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HomeMy WebLinkAboutAgenda - 03-10-20; 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: March 10, 2020 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 Robert Jessup, (919) 933-9891 Attachment 3. Finance PowerPoint PURPOSE: To conduct a public hearing on the issuance of approximately $45,500,000 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 loan amount. BACKGROUND: County staff estimates that the total amount to be financed for capital investment projects and equipment will be approximately $45,500,000. 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. After conducting the public hearing and receiving public input, the Board may 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 in 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 April 7, 2020 meeting. Under the current schedule, County staff expects to set the final interest rates and close by the end of April. 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 2 service applicable to the capital investment projects and equipment financing would require the highest debt service payment of $4.2 million in FY 2021-22. The tax rate equivalent for the estimated highest debt service payment is approximately $2.23 cents. SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to this item: • 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. • GOAL: CREATE A SAFE COMMUNITY The reduction of risks from vehicle/traffic accidents, childhood and senior injuries, gang activity, substance abuse and domestic violence. • GOAL: ENABLE FULL CIVIC PARTICIPATION Ensure that Orange County residents are able to engage government through voting and volunteering by eliminating disparities in participation and barriers to participation. ENVIRONMENTAL IMPACT: The following Orange County Environmental Responsibility Goal impacts are applicable to this item: • ENERGY EFFICIENCY AND WASTE REDUCTION 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. • RESULTANT IMPACT ON NATURAL RESOURCES AND AIR QUALITY Assess and where possible mitigate adverse impacts created to the natural resources of the site and adjoining area. Minimize production of greenhouse gases. 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 Notice of Public Hearing - Orange County, North Carolina Financing for Various Public Improvements and Acquisitions The Board of Commissioners of Orange County, North Carolina, will hold a public hearing on Tuesday, March 10, 2020, 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 $45,500,000 to pay for the various public improvements and acquisitions as described below. Component Estimated Cost Facility, Accessibility, Safety and Security Projects $ 212,634 Generator Projects $ 33,000 HVAC Projects $ 230,218 Major Plumbing Repairs $ 50,885 Northern Campus (Detention, EAC, Parks Ops Base) $ 29,071,556 Government Services (Link) Remediation $ 581,503 Skill Development Relocation - Europa Center Upfits $ 254,953 Roofing and Facade Projects $ 686,167 Parks and Recreation Facility Renovations. Repairs, Safety Improvements $ 246,500 Conservation Easements $ 259,514 River Park, Phase II $ 118,509 ITGC Initiatives $ 197,826 IT Infrastructure $ 489,910 Communication Systems $ 273,221 Solid Waste - Equipment and Vehicles $ 717,228 Solid Waste - Administrative Building Remediation $ 281,324 Sportsplex Capital Items- 2 Vans $ 70,090 Schools - Recurring Capital Needs $ 3,000,000 Schools - Improvements to Older Facilities $ 1,607,300 Schools—Other Various Projects $ 4,012,132 Total Project Costs $ 42,394,470 4 The County will also use additional loan proceeds to pay financing costs. 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 Chief Financial Officer, Post Office Box 8181, Hillsborough, NC 27278 (telephone 919/245-2453, email gdonaldson@orangecountync.gov). 5 PES-2020-009 Attachment 2 s*h draft of February 12 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 $42.3 million 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 $42.3 million. 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: 6 (a) The proposed projects are necessary and appropriate for the County under all the circumstances. (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, other than the school projects. 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. These projects will produce no revenues that could be used to support a self-liquidating financing. (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 and in consultation with the County's financial adviser. 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. 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 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 Facility, Accessibility, Safety and Security Projects $ 212,634 Generator Projects $ 33,000 HVAC Projects $ 230,218 Major Plumbing Repairs $ 50,885 Northern Campus (Detention, EAC, Parks Ops Base) $ 29,071,556 Government Services (Link) Remediation $ 581,503 Skill Development Relocation - Europa Center Upfits $ 254,953 Roofing and Fagade Projects $ 686,167 Parks and Recreation Facility Renovations. Repairs, Safety Improvements $ 246,500 Conservation Easements $ 259,514 River Park, Phase II $ 118,509 ITGC Initiatives $ 197,826 IT Infrastructure $ 489,910 Communication Systems $ 273,221 Solid Waste - Equipment and Vehicles $ 717,228 Solid Waste -Administrative Building Remediation $ 281,324 Sportsplex Capital Items- 2 Vans $ 70,090 Schools - Recurring Capital Needs $ 3,000,000 Schools - Improvements to Older Facilities $ 1,607,300 Schools—Other Various Projects $ 4,012,132 Total Project Costs $ 42,394,470 The County will also use additional loan proceeds to pay financing costs. 9 Adompt- ORANGE COUNTY NORTH CAROLINA Series 2020 Limited Obligation Bonds Spring Financing Resolution Gary Donaldson, Chief Financial Officer March 10, 2020 10 Purpose ➢ Conduct Public Hearing for Limited Obligation Bonds pursuant to NC Statute Section 160A-20 ➢ Obtain Board Approval to Proceed with Filing Local Government Commission Application for Series 2020 Financing ➢ Funds our FY 2019-20 Capital Investment Plan through this Series 2020 Limited Obligation Bonds are secured by a Deed of Trust, with a security interest in the Northern Campus and a portion of the Southern Campus ➢ The Series 2020 Limited Obligation Bonds will fund various County projects including: - Vehicles and Equipment (5-8 Years useful life): $717,228 - County Facilities (up to 20 years useful life): $33.1 Million* - School Facilities (up to 20 years useful life): $8.6 Million Total: $42.3 Million * $29 Million represents remaining amount for Northern Campus construction uKANGE COUNTY NORTH CAROLINA 11 Projects to be Financed Projects Estimated Cost Facility, Accessibility,Safety and Security Projects $ 212,634 Generator Projects $ 33,000 HVAC Projects $ 230,218 Major Plumbing Repairs $ 50,885 Northern Campus (Detention, EAC, Parks Ops Base) $ 29,071,556 Government Services (Link) Remediation $ 581,503 Skill Development Relocation - Europa Center Upfits $ 254,953 Roofing and Facade Projects $ 686,167 Parks and Recreation Facility Renovations. Repairs,Safety Improvements $ 246,500 Conservation Easements $ 259,514 River Park, Phase II $ 118,509 ITGC Initiatives $ 197,826 IT Infrastructure $ 489,910 Communication Systems $ 273,221 Solid Waste- Equipment and Vehicles $ 717,228 Solid Waste-Administrative Building Remediation $ 281,324 Sportsplex Capital Items- 2 Vans $ 70,090 Schools- Recurring Capital Needs $ 3,000,000 Schools- Improvements to Older Facilities $ 1,607,300 Schools—Other Various Projects $ 4,012,132 Total Project Costs $ 42,394,470 ORANGE COUNTY NORTH CAROLINA Key Financing Terms 12 ➢ Security Pledge- County assets and annual County appropriations ➢ Maturity Term- 5- 20 Year maturities matches the useful life of the assets ➢ Estimated Interest Rates- up to 4% subject to market conditions ➢ Maximum Annual Debt Service not exceeding $4.2 Million (FY 2021-22) ➢ Source of Repayment- Property Tax, Solid Waste Fees and Sportsplex Fees ➢ Limited Obligation Bonds are Subordinate Lien to AAA General Obligation Bonds ➢ Anticipated Limited Obligation Bonds- AA1/AA+/AA+ from Moody's, Standard & Poor's and Fitch Ratings ORANGE COUNTY NORTH CAROLINA 13 Key Debt Model Metrics Debt Ratios 10-Year Payback Debt to Assessed Value DS to GF Revenues 2020 65.17% 1.63% 13.26% 2021 62.08% 1.89% 14.33% 2022 62.31% 1.94% 17.19% 2023 62.76% 1.89% 17.42% 2024 64.44% 1.79% 16.81% 2025 66.21% 1.87% 15.62% 2026 68.54% 1.70% 15.29% Note: Includes the Spring 2020 Financing plus future 2021-2026 CIP projects as of 2/18. ORANGE COUNTY NORTH CAROLINA 14 Financing Schedule Key Dates February 23 Public Hearing Notice Advertisement in Herald-Sun and News of Orange March 10th Public Hearing and Board Action Adopting Resolution Supporting LGC Application March through April Submit/Complete LGC Application and Credit Rating Reviews April 7th Board Action Adopting Final Resolution pursuant to Section 160A-20 of North Carolina General Statutes April 7th LGC Approves Installment Purchase Financing End of April Installment Purchase Closing -Sign Bond Purchase Agreement ORANGE COUNTY NORTH CAROLINA 15 Questions/Comments ORANGE COUNTY NORTH CAROLINA