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HomeMy WebLinkAboutAgenda - 05-02-2017 - 8-g - Two-Thirds General Obligation Bonds 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 2, 2017 Action Agenda Item No. 8-g SUBJECT: Two-Thirds General Obligation Bonds DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Preliminary Resolution Gary Donaldson, 919-245-2453 Bob Jessup, 919-933-9891 PURPOSE: To adopt a preliminary resolution for the issuance of $5.9 million in two-thirds General Obligation Bonds to support both school systems capital requirements for renovation and improvement of school facilities, with the two-thirds bond proceeds replacing the General Fund pay-as-you go funding for both school districts' renovations and facility improvements in FY 2017-18. BACKGROUND: Pursuant to North Carolina General Statute 159-48, local governments can issue General Obligation bonds each year in an amount equal to two-thirds of the principal amount of debt retired in the previous year. These General Obligation bonds may be issued without a referendum but are subject to approval by the Local Government Commission in the same manner as other debt financing methods. In fiscal year 2016-17, the County will retire $8.8 million in principal on outstanding General Obligation bonds. The statutes allows the County to issue up to two-thirds of the $8.8 million in principal retired or an additional General Obligation bond capacity of $5.9 million in FY 2017-18. This bond capacity cannot be accumulated or carried forward to future years. The County has issued two-thirds bonds in previous years. For example, the County issued $4.2 million in two- thirds bonds in 2004 and used the proceeds for Lands Legacy Program acquisitions and various public building projects. Two-thirds bonds can be used for substantially all the purposes for which voter-approved bonds may be issued except to fund auditoriums, coliseums, stadiums, convention centers, art galleries, museums, historic properties, urban redevelopment, public transportation or cable television systems. After review of the County's Capital Investment Plan (CIP), and in consultation with the County's financial advisor, County staff recommends that the County proceed to authorize and issue the two-thirds bonds for School renovations, facility improvements, and cost of issuance at both school systems. The bond proceeds will be allocated on the average daily membership for both 2 school systems; Chapel Hill-Carrboro City Schools $3,545,310 and Orange County Schools $2,354,690. The authorization process includes tonight's adoption of a preliminary resolution stating the County's intent, the introduction of an authorizing bond order (currently scheduled for the May 16 meeting), and then a public hearing and final adoption of the bond order (currently scheduled for the June 20 meeting). The County's current plan is to sell the two-thirds bonds in conjunction with the first sale of General Obligation bonds approved at the 2016 referendum, with that bond sale tentatively scheduled for September 19, 2017. FINANCIAL IMPACT: The proposed two-thirds General Obligation bonds are included in the County's CIP debt service schedule. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to this agenda item: • GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. RECOMMENDATION(S): The Manager recommends that the Board approve the attached preliminary resolution for the issuance of $5.9 million in two-thirds General Obligation Bonds to support both school systems capital requirements for renovation and improvement of school facilities. 3 RES-2017-026 Resolution Stating Intent To Proceed with a General Obligation Bond Issue for Orange County, North Carolina WHEREAS-- The County's long-range capital improvement plan contemplates funding for a wide variety of projects, and calls for funding those projects using the multiple tools available to the County. Staff has suggested that the Board of Commissioners proceed with the issuance of County general obligation bonds to provide funds for the renovation and improvement of school facilities. These improvements will be made in both the Chapel Hill - Carrboro school system and the Orange County school system. The County expects to be able to issue approximately $5,900,000 general obligation bonds to provide funds for this project. These bonds would be issued under the provisions of law that allow the County to issue general obligation bonds to the extent of two-thirds of the amount the County paid down its debt in the prior fiscal year. 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 required approval of the County's proposed two-thirds bonds. In this resolution, the Board of Commissioners makes the appropriate findings, and takes other appropriate action. BE IT THEREFORE RESOLVED by the Board of Commissioners of Orange County, North Carolina, that the Board makes an initial determination to issue approximately $5,900,000 general obligation school bonds for renovation and improvement of school facilities. The Board will determine the final amount of bonds to be issued by a later resolution. The total amount financed may reflect adjustment to the expected project costs and may include amounts for financing costs. 4 BE IT FURTHER RESOLVED that the Board makes the following findings of fact in support of its determination: (1) The proposed capital projects are necessary and expedient for the County. (2) The amount of bonds proposed is adequate and not excessive for the proposed purpose. (3) The County's debt management and budgetary and fiscal management policies have been carried out consistently in accordance with the law. (4) The Board believes that no actual increase in the County's property tax rate will be necessary to provide for principal and interest payments on the bonds. The Board expects that existing revenue sources allocated for debt service payments will be sufficient to generate funds for debt payments BE IT FURTHER RESOLVED, as follows: (a) The Board directs the Finance Officer to proceed with the steps for the bond issue, including proceeding with an application to the LGC for its approval of the proposed bonds. The Board appoints the Finance Officer as the County's authorized representative with respect to the LGC application process. (b) The Board authorizes all County representatives to take all further action as they may consider desirable for accomplishing the purposes and intentions of this resolution. The Board ratifies all prior actions of County representatives in this regard. This resolution takes effect immediately. (c) 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, the school capital fund, or any other County fund, may be reimbursed from the financing proceeds. (d) This resolution takes effect immediately