HomeMy WebLinkAboutAgenda - 11-14-1995 - VII-A 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
Action Agenda
Item No •A
ACTION AGENDA ITEM ABSTRACT
Meeting Date: November 14, 1995
SUBJECT: Construction Project Financing Agreement - Jail/Courthouse
Additions and Southern Human Services Center
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DEPARTMENT Finance PUBLIC HEARING YES x NO
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BUDGET AMENDMENT
REQUIRED YES x NO
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ATTACHMENT(S) INFORMATION CONTACT
Summary of Financing Proposals Ken Chavious, ext 2450
Public Hearing Notice TELEPHONE NUMBER
NationsBank Financing Proposal Hillsborough 732-8181
Chapel Hill 968-4501
Mebane 227-2031
Durham 688-7331
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PURPOSE: To conduct a public hearing about , and consider approval of ,
a proposal from NationsBank to provide $2 million in installment
purchase financing for the planned additions to the Jail and New
Courthouse, and for a portion of the Southern Human Services Center .
BACKGROUND: At the September 5 , 1995 meeting , the Board of
Commissioners authorized staff to solicit proposals for private
placement financing of $2 , 000, 000 to supplement existing funds for
several County construction projects . Of that amount, $1 . 5 million
would help fund the construction of additions to the County Jail and
New Courthouse. The remaining $500 , 000 would be allocated to complete
the funding for the Southern Human Services Center.
Subsequently, on October 2, 1995 , the Board adopted a resolution
authorizing staff to seek approval from the Local Government Commission
(LGC) to facilitate the financing . In conjunction with the LGC
application process, County staff disseminated Requests for Financing
Proposals to interested lenders. Proposals were due to the County by
November 8 , 1995. County staff received and reviewed Financing
Proposals from 6 prospective lenders. A table summarizing the
proposals is included as page 3 of this abstract.
Staff have reviewed these proposals and believe that the most
advantageous proposal is for the County to enter into an agreement with
NationsBank at a 10 year fixed rate of 4. 35% . The total interest
payments by the County would be about $495 , 000 under this proposal .
By way of comparison, staff had conservatively estimated in September
that interest costs of the proposed financing might slightly exceed $1
million. The County had requested that prospective lenders offer
proposals for 15 year financing arrangements. As the table shows ,
NationsBank also submitted the best 15 year proposal , at a rate of
4 . 40%, with total interest payments of about $765 , 000 . Even with the
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10 year proposal , total installment purchase payments during the first
several years would be lower than the conservative estimates prepared
by staff in September. Given that , and the substantial total interest
savings of about $270 , 000 , Staff believes it is worthwhile to pursue
the 10 year arrangement rather than the 15 year arrangement .
The County would receive the full $2 million at closing, which would be
placed in a NationsBank escrow account on behalf of the County. The
County would withdraw funds with 14 days notice to NationsBank to meet
construction payments . While in escrow, unexpended portions of the $2
million would earn interest for the County (currently at a rate
of 5 . 600 ) , thus further reducing the net cost to the County of the
installment purchase financing.
The LGC requires that governments conduct a public hearing on financing
agreements of this nature prior to their consideration of the
application for approval . At the October 17 , 1995 meeting , the Board
established November 14, 1995 as the date for the required public
hearing. The LGC will consider the County' s application for approval
of the financing agreement on Tuesday; December 5 , 1995 . Assuming that
both the Board and the LGC approve the financing, closing and receipt
of funds will occur by January 15 , 1996 .
RECOMMENDATION(S) : The Manager recommends that the Board of
Commissioners conduct the public hearing , and approve the proposed
financing agreement with NationsBank, subject to final document review
by County staff and County Attorney.
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NOTICE OF PUBLIC HEARING
CONCERNING A PROPOSED INSTALLMENT PAYMENT AGREEMENT
OF THE COUNTY OF ORANGE, NORTH CAROLINA
TO FINANCE ADDITIONS TO THE COUNTY JAIL AND COURTHOUSEp
AND THE CONSTRUCTION OF A SOUTHERN HUMAN SERVICES CENTER.
NOTICE IS HEREBY GIVEN of a public hearing to be held at
7:30 P.M. on -November 14, 1995, in the OWASA Meeting Room on
Jones Ferry Road in Carrboro, North Carolina, for the purpose
of considering whether the Board of Commissioners for the
County of Orange, North Carolina should approve a proposed
installment payment agreement and certain related documents
under which the County would obtain financing for the
construction and equipping of projects consisting of
additions to the County Jail, New Courthouse and new
construction of a Southern Human Services Center, to include
landscaping and other related site work.
Under the proposed installment payment agreement and
related documents the County would secure the repayment by it
of moneys advanced pursuant to such installment payment
agreement by granting a security interest in such project and
certain related property, including the sites of such
project.
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Beverly A. Blythe
Clerk to the Board of Commissioners
for the County of Orange,
North Carolina
ORANGE COUNTY, NORTH CAROLINA
COMMITMENT PACKAGE
NATIONSBANK, N.A.
137 E. FRANKLIN STREET
P.O. BOX 570
CHAPEL HILL, NC 27514
NOVEMBER 8. 1995
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NationsBank, N.A.(Carolinas Tel 919 918-4245
Commercial Banking Group Fax 919 967-3881 6
P. O. Box 570
Chapel Hill, NC 27514-0570
NationsBank
November 6, 1995
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Mr. Ken Chavious
Finance Officer
Orange County Finance Office
P.O. Box 8181
Hillsborough, NC 27278
Dear Mr. Chavious:
NationsBank is pleased to have the opportunity to bid on Orange County's
Proposed Installment Purchase Financing request. Enclosed please find our
commitment letter and related attachments.
The commitment letter presents two options featuring a 10 and a 15 year
amortization, each fully funded. Orange County will be able to draw the full
loan amount at closing. The funds can then be housed in an escrow account
and withdrawn as needed for construction.
' With each option, NationsBank would establish an escrow account for
investment of the excess funds over the construction period. There are two
options for this account. First, the funds could be placed in a Public
Investment Account, which currently bears an interest rate of 2.36% with a
yield of 2.39%. This option would allow Orange County immediate access to
the funds at any time. Additionally, NationsBank will secure these deposits
with U.S. Treasuries.
The second option would be to invest the funds in Orange County's existing
r 14-day Time Open Account, which currently bears an interest rate of 5.60%.
Orange County would have access to the funds at any time given 30 days
notice. NationsBank could accommodate any withdrawal schedule that
Orange County might have, given appropriate notice. The Time Open
Account will also be secured by U.S. Treasuries.
USA
t OM
Official Sponsor
1994/19% Member FDIC
7
Both the Public Investment and the Time Open interest rates are subject to
change weekly.
Ken, we look forward to hearing from you soon. Please call with any
questions you may have about our proposal.
Yours truly,
Denise Corey
Chapel Hill City Executive
(919) 918-4203
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NationsBank, N.A. (Carolinas) Tel 919 918-4245
Commercial Banking Group Fax 919 967-3881 g
P.O. Box 570
Chapel Hill, NC 27514-0570
NationsBank
It November 8, 1995
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Mr. Ken Chavious
Finance Officer
Orange County Finance Office
P.O. Box 8181
Hillsborough, NC 27278
Dear Mr. Chavious:
NationsBank of North Carolina, N.A. ("Bank") is pleased to provide a financing
commitment to Orange County ("Borrower") pursuant to the Installment Financing
Proposal dated October 11, 1995. Terms and conditions are as follows:
BORROWER: Orange County, North Carolina.
PURPOSE: To provide financing for construction of an addition to the
County Jail and Courthouse and a new Human Services
Center.
TYPE OF FACILITY: A term loan to be fully funded at closing
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AMOUNT: Up to $2,000,000.00.
INTEREST RATE: The Borrower will have the choice of the following interest rate
options:
15 Year Amortization 4.40% (Exhibit A)
10 Year Amortization 4.35% (Exhibit B)
For any interest rate option, interest will be calculated on the basis of the 365/365 day
method.
USA
J 0"
Official Sponsor
1994/1996 Member FDIC
9
TERMS: Equal payments of principal and interest shall be due semi-
annually beginning on July 15, 1996. See attached
amortization schedules for payment amounts.
FEE: The Bank's standard fee of 1% will be waived.
MATURITY: 15 Year Amortization January 15, 2011
10 Year Amortization January 15, 2006
SECURITY: A first security interest in the land and buildings of the Jail
j being financed and as described in the Orange County
t Installment Financing Proposal dated October 11, 1995.
CONDITIONS TO
FIRST ADVANCE: Prior to making the first advance to the Borrower, the
following precedent conditions shall have occurred:
(A) The Bank shall have received, duly executed, all
promissory notes, loan agreements, deeds of trust, security
agreements, financing statements, borrowing authorization
documents and resolutions, and other documents necessary or
advisable in connection with the loan, all of which shall be in
,= form and substance satisfactory to Orange County, and to the
Bank and its counsel. A complete legal description of the
collateral will be sent to the Bank by January 15, 1996, if this
commitment is accepted. It should also be noted that the Bank
will not require a new survey, appraisal, or environmental
report to be obtained; however, the Bank would like copies of
these items if they are available.
(B) The Bank shall have received the written opinion of
Borrower's counsel as to the validity and enforceability of the
loan documents and such other matters as the Bank may
reasonably require. The Bank shall also have received the
opinion of Borrower's counsel that all security interest in
collateral constitutes a first priority lien.
OTHER CONDITIONS: This financing commitment is made under provisions of North
Carolina General Statute 160A-20, and is subject to approval
by the Local Government Commission.
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This financing commitment is contingent upon Orange
County's qualification as a small issuer pursuant to IRS
Section 265 (b) 3. If Orange County should issue more than
$10,000,000.00 in tax-exempt obligations during the calendar
year 1996, the Bank will adjust its interest rate on this credit
facility to the extent necessary to produce the same yield to the
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Bank using the 100% TEFRA Disallowance Rate as required if
Orange County is classified as a "large issuer."
Should Standard & Poor's or Moody's downgrade any of
Orange County's debt by two grades or more from its current
^� rating, NationsBank will have the right to adjust its interest
�j rate on this credit facility to the extent necessary to produce
the same yield to the Bank.
The loan documents shall include a non-appropriation clause,
and a "no deficiency judgment"provision.
The facility will close by January 15, 1996, with the first draw
funded on that date.
NationsBank will establish an Escrow Account which will
house the advanced funds. The County may withdraw funds
from the account as needed with each draw approved by
NationsBank.
The Bank will engage its counsel to prepare loan documents, including all documents
required to perfect the Bank's real estate lien. All the Bank's legal expenses associated
with closing this facility will be paid by the County.
Although NationsBank is waiving the requirement for any environmental due diligence,
Orange County would be responsible for and pay any expenses assessed due to
environmental contamination which is identified prior to or after closing of this credit
facility.
All requested addendum documents are attached to this commitment letter.
If the above financing offer is acceptable to you, please acknowledge by having the
appropriately authorized representative(s) of Orange County execute the enclosed copy of
this letter and return it to the undersigned. The aforementioned interest rates are good
through January 8, 1996. If this commitment is not accepted by that date, the interest
rates contained herein are subject to change.
v We appreciate having an opportunity to work with Orange County on this new project and
hope you find our financing offer acceptable. If you'have any questions, please contact us.
We will be glad to meet with both Orange County and the Local Government Commission,
if necessary, to address any issues or terms of our offer.
We look forward to hearing from you soon.
Sincerely,
Denise Corey
The above financing commitment to Orange County, North Carolina is hereby accepted this
day of . 1995.
Orange County, North Carolina
By:
Title:
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} AMORTIZATION SCHEDULE
_ Now. This wwrtintion L an estimate only. Actual bMng for interes t expense will be calculated daily.
j OPTION ONE-FULLY FUNDED{15 YR}
PRINCIPAL SAL. RATE PAYMENT IN� `�T = FRINCIPA
Jan 96 $2,000,000.00 WJul-96 $1,952,317.42 4.40% $92,171.47 44,488 89 $47,682
Jan-97 $1,904,051.40 4.40% $92,17147 x`$43;905 .
$40
Jul-97 $1,854,001.78 4.40% $92,17147 $42,12185 , :$50,04962_
Jan-98 $1 24.75 4.40% 9217147 �_ W
J ,8035 $ , $41,694 44� $50477."03
Jul-98 $1,751,251.26 4.40% $92,17147y $39,8977x98 . $52,273 4
Jan-99 $1,698,463.49 4.40% $92,17147 w_,,'$39,383 70$52,78 77
Jul-99 $1,643,865.81 4.40% $92,17147 $37,573 79'°" $§4,59769j
Jan-00 $1,588,663.06 4.40% $92,171.47 $36,968;72=����'�`,� $55;2027
Jul-00 $1,531,830.52 4.40% $92,17147 $3U38.93 $56,832 54
Jan-01 $1,474,108.22 4.40% $92,17147 ° $34.449 27 ,$57,722 30
Jul-01 $1,414,547.30 4.40% $92,17147 ftst, $32,6_10 55 s � '-$59'560_92;
Jan-02 $1,354,187.43 4.40% $92,17147 $31;811 b0 $60,359 8Z
Jul-02 $1,291,973.60 4.40% $92,17147 � $29,957 64V $62,213 83
Jan-03 $1,228,857.18 4.40% $92,17147 u- $29",0-
29,055 05 $63,11642
Jul-03 $1,163,870.76 4.40% $92,17147 $27,185 05 $ 4,986 42
Jan-04 $1,097,873.45 4.40% $92,17147 $26;174.16 0 x$65,997 33
Jul-04 $1,030,123.56 4.40% $92,17147 3 $24;42158 7,149.8
Jan-05 $961,118.42 4.40% $92,17147 4 $23,166 33: ¢' $69,00514
Jul-05 $890,209.03 4.40% $92,17147 .$21,26208' $70,909 39=:
Jan-06 $818,057.37 4.40% $92,17147 V .$20,019 82 2,151,A6!
Jul-06 $743,983.15 4.40% $92,17147 -' $18,09725 $74,07422
a Jan-07 $668,543.03 4.40% $92,17147 $16,73135 ���� $75,44012:
Jul-07 $591,161.22 4.40% $92,17147 $14,789 66 ,N,
b 8
Jan-08 $512,284.31 4.40% $92,17147 $13, ' h .*
-'� J 294 56w $78,876 9L
Jul-08 $431,508.32 4.40% $92,1714? + $11,395 48°� _$80,775 99
Jan-09 $349,040.99 4.40% $92,17147 .1 $9,704.14: $82,467833
iTIZ$7, r .d
t; Jul-09 $264,591.08 4.40% $92,17147 72156 $84449_91
Jan-10 $178,369.97 4.40% $92,17147 $5,950 36as t$86,221 T1
Jul-10 $90,144.44 4.40% $92,17147 $3,945 94-P, $88,22553
Jan-11 $0.00 4.40% $92,17147 4 R$2,02 03'� z,Tr$90,144 44
TOTAL PAYMENTS $765,144.10 $2,000,000.00
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AMORTIZATION SCHEDULE
Note:This amortization is an mtimate only. Actual bMmg for interest expense will be c&L-ub ed daily.
! OPTION TWO-FULLY FUNDED(10 YR)
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PRINCIPAL BAT-- RATE PAYMENT "T
Jan-96 $2,000,000.00
Jul-96 $1,919,220.27 4.35% $124,763.06 983 ,779:,
Jan-97 $1,837,127.87 4.35% $124,763.06
Jul-97 $1,752,544.33 435% $124,763.06
Jan-98 $1,666,746.17 4.35% $124,763.06 $38;964=90
J Jul-98 $1,578,436.24 4.35% $124,763.06 ;4531 'x$88,309:9
Jan-99 $1,488,767.08 4.35% $124,763.06
Jul-99 $1,396,564.60 4.35% $124,763.06
Jan-00 $1,302,851.83 4.35% $124,763.06 ;050;29 93°
Jul-00 $1,206,740.65 4.35% $124,763.06
Jan-01 $1,108,807.46 4.35% $124,763.06 26 29:87 97;933:1
Jul-01 $1,008,294.94 4.35% $124,763.06 . 24;250: ` $100;512:5
Jan-02 $905,949.64 4.35% $124,763.06 22;417.;7 $10
Jul-02 $801,000.45 4.35% $124,763.06 19f 13:8 :$1 949:
Jan-03 $694,046.30 4.35% $124,763.06 $17,80891 $106;954:
Jul-03 $584,462.61 4.35% $124,763.06 $15179:37
Jan-04 $472,694.10 4.35% $124,763.06 $12;99455 1_;768°
Jul-04 $358,326.37 4.35% $124,763.06 $10 95:33 $11 b7
Jan-05 $241,530.10 4.35% $124,763.06 y$7,96G 79 $116;7 .37
1 Jul-05 $122,049.50 4.35% $124,763.06 $5;282:46 _$119;480. .
Jan-06 $0.00 4.35% $124,763.06 : }s.$2713.56' ;$1?2r049
TOTAL PAYMENTS $495,261.20 $2,000,000.00
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Orange County, North Carolina
$290009000 1995-1996 Fiscal Year
Installment Financing
Additional Costs to Orange County
Origination and Placement Fees: $0
Trustee Costs: $0
Underwriter's Counsel: $4,000
Appraisal: $0
Environmental Site Assessment: $0
The following documents are requested if available:
-Appraisal
- Environmental Site Assessment
- Survey
- Title Insurance with NationsBank shown as mortgagee
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NationsBank Commitment to Orange Count North Carolina
Y�
J Our Commercial Lending Group in Chapel Hill is looking forward to
extending our relationship with Orange County with this proposal. You will
continue to be supported by a NationsBank relationship team consisting of
the following persons:
City Executive: Denise Corey
Chapel Hill City Executive
Phone: 918-4203
Fax: 967-3881
Associate Relationship Manager: Robert Owen
Phone: 918-4201
Mailing Address: NationsBank, N.A.
P.O. Box 570
Chapel Hill, NC 27514
Relationship Assistants: Linda Dunn
Phone: 918-4232
Karen Shields
Phone: 918-4208
Senior Management: Howard Edwards
Triangle Regional Executive
Phone: 829-6602
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Orange County, North Carolina
$2,000,000 1995-1996 Fiscal Year
Installment Financing
History of Similar Financine
County/Municipality: City of Graham
Date of Financing: By November 30, 1993
` Amount Financed: $2,000,000
f. . Frequency of repayment: P&I semi annually
Total project cost: $2,000,000
Contact at County/Municipality: Ray Fogleman 919-228-8362
Project: Police Dept. Building
z Term: 10 yrs. straight amount
Underwriting Cost: $3,900 legal bill
Percent financed: 100%
The project qualifies as a tax-exempt obligation.
County/Municipality: Town of Cary
Date of Financing: October, 1993
Amount Financed: $3,615,000
Frequency of repayment: Annual P ; I monthly
Total project cost: $9,037,500
Contact at County/Municipality: Karen Mills 919-469-4110
Project: Public Works/Utility Bldg.
Term: 4 year amt.
Underwriting Cost: $3,000 legal fees
Percent financed: 40%
The project qualifies as a tax-exempt obligation.
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County/Municipality: City of Greensboro
Date of Financing: July, 1993
Amount Financed: $590,000
Frequency of repayment: Monthly P&I
Total project cost: $590,000
Contact at County/Municipality: Sammy Vestal 919-373-2077
Project: Purchase golf carts
Term: 59 months amt.
Underwriting Cost: $2,000 legal fees
Percent financed: 100%
The project qualifies as a tax-exempt obligation.
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Orange County, North Carolina
' $2,000,000 1995-1996 Fiscal Year
Installment Financing
'story of imilar Financing
County/Municipality: County of Alamance
Date of Financing: June, 1993
Amount Financed: $590,000
Frequency of repayment: Monthly P&I
Total project cost: $590,000
Contact at County/Municipality: Chuck Kitchen.919-228-1312
Project: Purchase computer system
Term: 5 year amortization
Underwriting Cost. 0
Percent financed: 100%
The project qualifies as a tax-exempt obligation.
County/Municipality: Town of Troutman
Date of Financing. September 1993
Amount Financed: $1,500,000
Frequency of repayment: Monthly P&I
Total project cost: $1,500,000
Contact at County/Municipality: Jim Troutman 704-528-7600
Project: Street repairs and improvements
Term: 13 yr. amt., 2 yrs.interest only
7yrs. balloon
Underwriting Cost: $4,500 legal expense
Percent financed: 100%
The project qualifies as a tax-exempt obligation.
County/Municipality: Town of Franklin
Date of Financing: . May 1993
Amount Financed: $3,225,000
Frequency of repayment: Semi-annual P&I
Total project cost: $3,500,000
Contact at County/Municipality: Ed Henson or City Manager
704-524-2516
Project: Sewer Plant Expansion
Term: 10 year amortization
Underwriting Cost: 0
Percent Financed: 92%
!` The project qualifies as a tax-exempt obligation.
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Orange County, North Carolina
$2,000,000 1995-1996 Fiscal Year
J Installment Financing
Histom of Similar Financing
County/Municipality: City of Greensboro
Date of Financing. November, 1992
Amount Financed: $4,753,000
`-� Project: Purchase of law-enforcement
facilities and acquisition of
sanitation-related equipment.
County/Municipality: City of Greensboro
Date of Financing. January 1993
Amount Financed: $3,800,000
Project: Coliseum equipment and
improvements.
County/Municipahty: City of Thomasville
Date of Financing: June, 1993
Amount Financed: $330,132
Project: Refinance fire station loan
County/Municipality: Town of Mooresville
Date of Financing: July 1993
Amount Financed: $500,000
Project: Renovation of fire station
County/Municipality: Town of Mooresville
F Date of Financing. July 1993
Amount Financed: $2,000,000
Project: Construction of community center
County/Municipality: Town of Swansboro
Date of Financing. September 1993
Amount Financed: $120,000
Project: Street repairs and improvements