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HomeMy WebLinkAboutAgenda - 03-18-1997 - 5a 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: March 18, 1997 Action Agenda Item No. 9—a SUBJECT: Modification of Installment Purchase Agreement- Southern Village Elementary School DEPARTMENT: Finance PUBLIC HEARING: (Y/1S) BUDGET AMENDMENT: (Y/N) ATTACHMENT(S): INFORMATION CONTACT: Resolution Ken Chavious Ext. 2453 Agreement Modification TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 227-2031 PURPOSE: To consider a resolution and modification to the Installment Purchase Agreement for the Financing of the Southern Village Elementary School. BACKGROUND: On November 19, 1996 the Board of County Commissioners approved a financing plan for the Southern Village Elementary School. The plan consisted of the acceptance of a financing proposal submitted by BB&T Public Finance for$14 million. The proposal accepted by the Board contained provisions to allow the County to remain bank qualified by dividing the funding into two parts, $5 million in 1996 and$9 million in 1997. The Board approved the Installment Purchase Agreement for the first$5 million on December 17, 1996. In order to take advantage of the favorable rates proposed by BB&T, the County is required to close on the remaining$9 million of the financing plan by March 20, 1997. Board action is necessary in order to facilitate this closing. The required actions consist of adoption of a resolution authorizing the transaction and adoption of an Installment Purchase Agreement modification on the remaining$9 million. All of the required documents have been prepared by Bond Counsel. RECOMMENDATION(S): The Manager recommends that the Board adopt the resolution, approve the Installment Purchase Agreement modification and authorize the Chair to execute the documents. 2 RESOLUTION PROVIDING FINAL APPROVAL OF TERMS AND DOCUMENTS FOR SECOND PHASE OF SOUTHERN VILLAGE ELEMENTARY SCHOOL FINANCING WHEREAS: The Board of Commissioners of Orange County, North Carolina (the "County"), has previously approved and determined to undertake a plan for the construction, acquisition and financing(the "Project") of a new elementary school in the County. There has been presented to this meeting a draft dated March 10, 1997, of a Modification Agreement to be dated as of March 1, 1997, from the County to a deed of trust trustee for the benefit of BB&T Governmental Finance ("BB&TGF"), providing for BB&TGF to finance the County's undertaking of the Project, a copy of which shall be filed with the County's permanent records. Such documents appear to be in forms appropriate for completing the financing portion of the Project. BE IT THEREFORE RESOLVED by the Orange County Board of Commissioners, as follows: 1. The County hereby confirms its decision to complete the financing of the Project through BB&TGF in accordance with the plan of financing described in the Agreement. 2. The Chair and Vice Chair of the County's Board of Commissioners, or either of them, are hereby authorized and directed to execute the Agreement and deliver the same to the appropriate counterparties, and the Clerk to this Board (or any assistant clerk) is hereby authorized and directed to affix the County's seal to the Agreement and to attest the same (when the seal and such second signature is required by the final form of any document). The Agreement shall be in substantially the form submitted to this meeting, which is hereby approved, with such changes as may be approved by the Chair or Vice Chair, such officer's execution to constitute conclusive evidence of such officer's approval of any such changes. The Agreement in final form, however, must provide for the amount now to be advanced to the County not to exceed$9,000,000, for a nominal annual interest rate (in the absence of default or change in tax stains) not to exceed 4.92%, and for a term not to exceed fifteen years from closing. 3. The County's payment of Installment Payments, as defined in the Agreement, shall be subject to annual appropriation of funds by the Board of Commissioners. The County shall not be obligated to make any payments under the Agreement beyond those for which funds have been appropriated in the County's sole discretion during the County's then-current fiscal 3 year. The Agreement shall not constitute a pledge of the County's full faith and credit. Neither the County's full faith and credit nor its taxing power is pledged directly, indirectly or contingently to secure any moneys due under the Agreement. 4. The County Manager and Finance Officer are hereby authorized and directed, together or separately, to hold executed copies of the Agreement, and any other documents authorized or permitted by this resolution, in escrow on the County's behalf until the conditions for the delivery of the Agreement have been completed to such officer's satisfaction, and thereupon to release the executed copies of such documents for delivery to the appropriate persons or organizations. Without limiting the generality of the foregoing, this authorization and direction is hereby specifically extended to authorize such officers to approve changes to any documents (including the Agreement) or closing certifications previously signed by County officers or employees, provided that such changes shall not substantially alter the intent of such certificates from that expressed in the forms of such certificates as executed by such officers. Such officer's authorization of the release of any such document for delivery shall constitute conclusive evidence of such officer's approval of any such changes. 5. Resolutions as to tax matters— (a) The County's officers are hereby authorized and directed to deliver all certificates and instruments and to take all such further action as they may consider necessary or desirable in connection with the execution and delivery of the Agreement and the consummation of the transactions contemplated thereby, including delivering a certificate setting forth the expected use and investment of the proceeds to be derived from the execution and delivery of the Agreement (the "Proceeds"), and to make any elections such officers deem desirable regarding any provision requiring rebate of earnings to the United States, for purposes of complying with the provisions of the Internal Revenue Code of 1986, as the same may be amended through the closing date, including applicable Treasury regulations (the "Code"), applicable to "arbitrage bands." (b) The County shall not take or omit to take any action the taking or omission of which will cause its obligations to pay Installment Payments (the "Obligations") to be "arbitrage bonds," within the meaning of Code Section 148, or otherwise cause interest components of Installment Payments to be includable inthe gross income for Federarincome tax purposes of the registered owners of the Obligations_ Without limiting the generality of the foregoing, the County shall comply with any provision of the Code that may require the County to pay to the United States any part of the earnings derived from the investment of the Proceeds. The County shall pay any such required rebate from its general funds. (c) The County covenants that it shall not permit the Proceeds to be used in any manner that would result in (i) 5% or more of the debt service on the Obligations being directly or indirectly (A) secured by an interest in property, or (B) derived from payments in respect of property or borrowed money, being in either case used in a trade or business carried on by any 4 person other than a governmental unit, as provided in Code Section 141(b), (ii) 5% or more of such Proceeds being used with respect to any "output facility" (other than a facility for the furnishing of water), within the meaning of Code Section 141(b)(4), or (iii) 5% or more of such Proceeds being used directly or indirectly to make or finance loans to any persons other than a governmental unit, as provided in Code Section 141(c); provided, however, that if the County receives an opinion of bond counsel acceptable to BB&TGF that compliance with any such covenant is not required to prevent the interest components of Installment Payments from being includable in the gross income for Federal income tax purposes of the registered owners of the Obligations under existing law, the County need not comply with such covenant. (d) The County hereby designates the Obligations as "qualified tax-exempt obligations" for the purpose of Code Section 265(b)(3). The County represents and covenants as follows: (i) The County will in no event designate more than $10,000,000 of obligations as qualified tax-exempt obligations in 1997, including the Obligations, for the purpose of such Section 265(b)(3); (ii) Barring circumstances unforeseen as of the date of delivery of the Agreement, the County will not issue tax-exempt obligations itself or approve the issuance of tax-exempt obligations of any "subordinate entities," within the meaning of Code Section 265(b)(3), and all entities which issue tax-exempt obligations on behalf of the County and its subordinate entities, if the issuance of such tax-exempt obligations would, when aggregated with all other tax-exempt obligations theretofore issued in 1997 by the County and such other entities, result in the County and such other entities having issued a total of more than$10,000,000 of tax-exempt obligations in 1997 (not including "private activity bonds," within the meaning of Code Section 141, other than "qualified 501(c)(3) bonds," within the meaning of Code Section 145), including the Obligations; and, (iii) The County has no reason to believe that the County and such other entities will issue tax-exempt obligations in 1997 in an aggregate amount that will exceed such$10,000,000 limit; provided, however, that if the County receives an opinion of bond counsel acceptable to BB&TGF that compliance with any covenant set forth in (i) or (ii) above is not required for the Obligations to be qualified tax-exempt obligations, the County need not comply with such covenant. 6. Miscellaneous provisions— All other actions of County officers in furtherance of the purposes of this resolution are hereby ratified, approved and confirmed. All other resolutions or parts thereof in conflict with this resolution are hereby repealed, to the extent of the conflict. This resolution shall take effect immediately. ' S Draft of March 10, 1997 Prepared By and Return After Recording To: Robert M. Jessup, Jr. P.O. Box 3168 Chapel Hill, ,NC 27615 This instrument has been preaudited in the manner required by The Local Government Budget and Fiscal Control Act. Finance Officer, Orange County,North Carolina MODIFICATION AGREEMENT STATE OF NORTH CAROLINA ) COLLATERAL IS OR INCLUDES FIXTURES ORANGE COUNTY ) ---_ THIS MODIFICATION AGREEMENT (this "Modification Agreement") is dated as of March 1, 1997, and is granted by ORANGE COUNTY, NORTH CAROLINA, a public body of the State of North-Carolina (the "County"), to F. Louis Loyd, III, a citizen and resident of Mecklenburg County,North Carolina, as trustee (the "Deed of Trust Trustee"), for the benefit of BB&T GOVERNMENTAL FINANCE ("BB&TGF"), which is an operating unit of Branch Banking&Trust Company of North Carolina. This Modification Agreement, among other things, modifies and amends a Financing Agreement and Deed of Trust(the "Original Agreement") dated as of December 1, 1997, which was recorded on December 20, 1997, at Book 1610, Page 667, Orange County Registry. BB&TGF is the assignee of BB&T Leasing Corporation's rights as beneficiary under the Original Agreement. 1 t 6 r The North Carolina Local Government Commission joins in the execution of this instrument for the purpose of evidencing its approval of the modifications effected by this instrument. Branch Banking & Trust Company of North Carolina, in its capacity as Escrow Agent (the "Escrow Agent"),joins in the execution of this instrument for the limited purpose of affirming its additional obligations under the Escrow Agreement referenced below. The parties desire to modify the Original Agreement. The purpose of the modification is to provide additional financing to the County for the Facilities, as defined in the Original Agreement. This Modification Agreement provides for an additional advance to the County, as contemplated by the Original Agreement. This Modification Agreement is given to secure a current advance of$9,000,000. The current scheduled date for final repayment is on or about December 20, 2011. The total amount, including present and future obligations, that may be secured by the Original Agreement, as modified by this Modification Agreement, at any one time remains at $20,000,000. The period within which future obligations may be incurred remains at fifteen years from December 1, 1996. The security interest evidenced hereby is a "construction mortgage" within the meaning of N.C. Gen. Stat. § 25-9-313. Now, therefore, for and in consideration of the premises, and for the purposes described in the Original Agreement, the County covenants and agrees with the Deed of Trust Trustee and BB&TGF(and their respective heirs,successors and assigns), as follows: 1. Pursuant to this Modification Agreement,there shall be provided for the benefit of the County an additional $9,000,000 (for a total principal amount financed of $14,000,000), which advance shall be made by the making an additional deposit of such amount in a new separate account in the Construction Fund established pursuant to Section 4 of the Escrow Agreement dated as of December 1, 1997 (the "Escrow Agreement"), related to the Original Agreement. 2. Exhibit-D-to-the_Original-Agreement is hereby_amended_to read-as set-forth on _ Exhibit A attached to this Modification Agreement and incorporated herein by this reference. 3. Except as modified by this Modification Agreement, the terms and provisions of the Original Agreement are in all respects ratified and confirmed. 4. Notwithstanding any other provision of this agreement or the Original Agreement, the County, the Deed of Trust Trustee and BB&TGF intend to comply with North Carolina General Statutes Section 160A-20. No deficiency judgment may be entered against the County in violation of such Section 160A-20, including, without limitation, any deficiency judgment for amounts that may be owed under this agreement or the Original Agreement when the sale of all of the Mortgaged Property, as defined in the Original Agreement, is insufficient to produce 2 ' 7 enough money to pay in full all Required Payments, as defined in the Original Agreement. 5. This document may be executed in counterparts, including separate counterparts, all of which shall constitute but a single agreement. [The remainder of this page has been left blank intentionally] 3 S 8 M IN WITNESS WHEREOF, the County has caused this instrument to be executed as of the day and year first above written by duly authorized officers. ATTEST: (SEAL) ORANGE COUNTY,NORTH CAROLINA Beverly A. Blythe William L. Crowther Clerk,Board of Commissioners Chair, Board of Commissioners Approved: BRANCH BANKING&TRUST COMPANY OF NORTH CAROLINA, as Escrow Agent Senior Vice President Approved: F. Louis Loyd,III, as Deed of Trust Trustee F. Louis Loyd,III This contract has been approved under the provisions of Article 8, Chapter 159 of the General Statutes of North Carolina. Robert M. High - Secretary,North Carolina Local Government Commission By [Robert M. High or Designated Assistant] [Modification Agreement dated as of March 1, 1997] Exhibit A-Revised Payment Schedule 4 9 STATE OF NORTH CAROLINA ORANGE COUNTY I, a Notary Public of such County and State, certify that William L. Crowther and Beverly A. Blythe personally came before me this day and acknowledged that they are the Chair and Clerk, respectively, of the Board of Commissioners of Orange County, North Carolina, and that by authority duly given and as the act of Orange County, North Carolina, the foregoing instrument was signed in the County's name by such Chair, sealed with its corporate seal and attested by such Clerk. WITNESS my hand and official stamp or seal,this day of March, 1997. Notary Public My commission expires: 5 10 X Exhibit A Revised Exhibit D (Payment Schedule) To Financing Agreement and Deed of Trust dated as of December 1, 1997 (the "Original Agreement"), granted by Orange County, North Carolina, to F. Louis Loyd, III, Deed of Trust Trustee, for the benefit of BB&T Leasing Corporation, and assigns. Dated as of: March 1, 1997 Account Number: 003-152300-001 &002 This Payment Schedule is issued pursuant to a Modification Agreement dated as of March 1, 1997 (the "Agreement"). The Modification Agreement, among other things,modifies and amends the Original Agreement. All terms used herein have the meanings ascribed to them in the Original Agreement. RATES, PAYMENTS AND TERMS Phase I Financing -- The payments required to repay the advance made pursuant to the Original Agreement call for an amortization period of approximately fifteen (15) years. Payments are semi-annually in arrears in the amount of$239,027.18 at an interest rate of 4.92%. A portion of each payment is paid as and represents payment of interest. Payments are due semi-annually beginning on August 1, 1997, and semi-annually on each February 1 and August 1 thereafter, with a final payment of all outstanding principal and accrued and unpaid interest due on December 20,2011, asset forth in Schedule X-1 hereto. Phase II Financing-- The payments required to repay the advance made pursuant to the Modification Agreement call for an amortization period of approximately fifteen (15) years. Payments are semi-annually in arrears in the amount of $ at an interest rate of 4.92%. A portion of each payment is paid as and represents payment of interest. - - -- --- Payments are due semi-annually beginning on 1, 1997, and semi-annually on each 1 and 1 thereafter, with a final payment of all outstanding principal and accrued and unpaid interest due on 20, 2011, as set forth in Schedule X-2 hereto. 6