Loading...
HomeMy WebLinkAboutAgenda 09-03-19 Item 5-b - Public Hearing on the Financing of Various Capital Investment Plan Projects 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 3, 2019 Action Agenda Item No. 5-b SUBJECT: Public Hearing on the Financing of Various Capital Investment Plan Projects DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Attachment 1. Copy of Public Hearing Gary Donaldson, (919) 245-2453 Notice Paul Laughton, (919) 245-2152 Attachment 2. Resolution Supporting Robert Jessup, (919) 933-9891 LGC Application Attachment 3. PowerPoint PURPOSE: To conduct a public hearing on the issuance of approximately $25,600,540 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 $25,600,540 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 on August 18, 2019 and the News of Orange on August 21, 2019. After conducting the public hearing and receiving public input, the Board will consider the adoption of the resolution (Attachment 2). The 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 with 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 October 1, 2019 meeting. Under the current schedule, County staff expects to set the final interest rates and close by the first week in November. 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 $2.1 million in FY 2021-22. The tax rate equivalent for the estimated highest debt service payment is approximately 1.2 cents. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable to this item: • GOAL: ESTABLISH SUSTAINABLE AND EQUITABLE LAND-USE AND ENVIRONMENTAL POLICIES The fair treatment and meaningful involvement of people of all races, cultures, incomes and educational levels with respect to the development and enforcement of environmental laws, regulations, policies, and decisions. Fair treatment means that no group of people should bear a disproportionate share of the negative environmental consequences resulting from industrial, governmental and commercial operations or policies. • 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. • GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND INEQUITY The fair treatment and meaningful involvement of all people regardless of race or color; religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic background; age; military service; disability; and familial, residential or economic status. ENVIRONMENTAL IMPACT: The following Orange County Environmental Responsibility Goal impact is applicable to this item: • Initiate policies and programs that: 1) conserve energy; 2) reduce resource consumption; 3) increase the use of recycled and renewable resources; and 4) minimize waste stream impacts on the environment. 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 s*h draft August 12 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, September 3, 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 an amount expected to not exceed $30,000,000 to pay for the various public improvements and acquisitions as described below. Component Estimated Cost Northern Campus Project: site preparation and preliminary costs for new detention center, agriculture-environment center, and parks operations base $10,600,000 Southern Campus Project: improvements to the driveway and access road to the Southern Campus, as well as providing additional parking for the Seymour Center 4,675,000 Seymour Center Building Expansion 990,000 River Park Phase II 298,500 Link Center Remediation 6,500,000 Passmore Center Remediation 199,114 Sportsplex Improvements/ Equipment 605,036 Community Loan Fund 224,340 Vehicle Replacements 1,030,550 Whitted Building — Elevator Work 154,000 Emergency Services Building Remediation 324,000 Total 25,600,540 The County will also use additional loan proceeds to pay financing costs. 4 The hearing will be held in the Commissioners' usual meeting room in the County's Whitted Building, 300 West Tryon Street, Hillsborough, 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 include property in the County's planned "northern campus" off Highway 70 just north of Hillsborough (including the site of the planned new jail) and portions of the County's "southern campus" off Homestead Road in Chapel Hill. 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-2019-048 Attachment 2 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 $30,000,000 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 $30,000,000. The final amount financed will include funds to pay financing costs and other related costs. 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. (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. 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 7 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 completing an application to the LGC for its approval of the proposed 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 Northern Campus Project: site preparation and preliminary costs for new detention center, agriculture-environment center, and parks operations base $10,600,000 i Southern Campus Project: improvements to the driveway and access road to the Southern Campus, as well as providing additional parking for the Seymour Center 4,675,000 Seymour Center Building Expansion 990,000 River Park Phase II 298,500 Link Center Remediation 6,500,000 Passmore Center Remediation 199,114 Sportsplex Improvements/ Equipment 605,036 Community Loan Fund 224,340 Vehicle Replacements 1,030,550 Whitted Building — Elevator Work 154,000 Emergency Services Building Remediation 324,000 Total 25,600,540 The County will also use additional loan proceeds to pay financing costs. 9 ORANGE COUNTY NORTH CAROLINA FY 2019=20 Fall Financing Limited Obligation Bonds Gary Donaldson, Chief Financial Officer September 3, 2019 10 Public Hearirom Ourp oo- ➢ Board Approval for FY 2018- 19 Installment Purchase Financing as authorized under Section 160A-20 of North Carolina General Statutes ➢ Issuance of approximately $25,600,540 to finance capital improvement projects, vehicles and equipment ➢ Approve Resolution supporting Limited Obligation Bond application to the Local Government Commission ORANGE COUNTY NORTH CAROLINA Limited Obligation Sonds Terms ➢ Security Pledge- Annual Appropriations and County collateral of Southern Campus, Seymour Center and Northern Campus Site added to Master Deed of Trust ➢ Maturity Term- 5- 20 Year maturities matches with the useful life of the assets ➢ Estimated Interest Rates- 2-3% subject to market conditions ➢ Source of Repayment- Property Tax and Sportsplex Fees ➢ 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 Component Estimated Cost Northern Campus Project: site preparation and preliminary costs for new detention center, agriculture-environment center, and parks operations base $10,600,000 Southern Campus Project: improvements to the driveway and access road to the Southern Campus, as well as providing additional parking for the Seymour Center 4,675,000 Seymour Center Building Expansion 990,000 River Park Phase II 298,500 Link Center Remediation 6,500,000 Passmore Center Remediation 199,114 Sportsplex Improvements/ Equipment 605,036 Community Loan Fund 224,340 Vehicle Replacements 1 ,030,550 Whitted Building — Elevator Work 154,000 Emergency Services Building Remediation 324,000 Total 25,600,540 Note: Vehicle Replacement includes Public Safety,Animal Control and Emergency Services vehicles. ORANGE COUNTY NORTH CAROLINA 13 Key Debt Model Metrics Debt Ratios 10-Year Payback Debt to Assessed Value DS to GF Revenues 2019 71.60% 1.37% 13.44% 2020 63.84% 1.77% 13.53% 2021 65.41% 1.80% 14.59% 2022 65.97% 1.80% 17.94% 2023 66.72% 1.70% 17.18% 2024 68.11% 1.58% 16.23% 2025 69.57% 1.41% 14.80% ORANGE COUNTY NORTH CAROLINA 14 Financing Calendar August 18 Public Hearing Notice Advertisement in Herald-Sun and News of Orange September 3 Public Hearing and Board Action Adopting Resolution Supporting LGC Application August-September County Submits LGC Application and Credit Reviews October 1 Board Action Adopting Final Resolution and financing terms October 1 LGC Approves Limited Obligation Bond Financing November Limited Obligation Bond Closing ORANGE COUNTY NORTH CAROLINA 15 Questions/Comments ORANGE COUNTY