LTCC outlines upcoming Measure F bond details
With two weeks away from approving its first bond issuance, the Lake Tahoe Community College board of trustees received a thorough rundown of what the district will face at its meeting on Tuesday.
At $19.5 million, the first set of bonds represents 35 percent the $55 million voters allowed the college district to float when Measure F passed in 2014.
Morgan Stanley will act as the district’s underwriter for the bond.
LTCC Vice President Jeff DeFranco said things appeared set and the district would sell bonds in July and secure its money in August.
Ryan Vollmer, from Morgan Stanley, said his firm’s goal was to secure a good deal.
“One of our main objectives is to help the district make sure it gets the best bonds,” Vollmer told the board. “Our second duty is working with county for lowest cost funds to the taxpayers.”
Vollmer said his firm also wants to encourage local retail participation. One of its Stateline, Nev. retail brokers will conduct outreach to encourage local businesses to purchase some of the bonds.
Bonds will be repaid through taxes levied on properties within the college district’s service area.
John Palmer, LTCC’s bond legal counsel, said no conflict of interest existed if board members or members of the college foundation purchased bond shares themselves.
He added the board has ultimate authority of what is approved, up to the $55 million. LTCC staff has some leeway within set boundaries, but changes require additional approval.
Bonds have a 30-year lifespan, something Palmer called conservative. The industry standard used to be 40 years before changes in California’s law made college districts more conservative.
“The trick is you want the bonds to match up with the lifespan of the projects you finance,” Palmer said. “You don’t want to buy iPads with a 40-year bond but you also don’t want to build a 40-year building with bonds over three years.”
Interest rates cannot exceed 8 percent.
Palmer added that Morgan Stanley can walk away from its services as an underwriter if the district has either misrepresented its status or if something goes wrong that is outside of the district’s control.
“If there’s an earthquake that swallows the district into the ground, Morgan Stanley won’t have to sell the bonds,” Palmer said. “If there’s a hurricane in Louisiana, that doesn’t mean much to them.”
The bonds go through an annual audit to ensure the funds are on target.
The board is expected to approve the first round of bond issuances at its June 23 meeting.
The master schedule of bond schedules was approved in a 4-0 vote. Board president Kelly David was absent.
DeFranco, LTCC’s vice president, said the master schedule includes overall projects for the first series of bonds, potential costs and likely timelines for improvements.
Some campus-wide improvements for 2015 would include maintenance and renovations of the student services front counter, counseling offices, gymnasium improvements, and replacement of the main building’s boiler.
Some timelines for projects scheduled in 2016 and 2017 may change depending on additional funding.
Outside of the Measure F funds, DeFranco said staff wants to set aside some funding to modernize classrooms and facilities like the art lab that benefit from it now.
The district’s planned university center, now funded by an $5 million donation from Lisa Maloff, has been separated from the Measure F funding. Initially $850,000 had been earmarked for that project, expected to break ground in May 2017.
Proposed improvements to the community field LTCC uses for its community soccer program may also be pushed off until more clarity has been established on what will be done with it. The community field is maintained with revenue from the Measure R bonds, which is overseen by the South Lake Tahoe Recreation Facilities Joint Power Authority.
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