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HomeMy WebLinkAboutAgenda - 06-06-2017 - 8-k - Adoption of the Final Financing Resolution Authorizing the Issuance of $13,700,000 in Installment Purchase Financing for Various Capital Investment Plan Projects 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 6, 2017 Action Agenda Item No. 8-k SUBJECT: Adoption of the Final Financing Resolution Authorizing the Issuance of $13,700,000 in Installment Purchase Financing for Various Capital Investment Plan Projects DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Attachment 1. Resolution Approving Gary Donaldson, (919) 245-2453 Financing Terms and Paul Laughton, (919) 245-2152 Documents for 2017 Robert Jessup, (919) 933-9891 Installment Financing PURPOSE: To adopt the final financing resolution authorizing the issuance of approximately $13,700,000 in installment financing to finance capital investment projects and equipment previously approved by the Board and as identified in the resolution, and including amounts to pay transaction costs. BACKGROUND: At the May 2, 2017 meeting, the Board of County Commissioners received preliminary information on capital projects and equipment financing for the fiscal year. At that meeting, the Board made a preliminary determination to finance costs of these projects and equipment by the use of an installment financing, as authorized under Section 160A-20 of the North Carolina General Statutes. The financing will also include amounts to pay transaction costs. The statutes require that the County conduct a public hearing on the proposed financing and refinancing contracts. The County conducted a public hearing at the May 2, 2017 Board meeting, and adopted the resolution supporting the application to the Local Government Commission (LGC) for approval of the financing. County staff has been in contact with the LGC staff, and staff expects no issues in receiving LGC approval. On May 16, 2017, the Board of County Commissioners approved Sterling National Bank to provide the financing. Sterling's proposal provides for a maximum annual interest rate of 2.83%. The proposed resolution approves substantially final financing documents and authorizes staff to complete the loan closing. Under the current schedule, staff expects to close on the financing the week of June 12, 2017. SOCIAL JUSTICE IMPACT: There are no Orange County Social Justice Goals applicable to consideration of the resolution. 2 FINANCIAL IMPACT: 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 $1.3 million in FY2017- 18. The tax rate equivalent for the estimated highest debt service payment is approximately .76 cents. Based on current financial resources, no adjustment to the tax rate is associated with this financing. RECOMMENDATION(S): The Manager recommends that the Board approve the resolution. 3 RES-2017-041 Resolution Providing Final Approval of Terms and Documents For 2017 Combined Projects Installment Financing WHEREAS-- The Board of Commissioners has previously determined to carry out a plan (the "Project") to acquire, construct and finance various public improvements, and in particular the public improvements and undertakings described in Exhibit A. The Board has also determined to finance Project costs by using an installment financing as authorized under Section 160A-20 of the General Statutes. The County has solicited competitive proposals from banks and other financial institutions to provide the desired financing, and Sterling National Bank (the "Lender") has submitted the best proposal. The County's Finance Officer has made available to this Board the draft agreements listed on Exhibit B (the "Agreements"), which relate to the County's carrying out the financing plan. This resolution provides the County Board's final approval of the financing terms and documents for the Project. BE IT THEREFORE RESOLVED by the Board of Commissioners of Orange County, North Carolina, as follows: 1. Determination To Proceed with Financing - The County confirms its plans to undertake the Project. The County will carry out the Project with financing from the Lender substantially in accordance with a financing proposal dated May 3, 2017. Under the financing plan, the Lender will make funds available to the County for use on Project costs. The County will repay the amount advanced, with interest, over time. The County will grant to the Lender a mortgage-type interest in the Orange County Sportsplex (and its associated real property) to secure the County's repayment obligation. 4 2. Approval of Agreements; Direction To Execute Agreements -- The Board approves the forms of the Agreements submitted to this meeting. The Board authorizes the Board's Chair and the County Manager, or either of them, to execute and deliver the Agreements in their final forms. The Agreements in their respective final forms must be in substantially the forms presented, with such changes as the Chair or the County Manager may approve. The execution and delivery of any Agreement by an authorized County officer will be conclusive evidence of that officer's approval of any changes. The Agreements in final form, however, must be consistent with the financing plan described in this resolution and must provide (a) for the amount financed by the County not to exceed $13,700,000, (b) for an annual interest rate not to exceed 2.83% (in the absence of default, or a change in tax status), and (c) for a financing term not to extend beyond December 31, 2037. 3. Officers To Complete Closing - The Board authorizes the County Manager, the Finance Officer and all other County officers and employees to take all proper steps to complete the financing in cooperation with the Lender and in accordance with this resolution. The Board authorizes the Finance Officer to hold executed copies of all financing documents permitted by this resolution in escrow on the County's behalf until the conditions for their delivery have been completed to that officer's satisfaction, and then to release the executed copies of the documents for delivery to the appropriate persons or organizations. Without limiting the generality of the foregoing, the Board specifically authorizes the Finance Officer to approve changes to any documents previously signed by County officers or employees, provided that the changes do not conflict with this resolution or substantially alter the intent from that expressed in the form originally signed. The Finance Officer's authorization of the release of any document for delivery will constitute conclusive evidence of his approval of any changes. In addition, the Board authorizes the Finance Officer to take all appropriate steps for the efficient and convenient carrying out of the County's on-going responsibilities with respect to the financing of the Project. This authorization includes, without limitation, contracting with third parties for reports and calculations that may be required under this resolution or otherwise with respect to the Agreements. 5 4. Resolutions as to Tax Matters -- The County will not take or omit to take any action the taking or omission of which will cause its obligations to pay principal and interest (the "Obligations") to be "arbitrage bonds," within the meaning of Section 148 of the "Code" (as defined below), or "private activity bonds" within the meaning of Code Section 141, or otherwise cause interest components of the installment payments to be includable in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the County will comply with any Code provision that may require the County at any time to pay to the United States any part of the earnings derived from the investment of the financing proceeds. In this resolution, "Code" means the United States Internal Revenue Code of 1986, as amended, and includes applicable Treasury regulations. 5. Miscellaneous Provisions -- The Board authorizes all County officers and employees to take all further action as they may consider desirable in furtherance of the purposes of this resolution. The Board ratifies all prior actions of County officers and employees to this end. Upon the absence, unavailability or refusal to act of the County Manager, the Chair or the Finance Officer, any other of those officers may assume any responsibility or carry out any function assigned in this resolution. The Board authorizes the Clerk to apply the County's seal, and to attest to the seal, on any document related to the purposes of this resolution. In addition, the Vice Chair or any Deputy or Assistant Clerk to the Board may in any event assume any responsibility or carry out any function assigned to the Chair or the Clerk, respectively, in this resolution. All other Board proceedings, or parts thereof, in conflict with this resolution are repealed, to the extent of the conflict. This resolution takes effect immediately. 6 Exhibit A - proposed projects Project description Est. Amount Financed ($) Rogers Road sewer improvements (from FY 2015-16 and 6,153,775 2016-17 Approved CIP) Sportsplex field house construction (from FY 2015-16 2,764,000 Approved CIP) Information Technologies projects - hardware and 1,000,000 software acquisition Vehicle replacements 789,722 Solid waste equipment replacements 562,717 Emergency services substation construction 500,000 Generator projects 375,000 Fairview Park access and parking improvements 325,000 Facility accessibility and security improvements 319,000 Roofing projects 194,700 Emergency services - radio replacements 166,892 Parking lot improvements (from FY 2015-16 Approved 120,000 CIP) Cedar Grove Community Center renovations 60,000 Estimated total $ 13,330,806 The County also expects to use additional financing proceeds to pay financing expenses. Unless stated otherwise in the table above, the proposed projects are part of the Approved FY 2016-17 Capital Investment Plan (CIP). 7 Exhibit B -- draft agreements (a) A draft dated May 26, 2017, of an Installment Financing Contract to be dated on or about June 15, 2017 (the "Financing Contract"), between the County and the Lender. The Financing Contract provides for the advance of funds to the County for the County's use on the project, sets out the County's repayment obligation, and sets out the County's obligations regarding care for the collateral and other matters. (b) A draft dated May 26, 2017, of a Deed of Trust and Security Agreement to be dated on or about June 15, 2017, from the County to a deed of trust trustee for the Lender's benefit. The Deed of Trust provides for a security interest in the Orange County Sportsplex and its associated real property to the Lender to secure the County's repayment obligation. (c) A draft of an Escrow Agreement to be dated on or about June 15, 2017, between the County and the Lender. The Escrow Agreement provides for the custody and investment of financing proceeds pending their use to pay project costs.