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Home My WebLink AboutAgenda - 06-18-2013 - 5r 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 18, 2013 Action Agenda Item No. 5-r SUBJECT: Adoption of Final Resolution Authorizing the Issuance of$10,000,000 Installment Financing for Various Capital Investment Plan Projects and County Equipment DEPARTMENT: Finance and Administrative PUBLIC HEARING: (Y/N) N� Services ATTACHMENT(S): INFORMATION CONTACTS: 1. Resolution Approving Financing Terms and Documents for 2013 Clarence Grier, 919-245-2453 Installment Financing Robert Jessup, 919-933-9891 2. Proposed Debt Service Schedule 3. Bid Summary PURPOSE: To adopt the final financing resolution authorizing the issuance of $10,000,000 Installment Financing for Various Capital Investment Plan Projects and County Equipment. BACKGROUND: During the April 23, 2013 meeting, the Board of County Commissioners approved various capital projects for installment financing. These projects included the following: Debt Financing in FY 2012-13 County Projects Amount Southern HSC (Future Planning) $ 300,000 HVAC Projects $ 1,553,201 Roofing Projects $ 165,000 Information Technology $ 702,500 Whitted Building $ 295,000 VIPER Radio System $ 543,750 Communications System Improvements $ 164,000 Twin Creeks Park- Phase II $ 600,000 Total $ 4,323,451 Debt Financing in FY 2012-13 Water and Sewer Projects Amount Buckhorn EDD Phase 2 (Article 46 Proceeds) $ 4,256,046 $ 4,256,046 2 Additional Debt Financing Needed in FY 2012-13 Project Amount Southern Human Services Center(10027) $ 280,000 Information Technology(30007) $ 500,000 $ 780,000 Vehicle Replacement Fund Project Amount Vehicle Replacements $ 640,503 $ 640,503 Grand Total $ 10,000,000 Additionally, on May 7, 2013, the Board of County Commissioners held a public hearing to receive public comments on the financing of the various projects. The County requested and received bids for the installment financing from the following financial institutions- 1. SunTrust Institutional and Government Inc. 2. Bank of America Public Capital Corporation 3. BB&T 4. Capital One SunTrust Institutional and Government, Inc. (SunTrust) was selected as the financially responsive and responsible bidder. The financing agreement proposed by SunTrust and accepted will be subdivided into two installment financing agreements: one for the financing of the capital investment projects, and one for the financing of the equipment. The financing terms of the two installment financing agreements will be follows: 1. Installment Financing Agreement 1 — Capital Projects - $7.45 million, Interest Rate — 2.09%, Average debt service over 15 years totals $581,605. 2. Installment Financing Agreement 2 — Equipment (Vehicles) - $2.63 million, Interest Rate — 1.0994%, Average debt service over 5 years totals $175,545. Total annual debt service will average $567,862 over the term of the installment financing agreements. FINANCIAL IMPACT: There is no financial impact related to this action. However, there will be a financial impact in proceeding with the financing. The maximum debt service applicable to the capital projects financing would be $610,515, and $543,278 for the equipment financing, with both occurring in fiscal year 2013-14. The tax rate equivalent for the highest debt service payment is approximately .7181 cents. 3 RECOMMENDATION(S): The Manager recommends the Board approve the final financing resolution authorizing the issuance of $10,000,000 Installment Financing for Various Capital Investment Plan Projects and County Equipment. 4 RES-2013-052 Attachment 1 Resolution Approving Financing Terms and Documents for 2013 Installment Financing WHEREAS-- Orange County has previously determined to carry out a plan (the "Project") to acquire, construct and finance various public improvements as identified in the County's capital improvement plan, and including the projects and improvements shown on Exhibit A. The County has solicited competitive proposals from financial institutions to provide the financing, and STI Institutional & Government, Inc. (the "Lender"), an affiliate of SunTrust Bank, has submitted the best proposal. The County's Finance Officer has made available to this Board the draft agreements listed on Exhibit B (the "Agreements"), which relate to the County's carrying out the financing plan. This resolution provides the County Board's final approval of the financing terms and documents for the financing of the Project. BE IT THEREFORE RESOLVED by the Board of Commissioners of Orange County, North Carolina, as follows: 1. Determination To Proceed with Financing — The County confirms its plans to undertake the Project. The County will carry out the plan with financing from the Lender, substantially in accordance with the Lender's financing proposal. Under the financing plan, the Lender will make funds available to the County for use on Project costs. The County will repay the amount advanced, with interest, over time. The County will grant to the Lender a mortgage-type interest in the County's Southern Human Services Center and the North Administrative Building to secure the County's repayment obligation. 2. Approval of Agreements; Direction To Execute Agreements -- The Board approves the forms of the Agreements submitted to this meeting. The Board authorizes the Board's Chair and the County Manager, or either of them, to execute and deliver the Agreements in their final forms. The Agreements in their respective final forms must be in substantially the forms presented, with such changes as the Chair or the County Manager may approve. The execution and delivery of any Agreement by an authorized 5 County officer will be conclusive evidence of such officer's approval of any such changes. The Agreements in final form, however, must be consistent with the financing plan described in this resolution and must provide (a) for the amount financed by the County not to exceed $10,000,000, (b) for an annual interest rate not to exceed 2.13% (in the absence of default, or a change in tax status), and (c) for a financing term not to extend more than fifteen years from the funding date. 3. Officers To Complete Closing— The County Manager, the Finance Officer and all other County officers and employees are authorized to take all proper steps to complete the financing in cooperation with the Lender and in accordance with this resolution. The Board authorizes the Finance Officer to hold executed copies of all financing documents authorized by this resolution in escrow on the County's behalf until the conditions for their delivery have been completed to his satisfaction, and thereupon to release the executed copies of the documents for delivery to the appropriate persons or organizations. Without limiting the generality of the foregoing, the Board specifically authorizes the Finance Officer to approve changes to any documents previously signed by County officers or employees, provided that the changes do not conflict with this resolution or substantially alter the intent from that expressed in the form originally signed. The Finance Officer's authorization of the release of any document for delivery will constitute conclusive evidence of his approval of any changes. In addition, the Finance Officer is authorized to take all appropriate steps for the efficient and convenient carrying out of the County's on-going responsibilities with respect to the Project. This authorization includes, without limitation, contracting with third parties for reports and calculations that may be required under this resolution or otherwise with respect to the financing. 4. Resolutions as to Tax Matters -- The County will not take or omit to take any action the taking or omission of which will cause its obligations to pay principal and interest (the "Obligations") to be "arbitrage bonds," within the meaning of Section 148 of the "Code" (as defined below), or "private activity bonds" within the meaning of Code Section 141, or otherwise cause interest components of the installment payments to be includable in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the County will comply with any Code provision that may require the County at any time to pay to the United States any part of the earnings derived from the investment of the financing proceeds. In this resolution, "Code" means the 2 6 United States Internal Revenue Code of 1986, as amended, and includes applicable Treasury regulations. 5. Obligations are "Bank-Qualified" - The County designates its payment Obligations as "qualified tax-exempt obligations" for the purpose of Code Section 265(b)(3), which provides certain tax advantages for financial institutions investing in obligations similar to the financing Obligations the County now plans to incur. 6. Miscellaneous Provisions -- All County officers and employees are authorized to take all such further action as they may consider necessary or desirable in furtherance of the purposes of this resolution. All such prior actions of County officers and employees are ratified. Upon the absence, unavailability or refusal to act of the County Manager, the Chair or the Finance Officer, any other of such officers may assume any responsibility or carry out any function assigned in this resolution. In addition, the Vice Chair or any Deputy or Assistant Clerk to the Board may in any event assume any responsibility or carry out any function assigned to the Chair or the Clerk, respectively, in this resolution. All other Board proceedings, or parts thereof, in conflict with this resolution are repealed, to the extent of the conflict. This resolution takes effect immediately. I certify as follows: that the foregoing resolution (which includes the attached Exhibits A and B) was properly adopted at a meeting of the Board of Commissioners of Orange County, North Carolina; that this meeting was properly called and held on June 18, 2013; that a quorum was present and acting throughout the meeting; and that this resolution has not been modified or amended, and remains in full effect as of today. Dated this day of June, 2013. [SEAL] Donna S. Baker Clerk, Board of Commissioners Orange County, North Carolina 3 7 Exhibit A — proposed proiects Project Estimated Amount Description Expansion Master Plan and Southern HSC Future Planning) $300,000 Preliminary Design Work and Planning HVAC Projects $1,553,201 Community Geothermal Projects Jail, Justice Facility, Asset Management Roofing Projects $165,000 Services, North Administrative Building Library Management System Software Information Technology $702,500 (ILS), Equipment, BOCC initiatives Whitted Building $295,000 Preliminary Design Work Additional Channels for Existing Towers to VIPER Radio System $543,750 increase the Viper System capacity Communications System Improvements $164,000 Purchase of additional Viper Radios Twin Creeks Park- Phase II $600,000 Construction of a main entry road To place Water and Sewer infrastructure in the Buckhorn - Mebane Economic Buckhorn EDD Phase 2 $4,256,046 Development District Southern HSC $280,000 Health Clinic and DSS Renovations Information Technology $500,000 Desktop, Laptop and Server Replacements Vehicle Replacements $640,503 Vehicle Purchases Exhibit B -- draft agreements (a) A draft dated June 4, 2013, of an Installment Financing Contract to be dated on or about July 1, 2013 (the "Financing Contract"), between the County and the Lender, providing for the advance of funds to the County for the County's undertaking of the project, setting out the County's repayment obligation and setting out the County's obligations regarding care for the collateral and other matters. (b) A draft dated June 4, 2013, of a Deed of Trust and Security Agreement to be dated on or about July 1, 2013, from the County to a deed of trust trustee for the Lender's benefit, providing for a security interest in the County's Southern Human Services Center and the North Administrative Building, and the associated real property, to secure the County's repayment obligations. 4 Two SunTrust Loans Combined Debt Service 6/1/2014 970,000 2.09 % / 1.35% 183,792 1,153,792 6/1/2015 973,000 2.09 % / 1.35% 173,631 1,146,631 6/1/2016 978,000 2.09 % / 1.35% 157,069 1,135,069 6/1/2017 983,000 2.09 % / 1.35% 140,403 1,123,403 6/1/2018 988,000 2.09 % / 1.35% 123,632 1,111,632 6/1/2019 484,000 2.09% 106,757 590,757 6/1/2020 490,000 2.09% 96,642 586,642 6/1/2021 495,000 2.09% 86,401 581,401 6/1/2022 501,000 2.09% 76,055 577,055 6/1/2023 507,000 2.09% 65,584 572,584 6/1/2024 514,000 2.09% 54,988 568,988 6/1/2025 520,000 2.09% 44,245 564,245 6/1/2026 526,000 2.09% 33,377 559,377 6/1/2027 533,000 2.09% 22,384 555,384 6/1/2028 538,000 2.09% 11,244 549,244 Total 10,000,000 2.09% 1,376,205 11,376,205 DAVENPORT & COMPANY LLC Attachment 2 8 ong Term and Short Term) 07# Orange County, NC Lone Term Debt Service (SunTrust Period. Debt Fading Principal Coupon Interest Service 6/1/2014 460,000 2.09% 150,515 610,515 6/1/2015 463,000 2.09% 146,091 609,091 6/1/2016 468,000 2.09% 136,414 604,414 6/1/2017 473,000 2.09% 126,633 599,633 6/1/2018 478,000 2.09% 116,747 594,747 6/1/2019 484,000 2.09% 106,757 590,757 6/1/2020 490,000 2.09% 96,642 586,642 6/1/2021 495,000 2.09% 86,401 581,401 6/1/2022 501,000 2.09% 76,055 577,055 6/1/2023 507,000 2.09% 65,584 572,584 6/1/2024 514,000 2.09% 54,988 568,988 6/1/2025 520,000 2.09% 44,245 564,245 6/1/2026 526,000 2.09% 33,377 559,377 6/1/2027 533,000 2.09% 22,384 555,384 6/1/2028 538,000 2.09% 11,244 549,244 Total 7,450,000 1,274,078 8,724,078 Short Term Debt Service (SunTrust Period Debt Fnding Principal Coupon Interest Service 6/1/2014 510,000 135% 33,278 543,278 6/1/2015 510,000 135% 27,540 537,540 6/1/2016 510,000 135% 20,655 530,655 6/1/2017 510,000 135% 13,770 523,770 6/1/2018 510,000 135% 6,885 516,885 Total 2,550,000 102,128 2,652,128 Attachment 3 Summary of Terms and Conditions 07# Orange County, NC DAVENPORT & COMPANY LLC Bank of America Public Capital Corp. nC e � BB&T T Capital One ai It Sun Trust sLI ,&US` '. 1 2 A B C D A B C D Al B-1 A2 B2 NTEAmount 2,550,753 10,000,000 11,500,000 10,000,000 11,500,000 10,000,000 11,500,000 10,000,000 11,500,000 10,000,000 11,500,000 10,000,000 11,500,000 Bank Qualification BQ NBQ BQ NBQ BQ NBQ BQ NBQ BQ NBQ BQ NBQ BQ NBQ Term 59 months 15 Years 20 Years 15 Years 20 Years 15 Years Final Maturity 5/13/2018 6/1/2028 6/1/2033 6/1/2028 6 /1/2033 6/1/2028 Interest Rate 1.0994% 1.1635% 2.4601/o 3.080% 3.490% 3.9401/o 2.380% 2.970% 1.8501/o 1.91% 2.0501/o 2.11% Interest Mode Fixed through maturity Fixed through maturity Fixed through maturity Fixed through maturity Optional Call Provisions After 30 months at par - -n =at 1 %OR non - callable for fast half and par Yrs 1 -5= non - callable, Yrs 1 -7= non - callable, Make Whole Call Callable at Par thereafter Yrs 67 =103 %, Yrs 8 -10 =103 %, Yrs 8 -10 =102 %, Years 11+ =par Years 11+ –par Bank / Legal Fees None stated $5,700 None $7,500 Security All Equipment Financed T_ _,. Deed of Trust in Southern Human Services and North Deed of Trust in Southern Human Services and North Administrative Building Administrative Building Offer Expiration Must close by June 152013, = °_ r r �, _– Must close within 45 Days (-6/27) Must close by June 142013 � - r __ Must close within 40Days(--6/21) � a -- Other Borrower will indemnify lender only as to actions or Subject to completion of due diligence; proceeds to be Res ery e the right to have trans action rated at the Bank's Determination of Taxability could result in penalty orms s ions ofborrower on an after-taxbas is agains t held at BB &T. expense. payments due to the bank, Lender will perform any loss ofFedeml income tax exemption on a lump Environmental Ass essment; Hunton & Williams will sumbasis. serve as Bank Counsel Subject to completion of due diligence Subject to completion of due diligence DAVENPORT & COMPANY LLC Estimated Debt Service 10 07# Orange County, NC * Preliminary, Subject to Change DAVENPORT & COMPANY LLC Bank ofAmerica Public Capital Corp. BB&T Capital One Sun Trust Bankof America Merrill Lynch BIR&T Capita SUNTRUST 1 2 A B C D' A B C D A -1 B-1 A -2 B -2, Fstirmted Debt Service* FY 2014 544,226 545,709 904,800 1,109,393 837,367 1,012,997 897,067 1,031,577 787,100 905,165 845,833 979,328 865,167 1,001,562 FY 2015 538,522 539,672 896,592 1,097,576 831,550 1,005,445 889,125 1,022,445 782,150 899,473 839,661 972,000 858,327 993,466 FY 2016 532,819 533,636 880,184 1,073,953 814,100 982,790 873,251 1,004,191 767,300 882,395 827,321 957,351 844,653 977,283 FY 2017 527,115 527,600 863,775 1,050,329 796,650 960,135 857,376 985,936 752,450 865,318 814,982 942,701 830,980 961,099 FY 2018 478,178 478,331 847,367 1,026,706 779,200 937,480 841,502 967,682 737,600 848,240 802,642 928,051 817,306 944,915 FY 2019 - - 830,959 1,003,082 761,750 914,825 825,627 949,427 722,750 831,163 790,303 913,402 803,633 928,732 FY 2020 - - 814,551 979,458 744,300 892,170 809,752 931,172 707,900 814,085 777,963 898,752 789,959 912,548 FY 2021 - - 798,143 955,835 726,850 869,515 793,878 912,918 693,050 797,008 765,624 884,102 776,286 896,364 FY 2022 - - 781,734 932,211 709,400 846,860 778,003 894,663 678,200 779,930 753,284 869,452 762,612 880,180 FY 2023 - - 765,326 908,588 691,950 824,205 762,129 876,409 663,350 762,853 740,945 854,803 748,939 863,997 FY 2024 - - 747,918 883,964 674,500 801,550 745,254 857,154 648,500 745,775 727,605 839,153 734,265 846,813 FY 2025 - - 731,534 860,371 657,050 778,895 729,403 838,923 633,650 728,698 715,284 824,522 720,612 830,650 FY 2026 - - 715,151 836,778 639,600 756,240 713,552 820,692 618,800 711,620 702,963 809,892 706,959 814,488 FY 2027 - - 698,767 813,186 622,150 733,585 697,702 802,462 603,950 694,543 690,642 795,261 693,306 798,325 FY 2028 - - 682,384 789,593 604,700 710,930 681,851 784,231 589,100 677,465 678,321 780,631 679,653 782,163 FY 2029 - - - - 587,250 688,275 - - 574,250 660,388 - - - - FY2030 - - - - 569,800 665,620 - - 559,400 643,310 - - - FY 2031 - - - - 552,350 642,965 - - 544,550 626,233 - - - FY 2032 - - - - 534,900 620,310 - - 529,700 609,155 - - - FY 2033 517,450 597,655 514,850 592,078 2,620,860 2,624,948 Total Debt Service 11,959,185 14,321,023 13,652,867 16,242,447 11,895,472 13,679,882 13,108,600 15,074,890 11,473,371 13,249,401 11,632,654 13,432,584 Total Principal 10,000,000 11,500,000 10,000,000 11,500,000 10,000,000 11,500,000 10,000,000 11,500,000 10,000,000 11,500,000 10,000,000 11,500,000 Total Interest 1,959,185 2,821,023 3,652,867 4,742,447 1,895,472 2,179,882 3,108,600 3,574,890 1,473,371 1,749,401 1,632,654 1,932,584 Bank Costs 5,700 5,700 5,700 5,700 - - - - 7,500 7,500 7,500 7,500 Total Bid Cost 11,964,885 14,326,723 13,658,567 16,248,147 11,895,472 13,679,882 13,108,600 15,074,890 11,480,871 13,256,901 11,640,154 13,440,084 * Preliminary, Subject to Change DAVENPORT & COMPANY LLC Disclaimer 11 07# Orange County, NC Unless the enclosed material specifically addresses Davenport & Company LLC (`Davenport") provision of financial advisory services or investment advisory services, or Davenport has an agreement with the recipient to provide such services, the recipient should assume that Davenport is acting in the capacity of an underwriter or placement agent. 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