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HomeMy WebLinkAboutAgenda - 09-12-2006-5fORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 12, 2006 Action Agenda Item No. 5--~ SUBJECT: Resolution for Financing Related to Carrboro High School DEPARTMENT: Finance PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: Ken Chavious, 919-245-2453 Resolution Schedule Public Hearing Notice PURPOSE: To consider adopting a resolution required by the North Carolina Local Government Commission (LGC) for approval of the acquisition of financing needed to complete construction of the new Carrboro High School. BACKGROUND: Construction of Carrboro High School in the Chapel Hill-Carrboro School district is well underway. The capital budget far this project includes $9,000,000 in alternative financing. During the capital and debt related discussions at the August 31, 2006 work session, staff informed the Board of the need to proceed with the acquisition of the funds for the project completion. As mentioned at the work session, staff currently expect to make short term bank loan arrangements for this financing and then combine it into a larger Certificates of Participation (COPs) financing which will be structtared in the upcoming months. This proposed financing will require approval of the LGC. The requested Board action is the initial step in the LGC approval process and involves the adoption of the attached resolution. The resolution accomplishes several purposes that include: • Makes the "findings of fact" that the LGC requires in support of the County's application for financing approval; • Authorizes County Staff to pursue the LGC application process; • Authorizes County Staff to solicit financing proposals; • Directs staff to arrange far a public hearing on the proposed financing (the proposed public hearing date is October 3, 2006); • Functions as a "reimbursement resolution", as provided under federal tax law, to preserve the County's ability to reimburse itself out of financing proceeds. If the Board approves the resolution, staff will proceed to solicit proposals from institutions interested in loaning the County the necessary funds„ The recommended financing proposal will be considered at the October 3, 2006 public hearing. FINANCIAL IMPACT: This $9,000,000 financing is a part of the debt issuance schedule and is already included in staffs calculations related to debt capacity. As mentioned above, the current plans are to acquire short term bank financing and to combine it into a larger COPS issue at a later date. Interest during the short term is expected to be in the range of $160,000 to $180,000, RECOMMENDATION(S): The Manager recommends that the Board adopt the accompanying resolution related to the Local Government Commission financing application, 3 2006 Orange County financing for Carrboro High School -- Resolution supporting an application to the Local Government Commission for its approval of a financing agreement, and taking other appropriate action WHEREAS-- Orange County has previously undertaken to finance the acquisition and constntction of a new high school for the Chapel Hill - Carrbora school district, to be known as Carrboro High School, and has established a financing plan that combines pay- as-you-go funding, general obligation bonds and installment financing, The County Commissioners now desire to continue the financing process for the high school by providing tentative approval for approximately $9,000,000 in financing for the project by the use of an installment conh•act, as authorized under Section 160A-20 of the Not°th Carolina General Statutes. Under the guidelines of the North Carolina Local Government Commission (the "L,GC"), this governing body must tnalce certain findings of fact to support the County's application for the LGC's approval of the County's proposed financing arrangements for the project, NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of Orange County, North Carolina, makes the following findings of fact: 1. The proposed project is appropriate for the County under all the circumstances. The project has been considered in detail by the Board on multiple occasions and is appropriate to serve the school population in the Chapel Hill -Carrboro district. 2, The proposed installment financing of approximately $9,000,000 is preferable to a bond issue for the same purpose, It is appropriate for the County to balance its capital finance program between bonds and installment financing, and the County has ah°eady applied some general obligation bond fiords and other resources to this project, This project is also suitable for installment financing because the financing is for a single real property asset, and this financing can later be combined with a larger installment financing the County has platuied. 3. The estimated sums to fall due under the proposed financing contract are adequate and not excessive for the proposed purpose. The County will obtain competitive lending proposals, and will closely review proposed lending rates against y" market rates with guidance from the LGC. The project is under construction pursuant to a construction budget previously evaluated by the Board. 4. As confirmed to the Board at this meeting by the County's Finance Officer, (a) the County's debt management procedures and policies are sound and in compliance with. law, and (b) the County is not in default under any of its debt service obligations. 5. The County expects that any tax increase that may be attributable to the can-ent proposed financing will be minimal and will in any event be appropriate tinder all the circumstances, given the importance of the project. 6. The County Attorney is of the opinion that the proposed project is authorized by law and is a purpose for which public fiords of the County may be expended pursuant to the Constitution and laws of North Carolina. BE IT FURTHER RESOLVED by the Board, as follows: (a) The County's Finance Officer is authorized and directed to file an application with the LGC for its approval of the project and the proposed financing an°angements and to take all necessary and appropriate action related to the LGC approval process. (b) The Finance Officer is authorized and directed to solicit proposals from financial institutions to provide the financing contemplated by this resolution and to make a recommendation to the Board of the proposal that he determines to be in the County's overall best interests. (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 Cotmty intends that fiords that have been advanced, or that may be advanced, from the County's general fiord, or any other County fiord, for project costs will be reimbursed from the financing proceeds. (d) A public hearing on this matter will be held at the Board's meeting of October 3, 2006. The Manager is authorized and directed to set the time of the hearing, and the Clerk to this Board is authorized and directed to publish a notice of such public hearing in the form and manner provided for by law. (e) This resohtion takes effect immediately. Orange Count- Carrboro High Temporary Financing -Schedule County staff provides update As soon as possible report to LGC after 8/31 BOCC work session County Board adopts preliminary BOCC meeting of 9/12 findings resolution; formally calls for public hearing County sends out bank loan RFP By 9/15 Publish notice of County public By 9/21 hearing Bank proposals due back to the By 9/28 County County Board holds public BOCC meeting of 10/3 hearing; adopts resolution approving financing School Board approves financing School Board meeting of 10/5 and property transfer County sends application By 10/6 materials to LGC LGC approval 11/7-8 First available closing date 11/15 Orange County, North Carolina --Notice of Public Hearing -- Financingfor Carrboro High School The Board of Conmzissioners of Orange County, North Carolina, will hold a public heal°ing on Tuesday, October .3, 2006, at 7:.30 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 approximately $9,000,000 to fiords for the acquisition and construction of Can-boro High School. The County may also rise financing proceeds to provide required reserves and pay financing costs. The hearing will be held in the F. Gordon Battle Courtroom, Orange County Cou1•thouse, 106 East Margaret Lane, Hillsborough, North Carolina, The proposed financing would be secured by a lien on the high school (and its associated land) and the County's promise to repay the financing, but there would be no recourse against the County or its property (other than the pledged facility and the associated land) if there were a default on the financing. As part of the financing plan, the Chapel Hill -Carrboro Board of Education will transfer the school property to the County, 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 Govermnent Conulrission. Persons wishing to make written comments in advance of the hearing or wishing more information concerning the subject of the hearing may contact Kenneth T. Chavious, Finance Officer, Orange County, Post Office Box 8181, Hillsborough, NC 27278 (telephone 919/245-2453),