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Home My WebLink AboutAgenda - 11-05-2013 - 6f1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: November 5, 2013 Action Agenda Item No. 6 -f SUBJECT: Public Hearing on the Financing of Various Capital Investment Plan Projects and County Equipment DEPARTMENT: Finance and Administrative PUBLIC HEARING: (Y /N) Y� Services ATTACHMENT(S): INFORMATION CONTACTS: 1. Copy of Public Hearing Notice 2. Resolution Clarence Grier, 919 - 245 -2453 3. Comparison of Financing Options Robert Jessup, 919 - 933 -9891 PURPOSE: To conduct a public hearing on the issuance of approximately $10,500,000 to finance County and School capital investment projects and County equipment for the year, and approve a related resolution supporting the County's application to the Local Government Commission (LGC) for its approval of the financing arrangements. BACKGROUND: The Board of Commissioners has previously approved the construction and purchase of capital investment projects and equipment for the year. The Board has made a preliminary determination to finance costs for this projects by the use of an installment financing, as authorized under Section 160A -20 of the North Carolina General Statutes. County staff estimates that the total amount to be financed for County and School capital projects and County equipment will be approximately $10,500,000. The financing will also include amounts to pay transaction costs. The statutes require that the County conduct a public hearing on the proposed financing contract. A copy of the published notice of this hearing is provided at Attachment 1. After conducting the hearing and receiving public input, the Board will consider the adoption of the resolution at Attachment 2. This resolution formally requests the required approval from the North Carolina Local Government Commission for the County's financing arrangements, and makes certain findings of fact as required under the LGC's guidelines. County staff has been in contact with LGC staff, and staff expects no obstacles to receiving LGC approval. If the Board adopts the resolution (indicating its intent to continue with the financing plan), the Board will be asked to consider a resolution giving final approval to the financing plan at its November 19, 2013 meeting. Staff expects the LGC to approve the financing plan at the LGC's meeting on December 1. Under the current schedule, staff expects to set the final interest rates 2 and other terms of the financing around November 15, and to close on the financing by the end of December. FINANCIAL IMPACT: There is no financial impact related to this action. However, there will be a financial impact in proceeding with the financing. A preliminary estimate of maximum debt service applicable to the County projects financing would require the highest debt service payment of $1,482,631 falling in fiscal years 2015 -2019. The tax rate equivalent for the highest debt service payment is approximately .923 cents. Based on current valuations, no adjustment to the tax rate associated with this financing is contemplated to occur during the period noted. RECOMMENDATION(S): The Interim Manager recommends that the Board conduct the public hearing and adopt the resolution supporting the application to the Local Government Commission for approval of the financing arrangements. 3 Attachment 1 Orange County, North Carolina -- Notice of Public Hearing Installment Financing for Various County Projects The Board of Commissioners of Orange County, North Carolina, will hold a public hearing on Tuesday, November 5, 2013, at 7:00 p.m. (or as soon thereafter as the matter may be heard). The purpose of the hearing is to take public comment concerning a proposed financing contract, under which the County would borrow approximately $10,500,000 to finance costs of various County projects. The hearing will be held in the Commissioners' meeting room in Central Orange Senior Center, 103 Meadowland Dr., Hillsborough, North Carolina. The projects to be financed may include the acquisition and equipping of a new wing on Culbreth Middle School in Chapel Hill, renovation of the County's Whitted Building in Hillsborough, and a variety of other County projects, including vehicle replacements, information technology upgrades and replacements, HVAC improvements, roof replacements and various communication systems upgrades and replacements. The County may also use financing proceeds to provide required reserves and to pay financing costs. The proposed financing would be secured by a lien on some or all of the property to be improved or acquired through the financing. The County expects this may include the Culbreth Middle School (and the related real property). There would be no recourse against the County or its property (other than the pledged facilities and associated land) in the case of a default. All interested persons will be heard. The County's plans are subject to change based on the comments received at the public hearing and the Board's subsequent discussion and consideration. The County's entering into the financing is subject to obtaining approval from the North Carolina Local Government Commission. Persons wishing to make written comments in advance of the hearing or wishing more information concerning the subject of the hearing may contact Clarence Grier, Orange County Finance Officer, Post Office Box 8181, Hillsborough, NC 27278 (telephone 919/245 -2453, email cgrier @orangecountync.gov). 4 RES- 2013 -093 Attachment 2 Resolution Supporting an Application to the Local Government Commission for its Approval of a Financing Agreement for the County WHEREAS -- The Board of Commissioners has previously determined to carry out the acquisition and construction of various public improvements, as identified in the County's capital improvement plan. The Board desires to finance the costs of these projects by the use of an installment financing, as authorized under Section 160A -20 of the North Carolina General Statutes. Under the guidelines of the North Carolina Local Government Commission, the Board must make certain findings of fact to support the County's application for the LGC's approval of the County's proposed financing arrangements. THEREFORE, BE IT RESOLVED by the Board of Commissioners of Orange County, North Carolina, that the County makes a preliminary determination to finance approximately $10,500,000 to pay capital costs of various public improvements. The proposed list of projects and improvements to be financed appears on Exhibit A. The Board will determine the final amount to be financed by a later resolution. The final amount financed may be slightly lower or slightly higher than $10,500,000. Some of the financing proceeds may provide reimbursement to the County for prior expenditures on project costs, and some proceeds may be used to pay financing costs. BE IT FURTHER RESOLVED that the Board of Commissioners makes the following findings of fact: (a) The proposed projects are necessary and appropriate for the County under all the circumstances. (b) The proposed installment financing is preferable to a bond issue for the same purposes. The County has no meaningful ability to issue non -voted general obligation bonds for this project. These projects will not produce sufficient revenues to support a self - liquidating financing. The County has in the past issued substantial amounts of voter - approved bonds, and it is appropriate for the County to balance its capital finance program between bonds and installment financing. 5 The County expects that in the current interest rate environment for municipal securities there would be no material difference in interest rates between general obligation bonds and installment financings for these projects. (c) The estimated sums to fall due under the proposed financing contract are adequate and not excessive for the proposed purpose. The County will closely review proposed financing rates against market rates with guidance from the LGC and its financial adviser. All amounts financed will reflect either approved contracts, previous actual expenditures or professional estimates. (d) As confirmed by the County's Finance Officer, (i) the County's debt management procedures and policies are sound and in compliance with law, and (ii) the County is not in default under any of its debt service obligations. (e) The County estimates that the maximum tax rate impact of paying debt service on the financing will be the equivalent of up to approximately 0.04 cents per $100 of valuation. Given this low amount and based on the estimated interest rates to be payable and the proposed financing term, the County expects to be able to repay the financing within current resources, and no actual tax rate increase related to this financing will be necessary. (f) The County Attorney is of the opinion that the proposed project is authorized by law and is a purpose for which public funds of the County may be expended pursuant to the Constitution and laws of North Carolina. BE IT FURTHER RESOLVED as follows: (a) The County intends that the adoption of this resolution will be a declaration of the County's official intent to reimburse project expenditures from financing proceeds. The County intends that funds that have been advanced for project costs, or which may be so advanced, from the County's general fund, or any other County fund, may be reimbursed from the financing proceeds. (b) This resolution takes effect immediately. Exhibit A — proposed projects Project Estimated Amount Description Culbreth Middle School Science Science Wing for Chapel Hill Wing $ 4,971,676 — Carrboro City Schools $ 130,000 Community Geothermal HVAC Projects Projects Roofing Projects $ 115,000 County Equipment, BOCC Initiatives, Firehouse Software and Information Technology $ 1,436,000 Central Permitting Software Whitted Building Renovations $ 1,700,000 BOCC Meeting Room Additional Channels for Existing Towers increase the Viper Radio System $ 500,000 Viper System capacity Communication System Improvements $ 709,062 Purchase of additional Viper Radios Vehicle Replacements $ 899,416 Vehicles Purchases Attachment 3 iii 111111 • %ICie: Public Scales are tram Davenloo i s Fixec, Encode Desk as C' i 13, 'PC rai s are trod receni riot � on Sir, -./, ..r ii"... 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RsacriCRs c�u c.^ received to a iet Princioa1 Amo ii avion, Firs, fnierest biyr?etli on 6,z-1 `201 , an Firs t Principal Payr?c�Ri on i2:' i,'�t�s * "Cr att t-�c�;J sC�"�"C;Ji! ?mss DAvENPORT & COMPANY _ 11 v _._