HomeMy WebLinkAboutAgenda - 09-20-2011 - 8cORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 20, 2011
Action Agenda
Item No. $ -G uQ~
SUBJECT: Resolution Authorizing Application to the Local Government Commission to
Issue Up to $17.04 Million in General Obligation Refundin Bonds
DEPARTMENT: Financial Services
PUBLIC HEARING: (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 life 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.
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 Obligation 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 $20 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.
ES -aa tl -0~3 3
RESOLUTION GIVING PRELIMINARY 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 Prior Bonds
by issuing a new series of refunding bonds would 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 Board makes a preliminary
determination to proceed with the refinancing of the outstanding balance of the Prior
Bonds through the County's issuance of a new series of general obligation refunding
bonds. The Board will make afinal-determination to proceed with the refmancing, and to
give final approval of the terms 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 Government Commission for its required approval of the refunding
bonds. The Board appoints the Finance Officer as the County's authorized representative
with respect to the LGC 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 -- 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.
4
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
Sources:
Bond Proceeds:
Par Amount
Premium
General
Obligation
Refunding
Bonds, Series
2011(2004A)
2,720,000.00 13,510,000.00 16,230,000.00
449,486.35 2,232,357.40 2,681,843.75
3,169,486.35 15,742,357.40 18,9.11,843.75
General
Obligation
Refunding
Bonds, Series
2011(2004B)
Total
Other Sources of Funds:
Accrued Interest 41,437.50 201,600.00 243,037.50
3,210,923.85 15,943,957.40 19,154, 881.25
General General
Obligation Obligation
Refunding Refunding
Bonds, Series Bonds, Series
Uses: 2011(2004A) 2011(2004B) Total
Refunding Escrow Deposits:
Cash Deposit 0.30 0.76 1.06
SLGS Purchases 3,149,196.00 15,644,373.00 18,793,569.00
3,149,196.30 15,644,373.76 18,793,570.06
Delivery Date Expenses:
Cost of Issuance
Underwriter's Discount
Other Uses of Funds:
Additional Proceeds
46,087.49 228,912.51 275,00000
13,600.00 67,550.00 81,150.00
59,687.49 296,462.51 356,150.00
2,040.06 3,121.13 5,161.19
3,210,923.85 15,943,957.40 19,154,881.25
5
Sep 13, 2011 7:17 pm Prepared by Davenport & Company Page 2
BOND SUMMARY STATISTICS
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
Last Maturity 02/01/2023
Arbitrage Yield 2.123253%
True Interest Cost (TIC) 2.284574%
Net Interest Cost (NIC) 2.508063%
All-In TIC 2.498054%
Average Coupon 4.496133%
Average Life (yeazs) 8.-060
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
Par 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
Tazget Date 12/01/2011 12/01/2011 12/01/2011
Yield 2.284574% 2.498054% 2.123253%
Sep 13, 2011 7:17 pm Prepared by Davenport & Company
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Page 3
Maturity
Bond Component Date
BOND PRICING
Orange County, NC
General Obligation Refunding Bands, Series 2011
Refunding of 2004A&B
All Callable Maturities
Rates as of 9/9/2011
Amount Rate Yield Price
Yield to Call Call
Maturity Date Price
2011 Serials:
02/01/2012 2.000% 0.420%
02/01/2013 2.000% 0.500%
02/01/2014 2.500% 0.580%
02/01/2015 835,000 3.000% 0.740%
02/01/2016 830,000 3.000% 1.070%
02/01/2017 815,000 4.000% 1.330%
02/01/2018 810,000 4.000% 1.600%
02/01/2019 2,905,000 4.000% 1.870%
02/01/2020 2,900;000 4.000% 2.100%
02/01/2021 2,885,000 5.000% 2.270%
02/01/2022 2,900,000 5.000% 2.450%
02/01/2023 1,350,000 5.000% 2.630%
100.262
101.742
104.127
107.059
107.843
113.287
114.038
114.222
114.188
122.475
120.819 C 2.650% 02/01/2021 100.000
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
Par Amount 16,230,000.00
Premium 2;681,843.75
Production 18,911,843.75 116.523991%
Underwriter's Discount -81,150.00- -0.500000%
Purchase Price 18,830,693.75 116.023991%
Accrued Interest
Net Proceeds 18,830,693.75
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 12/01/2011
Delivery Date 12/01/2011
Arbitrage yield 2.123253%
Escrow yield 0.177668%
Bond Par Amount 16,230,000.00
True Interest Cost 2.284574%
Net Interest Cost 2.508II63%
Average Coupon 4.496133%
Average Life 8.D60
Par amount of refunded bonds 17,040,000.00
Average coupon of refunded bonds ~ 4.323134%
Average life of refunded bonds 8.033
PV of prior debt to 12/01/2011 @ 2.123253% 20,018,164.56
Net PV Savings 738,445.23
Percentage savings of refunded bonds 4.333599%
Percentage savings of refunding bonds 4.549878%
8
Sep 13, 2011 7:17 pm Prepared by Davenport & Company Page 5
SAVINGS
Orange County, NC
General Obligation Refunding B onds, series 2011
Refunding of 2004A&B
All Callable Maturities
Rates as of 9/9/2011 '
Present Value
Prior Prior Prior Refunding to 12/01/2011
Date Debt Service Receipts Net Cash Flow Debt Service Savings @ 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 84,501.43
02/01/2016 1,592,737.50 1,592,737.50 1,508,850.00 83,887.50 76,888.20
02/01/2017 1,556,362.50 1,556,362.50 1,468,950.00 87,412.50 78,387.27
02/01!2018 1,519,987.50 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 3,331,487.50 3,241,750.00 89,737.50 73,831.66
02/01/2022 3,200,112.50 3,200,112.50 3,112,500.00 87,612.50 70,62:9.41
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 Summa ry
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
Net PV Savings 738,445.23