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HomeMy WebLinkAboutP-0290 - Summary of Capital Policy 12-07-1996POLICY FOR INSERTION INTO THE POLICY MANUAL MEETING DATE December 7, 1996 NUMBER: A: 0290 EFFECTIVE DATE: December 7, 1996 POLICY: A. Sources of Funds REVISIONS: 04 -10 -2007 04 -24 -2004 Summary of Capital Policy The following sources of funds will be allocated for Capital Projects and Debt Service: All proceeds from the Article 40 and Article 42 one half sales tax The North Carolina General Statutes require that 30 percent of the Article 40 and 60 percent of the Article 42 sales tax revenue be earmarked for school capital projects or debt service on debt issued for school capital projects. Revenue from the property tax as follows: $800,000 The equivalent of 2.7 cents on the tax rate based on valuation as of 1996- 97. This earmarking will be adjusted each revaluation cycle. The amount necessary to retire the 1992 School Bonds. (In 1997 -98 this amount is $4.7 million.) The amount of the reduction in the Human Services function of the County budget (equivalent to one half of one percent of the budget or $50,000) in 1994 -95 for automation projects in Human Services. Utilities Extension Fund - This amount may vary in that it is based on the increase in property tax base as a result of expenditures in the Utilities Extension Capital project. The amount currently planned is $35,000 for 1997 -98 and $25,000 for each year thereafter. Impact Fees for Each School System. Public School Building Fund Other revenues that are restricted including, payments -in -lieu, grant funds, rental revenue and inmate fees as a result of the new jail addition. • B. Debt Service: Prior to funds being allocated for specific projects, all debt service, including private placement financing will be subtracted from the unrestricted funding sources. C. Allocation All sources of unrestricted revenue, less debt service is then allocated between County and School projects based on 50 percent of the net amount for School projects and 50 percent of the net amount for County projects. Funding between the two school systems will be allocated based on the 10th day enrollment adjusted each year. For example, the 10th day enrollment as of September 1996 will be the basis of the 1997 -2007 Capital Improvements Plan. These percentages will be rounded to one decimal place. Impact fees will be projected and allocated to each school system, although these fees may be used to pay debt service. When impact fees are used to pay debt service, the equivalent amount of the projected impact fee will be allocated to each school system. For the first three years of the planning period (1997 -98, 1998 -99 and 1999 -2000) impact fees are dedicated to the cost of the new schools. D. Funding Levels It is the intent of the Board of Commissioners to "hold harmless" School projects and County projects as identified by the amount of funding projected in the 1996 -2006 Capital Improvements Plan. To achieve this intention, the following funding options will be used: The difference between the amount of general obligation debt service payments at the peak year of the debt schedule and the actual debt service payment will be earmarked for the Orange County Schools until the time that any shortfall that would have been realized by that system is made up. For County projects, beginning in 1998 -99 the equivalent of one cent on the general fund property tax rate will be necessary. The Board of Commissioners in adopting this policy instructed staff to identify other funding options rather than a tax increase to make up this shortfall. The Board of Commissioners may consider shifting the one cent capital reserve fund to be dedicated to County projects (see Capital Reserve section below). • E. Capital Reserve The capital reserve fund, established by the Board of Commissioners in 1995 -96 is equivalent to one cent on the General Fund Property Tax Rate (not adjusted for the 1997 revaluation of property but adjusted for revaluation of real property beyond the 1997 revaluation.) This reserve will accumulate during 1996 -97 and 1997 -98 with these funds used for site acquisition for schools and or recreation, or the combination of both. The Board of Commissioners will evaluate this reserve fund during 1998 -99 to determine if this one cent reserve should continue. F. School/Parks/Recreation It is the intent of the Board of County Commissioners to evaluate each new proposed school in both School Districts for joint use to include park and recreation use. G. Recurring Capital Recurring capital for each School System will be based on the equivalent of three cents on the General Fund Property Tax Rate (not adjusted for the 1997 revaluation of real property but adjusted each revaluation thereafter.) Funds will be allocated to each school system based on the State Department of Public Instruction planning allocation which is the same method used to allocate current expense appropriation. H. Planning Period During each fiscal year, the Board of Commissioners shall adopt a ten year Capital Improvements Plan. The ten year plan shall include anticipated County capital expenditures costing $30, 000 or more excluding equipment and anticipated school capital expenditures costing $50,000 or more, excluding equipment. Equipment, costing $1,000 or more can be considered as part of the Capital Improvements Plan. The first year of the adopted Ten Year Capital Improvements Plan shall be incorporated into the next annual operating budget recommended by the County Manager. • 0 Summary of Capital Policy (Note changes made to the November 19 draft are shown in bold print) Sources of Funds The following sources of funds will be allocated for Capital Projects and Debt Service: All proceeds from the Article 40 and Article 42 one half sales tax The North Carolina General Statutes require that 30 percent of the Article 40 and 60 percent of the Article 42 sales tax revenue be earmarked for school capital projects or debt service on debt issued for school capital projects. Revenue from the property tax as follows: $800,000 The equivalent of 2.7 cents on the tax rate based on valuation as of 1996 -97. This earmarking will be adjusted each revaluation cycle. The amount necessary to retire the 1992 School Bonds. (In 1997 -98 this amount is $4.7 million.) The amount of the reduction in the Human Services function of the County budget (equivalent of one half of one percent of the budget or $50,000) in 1994 -95 for automation projects in Human Services. Utilities Extension Fund - This amount may vary in that it based on the increase in property tax base as a result of expenditures in the Utilities Extension Capital project. The amount currently planned is $35,000 for 1997 -98 and $25,000 for each year thereafter. Impact Fees for each school system. Public School Building Fund Other revenues that are restricted including, payment -in -lieu, grant funds, rental revenue and inmate fees as a result of the new jail addition. Debt Service Prior to funds being allocated for specific projects, all debt service, including private placement financing will be subtracted from the unrestricted funding sources. Allocation All sources of unrestricted revenue, less debt service is then allocated between County and School projects based on 50 percent of the net amount for School projects and 50 percent of the net amount for County projects. Funding between the two school systems will be allocated based on the 10th day enrollment adjusted each year. For example, the 10th day enrollment as of September 1996 will be the basis of the 1997 -2007 Capital Improvements 40 Plan. These percentages will be rounded to one decimal place. Impact fees will be projected and allocated to each school system, although these fees may be used to pay debt service. When impact fees are used to pay debt service, the equivalent amount of the projected impact fee will be allocated to each school system. For the first three years of the planning period (1997 -98, 1998 -99 and 1999 -2000) impact fees are dedicated to the cost of the new schools. Funding Levels It is the intent of the Board of Commissioners to "hold harmless" School projects and County projects as identified by the amount of funding projected in the 1996 -2006 Capital Improvements Plan. To achieve this intention, the following funding options will be used: The difference between the amount of general obligation debt service payments at the peak year of the debt schedule and the actual debt service payment will be earmarked for the Orange County Schools until the time that any shortfall that would have been realized by that system is made up. For County projects, beginning in 1998 -99 the equivalent of one cent on the general fund property tax rate will be necessary. The Board of Commissioners in adopting this policy instructed staff to identify other funding options rather than a tax increase to make up this shortfall. The Board of Commissioners may consider shifting the one cent capital reserve fund to be dedicated to County projects (see Capital Reserve section below). E. Capital Reserve The capital reserve fund, established by the Board of Commissioners in 1995 -96 is equivalent to one cent on the General Fund Property Tax Rate (not adjusted for the 1997 revaluation of property but adjusted for revaluation of real property beyond the 1997 revaluation.) This reserve will accumulate during 1996 -97 and 1997 -98 with these funds used for site acquisition for schools and or recreation, or the combination of both. The Board of Commissioners will evaluate this reserve fund during 1998 -99 to determine if this one cent reserve should continue. F. School/Parks/Recreation It is the intent of the Board of County Commissioners to evaluate each new proposed school in both School Districts for joint use to include park and recreation use. Recurring Capital 40 Recurring capital for each School System will be based on the equivalent of three cents on the General Fund Property Tax Rate (not adjusted for the 1997 revaluation of real property but adjusted each revaluation thereafter.) Funds will be allocated to each school system based on the State Department of Public Instruction planning allocation which is the same method used to allocate current expense appropriation. Planning Period During each fiscal year, the Board of Commissioners shall adopt a ten year Capital Improvements Plan. The ten year plan shall include anticipated County capital expenditures costing $30,000 or more excluding equipment and anticipated school capital expenditures costing $50,000 or more, excluding equipment. Equipment, costing $1,000 or more can be considered as part of the Capital Improvements Plan. The first year of the adopted Ten Year Capital Improvements Plan shall be incorporated into the next annual operating budget recommended by the County Manager. • MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS DECEMBER 7, 1996 GOALS AND OBJECTIVES RETREAT AT THE HOMESTEAD COMMUNITY CENTER The Orange County Board of Commissioners met for their annual retreat on Saturday, December 7, 1996 at 8:30 a.m. at the Homestead Community Center, Chapel Hill, North Carolina. COUNTY COMMISSIONERS PRESENT Chair William L. Crowther and Commissioners Margaret W. Brown, Moses Carey, Jr., Alice M. Gordon and Stephen H. Halkiotis. COUNTY ATTORNEY PRESENT: Geoffrey Gledhill COUNTY STAFF PRESENT: County Manager John M. Link, Jr., Assistant County Managers Rod Visser and Albert Kittrell and Clerk to the Board Beverly A. Blythe (All other staff members will be identified appropriately below) Chair Crowther called the meeting to order. He reviewed the agenda for the day indicating that they would be discussing the present goals and creating and adding new ones as necessary. Several changes were made to the agenda and they are incorporated below. COUNTY FISCAL POLICY CONSIDERATION AND FORECASTS FOR 1996-97 1. Revenue Trends and Projections Budget Director Sally Kost reviewed the revenues and expenditures. In summary she made the following points: 1. The growth in the tax base will increase from an estimated 4.1 % in 1996 -97 to an estimated 23.2% in 1997 -98 with the new revaluation. 2. The impact of revaluation on the general fund tax rate will be a decrease in the rate to an amount of between 14.75 cents /per $100 valuation to 17.75 cents /per $100 valuation. 3. After revaluation, one cent on the General fund property tax will yield $612,000 to $620,000. 4. They had budgeted the growth in the tax base to be 3% and now expect it to be 4% which will be an additional $400,000 5. Sally Kost projects a 3% growth for the one cent sales tax which is collected here in the County and a 6% growth for the 1/2 cents collected statewide and distributed to the County on the basis of population. 6. Sally Kost noted she is not concerned about the $200,000 drop in sales tax revenues because she feels that it will be received when sales tax revenues are received for the last quarter. 7. Other revenue sources should remain the same except for the charge for services when the new jail opens. 8. There will be no dramatic increase in the intangibles tax. 9. Earnings on investments are up to $870,000 and they estimate receiving in 97 -98 $950,000 to $1,000,000 for investment earnings. 10. The fund balance is at 10.4% which means they may want to appropriate more fund balance than they did last year. Sally Kost will let the County Commissioners know about the fund balances for the two school systems as soon as she receives their audits. School enrollments figures were reviewed. The current per pupil cost is $1,782. 7 John Link explained that they are now working on the floorplan. Albert Kittrell is working with the appropriate agencies to ensure the outcomes they want. In answer to a question from Commissioner Brown about the budget, John Link said that they are trying to obtain federal funds and that there may be other funding. They are hoping to receive $238,000 from funds being drawn down for Hurricane Fran. There is some money in the CIP for upgrading the building and they will need additional funds for operational expenses. In answer to a question from Chair Crowther about the Employment Security Commission, Albert Kittrell said that three or four of their employees plan to move into the building and that they will pay rent for their space. They expect to receive some funding from the JOBS Program. The only agencies that will not pay for their space will be Durham Tech and JOCCA. . Commissioner Brown asked how they will know if their goals will be accomplished and suggested an advisory board. Commissioner Gordon agreed with this suggestion. Commissioner Carey suggested developing a permanent structure for this advisory board since this is a County owned facility. Commissioner Halkiotis said that he would be glad to give up his representation on the LOG to serve on the Skills Development Center Committee. John Link will develop a proposal and bring back to the next meeting for the Board's consideration. SCHOOLS 1. Student Population projections update Sally Kost said that she received student population projections but they were incorrect. She • will include the correct figures in a managers memo. Commissioner Halkiotis said that these projections can be done in -house and he will work with Roscoe Reeve in Land Records to provide these within the next couple of months. 2. Review of 10 year school capital plan adopted by Board of County Commissioners and decision on next steps. John Link made reference to the information on the Capital Funding Policy from the October 15, November 19 and December 2 meetings. At the December 2 meeting, the County Commissioners decided to delay their decision on this policy until today. John Link stressed that when considering all the actions they have taken and points they have considered in the last 8 to 10 months, they have come a long way at looking at the needs based on need and not student population. He stressed that the CIP is good for one year and he recommended that the Board adopt the policy that included those changes the County Commissioners made on October 15. Chair Crowther suggested that this could be an agenda item for the next meeting. He supports this policy and feels that it will move the process forward and they can review it for possible changes in the upcoming years. Commissioner Halkiotis said that the County_ has taken care of the upcoming school needs and he wants the County needs addressed. It still bothers him that there may be a tax increase in two years. John Link said that as they go through the needs process, they will hear additional needs that •have not been identified or included in the past. They hope this needs assessment committee will be finished by April. Commissioner Gordon feels that the Board should put in place policies that will accommodate the needs and that this is a good policy. W Chair Crowther asked about the money that will be left at the end of the time and John Link •said that the formula will generate a surplus which could be used to address the needs in whichever system needs it. Commissioner Halkiotis said that both systems have a problem with the surplus left at the end of the plan because they are comparing it to what they have had in the past. He wants to be sure county employees are taken care of including the buildings and citizens who visit those buildings. Commissioner Carey suggested adopting this new Capital Funding Policy and then look at the needs in the future which will dictate how the formula will be changed and how existing resources will be used. Superintendent Neil Pedersen said that they support the new policies and the formula being used. A motion was made by Commissioner Gordon, seconded by Commissioner Carey to adopt the capital funding policy known as option 58 as presented on December 2, 1996. An amendment to delete the reference to a tax increase was included in this motion. VOTE: UNANIMOUS 3. Review Operating Definition of Equity for changes - IF ANY Rod Visser said that the definition of equity uses the per pupil amount from all funding sources. If that figure is within 3 to 4 percent they consider that equity has been achieved. They have not looked •at this issue for the last 2 or 3 years. Commissioner Gordon feels that they need to know what equity is if they want to achieve equity and feels it can be measured by using benchmarks like square feet per pupil. John Link noted that he can see how equity can be achieved on the capital side. However, when talking about operating equity, they are talking about two different philosophies of education and different goals of the two school boards. Commissioner Gordon feels the Board needs to make a decision on the district tax. It would help the Chapel Hill - Carrboro City School Board if they knew when the County Commissioners were going to allow a district tax increase and when they are not going to allow it. The Board discussed equity and the problems of achieving it. Commissioner Carey feels it is important to continue to look at equity to see if the spending per pupil is within 5 %. It would be difficult to develop a policy for the use of the district tax because the Board does not know what is going to be requested from year to year. He feels they need to discuss the use of the district tax since it has been expanded to include capital and especially if one system wants to pay for a building which is above the minimum standards. John Link recommended that they come back.in March or April with a snapshot on equity and see where they are and go from there. He noted that when they put into the formula the cost for the new schools they added 5% each year for inflation. There may be a case where the County Commissioners will say that there is a certain dollar amount available for a school and if the school system wishes to �uild only the base tier school to save money, then the school system could take the remainder of what was included in the CIP for the new school and use it for other capital projects. • APPROVED 12117/96 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS REGULAR MEETING MONDAY, DECEMBER 2, 1996 The Orange County Board of Commissioners met in regular session on Monday, December 2, 1996 at 7:30 p.m. in the courtroom of the Old County Courthouse, Hillsborough, North Carolina. COUNTY COMMISSIONERS PRESENT: Chair Moses Carey, Jr., and Commissioners William L. Crowther, Alice M. Grodon, Stephen H. Halkiotis and Don Willhoit. COUNTY STAFF PRESENT: County Manager John M. Link, Jr., Assistant County Managers Albert Kittrell and Rod Visser, Clerk to the Board Beverly A. Blythe (all other staff will be identified appropriately below) COUNTY ATTORNEY PRESENT: Geoffrey Gledhill NOTE: ALL DOCUMENTS REFERRED TO ARE IN THE PERMANENT AGENDA FILE IN THE CLERK'S OFFICE. RECORDING TAPES ARE KEPT FOR FIVE (5) YEARS. 1. APPROVAL OF MINUTES A motion was made by Commissioner Crowther, seconded by Commissioner Gordon to approve the minutes as presented for August 20, October 1, October 15, November 4 and November 19, 1996 and to approve the minutes for November 13 as corrected. VOTE: UNANIMOUS 2. RESOLUTION OF APPRECIATION A resolution of appreciation was presented to Commissioner Willhoit for his twenty years of service to Orange County as County Commissioner. A motion was made by Commissioner Halkiotis, seconded by Commissioner Crowther to approve the resolution as stated below: ORANGE COUNTY BOARD OF COMMISSIONERS HILLSBOROUGH, NORTH CAROLINA -Tesolution of Commendation for 'Don Willhoit WHEREAS, Don Willhoit was nominated by the voters of Orange County to The Board of County Commissioners in the Democratic Primary of May, 1976, and WHEREAS, he was elected by the voters of Orange County to the Board of County Commissioners in the General Elections of November, 1980, 1984, 1988 and 1992, and WHEREAS, during his 20 years of continuous service, he was elected by his fellow Commissioners as Chair of the Board in December of 1983, 1984 and 1985, and through his knowledge and leadership skills and understanding of those addressing the Board, he always provided reassurance to those who •Commissioner Gordon said she would like to refer this back to staff. She made two suggestions which will be incorporated in the document. One, the right of the County to give this conservation easement back to the Homeowners Association; and two, there be nothing in the document that would preclude that from happening. This was accepted as an amendment to the motion made by Commissioner Carey and seconded by Chair Crowther. After further discussion and determining that the Homeowners Association does exist but owns no property and has no membership, it was decided to adopt this is principle with the language to be worked out and brought back on December 17, 1996. VOTE: AYES, 4; NOS, 1 (Commissioner Halkiotis) C. REVISED CAPITAL FUNDING POLICY FOR SCHOOL AND COUNTY CAPITAL PROJECTS At the November 19th Board meeting, the Commissioners discussed the revised capital funding policy which outlines the capital policy used in developing the Ten Year Capital Improvements Plan. The Board of Commissioners asked Staff to make certain revisions to the draft policy presented at the November 19th meeting. The revisions are listed in the abstract. John Link said that he contacted both school superintendents and both responded in writing as distributed. Dr. Pedersen, Superintendent of the Chapel Hill- Carrboro City School District, endorses the policy. Dr. Harrison, Superintendent of the Orange County Schools, expressed concerns about their shortfall in revenue for long -term capital needs which are not addressed including additional high school space. Commissioner Halkiotis stated that he is opposed to 5B - the one part where there is a surplus of $4.5 million plus for one system and $167,000 negative for the other system. He hopes that both of these numbers could be zero. He is concerned about the needs in the County facilities that •have not been addressed. He mentioned that parking lots are not paved, bathrooms are falling apart, senior citizens and little children can barely see to eat and read in the Northern Human Services Center. He will not support a plan that talks about possible tax increases and yet leaves a surplus when there are county facilities that need repair. He would like to see both of these end numbers at zero because there are needs for County government and County employees and all County citizens. In answer to a question from Chair Crowther, Budget Director Sally Kost said that the numbers will need to be updated now that they have the real numbers for the Southern Village Elementary School debt service. She will also be updating the sales tax numbers which were presented at the October 15th meeting. John Link said that what they have done is pursue a plan, a formula or process which has gotten them to this point. He suggested that this may be an item the Board may wish to continue discussing on Saturday. He will be looking for direction from the Board. Commissioner Carey agreed with Commissioner Halkiotis about the ending balances at the end of this ten year plan. He realizes the plan is not cast in stone and will be updated each year. He would like to see some of the savings generated by favorable financing programmed into the County facilities that need repairs or maintenance. He noted that if $4.5 million is left, Chapel Hill - Carrboro City School District will generate needs for that money. A motion was made by Chair Crowther, seconded by Commissioner Carey to continue the discussion of this issue at the Board's retreat scheduled for Saturday, December 7, 1996. VOTE: UNANIMOUS • D. PROPOSED CHANGES IN THE ANIMAL CONTROL ORDINANCE ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No. 14. - L ACTION AGENDA ITEM ABSTRACT Meeting Date: December 2, 1996 SUBJECT: Revised Capital Funding Policy for School and County Capital Projects DEPARTMENT: County Manager/Budget PUBLIC HEARING: YES: NO: x BUDGET AMENDMENT: YES: NO: x ATTACHMENT(S): Revised Policy (1) Current Capital Policy (2) INFORMATION CONTACT: John Link, ext 2300 Sally Kost, ext 2151 TELEPHONE NUMBERS: Hillsborough - 732 -8181 Chapel Hill - 968 -4501. Durham - 688 -7331 Mebane - 227 -2031 PURPOSE To adopt a revised capital funding policy for School and County Capital Projects. BACKGROUND At the November 19 Board meeting, the Commissioners discussed the revised capital funding policy, which outlines the capital policy used in developing the Ten Year Capital Improvements Plan. This policy implements the funding approach as presented in Option 5B of the long range school capital funding plan, approved by the Board of Commissioners at their October 15, 1996 meeting. This option includes a combination of sales tax and property tax revenue for capital projects. The current policy (Attachment 2) provides that 80 percent of the Article 40 one half cent sales tax revenue and 60 percent of the Article 42 one half cent sales tax revenue is dedicated to School projects, with the balance of this revenue dedicated to County projects. The Board of Commissioners asked Staff to make certain revisions to the draft policy presented at the November 19 meeting. These revisions are: Include in the policy, reference to the required uses (as stated in the General Statutes) of the Half Cent Sales Tax Revenue. This information is included under Al of the policy. • 2. Provide the information that was shown in Number 10 of the old policy (see • Attachment 2). This includes reference to the planning period of the Capital Improvements Plan (ten years) and states the minimum project amounts for School and County projects. (See H on the revised policy at Attachment 1) Staff recommends no change in the minimum project amounts with one exception. County projects remain at a minimum of $30,000 and School projects remain at $50,000. Staff recommends that equipment be excluded from these minimum levels, and that equipment costing $1,000 or more, be considered as part of the Capital Improvements Plan. The intent of this change is to allow automation equipment/systems, vehicles, heating/cooling systems, to be part of the Capital Improvements Plan. The Manager has been in contact with the Superintendents of both school systems concerning the proposed capital funding policy, and will be prepared to respond verbally to the Board's questions. RECOMMENDATION The Manager recommends that the Board adopt the revised capital funding policy. u 10 lie Attachment 1 Summary of Capital Policy (Note changes made to the November 19 draft are shown in bold print) A. Sources of Funds The following sources of funds will be allocated for Capital Projects and Debt Service: 1. All proceeds from the Article 40 and Article 42 one half sales tax The North Carolina General Statutes require that 30 percent of the Article 40 and 60 percent of the Article 42 sales tax revenue be earmarked for school capital projects or debt service on debt issued for school capital projects. 2. Revenue from the property tax as follows: • $800,000 • The equivalent of 2.7 cents on the tax rate based on valuation as of 1996 -97. This earmarking will be adjusted each revaluation cycle. • The amount necessary to retire the 1992 School Bonds. (In 1997 -98 this amount is $4.7 million.) • The amount of the reduction in the Human Services function of the County budget (equivalent of one half of one percent of the budget or $50,000) in 1994 -95 for automation projects in Human Services. • Utilities Extension Fund - This amount may vary in that it based on the increase in property tax base as a result of expenditures in the Utilities Extension Capital project. The amount currently planned is $35,000 for 1997 -98 and $25,000 for each year thereafter. 3. Impact Fees for each school system. 4. Public School Building Fund 5. Other revenues that are restricted including, payment -in -lieu, grant funds, rental revenue and inmate fees as a result of the new jail addition. B. Debt Service Prior to funds being allocated for specific projects, all debt service, including private placement financing will be subtracted from the unrestricted funding sources. C. Allocation All sources of unrestricted revenue, less debt service is then allocated between County and School projects based on 50 percent of the net amount for School projects and 50 percent of the net amount for County projects. Funding between 3 4 Attachment 1 the two school systems will be allocated based on the 10`h day enrollment adjusted each year. For example, the 10'h day enrollment as of September 1996 will be the basis of the 1997 -2007 Capital Improvements Plan. These percentages will be rounded to one decimal place. Impact fees will be projected and allocated to each school system, although these fees may be used to pay debt service. When impact fees are used to pay debt service, the equivalent amount of the projected impact fee will be allocated to each school system. For the first three years of the planning period (1997 -98, 1998 -99 and 1999 -2000) impact fees are dedicated to the cost of the new schools. D. Funding Levels It is the intent of the Board of Commissioners to "hold harmless" School projects and County projects as identified by the amount of funding projected in the 1996- 2006 Capital Improvements Plan. To achieve this intention, the following funding options will be used: • The difference between the amount of general obligation debt service payments at the peak year of the debt schedule and the actual debt service payment will be earmarked for the Orange County Schools until the time that any shortfall that would have been realized by that system is made up. • For County projects, beginning in 1998 -99 the equivalent of one cent on the general fund property tax rate will be necessary. The Board of Commissioners may at that time consider shifting the one cent capital reserve fund to be dedicated to County projects (see Capital Reserve section below). E. Capital Reserve The capital reserve fund, established by the Board of Commissioners in 1995 -96 is equivalent to one cent on the General Fund Property Tax Rate (not adjusted for the 1997 revaluation of property but adjusted for revaluation of real property beyond the 1997 revaluation.) This reserve will accumulate during 1996 -97 and 1997 -98 with these funds used for site acquisition for schools and or recreation, or the combination of both. The Board of Commissioners will evaluate this reserve fund during 1998 -99 to determine if this one cent reserve should continue. F. School /Parks /Recreation It is the intent of the Board of County Commissioners to evaluate each new • proposed school in both School Districts for joint use to include park and recreation use. Attachment 1 G. Recurring Capital Recurring capital for each School System will be based on the equivalent of three cents on the General Fund Property Tax Rate (not adjusted for the 1997 revaluation of real property but adjusted each revaluation thereafter.) Funds will be allocated to each school system based on the State Department of Public Instruction planning allocation which is the same method used to allocate current expense appropriation. H. Planning Period During each fiscal year, the Board of Commissioners shall adopt a ten year Capital Improvements Plan. The ten year plan shall include anticipated County capital expenditures costing $30,000 or more excluding equipment and anticipated school capital expenditures costing $50,000 or more, excluding equipment. Equipment, costing $1,000 or more can be considered as part of the Capital Improvements Plan. The first year of the adopted Ten Year Capital Improvements Plan shall be incorporated into the next • annual operating budget recommended by the County Manager. POLICY FOR INSERTION INTO THE POLICY MAriU AL rMEETING DATE: September 22, 1987 EFFECTIVE DATE: September 22, 1987 POLICY: NLiKBER: P:0290 REVISIONS: Attachment 2 ORANGE COUNTY CAPITAL POLICIES 1. Eighty percent (80 %) of the original half -cent sales tax revenue and sixty percent (60 %) of the additional half - cent sales tax revenue shall be dedicated to school capital expenditures. Such expenditures shall be limited to acquisitions of or improvements to land, buildings, and equipment costing $50,000 or more. Any year in which such revenues exceed such expenditures, the excess shall be transferred to the School Capital Reserve Fund. 2. Twenty percent (20 %) of the original half -cent sales tax revenue and forty percent (40 %) of the additional half - cent sales tax revenue shall be dedicated to county capital expenditures. Such expenditures shall be limited to acquisitions of or improvements to land, buildings, and equipment costing $30,000 or more. Any year in which such revenues exceed such expenditures, the excess shall be transferred to the County Capital Reserve Fund. 3. The School Capital Reserve Fund shall be used to accumulate funds for acquisitions of or improvements to land, buildings, and equipment for school purposes costing $50,000 or more. 4. The County Reserve Fund shall be used to accumulate funds for acquisitions of or improvements to land, buildings, and equipment for county purposes costing $30,000 or more. 5. A vehicle Capital Reserve Fund shall be established and used to accumulate funds for the acquisitions of county vehicles. 6. Each year, an amount equal to $800,000 minus the amount required for that year's debt service on school bonds issued prior to the 1987 -88 fiscal year shall be appropriated in the General Fund budget and transferred to the School Capital Reserve Fund. 10 Attachment 2 7. Debt incurred under the "two- thirds net debt reduction" rule shall be limited to instances where the health and safety of Orange County citizens are threatened. S. The amount to be appropriated to each school system for recurring capital expenditures shall be $750,000. This appropriation shall be in effect for a period of at, least five years and includes funds for roof repairs. 9. County capital expenditures with a cost of $30,000 or more and useful life of at least five years shall be considered capital projects and accounted for in capital project funds. 10. During each fiscal year, the Board shall Adopt a Five Year Capital Improvements Program. The FZ7E -Year Program shall include anticipated county capital expenditures costing $30,000 or more and anticipated school capital expenditures costing $50,000 or more, as well as available financing sources. The first year of '-:,e dopted -Year Capital Improvements Program shall ccrporate into the.riext annual operating budget c'o en-led #so the County Manager. 10 7 �4c�va POLICY FOR INSERTION INTO THE POLICY MANUAL' D, ` 15 MEETING DATE: December 7, 1996 NUMBER: P:01 EFFECTIVE DATE: December 7, 1996 REVISIONS: POLICY: Orange County Board of Commissioners Capital Funding Policy A. Sources of Funds The following sources of funds will be allocated for Capital Projects and Debt Service: All proceeds from the Article 40 and Article 42 one half sales tax The North Carolina General Statutes require that 30 percent of the Article 40 and 60 percent of the Article 42 sales tax revenue be earmarked for school capital projects or debt service on debt issued for school capital projects. 2. Revenue from the property tax as follows: $800,000 The equivalent of 2.7 cents on the tax rate based on valuation as of 1996 -97. This earmarking will be adjusted each revaluation cycle. The amount necessary to retire the 1992 School Bonds. (In 1997 -98 this amount is $4.7 million.) The amount of the reduction in the Human Services function of the County budget (equivalent of one half of one percent of the budget or $50,000) in 1994 95 for automation projects in Human Services. Utilities Extension Fund - This amount may vary in that it based on the increase in property tax base as a result of expenditures in the Utilities Extension Capital project. The amount currently planned is $35,000 for 1997 -98 and $95,000 for each year thereafter. 3. Impact Fees for each school system. 4. Public School Building Fund 5. Other revenues that are restricted including, payment -in -lieu, grant funds, rental revenue and inmate fees as a result of the new rail auction. B. Debt Service Prior to funds being allocated for specific projects, all debt service, including private placement financing will be subtracted from the unrestricted funding sources. As an exception, the Orange County Schools are responsiblefor funding directly from their IN pay-as-you-go capital allocations, that portion of the cost of a new high school in t/ze Prior to funds being allocated for specific projects, all debt service, including private • placement financing will be subtracted from the unrestricted funding sources. As an exception, the Orange County Schools are responsiblefor funding directly from their pay-as-you-go capital allocations, that portion of the cost of a new high school in t/ze Orange County School system beyond the $12.5 million bonds approved by voters for tizat school in November 1997 Allocation All sources of unrestricted revenue, less debt service, is then allocated between County and School projects based on 50 percent of the net amount for School projects and 50 percent of the net amount for Country projects. Funding between the two school systems will be allocated based on the 20th day enrollment adjusted each year. For example, the 20th day enrollment as of September 1998 will be the basis of the 1999 -2009 Capital Improvements Plan. These percentages will be rounded to one decimal place. Impact fees will be projected and allocated to each school system, although these fees may be used to pay debt service. When impact fees are used to pay debt service, the equivalent amount of the projected impact fee will be allocated to each school system. For the first three years of the planning period (1997 -98, 1998 -99 and 1999 -2000) • impact fees are dedicated to the cost of the new schools. All funds allocated to capitalprojects are to be accounted for in a Capital Project Fund under a Project Ordinance adopted by the Board of Commissioners. The Project Ordinance will include a detailed break down of each cost category related to the project, as outlined in the Sample Capital Project Ordinance at Attachment 1, which is incorporated by reference into this policy. Whenever County or School project bids exceed budget or come in lower than projected, or any otherfactor affecting the project budget occurs, County departments or the school systems would be expected to present revised capital project ordinances for adoption by the Board of Commissioners. D. Funding Levels It is the intent of the Board of Commissioners to "hold harmless" School projects and County projects as identified by the amount of funding projected in the 1996 -2006 Capital Improvements Plan. To achieve this intention, the following funding options will be used: The difference between the amount of general obligation debt service payments at the peak year of the debt schedule and the actual debt service payment will be earmarked for the Orange County Schools until the time that any shortfall that • would have been realized by that system is made up. For County projects, beginning in 1998 -99 the equivalent of one cent on the general • fund property tax rate will be necessary. The Board of Commissioners in adopting this policy instructed staff to identify other funding options rather than a tax increase to make up this shortfall. The Board of Commissioners may consider shifting the one cent capital reserve fund to be dedicated to County projects (see Capital Reserve section below). E. School/parks Capital Reserve The school /parks capital reserve fund, established by the Board of Commissioners in 1995 -96, receives annual allocations equivalent to one cent on the General Fund Property Tax Rate (not adjusted for the 1997 revaluation of property but adjusted for revaluation of real property beyond the 1997 revaluation.) This reserve will accumulate during 1996 -97 and 1997 -98 with these funds used for site acquisition for schools and or recreation, or the combination of both. The Board of Commissioners will evaluate this reserve fund during 1998 -99 to determine if this one cent reserve should continue. F. School/Parks/Recreation It is the intent of the Board of County Corurnissioners to evaluate each new proposed school in both School Districts for joint use to include park and recreation use. G. Recurring Capital Recurring capital for each School System will be based on the equivalent of three cents on the General Fund Property Tax Rate (not adjusted for the 1997 revaluation of real property but adjusted each revaluation thereafter.) Funds will be allocated to each school system based on the State Department of Public Instruction planning allocation which is the same method used to allocate current expense appropriation. H. Planning Period During each fiscal year, the Board of Commissioners shall adopt a ten year Capital Improvements Plan. The ten year plan shall include anticipated County capital expenditures costing $30,000 or more (excluding equipment) and anticipated school capital expenditures costing $50,000 or more (excluding equipment). Equipment costing $1,000 or more can be considered as part of the Capital Improvements Plan. The first year of the adopted Ten Year Capital Improvements Plan shall be incorporated into the next annual operating budget recommended by the County Manager. • ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 10, 2007 Action Agenda Item No. (0 _ b SUBJECT: County Capital Funding Policy Amendments DEPARTMENT: Budget PUBLIC HEARING: (Y/N) I No ATTACHMENT(S): INFORMATION CONTACT: Donna Coffey, (919) 245-2151 ............ ............................... PURPOSE: To amend the County's Capital Funding Policy to include use of the anticipated NC Education .Lottery proceeds, intent for funding for recurring capital and presentation of future Capital Investment Plans. BACKGROUND: Over the last few months, staff has provided to the Board a number of items of interest that may potentially affect the development of the upcoming 2007-17 County Capital, Investment [CI P) plan, the 2007-08 Annual Operating Budget, or future years' budgets. Examples of recent updates include discussions related to the anticipated decrease in projected revenues from the North Carolina Education Lottery along with the General Assembly's interest in providing local property tax assistance to taxpayers throughout the State. Both of those items would have negative impacts on the County's budget. Lottery Proceeds At the most recent work session on March 20, 2007, the County Manager led the Board through the County's current capital funding formula and outlined how staff determines annual pay-as- you-go revenues for the County and each school district. Absent from the current policy are the County's anticipated receipt of future NC Education Lottery proceeds. Staff has advised the Board, on a number of occasions this year, that it is imminent that the County's share of lottery proceeds will fall short of the original budgeted amount of $2.4 million because the State over estimated ticket sales. Based on the most recent projections from the State, the County can expect to receive about $2 million this fiscal year — around $400,000 short of budget. It is important to note that with receipts of only two quarters-so far this year, the State could possibly adjust its year-end projections again before June 30, 2007.- Given the County's experience with lottery proceeds this year, staff has recommended that the Board consider budgeting future proceeds "in arrears" — meaning funds would be budgeted in the year after the State distributes them. For example, lottery proceeds distributed to the County during the upcoming 2007-08 fiscal year would be budgeted the following fiscal year, 2008-09. The remaining question regarding lottery proceeds centers around how the Board of County Commissioners chooses to use the .monies. In accordance with NC General Statutes, a county may use lottery monies to pay for school construction and renovation projects and to retire indebtedness incurred for school construction projects incurred on or after January 1, 2003. Over the last few months, staff has analyzed various ways to balance school needs and fiscal responsibility with regard to use of future years lottery proceeds. The Board may recall that during the March 20 work session both the Chapel Hill Carrboro City Schools (CHCCS) and the Orange County Schools (OCS} presented their long-range capital needs to Commissioners. A common thread between the two districts is the need for updating their older facilities. Examples of areas that each district identified as priority needs include replacement of aged mechanical systems and windows with newer, more efficient ones. The requests from both districts totaled $25.3 million ($14.4 million for CHCCS and $10.9 million for OCS) excluding new facilities construction and technology upgrades. It is important to note that the County's current debt issuance plans of $96.6 million . includes about $5.1 million for CHCCS to address renovation needs identified during the 2001 bond and alternative financing planning process; however those plans do not 'Include financing to address the school facility needs identified by the districts on March 20■ It is fair to say that, based on first year experiences with the lottery, it is not likely that the $2 million in annual lottery revenues passed on to the County will allow either district to make a huge dent in meeting the needs of their older facilities. On the other hand, it is a valid point that assuming a fifteen-year financing arrangement at an annual interest rate of between 5 and 6 percent, $2 million in annual debt service would equate to somewhere between $17 million and $19 million in face value debt. During the March 20 work session, the Board Commissioners directed the Manager to discuss the use of lottery proceeds with school district officials. The use of lottery proceeds was a topic of discussion during the March 27, 2007 Manager and Superintendents meeting. In addition, the School Collaboration Work Group plans to discuss the topic during its April 9, 2007 meeting. The Manager will update the Board of the outcome of that meeting during discussion of this agenda item on April 10. Funding for Recurring Capital In accordance with the current Capital Funding Policy, the equivalent of four cents on the annual ad valorem property tax is dedicated to funding recurring capital expenditures for schools (three cents) and county (1 cent). As mentioned during recent capital related work sessions, Commissioners have deferred fully funding the recurring capital portion of the policy since the adoption of the pay-as-you-go funding formula in 2005 due to fiscal constraints. The Board's P has been to phase in full funding of recurring capital over time. To that end, the Board has allocated the equivalent of two cents, for each of the last two fiscal years, to school recurring capital. The additional two cents needed to fully fund the policy (one additional cent for schools and one cent for County) has not been funded to date. During the March 20 work session, Commissioners agreed that the Policy should declare the Board's intent to fully implement funding but also recognize the fact that there will be times when the County will be bound fiscally and unable to achieve full funding. During those times, Commissioners may find it necessary to depart from the Policy. Presentation of Future Capital Investment Plans Over the last few years, while the Board has adopted annual capital budgets for School and County pay-as-you-go projects, adoption of a full ten-year capital plan has been deferred. During the March 20 work session, Commissioners articulated the need to get back on track and adopt a full ten-year CI each year. The Board also expressed a desire for staff to present the plan earlier in the fiscal year and to conduct a related public hearing before Board approval. FINANCIAL IMPACT: Financial impacts are included in the background information above. RECOMMENDATION(S): The Manager recommends that the Board of County Commissioners: (1) Direct staff to amend the current, County Capital Funding Policy to include the following provisions: a. Beginning in fiscal year 2007-08, the County will budget NC Education Lottery proceeds "in arrears" — meaning that funds will be budgeted in the year after the State distributes them. For example, lottery proceeds distributed to the County during the upcoming 2007-08 fiscal year would be budgeted the following fiscal year, 2008-09; b. NC Education Lottery monies will be dedicated to repay debt service for debt issued after fiscal year 2006-07 to address school facility renovation needs; c. It is the intent of the Board of County Commissioners to dedicate the equivalent of four cents on the annual ad valorem property tax to funding recurring capital expenditures for schools (three cents) and county (1 cent). However, there will be times when the County will be bound fiscally and unable to achieve full funding. During those times, Commissioners may find it necessary to depart from the Policy. d. During October of each fiscal year, the County Manager shall present, to the Board, ten-year County and School capital needs and funding plans in the form of a Capital Investment Plan. Each year, the Board of Commissioners shall conduct a public hearing on the Manager's Recommended CIP during November and subsequently adopt a ten-year Capital Investment Plan [CI P). e. The first year of the adopted ten-year Capital Investment Plan shall become the annual capital budget and incorporated into the next annual operating budget recommended by the County Manager. Upon approval of the amendments outline above, staff will update the County Capital Funding Policy and include adoption of the final Policy as a Consent Agenda item on the April 24, 2007 agenda. (2) Request that the CHCCS and OCS Boards of Education prioritize existing school facility needs and present those needs with the School Collaboration Work Group for their review during Summer 2007. Based on the outcome of the Collaboration Work Group's review and recommendations: a. Direct County staff to analyze how the school facility needs can be accommodated in the County's debt issuance plans for fiscal year 2007-08; b. Present the outcomes of these recommendations at the September 2007 Joint Meeting of the Boards of Education and County Commissioners; (3) Direct staff to: a. Prepare an 'Interim County and School pay-as-you-go capital budget for fiscal year 2007-08 to be presented to Commissioners in conjunction with the County's annual operation budget in May 2007; b. Present, in October 2007, ten-year Capital Investment. Plan that includes the outcomes of the School Collaboration Work Group as outlined in item 2 (above). r� Fra `i7c w� .#.w �. +cn '}s' •. ,�. �. .^� .. #�4{4c' .. Y+a3 'ac' 'cam •#Y4{4r $� � �'a' - Rn ccr �0` yr � Yx "R �Y ' . 1p M1 t � U! 'R+` �'`T x�i' •. r i4 � � � nl � u�' # rn` ' 'R+` � � � � � � ,� 5E- 4-t rJ 8 'R+` # ' 'F' � � '.,r^ N . wn' � ASP 'ac' `7� . Rp '.,r •,p' �• °,m �' I ,� � .� �'�.•� ar�' x aEt � � �` �� �' o', r.,� i{ .m u cv o', co- . � u � ' u ar.. OH f. . -W k s DD I . o . ,x �''' i a-s• o. 3?'rs I I a. � I s • q R• i li � # ib iS� w ?` 45' '#. o- . i'h G [l%�k �` rL � 'NJ x a9' !� i x, x, z AL x• ill }} 17, 1 ZY } SY 4 iS' i•F u�+ IIc, Y Fr a_' ' lk sSF t ¢-29' - {l% ilk lk .D 'ifl ?` r si^ ,� 'k �F lS ; "P"l^s F '� � p•+ p•+ I .j I ,W dS, 4j+ � ril W V'k x /.° �(% •y+ - I y '° {p I �, . • p �� +� a; �:o `�' ' � ' }'� ac r I ac k� ac ac a; � a' �' a� �S' �.. :7 sipp,, d�E�t s76 ,,SSxx d�E�t sipp,, T b4 y ?S = c� — x x �S an •' -0# c� c� 5 rd' c� ai nor �o- x •' s �' � � �} �, ¢1 I � � ,. _ I . � • '� xi � ASS � � .x � b" I '� �E Zwf �rlvt AM 0 1 ki MU'llo itl. a q FSA iorl� I �0 ff Q*XP LM L-� AIR w silrims FIN III 9 W t. iT I � 711 M 1., 0 ORANGE COUNTY BOARD of COMMISSIONERS ACTION AGENDA ITEM ABSTRACT. Meeting Date: April 24, 2007 Item No. SUBJECT: A roval of Countv Capital Funding Polic DEPARTMENT: Budget PUBLIC HEARING: (Y/N) LNO--] MTACT ATTACHMENT(S): County Capital Funding Policy [WORWAT[Of Loo Donna Coffey, 91 245-2151 Polio � include use Of the anticipated E: To rove the County s Capital Funding re PR p recurring capital and presentation of future Education Lott proceeds intent for funding for p Cad P Capital Investment Plans. . FUND: Over the last few months: staff h provided the Board with number of ACIR # the upcoming ��-'l Currfi Of interest that rT�y potentially affect the development � ets* Nterns Annual Operating Budget, or future years budgets. Capital Investment (CIP) P lan, the 9- Ann � .. projected e discussions related to the anticipated decrease in,pro Examples f recant updates include � Assembly's interest ' Education Lottery along with the General As y revenues from the forth Carolina Both of thane items • c assistance to taxpayers throughout the State. �r� providing local property to would have negative impacts on the County's budget. ions related to the County's Capital Funding April � �, the hoard tool a number of act kern On Ap process. The items below summarize actions to Polio and Capital investrnent Plan (CIP) p by the Board* Amend the County's Capital Funding Policy with the following changes: � the Count will budget Education lottery (a) Beginning �r� fiscal year �� � y � aver ��. � � will be budgeted �n the year proceeds in arrears — meaning that funds g p ctT� le loge proceeds distributed to the the State distributes. therm. Fore p r • � -off fiscal. year would b budgeted the County during the upcoming � y t following fiscal, year, 2008 --0; option to dedicate its share f the annual NC (b) each school district r�li have the op ` after Education Lotto monies either (1) to repay d bt serve for debt issued Bd a m school facility renovation needs or fiscal year � t address col .. `its pay-as-you-go u -o funding to address soh additional revenue to the d�str� p � � need eds. if either district chooses facility renovation ne to dedicate Lottery pr e -cover annual debt debt service, Lottery proceeds, sufficient to repay payments ment for principal and interest, will be dedicated for the life of the financing. N (c) It is the intent of the Board of county Commissioners to dedicate the equivalent of four cents on the annual ad valorem property tax to funding recurring capital expenditures for schools (three coats) and . county �1 cent). However, there will. be times when the county will be bound fiscally and unable to achieve full funding. During those times, Commissioners may find it necessary to depart from the Policy= During the 2008 --18 capital Investment Plan development process, the Board will consider a timetable for phasing in the additional two — cents necessary to fully the recurring capital component of this policy. (d) During October of each fiscal year, the county Manager shall present, to the Board, ten -year county and School capital needs and funding plans in the form of a capital Investment Plan. Each year, the Board of Commissioners shall conduct a public hearing on the Manager's Recommended cl P during i November and subsequently adopt a tern -year capital Investment Plan CIP . (e) The first year of the adopted ten -year capital Investment Plan shall become the basis for the annual capital budget and incorporated into the next annual operating budget recommended by the county Manager. 2) Request that the c ccS and OCS Boards of Education prioritize existing school facility needs and present those needs with the School collaboration Work Group for their review during Summer 2007. Based on the outcome of the collaboration wort Group's review and recommendations: (a) Direct County staff to analyze how the school facility needs can be accommodated in' the county's debt issuance plans for fiscal year 2007-08 and beyond. F (b) Present the outcomes of these recommendations at the September 2007 Joint Meeting of the Boards of Education and county Commissioners. Y Commissioners also directed staff to; (a) Prepare an interim county and School pay -as- you -go capital budget for fiscal year 2007 -08 to be presented to Commissioners in conjunction with the County's annual operation budget in May 2007. (b) Present, in October 2007, ten -year capital Investment Plan that includes the outcomes of the School collaboration Work Group as outlined in item (above). During the April 10 meeting,, Commissioner Gordon requested staff to contact state officials to see if there was a way for the county to request Lottery proceeds prior to them being expended by the county. Budget Director Donna Coffey spoke with NC Department of Public Instruction and was advised that the county can request Lottery funds before actually expending there as lone as 1 the county anticipates making the expenditure within the fiscal year and there are funds in the account to request. It is important to note that in accordance with General Statutes, the Lottery Commissicin is required to make a deposit into the school construction account four times per gear. The Statute is silent on specific dates or timing of those deposits. This gear, for example, the Lottery Commission has made two deposits on a quarterly basis -- one in October 2006 and the other in February 2007, However, according to staff from the Department of Public Instruction, if the Commission chose to make four deposits in four consecutive days at. the end of the fiscal gear, they would comply with the statute. To that end, it is suggested that an additional .amendment to the County's capital Funding Policy be made~ C ears County staff Wit the first quarter of each y both • cal ear -, during the Lottery fund for �eg�nn�ng �n � of monies accumulated to either the state, the amount urrt he fiscal year for request, from those funds � _ 't s with the intent of expending identified each districts school dttr�ct • • School capital projects '* payments or individual debt erv� � their ten-year capital plan. their annual update of the during h • • n�llllor� lcl rtes receiving -0 the County ant p d debt for fiscal year tie on school relate �ic��.. iMPACT: those funds for debt end Will and intends to upend fro the Lottery � Lottery proceeds a � # future years proceeds r 007- ua 1, 200. anticipate - beginning to fiscal year incurred after January act round section above g funds will ` accordance lth itet '1a to the " arrears" . meaning he to accordart Education Lottery proceeds to proceeds t will budget C dot • m, For e a piel lottery of the un the tta d�trtbute the a budgeted the budgeted in the year after .. fiscal- year would g he budge to the upcoming X007 uted to the County during distributed fiscal gear, 2008-09, following . + d of county commissioners ►iDATIOi . The Manager reconnn�et�d that the hoar Count Capital Funding y approve the y Adopted 04/2412007 4 Orange County Board of Commissioners Proposed Capital Funding Policy Preamble This apital funding policy is the product of extensive analysis and deliberation. ` this � erat�on� The intent of this policy is to reflect greater priority than there has been historically y o n providing funding for county projects, with paficular emphasis directed at enhanced upkeep of existing, county facilities; The policy reflects the implementation of the Board of Commissioners' � rr�issioners resolution of November 1 , 2004 that the Board `'does hereby adopt In policy of allocating a target of 60 percent of capital expenditures for school projects and 40 percent f capital expenditures for court projects over the decade I� l beginning in calendar year 2005 ": This policy continues the County's and hr i � � t principle torical practice of funding all school and county related debt service obligations before allocating an others g School or county capital funds {for other purposes. Long Range capital Investment Flan During October of each fiscal year, the County Manager shall resent p , to the Ford, ten- year county and School capital needs and funding it cans in the form of a Capital pal Investment Plan. Each year, the Board of Commissioners shall conduct a public hearing the Manager's Recommended clP during November and subsequently adopt a ten - year Capital Investment Plan lP). The first year of the adapted tern- -gear Capital Investment Plan shall become une the bass for the annual capital budget and incorporated into the next annual operating p rating budget recommended by the county Manager. County and School recurring capital needs will be identified and reviewed e during each annual operating budget cycle, and recurring capital appropriations will be approved b Board p pp the d of Commissioners a -an element of each annual Orange County Budget Ordinance. The ten -rear plan for long -range capital funding shall include= Anticipated County capital expenditures costing or more equipment g Anticipated school capital expenditures costing $50,000 or more excludin equipment) . . g • Equipment costing $5,000 or more Sources of Funds The county will allocate the following sources of funds for count and B ' . chox�l debt service and long -range and recurring capital: • . All proceeds from the Article 40 and Article 42 half-cent sales takes. (The North Carolina General Statutes require that 30 percent of the Article 40 (NCGS§105-487(a)) and 60 percent of the A►ticle 42 (NCGS§105-502(a)) sales tax Adopted 041241200 revenue be earmarked for public school CaPital outlay as defined in I GS §10 -426(0 or to retire any indebtedness incurred by the county for these purposes) 0 School Construction Impact Fees for each school system. • Public School Building Capital Fund monies ue sufficient to all debt service on remaining 1988, '1992, 1997, Property tai revenue P or 200 bonds, 9 or refinancings thereof$ as well as alternative financing programmed in the debt issuance schedule approved the Board on May , 2004 and any subsequent updates to that schedule as the Board may approve. • It is the intent of the Board of County commissioners to dedicate the equivalent of four annual ad valorem property tax to funding recurring capital expenditures cents on the p p � the cents acrd county I cent). However, there will be titres when for schools (three } e bound fiscal! and unable to achieVe full funding* During those dines, County will � b o�-�I 8 be may find it necessary to depart from the Policy. During the 20 cr�rn��ro y ' t Plan development process, the Board will consider timetable for Capital Investment p P ent phasing in the additional tiro— cents necessary t fully the recurring capital component of this policy. to a abut need not, be adjusted with each qua fr nnial revaluation o (This 4�n� rate y, . "revenue neutral" earmarking) . the count will budget IBC Education Lottery Beginning �n fiscal year 2007 � y g , r�. arrears" — me n-In that funds will be budgeted in the year after the State proceeds �n 9 distributes thee. For example, le lottery p roceed distributed to the county during the upcoming 007-0 fiscal year would b budgeted the following fiscal year, 2008 -09. � Debt service elated debt service III county and School r obligations would be funded prior to allocation 9 of programmed funding for any other capital purposes. All proceeds from annual allocations of North Carolina Public School Building capital Funds will be earmarked explicitly to pay for eligible school debt service. Schools' impact fees will be earmarked explicitly to pay for debt service on Orange county B p projects that involved the construction of new school space in the orange County Schools ystern Chapel Fill- carrboro City Schools' imptict fees will be earmarked explicitly to pay p for debt service on projects that involved the construction of n school space in the Chapel bill- carrboro city Schools system, NIC Education Lottery Proceeds Beginning �n fiscal ` year 2008 -09 each school district will have the option to dedicate its l l Education Lottery monies either (1) to repay debt service for debt share of the annual � ear 2006 -�07 to. address school facility renovation needs or (2) as an issued after fiscal . . .. to the districts pay-as-you-go funding to address school facility additional revenue If either district chooses to dedicate Lottery proceeds to repay debt renovation needs. � service, Lottery proceeds, sufficient to cover annual debt payments for principal a nd interest, will be dedicated for the life of the financing. . Adopted 04/2412007 Beginning in fiscal year 2008-09, during the first quarter of each year, County staff will request, from the State, the amount of monies accumulated in the Lottery fund for both school districts with the intent of expending those funds during the fiscal year for either debt service payments or individual School capital projects as identified by each districts during their annual update of their ten -year capital plan. Allocation With the exception of the revenues earmarked for School and County recurring capital and the Construction Management function, the net proceeds of all programmed revenue sources after debt service obligations 'have. been satisfied will be allocated on the basis of 0% to schools and 0% to the County. Capital funding for each tern -year capital planning period will be - allocated between the two school systems based on certified student membership as of November 15 each year. Capita! Project ordinances — Form and Purpose All funds allocated to capital projects are to be accounted for in a Capital Project Fund as authorized by a Board of County Commissioner approved Capital Project ordinance. The Capital Project ordinance will include a detailed break down of each major cost category related to the project. In accordance with the Board of County Commissioners November 2000 adopted "'Policy on Planning and Funding School Capita! Projects", whenever School capital project bids are either higher or lower than originally projected, or any other factor affecting the project budget occurs, the affected school system is expected to work with County Management.- and Budget staff to present revised capital project ordinances for adoption by the Board of Commissioners. The same expectation shall be applicable for changes to County Capital project budgets. Community Use of Schools It is the intent of the Board of County Commissioners to evaluate each new proposed school in both School Districts for joint community use opportunities, including, but not limited to, park and recreation use. Recurring Capital As outlined in the "Sources of Funds' section of this policy, recurring capital funding for the Schools and County will be based on the estimated proceeds of 4 cents on the annual General Fund property tax rate. `I'"`he proceeds from 3 cents Will be earmarked for schools, with funds allocated to each school system for the next fiscal year based on each system's respective share of the student membership as of November 1 Immediately preceding the next fiscal gear. Proceeds from I cent on the tax rate will be earmarked for Counter recurring capital needs. With regard to County Equipment and vehicle 'acquisitions accomplished using third party financing, the Board of County Commissioners will determine the source of funding to repay the associated debt service at the point that the Board approves the financing arrangement. rol Adopted 04!2412007 Construction Management Function Beginning with the 2005-06 fiscal year, the Board of Commissioners will appropriate funding to establish a construction Management function to oversee county and School capital projects. In fiscal years 2005,06 through 2007-08, $100,000 will be allocated annually to fund this function. The source of funding for the construction Management function will be split on a 50/40 basis with each school district sharing 'the schools portion of funding 0% in accordance with certified student membership as of No- Vember 15 each year: Each entity's sham of this function will, be deducted from its share of long-range apital funding prior to allocating capital funds. Schools Adequate Public Facilities ordinance Orange county's schools Adequate Public Facilities ordinance SAPFO and Memoranda of 'Understanding- l between the county and its municipal and school partners establish the mbchinery to assure that, to the extent possible, new development will take place only when there are adequate public school facilities available, or planned, which will accommodate such new development. The Board of Counter Commissioners is committed to the principle that new school space documented as needed through the annual SAPF technical review process will be reflected in the next adopted clP, and will be funded so as to be constructed to be available before the relevant level of service threshold is exceeded. Rescission This policy rescinds the Orange county Board of Commissioners capital Funding Policy, as originally approved on December , 1996 and as amended on February , 1998 and June 23, 2005. Approved April 24, 007R <l -a Al' TA04 7 ' er in consultation with the County Attorney ` �� ��� �� authorized �� community �� � ant detailing the conditions of award. to htr into a Development greern t Amendment .arnendrnents.for fiscal year 2006 -Q7 �' � budget end capital project ordinance The Beard approved g School Capital Projects, portsPlex Health Department, Department on Aging t Partnership Program. Enterprise Fund, Library Seim for the � a lees and rangelChthai Justice f al Value -Added Processing Center �, Regional . , '���� study for an agriculture products ` d an additional $4000 for a feast t The heard appropriate authorized the Chair to sign the contract IF -added rocessing center and regional value-added Fund �� •, i✓oa� 'Coun't", a itl sent a end'a for separate corisidratien. Y moved and placed at the end of the con wnershi This item was r Celle a Satellite l ro art Durham Technical Communit County County and The Special Warranty e d from Orange The hoard ececutd a p College and authorized the Chair to sign. Trustees of Durham Technical Ce�niuni Co e u�ar Meeting hedu� for 2007 ' point Meeting Chan a in calendar to the year OD adding a d mended its regular meeting cal► theuthernlunan The Boar Commissioners on Tuesday, May , 0 with the Chatham County Crrim el �lil�, • ter, Olmstead load, in Chap , services Cen f Count Corniissionrs Tannin �� ��iE Conservation ation Ai endment to c�a�rd c� Las! le a ends for separate consideration. F ed and laced at the end of the onsen This item was removed VOTE N CONSENT AGENDA: UNANIMOUS QED FROM CONSENT AGENDA: County Ca ital Fund po�ic �. royal of Cot it Flans in the fall. • future, to resent draft Capitai l nestrn en when lottery funds are intent, in the fu p asked about the interim period bete Commissioner Cordon ash i arrears, there is a big fine gain ice and when they are budgeted budgeted for debt sere t . there. � receipts deposited In the'Couritr's account Coff said that to ��- the p Donna budgeted. 2007 -2008 would be budg .. the proceeds would he used for e during er Gordon clarified that the only dear Commission a ears would he used o the outcome • current ear, donna Coffer said that ,future � cis wanted to use the service is the eurre year. this sur�nrr�r,� as to whether the schools t of the school collaboration meetings a not et been planned in the doh future fund for deft service to address renoatIon that have ' ance laps. of budgeting In arrears at first, but �ssu plans. said that she liked the idea g Commissioner a future needs and wondered if here was a then she thought about the debt fin nc�ng and th b same of the money could used. Board of County Commissioners Blackmon said that the staff gave the Laura � e � 0,000 of the n�iiiion from that the County would need ,to make p document that stated debt sorice. • This was included in the total d of to sit (hero for a year and this year rdon is worried that the money is just g g Commissioner Co bons. not be used for debt service or school renoa the money, it will have to he spent on said that if the County drags down ear, The schools .aura Blackmon the none t the er�d of the f�sca! . The proposal was to drag down h ants for renovations, that ear, `t r future incurrod debt service payments could use it for renovations or for donna Coffey said that the money would draw interest. p CI r Chair Carey said that the school collaboration group tallied about when the schools would have access to the money and they discussed some of these options. Ho recognized the chairperson of the OCS Board, who was in attendance. OCS Board Chair [Dennis Whitling said that they did tally about this, and from a school standpoint, they like the flexibility. Commissioner Gordon said that there are a lot of typos in this document. A notion was made by ommissi n r Gordon, seconded by Commissioner Jacobs to approve the County's Capital Funding Policy which included the intent to use the anticipated I Education Lottery proceeds for funding of school recurring capital and also included the intent, in the future, to present draft Capital Investment Plans in the fall. VOTE. UNANIMOUS 1. Enemy conservation ,Amendment to Board of county Commissioners Piar�rrir� Pri nci The Board considered modifying a BOCC adopted planning principle- for the comprehensive plan to include energy conservation as a linchpin to promoting air quality and effective transportation. Commissioner Gordon read the original language of-the third principle, which was "Encouraging Air Protection and Development of an Effective Transportation System." She said that the language in the fiat part of the revised principle is fine. She suggested changing.-the language in the second -part.to say, "....while promoting both air quality protection and the development of an effective transportation system." She asked if "development of an effective transportation system" was left off for a reason. Commissioner Nelson said no and that he would agree with this change. A motion was made by Commissioner Gordon, secondod by Commissioner Jacobs to amend the principle as revised (with charges by Commissioner Gordon) and forward to the Planning Board for inclusion in the Comprehensive Plan update process. VOTE: UNANIMOUS 5. Public Hearin cis - NONE 6. Ike ular Agenda a. Orange county Speedway 2007 EMS Coveracle Contract . ■_unn.w■uuin.r The Board considered contracting with-Speedway Management for the provision of Emergency Medical coverage to ensure public safety at public events at the Orange County Speedway and authorizing the Chair to sign upon review by the County Attorney. Interim. Emergency Management Director lent Mcl~ enzie said that there are recommended fee reductions for special event coverage for EMS in the packet. The staff met with Vance Agee and Kim Foushee from the Grange County Speedway last week, and they found two more areas to reduce some of the time on scene to help reduce the fees. Public comment: Vance Agee said that he would life to review any revisions that are made in writing. Kira Foushee said that she appreciates all of the work by Kent McKenzie and his staff■ She said that it was acknowledged by Debt Mcl en ie's staff and with the presentation that there was a 15% overage that the speedway paid last year. She asked that the Board consider giving the speedway a credit for this. Chair Carey said that at the last meeting there was a draft contract and it was his understanding that this would be reviewed by all parties, lent McKenzie said that this is still pending final review from the County Attorney's office.