161,00041,124,0001,200,000 $101,735,000Measure L$21,481,00015,076,50022,508,0001,200,000 (4,517,500) $55,748,000State$9,769,0008,434,50012,016,000

$30,219,500A. NEXT SERIES OF BONDSB1Dev. Fees* May include Developer Fee Credits**

MEASURE L CONSTRUCTIONSummary of Future Bond Series (cont.) C. TOTAL MEASURE LDescriptionCosts$222,200,000Measure L$114,048,000$73,702,000State$34,450,000Other1. Academy High

2. Total Final Series$6,600,000

$6,600,000$20,900,000

$20,900,000$8,300,000

$8,300,000$6,000,000

$6,000,000B. FINAL SERIES OF BONDSB2

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