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Home My WebLink AboutAgenda - 03-19-2019 5-c - Public Hearing on the Financing of Various Capital Investment Plan Projects 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: March 19, 2019 Action Agenda Item No. 5-c SUBJECT: Public Hearing on the Financing of Various Capital Investment Plan Projects DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Attachment 1. Public Hearing Notice Gary Donaldson, (919) 245-2453 Attachment 2. Resolution Supporting Paul Laughton, (919) 245-2152 LGC Application Robert Jessup, (919) 933-9891 Attachment 3. PowerPoint PURPOSE: To conduct a public hearing on the issuance of approximately $25,985,000 to finance capital investment projects and equipment for the fiscal year; and approve a related resolution supporting the County's application to the Local Government Commission (LGC) for its approval of the financing arrangements. The financing and transaction costs are included in the borrowing amount. BACKGROUND: County staff estimates that the total amount to be financed for capital investment projects, vehicles and equipment will be approximately $25,985,000 including financing costs. The statutes require that the County conduct a public hearing on the proposed financing. A copy of the published notice of this hearing is provided (Attachment 1). The notice of public hearing was advertised in The Herald Sun and the News of Orange on March 3 and 6, 2019, respectively. After conducting the public hearing and receiving public input, the Board will consider the adoption of the resolution (Attachment 2). This resolution formally requests the required approval from the North Carolina Local Government Commission (LGC) for the County's financing, and makes certain finding of fact as required under the LGC's guidelines. County staff has been in contact with the LGC staff, and staff expects no issues to receiving LGC approval. If the Board adopts the resolution indicating its intent to continue with the financing plan, the Board will be asked to consider a resolution giving final approval to the financing plans at its May 2, 2019 meeting. Under the current schedule, County staff expects to set the final interest rates and close by the end of May. 2 FINANCIAL IMPACT: There is no financial impact related to this action. However, there will be a financial impact in proceeding with the financing. A preliminary estimate of maximum debt service applicable to the capital investment projects and equipment financing would require the highest debt service payment of $3.2 million in FY 2020-21. The tax rate equivalent for the estimated highest debt service payment is approximately 1.7 cents. SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board conduct the public hearing and adopt the resolution supporting the application to the Local Government Commission for approval of the financing. 3 Attachment 1 sash draft of February 26 Orange County, North Carolina -- Notice of Public Hearing Financing for Various Public Improvements and Acquisitions The Board of Commissioners of Orange County, North Carolina, will hold a public hearing on Tuesday, March 19, 2019, at 7:00 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 $25,985,000 to pay for the various public improvements and acquisitions as described below Component Estimated Cost IT Infrastructure and Governance Council Initiatives $ 769,497 Sheriff- Body Cameras 300,000 Parks and Recreation Facility Renovations 371,000 Vehicle Replacements 689,328 School Capital 3,000,000 Communication Systems - Portable Radios 505,000 Emergency Services (Backup Consoles) 985,000 Criminal Justice Resource Department Improvements 75,000 Facility Accessibility and Security Improvements 114,500 HVAC Projects 37,000 Lower Link Center Up-Fit 210,000 Roofing Projects 511,800 Southern Campus Expansion 4,000,000 Seymour Center (Senior Center) 990,000 Southern Human Services Center Expansion 375,000 IT - Broadband Connectivity 500,000 Conservation Easements 250,000 Mountains to Sea Trail 263,000 Schools Facilities Improvements 3,889,799 River Park, Phase II 350,000 Historic Rogers Road Neighborhood Community Center- related 126,225 4 Meadowlands Emergency Center 2,153,209 Government Services Annex Remediation 685,936 Link Center Remediation 1,533,469 Solid waste system - trucks 984,000 Solid waste system — High Rock facility construction 571,000 Hillsborough EDD — utility projects 1,300,000 Total Project Costs 25,539,763 Financing Costs/Underwriter's Discount/Contingency $ 445,237 Total Financing $ 25,985,000 The hearing will be held in the Commissioners' usual meeting room in the County's Southern Human Services Center, 2501 Homestead Road, Chapel Hill, North Carolina. The proposed financing would be secured by a lien on some or all of the property purchased or improved through the financing as well as the County's promise to repay the financing, but there would be no recourse against the County or its property (other than the pledged property) if there were a default on the financing. The County expects that the collateral for the financing will consist primarily of property in the County's "southern campus" off Homestead Road and the County's emergency operations buildings in the Meadowlands section of Hillsborough. 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 Government Commission. Persons wishing to make written comments in advance of the hearing or wishing more information concerning the subject of the hearing may contact Gary Donaldson, Orange County Finance Officer, Post Office Box 8181, Hillsborough, NC 27278 (telephone 919/245-2453, email gdonaldson@ orange countync.gov). 5 PES-2019-018 Attachment 2 s*h draft of February 28 Resolution supporting an application to the Local Government Commission for its approval of a County financing agreement WHEREAS-- The Board of Commissioners has previously determined to carry out various public improvements and acquisitions, as identified in the County's capital improvement plan and as described on Exhibit A. The Board of Commissioners has also determined to finance the costs of these projects through an installment financing, as authorized under Section 160A-20 of the North Carolina General Statutes. Under the guidelines of the North Carolina Local Government Commission, this governing body must make certain findings of fact to support the County's application for the LGC's approval of the County's financing arrangements. 1. THEREFORE, BE IT RESOLVED by the Orange County Board of Commissioners, as follows: (a) The County makes a preliminary determination to finance approximately $25,985,000 to pay capital costs of public improvements and acquisitions, and in particular those described on Exhibit A. (b) The Board will determine the final amount to be financed by a later resolution. The final amount financed may be slightly lower or slightly higher than $25,985,000. 2. The Board of Commissioners makes the following findings of fact in support of the County's application to the LGC: (a) The proposed projects are necessary and appropriate for the County under all the circumstances. 6 (b) The proposed installment financing is preferable to a bond issue for the same purposes. The County has no meaningful ability to issue non-voted general obligation bonds for these projects. These projects will produce no revenues that could be used to support a self-liquidating financing. The County is in the midst of a program for issuing voter-approved bonds for school purposes, and it is appropriate for the County to balance its capital program between various types of financings. The County expects that in the current interest rate environment for municipal securities there would be no material difference in the overall financing costs between general obligation bonds and installment financings for these projects. (c) The estimated sums to fall due under the proposed financing contract are adequate and not excessive for the proposed purpose. The County will closely review proposed financing rates against market rates with guidance from the LGC. All amounts financed will reflect either approved contracts, professional estimates, or previous actual expenditures. (d) As confirmed by the County's Finance Officer, (i) the County's debt management procedures and policies are sound and in compliance with law, and (ii) the County is not in default under any of its debt service obligations. (e) Although the County expects there will be tax increases associated with the County's overall capital improvement program, any tax increase directly attributable to the current proposed financing will be minimal. The County will manage the projects and its borrowing plans so as to minimize the tax impact while still allowing the projects to proceed. The County believes that the tax rate impact of this financing is reasonable under all the circumstances. In addition, the County expects that debt service related to the solid waste fund projects will be fully paid from the County's solid waste enterprise fund, and the debt service related to the utility projects in the Hillsborough EDD will be paid from Article 46 sales tax receipts. (f) The County Attorney is of the opinion that the proposed project is authorized by law and is a purpose for which public funds of the County may be expended pursuant to the Constitution and laws of North Carolina. 7 3. Additionally, the Board resolves as follows: (a) 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 County intends that funds that have been advanced for project costs, or which may be so advanced, from the County's general fund, or any other County fund, may be reimbursed from the financing proceeds. (b) The Board directs the Finance Officer to take all appropriate steps toward the completion of the financing, including (i) completing an application to the LGC for its approval of the proposed financing, and (ii) soliciting one or more proposals from financial institutions to provide the financing. The Board ratifies all prior actions of County representatives in this regard. (c) This resolution takes effect immediately. 8 Exhibit A - list of projects to be financed with estimated amounts Component Estimated Cost IT Infrastructure and Governance Council Initiatives $ 769,497 Sheriff- Body Cameras 300,000 Parks and Recreation Facility Renovations 371,000 Vehicle Replacements 689,328 School Capital 3,000,000 Communication Systems - Portable Radios 505,000 Emergency Services (Backup Consoles) 985,000 Criminal Justice Resource Department Improvements 75,000 Facility Accessibility and Security Improvements 114,500 HVAC Projects 37,000 Lower Link Center Up-Fit 210,000 Roofing Projects 511,800 Southern Campus Expansion 4,000,000 Seymour Center (Senior Center) 990,000 Southern Human Services Center Expansion 375,000 IT - Broadband Connectivity 500,000 Conservation Easements 250,000 Mountains to Sea Trail 263,000 Schools Facilities Improvements 3,889,799 River Park, Phase II 350,000 Historic Rogers Road Neighborhood Community Center- related 126,225 Meadowlands Emergency Center 2,153,209 Government Services Annex Remediation 685,936 Link Center Remediation 1,533,469 Solid waste system - trucks 984,000 Solid waste system — High Rock facility construction 571,000 Hillsborough EDD — utility projects 1,300,000 Total Project Costs 25,539,763 Financing Costs/Underwriter's Discount/ Contingency $ 445,237 Total Financing $ 25,985,000 9 Adompt- GRANGE COUNTY NORTH CAROLINA FY 2018= 19 Spring Financing Installment Purchase Agreement Gary Donaldson, Chief Financial Officer March 19, 2019 10 Public HearingPurpcip ➢ Board Approval for FY 2018- 19 Installment Purchase Financing as authorized under Section 160A-20 of North Carolina General Statutes ➢ Issuance of approximately $25,985,000 to finance capital improvement projects, vehicles and equipment ➢ Approve Resolution supporting Installment Purchase application to the Local Government Commission ORANGE COUNTY NORTH CAROLINA 11 Installment Purchase Terms ➢ Security Pledge- County collateral of Southern Campus and the Meadowlands emergency operations buildings ➢ Maturity Term- 5- 20 Year maturities matches with the useful life of the assets ➢ Estimated Interest Rates- 3%-4% subject to market conditions ➢ Source of Repayment- Property Tax, Article 46 Sales Tax (for Hillsborough EDD Utility) and Solid Waste Fees (for Vehicles and Equipment) ➢ Subordinate Lien to General Obligation Bonds ➢ Current and Projected Ratings- AA1/AA+/AA+ from Moody's, Standard & Poor's and Fitch Ratings ➢ LGC Approval required ORANGE COUNTY NORTH CAROLINA List of Projects to be Financed 12 Projects Estimated Cost IT Infrastructure and Governance Council Initiatives $ 769,497 Sheriff-Body Cameras 300,000 Parks and Recreation Facility Renovations 371,000 Vehicle Replacements 689,328 School Capital 3,000,000 Communication Systems-Portable Radios 505,000 Emergency Services(Backup Consoles) 985,000 Criminal Justice Resource Department Improvements 75,000 Facility Accessibility and Security Improvements 114,500 HVAC Projects 37,000 Lower Link Center Up-Fit 210,000 Roofing Projects 511,800 Southern Campus Expansion 4,000,000 Seymour Center(Senior Center) 990,000 Southern Human Services Center Expansion 375,000 IT-Broadband Connectivity 500,000 Conservation Easements 250,000 Mountains to Sea Trail 263,000 Schools Facilities Improvements 3,889,799 River Park,Phase II 350,000 Historic Rogers Road Neighborhood Community Center-related 126,225 Meadowlands Emergency Center _ 2,153,209 Government Services Annex Remediation 685,936 Link Center Remediation 1,533,469 Solid waste system—trucks and equipment 984,000 Solid waste system—High Rock facility construction 571,000 Hillsborough EDD—utility projects 1,300,000 Total Project Costs 25,539,763 Financing Costs/Underwriter's Discount/Contingency $ 445,237 Total Financing $ 25,985,000 ORANGE COUNTY NORTH CAROLINA 13 Financing Calendar March 3rd and 6th Public Hearing Notice Advertisement in Herald-Sun and News of Orange March 19th Public Hearing and Board Action Adopting Resolution Supporting LGC Application April 15-30 County Submits LGC Application and Credit Reviews May 2nd Board Action Adopting Final Resolution and financing terms May 7th LGC Approves Installment Purchase Financing Week of May 27th Installment Purchase Closing ORANGE COUNTY NORTH CAROLINA 14 Questions/Comments ORANGE COUNTY