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HomeMy WebLinkAboutAgenda - 03-22-2016 - 5-a - Public Hearing on the Financing of Various Capital Investment Plan Projects 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: March 22, 2016 Action Agenda Item No. 5-a SUBJECT: Public Hearing on the Financing of Various Capital Investment Plan Projects DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Attachment 1. Copy of Public Hearing Gary Donaldson, (919) 245-2453 Notice Paul Laughton, (919) 245-2152 Attachment 2. Resolution Robert Jessup, (919) 933-9891 PURPOSE: To conduct a public hearing on the issuance of approximately $8,150,000 to finance capital investment projects and equipment for the fiscal year as approved in the 2015- 2015 Capital Investment Plan; and to approve a related resolution supporting the County's application to the Local Government Commission (LGC) for its approval of the financing arrangements. BACKGROUND: County staff estimates that the total amount to be financed for capital investment projects and equipment will be approximately $8,150,000. The financing will include amounts to pay transaction costs. The statutes require that the County conduct a public hearing on the proposed financing. A copy of the published notice of this hearing is provided (Attachment 1). After conducting the public hearing and receiving public input, the Board will consider the adoption of the resolution (Attachment 2). This resolution formally requests the required approval from the North Carolina Local Government Commission (LGC) for the County's financing, and makes certain findings of fact as required under the LGC's guidelines. County staff has been in contact with the LGC staff, and staff expects no issues 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 plans at its April 19, 2016 meeting. The general schedule for this process is as follows: • BOCC conducts public hearing and adopts resolution in support of financing and LGC approval — March 22 2 • County staff reviews financing proposals from lenders and develops recommendation for Board approval — by end of March • County Board adopts resolution formally approving financing provider and the substantially-final financing documents —April 19 • LGC approves financing — May 3 • Closing on the financing —funds advanced to County — by mid-May The County's financing is proceeding as an installment financing under the authority of the North Carolina General Statutes. Under the statutes, an installment financing has to be secured by a lien on part or all of the property being acquired or improved through the financing. County staff recommends that the County use Grady Brown Elementary School as the collateral. Grady Brown is receiving two new roofs through the financing package. For the County to provide a lien on this school, the County must own the school. The Orange County Board of Education has approved the use of the school as collateral and the related transfer of that property to the County (the financing documents will provide for the return of the school upon the County's repayment of the financing). This is similar to arrangements the County has used previously, most recently with respect to financings related to the Orange County Schools District's Gravelly Hill Middle School and with Culbreth Middle School in Chapel Hill Carrboro City Schools. Ownership of Grady Brown will revert back to Orange County Schools upon final payment of the installment financing. 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 capital investment projects and equipment financing would require the highest debt service payment of $871,454 in FY 2016-17. The tax rate equivalent for the estimated highest debt service payment is approximately 1/2 cent. Based on current resources and the retirement of existing debt, no adjustment to the tax rate associated with this financing is anticipated to occur during the period noted. SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated with this item. RECOMMENDATION(S): The 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 and refinancing arrangements. 3 Attachment 1 Orange County, North Carolina -- Notice of Public Hearing Financing for Various Public Improvements and Acquisitions The Board of Commissioners of Orange County, North Carolina, will hold a public hearing on Tuesday, March 22, 2016, 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 an amount estimated as up to approximately $8,150,000 to pay for the public improvement projects described below. Project Description Estimated Amount Financed Cedar Ridge High School— construction of auxiliary gym 3,328,750 Vehicle replacements 771,209 Various school improvements and repairs for the Chapel 750,000 Hill—Carrboro system Information Technologies projects —hardware and software 746,125 acquisition Various school improvements and repairs for the Orange 478,000 County system Soccer.com Soccer Center, Phase II land acquisition 425,000 Purchase new truck for rural curbside recycling 310,090 Purchase of solid waste disposal carts 234,000 Rogers Road water project— easement acquisition 212,000 Cedar Grove Community Center Library Kiosk—purchase 180,000 and install 4 Board of Elections equipment—purchase and install 169,575 Recycling Roll-Cart Distribution and Maintenance Building 165,000 —purchase and construct Upper Eno Nature Preserve— construct parking lot and trail 125,000 work Purchase new generator for Hillsborough Commons 100,000 Financing and related costs 155,241 Estimated total project costs $ 8,150,000 As part of this financing plan, the Orange Board of Education will transfer title to the County of Grady Brown Elementary School (and the associated land and buildings). The Board will also hear any public comment on the advisability of this property transfer. The hearing will be held in the County's Southern Human Services Center, 2501 Homestead Road, Chapel Hill, North Carolina 27516. The proposed financing would be secured by a lien on some or all of the property purchased or improved through the financing as well as the County's promise to repay the financing, but there would be no recourse against the County or its property (other than the pledged property) if there were a default on the financing. The County expects that the collateral for the financing will consist primarily of the Grady Brown Elementary School property. 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 Gary Donaldson, Orange County Finance Officer, Finance Officer, Post Office Box 8181, Hillsborough, NC 27278 (telephone 919/245-2453, email gdonaldson @orangecountync.gov). 5 RES-2016-020 Attachment 2 Resolution supporting an application to the Local Government Commission for its approval of a County financing agreement 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 of Commissioners 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 County's financing plan, the County will acquire Grady Brown Elementary School (and its associated land and buildings) from the Orange County Board of Education, and use that property as the collateral for the financing. The Board of Education has approved this property transfer. Under the guidelines of the North Carolina Local Government Commission, this governing body must make certain findings of fact to support the County's application for the LGC's approval of the County's 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 an amount estimated as up to approximately $8,150,000 to pay capital costs of various public improvements, and in particular the improvements shown 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 $8,150,000. Some of the financing proceeds may represent 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: 6 (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. 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 the County's financial adviser. All amounts financed will reflect either approved contracts, professional estimates or previous actual expenditures. (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 1/2 cent per $100 of valuation. Given this relatively 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: 7 (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) The Board will hold a public hearing on this matter. The County Manager is directed to set the date and time of the hearing, and the Clerk to this Board is directed to publish a notice of the public hearing in the manner provided for by law. (c) The Finance Officer is directed to take all appropriate steps toward the completion of the financing, including (i) completing an application to the LGC for its approval of the proposed financing, and (ii) soliciting one or more proposals from financial institutions to provide the financing. All prior actions of County representatives in this regard are ratified. (d) The County agrees to accept title to the Grady Brown School property to facilitate the financing arrangements. The Board will approve appropriate documents for this arrangement by later resolution. Ownership of Grady Brown School will revert back to Orange County Schools upon final payment of the installment financing. (e) This resolution takes effect immediately. 8 Exhibit A - list of projects to be financed with estimated amounts Project description Est. Amount Financed Cedar Ridge High School— construction of auxiliary gym 3,328,750 Vehicle replacements 771,209 Various school improvements and repairs for the Chapel 750,000 Hill—Carrboro system Information Technologies projects —hardware and software 746,125 acquisition Various school improvements and repairs for the Orange 478,000 County system (including Grady Brown Elementary) Soccer.com Soccer Center, Phase II land acquisition 425,000 Purchase new truck for rural curbside recycling 310,090 Purchase of solid waste disposal carts 234,000 Rogers Road water project— easement acquisition 212,000 Cedar Grove Community Center Library Kiosk—purchase 180,000 and install Board of Elections equipment—purchase and install 169,575 Recycling Roll-Cart Distribution and Maintenance Building 165,000 —purchase and construct Upper Eno Nature Preserve— construct parking lot and trail 125,000 work 9 Purchase new generator for Hillsborough Commons 100,000 Financing and related costs 155,241 TOTAL $ 8,150,000