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Illinois County School Facility Tax Public Act 97-0542

Illinois County School Facility Tax Public Act 97-0542. Presentation to McLean County School Districts September 25, 2013. Presented by Stifel, Nicolaus & Co., Inc. Jim Burgett First Vice President 618-830-9782 burgettj@stifel.com. Anne Noble Senior Vice President 800-230-5151 x8488

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Illinois County School Facility Tax Public Act 97-0542

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  1. Illinois County School Facility Tax Public Act 97-0542 Presentation to McLean County School Districts September 25, 2013

  2. Presented by Stifel, Nicolaus & Co., Inc. Jim Burgett First Vice President 618-830-9782 burgettj@stifel.com Anne Noble Senior Vice President 800-230-5151 x8488 noblea@stifel.com Kevin Heid Senior Vice President 309-661-0004 heidk@stifel.com Tom Crabtree First Vice President 800-230-5151 x8457 crabtreet@stifel.com Sean McCarthy First Vice President 800-230-5151 x2737 mccarthys@stifel.com 70 West Madison Street, Suite 2400, Chicago, Illinois 60602 Telephone: 312/269-0329 501 North Broadway, St. Louis, Missouri, 63102 Telephone: 314/342-2993 2101 Eastland Drive, Suite B, Bloomington, Illinois 61704 Telephone: 309/661-0004

  3. Nontraditional Approach for Illinois Public Schools • Sales tax vs. Real Estate tax for school capital • Allows county voters to approve a sales tax to fund school facility costs • 1% maximum in ¼% increments • Law went into effect October 2007 • Law was based on similar law that is currently in place in every county in Iowa • Law was amended in August 2011 • County Board no longer has to approve the tax

  4. Illinois County School Facility Tax Act:Election Results and Future Votes X Counties where the CSFT has passed (18) X X X X X X X X Counties where the CSFT failed in the November 2008 (X),April 2009 (X), February 2010 (X), November 2010 (X), April 2011 (X) Elections, March 2012 (X) Elections, November 2012 (X)Elections and (X)2013 Elections (41) X X X X X X X X X X X X X X X X X X X X X X Counties considering placing CSFT on the ballot March 2014 X X X X X X X X X X X X X

  5. Low Impact on Key Business and Fixed Income Persons • Sales Tax Base: • Everything in the municipal and county sales tax base is included in the tax base except for: • Cars, Trucks, ATVs • Boats & RVs • Mobile homes • Unprepared Food • Drugs (including over-the-counter and vitamins) • Farm Equipment and Parts • Farm Inputs • Services are not taxed • “If it is not currently taxed, it will not be taxed”

  6. Use of Sales Tax Revenues

  7. How to Use Sales Taxes • Pay as you go capital projects • Sales tax can be saved up over time • Issue new bonds for current capital needs • Support bonds with sales tax • Retire existing debt issued for capital purposes • Abate taxes • Refund qualifying debt • ………Or any combination of the above

  8. D R A F T The Money Follows the Student

  9. Source of Sales Tax Revenues • Property taxes are paid just by home and property owners in the County • Sales tax is paid by all shoppers, including visitors, passers-through on the interstate and college students • Approximately 22% of McLean County sales tax revenue for the schools is produced by shoppers who do not reside in the County • An additional 15% of McLean CSFT revenues is estimated to be produced by ISU and Illinois Wesleyan students • Source: PGAV Planners and ESRI

  10. How to Place Before Voters? • School boards pass a resolution • When School Boards representing more than 50% of the resident student enrollment in the county adopt resolutions, the Regional Superintendent must certify the question to the County clerk • County Clerk will place on the ballot at the next regularly scheduled election

  11. Required Language on the Ballot • Ballot Language (cannot change): Shall a retailer’s occupation tax and a service occupation tax (commonly referred to as a “Sales Tax”) be imposed in (name of county) at a rate of (insert rate) to be used exclusively for school facility purposes? • Simple majority of votes cast needed to pass l

  12. Distribution of Sales Tax R.O.E. Distributed by R.O.E. on a per resident-pupil basis 2% withheld by IL Dept. of Revenue - Same as all local sales taxes The money follows the student

  13. Timeline is Critical

  14. It’s Different Because… Communication challenges • Unfamiliar type of school funding – explain WHAT and WHY • Requires explanation of need, by district Organizationis more complicated • Coordinating multiple districts a challenge • Unity among school districts is key

  15. It’s Different Because… Community support can be elusive • Abatement is hard to understand • Consider projects needs that can be “touched and seen” Opposition more likely • Sales tax referenda can attract organized opposition • Other municipalities might oppose referendum

  16. It’s Like a District Referendum… • Time is your most important asset – don’t waste it • Build foundation from community engagement regarding facility needs • Someone has to take ownership to organize (county-wide) • District leadership commitment to informational communications • Strong campaign leadership for any “Vote Yes” Committee

  17. Roles in a Campaign • District employees “on the clock and on school property” can only share factual information relating to any referendum – no “vote yes” activities • Districts (and district website/email) can only distribute factual information, fliers, newsletters, etc. – no “vote yes” • “Vote Yes” committee can include volunteers who are school employees or board members on their personal time

  18. Next Steps • Start talking NOW with community regarding possible use of sales tax revenue – seek input • Identify inter-district communication coordinator (“cat herder”) • Community support group organizes • Develop purpose statements and pass resolutions • Do not assume work ends after resolutions are passed • Talk about “what and why” CSFT 24/7

  19. Introductory Video Below is a link to a 10 minute video that gives a non-technical introduction to the basics of the County School Facilities Sales Tax and how it has been used across the State. http://www.youtube.com/watch?v=Mv9LmF6baMM

  20. Key Resources

  21. Important Disclosures and Certifications Pursuant to revised Municipal Securities Rulemaking Board (“MSRB”) Rule G-23 (the “Rule”), in connection with new issues for which the Time of Formal Award occurs after November 27, 2011, a broker, dealer, or municipal securities dealer (“dealer”) is prohibited from acting as a Financial Advisor or Municipal Advisor, as defined in Section 15B of the Exchange Act of 1934 (as amended), to an issuer for a particular issue sold on a negotiated or competitive bid basis and subsequently switching roles to act as underwriter or placement agent with respect to the same issue. In compliance with the rules set forth by the MSRB, Stifel, Nicolaus & Company, Inc. (“Stifel”) is acting as an underwriter or placement agent and not a Financial Advisor or Municipal Advisor in connection with all services proposed and/or provided. MSRB Notice 2011-29 (the “Notice”) defines as “underwritings” both (i) the acquisition of all or any portion of an issue, directly or indirectly, from the issuer as principal, either alone or as a participant in a syndicate or other similar account formed for that purpose and (ii) acting as an agent for the issuer in arranging the placement of an issue. Additionally, the MSRB defines the role of an underwriter in the Notice, which states, “the primary role of an underwriter is to purchase securities in an arm’s-length commercial transaction between the issuer and the underwriter” and, “the underwriter has financial and other interests that differ from those of the issuer.” Furthermore, the Rule states that an underwriter may provide advice concerning the structure, timing, terms, and other similar matters related to the issuance of municipal securities to the extent the underwriter discloses that such advice is provided with respect to the underwriting and not in relation to a financial advisory relationship, as specifically defined in the Rule. Accordingly, any such services provided by Stifel as they relate to our role as underwriter or placement agent should not be construed as those of a Financial Advisor or Municipal Advisor and such notice, as described above, is hereby provided as set forth in the Rule. Additional information is available upon request Stifel, Nicolaus & Company, Inc., 501 N. Broadway, St. Louis, MO 63102

  22. This presentation contains proprietary information compiled by Stifel Nicolaus. Reproductions can be made with permission from Stifel Nicolaus. Please call Tom Crabtree for permission at 1(800) 230 5151 Extension 8457 THANKS

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