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HomeMy WebLinkAboutMinutes - 19931130x R? 611 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS WORK SESSION FUNDING FOR NEW ELEMENTARY SCHOOL SPACE NOVEMBER 30, 1993 The Orange County Board of Commissioners met in special session on Tuesday, November 30, 1993 at 7:30 p.m., in the Orange Water and Sewer Authority's Community Meeting Room, Cariboro, North Carolina. COUNTY COMMISSIONERS PRESENT: Chairman Moses Carey, Jr., and members Stephen H. Halkiotis, Alice M. Gordon and Verla C. Insko. COUNTY COMMISSIONER ABSENT: Commissioner Don Willhoit COUNTY ATTORNEY PRESENT: Geoffrey Gledhill STAFF PRESENT- County Manager John M. Link, Jr., Assistant County Manager Rod Visser, Deputy Clerk to the Board Kathleen Baker, Finance Director Ken Chavious, and Budget Director Sally Kost. FINANCING PLAN FOR ELEMENTARY SCHOOL: County Manager John Link indicated that using Certificates of Participation (COP Is) as a method of financing new schools is a possibility. This is a relatively new method of financing in North Carolina. Six or seven counties have recently used this method. However, in researching this option it has become clear that special local legislation will be required. This could be approved in the short session of the General Assembly if consensus between the Boards is reached. County Attorney Geof Gledhill explained that the term "Certificates of rticipation" describes a form of installment financing. It is a concept .whereby local governments borrow money for construction projects which is paid back with interest over a period of time. Local governments secure the repayment of the loan by pledging the property upon which the facility is constructed. The only thing a local government can provide a lender as security for this type of financing is property. Counties are empowered to secure this type of financing in North Carolina, however, school boards are not. North Carolina law requires that school boards own the property on which their facilities are constructed. This causes a roadblock to the.County using the COP option for financing. The County has the ability to secure the loan and acquire the money for the loan, but they, not the school board, must own the property so it can be used as collateral to secure the loan. In order to allow the COP option to. be used, legislation must be approved that authorizes the County to own property for school construction projects and to authorize the schools to convey the property to the County to accomplish that purpose. Until the loan is paid off, the county would lease the building to, the school board for $1.00 per year. At payoff time, the property would be purchased by the school board for a nominal amount of money. suggested creating a non-profit corporation whicwould borrow the money and handle the leasing of the property to the school board. The county would retain title to the property throughout the life of the loan. The non-profit corporation would handle the financing with the lenders and the County would contract with the non-profit corporation. More information will be requested ="om the Bond Counsel to determine why they suggest that the County work ough a non-profit. John Link indicated that the Chapel Hill-Carrboro School System needs - 612 this elementary school and anticipates a completion date of mid-1996. TY Legislators will meet in short session in late May of 1994. The planni: process for this school will be completed by that time. The funds will be' available 120 days from the approval date. Superintendent Neil Pedersen commented that they need the school now, however, the summer of 1996 is the earliest projected completion date. He indicated that the COP is one option for the financing of this school. Another option would be to use the reserve in the current C.T.P. fund or to adjust the funds within the current C.I.P. projects. County Manager Link mentioned that in the early 1980's the lease/purchase agreements were introduced to county financing. The uncertainty about the COP funding is similar to what was felt about lease/purchase agreements when they were first introduced. Orange County School Board Chair Mary Bobbit-Cook requested clarification on why the Orange County School. Board was being asked to vote on how the Chapel Hill-Carrboro School Board financed schools? This method of financing could place a heavier financial burden on County takpayers than on Chapel Hill tax payers. Chair Carey indicated that the requested legislation would allow either school system to use this option. Requesting this legislation without an impression of controversy is critical to its approval. This COP financing.,.. could be used for additional classrooms in the orange County system in th, future when those needs arise. Commissioner Insko indicated that the Orange County system would not be required to use this financing. It would simply be one option available to them. She asked if it would be possible for the resolution to indicate that Orange County endorses the process but will look at the issue again when a new school is needed. Chair Carey mentioned that the County Commissioners- and both school boards agreed that neither a bond nor a tax increase were options. The Cop is a way to finance a new school without using those methods. Commissioner Halkiotis stated that the Planning Department has been asked to keep the Orange County schools abreast of proposed developments in the County. It is possible that increased growth would create a need for a school much sooner than anticipated. Chair Carey stated that merger needs to be discussed so that the issue of fairness does not come up at each meeting. Orange County School Board member Ralph Warren indicated that the school board was not in disagreement with this method of financing. They did want to be assured that they would not be required to use the COP method. Orange County School Board Chair Mary Bobbit-Cook referred to the impact fee that is being set aside and noted that she would like to see the pay-as- you-go method discussed further by the school board. They do not want ?. 613 Certificates of Participation to.be the only option available to them. Commissioner Halkiotis suggested that the staff draft a resolution and have another joint meeting with the School Boards inviting the Orange County delegates to attend. this. Chair Carey suggested asking the delegates how they would like to handle Chapel Hill-Carrboro School Board Chair Mary Bushnell indicated that Chapel Hill-Carrboro needs a new elementary school as soon as possible. Other urgent needs will be sacrificed in order to meet this more urgent need. orange County School Board member Bob Bateman commented that the use of COP's is a creative method of financing that fulfills the need to hold the line on taxes. County Manager John Link stated that this matter will be brought to the individual boards for further discussion with a vote in January, 1994. OUTSTANDING SCHOOL ISSUES: Commissioner Gordon asked that the School Issues Task Force discuss equity. She feels this term needs to be more clearly defined. Chapel Hill-Carrboro School Board Member Sue Baker mentioned that the Special District Tax has been frozen and other strategies implemented to ensure equity. There are funding differences other than the local issues. Commissioner Insko suggested discussing ways to link funds with outcome. A report outlining the outcomes of funded programs would be helpful. The fund balance also needs to be discussed. Mary Bushnell indicated that the school boards receive reports on outcomes and she will send this information to the Commissioners. Commissioner Gordon suggested .redefining_.the terms recurring. capital and - equity. equity. Also, school construction standards needs to be discussed. There is a strong need to have a systematic approach in building new schools and to be able to explain that approach. Chairman Carey indicated that he would like to discuss potential merger and other funding issues. It was decided by consensus that the School Issues Discussion Group will meet to discuss these issues prior to the Board of Commissioners and school boards meeting again. Commissioner Halkiotis stated that Chairman Carey has asked that the NCACC look at the issue of federal mandates. . There being no further discussion, the meeting was adjourned. The next regular meeting of the Board of County Commissioners will be held on Monday, - 61 4 December 6, 1993 at 7:30 p.m. in the old Court House, Hi,llsbor-ough, North Carolina. Moses Carey, Jr., Chair Kathleen Baker, Deputy Clerk