HomeMy WebLinkAboutAgenda - 10-06-2009 - 6aORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: October 6, 2009
Action Agenda
Item No. (p -a
SUBJECT: Resolution Authorizing Application to the Local Government Commission to
Issue Up to $27 Million in General Obligation Refundin Bonds
DEPARTMENT: Financial Services PUBLIC HEARING: (Y/N) NO
ATTACHMENT(S):
Resolution
INFORMATION CONTACT:
Gary Humphreys 919-245-2453
Bob Jessup 919-933-9891
PURPOSE: To consider approving a resolution authorizing application to the Local
Government Commission to issue up to $27 million in General Obligation Refunding Bonds.
BACKGROUND: Staff maintains contact with several financial advisors who track the County's
bonds against market conditions to identify opportunities to achieve debt service savings
through refunding outstanding debt of the County. Municipal bond interest rates have continued
to fall in recent months. BB&T Capital Markets has identified an opportunity for debt service
savings and brought an analysis of the potential savings under current market conditions. The
current proposal is to refund $9.19 million of General Obligation (GO) debt issued in 2001 and
$6.525 million of GO debt issued in 2003. The analysis shows a potential savings of $589,000
over the remaining life of the debt with a net present value of $496,000. The analysis shows a
reduction in debt service would be approximately $30,000+ in the current fiscal year and would
average a little over $50,000 a year for fiscal years 2011 through 2021.
The Local Government Commission requires the percentage savings of debt service to be
approximately 3.0% or more of the amount of the refunded bonds. The proposal shows a
3.16% savings. Market conditions could change between now and the time of issuance either
increasing or decreasing savings. The refunding analysis proposed does not refund all of the
outstanding maturities of these bonds. The application to the LGC is proposed for up to $27
million in order to allow the flexibility to refund the additional $6.8 million of outstanding
maturities if there will be sufficient additional savings.
Staff is proposing the Board approve a resolution 1) authorizing staff to proceed with an
application requesting the Local Government Commission's approval to issue up to $27 million
of refunding bonds for the purpose of refunding a part of the County's outstanding 2001 and
2003 General Obligation Bonds; and 2) authorizing BB&T Capital Markets, a Division of Scott
and Stringfellow, LLC ("BB&T Capital Markets"), to serve as Financial Advisor and the firm of
Sanford Holshouser, LLP represented by Bob Jessup to serve as Bond Counsel.
There is not a public hearing related to issuing refunding bonds because the County's debt
obligation is not being increased. The refunding will come back to the Board for approval of the
Bond Order and final terms and conditions. The refunding bonds are sold through a
competitive process by the Local Government Commission. If there is not a reasonable savings
to the County then sale of the refunding bonds does not occur.
FINANCIAL IMPACT: The resulting financial impact of this action is a savings in future debt
service costs described above.
RECOMMENDATION(S): The Manager recommends that the Board approve the attached
resolution 1) authorizing staff to proceed with an application requesting the Local Government
Commission's approval to issue up to $27 million of refunding bonds for the purpose of
refunding a part of the County's outstanding 2001 and 2003 General Obligation Bonds; and 2)
authorizing BB&T Capital Markets, a Division of Scott and Stringfellow, LLC ("BB&T Capital
Markets") to serve as Financial Advisor and the firm of Sanford Holshouser, LLP represented by
Bob Jessup to serve as Bond Counsel.
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RESOLUTION PROVIDING PRELIMINARY APPROVAL FOR THE
ISSUANCE OF GENERAL OBLIGATION REFUNDING BONDS
WHEREAS:
Orange County has previously issued general obligation public improvement bonds in
2001 and 2003. County staff has advised the Board of Commissioners that refinancing all or
a portion of these bonds may provide savings to the County.
BE IT RESOLVED by the Board of Commissioners of Orange County, North
Carolina, as follows:
1. Approval for Refunding Bonds -- The County Manager and the Finance
Officer are authorized and directed to take all proper steps to determine the feasibility of
refunding the 2001 and 2003 public improvement bonds to provide debt service savings to
the County, and to proceed with all proper steps to carry out the refunding. The Finance
Officer is authorized to file the required application with the North Carolina Local
Government Commission. The precise financial details of the issuance of refunding bonds
will be subject to the Board's further approval by subsequent proceedings. The estimated
maximum amount of refunding bonds to be issued is $27,000,000.
2. Approval of Advisors -- The County appoints Sanford Holshouser LLP as the
County's bond counsel and BB&T Capital Markets as its financial advisor with respect to the
proposed refunding bonds. BB&T Capital Markets will provide financial analysis and other
services required in connection with the issuance of refunding bonds, including analysis as
required by the LGC of the savings to be obtained through the refunding.
3. Miscellaneous Provisions -- All County officers and employees are authorized
and directed to take all such further action as they may consider necessary or desirable in
connection with the furtherance of the purposes of this resolution. All such prior actions of
County officers and employees are ratified, approved and confirmed. All other resolutions,
or parts thereof, in conflict with this resolution are repealed, to the extent of the conflict.
This resolution takes effect immediately.
I certify that the foregoing resolution was duly adopted at a meeting of the Board of
Commissioners of Orange County, North Carolina, duly called and held on October 6, 2009,
and that a quorum was present and acting throughout such meeting. Such resolution remains
in full effect as of today.
Dated this ty day of October, 2009.
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[SEAL]
Donna S. Baker
Clerk, Board of Commissioners
Orange County, North Carolina