HomeMy WebLinkAboutAgenda - 01-24-2005-5iORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: January 24, 2005
Action Agendas
Item No. 5-/
SUBJECT: Refinancing BB&T Installment Purchase Agreements
DEPARTMENT: Finance PUBLIC HEARING: (YIN) No
ATTACHMENT(S):
Modification Agreement
Resolution
BB&T Letter
INFORMATION CONTACT:
Ken Chavious / Bob Jessup, ext 2453
TELEPHONE NUMBERS:
Hillsborough 732-8181
Chapel Hill 968-4501
Durham 688-7331
Mebane 336-227-2031
PURPOSE: To consider approving a modification agreement for installment purchase contracts
entered into with BB&T to finance school facilities that will result in savings to the County.
BACKGROUND: During the past 10 years, the County has effectively used installment
purchase contracts as an alternative financing source to fund a number of capital facilities for
both School and County projects. Similar to bonds, staff periodically reviews these agreements
to assess the potential for savings through refinancing these loans in low interest rate
environments. There is an agreement with BB&T Governmental Finance that analysis reveals
could result in savings if the County were to pursue a refinancing. On August 17, 2004, the
Board approved a modification to the BB&T agreement and authorized the Finance Director to
proceed with the refinancing. However, the timing of the closing would have required the
County to pay a substantial amount of accrued interest. Therefore, the refinancing was delayed
to the next payment due date which is February 1, 2005.
Since there has been a change in interest rates, the savings calculation presented to the Board
in August are slightly different in the updated refinancing proposal. In August, staff reported
that the estimated annual savings would be approximately $60,000. Savings in the updated
proposal are estimated at approximately $58,600. In order to accomplish the refinancing, the
Board is required to adopt a resolution and approve an agreement that modifies the existing
arrangement. The agreement under consideration includes the installment purchase contract
for the construction of Scroggs Elementary School. This financing was accomplished in two
parts beginning in December 1996 with $5,000,000 and finalized in March 1997 with the
addition of another $9,000,000. The remaining balance on this financing is approximately $8.2
million as of February 1, 2005. The original interest rate on this financing was 4.92%. The new
2
rate quoted by BB&T in the refinancing would be 3.69% and would result in savings as outlined
in the financial impact section below and mentioned above. A copy of the modification
agreement and required Board Resolution is attached.
FINANCIAL IMPACT: There will be no savings in the current fiscal year since the payment due
in February will be made as required. Current estimates are that annual savings beginning in
the 2005-2006 fiscal year will be approximately $58,600 with a total savings of approximately
$410,700 over the remaining 7-year term.
RECOMMENDATION(S): The Manager recommends that the Board adopt the resolution and
approve the modification agreement with BB&T and authorize the Chair and Finance Director to
sign.
Return After Recording To:
F. Louis Loyd, III
Post Office Box 31273
Charlotte, NC 28231
Affected Property:
9777-94-6667
PIN: 7.126.AAR
MODIFICATION AGREEMENT
STATE OF NORTH CAROLINA) COLLATERAL IS OR INCLUDES FIXTURES
ORANGE COUNTY )
THIS MODIFICATION AGREEMENT (this "Modification Agreement") is dated as
of February 1, 2005, and is granted by ORANGE COUNTY, NORTH CAROLINA, a political
subdivision of the State of North Carolina (the "County"), for the benefit of BRANCH
BANKING AND TRUST COMPANY ("BB&T").
The North Carolina Local Government Commission joins in the execution of this
instrument for the purpose of evidencing its approval of the modifications effected by this
instrument.
This Modification Agreement, among other things, modifies and amends a
Financing Agreement and Deed of Trust granted to a Deed of Trust Trustee for the benefit
of BB&T Leasing Corporation dated as of December 1, 1996, and recorded in Book 1536,
Page 459, Orange County Registry; and those subsequent Modification Agreements dated
as of March 1, 1997, and recorded at Book 1564, Page 163, Orange County Registry, and
dated as of June 1, 1998 and recorded at Book 1797, Page 393, Orange County Registry,
respectively (together, the "Original Agreement").
4
BB&T is the successor in interest to BB&T Leasing Corporation.
The parties desire to modify the Original Agreement to lower' the rate of interest payable
by the County on the outstanding balance of the principal amount financed pursuant to the
Original Agreement to an amoral interest rate of 3.69%.
This Modification Agreement provides for no additional advance of funds to the County. The
scheduled date for the County's final repayment of amounts advanced under the Original
Agreement remains on or about February 1, 2011
Now, therefore, for and in consideration of the premises, and for the purposes
described in the Original Agreement the County covenants and agrees with the Deed of
Trust Trustee and BB&T (and their respective heirs, successors and assigns), as follows:
1. The payment schedules that were attached to the Original Agreement (Exhibit X-1
and X-2 to the 1998 Modification Agreement) are hereby replaced by those payment schedules
set forth in Exhibits A-1 and A-2 attached to this Modification Agreement and incorporated
herein by this reference.
2. Except as modified by this Modification Agreement, the terms and provisions of
the Original Agreement are in all respects ratified and confirmed.
3. This Modification Agreement affects the same real property as the Original
Agreement. To the extent permitted by law, the parties intend that the security interest evidenced
by the Original Agreement, as modified by this Modification Agreement, should relate and be
effective from the recording date of the Original Agreement (that being December 19, 1996).
4. Notwithstanding any other' provision of this agreement or the Original
Agreement, the County and BB&T intend to comply with North Carolina General Statutes
Section 160A-20. No deficiency judgment may be entered against the County in violation of
such Section 160A-20.
5. This document may be executed in counterparts, including separate counterparts,
all of which shall constitute but a single agreement.
2
5
IN WITNESS WHEREOF, the County has caused this instrument to be executed as of
the day and year first above written by duly authorized officers.
ATTEST: (SEAL)
ORANGE COUNTY,
NORTH CAROLINA
Clerk, Board of Commissioners County Manager/Chair, Board of Commissioners
STATE OF NORTH CAROLINA;
ORANGE COUNTY
I, a Notary Public of such County and State, certify that
and personally came before me
this day and acknowledged that they are the and the Clerk to the
Board of Commissioners of Orange County, North Carolina, and that by authority duly given and
as the act of Orange County, North Carolina, the foregoing instrument was signed in the
County's name by such , sealed with its corporate seal and attested by such
Clerk to the Board of Commissioners.
WITNESS my hand and official stamp or seal, this day of February, 2005.
[SEAL]
My commission expires:
Notary Public
[Signature page to Modification Agreement dated as of February 1, 2005]
(0
Approved:
BRANCH BANKING AND
TRUST COMPANY
By:
F. Louis Loyd, III,
Senior Vice President
This instrument has been pre-audited
in the manner required by The Local
Government Budget and Fiscal Control Act.
Finance Director
Orange County, North Carolina
This contract has been approved under the
provisions of Article 8, Chapter 159 of the
General Statutes of North Carolina.
Janice T. Burke
Secretary, North Carolina
Local Government Commission
BY
[Janice T. Burke or
Designated Assistant]
[Signature page to Modification Agreement dated as of February 1, 2005]
I
EXHIBIT A-1
Revised Payment Schedule to Financing Agreement and Deed of Trust dated as of
December 1, 1996, and subsequent Modification Agreements dated as of March 1, 1997,
and June 1, 1998, respectively (together, the "Original Agreement"), granted by Orange
County, North Carolina for the benefit of BB&T.
[Replaces Exhibit X-11
Dated as of`. February 1, 2005 Account Number: 003-1523500-005
This Payment Schedule is issued pursuant to a Modification Agreement dated as of
February 1, 2005 (the "Modification Agreement'). The Modification Agreement, among other
things, modifies and amends the Original Agreement. All terms used in this Payment Schedule
have the meanings ascribed to them in the Original Agreement.
The payments required to repay the outstanding principal balance of the advance made
pursuant to the Original Agreement (which amount is $2,921,776.18) call for remaining
amortization period of approximately seven (7) years. Payments are semi-annual in arrears in the
amount of'$236,116.05. A portion of each payment is paid as and represents payment of interest
at an annual interest rate of 3.69%.
Payments are due beginning on August 1, 2005, and semi-annually thereafter, with a final
payment of all outstanding principal and accrued and unpaid interest due on December 20, 2011,
all as set forth in the attached amortization schedule,
5
Orange County, North Carolina
Re-financing of Contract #001
003-1523500-005
Compound Period: Semiannual
Nominal Annual Rate: 3.900 %
AMORTIZATION SCHEDULE - Normal Amortization
Date Payment
36o Day Year
Interest
rincipal
alance
Loan 02/01/2005 2,921,776.18
1 02/01/2005 236,116.05 0.00 236,116.05 2,685,660.13
2005 Totals 236,116.05 0100 236,116,05
2 08/01/2005 236,116.05 52,370.37 183,74568 2,501,91445
3 02/01/2006 236,116.05 48,787.33 187,328-72 2,314,585.73
2006 Totals 472,232.10 101,157.70 371,074.40
4 08/01/2oo6 236,116,05 45,134.42 igo,981.63 2,123,604.10
5 02/01/2007 236,116.05 41,410.28 194,705.77 1,928,898-33
2007 Totals 472,232.10 86,544 70 385,68740
6 08/01/2007 236,116.05 37,613.52 198,502.53 1,730,395.80
7 02/01/2008 236,116.05 33,742.72 202,373.33 1,528,022,47
2008 Totals 472,232.10 71,356.24 400,875.86
8 08/01/2oo8 236,116.05 29,79644 206,319.61 1,321,702.86
9 02/01/2009 236,116.05 25773-21 210,342.84 1,111,360.02
2009 Totals 472,232.10 55,569.65 416,662.45
10 08/01/2oo9 236,116.05 21,671.52 214,44453 896,915.49
11 02/01/2010 236,116.05 17,489.85 218,626.20 678,289.29
201o Totals 472,232.10 39,161.37 433,070.73
12 08/01/2010 236,116,05 13,226.64 222,889.41 455,399-88
13 02/01/2011 236,116,05 8,880.30 227,235.75 228,164.13
2011 Totals 472,232.10 22,106.94 450,125.16
14 12/20/2011 236,116.05 7,951.92 228,164.13 0.00
2012 Totals 236,116.05 7,95192 228,164-13
Grand Totals 3,305,624.70 383,848.52 2,921,776.18
G
q
EXHIBIT A-2
Revised Payment Schedule to Financing Agreement and Deed of Trust dated as of
December 1, 1996, and subsequent Modification Agreements dated as of March 1, 1997,
and dated as of June 1, 1998, respectively (together, the "Original Agreement") granted by
Orange County, North Carolina, for the benefit of BB&T.
Dated as of. February 1, 2005 Account Number: 003-1523500-006
(Replaces Exhibit X-4
This Payment Schedule is issued pursuant to a Modification Agreement dated as of
February 1, 2005 (the "Modification Agreement"). The Modification Agreement, among other
things, modifies and amends the Original Agreement. All terms used in this Payment Schedule
have the meanings ascribed to them in the Original Agreement.
The payments required to repay the outstanding principal balance of the advance made
pursuant to the Original Agreement (which amount is $5,258,222.67) call for remaining
amortization period of approximately seven (7) years. Payments are semi-annual in arrears in the
amount of $429,615.62, A portion of each payment is paid as and represents payment of interest
at an annual interest rate of 3.69%.
Payments are due beginning on August 1, 2005, and semi-annually thereafter, with a final
payment of all outstanding principal and accrued and unpaid interest due on February 1, 2012, all
as set forth in the attached amortization schedule.
7
iD
Orange County, North Carolina
Re-financing of Contract #002
003-1523500-006
Compound Period: Semiannual
Nominal Annual Rate: 3.690 %
AMORTIZATION SCHEDULE - Normal Amortization, 36o Day Year
Date Payment Interest Principal Balance
Loan 02/01/2005 5,258,222.67
2005 Totals 0.00 0.00 0.00
1 08/01/2005 429,615.62 97,014.21 332,60141 4,925,621.26
2 02/01/2006 429,615.62 90,877-71 338,737.91 4,586,883.35
2006 Totals 859,231.24 187,891.92 671,339,32
3 08/01/2006 429,615.62 84,628.00 344,987.62 4,241,895.73
4 02/01/2007 429,615.62 78,262.98 351,352.64 3,890,543.09
2007 Totals 859,231.24 162,890.98 696,340.26
5 08/01/2007 429615.62 71,780.52 357,835,10 3,532,707.99
6 02/01/2008 429,615.62 65178.46 36443716 3468,270.83
2008 Totals 859,231.24 136,958.98 722,272.26
7 08/01/2oo8 429,615.62 58,454.60 371,161.02 2,797,109.81
8 02/01/2009 429,615.62 51,606.68 378,008.94 2,419,100.87
2oo9 Totals 859,231.24 110,061.28 74909.96
9 08/01/2009 429,615.62 44,63241 384,983.21 2,034,11766
10 02/01/2010 429,615.62 37,529.47 392,086.15 1,642,031.51
201o Totals 859,231.24 82,161,88 777,069.36
11 08/01/2010 429,615.62 30,295,48 399,320.14 1,242,711.37
12 02/01/2011 429,615.62 22,928.02 406,687.60 836,02377
2or1 Totals 859231-24 53223-50 806,007.74
13 08/01/2011 429,615,62 15,424.64 414,190.98 421,832.79
14 02/01/2012 429,615.62 7,782.83 421,83279 0.00
2012 Totals 859,23124 23,207,47 836,023.77
Grand Totals 6,014,618.68 756,396.01 5,258,222.67
8
01/12/2005 10:50 9196449324
FINANCE
Resolution Approving Terms of Re financing
WHEREAS, Orange County, North Carolina (the "County") has
determined to change the terms of the Payment Schedule to that Financing
Agreement and Deed of Trust granted to F. Louis Loyd, III (the "Deed of Trust
Trustee") for the benefit of Branch Banking and Trust Company, successor to
and assignee of BB&T Leasing Corporation ('BB&T) dated as of December 1,
1996, and recorded in Book 1536, Page 459, Orange County Registry; and those
subsequent Modification Agreements dated as of March 1, 1997, and recorded
at Book 1564, Page 163, Orange County Registry, and dated as of June 1, 1998
and recorded at Book 1797, Page 393, Orange County Registry, respectively
(together, the "Original Agreement'); and
WHEREAS, the changes to the terms of the Payment Schedule include
revising the interest rate from 4.92% to 3.69%;
NOW, THEREFORE BE IT RESOLVED by Orange County, North
Carolina, that the proposed changes to the Payment Schedule of the Original
Agreement are hereby approved and the officers designated to sign financing
documents are hereby authorized and directed to take such action as may be
necessary to effectuate such changes. All other terms and conditions of the
Original Agreement and the Payment Schedule thereof remain in full force and
effect.
Adopted this _ day of January, 2005.
Attestation:
SEAL
Clerk to the Board Board Chair
Orange County, North Carolina Orange County, North Carolina
01/12/2005 10:50
BB&T
919644'3324
January 6, 2005
ivlr. Ken Chavious
Finance Director
Orange County
PO Box 8181
Hillsborough, NC 27278
Dear Ken:
1A
Branch Banking 8, Trust Co.
Governmental Finance
P..Q Box 31273
Charlotte. NC 28231
(704) 954-1700
Fax (704) 954-1799
Enclosed are the amortization schedules for units 001 and 002. I am enclosing the
original schedules and the "rate changes" schedules. These schedules will show you the
following:
Unit 001 Savings of $ 145,992.28
Unit 002 Savings of $ 264,728.94
This is a total savings for these two units of 410,721.22 over the life of the loans.
Because we will be making the modifications as of the payment date, there will be no out
of pocket cost to the County.
I am also enclosing the resolution to be passed by the Orange County Board of
Commissioners before the modifications can be made. We have a target date of closing
on or before your payment date for these 2 contracts which is February 1, 2005.
Because we are not adding any financing dollars to the refinancing/modifications, the fact
that Orange County is NBQ this calendar year does not come into play. The original
issues were BQ and will remain BQ as long as they are "current refundings" and no
money is added to the transactions.
Call me at 704-954-1710 with any questions or concerns.
Sincerely,
BB&T Govemmental Finance
??4
Veverly C. Hi s
Vice President
FINANCE
Enclosures