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HomeMy WebLinkAboutAgenda - 04-04-1994 - VII-A ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No A ACTION AGENDA ITEM ABSTRACT Meeting Date: April 4, 1994 SUBJECT: Orange County Community Activity Center Bonds ----------------------------------------------------------------------- DEPARTMENT County Manager/Attorney PUBLIC HEARING YES X NO ----------------------------------------------------------------------- ATTACHMENT(S) INFORMATION CONTACT Amended Resolution Rod Visser, ext 2300 Geof Gledhill, 732-2196 TELEPHONE NUMBER Hillsborough 732-8181 Chapel Hill 968-4501 Mebane 227-2031 Durham 688-7331 ----------------------------------------------------------------------- PURPOSE: To conduct a public hearing on the proposed issuance of Orange County Community Activity Corporation revenue bonds, and to consider an amended resolution approving the Orange County Community Activity Center project. BACKGROUND: At the October 4, 1993 meeting, the Board of Commissioners approved the County' s participation in a "63-20" financing arrangement whereby the Orange County Community Activity Corporation (OCCAC, previously known as the Triangle Youth Hockey Association) would issue bonds, in an amount not to exceed $8.5 million, for the construction of a swimming pool/ice rink facility at the Meadowlands. The debt thus created is an obligation strictly of the Corporation. The County is in no way incurring debt or pledging its faith and credit or taxing power for the repayment of the bonds. Because 1163-20" financing under the Internal Revenue Service Code permits the sale of bonds as tax-exempt instruments which will benefit a non-governmental agency, the County was required to hold a public hearing on the matter under provisions of the federal 1986 Tax Equity and Fiscal Responsibility Act (TEFRA) . The County held this required public hearing on November 16, 1993. No one spoke either for or against the proposed bonds. During efforts to market the bonds in the last several months, it became apparent to the OCCAC's financial placement agents that a larger bond issue, which would permit the creation upfront of a large debt service reserve, would make the bonds appear more secure and thus much more attractive to potential investors. The creation of this debt service reserve necessitates an increase in the amount of bonds to be issued to approximately $10 million. In accordance with IRS regulations and TEFRA, another public hearing must be held because the size of the proposed bond issue has increased by more than 5% of the amount contemplated during the original public hearing. 4 f 2 On March 23, the OCCAC received a conditional offer from Eaton Vance Management, Inc. of Boston to purchase a total of $9,850,000 in tax-exempt bonds to finance the project. At its meeting on March 24, the OCCAC Board of Directors voted to approve the financing deal with Eaton Vance, subject to final negotiation on several points contained in the offer. OCCAC' s placement agents are continuing efforts to market approximately $420,000 in short-term taxable bonds that would complete the project financing. Closing on the project will likely be completed within the next month or so. The key points of the offer from Eaton Vance include: * purchase of $9.85 million in tax-exempt OCCAC bonds at an interest rate of 7.5%, in minimum denominations of $100,000 * 30 year maturity, with provision for redemption of outstanding bonds as early as 10 years from closing * creation of a debt service reserve of approximately $950,000 from bond proceeds * provision that should the OCCAC fail to meet certain financial tests related to operating funds available in a given year to pay debt service, that an independent management consultant will be retained and their recommendations implemented to improve the financial strength of the operation In order for the project to proceed and for the bonds to be tax-exempt, the County Commissioners must conduct a second public hearing on the proposed bond issue and must adopt an amended resolution approving the project. The Board adopted a virtually identical resolution on November 16, 1993. The amended resolution recognizes that the principal amount of bonds expected to be issued has increased from the amount that was considered in November. RECOMMENDATION: The Manager recommends that the Board conduct the public hearing and approve the amended resolution. ' 3 AMENDED RESOLUTION OF THE COUNTY OF ORANGE, NORTH CAROLINA APPROVING A FACILITIES/SERVICES AGREEMENT AND RELATED MATTERS WHEREAS, the County of Orange, North Carolina (the "County") is a validly existing political subdivision of the State of North Carolina, existing as such under and by virtue of the Constitution, statutes and laws of the State of North Carolina (the "State"); WHEREAS, the County has the power, pursuant to North Carolina General Statutes, to(i)provide community activity facilities used, or to be used, for public purposes and (ii) enter into contracts with respect to the provision of such facilities; WHEREAS, pursuant to a certain Indenture of Trust dated as of March 1, 1994(the "Indenture"), between Orange County Community Activity Corporation(the "Corporation") and First Union National Bank of North Carolina, as trustee (the "Trustee"), the Corporation will issue its Orange County Community Activity Center Revenue Bonds, Series 1994A and Series 1994B (collectively, the "Bonds") and apply the proceeds thereof to the acquisition, construction and equipping of a public ice hockey rink, two swimming pools and related facilities to be located in the County (the "Project"); WHEREAS, the County has determined that it is in the best interest of the County that, instead of building and operating its own swimming pool, the County contract with the Corporation pursuant to a Facilities/Services Agreement dated as of March 1, 1994 (the "Agreement") between the County and the Corporation to provide public swimming pools and management services through the operation of the Project for the benefit of County residents and other persons visiting the County; WHEREAS, the obligation of the County to make payments under the Agreement shall constitute a valid, binding and legally enforceable contractual obligation of the County to the payment of which the County is obligated to appropriate funds in each year thereof, and payable from the County's general fund and from the earnings and all income received by the County from whatever source derived unless the use of such funds are restricted other than by action of the Board of Commissioners of the County or the use thereof is otherwise restricted by law, and enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights heretofore or hereafter enacted or by equitable principles; WHEREAS, there have been presented to the Board of Commissioners of the County (the "Board") the following documents (collectively, the "Instruments"), copies of which are attached hereto, which the County proposes to approve, enter into and deliver to effectuate the proposed purchase financing: (1) the form of the Agreement; and (2) the form of the Indenture. mun34243\93cls.trs 4 WHEREAS, it appears that each of the Instruments is in appropriate form and is an appropriate instrument for the purposes intended; WHEREAS, the net sums to fall due under the Agreement will not exceed $400,000 in each year for 10 years and can be included in the County's budget; WHEREAS, it is reasonable to conclude that the payments under the Agreement are not excessive for the stated purpose and no increase in the property tax rate will be required to raise funds to fall due under the contract in each fiscal year during the term of the Agreement; WHEREAS, the County Attorney is of the opinion that this transaction is authorized by law and is a purpose for which public funds may be expended pursuant to the Constitution and laws of the State, WHEREAS, the County's budget process and Annual Budget Ordinance are in compliance with the Local Government Budget and Fiscal Control Act, and external auditors have determined that the County has conformed with generally accepted accounting principles in preparing its Annual Budget Ordinance; WHEREAS, past audit reports of the County indicate that its debt management and contract obligation payment policies have been carried out in strict compliance with the law, and the County has not been censured by the North Carolina Local Government Commission(the "LGC"),,external auditors, or any other regulatory agencies in connection with such management; WHEREAS, the County is not in default in meeting any of its debt service or contract obligations: WHEREAS, the Board has previously approved the Agreement and the issuance of the Bonds by the Corporation after a public hearing thereon, but an increase in the principal amount of such Bonds has required a second public hearing thereon which was conducted this 4th day of April, 1994; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF THE COUNTY OF ORANGE, NORTH CAROLINA, AS FOLLOWS: . Section 1. That all actions of the County in effectuating the Project are hereby approved, ratified and authorized pursuant to and in accordance with the transactions contemplated by the Instruments. Section 2. That the form and content of the Agreement are in all respects authorized, approved and confirmed, and the County Manager or his designee and the County Clerk are authorized, empowered and directed to execute and deliver the Agreement for and on behalf of the County, including necessary counterparts, in substantially the form attached hereto, but with such changes, modifications, additions or deletions therein as shall to them and the County Attorney seem necessary, desirable or appropriate, their execution thereof to constitute conclusive evidence of their approval of any and all such changes, modifications, additions or deletions, and that from and after the execution and delivery of the Agreement, the County Manager and the County Clerk or their respective designees are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Agreement as executed. =04243\930s.trs r c Section 3. That the County acknowledges that its payments under the Agreement constitute a valid, binding and legally enforceable contractual obligation of the County to the payment of which the County is obligated to appropriate funds in each year thereof, and payable from the County's general fund and from the earnings and all income received by the County from whatever source derived unless the use of such funds are restricted other than by action of the Board of Commissioners of the County or the use thereof is otherwise restricted by law, and enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights heretofore or hereafter enacted or by equitable principles. Section 4. That the County approves the issuance of the Bonds by the Corporation and agrees to accept title to the Project, including the land on which it is located as described in the Deed of Trust from the Corporation to the Deed of Trust trustee named therein, on the payment in full of the principal of and interest on the Bonds and the discharge of the lien of the Indenture. Section 5. That the County Manager is hereby designated as the County's representative to act on behalf of the County in connection with the transactions contemplated by the Instruments, and the County Manager is authorized and directed to proceed in accordance with the Instruments, and to seek opinions on matters of law from the County Attorney, which the County Attorney is authorized to furnish on behalf of the County, and opinions of law from such other attorneys for all documents contemplated hereby as required by law. The County Manager is hereby authorized to designate one or more employees of the County to take all actions which the County Manager is authorized to perform under this Resolution, and the County Manager or his designees are in all respects authorized on behalf of the County to supply all information pertaining to the County for use in the transactions contemplated by the Instruments. The County Clerk and the County Manager are authorized to execute and deliver for and on behalf of the County any and all additional certificates, documents, opinions or other papers and perform all other acts as may be required by the Instruments or as they may deem necessary or appropriate in order to implement and carry out the intent and purposes of this Resolution. Section 6. That if any section, phrase or provision of this Resolution is for any reason declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Resolution. Section 7. That all motions, orders, resolutions, ordinances and parts thereof, in conflict herewith are hereby repealed. =04243\93cls.trs 6 Section 8. That this Resolution shall become effective on the date of its adoption. YEAS NAYES READ, APPROVED AND ADOPTED this 4th day of April, 1994. CERTIFICATE I, Beverly Blythe, County Clerk of the County of Orange, North Carolina, do hereby certify that the foregoing is a true and accurate copy of Resolution which was passed by the Board of Commissioners of the County of Orange, North Carolina at its regular meeting held on the 4th day of April, 1994, to become effective on the 4th day of April, 1994, and that said Resolution has been duly recorded in the minutes of the County. WITNESS my hand and official seal of said County, this_ day of , 1994. COUNTY OF ORANGE, NORTH CAROLINA [SEAL] Beverly Blythe County Clerk mim342A3\930s.as