HomeMy WebLinkAboutAgenda - 02-20-2007-9eORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: February 20, 2007
Action Agenda
Item No.
SUBJECT: Authorization to Proceed With Alternative Financing
DEPARTMENT: Finance and Budget PUBLIC HEARING: (YIN) No
ATTACHMENT (S):
Tentative Projects Proposed for Alternative
Financing
Tentative Schedule For Alternative
Financing
INFORMATION CONTACT:
Ken Chavious/Bob Jessup, 919-245- 2453
Donna Coffey, 919-245-2151
PURPOSE: To approve the County's plans to issue $96.2 million in alternative financing
between fiscal years 2006-07 and 2009-10 and to authorize staff to proceed with the required
steps necessary to obtain the financing planned for fiscal year 2006-07 including request for
proposal (RFP) for underwriting services and minority participation in bond counsel services.
BACKGROUND: The County has several County and school-related capital projects that are
currently in various stages of planning, development and construction. Current estimates
anticipate that over the next three years the projects will cost the County $96.2 million ($92.2
million in General Fund debt plus $4 million in Solid Waste and SportsPlex Enterprise funds
debt) to construct. The County plans to debt finance the projects.
Over the last six months, staff has analyzed the affordability of the construction projects. The
Board's established debt management policy provides that no more than fifteen percent of the
annual General Fund expenditures shall be allocated for debt service payments. Using a 7
percent annual General Fund growth assumption and structuring debt service payments in a
manner reviewed with North Carolina Local Government Commission (LGC) staff, staff
concluded that the County could issue debt to fund all of the planned projects between fiscal
years 2006-07 and 2009-10 while the County remains below its self-imposed debt ceiling.
On September 14, 2006, the Board approved individual debt issuance amounts for a number of
school and County projects. The Board then held a public hearing on December 12, 2006
regarding its plans to issue $96.2 million in debt over the next three years. No one spoke
against the County's plans to issue the debt, and staff has not received any written comments
from citizens regarding the plan. Commissioners approved the minutes for the December 12,
2006 meeting on February 6, 2007.
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In accordance with the Board's debt issuance plans, the first issuance would need to occur
before June 30, 2007 in order to meet cash flow needs of the most imminent projects. It is
important to note that there is a several month planning and Local Government Commission
approval process before the County actually has the cash in hand to pay for the projects. In
order to ensure that cash is available when needed, it is essential that the Board authorize staff
to proceed with the required steps necessary to obtain the financing before the end. of the
current fiscal year.
The LGC meets and reviews local governments borrowing requests on the first Tuesday of each
month. Considering the steps that must be taken between now and the final approval step, staff
plans to have the LGC review the County's alternative financing proposal on June 5, 2007. In
order to meet that target date, staff requests that on February 20, 2007, the Board approve the
next steps in the process - preliminary approval to proceed with financing including approval of
a tentative project list and approximate financing amounts and approval to distribute the
Request for Proposal for underwriters.
At this time, while there are unanswered questions related to certain projects, namely Chapel
Hill Carrboro City Schools Elementary #10 and the Justice Facility, it is important for
Commissioners to know that the project list they approve tonight is tentative and can be
amended. In accordance with the attached approval schedule, the Board does not need to
approve the final list of projects until May 3, 2007.
Bond Counsel Services
The Sanford Holshouser law firm has served as the County's bond counsel for a number of
years. Commissioner Carey, at the February 6, 2007 Board meeting, proposed that the County
request the Sanford Holshouser law firm to explore opportunities for minority participation in
bond counsel services. The Board, by consensus, supported this proposal, and requested that
staff bring a proposal back to the Board for minority participation.
In previous financing arrangements, the County has included minority participation as it relates
to underwriting services. County staff intends to pursue a Request for Proposal (RFP) process
for underwriting services to include minority participation. Similarly, County staff recommends
that the Sanford Holshouser law firm be asked to identify and select one or more law firms in the
region that are minority- and/or women-owned and that evidence an interest and ability to
partner with Sanford Holshouser in Orange County transactions requiring bond counsel. The
long-term goal would be that minority- and/or women-owned law firms develop independent
expertise to carry out a stand-alone bond counsel practice. Sanford Holshouser plans to present
a proposal to the County staff and Board for appropriate consideration. Staff has met with Bob
Jessup, the partner with Sanford Holshouser responsible for ably handling the County's bond
counsel work, to discuss this process. The Sanford Holshouser law, firm is open to the idea and
expressed willingness to work with the County to accomplish this initiative.
FINANCIAL IMPACT: The amount of the tentative projects planned for financing this fiscal year
total $50,057,000. Based on a 20-year loan at a 6 percent interest rate, staff anticipates that the
debt service payment for fiscal year 2007-08 would be approximately $1.5 million (about 1.2
cents on the anticipated 2007-08 tax rate) for interest only followed by debt and interest
payments in fiscal year 2008-09 of approximately $5.5 million (about 4.3 cents on the
anticipated 2008-09 tax rate).
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RECOMMENDATION(S): The Manager recommends that the Board approve the tentative
listing of projects to be included in the alternative financing, approve the schedule that includes
LGC approval on June 5, 2007 and authorize staff to proceed with the RFP and selection
processes for underwriters and bond counsel as described in this abstract.
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Tentative Projects Proposed for Alternative Financing - June 2007
General Fund Debt Projects Estimated Amount
to Borrow
Central Orange Senoir Center - Funds to be used with bond funds to Construct Senior Center Addition to
Orange County SportsPlex
$2,500,000
Elementary 10 CHCCS - Construction of New Elementary School on property owned b the Count $22,102,000
CHCCS Renovations - Completion of Renovations to existing Schools $3,450,000
Efland Water and Sewer - Completion of Water and Sewer Lines $400,000
Jail - ex ansion of existing jail to add additional beds $600,000
Justice Facility - Courthouse addtion to include courtrooms and office space $10,200,000
Durham Technical Community College - The County's contribution to be used with state bond funds provided
Durham Tech
$3,588,000
Twin Creeks Infrastructure - water and sewer lines to site $1,250,000
West Ten Soccer - Development of soccer complex on existing count property $2,267,000
Total Tentative General Fund Debt - June 2007 $46,357,000
Enterprise Fund Projects Estimated Amount
to Borrow
Solid Waste Operations Center - New Facility to house solid waste staff $2,200,000
S ortsPlex Renovations - renovations to existing facility required to accommodate senior center addition $1,500,000
1 Total Enterprise Funds Debt - June 2007 $3,700,000
Total Tentative Debt Contemplated - All Funds - June 2007 $50,057,000
Orange County -- 2007 COPS -- Financing Schedule (i) (J
June closing
County staff determines list of projects and
desired financing schedule As soon as possible
County makes initial contact with LGC As soon as possible
BOCC gives preliminary approval to proceed
with financing, incl. approval of project list and
approximate financing amounts, and approval
to distribute RFP for underwriters Feb. 20
Send out RFP for underwriters Feb. 21
RFP for underwriters due back March 2
BOCC adopts findings resolution; authorizes
notice of public hearing; formally approves
choice of underwriter April 10
Publish notice of County public hearing By 4/22
County's preliminary application due to LGC By 4/27
BOCC holds public hearing 5/3
BOCC adopts resolution providing final,
formal approval of financing terms and
documents
5/3
LGC approval 6/5
OS goes out to investors 6/4
Sale period 6/4-11
Pricing 6/11-12
Closing 6/25-26
(') Will also need to add in approval from Chapel Hill Carrboro City Schools Board of Education if
Elementary #10 is all or part of the collateral; school board meeting dates include April 12, April 19
and May 3