HomeMy WebLinkAboutAgenda - 10-15-1996 - 9a ti 1
Orange County
Board of County Commissioners
Action Agenda
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Action Agenda Item Abstract Item No a
Meeting Date: October 15, 1996
Subject: Long Range School Capital Funding Options
Department Public Hearing Yes No x
County Manager — —
Budget Office Budget Amendment
Needed Yes No_x_
Attachment(s) Information Contact
Capital Financing Sally Kost ext. 2151
Spreadsheets Telephone and Extension Number
Hillsborough 732-8181
Chapel Hill 968-4501
Durham 688-7331
Mebane 227-2031
Purpose
To adopt a plan for financing long range school capital needs.
Background
At the August 20, 1996 Commissioners meeting, County staff presented a report
on long range school capital funding options. The Board reviewed this plan again
at their meeting on September 17, and endorsed the plan's conceptual
approach, asking for additional staff work on three issues:
• The Board of Commissioners asked Staff to explore ways to address
the concerns expressed by the Chapel Hill/Carrboro City Schools
board members and the superintendent. Their concern was that
Option 5A would reduce Capital Improvements Plan funding in the
early years of the planning period, although through the nine year
planning period, funding would be more than currently available.
• In addition to the concerns expressed by the Chapel Hill/Carrboro City
Schools, the Board of Commissioners directed that the annual revenue
from the one cent on the tax rate that is currently earmarked for a
capital reserve should remain for that purpose. The plan as it was
presented at the September 17 Commissioners' meeting, included
shifting in fiscal year 1998-99, the earmarking of these funds to County
capital projects.
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• The Board of Commissioners encouraged staff to see if funding for
County projects could be "held harmless" without tapping the funds
earmarked for a land capital reserve.
Option 5B presented here, addresses each of these concerns as will be
explained below.
Option 5A as presented on September 17, included the following key elements:
• All funding currently earmarked for capital projects would continue.
Debt service (existing and planned) would be deducted before funds
are allocated to the two School systems and to County capital projects.
• The equivalent of three cents on the general fund property tax rate
would be earmarked for recurring capital for the Schools. These funds
would be allocated to each school system based on the State
Department of Public Instruction planning allocation (projected student
enrollment) which is prepared in April each year.
• Orange County citizens would be asked to vote on a $40 million bond
referendum in November 1997. This referendum would include $35
million for Schools with the balance used for County projects, and
possibly housing and parks/recreation.
The funding plan as presented here is based on the new facility needs as
presented by the two school systems during the Capital Improvements Plan
process last Spring. The cost for the new facilities was based on the School
Construction Standards approved by the Board of Commissioners in May 1996,
adjusted for five percent annual inflation until each project is bid. The School
systems can decide to construct a school at less than the Level Two standards
adopted, therefore freeing up funds for on-going capital projects.
A fundamental element of the conceptual plan endorsed by the Commissioners
is review of the capital needs identified, by a Commissioner appointed Capital
Needs Advisory Committee. As the needs assessment process is conducted, the
committee studying school and county capital needs may want to review the
projects that have already been identified, to determine if other adjustments
should be made in the capital funds distribution formula to ensure that the
highest priority capital needs are being addressed.
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In response to the concerns expressed by the Chapel Hill/Carrboro City Schools
regarding reduced funding in the early years of the capital plan, Staff has made
the following adjustments to Option 5A:
• In the original plan, the $40 million in bonds were to be sold in two
installments of$20 million each. In this latest revision, bonds are assumed to
be sold in three installments of$10 million, $20 million, and $10 million. This
change reduces debt service payments in the first several years of the plan,
thus freeing up funds for on-going projects. The drawback of splitting the
bonds into three separate bond sales is the issuance costs, which are
approximately $50,000 each sale. However, issuance fees have in the past
been paid from interest earnings on bond proceeds sold and not yet
expended. Staff proposes to continue this practice.
The actual decision on the number and amount of each bond sale is based
on cash flow projections usually prepared by project architects. Although the
assumptions in this plan seem reasonable to meet the cash flow
requirements of the planned projects, staff will need Board flexibility in how
and when these bond sales are actually structured and carried out.
• The long range funding plan includes bond funds for each school system for
renovations/school improvements. The plan includes $3,002,535 for the
CHCCS and $3,795,953 for the Orange County Schools. In the plan as
presented in September, these funds were projected to be appropriated
beginning in 1998-99, with one third of the total amount included in each of
the next three years. Since bond proceeds will be available during fiscal year
1997-98, the first year of appropriation of these funds under Option 5B was
advanced one year and the funds distributed to be more in line with the
currently adopted Capital Improvements Plan.
• Although the revised plan addresses the concerns of the Chapel Hill/Carrboro
City Schools, without additional modification, the impact on the Orange
County Schools would have been that Orange County Schools would receive
about $1 million less-when compared to the same time frame in the current
Capital Improvements Plan. This is due to the adjustments in the bond sale
schedule, altering the peak year of debt service by pushing it back one year,
and slightly reducing the total peak year amount. Because the difference in
the peak year amount and the actual debt service payment is allocated to the
Orange County Schools, this change in the debt schedule would have
negatively impacted the total allocation for Orange County Schools. To
adjust for this impact, an additional $1 million in bond funds from the $5
million in County bond funds is allocated under Option 513 to Orange
County Schools. This would result in $36 million in bonds for the Schools
and $4 million for County/recreation/parks projects. The $1 million that is
allocated to the Orange County Schools could be made up for County
a r
projects in fiscal year 2006-07, from a portion of the funds that is the
difference between the bond peak year and the actual debt service payment
in fiscal year 2006-07.
The Board of Commissioners also expressed concern about using the one cent
that is earmarked for a capital reserve account for County projects beginning in
1998-99. As staff has reviewed the funding options for County projects, the only
funding source that could be identified to replace these lost funds for County
projects is a one cent increase in the general fund property tax rate. This tax
increase would occur in 1998-99. Because the specific purpose of this capital
reserve has not been adopted by the Board of Commissioners, the Board may
want to consider adopting a policy for the purpose and distribution of these
funds.
Recommendation
The Manager recommends that the Board of Commissioners adopt the capital
policy as defined in Option 5A presented at the September 17 Board of
Commissioners meeting, with the changes outlined in this abstract.
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School Financing Options
Facilities
Year
Needed CHCCS OCS Total
Elem School#8 1999 14,100,000 - 14,100,000
CH High Addition 1999 11,800,000 - 11,800,000
Middle School#4 2000 22,500,000 - 22,500,000
Elem School OCS 1999 - 14,500,000 14,500,000
Total $ 48,400,000 $ 14,500,000 $ 62,900,000
Funding Sources
State Bond $ 10,995,840 $ 5,980,160 $ 16,976,000
Impact Fees
1997-98 1,100,000 344,250 1,444,250
1998-99 1,122,000 351,135 1,473,135
1999-00 1,144,440 358,158 1,502,598
Total Impact Fees $ 3,366,440 $ 1,053,543 $ 4,419,983
Private Placement(CHCCS Elem School)
Fall 1996 5,000,000 - 5,000,000
Fall 1997 9,000,000 - 9,000,000
Total Private Placement $ 14,000,000 $ - $ 14,000,000
County Bond Referendum
CHCCS Middle School. 20,735,185 - 20,735,185
OCS Elem School - 7,466,297 7,466,297
Total Revenue New Schools $ 49,097,465 $ 14,500,000 $ 63,597,465
Bond Funds for Renovations 3,002,535 4,795,983 7,798,518
Total Funding For Schools $ 52,100,000 $ 19,295,983 $ 71,395,983
Revised 9/17
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October 15, 1996 10/10/96
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Option 5 - Revised
Remove recurring capital from the formulas and earmark 3 cents on the General Fund Property Tax Rate for Recurring Capital
CHCCS 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 Total
CurrentClP 2,856,079 2,413,496 2;040,546 2,343,801 2,658,788 2,370,397 2,102,293 2,459,891 2,791,110 22,036,401
Current Recurring 874,500 874,500 874,500 874,500 874,500 874,500 874,500 874,500 874,500 7,870,500
Total Current 3,730,579 3,287,996 2,915,046 3,218,301 3,533,288 3,244,897 2,976,793 3,334,391 3,665,610 29,906,901
Option 5 Revised CIP 2,706,244 2,235,422 1,824,645 2,084,759 2,331,647 2,672,295 3,025,3$4 3,375,535 3,762,406 24,018,307
Option 5 Recurring 1,026,600 1,05Z398 1,089,120 1,121,794 1,155,447 1,190,111 1,225,814 1,262,589 1,300,466 10,429,338
Total Option 5 Revised 3,732,844 3,292,820 2,913,765 3,206,553 3,487,094 3,862,405 4,251,168 4,638,124 5,062,872 34,447,645
difference 2,265 4,824 (1,281) (11,748) (46,194) 617,508 1,274,375 1,303,733 1,397,262 4,540,744
OCS
-Current ClP 2,156,538 2,347,991 1,935,702 2,151,623 2,376,010 2,611,711 2,862,139 3,063,344 3,353,102 22,858,160
-Current Recurring 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 6,750,000
Total Current 2,906,538 3,097,991 2,685,702 2,901,623 3,126,010 3,361,711 3,612,139 3,813,344 4,103,102 29,608,160
Option 5 Revised CIP 2,161,496 2,334,004 1,812,183 1,893,698 1,831,154 2,079,642 2,696,546 3,247,506 3,882,971 21,939,200
Option 5 Recurring 743,400 765,702 788,673 812,333 836,703 861,804 887,658 914,288 941,717 7,552,279
Total Option 5 Revised 2,904,896 3,099,706 2,600,856 2,706,032 2,667,857 2,941,446 3,584,205 4,161,795 4,824,687 29,491,479
difference (1,642) 1,715 (84,846) (195,591) (458,153) (420,265) (27,934) 348,451 721,585 (116,681)
The difference between$750,000 and this amount,$6,600 will be made up from fund balance.
ON
October 15, 1996
Revenue: 1997-98 1998-99 1999-00 2000-01 21001-02 - 2002-03 2003-04 200405 2005-06 Total Line H
Sales Tan Revised 91% 7,500,000 8,025,000 8,586,750 9,187,823 - 9,830,970 10,519,138 11,255,478 12,043,361 12,886,3% 89,834,916 1
Property Tax 6,977,876 6,888,217 6,807,937 6,728,922 6,651,211 6,577,841 6,499,854 6,426,290 6,354,194 59,912,342 2
Skills Dev Ctr Rental 85,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000 765,000 3
Inmate Jail Fees 164,000 164,000 164,000 164,000 164,000 164,000 164,000 164,000 164,000 1,476,000 4
Total Revenue 14,726,876 15,162,217 15,643,687 16,165,745 16,731,181 17,345,979 18,004,332 18,718,651 19,489,590 151,988,258 5
Debt Service:
Existing 9,651,886 9,403,856 8,717,986 8,481,422 8,248,876 7,994,267 7,754,507 7,521,022 7,288,557 75,062,379 6
New 601,200 2,761,200 5,028,700 6,081,200 6,004,200 5,851,200 5,691,200 5,591,200 5,431,200 43,041,300 7
Total Debt Service 10,253,006 12,165,056 13,746,686 14,562,622 14,253,076 13,845,467 13,445,707 13,112,222 12,719,757 118,103,679 8
Revenue Less Debt 4,473,790 2,997,161 1,897,001 1,603,123 2,478,105 3,500,512 4,558,625 5,606,429 6,769,833 33,884,579 9
New Debt Property Taxes(1) 0 10
Revenue Less Debt 4,473,790 2,997,161 1,897,001 1,603,123 2,478,105 3,500,512 4,558,625 5,606,429 6,769,833 33,884,579 11
Allocation
For Schools 50% 2,236,895 1,498,581 948,501 801,562 1,239,053 1,750,256 2,279,313 2,803,215 3,384,917 16,942,290 12
!, For County 1 50%1 2,236,895 1,498,581 948,501 801,562 t,239,053 1,750,256 2,279,313 2,803,215 3,384,917 16,942,290 13
Split of Net Amount Available 4,473,790 2,997,161 1,897,001 1,603,123 2,478,105 3,500,512 4,558,625 5,606,429 6,769,833 33,884,579 14
Schools - - -- -
From Above 2,236,895 1,498,581 948,501 801,562 1,239,053 1,750,256 2,279,313 2,803,215 3,384,917 16,942,290 15
PSBF Revised 9!% 600,000 630,000 661,500 694,575 729,304 765,769 804,057 844,260 886,473 6,615,938 16
Total Amount for Schools 2,836,8% 2,128,581 1.,610,001 1,4 96,137 1,968,357 2,516,025 3,083,370 3,647,475 4,271,390 23,558,228 17
Allocation
OCS 42% 1,191,496 -894,004 - 676,200 628,377 826,710 1,056,731 1,295,015 1,531,939 1,793,984 9,894,456 18
Impact Fees __ 365,321 372,627 380,080 387,681 395,435 403,344 2,304,488
Peak Debt Service 281,817 642,831 1,013,850 1,320,132 1,685,643 4,944,273
Bond Funds for Renovations 970,000 1,440,000 1,135,983 900,000 350,000 4,795,983 19
Total OCS 2,161,4% 2,334,004 1,812,183 1,893,698 1,8312154 2,079,642 2,6%,546 3,247,506 3,882,971 21,939,200 20
CHCCS _ 58% 1,645,399 - -_1,234,577 - 933,800- - 867,759 1,141,647 1,459,295 1,788,354 2,115,535 2,477,406 13,663,772 21
Impact Fees 1,167,000 1,190,000 1,213,000 1,237,000 1,260,000 1,285,000 7,352,000
Bond Funds for Renovations 1,060,845 1,000,845 890,845 50,000 3,002,535 22
Total CHCCS 2,706,244 &235 422 1,824,645 2,084,759 2,331,647 2,672,295 3,025,354 3,375,535 3,762,406 24,018,307 23
County
From Above 2,236,895 1,498,581 948,501 801,562 1,239,053 1,750,256 2,279,313 2,803,215 3,384,917 16,942,290 24
Restricted:
Payment in Lieu 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 135,000 25
Transportation 99,850 86,000 33,480 120,750 82,592 82,592 82,592 82,592 82,592 753,040 26
Bond Proceeds for Projects 666,667 666,667 666,666 1,999,999 27
Total County 2,351,745 2,266,247 1,663,647 1,603,977 1,336,645 1,847,848 2,376,905 2,900,807 3,482,509 19,8311,329 28
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October 15, 1996
Funding Sources for All Capital and Debt Service - Option 5 - Revised
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 Total
Sales Tax
Schools 5,250,000 5,617,500 6,010,725 6,431,476 6,881,679 7,363,397 7,878,834 8,430,353 9,020,477 62,884,441
County 2,250,000 2,407,500 2,576,025 2,756,347 2,949,291 3,155,741 3,376,643 3,613,008 3,865,919 26,950,475
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Total Sales Tax $7,500,000 $8,025,000 $8,586,750 $9,187,823 $9,830,970 $10,519,138 $11,255,478 $12,043,361 $12,886,396 $89,834,916
Property Tax:
For 1977 Debt and General-Schools 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 800,000 7,200,000
For 1988 Debt-Schools(equivalent to 2 cents) 1,010,908 1,041,235 1,072,472 1,104,646 1,137,786 1,174,919 1,207,077 1,243,289 1,280,588 10,272,920
For 1988 Debt-County 353,818 364,432 375,365 386,626 398,225 410,172 422,477 435,151 448,206 3,594,472
For 1992 Debt-Schools 4,728,150 4,607,550 4,485,100 4,362,650 4,240,200 4,117,750 3,995,300 3,872,850 3,750,400 38,159,950
Human Services Automation(one half of one L
percent) 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 450,000
Utilities Extension Fund-Projects 35,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 235,000
Recurring Capital(1)
Total Property Tax $6,977.87 6 888 217 $6,807,937 $6,728,922 $6,651,211 $6,577,841 6 499 8 $6,426,290 $6,354,1 94 $59,912,342
Restrictive Revenue
For Schools Only:
Impact Fees-CHCCS 1,100,000 1,122,000 1,144,440 1,167,000 1,190,000 1,213,000 1,237,000 1,260,000 1,285,000 10,718,440
Impact Fees-OCS 344,250 351,135 358,158 365,321 372,627 380,080 387,681 395,435 403,344 3,358,031
Public School Building Fund 600,000 630,000 661,500 694,575 729,304 765,769 804,057 844,260 886,473 6,615,939
State School Bond CHCCS 2,748,960 2,748,960 2,748,960 2,748,960 10,995,840
State School Bond OCS 1,495,040 1,495,040 1,495,040 1,495,040 5,980,159
Total Schools Restricted 6,288,250 6,347,135 6,408,098 6,470,896 2,291,931 2,358,849 2,428,738 2,499,695 2,574,817 37,668,409
For County Only:
Payment-in-Lieu 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 135,000
Transportation Co-Payment 99,850 86,000 33,480 120,750 82,592 82,592 82,592 82,592 82,592 753,040
Rental Revenue-Skills Development Ctr 85,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000 765,000
Inmate Jail Fees(Federal Prisoners) 164,000 164,000 164,000 164,000 164,000 164,000 164,000 164,000 164,000 1,476,000
Total County Restricted 363,850 350,000 297,480 384,750 346,592 346,592 346,592 346,592 346,592 3,129,040
Total Restricted 6,652,100 6,697,135 6,705,578 6,855,646 2,638,523 2,705,441 2,775,330 2,846,287 2,921,409 40.797,449
Total Revenue
For Schools 18,077,308 18,413,420 18,776,395 19,169,668 15,351,596 15,814,915 16,309,950 16,846,187 17,426,283 156,185,720
For County 3,052,668 3,196,932 3,323,870 3,602,723 3,769,108 3,987,505 4,220,712 4,469,751 4,735,717 34,358,957
October 15, 1996 Total Revenue 21,129,976 21,610,352 22,100,265 22,772,390 19,120,704 19,802,420 20,530,662 21,315,938 22,162,000 190,544.706
00
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 200405 2005-06 Total
Expenditures
Debt Service-Existing:
1977 Bonds 490,000 468,000 958,000
1988 Bonds-Schools($22m) 2,425,539 2,340,426 2,153,724 2,066,813 1,984,446 1,898,882 1,810,313 1,726,481 1,643,420 18,050,044
1988 Bonds-County($7m) 627,926 607,609 698,891 670,688 643,959 616,193 587,452 560,249 533,295 5,546,262
1992 Bonds -Schools($52m) 4,728,150 4,607,550 4,485,100 4,362,650 4,240,200 4,117,750 3,995,300 3,872,850 3,750,400 38,159,950
Private Placement-McDougle Elem 961,300 961,300 961,300 961,300 961,300 961,300 961,300 961,300 961,300 8,651,700
Private Placement-Skills Development 169,445 169,445 169,445 169,445 169,445 150,616 150,616 150,616 150,616 1,449,689
Private Placement-So. Hu Srvs/Crthouse 249,526 249,526 249,526 250,526 249,526 249,526 249,526 249,526 249,526 2,246,734
Total Existing Debt $9,651.88 6 9 403 85 $8,717.98 6 8 481 422 $8,248,8 76 7 994 267 $7,754,507 $7,521,022 $7,288,557 75 062 379
Debt Service - Projected
Private Placement Jail/CH Project 40,200 40,200 40,200 40,200 40,200 40,200 40,200 40,200 40,200 361,800
Debt Service$10m Bond Installment 1(1998) 1,150,000 1,117,500 1,085,000 1,052,500 1,050,000 987,500 955,000 922,500 8,320,000
Debt Service$20m Bond Installment 2(1999) 2,300,000 2,235,000 2,170,000 2,105,000 2,040,000 1,975,000 1,910,000 14,735,000
Debt Service$10m Bond Installment 3 (2000) 1,150,000 1,170,500 1,085,000 1,052,500 1,050,000 987,500 6,495,500
Private Placement-CHCCS Elem 561,000 561,000 561,000 561,000 561,000 561,000 561,000 561,000 561,000 5,049,000
-Installment 2 1,010,000 1,010,000 1,010,000 1,010,000 1,010,000 1,010,000 1,010,000 1,010,000 8,080,000
Total Projected New Debt $601,200 $2,761,200 $5,028,700 $6,081,200 $6,004,2 00 5 851 2 $5,691, $5,591,2 00 5 431 20 $43,041,30 0
Total Debt Service $10,253.08 6 $12,165,056 $13,746, $14,562,622 $14,253,076 $13,845,467 $13,445,707 $13,112,222 $12,719,757 $118,103,679
October 15, 1996
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