Exhibit CC 11-17-15 Item #1 Civic Center Master Plan Study SessionCity of Cupertino
Civic Center Master Plan
Conceptual Financing Strategy
1 November 17, 2015 Civic Center Master Plan
CC 11-17-15 Item #1
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Presentation Overview
November 17, 2015
•Background
•Recap of Civic Center Master Plan (“CCMP”)
•Financial Impact to City
•Credit Implications and Affordability
•Summary
Civic Center Master Plan
Objective: Obtain Council Direction on Next Steps
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Background
November 17, 2015
•CCMP under development since 2012
•July 7, 2015 – City Council adopted
Resolution No. 15-060 approving the CCMP
•August 18, 2015 - City Council directed
staff to provide additional information
regarding conceptual financing for
implementation of the CCMP
Civic Center Master Plan
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Recap of CCMP – Needs
November 17, 2015
City Hall
•Cannot house an Emergency Operations Center
•Needs significant seismic upgrades
•Mechanical systems do not meet current codes
•Current electrical loads often exceed capacity –
compromising City services
•Inefficient electrical system
•Accessibility issues
•Compromised public service interface
•Inadequate space for staffing – lease space or trailer
options currently being secured
Library
•Cannot accommodate community demand for more
programming and meeting space
Parking
•Does not meet the demands of Civic Center users
Civic Center Master Plan
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Recap of CCMP - Goals
November 17, 2015
City Hall
•Resilient building
•House Emergency Operations Center
•More customer-friendly interface
•More community meeting space
Library
•More program space
•More community meeting space
Parking
•Resolve current parking shortage
•Provide additional parking for library expansion
Civic Center Master Plan
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Recap of CCMP – Elements
November 17, 2015
New City Hall Building
•2 stories
•40,000 sq. ft.
•118 spaces of underground parking
Library
•Perched addition for 130-seat program room
Civic Center Master Plan
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Financial Impact to City - General
November 17, 2015
•The CCMP Project would be financed through
issuance of Certificates of Participation (“COPs”).
•The COPs will entail annual appropriations from
the General Fund to pay principal and interest.
•Annual debt service is fixed and will depend on:
•Interest rates
•Amount borrowed
•Term of financing
•Credit rating
Civic Center Master Plan
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Financial Impact to City – Interest Rates
November 17, 2015
Current interest rates are near historic lows:
Civic Center Master Plan
0%
1%
2%
3%
4%
5%
6%
7%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
5Y MMD 10Y MMD 30Y MMD
0
1
2
3
4
5
6
7
8
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Current 20y Range
2y Range YTD Low
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Financial Impact to City – Estimated
Annual Debt Service
November 17, 2015 Civic Center Master Plan
$30 Million $45 Million $60 Million
Current Rates $1.63 MM $2.45 MM $3.26 MM
Current + 1% $1.84 MM $2.76 MM $3.68 MM
•Assumes 30 year maturity and level debt
service
•Assumes cash funding a portion of the
project costs
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Credit Implications and Affordability
November 17, 2015 Civic Center Master Plan
Any assessment of the City of Cupertino starts
with its position of significant financial strength:
•Limited outstanding debt
•$37.9 million of 2012 Refunding COPs
•$3.2 million in annual debt service
•Manageable Unfunded Pension Liability
•$28.3 MM as of most recent CalPERS valuation
•No liability for public safety
•Strong Fund Balances
•Conservative budgeting practices
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Credit Implications and Affordability
Rating Agency Metrics
November 17, 2015 Civic Center Master Plan
Source: Moody’s Investors Services, Rating Methodology, U.S. Local Government
General Obligation Debt (January 15, 2014)
Local Government Scorecard Very Strong Strong Moderate Cupertino
Economy/Tax Base Full Tax Base (Full Value) >$12B $1.4B to $12B $240M to $1.4B $18.2 B Full Value/Capita >$150M $65M-, $150M $35M - $65M $301M Income (% US Median) >150% 90% - 150% 75%-90% 300%
Finances Fund Balance as % Revenues >30% 15%-30% 5%-15% 76.7%* Cash Balance as % of Revenues >25% 10%-25% 5%-10% 64.1%
Management 5 year Avg Rev vs. Oper Exp >1.05% 1.02%- 1.05% 0.98%- 1.02% 1.055%**
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Credit Implications and Affordability
Rating Agency Metrics (cont.)
November 17, 2015 Civic Center Master Plan
The CCMP COPs are not projected to impact the scorecard – except in
the category “Debt/Operating Rev”
Source: Moody’s Investors Services, Rating Methodology, U.S. Local Government
General Obligation Debt (January 15, 2014)
Local Government Scorecard Very Strong Strong Moderate Cupertino
Debt/Pensions Debt***/Full Value <0.75% 0.75% - 1.75% 1.75% - 4% 0.21% Debt/Operating Rev < 33% 33%-67% 67%- 3x 26.7% Net Pension****/Full Value <0.9% 0.9%-2.1% 2.1%-4.8% 0.16% Net Pension/Rev <40% 40%-80% 80%-3.6x 20.0%
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Credit Implications and Affordability
November 17, 2015 Civic Center Master Plan
High Medium Low Cupertino Debt Per Capita >5,000 $2,000 - $5,000 < $2,000 $626 Debt Service as % of Operating Expense >15% 7% - 15% < 7% 2.23%* Debt as % of Assessed Value >8% 3% - 8% <3% 0.21%
Source: California Debt and Investment Advisory Commission, “Municipal Debt
Essentials – Accessing the Debt Market” (February 2, 2011)
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Credit Implications and Affordability – Comparison
with Other Cities (“Moody’s Medians”)
November 17, 2015 Civic Center Master Plan
Even with the CCMP COPs, the City should continue
to compare favorably with other Aaa rated cities in
these categories
Aaa Aa Cupertino
Total General Fund (GF) Revenues $57,976M $56,433M $88.353M
GF Balance as % of GF Revenue 38.53% 32.66% 54.42%*
Available GF Balance as % of Revenue 36.09% 29.88% 52.32%**
Debt as % of Full Value 0.69% 1.13% 0.21%
Overall Debt as % of Full Value 2.20% 3.04% 0.36%
Total Full Value $9.976B 5.691B $18.2B
Population 64,206 67,895 60,550
Full Value per capita $138,422 $82,268 $300,000
Source: Moody’s Investors Services, Updated 2013 US Local Government Medians
(August 13, 2015)
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Summary
November 17, 2015 Civic Center Master Plan
•The City’s credit and finances are very
strong
•A lease financing for a new City Hall will
not change that overall assessment
•Based on rating metrics, the City can
comfortably afford the additional lease
financing obligation
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Summary
November 17, 2015 Civic Center Master Plan
If the City Council concurs that the
financing is appropriate:
•Should staff move forward with the project?
•What level of financing does the Council find
acceptable?
•Should staff bring back the master agreement
and if so, when?