HomeMy WebLinkAboutAgenda - 06-13-2017 - 2.4 Attachment 4 Davenport and Company County Tax Supported CIP Discussion Materials. Attachment 4
Count y Supported Tax CIP Discussion Materials
Orange County, North Carolina
ORANGE COUNTY
NORTH CAROLINA
June 13, 2017
DAVENPORT & COMPANY
Member NYSE I FIN RA I SIPC
Attachment 4 _
Contents / Agenda ORANGE COUNTY
NORTH CAROLINA
Credit Rating Overview and Peer Comparatives
Existing Tax Supported Debt Profile
Debt Capacity and Debt Affordability Analysis
Appendix A: Details of Principal Structuring Cases
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 1
Attachment 4 ^
ORANGE COUNTY
NORTH CAROLINA
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1
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 2
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Credit Rating Overview and Peer Comparatives ORANGE COUNTY
NORTH CAROLINA
Peer Comparative Introduction Moody's Investors Standard & Poor's Fitch Ratings
• The County is currently rated Aaa by Moody's Investors Service (May Service
2015), AAA by Standard and Poor's (June 2015), and AAA by Fitch
(June 2015). Aaa AAA AAA
Aa 1 AA+ AA+
• The following pages contain peer comparatives based on the Moody's Aa2 AA AA
Aaa peer counties listed below. Aaa AA- AA-
A1 A+ A+
A2 A A
— National Aaa Counties - 93 Credits A3 A- A-
Baa1 BBB+ BBB+
— North Carolina Aaa Counties - 9 Credits Baa2 BBB BBB
— Buncombe, Durham, Forsyth, Guilford, Mecklenburg, New Baa3 BBB- BBB-
Hanover, Orange, Union, Wake Non Investment Grade
Note: The data shown in the peer comparatives is from Moody's Municipal Financial
Ratio Analysis database. The figures shown are derived from the most recent financial
statement available as of April 26, 2017 (FY 2016 figures in most cases).
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 3
Attachment 4
Historical Credit Spreads ORANGE COUNTY
NORTH CAROLINA
■ The County's credit rating has a direct impact on the cost
of borrowing, which in turn effects the County's debt 30-Year
s
capacity. 7.5
7
— The credit spread is the premium an issuer pays to 6.5
the purchaser of their bonds (i.e. higher interest o 5.5
rate) as compensation for increased credit risk. 5
4.5
F VW
— Since the financial downturn in September 2008, a 4
3.5
credit quality of issuers has taken on a renewed 3
importance to investors. 2.5
2
— The average spread for an A rated borrower has 1.5
OR p p0 O� O5b 00 ti0 titi ti� tilb ti� "P '11
increased from 0.33% from Nov 2004 - Dec 2008
to 0.70% since Dec 2008. —AAA —AA —A —BBB
Credit Spreads (%) vs the 30-yr AAA M M D
Nov 2004 - Dec 2008
Ratin Min Max Averaae
AA 0.04 0.19 0.10
A 0.15 1.26 0.33
BBB 0.30 2.52 0.60
Dec 2008 - June 2017
Ratin Min Max Averap-e
AA 0.09 0.53 0.23
A 0.46 1.11 0.70
BBB 0.69 2.58 1.33
Note:credit spreads compared to the 'AAA'equivalent
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 4
Attachment 4 ^
Rating Agency Methodology Updates ORANGE COUNTY
NORTH CAROLINA
Moody's Moody's Qualitative Factors
• On January 15, 2014, Moody's updated its US Local Governments
Below-the-Line Adjustments Other Considerations)
General Obligation Debt methodology and assumptions. 1 Economy/Tax Base
2 Institutional presence(+) Per capita income
• Under the new methodology, an initial indicative rating is 3 Regional economic center(+) Composition of workforce/employmentopportunities
4 Economic concentration(-) Proportion of tax base that is vacant or exempt from taxes
calculated from a weighted average of four key factors: 5 Outsized unemployment or poverty levels(-) Median home value
6 Trend of real estate values
7 Population trends
8 Property tax appeals outstanding
US Local Governments General Obligation Debt Methodology 9 Unusually significant tax base declines or growth
10
1. Economy/ Tax Base 30% 11 Finances
0 12 Outsized enterprise or contingent liability risk(-) Questionable balance sheet items that may distort fund balance
Tax Base Size (Full Value) 10%
13 Unusually volatile revenue structure(-) Large portion of fund balance that is restricted or unusable
Full Value Per Capita 10% 14 Labor contracts that materially affect credit strength
Wealth (Median Family Income) 10% 15 Limited revenue raising ability:
16 Restrictive property tax cap
2. Finances 30% 17 Constraints on capturing tax base growth
Fund Balance (%of Revenues) 10% 18 Other levy-raising limitation
19 Limited ability to cut or control expenditures:
Fund Balance Trend (5-Year Change) 5% 20 Limitation constrains budgetary flexibility to a degree not already
captured in the scorecard
Cash Balance (%of Revenues) 10% 21 Heavy fixed costs,including contractually fixed costs such as pension
Cash Balance Trend (5-Year Change) 5% payments
22 Management
3. Management 20% 23 State oversight or support(+or-)
Institutional Framework 10% 24 Unusually strong or weak budget management and
planning(+or-)
Operating History 10% 25
4. Debt/ Pensions 20% 26 Debt/Pensions
27 Unusually weak or strong security features(-or+) Very high or low debt service relative to budget
Debt to Full Value 5% 28 Unusual risk posed by debt structure(-) Very high or low overall debt burden(including overlapping debt)
Debt to Revenue 5% 29 History of missed debt service payments(-) Heavy capital needs implyingfuture debt increases
30 Unusuallyslow or rapid amortization of debt principal(gauged bythe
Moody's Adjusted Net Pension Liability(3-Year Average)to Full Value 5% percentage of principal repaid within 10 years)
31 Other post-employment benefits(OPEB),the most significant of which
Moody's Adjusted Net Pension Liability(3-Year Average)to Revenue 5% is retiree healthcare liabilities,when they have the potential to
significantly constrain operational flexibility
'These other considerations include factors specifically outlined in Moody's rating methodology.However,any information regarding an issuer can rise to the
level of a qualitative factor/consideration as deemed appropriate by the rating analyst and credit committee.
■ Below the line qualitative adjustments can be made based upon
certain factors.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 5
Attachment 4 ^
Rating Agency Methodology Updates ORANGE COUNTY
NORTH CAROLINA
S&P Fitch
• On September 12, 2013, Standard & Poor's updated its US Local ■ On April 18, 2016, Fitch updated its US Tax-Supported Rating
Governments General Obligation Ratings methodology and Criteria.
assumptions.
• Under the new methodology, Under the new methodology, Fitch has identified four key rating
gy, an initial indicative rating is
calculated from a weighted average of seven key factors: factors that play a significant role in driving the rating outcome for
a given issuer in the context of its economic base:
US Local Governments General Obligation Ratings Methodology Key Rating Factors
1. Institutional Framework 10% 1 Revenue Framework
Legal and practical environment in which the local govt operates Growth Prospects for Revenues Without Revenue-Raising Measures
2. Economy 30% Independent Legal Ability to Raise Operating Revenues Without External Approval
Total Market Value Per Capita
Projected per capita effective buying income as a %of US projected 2 Expenditure Framework
effective buying income Natural Pace of Spending Growth Relative to Expected Revenue Growth
3. Management 20% Flexibility of Main Expenditure Items
Impact of management conditions on the likelihood of repayment 3 Long-Term Liability Burden
4. Budgetary Flexibility 10% Combined Burden of Debt and Unfunded Pension Liabilities in Relation to Resource Base
Available Fund Balance as a %of Expenditures
5. Budgetary Performance 10% 4 Operating Performance
Total Government Funds Net Result(%) Financial Resilience Through Downturns
General Fund Net Revenue Budget Management at Times of Economic Recovery _
6. Liquidity 10%
Total Gov't Available Cash as a %of Total Gov't Funds Debt Service
Total Gov't Cash as a %of Total Gov't Funds Expenditures ■ The factors cover both the institutional framework in which an
7. Debt and Contingent Liabilities 10% issuer operates, which varies by level and location of government,
Net Direct Debt as a %of Total Governmental Funds Revenue and performance within that framework.
Total Governmental Funds Debt Service as a %of Total
Governmental Funds Expenditures ■ Fitch publishes specific rating category evaluations for each factor,
with analysis focused on long-term trends and expectations.
■ Up to a one-notch adjustment can be made from the indicative
rating based on other qualitative factors.
DAVENPORT 8L COMPANY
June 13,2017 Orange County, NC 6
Attachment 4 ^
ORANGE COUNTY
NORTH CAROLINA
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DAVENPORT&COMPANY
June 13,2017 Orange County, NC 7
Attachment 4 ^_
Existing Tax Supported Debt ORANGE COUNTY
NORTH CAROLINA
Tax Supported Debt Service Tax Supported Debt Service
U) 30.0
`o FY Principal Interest Total 10-yr Payout
25.0 Total 170,965,205 36,486,070 207,451,276
20.0
'_1_
' 2017 19,794,536 6,338,040 26,132,576 89.7%
�—,—. 2018 19,804,870 5,757,147 25,562,017 93.1%
15.0 2019 19,147,190 5,125,080 24,272,270 94.0%
2020 18,485,819 4,440,496 22,926,315 95.1%
10.0 - — — — — — — — 2021 18,116,274 3,754,643 21,870,917 96.1%
2022 18,049,652 3,067,443 21,117,095 97.1%
5.0 - — _ 2023 14,268,570 2,324,055 16,592,626 98.1%
0.0 r 2024 11,084,848 1,741,855 12,826,703 100.0%
'l lb Cb O ti 0 3 D h 0 1 O 2025 8,333,798 1,263,524 9,597,322 100.0%
O`1' 2026 6,224,894 935,805 7,160,699 100.0%
2027 7,246,417 597,513 7,843,931 100.0%
JPrincipal mjlnterest 2028 2,554,056 388,778 2,942,835 100.0%
Par Outstanding - Estimated as of 6/30/2016 2029 2,347,056 298,821 2,645,877 100.0%
2030 1,893,056 212,744 2,105,800 100.0%
2031 1,458,056 137,709 1,595,765 100.0%
Type Par Amount 2032 1,078,056 76,812 1,154,868 100.0%
2033 1,078,056 25,604 1,103,660 100.0%
General Obligation Bonds $59,280,000
IPCs/ COPS/ LOBS $111,685,205
Total $170,965,205
Notes:
2010 and 2011 QSCBs are shown gross of Federal Subsidy.
Tax Supported Debt shown includes Vehicle Replacement Fund Debt.
Tax Supported Debt shown excludes Sportsplex, Solid Waste, and Water
&Sewer Debt supported by the Article 46 Sales Tax.
DAVENPORT&COMPANY Source: LGC Bond Ledger and 2016 CAFR
June 13,2017 Orange County, NC 8
Attachment 4 ^
Key Debt Ratio: Tax Supported Payout Ratio ORANGE COUNTY
NORTH CAROLINA
10-Year Payout Ratio 10-year Payout Ratio Peer Comparative (Higher is Better)
100.0% —
Orange County(2017)
90.0%
80,0% National'Aaa'Median
70.0%
60.0% NC'Aaa'Median
50.0%
Buncombe
40.0% Durham
30.0% Forsyth
20.0% Guilford
10.0% Mecklenburg
0.0% New Hanover
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0 20 40 60 80 100
10-yr Payout Percent
• Existing 10-year Payout Ratio ■ Rating Considerations:
— FY 2017: 89.7% — Moody's: Moody's rating criteria for General Obligation credits
allows for a scorecard adjustment if an issuer has unusually slow
or rapid amortization of debt principal.
• The 10 Year Payout Ratio measures the amount of principal to be
retired in the next 10 years.
— S&P: A payout ratio greater than 65% results in a one point positive
qualitative adjustment to the Debt & Contingent Liabilities section
• This ratio is an important metric that indicates whether or not a of S&P's General Obligation rating methodology.
locality is back-loading its debt.
• The County does not have a Financial Policy setting a minimum 10-
Year Payout Ratio.
COMPANY
DAVENPORT 8L
Source: LGC Bond Ledger,2016 CAFR,County Budget Documents,Moody's Investors Service,and S&P
June 13,2017 Orange County, NC 9
Attachment 4
Key Debt Ratio: Tax Supported Debt to Assessed Value ORANGE COUNTY
NORTH CAROLINA
Tax Supported Debt to Assessed Value TS Debt to Assessed Value Peer Comparative (Lower is Better)
3.50% Orange County(2017)
3.00%
National'Aaa'Median
2.50%
2.00 NC'Aaa'Median -
1.50% Buncombe —
Durham -
1.00
Forsyth
0.50% Guilford
Mecklenburg
0.00% , ■ — — New Hanover
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0.0 0.5 1.0 1.5 2.0
Existing Policy Percent
• Existing Tax Supported Debt to Assessed Value ■ Rating Considerations:
— FY 2017: 1.01% — Moody's: Criteria for General Obligation Credits defines categories
of Debt to Assessed Values as:
• Assumed Future Growth Rates — Very Strong (Aaa): < 0.75%
— 2016 Assessed Value: $16,778,182,392 — Strong(Aa): 0.75%- 1.75%
— 2017 Budgeted A.V.: $16,942,732,752 — Moderate (A): 1.75%- 4.00%
— 2018 & Beyond: 1.70% — Weak - Very Poor (Baa and below): > 4.00%
• The County has a Financial Policy setting a maximum Tax Supported — S&P: A positive qualitative adjustment is made to the Debt and
Debt to Assessed Value of 3.0%. Contingent Liabilities score for a debt to market value ratio below
3.00%, while a negative adjustment is made for a ratio above
10.00%.
DAVENPORT&COMPANY Source: LGC Bond Ledger,2016 CAFR,County Budget Documents,Moody's Investors Service,and S&P
June 13,2017 Orange County, INC 10
Key Debt Ratio: Tax Supported ' g6rvice vs. ORANGE COUNTY
Governmental Expenditures NORTH CAROLINA
Tax Supported Debt Service vs. Governmental Expenditures TS Debt Service vs. Gov't Expenditures Peer Comparative (Lower is Better)
14%
Orange County(2017)
12%
National'Aaa'Median
10%
8% NC'Aaa'Median _
6% Buncombe
Durham
4%
Forsyth
2% Guilford
' ■ ■ - _ — — Mecklenburg
0% New Hanover
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0 5 10 15 20 25
■ Existing Percent
• Existing Tax Supported Debt Service vs. Governmental Expenditures ■ Rating Considerations:
— FY 2017: 11.72% — Moody's: Moody's criteria allows for a scorecard adjustment if an
issuer has very high or low debt service relative to its budget
• Assumed Future Growth Rates Percent.
— 2016 Adjusted Expenditures: $193,857,534
— 2017: 1.50%
— 2018 & Beyond: 1.70% — S&P: The Debt and Contingent Liabilities section defines
categories of Net Direct Debt as a /o of Total Governmental Funds
• The County does not have a Financial Policy setting a maximum Tax Expenditures as follows:
Supported Debt Service to Governmental Expenditures. However, the — Very Strong: <8%
County has a policy setting a maximum Debt Service to General Fund — Strong: 8%to 15%
Revenues of 15.0%.
— Adequate: 15%- 25%
— Weak: 25% - 35%
Note: Governmental Expenditures represent the ongoing operating expenditures of the County.In this
analysis,debt service and capital projects expenditures are excluded. — Very Weak: > 35%
DAVENPORT&COMPANY Source: LGC Bond Ledger,2016 CAFR,County Budget Documents,Moody's Investors Service,and S&P
June 13,2017 Orange County, INC 11
Key Debt Ratio: Tax Supportedftg6rvice vs. General =
ORANGE COUNTY
Fund Revenues NORTH CAROLINA
Tax Supported Debt Service vs. General Fund Revenues TS Debt Service vs. General Fund Revenues (Lower is Better)
20%
Orange County(2017)
18%
16% NC'Aaa'Median
14%
12% Buncombe
10% - — — — Durham
8% - — — — —
Forsyth
6% - — — — -
Guilford
— — Mecklenburg
2% - — — —
New Hanover
0% r— r—r
Union I
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0 5 10 15 20 25
iiiiiiiiiiiiiiiiiiiiiiiiiExisting Policy Percent
• Existing Tax Supported Debt Service vs. General Fund Revenues ■ Note: Peer comparative is estimated based on data available through
— FY 2017: 12.87% Moody's MFRA.
• Assumed Future Growth Rates
— 2017 Original Budget': $203,116,868
— 2018 Estimate 2: $209,221,031
— 2019 & Beyond: 2.00%
• The County has a policy setting a maximum Tax Supported Debt
Service to General Fund Revenues of 15.0%.
1 Excludes Fund Balance appropriation of$12,726,944.
2 Per County Staff. Excludes Fund Balance appropriation of$7,976,633.
COMPANY
DAVENPORT 8L
Source: LGC Bond Ledger,2016 CAFR,County Budget Documents,and Moody's Investors Service
June 13,2017 Orange County, NC 12
Attachment 4 ^_
Debt Affordability Analysis ORANGE COUNTY
NORTH CAROLINA
Existing Debt
A B C D E F G H I J K L M N 0 P
Debt
Proposed CIP and CIP General Fund Federal Internal Rogers Road Revenue from Estimated
Existing Debt GO Referendum Operating Budgeted Debt QSCB Service Cost Sharing Total Revenues Surplus/ Prior Tax Equiv. Capital Reserve Adjusted Surplus/ Incremental Tax Capital Reserve
FY Service Debt Impact Total Service Subsidy' Vehicle Fund Agreement2 Available (Deficit) (Column 0) Utilized (Deficit) Equivalent Fund Balance
2017 26,132,576 26,132,576 25,879,488 332,068 282,125 26,493,682 361,106 361,106 361,106
2018 25,562,017 25,562,017 25,879,488 299,182 283,263 26,461,934 899,917 899,917 1,261,022
2019 24,272,270 24,272,270 25,879,488 265,940 283,202 26,428,630: 2,156,360 2,156,360 3,417,383
2020 22,926,315 22,926,315 25,879,488 232,697 285,422 26,397,608; 3,471,293 3,471,293 6,888,675
2021 21,870,917 21,870,917 25,879,488 199,455 123,096 26,202,039: 4,331,122 4,331,122 11,219,797
2022 21,117,095 21,117,095 25,879,488 166,212 122,451 26,168,152 5,051,057 5,051,057 16,270,854
2023 16,592,626 16,592,626 25,879,488 132,970 122,760 26,135,218: 9,542,593 9,542,593 25,813,447
2024 12,826,703 12,826,703 25,879,488 99,727 - 25,979,216; 13,152,513 13,152,513 38,965,960
2025 9,597,322 9,597,322 25,879,488 66,485 25,945,973: 16,348,652 16,348,652 55,314,612
2026 7,160,699 7,160,699 25,879,488 33,242 25,912,731 18,752,032 18,752,032 74,066,644
2027 7,843,931 7,843,931 25,879,488 - 25,879,488 18,035,558 18,035,558 92,102,202
2028 2,942,835 2,942,835 25,879,488 25,879,488 22,936,654 22,936,654 115,038,855
2029 2,645,877 2,645,877 25,879,488 25,879,488 23,233,611 23,233,611 138,272,466
2030 2,105,800 2,105,800 25,879,488 25,879,488 23,773,688 23,773,688 162,046,154
2031 1,595,765 1,595,765 25,879,488 25,879,488 24,283,723 24,283,723 186,329,877
2032 1,154,868 1,154,868 25,879,488 25,879,488 24,724,621 24,724,621 211,054,498
2033 1,103,660 1,103,660 25,879,488 25,879,488 24,775,828 24,775,828 235,830,326
2034 - - 25,879,488 25,879,488 25,879,488 25,879,488 261,709,815
2035 - - - - 25,879,488 - - - 25,879,488: 25,879,488 - - 25,879,488 - 287,589,303
2036 25,879,488 25,879,488; 25,879,488 25,879,488 313,468,791
2037 25,879,488 25,879,488: 25,879,488 25,879,488 339,348,280
2038 25,879,488 25,879,488; 25,879,488 25,879,488 365,227,768
2039 25,879,488 25,879,488: 25,879,488 25,879,488 391,107,256
2040 25,879,488 25,879,488; 25,879,488 25,879,488 416,986,745
2041 25,879,488 25,879,488 25,879,488 25,879,488 442,866,233
2042 25,879,488 25,879,488 25,879,488 25,879,488 468,745,721
2043 25,879,488 25,879,488 25,879,488 25,879,488 494,625,210
Total Tax Effect 0.00
Tota l 207,451,276 207,451,2 76 Tota l
i Reduced 6.95/.and beyond due to Federal Sequestration
2The County has an Interlocal Agreement with the Town of Chapel Hill and Town of Carrboro to repay 43%and 14%of the debt service associated with the Rogers Road portion of the County's 20171FC,respectively.
■ FY 2018 Value of a Penny: $1,781,692
■ Assumed FY 2019 & Beyond Growth Rate: 1.70%
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 13
Attachment 4 ^
ORANGE COUNTY
NORTH CAROLINA
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DAVENPORT&COMPANY
June 13,2017 Orange County, NC 14
Attachment 4 ^
September 2015 Overview - Bond Referendum Discussion ORANGE COUNTY
NORTH CAROLINA
Overview September 2015 Summary of Cases 1 & 2
• On September 10, 2015,the County Board held a retreat to review
potential General Obligation Bond Referendum packages. 1 Case Description County CIP Only County CIP& $125 Million GO
$125 Million GO Referendum
Referendum
2
3 Assumptions
• During that meeting, Davenport presented a series of potential 4 Interest Rate 3.75%-4.50% 3.75%-4.50% n/a
cases which included: 5 Term 20 Years 20 Years n/a
6 GO Amortization Level Principal Level Principal n/a
7 Non-GO Debt Amortization Level Principal Level Principal n/a
- Case 1: Existing County CIP Only 8
9 Debt Issued
- Case 2: Existing County CIP and $125 of Referendum Projects 10 FY 2016 $ 6,475,175 $ 6,475,175 $ -
11 FY 2017 23,985,200 65,651,867 41,666,667
- Case 3: Existing County CIP and $130 of Referendum Projects 12 FY 2018 28,563,031 28,563,031 -
13 FY 2019 3,967,500 45,634,167 41,666,667
- Case 4: Existing ount CIP and $135 of Referendum Projects 14 FY 2020 7,917,545 7,917,545
g y � 15 FY 2021 32,936,845 74,603,512 41,666,667
16 Total Debt Issued $103,845,296 $228,845,296 $125,000,000
17
18 Total New Debt Service $148,909,738 $328,597,238 $179,687,500
■ At the October 7, 2015 County Board meeting, the Board voted to 19
20 Debt Ratios Policy
pursue a $125 million Bond Referendum for: 21 10 Year Payout(Worst Shown) N/A 73.6% 65.1% -8.4%
22 Debt to Assessed Value(Worst Shown) 3.009/o 1.29/6 1.6% 0.5%
- School Projects - $120 Million 23 Debt Service toGF Revenues(2016-2023) 15.00%
24 FY 2016 12.7% 12.7% 0.0%
25 FY 2017 12.2% 12.2% 0.0%
- Affordable Housing Projects - $5 Million 26 FY 2018 12.9% 14.4% 1.5%
27 FY 2019 13.1% 14.5% 1.4%
28 FY 2020 12.4% 15.2% 2.8%
29 FY 2021 11.9% 14.7% 2.7%
■ As part of the presentation on September 10, 2015,the CIP 30 FY 2022 12.7% 16.6% 3.9%
31 FY 2023 10.4% 14.2% 3.8%
funding case that included the $125 million referendum resulted 32
in the following: 34 FY2016valentImpact
35 FY 2017 - - -
- A required tax equivalent increase of 4.92It in FY 2018 or a 36 FY2018 0.654 2.784 2.134
total of 7.47 between FY 2018 and 2022. 37 FY 2019 0.994 0.904 0
38 FY 2020 1.454 1.45459
4
39 FY 2021 - - -
- While the County was projected to be in compliance in all cases 40 FY 2022 2.354 2.354
41 Total 1.644 7.474 5.834
with its Debt Service to Assessed Value policy, the General Fund 42
Debt Service to General Fund Revenues exceed the policy in FY 43 One Time FY 2018 Tax Equivalent Impact 1.224 4.924 3.704
2020 and 2022.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 15
Attachment 4 ^
September 2015, Recommended 2017, and 2017 CIP Alternative #2 ORANGE COUNTY
NORTH CAROLINA
Overview Difference in Debt Funded Projects
• The County adopts a 5 Year Capital Improvement Plan on an A B c D
annual basis as part of its budget process. September 2015 Recommended 2017 CIP
— The County identifies funding sources for each of the projects. CIP Funding 2017 CIP Funding Alternative #2
Funding
— Proposed capital projects are reviewed and adjusted as
necessary each year. 1 Debt Funded Projects
2 2016 6,475,175 7,427,000 7,427,000
• Since September 2015,the County has adopted the FY 2016-2017 3 2017 65,651,867 10,000,000 9,312,000
CIP and is currently in the process of reviewing the FY 2017-2018 4 2018 28,563,031 67,683,272 66,971,272
5 2019 45,634,167 34,245,550 30,520,392
CIP' 6 2020 7,917,545 76,995,092 61,720,311
7 2021 74,603,512 28,584,380 11,366,868
• As part of the adoption and development of these CIPs, a number 8 2022 - 58,017,330 54,935,304
of items have changed and evolved since September 2015. 9 Total ('16-'22) 228,845,297 282,952,624 242,253,147
10
• In addition to adjustments made to the projects included in the 11 Total ('17-'22) 222,370,122 275,525,624 234,826,147
CIP, a number of assumptions have been adjusted in the debt
funding model, including items such as:
— Project amounts and timing to match the CIP, including one
additional year of CIP projects.
— The addition of short term financings for software, equipment,
and similar projects.
— Updated budget assumptions and growth rates for key drivers,
including:
— General Fund Revenues.
— Assessed Value.
— Value of a Penny.
— In analyses where an upfront tax increase is calculated, the year
of the tax increase was shifted from FY 2018 to FY 2019.
• The following pages contain a summary of the debt issuance
included in the current draft CIP and the associated impacts.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 16
Attachment 4 ^
Capital Improvement Plan — Case Overview ORANGE COUNTY
NORTH CAROLINA
• As part of the annual CIP process, the County identifies Capital Projects for potential debt funding. The CIP includes
Installment Purchase Contracts/ Limited Obligation Bonds as well as General Obligation Bonds approved during the
November 2016 Referendum.
• Future debt is assumed to be funded under the following assumptions:
— Issuance Date: Fiscal Year indicated in the CIP (mid year)
— First Payment: Fiscal Year following issuance
— Short-Term Borrowings: 5-7 Year Term at 2.83% - 3.00%
— Medium-Term Borrowings: n/a
— Long-Term Borrowings: 20 Year Term at 2.83% - 4.50%
• Key Debt Ratio Growth Assumptions:
— Assessed Value - Natural Growth: 2018 & Beyond: 1.70%
— General Fund Revenues - Natural Growth: 2018 & Beyond: 2.00% plus revenue derived from projected tax
increases identified in the capital funding plan (note: revenues include
sales tax).
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 17
Attachment 4 ^
2017 CIP Alternative #2 — Future Debt Financings ORANGE COUNTY
NORTH CAROLINA
Fiscal Year 2017 2018 2019 2020 2021 2022 Total
Interest Rate Assumptions
Short-Term Borrowings(5-7 Year) 2.83% 3.00% 3.00% 3.00% 3.00% 3.00%
Medium-Term Borrowings(10-15-Year) n/a n/a n/a n/a n/a n/a
Long-Term Borrowings(20-Year) 2.83% 4.00% 4.25% 4.50% 4.50% 4.50%
1 FY 2017 - 2022 County CIP
2 Short-Term Borrowings(5-7 Year)'
3 County Capital Projects $ 1,180,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 3,680,000
4
5 Medium-Term Borrowings(15-Year)2
6 County Capital Projects - - - - - - -
7 School Capital Projects -
8 Total Medium-Term Borrowings (15-Year) - - - - - - -
9
10 Long-Term Borrowings(20-Year)3
11 County Capital Projects 8,132,000 18,114,936 24,558,300 13,747,417 5,834,380 10,342,330 80,729,363
12 School Capital Projects - 5,856,336 4,914,181 4,972,894 5,032,488 4,092,974 24,868,873
13 School GO Referendum 40,000,000 - 40,000,000 - 40,000,000 120,000,000
14 Affordable Housing GO Referendum 2,500,000 - 2,500,000 - 5,000,000
15 Durham Tech Capital Projects - - 547,911 - - - 547,911
16 Total Long-Term Borrowings (20-Year) 8,132,000 66,471,272 30,020,392 61,220,311 10,866,868 54,435,304 231,146,147
17
18 Total CIP $ 9,312,000 $ 66,971,272 $ 30,520,392 $ 61,720,311 $ 11,366,868 $ 54,935,304 $ 234,826,147
'Beginning in FY 2017,future vehicle financings are assumed to be paid for from Vehicle Replacement Fund Internal Service Fees.
2 Assumed for borrowing amounts under$10 million.
3 Assumed for borrowing amounts over$10 million.
Note: FY 2017 CIP reflects actual borrowing amounts for County Short-Term and Long-Term Capital.
Note: 2/3 Bonds are assumed to be issued in FY 2018 to fund projects in FY 2018 and FY 2019.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 18
Attachment 4 ^
Summary of Results - 2017 CIP Alternative *2 ORANGE COUNTY
NORTH CAROLINA
Level Principal Amortization
Existing Debt Only 2017-2022 CIP
Assumptions Short-Term Medium-Term Long-Term Total
1 Interest Rate N/A 2.83%-3.00% n/a 2.83%-4.50% 2.83%-4.50%
2 Term N/A 5-7 Years n/a 20 Years 5/7/20 Years
3 Amortization N/A Level Debt Service n/a Level Principal LDS/Level Principal
4
5 Debt Issued
6 FY 2017 N/A $ 1,180,000 $ $ 8,132,000 $ 9,312,000
7 FY 2018 N/A 500,000 68,514,936 69,014,936
8 FY 2019 N/A 500,000 27,976,728 28,476,728
9 FY 2020 N/A 500,000 61,220,311 61,720,311
10 FY 2021 N/A 500,000 10,866,868 11,366,868
11 FY 2022 N/A 500,000 54,435,304 54,935,304
12 Total Debt Issued N/A $ 3,680,000 $ $ 231,146,147 $ 234,826,147
13
14 Total New Debt Service N/A $ 4,045,453 $ $337,720,934 $ 341,766,387
15
16 Debt Ratios Policy
17 10 Year Payout(Worst Shown) N/A 89.7% 64.8% 64.8% 64.8%
18 Debt to Assessed Value(Worst Shown) 3.00% 1.0% 1.6% 1.6% 1.6%
19 Debt Service to GF Revenues(2017-2025) 15.00% No Adjustment Up Front Adjustment Incremental Adjustment
20 FY 2017 12.9% 12.9% 12.9% 12.9%
21 FY 2018 12.2% 12.6% 12.6% 12.6%
22 FY 2019 11.4% 14.7% 14.1% 14.4%
23 FY 2020 10.5% 15.0% 14.4% 14.6%
24 FY 2021 9.9% 16.8% 16.1% 16.0%
25 FY 2022 9.3% 16.5% 15.8% 15.7%
26 FY 2023 7.2% 16.3% 15.7% 15.5%
27 FY 2024 5.4% 14.1% 13.6% 13.5%
28 FY 2025 4.0% 12.2% 11.7% 11.6%
29
30 Tax Equivalent Impact
31 FY 2017 - - - -
32 FY 2018 - -
33 FY 2019 4.56 2.18
34 FY 2020 - 1.03
35 FY 2021 2.54
36 FY 2022 -
37 FY 2023 0.020
38 FY 2024 - - - -
39 Total 0.006 0.006 4.566 5.766
40
41 Additional Existing Revenues/ Reserves Required N/A $53,120,815 N/A N/A
Note:2/3 Bonds are assumed to be issued in FY 2018 to fund projects in FY 2018 and FY 2019.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 19
Attachment 4 ^_
Debt Affordability Analysis ORANGE COUNTY
NORTH CAROLINA
2017 CIP Alternative #2 Debt - No Tax Adjustment
A B C D E F G H I J K L M N 0 P
Debt
Proposed CIP and CIP General Fund Federal Internal Rogers Road Revenue from Estimated
Existing Debt GO Referendum Operating Budgeted Debt QSCB Service Cost Sharing Total Revenues Surplus/ Prior Tax Equiv. Capital Reserve Adjusted Surplus/ Incremental Tax Capital Reserve
FY Service Debt Impact Total Service Subsidy' Vehicle Fund Agreement' Available (Deficit) (Column 0) Utilized (Deficit) Equivalent Fund Balance
2017 26,132,576 - 26,132,576 25,879,488 332,068 282,125 - 26,493,682 361,106 361,106 361,106
2018 25,562,017 817,013 26,379,030 25,879,488 299,182 283,263 274,085 26,736,019 356,988 356,988 718,094
2019 24,272,270 7,089,118 31,361,388 25,879,488 265,940 283,202 272,687 26,701,317 (4,660,071) (718,094) (3,941,977) -
2020 22,926,315 9,637,095 32,563,410 25,879,488 232,697 285,422 267,667 26,665,274 (5,898,136) (5,898,136)
2021 21,870,917 15,354,591 37,225,508 25,879,488 199,455 123,096 262,646 26,464,685 (10,760,823) (10,760,823)
2022 21,117,095 16,150,622 37,267,716 25,879,488 166,212 122,451 257,626 26,425,778 (10,841,939) (10,841,939)
2023 16,592,626 21,061,062 37,653,688 25,879,488 132,970 122,760 252,605 26,387,824 (11,265,864) (11,265,864)
2024 12,826,703 20,459,174 33,285,876 25,879,488 99,727 - 247,585 26,226,801 (7,059,075) (7,059,075)
2025 9,597,322 19,669,143 29,266,465 25,879,488 66,485 242,565 26,188,538 (3,077,927) (3,077,927) -
2026 7,160,699 19,067,292 26,227,991 25,879,488 33,242 237,544 26,150,275 (77,716) (77,716)
2027 7,843,931 18,465,440 26,309,371 25,879,488 - 232,524 26,112,012 (197,359) (197,359) -
2028 2,942,835 17,863,589 20,806,424 25,879,488 227,504 26,106,992 5,300,568 5,300,568 5,300,568
2029 2,645,877 17,370,915 20,016,792 25,879,488 222,483 26,101,972 6,085,179 6,085,179 11,385,747
2030 2,105,800 16,877,241 18,983,041 25,879,488 217,027 26,096,515 7,113,474 7,113,474 18,499,221
2031 1,595,765 16,384,595 17,980,360 25,879,488 212,019 26,091,507 8,111,147 8,111,147 26,610,368
2032 1,154,868 15,891,949 17,046,817 25,879,488 207,011 26,086,499 9,039,682 9,039,682 35,650,051
2033 1,103,660 15,399,303 16,502,963 25,879,488 202,003 26,081,491 9,578,528 9,578,528 45,228,578
2034 - 14,906,658 14,906,658 25,879,488 196,995 26,076,483 11,169,825 11,169,825 56,398,404
2035 14,414,012 14,414,012 25,879,488 191,987 26,071,475 11,657,463 11,657,463 68,055,867
2036 13,921,366 13,921,366 25,879,488 186,979 26,066,467 12,145,101 12,145,101 80,200,968
2037 13,428,720 13,428,720 25,879,488 181,971 26,061,459 12,632,739 12,632,739 92,833,707
2038 12,530,074 12,530,074 25,879,488 - 25,879,488 13,349,414 13,349,414 106,183,121
2039 8,623,172 8,623,172 25,879,488 25,879,488 17,256,317 17,256,317 123,439,438
2040 6,880,209 6,880,209 25,879,488 25,879,488 18,999,279 18,999,279 142,438,717
2041 3,534,518 3,534,518 25,879,488 25,879,488 22,344,970 22,344,970 164,783,687
2042 2,844,245 2,844,245 25,879,488 25,879,488 23,035,244 23,035,244 187,818,931
2043 - - 25,879,488 25,879,488 25,879,488 25,879,488 - 213,698,419
Total Tax Effect 0.00
Total 207,451,276 338,641,116 546,092,392 Total (718,094)
i Reduced 6.95/.and beyond due to Federal Sequestration
'The County has an Interlocal Agreement with the Town of Chapel Hill and Town of Carrboro to repay 43%and 14%of the debt service associated with the Rogers Road portion of the County's 20171FC,respectively.
■ FY 2018 Value of a Penny: $1,781,692 ■ Note: Without a tax increase, the County is forecasted to have
shortfalls from FY 2019 to 2027 totaling $53,120,815.
■ Assumed FY 2019 & Beyond Growth Rate: 1.70%
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 20
Summary of Results - Attachment 4 =
ORANGE COUNTY
2017 CIP Alternative #2 with Structured Principal NORTH CAROLINA
Existing Debt Only
_ Assumptions Short-Term Medium-Term Long-Term Total
1 Interest Rate N/A 2.83%-3.00% n/a 2.83%-4.50% 2.83%-4.50%
2 Term N/A 5-7 Years n/a 20 Years 5/7/20 Years
3 Amortization N/A Level Debt Service n/a Structured Principal* LDS/Structured Principal*
4
5 Debt Issued
6 FY 2017 N/A $ 1,180,000 $ $ 8,132,000 $ 9,312,000
7 FY 2018 N/A 500,000 68,514,936 69,014,936
8 FY 2019 N/A 500,000 27,976,728 28,476,728
9 FY 2020 N/A 500,000 61,220,311 61,720,311
10 FY 2021 N/A 500,000 10,866,868 11,366,868
11 FY 2022 N/A 500,000 54,435,304 54,935,304
12 Total Debt Issued N/A $ 3,680,000 $ $ 231,146,147 $ 234,826,147
13
14 Total New Debt Service N/A $ 341,766,387 $ 341,513,937
15
16 Debt Ratios Policy
17 10 Year Payout(Worst Shown) N/A 89.7% 63.8% 64.0%
18 Debt to Assessed Value(Worst Shown) 3.00% 1.0% 1.6% 1.6%
19 Debt Service to GF Revenues(2017-2025) 15.00% Up Front Adiustment Incremental Adiustment
20 FY 2017 12.9% 12.9% 12.9%
21 FY 2018 12.2% 12.6% 12.6%
22 FY 2019 11.4% 14.1% 14.4%
23 FY 2020 10.5% 14.4% 14.6%
24 FY 2021 9.9% 15.0% 15.0%
25 FY 2022 9.3% 15.0% 15.0%
26 FY 2023 7.2% 15.0% 15.0%
27 FY 2024 5.4% 13.9% 13.7%
28 FY 2025 4.0% 12.0% 11.9%
29
30 Tax Equivalent Impact
31 FY 2017 - - -
32 FY 2018 - -
33 FY 2019 4.564 2.184
34 FY 2020 - 1.03¢
35 FY 2021 2.544
36 FY 2022 -
37 FY 2023 0.024
38 FY 2024 - - -
39 Total 0.00 4.56 5.76
40
41 Additional Existing Revenues/ Reserves Required N/A N/A N/A
Note:2/3 Bonds are assumed to be issued in FY 2018 to fund projects in FY 2018 and FY 2019.
*Subject to review and discussion with LGC Staff
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 21
Attachment 4
Observations / Items for Discussion ORANGE COUNTY
NORTH CAROLINA
• Orange County has formalized a series of Financial Policy Guidelines and has a formal CIP process in place.
• Orange County has historically managed its debt in a conservative fashion, as evidenced by a strong 10 year Payout Ratio.
— Note: This conservative debt structure contributes to a higher Debt Service to Budget Ratio.
• Based on a series of conservative CIP projections/ assumptions, the 2017 CIP Alternative #2 results in a projected cash flow shortfall (after the
FY 2018 borrowing) and the County is projected to exceed its Debt Service to General Fund Revenues Policy (after the FY 2020 borrowing).
• The County has a number of options to consider as it relates to exceeding its policy and/or addressing cash flow shortfalls:
— Consider delaying projects until they can be funded within the confines of the adopted policies.
— Consider requesting alternative debt structuring flexibility from the LGC in order to fund the currently scheduled CIP projects within current
policy limits and/or reduce cash flow shortfalls.
— Implement tax rate adjustments to minimize/ eliminate cash flow shortfalls.
— Consider amendments to County policies:
— Change Policy Targets or Ratios.
— Add provisions that allow for policy exceptions subject to Board review/ approval.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 22
Attachment 4 ^
Potential Next Steps ORANGE COUNTY
NORTH CAROLINA
• County Board reviews the current draft of the CIP and projected results.
• County Board provides guidance on preferred option or options for addressing cash flow shortfalls and policy non-compliance.
• Davenport and County staff develop potential alternative scenarios and present a series of options for the Board's consideration and feedback.
• Final CIP developed and adopted by the County Board.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 23
Attachment 4 ^
ORANGE COUNTY
NORTH CAROLINA
v� -
Details of Principal Structuring Cases
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 24
Attachment 4 ^
Principal Structuring ORANGE COUNTY
NORTH CAROLINA
2017 CIP Alternative *2 — Structured Principal with Upfront FY 2019 Tax Adjustment
2018 _ 2019 2020 2021 2022 _ Total
Total 68,514,936 27,976,728 61,220,311 _10,866,868 _54,435,304 223,014,147
2018 - — — - —_ - _ - _ - -
2019 3,425,747 - - - _ - _ 3,425,747
2020 3,425,747 1,398,836 - - - 4,824,583
2021 3,425,747 1,398,836 425,000 - - 5,249,583
2022 3,425,747 1,398,836 950,000 543,343 - 6,317,927
2023 3,425,747 1,398,836 3,324,740 543,343 550,000 9,242,666
2024 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2025 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2026 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2027 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2028 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2029 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2030 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2031 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2032 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2033 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2034 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2035 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2036 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2037 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2038 3,425,747 1,398,836 3,324,740 543,343 2,836,069 11,528,735
2039 - 1,398,836 3,324,740 543,343 2,836,069 8,102,988
2040 - - 3,324,740 543,343 2,836,069 6,704,152
2041 - - - 543,343 2,836,069 3,379,412
2042 - - - - 2,836,069 2,836,069
Note: Cells in light blue represent structured principal periods
Note: Subject to review and discussion with LGC Staff.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 25
Attachment 4 ^
Principal Structuring ORANGE COUNTY
NORTH CAROLINA
2017 CIP Alternative *2 — Structured Principal with Incremental Tax Adjustment
2018 _ 2019 2020 2021 2022 Total
Total 68,514,936 27,976,728 61,220,311 _10,866,868 _54,435,304 223,014,147
2018 - — — - —_ - _ - _ - -
2019 3,425,747 - - - _ - _ 3,425,747
2020 3,425,747 1,398,836 - - - 4,824,583
2021 3,425,747 1,398,836 350,000 - - 5,174,583
2022 3,425,747 1,398,836 1,255,000 543,343 - 6,622,927
2023 3,425,747 1,398,836 3,311,962 543,343 900,000 9,579,888
2024 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2025 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2026 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2027 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2028 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2029 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2030 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2031 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2032 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2033 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2034 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2035 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2036 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2037 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2038 3,425,747 1,398,836 3,311,962 543,343 2,817,648 11,497,536
2039 - 1,398,836 3,311,962 543,343 2,817,648 8,071,789
2040 - - 3,311,962 543,343 2,817,648 6,672,953
2041 - - - 543,343 2,817,648 3,360,991
2042 - - - - 2,817,648 2,817,648
Note: Cells in light blue represent structured principal periods
Note: Subject to review and discussion with LGC Staff.
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 26
Attachment 4
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Charlotte Office Ted Cole
Independence Center Senior Vice President
101 N. Tryon Street
804-697-2907
Suite 1220
Charlotte, NC 28246 tcole @investdavenport.com
Richmond Office Mitch Brigulio
One James Center First Vice President
901 East Cary Street 704-644-5414
11th Floor mbrigulio @investdavenport.com
Richmond, VA 23219
Raleigh Office
Glenwood Plaza
36905 Glenwood Ave.
Suite 390
Raleigh, NC 27612
DAVENPORT&COMPANY
June 13,2017 Orange County, NC 27
Attachment 4 ^_
Municipal Advisor Disclosure ORANGE COUNTY
NORTH CAROLINA
The U.S.Securities and Exchange Commission(the"SEC")has clarified that a broker,dealer or municipal securities dealer engaging in municipal advisory activities outside the scope of underwriting a particular issuance of
municipal securities should be subject to municipal advisor registration. Davenport&Company LLC("Davenport") has registered as a municipal advisor with the SEC.As a registered municipal advisor Davenport may
provide advice to a municipal entity or obligated person.An obligated person is an entity other than a municipal entity,such as a not for profit corporation,that has commenced an application or negotiation with an entity to
issue municipal securities on its behalf and for which it will provide support.If and when an issuer engages Davenport to provide financial advisory or consultant services with respect to the issuance of municipal securities,
Davenport is obligated to evidence such a financial advisory relationship with a written agreement.
When acting as a registered municipal advisor Davenport is a fiduciary required by federal law to act in the best interest of a municipal entity without regard to its own financial or other interests.Davenport is not a fiduciary
when it acts as a registered investment advisor,when advising an obligated person,or when acting as an underwriter,though it is required to deal fairly with such persons.
This material was prepared by public finance,or other non-research personnel of Davenport. This material was not produced by a research analyst,although it may refer to a Davenport research analyst or research report.
Unless otherwise indicated,these views(if any)are the author's and may differ from those of the Davenport fixed income or research department or others in the firm. Davenport may perform or seek to perform financial
advisory services for the issuers of the securities and instruments mentioned herein.
This material has been prepared for information purposes only and is not a solicitation of any offer to buy or sell any security/instrument or to participate in any trading strategy. Any such offer would be made only after a
prospective participant had completed its own independent investigation of the securities, instruments or transactions and received all information it required to make its own investment decision, including, where
applicable, a review of any offering circular or memorandum describing such security or instrument. That information would contain material information not contained herein and to which prospective participants are
referred. This material is based on public information as of the specified date,and may be stale thereafter. We have no obligation to tell you when information herein may change. We make no representation or warranty
with respect to the completeness of this material. Davenport has no obligation to continue to publish information on the securities/instruments mentioned herein. Recipients are required to comply with any legal or
contractual restrictions on their purchase,holding,sale,exercise of rights or performance of obligations under any securities/instruments transaction.
The securities/instruments discussed in this material may not be suitable for all investors or issuers. Recipients should seek independent financial advice prior to making any investment decision based on this material.
This material does not provide individually tailored investment advice or offer tax, regulatory,accounting or legal advice. Prior to entering into any proposed transaction, recipients should determine, in consultation with
their own investment, legal,tax, regulatory and accounting advisors,the economic risks and merits,as well as the legal,tax, regulatory and accounting characteristics and consequences,of the transaction. You should
consider this material as only a single factor in making an investment decision.
The value of and income from investments and the cost of borrowing may vary because of changes in interest rates,foreign exchange rates,default rates,prepayment rates,securities/instruments prices,market indexes,
operational or financial conditions or companies or other factors. There may be time limitations on the exercise of options or other rights in securities/instruments transactions. Past performance is not necessarily a guide
to future performance and estimates of future performance are based on assumptions that may not be realized. Actual events may differ from those assumed and changes to any assumptions may have a material impact
on any projections or estimates. Other events not taken into account may occur and may significantly affect the projections or estimates. Certain assumptions may have been made for modeling purposes or to simplify the
presentation and/or calculation of any projections or estimates, and Davenport does not represent that any such assumptions will reflect actual future events. Accordingly, there can be no assurance that estimated
returns or projections will be realized or that actual returns or performance results will not materially differ from those estimated herein. This material may not be sold or redistributed without the prior written consent of
Davenport.
Version 1.13.14 CH I MB I TC
DAVENPORT&COMPANY
June 13,2017 Orange County, INC 28