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Home My WebLink AboutRES-2011-083 Resolution Authorizing Application to the Local Government Commission to Issue Up to $17.04 Million in General Obligation Refunding Bonds~~5-aa~l-Og3 3 RESOLUTION GIVING PRELIlVIINAR'Y APPROVAL TO THE ISSUANCE OF GENERAL OBLIGATION REFUNDING BONDS WHEREAS -- Orange County has previously issued its $25,140,000 General Obligation Public Improvement Bonds,- Series 2004A and 2004B (the "Prior Bonds"). The Prior Bonds remain outstanding in~ the approximate principal amount of $17,040,000. The Finance Officer has provided information to the Board indicating that refinancing the Pr-ior Bonds by issuing a new series of refunding bonds would provide savings to the County. BE IT RESOLVED by the Board of Couimissioners of Orange County, North Carolina, as follows: Y. Approval for Refunding Bonds -- The Board makes a preliminary determination to proceed with the refinancing of the outstanding balance of the Prior ffonds through the County's issuance of a new series of general obligation refunding bonds. The Board will make a final-determination to proceed with the refinancing, and to give final approval of the te~~-ms of any refunding bonds, by one or more subsequent Board actions. 2. Staff to proceed with refunding issue -The County Manager, the Finance Officer and other County representatives are authorized and directed to take all proper steps to proceed with the refunding, including proceeding with an application to the North Carolina Local Governrn~nt Commission for its required approval of the refunding bonds. The Board appoints 'the Finance Offieer as -the County's authorized representative with respect to the LCC application process. 3. Approval of Bond Counsel and Financial Advisor -- The County appoints Robert M. Jessup of Sanford Holshouser LLP as the County's bond counsel with respect to the proposed refunding bonds, and appoints Davenport & Co. LLC to serve as the County's financial adviser with respect to the proposed refunding bonds. 4. Miscellaneous Provisions -- Ail 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 c~nfu-med. All other resolutions, or parts thereof, in conflict with this resolution .axe repealed, to the extent of the conflict. This resolution takes. effect immediately. Sep 13, 2011 7:17-pm Prepared by Davenport & Company Page 1 SOURCES AND USES OF FUNDS Orange County, NC General Obligation Refunding Bonds, Series 2011 . Refunding of 2004A&B All Callable Maturities Rates as of 9/9/2011 Dated Date 12/01/2011 Delivery Date 12/01/2011 General General Obligation Obligation Refunding Refunding Bonds, Series Bonds,Series Sources: 2011(2004A) 2011(2004B) Total Bond Proceeds: Par Amount 2,720,000.00 13,510,000.00 16,230,000.00 Premium 449,48635 2,232,357.40 2,681,843.75 3,169,486.35 15,742,357.40 18,9-11, 843.75 Other Sources of3runds: Accrued Interest 41,437.50 201,600.00 243,037.50 3,210,923.85 15,943,957.40 19,154,881.25 ses: General Obligation Refunding Bonds, Series 2011(2004A) General Obligation Refunding Bonds, Series 2011(2004B) otal Refunding Escrow Deposits:. Cash Deposit 0.30 0.76 1.06 SLGS Purchases 3,149,196.00 15,644,373.OA 18,793,569.00 3,149,196.30 15,644,373.76- 18,793,570.06 Delivery Date Expenses: Cost of Issuance 46,087.49 228,912.51 275,000:00. Underwriter's Discount 13,600.00 67,550.00 81,150.00 59,687.49 296,462.51 356,150.00 Other Uses of Funds: AdditionalProoeeds .2,040.06 3,121.13 5,161.19 3,210,923.85 15,943,957.40 19,154,881.25 4 5 Sep 13, 2011 7:ITpm Prepared by Davenport & Company page 2 BOND SUIviMARY STATISTICS Orange County, NIr General Obligation Refunding Bonds, Series 2011 Refunding of 2004A&B . All Ca-liable Maturities Rates as of 9/9/2011 Dated Date 12/01/2011 Delivery Date 12/01/2011 Last Maturity 02/01/2023 Arbitrage Yield 2.123253% True Interest Cost (TIC) 2.284574% Net Interest Cost (TIC) 2.508063% All-In TIC 2.498054% Average Coupon 4.496133% Average Life (years) 8A60 Duration of Issue (years) 6.982 Par Amount 16,230,000..-00 Bond Proceeds 18,911,843.75 Total Interest 5,881,616.67 Net Interest 3,280,922.92- Total Debt Service 22,111-,616.67 Maximum Annual Debt Service 3,493,950:00 Average Annual-Debt Service 1,980,144.78 " Underwriter's Fees (per $1000) Average Takedown Other Fee 5.000000 Total Underwriter's Discount 5.000000 Bid Price 116.023991 Par Average Average Bond Component Value Price Coupon Life 2011 Serials 16,230,000.00 116.524 4.496% 8.060 16,230,000.00 8.060 All-In Arbitrage TIC TIC Yield Paz Value 16,230,000.00 16,230,000.00- 16,230,000.00 + Accrued Interest +Premium (Discount) 2,681,843.75 2,681,843.75 2,681,843.75 -Underwriter's Discount -81,150.00 -81,150.00 - Cost of Issuance Expense -275,000.00 - Other Amounts Target Value 18,830,693.75 18,555,693.75 18,911,843.75 Target Date 12/01/2011 12/01/2011 12/01/20.11 Yield 2.284574% 2.498054% 2.123253% Sep 13, 201 I 7:17 pm Prepared by Davenport & Company 6 Page 3 BOND PRICING Orange County, NC General Obligation Refunding Bonds, Series 2011 Refunding of 2004A&B All" Callable Maturities Rates as of 9/9/2011 Ivfaturity Bond Component Date 2011 Serials: Yieldto Call Call Amount Rate Yield Price Maturity Date Price 02/01/2012 2.000% 0.420% 100.262 02/01/2013 2.000% 0.500% 101.742 02/01/2014 2.500% 0.580% 104.127 02/01/2015 835,000 3.000% 0.740% 107.059 02/01/2016 830;000 3.000% 1.070% 107.843- 02/01/2017 815,000 4.000% 1.330% -1-13.287 02!01/2018 810,000 .4.000-% 1.600% 114.038 -02!01/2019 2,905,000 4.000% 1.870% 114.222 02!01/2020 2,900,000 4.000% 2.100% 114.188 02/01/2021 2,885,000 S.Q00% 2.270% 122.475 02/01/2022 2;900;000 5.000% 2.450% 120.819 C 2.650% 02/01/2021 100 000 02/01/2023 1,350,000 5.000% 2.630% _ . 119.189 C .2.968% 02/01/2021 100.000- 16,230,000 Dated Date 12/01/2011 Delivery Date 12/01/2011 First Coupon 02/01/2012 Paz Amount 16,230,000:00 Premium 2;681,843.75 Production 18,911,843.75 176.523991% Underwriter's Discount -81,150.00- --0.50000.0% Purchase Price 18,830,693.75 116.023991% Accrued Interest Net Proceeds 18,830,693.75 7 Sep 13, 2011 7:17 pm Prepared by Davenport & Company Page 4 SUMMARY OF REFUNDING RESULTS Orange County, NC General Obligation Refunding Bonds, Series 2011 Refunding of 2004A&B All Callable Maturities Rates as of 9/9/2011 Dated Date Delivery Date Arbitrage yield Escrow yield 12/01/2011 lvol/roll 2.123253% 0.177668% Bond Paz Amount True interest Cost Net Interest Cost Average Coupon Average Life Paz amount of refunded bonds Average coupon of refunded bonds Average life of refunded bonds PV of prior debt to 12/01/2011 @ 2.123253% Net PV Savings Percentage savings of refunded bonds Percentage savings of refunding bonds 16,230,000.00- 2.284574% 2.5080.63%- 4.496133% 8Ab0= 17,040,000.00 ' 4.323134% 8.033 20,018,164.56 738,445.23 4.333599% .4.549878% Sep 13, 2011 7:17 pm Prepared by Davenport & Company Page 5 SAVINGS Orange County, NC General Obligation Refunding Bonds, series 2011 Refunding of 2004A&B All Callable Maturities Rates_as of 9/9/2011 Date Prior Debt Service Prior Receipts Prior Net Cash F-.1_ow Refunding Debt Service Savings Present Value to 12/01/2011 ®2.1232528% 02/01/2012 364,556.25 243,037.50 121,518.75 117,316.67 4,202.08 3,333.30 02/01/2013_ 729,112.50 729,112.50 703,900.00 25,212.50 24,729.41 02/01/2014 729,112.50 729,112.50 703,900.00- 25,212.50 24,212.59 02/01/2015 1,629,112.50 1,629,112.50 1,538,900.00 90,212.50 84,SOi.43 02/01/2016 1,592,737.50 1,592,737.50 1,50$,850.00 83,887.5.0. 76,888.20 02/01/2017 1,556,362.50 1,556,362.50 1,468,950:00 87,412.50 78,387.27 02/01120/8 1,19,987.50 1,519,987.50 1,431,350.00 88,637.50_ 77,806.86 02/01/2019 3,583,612.50 3,583,612.50 3,493,950.00 89,662.50 77,043.65 02/01/2020 3,459,237.50 3,459,237.50 3,372,750.00 86,487.50 72,725.00 02/01/2021 3,331,487.50 3,331,48x.50 3,241,750.00 89,737.50 73,831.66 02/01/2022 3,2.0.0,112:50 3,200,112.50 3,112,500.00 87;612:50 70,629.41 02/01/2023 1,505,112.50 1,505,112.50 1,417,500.00- 87,612.50 69,195.25 23,200,543.75 243,037.50 22,957,506.25 22,111,616.67 845;889.58 733,284.04 Savings Summary Dated Date 12/01/2011 Delivery Date 12/01/2011 PV of savings from cash flow 733,284.04 Plus: Refunding-funds on hand 5,161.19 NetPV Savings 738,445.23 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 20, 2011 Action Agenda Item No. $ -G SUBJECT: Resolution Authorizing Application to the Local Government Commission to Issue Up to $17.04 Million- in General Obligation Refunding Bonds DEPARTMENT: Financial Services PUBLIC IifARING: (Y/N) No ATTACHMENT(S): 1. Resolution 2. Bond Refunding Analysis INFORMATION CONTACT: Clarence Grier, 919-245-2453 Bob Jessup, 919-933-9891 PURPOSE: To consider approving a resolution authorizing application to the Local Government Commission (LGC) to issue up to $17.04 million in General Obligation Refunding Bonds to refund the 2004A&B General Obligation Bonds. BACKGROUND: Staff continues to maintain contact with financial advisors who provide analysis on the County`s bonds against market conditions to identify opportunities to achieve debt service savings through refunding outstanding debt of the County. As a result of the recent market conditions, financial advisors Davenport and Company, Bond Counsel Bob Jessup of Sanford Holshouser, LLP, and staff have identified an additional refunding opportunity for debt service savings and have provided an analysis of the potential savings under current market conditions. The additional proposal is to refund $17.04 million of the 2004A&B General Obligation Bonds of the County. The analysis shows a potential savings of $846,000 over the remaining lift of the debt, with a net present value of $733,000. The analysis shows the reduction in debt service would. average slightly over $70,000 a year for fiscal years 2012 through 2023. 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 realizes a 4.333% savings. Market conditions could change- between now and the time of issuance, potentially increasing or decreasing savings. Additionally, as an update.on the County's recent refunding of $42.8 million, due to the credit quality of bond offering- and market conditions, the debt service savings on the refunding totaled $2 million, which was $245,000 more than the preliminary estimated savings analysis provided at the September 8, 2011 Board Meeting. z With this proposed refunding, if approved,- and the previous refunding, the total combined savings in debt service will total approximately $2.9 million over the next 15 years. 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 $20 million of General pbligation Refunding Bonds for the purpose of refunding the 2004A&B General Obligation Bonds of the of the County. and 2)- authorizing Davenport and Company, LLC, to serve as Financial Advisor and the firm- of Sanford Holshouser, LLP, represented by Bob Jessup, to serve as Bond Counsel 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 $2~0 million of refunding bonds for the purpose of refunding the 2004A&B General Obligation Bonds of the County; and 2) authorizing Davenport and Company, LLC to serve as Financial Advisor and the firm of Sanford Holshouser, LLP, represented by Bob Jessup, to serve as Bond .Counsel.