HomeMy WebLinkAboutORD-2018-023 General Obligation Bond Sale for Chapel Hill High School and Approval of Budget Amendment #9-A Related to the FY 2017-18 Capital Investment Plan
ORD-2018-023
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: June 5, 2018
Action Agenda
Item No. 6-b
SUBJECT: General Obligation Bond Sale for Chapel Hill High School and Approval of
Budget Amendment #9-A Related to the FY 2017-18 Capital Investment Plan
DEPARTMENT: Finance and Administrative
Services
ATTACHMENT(S): INFORMATION CONTACT:
1. General Obligation Bond Sale
Resolution
2. November 20, 2017 BOCC Abstract
3. November 2, 2017 CHCCS Abstract
4. CHHS Key Dates
Gary Donaldson, 919-245-2453
Paul Laughton, 919-245-2152
Bob Jessup, 919-933-9891
PURPOSE: To approve Budget Amendment #9-A related to the FY 2017-18 Capital Investment
Plan and adopt the attached General Obligation (GO) bond resolution for Chapel Hill High
School for the following purposes:
1) Formally authorize the sale of $64,400,000 in school bonds;
2) Formally pledge the County’s taxing power to provide for payment on the bonds;
3) Approve the proposed form of the bonds;
4) Approve the form of the draft official statement for use in offering bonds to investors;
5) State the County’s agreement to comply with the relevant provisions of federal tax law
and the federal rules for continuing disclosure to the securities markets; and
6) Authorize County staff to complete the process of issuing the bonds and authorizing
the final principal payment schedule.
BACKGROUND: On November 8, 2016 voters approved $120 million in School Bonds of which
the CHCCS GO bond allocation is $72.1 million based on Average Daily Membership.
The current GO Bond Financing Plan includes the issuance of $64.4 million in School General
Obligation Bonds for a scheduled June 26, 2018 Bond Sale to be administered by the Local
Government Commission. The County issued $5 million in November 2017 for CHCCS of which
$3.6 million was used for the Chapel Hill High School and $1.4 million for the Lincoln Center.
The School GO bond funds earmarked for Chapel Hill High School is $68 million.
The Local Government Commission has approved the Financing Plan based on a Guaranteed
Maximum Price/Construction Manager at Risk (CMAR) and satisfaction of key permitting
requirements prior to the issuance of General Obligation Bonds.
1
The CHCCS CMAR Agreement is similar to the County CMAR for the Sportsplex Fieldhouse.
The County and CHCCS have worked to develop a Financing Plan that meets the CHCCS Cash
flow requirements, County Debt Affordability, and Local Government Commission bond approval
requirements.
In accordance with the County Capital Investment Program and in advisement with the County’s
bond counsel and financial advisor, the County staff recommends that the County proceed with
the General Obligation Bond sale.
The actual interest rates on these bonds will be set when the Local Government Commission
takes competitive bids on June 26, 2018, and the bond closing is scheduled for July 12, 2018.
The Budget Amendment will allow the County to proceed with a General Obligation Bond sale
and closing. The original CHCCS School GO bond issuances included three tranches of bonds
every other year for CHCCS in the amount of $24 million with the last issuance in FY 2021-22.
This Budget Amendment allows the County to advance those bond issuances, and there will
only be $2.7 million of remaining CHCCS School Bonds to be issued in FY 2021-22.
FINANCIAL IMPACT: The amortization schedule is based on 18 Years Level Principal and 2
Years Interest Only. The first year incremental tax rate to support the new debt service is 1.42
cents as indicated in the FY 2018-19 Manager’s Recommended Budget. This Budget
Amendment #9-A provides for the issuance of $64.4 million in School General Obligation Bonds
and amends the following CHCCS Major Facility Renovations Capital Project Ordinance:
CHCCS Major Facility Renovations Capital Project ($64,400,000) - Project # 53053
Revenues for this project:
Current
FY 2017-18
FY 2017-18
Amendment
FY 2017-18
Revised
Bond Proceeds $5,000,000 $64,400,000 $69,400,000
Total Project Funding $5,000,000 $64,400,000 $69,400,000
Appropriated for this project:
Current FY
2017-18
FY 2017-18
Amendment
FY 2017-18
Revised
Lincoln Center $1,400,000 $0 $1,400,000
Chapel Hill High School $3,600,000 $64,400,000 $68,000,000
Total Costs $5,000,000 $64,400,000 $69,400,000
SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to
this 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 GO
Bond resolution and related Budget Amendment #9-A for Chapel Hill High School.
2
RES-2018-034 Attachment 1
Resolution for the Sale of School Bonds
WHEREAS -- The voters of Orange County have previously approved the issuance of up to $120,000,000 of the County's general obligation bonds to pay capital costs of providing school facilities (the “School Bonds”). The County still has $99,000,000 of those School Bonds left to be issued. The Board has now determined that the County should issue $64,400,000 of the remaining School Bonds. This resolution provides for the issuance of these bonds and takes related action, such as approving the form of the disclosure document that will be used to provide information to prospective bond investors.
BE IT THEREFORE RESOLVED by the Board of Commissioners of Orange
County, North Carolina, as follows:
1. County Will Sell School Bonds - The County will issue and sell up to $64,400,000 of the unissued School Bonds (referred to as the “Bonds” in this resolution) for their authorized purpose.
2. Payment Provisions -- The Bonds will bear interest at the rates determined at the time of their sale by the Local Government Commission (currently scheduled for June 26). The principal of the Bonds will be payable in annual installments as the Finance Officer may determine after consultation with the LGC, except that the final maturity for the Bonds must not extend beyond December 31, 2038.
3. Pledge of Faith, Credit and Taxing Power -- The County's full faith and credit are hereby irrevocably pledged for the payment of the principal of and interest on the Bonds. Unless other funds are lawfully available and appropriated for timely payment of the Bonds, the County will levy and collect an annual ad
3
valorem tax, without restriction as to rate or amount, on all locally taxable property in the County sufficient to pay the principal of and interest on the Bonds as the same become due.
4. Approval of Official Statement for Offering - There has been made available to each member of the Board a draft of an official statement (the “Official Statement") relating to the Bonds, which is designed to provide appropriate information about the County and the financing to prospective investors in the Bonds. The draft Official Statement remains subject to completion and amendment.
The Board approves the LGC's distribution of the Official Statement to prospective purchasers of the Bonds. The Official Statement as distributed must be in substantially the form presented to this meeting, which the Board approves, with changes as the Finance Officer may approve. The Board ratifies the prior actions of the Finance Officer and other County representatives, in collaboration with the LGC staff, in preparing the text of the Official Statement. The Board acknowledges that it is the County’s responsibility, and ultimately the Board’s responsibility, to ensure that the Official Statement in its final form neither contains an untrue statement of a material fact nor omits to state a material fact required to be included therein for the purpose for which the Official Statement is to be used or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. By the adoption of this resolution, the Board members acknowledge and accept their own responsibility for causing the County to fulfill these responsibilities for the Official Statement. The County deems the Official Statement as distributed by the LGC to be a “final official statement” within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended (“Rule 15c2-12”), except for the omission of certain final Bond pricing and other information that Rule 15c2-12 allows to be omitted.
5. Prepayment Provisions – The Board directs the Finance Officer, upon advice from the LGC, to determine the terms and conditions under which the Bonds will be subject to prepayment prior to maturity. The Finance Officer shall execute a
4
certificate prior to the initial delivery of the Bonds designating prepayment terms and conditions. This certificate will be conclusive evidence of the Finance Officer’s determination of these terms and conditions.
6. Form of Bonds; Payment Details -- The Bonds will be designated "General Obligation School Bonds, Series 2018.” The Bonds will be in substantially the form set out in Exhibit A. The Bonds will be dated the date of their initial issuance, will be in fully registered form, will be in denominations of $5,000 and integral multiples thereof and will be numbered for identification from R-1 upward. The Bonds must be signed by the manual or facsimile signature of the Board’s Chair or the County Manager, and the County's seal must be affixed to the Bonds (or a facsimile of the seal printed on the Bonds) and attested by the manual or facsimile signature of the Clerk to this Board or any Deputy or Assistant Clerk. No Bond will be valid unless at least one of the signatures appearing on the Bond (which may be the signature of the LGC’s representative required by law) is manually applied or until the Bond has been authenticated by the manual signature of an authorized officer or employee of a bond registrar selected by the Finance Officer. Interest on each Bond will be payable semiannually (a) from its date, if it is authenticated prior to the first interest payment date, or (b) otherwise from the interest payment date that is, or immediately precedes, the date on which it is authenticated (unless payment of interest is in default, in which case such Bond will bear interest from the date to which interest has been paid). Principal, interest and any prepayment premium will be payable in lawful money of the United States of America. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The Board directs the Finance Officer to execute a certificate prior to the initial delivery of the Bonds designating the final aggregate principal amount of the Bonds (up to the maximum authorized amount of $64,400,000), the final principal payment schedule, and the interest payment dates for the Bonds. This certificate
5
will be conclusive evidence of the Finance Officer’s approval and determination of these matters.
7. Finance Officer as Registrar; Payments to Registered Owners -- The Board appoints the Finance Officer as Registrar for the Bonds. As Registrar, the Finance Officer shall maintain appropriate books and records of the ownership of the Bonds. The County will treat the registered owner of each Bond as the person exclusively entitled to payment of principal, interest and any prepayment premium and the exercise of all rights and powers of the owner, except that the County will make payments to the person shown as owner on the registration books at the end of the calendar day on the 15th day of the month (whether or not a business day) preceding each interest payment date.
8. Advertising Bonds for Sale – The Board directs the Finance Officer, in collaboration with the LGC, to take all proper steps to advertise the Bonds for sale in accordance with standard LGC procedures, including through the use of a “Notice of Sale” document in the LGC’s customary form and in substantially the same form as used for prior County bond sales. The Board directs the Finance Officer to review and approve a form of Notice of Sale as that officer may determine to be in the County's best interest.
9. LGC To Sell Bonds -- The County asks the LGC to sell the Bonds, to receive and evaluate bids and to award the Bonds based on the best bid received.
10. Completing Official Statement after Sale – After the LGC has received bids and awarded the Bonds to the successful bidder, the Board directs the Finance Officer, in collaboration with the LGC, to prepare a final Official Statement within the meaning of Rule 15c2-12. The Board authorizes the Finance Officer to approve the final document as a final Official Statement. The County, together with the LGC, will arrange for the delivery within seven business days of the sale date of a reasonable number of copies of the final Official Statement to the successful bidder on the Bonds for delivery to each potential investor requesting a copy of the final Official Statement and to each entity to which the bidder and members of the bidding group initially sell the Bonds.
6
11. County Officers To Complete Closing – The Board authorizes the Finance Officer and all other County officers and employees to take all proper steps to deliver the Bonds to the purchaser upon payment for the Bonds, and to take all other proper steps to complete the issuance of the Bonds. The Board authorizes the Finance Officer to hold the executed Bonds, and any other documents permitted by this resolution, in escrow on the County’s behalf until the conditions for the delivery of the Bonds and other documents have been completed to the Finance Officer’s satisfaction. The Finance Officer may then release the executed Bonds and other 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 Bonds must be in substantially the form approved by this resolution and that any changes must not substantially alter the intent of the document from that expressed in the form originally executed. The Finance Officer’s authorization of the release of any such document for delivery will constitute conclusive evidence of that officer’s approval of any such 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 Bonds. This authorization includes, without limitation, contracting with third parties for reports and calculations that may be required under the Bonds, this resolution, or otherwise with respect to the Bonds.
12. Undertaking for Continuing Disclosure -- The County undertakes, for the benefit of the beneficial owners of the Bonds, to provide continuing disclosure with respect to the Bonds as described in Exhibit B. The Board designates the Finance Officer as the County officer to be primarily responsible for the County’s compliance with its undertakings for continuing disclosure provided for in this resolution. The Finance Officer will provide for the
7
filings and reports (including the reports of material events) constituting the continuing disclosure provided for in this resolution.
13. Resolutions as to Tax Matters -- The County will not take or omit to take any action the taking or omission of which will cause the Bonds 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 on the Bonds 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 proceeds of the Bonds, and the County will pay any such required rebate from its general funds. For this paragraph, “Code” means the United States Internal Revenue Code of 1986, as amended, including applicable Treasury regulations.
14. Book-Entry System for Bond Registration -- The County will issue the Bonds by means of a book-entry system, with one bond certificate for each maturity immobilized at The Depository Trust Company, New York, New York ("DTC"), and not available for distribution to the public. The book-entry system for registration will operate as described in the Official Statement. Therefore, so long as the book-entry system of registration with DTC is in effect, (a) the County will make Bond payments only to DTC or its nominee as registered owner of the Bonds, (b) the County will not be responsible or liable for any transfer of payments to parties other than DTC or for maintaining, supervising or reviewing the records maintained by DTC or any other person related to the Bonds, and (c) the County will not send redemption notices (or any other notices related to the Bonds) to anyone other than DTC or its nominee. The Board, by resolution, may elect to discontinue the County’s book-entry system with DTC. The Board authorizes the Finance Officer to enter into any agreements such officer deems appropriate to put into place and carry out the book-entry system with DTC.
15. Finding as to Useful Life and Term of the Bonds – The Board finds and determines that the average weighted maximum useful life of the projects to be financed with the proceeds of the Bonds is at least twenty-five years, subject to
8
ordinary maintenance for projects of this type, and therefore the term of the Bonds will be within such maximum useful life.
16. Miscellaneous Provisions – The Board authorizes all County officers and employees to take all such further action as they may consider desirable in carrying out the purposes of this resolution. The Board ratifies all prior actions of County officers and employees in this regard. Upon the absence, unavailability or refusal to act of the Chair, the County Manager or the Finance Officer, any of such officers may assume any responsibility or carry out any function assigned to another officer in this resolution. In addition, upon the unavailability of the Chair or the Clerk, respectively, any of the rights or responsibilities directed to such officers may be carried out or exercised by the Vice Chair or any Deputy or Assistant Clerk. All other resolutions, or parts thereof, in conflict with this resolution are repealed, to the extent of the conflict. This resolution takes effect immediately.
9
EXHIBIT A - Form of Bonds
REGISTERED REGISTERED
Number R-X
UNITED STATES OF AMERICA
STATE OF NORTH CAROLINA
ORANGE COUNTY
General Obligation School Bond, Series 2018
INTEREST RATE MATURITY DATE DATED DATE CUSIP _______ % August 1, ____ July 12, 2018 684 609 XXX
REGISTERED OWNER: *****CEDE & CO.*****
PRINCIPAL AMOUNT: **** _________ THOUSAND DOLLARS
($_____,000)***
ORANGE COUNTY, NORTH CAROLINA (the "County"), for value received, promises to pay to the registered owner of this Bond, or registered assigns or legal representative, the principal amount stated above on the maturity date stated above, subject to prior redemption as described below, and to pay interest on this Bond semiannually on each August 1 and February 1, beginning February 1, 2019, at the annual rate stated above (calculated on the basis of a 360-day year consisting of twelve 30-day months). Interest is payable (a) from the dated date stated above, if this Bond is authenticated prior to February 1, 2019, or (b) otherwise from the February 1 or August 1 that is, or immediately precedes, the date on which this Bond is authenticated (unless payment of interest on this Bond is in default, in
10
which case this Bond will bear interest from the date to which interest has been paid). This Bond is one of an issue of the County's $64,400,000 General Obligation School Bonds, Series 2018 (the "Bonds"), of like date and tenor, except as to number, denomination, rate of interest, privilege of redemption and maturity. The Bonds are issued pursuant to a resolution adopted by the County’s governing Board of Commissioners on June 5, 2018, and the Constitution and laws of the State of North Carolina, including the Local Government Bond Act. The County's full faith and credit are pledged for the payment of principal of and interest on this Bond. The Bonds are issued by means of a book-entry system, with one bond certificate for each maturity immobilized at The Depository Trust Company, New York, New York ("DTC"), and not available for distribution to the public. Transfer of beneficial ownership interests in the Bonds in the principal amount of $5,000 or any integral multiple thereof will be effected on the records of DTC and its participants pursuant to rules and procedures established by DTC and its participants. Principal, and interest on the Bonds are payable by the County to DTC or its nominee as registered owner of the Bonds. The County is not responsible or liable for such transfer of ownership or payments or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. Bonds maturing prior to August 1, 2027, are not subject to redemption prior to maturity. Bonds maturing on August 1, 2027, and thereafter are redeemable, at the County's option, from any moneys that may be made available for that purpose, in whole or in part on any date not earlier than August 1, 2026, at a redemption price of 100% of the principal amount to be redeemed, plus interest accrued to the redemption date, without premium. If less than all of the Bonds stated to mature on different dates are called for redemption, the County will select the Bonds to be redeemed in such manner as the County may determine. If less than all of the Bonds of any one maturity are called
11
for redemption, the particular Bonds or portions of Bonds to be redeemed from that maturity will be selected by lot in such manner as the County in its discretion may determine; provided, however, that the portion of each Bond to be redeemed will be in the principal amount of $5,000 or some integral multiple thereof, and that, in selecting Bonds for redemption, each Bond will be considered as representing that number of Bonds which is obtained by dividing the principal amount of such Bond by $5,000. Notwithstanding the foregoing, so long as a book-entry system with DTC is used for determining beneficial ownership of Bonds, if less than all of the Bonds within a maturity are to be redeemed, DTC and its participants will determine which of the Bonds within any such maturity are to be redeemed. If a portion of a Bond is called for redemption, the County will issue a new Bond to the registered owner in a principal amount equal to the unredeemed portion, upon the registered owner’s surrender of the Bond. The County will send notice of redemption to DTC or its nominee as the registered owner of the Bonds in such manner as may be provided for under DTC’s then-current operating procedures. The County will send this notice not more than 60 days and not less than 30 days prior to the date fixed for redemption. The County is not responsible for sending redemption notices to anyone other than DTC or its nominee. If (a) DTC determines not to continue to act as securities depository for the Bonds or (b) the County so elects, the County will discontinue the book-entry system with DTC. If the County does not identify another qualified securities depository to replace DTC, the County will deliver replacement Bonds in the form of fully-registered certificates. The County Finance Officer has been appointed Registrar for the Bonds. As Registrar, the Finance Officer will maintain appropriate books and records indicating ownership of the Bonds. The County will treat the registered owner of this Bond as the person exclusively entitled to payment of principal and interest and the exercise of all other rights and powers of the owner, except that the County will make Bond payments to the person shown as owner on the County's registration books at the end of the calendar day on the 15th day of the month (whether or not a
12
business day) preceding each interest payment date. Principal and interest are payable in lawful money of the United States of America. The County intends that North Carolina law will govern this Bond and all matters of its interpretation. All acts, conditions and things required by the Constitution and laws of the State of North Carolina to happen, exist or be performed precedent to and in the issuance of this Bond have happened, exist and have been performed, and the issue of Bonds of which this Bond is one, together will all other indebtedness of the County, is within every debt and other limit prescribed by the Constitution and laws of the State of North Carolina.
IN WITNESS WHEREOF, Orange County, North Carolina, has caused this Bond to be signed by its County Manager, its seal to be affixed hereto and attested by the Clerk to its Board of Commissioners, and this Bond to be dated July 12, 2018. (SEAL)
ATTEST:
[Sample only - do not sign] Clerk, Board of Commissioners
Orange County, North Carolina
[Sample only - do not sign] County Manager Orange County, North Carolina The Bonds have been approved by the North Carolina Local Government Commission in accordance with the Local Government Bond Act.
[Sample only - do not sign] Greg C. Gaskins Secretary, Local Government Commission
13
[Orange County, North Carolina
$64,400,000 General Obligation School Bonds, Series 2018]
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s) unto
__________________________________________________________________ (Please print or type transferee’s name and address, including zip code) PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OR TRANSFEREE: the within bond and all rights thereunder, hereby irrevocably constituting and appointing ___________________________, Attorney, to transfer said bond on the books kept for the registration thereof, with full power of substitution in the premises. Dated: _______________________________________ Signature Guaranteed: _____________________________ NOTICE: Signature(s) must be guaranteed by a participant in the Securities Transfer Agent Medallion Program (“STAMP”) or similar program
_____________________________ (Signature of Registered Owner) NOTICE: The signature above must correspond with the name of the registered owner as it appears on the front of this bond in every particular without alteration or enlargement or any change whatsoever.
14
[Orange County, North Carolina
$64,400,000 General Obligation School Bonds, Series 2018]
15
Exhibit B -- Undertaking for Continuing Disclosure
The County undertakes, for the benefit of the beneficial owners of the Bonds, to provide the following items and information to the Municipal Securities Rulemaking Board (the “MSRB”): (a) by not later than seven months from the end of each of the County’s fiscal years, audited County financial statements for such fiscal year, if available, prepared in accordance with Section 159-34 of the General Statutes of North Carolina, as it may be amended from time to time, or any successor statute, or, if such audited financial statements are not available by seven months from the end of any fiscal year, unaudited County financial statements for such fiscal year, to be replaced subsequently by audited County financial statements to be delivered within 15 days after such audited financial statements become available for distribution; (b) by not later than seven months from the end of each of the County’s fiscal years, (i) the financial and statistical data as of a date not earlier than the end of the preceding fiscal year (which data will be prepared at least annually, will specify the date as to which such information was prepared and will be delivered with any subsequent material events notices specified in subparagraph (c) below) for the type of information included under heading "The County - Debt Information” and “- Tax Information” in the final Official Statement (excluding any information on overlapping or underlying units), and (ii) the combined budget of the County for the current fiscal year, to the extent such items are not included in the audited financial statements referred to in (a) above; (c) in a timely manner, not in excess of ten business days after the occurrence of the event notice of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults;
16
(3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on any credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of the beneficial owners of the Bonds, if material; (8) calls for redemption of the Bonds (other than calls pursuant to sinking fund redemption), if material, and tender offers; (9) defeasances; (10) release, substitution or sale of any property securing repayment of the Bonds; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar proceedings related to the County or any other person or entity that may at any time become legally obligated to make payments on the Bonds (collectively, the “Obligated Persons”); (13) the consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive
17
agreement relating to any such actions, other than pursuant to its terms, if material; and (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material; and (d) in a timely manner, notice of a failure of the County to provide required annual financial information described in (a) or (b) above on or before the date specified. For the purposes of the event identified in subparagraph (12) above, the event is considered to occur when any of the following occurs: the appointment of a receiver, fiscal agent or similar officer for an Obligated Person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Obligated Person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Obligated Person. If the County fails to comply with the undertaking described above, any beneficial owner of the Bonds may take action to protect and enforce the rights of all beneficial owners with respect to such undertaking, including an action for specific performance; provided, however, that failure to comply with such undertaking will not be an event of default and will not result in any acceleration of payment of the Bonds. All actions will be instituted, had and maintained in the manner provided in this paragraph for the benefit of all beneficial owners of the Bonds. The County shall provide the documents and other information referred to above to the MSRB in an electronic format as prescribed by the MSRB and accompanied by identifying information as prescribed by the MSRB.
18
The County may discharge its undertaking as set forth in this resolution by providing such information in any manner that the United States Securities and Exchange Commission subsequently authorizes in lieu of the manner described above. The County reserves the right to modify from time to time the information to be provided to the extent necessary or appropriate in the County’s judgment, provided that: (a) any such modification may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the County; (b) the information to be provided, as modified, would have complied with the requirements of Rule 15c2-12 as of the date of the final Official Statement, after taking into account any amendments or interpretations of Rule 15c2-12, as well as any changes in circumstances; and (c) any such modification does not materially impair the interests of the beneficial owners, as determined either by parties unaffiliated with the County or by the approving vote of the registered owners of a majority in principal amount of the Bonds pursuant to the terms of the bond resolution, as it may be amended from time to time, at the time of the amendment. Any annual financial information containing modified operating data or financial information will explain, in narrative form, the reasons for the modification and the effect of the change in the type of operating data or financial information being provided.
19
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: November 20, 2017
Action Agenda
Item No. 6-a
SUBJECT: Chapel Hill-Carrboro City Schools Bond Project Update
DEPARTMENT: County Manager
ATTACHMENT(S):
Attachment 1: November 2, 2017
CHCCS Board of
Education Abstract
Attachment 2: March 21, 2017 County
Abstract
INFORMATION CONTACT:
Bonnie Hammersley, 919-245-2300
Gary Donaldson, 919-245-2453
Paul Laughton, 919-245-2152
Dr. Todd LoFrese, 919-967-8211
PURPOSE: To receive an update from the Chapel Hill-Carrboro City Schools (“CHCCS”)
regarding its General Obligation bond referendum funded capital projects and provide feedback
to CHCCS.
BACKGROUND: On November 8, 2016 voters approved $120 million in School Bonds of which
the CHCCS bond allocation is $72.1 million based on Average Daily Membership. The CHCCS
allocation was earmarked for two projects; 1) Lincoln Center and 2) Chapel Hill High School.
The Lincoln Center project was originally estimated at $21 million and Chapel Hill High School
at $51 million.
On March 21, 2017, the CHCCS staff updated the Lincoln Center estimate to $25 million and
decreased the Chapel Hill High School project from $51 million to $47.1 million (Attachment 2).
The updated Lincoln Center project budget of $25 million included both design and construction
estimates. The CHCCS staff attributed the Lincoln Center increase to construction cost
increases of 5% annually.
On October 17, 2017, CHCCS staff updated the Board of Orange County Commissioners
(BOCC) regarding its September 2017 bids for the Lincoln Center project. That CHCCS update
indicated four base bids and the lowest responsive and responsible bid was significantly over
budget. The four base bids for the Lincoln Center ranged from $35.3 million to $35.8 million
which exceeds the County’s CIP Funding and Debt Affordability parameters.
Following the CHCCS staff update on November 2, 2017, the BOCC approved an initial CHCCS
bond amount of $5 million to reimburse CHCCS for design expenditures to date on the Lincoln
Center and Chapel Hill High School and meet remaining cash flow requirements for design
expenditures through the Chapel Hill High School bid openings in April/May 2018. This
20
additional time allows CHCCS to determine a definitive funding plan for both bond projects.
County staff would then present a revised funding application and recommendation of issuing
remaining first tranche bonds for CHCCS in March/April 2018 to the Local Government
Commission.
The CHCCS Administration is presenting the following two options:
Option 1: Proceed with the Lincoln Center Redevelopment project
Sources
Bond Proceeds $28,845,900
CHCCS Fund Balance $5,576,000
CIP Reprioritization $2,400,00
Total $36,821,900
Uses
Construction $32,771,900 A
Professional Fees $1,900,000
Furniture/Equipment $1,000,000
Contingency-3.5% $1,150,000
Total $36,821,900
A) CHCCS revised construction estimate includes deferment of gymnasium
improvements, $1.2 million in Value Engineering reductions, $500,000 decrease due
to a projected Town of Chapel Hill reimbursement for off-site work, and $97,000
increase for energy management controls.
Option 2: Defer decision on Lincoln Center Redevelopment project until Chapel Hill High
School construction bids are opened in March/April 2018 timeframe
Benefits Challenges
Provides certainty regarding cost of both
projects and aligns with the Local Government
Commission policy for bond financing projects
Proceeding with only Chapel Hill High School
means centralizing Pre-K and expansion of
Phoenix Academy not realized
FINANCIAL IMPACT: The County’s Debt Affordability and Operating Fund does not have any
existing sources of funds above the $72.1 million allocated for these two CHCCS projects.
Additionally, the annual loss of approximately $3 million in Impact Fees further exacerbates this
funding issue. The Manager recommends that the BOCC defer any final decision until receiving
the County’s Five Year Financial Forecast at the January 2018 BOCC Retreat.
SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated
with this item.
RECOMMENDATION(S): The Manager recommends that the Board receive an update from
Chapel Hill-Carrboro City Schools regarding its General Obligation bond funded capital projects
and provide feedback to CHCCS staff.
21
Board of Education
Agenda Abstract
Meeting Date: 11/2/17
Agenda Type: Work Session
Agenda Item #: 7a
Subject: Options for Bond Projects
Division: Support Services Division,
Todd LoFrese
Department: Facilities
Management
Person
Responsible:
William J. Mullin, Executive Director
of School Facilities
Feedback
Requested
From:
Public Hearing Required: Yes No
Previous Work Session: Yes No Date 10/5/2017
Previous Discussion and Action: Yes No Date
Attachment(s):
Potential Funding for Capital Projects
PURPOSE:
Provide the Board with information and options regarding the 2016 Bond funded projects to
redevelop the Lincoln Center Campus and renovate Chapel Hill High School.
BACKGROUND:
In 2012 the district began work on a plan to correct facility conditions at its oldest schools. The
2013 Facilities Assessment of the District’s 10 Oldest Schools detailed the code deficiencies and
substandard building conditions at each location while providing cost estimates to make the
necessary corrective improvements. A plan was developed that prioritized the work while at the
same time increasing needed student capacity at the elementary and high school levels. The
increased capacity had the added effect of deferring the need to construct new schools.
22
The first phase of this plan was funded by the successful 2016 School Bond referendum and
included the redevelopment of the Lincoln Center Campus and renovations at Chapel Hill High
School. The Lincoln Center Campus project included a new building housing centralized Pre K
classrooms on the first floor, central office staff on the second floor, a new Phoenix Academy
building and a relocated warehouse to an area next to the Transportation Center.
The Chapel Hill High School project includes two new academic buildings for classrooms,
renovations to the Cultural Arts and gymnasium/cafeteria buildings, site improvements
addressing stormwater issues and better vehicle/bus options for entrance and egress.
The district receives $73 million from the bond proceeds. $25 million was allocated to the
Lincoln Center Campus project and $48 million was earmarked for the CHHS project.
Construction bids for the Lincoln Center Campus were opened on September 28, 2017 with only
4 companies participating. The 4 base bids were extremely close ranging from $35.3 million to
$35.8 million and obviously greatly exceeded budget.
Today’s construction market is extremely volatile. The long economic recession forced many
companies to abandon the market resulting in less competition. As more publically funded
projects come online, the past few years has seen local construction costs escalate rapidly
especially over the past year. The fact that our budget estimates were 4 years old added to the
cost discrepancy.
At this point, the administration offers two options that are outlined as follows.
Option 1 – Proceed with the Lincoln Center Campus redevelopment with a decreased scope
of work, value engineering reductions to the bid and supplemental funding. Additional
local funding has been identified and outlined in the attachment.
The following financials are suggested:
Low base bid $ 34,374,900 - gymnasium improvements are deferred
Alt. 16 97,000 – energy management controls
Value Engineering Reductions (1,200,000) –VE review continues with final reduction TBD
Town of CH reimbursement
for off-site work ( 500,000)
NET construction cost 32,771,900
Revised Project Budget
Construction 32,771,900
Professional Fees 1,900,000
Furniture/Equipment 1,000,000
Contingency – 3.5% 1,150,000
PROJECT COST $ 36,821,900
23
Funding Sources
Bond Proceeds 28,845,900
Fund Balances/other 5,576,000
CIP contingency 2,400,000
TOTAL $ 36,821,900
Benefits
• Centralized Pre K is accomplished and its advantages realized: appropriate environment,
increased opportunities for targeted interventions, improved access for exceptional
children, improved occasions for staff development and coaching, better support for new
teachers.
• Provides the most immediate increase in elementary school capacity – 189 permanent
seats plus the repurpose of 8 mobile units. This positions the district to better meet the
needs for class size reductions and/or student growth.
• Expansion of Phoenix Academy is achieved and high school capacity is increased by 90
seats.
• The district’s investment in the project is safeguarded.
• Proceeding now avoids re-bidding the project.
Challenges
• Remaining $44.2 million Bond proceeds for Chapel Hill High School.
• Potential exists for major revisions and decreased scope of work to CHHS project.
• Begin discussions to identify additional funding for CHHS.
Option 2 – Defer decisions until CHHS construction bids are opened in March/April 2018.
Benefits
• Waiting provides certainty regarding the cost of the two projects.
• Using current construction bid costs, if the total CHHS project is done with building
additions and renovations, the remaining Bond funds of $9-10M could be directed to
improve Lincoln Center buildings or other smaller projects.
• CHHS project produces an increase in high school capacity of 105 seats.
Challenges
• Proceeding with only the CHHS project means the centralization of Pre K and expansion
of Phoenix Academy are not realized and their resulting benefits not achieved.
• Abandoning centralized Pre K halts the increase in elementary school capacity thereby
eliminating possibilities to accommodate class size reductions and/or student growth.
• If the Lincoln Center Campus project is re-visited in 2018, construction cost needs to be
re-bid.
24
There are no good options in the current circumstance, only compromises and financial concerns.
However, the administration prefers Option 1 with the understanding that all efforts will be made
to secure additional finding in 2018. It is recommended that the Board request to meet with the
County Commissioners as soon as possible to determine whether additional financial support is
feasible.
PERSONNEL IMPACT: N/A
FINANCIAL IMPACT: As described in the abstract
RECOMMENDATION: It is recommended that the Board consider the two options and
provide feedback and direction for administration.
25
Local Fund Balance:
2016-17 Unassigned Fund Balance 7,180,587
Reduction for Capital Projects 3,500,000 *
Balance of Unassigned Fund Balance3,680,587 5.03%
CIP Additional 5 yr funding 2,400,000
Recurring Capital Fund Balance:
2016-17 Unassigned Fund Balance 976,000
2017-18 Unobligated Balance of Non-recurring $1M 700,000
Subtotal1,676,000 *
Fund 6 Cash Balances:
2016-17 Ending Cash - unobligated400,000 *
GRAND TOTAL7,976,000
POTENTIAL FUNDING FOR CAPITAL PROJECTS
26
27
Attachment 4
• .
CHHS Key Dates
May 2 : Chapel Hill High School Open House
. May 23 : Town of Chapel Hill Public Hearing
and Special Use Permit
. May 25 : Special Board of Education Meeting
to approve GMP and notice to Orange
County Finance Staff
. June 11 : Commence construction
. December 2020 : Project completion