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HomeMy WebLinkAboutAgenda - 04-07-20; 8-h - Adoption of the Final Resolution Authorizing the Issuance of Approx. $40,000,000 in Installment Purchase Financing for CIP Projects 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 7, 2020 Action Agenda Item No. 8-h SUBJECT: Adoption of the Final Financing Resolution Authorizing the Issuance of Approximately $40,000,000 in Installment Purchase Financing for Various Capital Investment Plan Projects DEPARTMENT: Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: Attachment 1. Resolution Approving Gary Donaldson, (919) 245-2453 Financing Terms and Paul Laughton, (919) 245-2152 Documents for 2020 Robert Jessup, (919) 933-9891 Installment Financing Attachment 2. Deed of Trust Attachment 3. Trust Agreement Attachment 4. Draft Preliminary Official Statement Attachment 5. Bond Purchase Agreement Attachment 6. School Project Category Descriptions Attachment 7. PowerPoint PURPOSE: To adopt the final financing resolution authorizing the issuance of approximately $40,000,000 in installment financing to finance capital investment projects and equipment for the fiscal year, including amounts to pay transaction costs. BACKGROUND: At the March 10, 2020 Board Business meeting, the Board of County Commissioners conducted a public hearing and received preliminary information on capital projects and equipment financing. The Board made a preliminary determination to finance costs of these projects and equipment and financing costs by the use of an installment financing, as authorized under Section 160A-20 of the North Carolina General Statutes. County staff has been in contact with the Local Government Commission (LGC) staff and expects no issues in receiving full LGC approval (expected the same day of this Board meeting - April 7, 2020). 2 If the Board adopts the attached resolution authorizing final approval for the financing, staff expects to price the bonds and to set the final interest rates and other terms of the financing on April 15, 2020 contingent on market conditions. FINANCIAL IMPACT: A preliminary estimate of maximum debt 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: There is no Orange County Social Justice Goal impact associated with this item. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board of Commissioners approve the final financing resolution authorizing the steps to proceed with the financing of the stated capital projects and equipment. 3 FES-2020-022 Attachment 1 Resolution providing final approval of terms and documents for Spring 2020 installment financing 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 has determined to carry out the financings by using a single installment financing, as authorized under Section 160A-20 of the North Carolina General Statutes. This financing plan also includes the use of limited obligation bonds, which represent interests in the installment payments to be made by the County that can be sold to investors. The County staff has made available to the Board the draft documents listed on Exhibit B (the "Documents"), and a draft of an official statement designed to provide information about the County and the financing to prospective investors in the bonds. These items relate to the County's carrying out the financing plan. This resolution provides the County Board's final approval of the financing terms and the substantially final financing documents. BE IT THEREFORE RESOLVED by the Board of Commissioners of Orange County, North Carolina, as follows: 1. Determination to Proceed with Financing -- The Board confirms its decision to carry out the proposed installment financing as described above, to provide financing for new public assets and improvements. Under the financing plan, the County will receive funds from the sale of the limited obligation bonds to carry out the projects. The County will repay the funds over time, with interest. The County will secure its repayment obligation by granting a mortgage-like interest in some or all of the following facilities: (a) the County's Government Services Annex at 208 S. Cameron St. in Hillsborough, along with the 4 County's Link Center and the District Attorney's office building; (b) the County's Emergency Operations Center on Meadowlands Drive in Hillsborough; (c) the County's Visitors Center on Franklin St. in Chapel Hill; (d) the proposed site of the new Northern County Campus; and (e) the County's Southern Campus in Chapel Hill. 2. Approval of Documents;Direction to Execute Documents--The Board approves the forms of the Documents submitted to this meeting. The Board authorizes the Chair and the County Manager,or either of them,to execute and deliver the Documents when in final form. The Documents in their respective final forms must be in substantially the forms presented,with changes as the Chair or the County Manager may approve. The execution and delivery of any Document by an authorized County officer will be conclusive evidence of that officer's approval of any changes. The Documents in final form, however, must provide for the principal amount of limited obligation bonds to not exceed $45,000,000, an annual true interest cost of the financing not to exceed 5.50%, and a financing term not to extend beyond December 31, 2040.The amount financed under the Documents may include amounts to pay financing expenses and other necessary and incidental costs. 3. Sale of Bonds; Approval of Official Statement - The Board appoints Robert W. Baird & Co. Incorporated, as senior manager, and FHN Financial Capital Markets, as co-manager, to underwrite a public offering of the proposed limited obligation bonds. The Board approves the draft official statement submitted to this meeting as the form of the preliminary official statement pursuant to which the underwriters will offer the bonds for sale. The preliminary official statement as distributed to prospective investors must be in substantially the form presented,with such changes as the Finance Officer may approve. The Board directs the Finance Officer, after the sale of the bonds, to complete and otherwise prepare the preliminary official statement as an official statement in final form. The Board authorizes the use of the preliminary official statement and the final official statement (collectively, the "Official Statement") by the underwriters in connection with the sale of the bonds. The Board acknowledges that it is the County's responsibility, and ultimately 5 the Board's responsibility, to ensure that the Official Statement 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. 4. Officers to Complete Closing - The Board authorizes the County Manager, the Finance Officer and all other County officers and employees to take all proper steps to complete the financing in accordance with the terms of this resolution. The Board authorizes the County Manager to hold executed copies of all financing documents authorized by this resolution in escrow on the County's behalf until the conditions for their delivery have been completed to her satisfaction, and then to release the executed documents for delivery to the appropriate persons or organizations. Without limiting the generality of the previous paragraphs, the Board specifically authorizes the County Manager (a) to approve and enter into, on behalf of the County, any additional agreements appropriate to carry out the financing plan contemplated by this resolution, and (b) to approve changes to any documents previously signed by County officers or employees, provided that the changes do not substantially alter the intent from that expressed in the form originally signed. The County Manager's authorization of the release of any document for delivery will constitute conclusive evidence of her approval of any changes. In addition, the County Manager and the Finance Officer are authorized to take all appropriate steps for the efficient and convenient carrying out of the County's on- going responsibilities with respect to the financing. This authorization includes, without limitation, contracting with third parties for reports and calculations that may be required under the Documents, this resolution or otherwise with respect to the bonds. 5. Other Financing Participants - Sanford Holshouser LLP will serve as the County's bond counsel. Davenport & Company LLC will serve as the County's financial adviser. The Bank of New York Mellon Trust Company, N.A., will serve as Trustee under the Supplemental Trust Agreement referenced in Exhibit B. 6 6. Miscellaneous Provisions - The Board authorizes all County officers and employees to take all further action as they may consider desirable to carry out the purposes of this resolution. In particular,the Board directs the Clerk to this Board to apply the County's seal to the final form Documents, and to attest to the application of the seal. The Board ratifies all prior actions of County officers and employees to this end. Upon the unavailability or refusal to act of the County Manager, the Chair or the Finance Officer,any other of those officers may assume any responsibility or carry out any function assigned in this resolution. In addition, the Vice Chair or any Deputy or Assistant Clerk may carry out or exercise any rights or responsibilities assigned in this resolution to the Chair or the Clerk. The Board repeals all other Board proceedings, or parts of proceedings, in conflict with this resolution, to the extent of the conflict. This resolution takes effect immediately. 7 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 Center $ 21,989,681 Northern Campus— EAC $ 5,677,065 Northern Campus— Parks Operations $ 1,404,810 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 $ 472,941 Schools—Other Various Projects $ 3,242,252 Total Project Costs $ 40,490,231 The County will also use additional loan proceeds to pay financing costs. 8 Exhibit C -- Draft Documents (a) A draft dated March 9, 2020, of a Third Supplemental Trust Agreement to be dated on or about May 1, 2020, between the County and The Bank of New York Mellon Trust Company, N.A. (the "Trustee"), providing for the advance of funds to the County, for the issuance of limited obligation bonds, for the County's obligation to repay the amounts advanced, and for the County's responsibilities for the use and care of the collateral (b) A draft dated March 9, 2020, of a Deed of Trust Supplement#3 to be dated on or about May 1, 2020, from the County to a deed of trust trustee for the Trustee's benefit, providing for a security interest in property to secure the County's obligations under the limited obligation bonds and the other financing documents. (c) A draft of a Bond Purchase Agreement to be dated on or about April 16, 2020, providing for the underwriters' obligation to purchase the bonds. The final form of this Agreement will set out the final principal amount, principal payment schedule and interest rates for the bonds, and the other terms and conditions for the underwriters' obligation to purchase the bonds. 9 Attachment 2 s*h draft of March 9 Prepared by and return after recording to: Robert M. Jessup Jr. Sanford Holshouser LLP 209 Lloyd St., Suite 3S0 Carrboro, NC 27S10 DEED OF TRUST SUPPLEMENT #3 PINS 9874-15-3612 9864-39-4358 9874-80-2738 9880-00-8527 Brief description: Link Center Building at 200 S. Cameron St., Government Services Annex at 208 S. Cameron St. and District Attorney's office building at 144 E. Margaret Lane, all in Hillsborough Future North Campus Site off Highway 70 Emergency Operations Center on Meadowlands Drive in Hillsborough Southern Campus Site off Homestead Rd. in Chapel Hill Supplements RB 6486, Page 413; RB 6613, Page 17; and RB 6633, Page 1121; also see RB , Page (partial release) STATE OF NORTH CAROLINA ) The collateral is or includes fixtures. ORANGE COUNTY ) This instrument secures future advances. 10 DEED OF TRUST SUPPLEMENT #3 THIS DEED OF TRUST SUPPLEMENT #3 (this "Supplement") is dated as of May 1, 2020, and is granted by ORANGE COUNTY, NORTH CAROLINA, a political subdivision of the State of North Carolina (the "County"), to Amy K. Johnson, as trustee (the "Deed of Trust Trustee"), for the benefit of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,AS TRUSTEE ("BNY-M"). RECITALS: The County is issuing its [$45,000,000] Limited Obligation Bonds, Series 2020 (the "2020 Bonds"), under a Third Supplemental Trust Agreement dated as of May 1, 2020 (the "2020 Agreement"), between the County and BNY-M, as trustee. The County is issuing the 2020 Bonds to provide funds, to be used together with other available funds, to acquire, construct, equip and otherwise improve a variety of County facilities and assets, as well as to pay financing costs and other related costs. The 2019B Agreement supplements a Trust Agreement dated as of June 1, 2018 (the "2018 Agreement"), between the County and BNY-M, as trustee, which the parties previously supplemented by a First Supplemental Trust Agreement dated as of May 1, 2019, and a Second Supplemental Trust Agreement dated as of October 1, 2019 (as supplemented, the "Prior Agreement"). Under the Prior Agreement, the County issued its $7,510,000 Limited Obligation Bonds, Series 2018, its $14,135,000 Limited Obligation Bonds, Series 2019A, and its $29,745,000 Limited Obligation Bonds, Series 2019B (together, the "Prior Bonds"). The County secured its repayment obligation with respect to the Prior Bonds by granting a security interest in certain Mortgaged Property, as defined in the 2019B Deed of Trust (as defined below). The parties have now agreed that the Mortgaged Property will also secure the County's repayment obligations with respect to the 2020 Bonds as provided in the 2020 Agreement. Accordingly, this Supplement supplements the Deed of Trust and Security Agreement granted by the County for the benefit of BNY-M dated as of June 1, 2018 (the "2018 Deed of Trust") and recorded at RB 6486, Page 413, Orange 2 11 County Registry, which has been previously supplemented by instruments recorded at RB 6613, Page 17, and RB 6633, Page 1121 (this is the "2019B Deed of Trust"), Orange County Registry (those instruments, together with the 2018 Deed of Trust, are referred to as the "Existing Deed of Trust" in this Supplement). The Existing Deed of Trust, as modified by this Supplement, is referred to as the "Modified Deed of Trust" in this Supplement. The Mortgaged Property includes the real property described in Exhibit A. The County is the record owner of that real property. The County executes and delivers this Supplement to secure current advances under the 2020 Agreement of [$45,000,000], as well as (a) total outstanding advances with respect to the Prior Bonds of approximately $50,595,000 and (b) potential future advances up to a total maximum principal amount of $200,000,000, all as described and pursuant to the Existing Deed of Trust. The time during which such future advances may be made is 30 years from June 1, 2018. The current scheduled date for final repayment of amounts secured under this Supplement and the Existing Deed of Trust is October 1, 2040. NOW, THEREFORE, (1) in consideration of the execution and delivery of the 2020 Bonds and the 2020 Agreement and other good and valuable consideration, the receipt and sufficiency of which the County acknowledges, (2) to secure the County's performance of all its covenants under this Supplement, the Existing Deed of Trust, the 2020 Agreement, the Prior Agreement, the 2020 Bonds and the Prior Bonds (together, the "Loan Documents"), and (3) to charge the Mortgaged Property with that payment and performance, the County sells, grants and conveys to the Deed of Trust Trustee, her successors and assigns forever, in trust, with power of sale, the Mortgaged Property, as defined in the 2019B Deed of Trust, which includes the property described in Exhibit A; BUT TAKE NOTE THAT Parcel 4 as defined in the 2019B Deed of Trust has previously been released from the lien of the Existing Deed of Trust; 3 12 TO HAVE AND TO HOLD the Mortgaged Property with all privileges and appurtenances belonging thereunto, to the Deed of Trust Trustee, her successors and assigns forever, upon the trusts, terms and conditions and for the purposes set out below, in fee simple in trust; SUBJECT, HOWEVER, to the encumbrances described in Exhibit B; BUT THIS CONVEYANCE IS MADE UPON THIS SPECIAL TRUST: if the County pays its "Obligations," as defined in Section 1-1 below, in full and in accordance with the Loan Documents, and the County complies with all the terms, covenants and conditions of the Loan Documents, this conveyance will be null and void and will be canceled of record at the County's request and cost, and title will revest as provided by law; BUT IF, HOWEVER, THERE OCCURS AN EVENT OF DEFAULT UNDER THE LOAN DOCUMENTS, then BNY-M will have the remedies provided for in this Modified Deed of Trust, including directing the Deed of Trust Trustee to sell the Mortgaged Property under power of sale. The County covenants with the Deed of Trust Trustee and BNY-M that the County is seized of and has the right to convey the Mortgaged Property in fee simple, that the Mortgaged Property is free and clear of all liens and encumbrances other than Permitted Encumbrances, as defined in the Prior Agreement and the 2020 Agreement, that title to the Mortgaged Property is marketable, and that the County will forever warrant and defend title to the Mortgaged Property (subject to the Permitted Encumbrances) against the claims of all persons. THE COUNTY COVENANTS AND AGREES with the Deed of Trust Trustee and BNY-M (and their respective heirs, successors and assigns), in consideration of the foregoing, as follows: 1. Security Provided 1-1 Security for Payment and Performance. The Modified Deed of Trust secures the County's payment, as and when the same become due and payable, of all amounts payable by the County under the Loan Documents (the "Obligations") and the County's timely compliance with all terms, covenants and 4 13 conditions of (a) the Loan Documents and (b) any Additional Bonds, as defined in and as may be executed and delivered pursuant to the Prior Agreement. 1-2 Present and Future Advances. This Deed of Trust is executed to secure all the County's present and future obligations to the Trustee related to the Mortgaged Property as described in and pursuant to the Modified Deed of Trust. The total amount, including present and future obligations, that may be secured by this Modified Deed of Trust at any one time is $200,000,000. The period within which future obligations may be incurred is 30 years from June 1, 2018. 1-3 Existing Deed of Trust Otherwise Confirmed. Except as provided by this Supplement, the County ratifies, approves and confirms the terms of the Existing Deed of Trust. 1-4 County's Obligation Limited. Notwithstanding any other provision of the Loan Documents, the parties intend that this transaction will comply with North Carolina General Statutes Section 160A-20. No deficiency judgment may be entered against the County in violation of Section 160A-20. No provision of this Supplement should be construed or interpreted as creating a pledge of the County's faith and credit within the meaning of any constitutional debt limitation. No provision of this Supplement should be construed or interpreted as an illegal delegation of governmental powers, nor as an improper donation or lending of the County's credit within the meaning of the North Carolina constitution. The County's taxing power is not and may not be pledged, directly or indirectly contingently, to secure any moneys due under this Supplement. Nothing in this Section is intended to impair or prohibit foreclosure under the Modified Deed of Trust if the Obligations are not paid when due or otherwise upon the occurrence of an Event of Default under the Loan Documents. No provision of this Supplement restricts the County's future issuance of any of its bonds or other obligations payable from any class or source of the County's moneys (except to the extent the Loan Documents restrict the incurrence of additional obligations secured by the Mortgaged Property). To the extent of any conflict between this Section and any other provision of this Supplement, this Section takes priority. 5 14 2. Miscellaneous 2-1 Notices. (a) Any communication provided for in this Supplement must be in writing (not to include facsimile transmission or electronic mail). (b) Any communication under this Supplement will be deemed given on the delivery date shown on a United States Postal Service certified mail receipt, or a delivery receipt (or similar evidence) from a national commercial package delivery service, if addressed as follows: (i) if to the County, to Orange County Manager, Re: Notice under 2020 LOBS Deed of Trust, Post Office Box 8181, Hillsborough, NC 27278 (ii) if to the Deed of Trust Trustee, to Deed of Trust Trustee, c/o The Bank of New York Mellon Trust Company, N.A., Re: Notice for 2020 Financing for Orange County, 10161 Centurion Parkway North, Jacksonville, FL 32256 (iii) if to BNY-M, to The Bank of New York Mellon Trust Company, N.A., Re: Notice for 2020 Financing for Orange County, 10161 Centurion Parkway North, Jacksonville, FL 322S6 (c) Any addressee may designate additional or different addresses for communications by notice given under this Section to each of the others. The County must send copies of any notices it sends to the Deed of Trust Trustee also to BNY-M. 2-2 Definitions. All capitalized terms used in this Supplement and not otherwise defined have the meanings ascribed to them otherwise in the Loan Documents. 2-3 Governing Law; Forum. The County, BNY-M and the Deed of Trust Trustee intend that North Carolina law will govern this Supplement and all matters of its interpretation. To the extent permitted by law, the County, BNY-M and the Deed of Trust Trustee agree that any action brought with respect to this Supplement must be brought in the North Carolina General Court of Justice in Orange County, North Carolina. 6 15 2-4 Limitation of Liability of Officers and Agents. No officer, agent or employee of the County, BNY-M or the Deed of Trust Trustee will be subject to any personal liability or accountability by reason of the execution of this Supplement or any other documents related to the transactions contemplated by this Supplement. Those officers or agents are deemed to execute documents in their official capacities only, and not in their individual capacities. This Section does not relieve any officer, agent or employee from the performance of any official duty provided by law. 2-5 Covenants Run with the Land. All covenants contained in the Modified Deed of Trust run with the real estate encumbered by the Modified Deed of Trust 2-6 Further Instruments. Upon the request of BNY-M or the Deed of Trust Trustee, the County will execute, acknowledge and deliver any further instruments reasonably necessary or desired by BNY-M or the Deed of Trust Trustee to carry out more effectively the purposes of this Supplement or any other document related to the transactions contemplated by this Supplement, and to subject to the liens and security interests of this Supplement all or any part of the Mortgaged Property intended to be given or conveyed, whether now given or conveyed or acquired and conveyed subsequent to the date of this Supplement. 2-7 Entire Agreement; Amendments. This Supplement, together with the other Loan Documents, constitutes the County's entire agreement with the Trustee and the Deed of Trust Trustee with respect to its general subject matter. This Supplement may not be changed except in accordance with the other Loan Documents. The consent of the Deed of Trust Trustee is not required for any changes. [The remainder of this page has been left blank intentionally.] 16 IN WITNESS WHEREOF, the County has caused this instrument to be signed, sealed and delivered by duly authorized officers, as of the day and year first above written. (SEAL) ATTEST: ORANGE COUNTY, NORTH CAROLINA By: Donna S. Baker Bonnie B. Hammersley Clerk, Board of Commissioners County Manager STATE OF NORTH CAROLINA; ORANGE COUNTY I, a Notary Public of such County and State, certify that Bonnie B. Hammersley and Donna S. Baker personally came before me this day and acknowledged that they are the County Manager and the Clerk of the Board of Commissioners, respectively, of Orange County, North Carolina, and that by authority duly given and as the act of such County, the foregoing instrument was signed in the County's name by such County Manager, sealed with its corporate seal and attested by such Clerk. WITNESS my hand and official stamp or seal, this day of , 2020. [SEAL] Notary Public My commission expires: [Deed of Trust Supplement#3 dated as of May 1, 2020 for the benefit of The Bank of New York Mellon Trust Company, N.A., as Trustee] s 17 EXHIBIT A - Pledged Sites Description TRACT 1 [Government Service Annex, Link Center and District Attorneys' Office]: BEING that certain property containing 9.202 acres, more or less, adjacent to South Cameron Street as shown on a plat entitled "Recombination Survey Properties of Orange County" as prepared by Riley Surveying, P.A. dated June 5, 2007 and recorded June 7, 2007 in Plat Book 102, Page 36, Orange County Register of Deeds. PIN Number: 9874-15-3612 TRACT 2 [North Campus SiteL- BEING all of that 19.334-acre parcel, more or less, shown on survey entitled "Recombination Survey, Property of Orange County" dated as of September 6, 2019 and recorded in Plat Book 120, Page 159, Orange County Registry. PIN Number: 9864-39-4358 TRACT 3 [E-911 Center in the Meadowlands -- Approximately 22,000-square foot building located on Meadowlands Drive, Hillsborough) BEGINNING at a point located in the eastern margin of the 60 foot wide right-of-way of Meadowlands Drive, said beginning point being further located South 12' 12' 30" West 360.84 feet from a nail located at the intersection of the center line of Meadowlands Drive with the center line of the 60 foot wide right-of-way of N.C. Highway 70; and running thence from said beginning point South 73' 36' 46" East 407.39 feet to a point; thence South 04' 48' 02" West 329.70 feet to a point; thence North 67' 16' 01" West 494.62 feet to a point located in the aforesaid easterly margin of the right-of- way of Meadowlands Drive; thence with said easterly margin of the right-of- way of Meadowlands Drive in two calls as follow: (1) with the arc of a circular curve to the left having a radius of 525.05 feet (and a chord course and distance of North 23' 54' 22" East 134.12 feet), an arc distance of 134.49 feet to a point; thence (2) North 16' 34' 02" East 135.34 feet to the point or place of BEGINNING; containing 3.00 acres and being Lot A as shown on a survey entitled "Subdivision of Property Surveyed for Meadowlands Associates" by Alois Callemyn Land Surveyors dated February 9 18 26, 1996 and recorded in Plat Book 75, Page 146, in the Orange County Registry. PIN Number: 9874-80-2738 TRACT 4 - Intentionally omitted TRACT 5 [Southern Campus Site] BEGINNING in the center of the public road leading from Calvander to Orange Church witnessed by an iron stake on the South side of said road; running thence South 2 degrees 30 minutes east 1,304 feet to an iron stake and pointers in the line of the University of North Carolina property; thence with said property East 1,194 feet to an iron stake in Will Freeland's land; thence with his line North 1,190 feet to the center of said road; thence with the center of said road North 84 degrees West 1,250 feet to the beginning, containing 34.10 acres, more or less, as surveyed by J. Ralph Weaver, County Surveyor, on November 20, 1940, and being part of the land formerly owned by Mrs. J. Walker Womble. BEING also described as the Lands of the County of Orange and the Project Homestead Lease Lot as shown on that plat entitled "Easement Plat for Orange County Senior Center" and recorded in Plat Book 102, Page 99, Orange County Registry. PIN Number: 9880-00-8527 10 19 EXHIBIT B -- Existing Encumbrances As to all Tracts: the Deed of Trust and Security Agreement granted by the County for the benefit of BNY-M dated as of June 1, 2018, and recorded at RB 6486, Page 413, Orange County Registry, as previously supplemented (referred to as the "Existing Deed of Trust" in this instrument, and further defined above). All references to books and pages in the lists below are to the Orange County Registry. As to Tract 1: 1. Subject to Matters shown on plats recorded in Plat Book 102, Page 34; Plat Book 102, Page 36; Plat Book 59, Page 179; and Plat Book 110, Page 91. 2. Conservation Easement to Orange County recorded in Book 4296, page 308. 3. Title to that portion of the Land lying below the mean high water mark of Eno River. 4. Riparian rights incident to the Land. S. Easement to the Town of Hillsborough recorded in Book 1030, Page 546. 6. Easement(s) to Duke Power Company recorded in Book 1146, Page 153. 7. Right of Way Agreement between Orange County and Duke Energy Carolinas, LLC recorded in Book 5905, Page 73. As to Tract 2: 1. Subject to matters shown on plat recorded in Plat Book 118, Page 105. 2. Subject to matters shown on plat recorded in Plat Book 94, Page 68 including a 30-foot joint driveway easement and septic easement located on the Land. 3. Rights of others for ingress and egress purposes in and to the use of easements located on the Land. 4. Commissioners' Second Revised Final Report recorded in Book 3446, Page 26 and Order of Confirmation recorded in Book 3446, Page 29. 5. Title to that portion of the Land within the right-of-way of US Hwy 70 and West Hill Ave. 6. Easement(s) to Duke Power Company recorded in Book 114, Page 95. 7. Easement(s) and/or Right(s) of Way to Jean A. Hall, heirs and assigns recorded in Book 3446 at Page 39, Orange County Registry. 8. Non-exclusive perpetual right and easement of ingress and egress for a driveway for Dorothy Hall Holloway and Husband, Bill Holloway and their successors and assigns, recorded in Book 3831 at Page 375, Orange County Registry. 9. Declaration of Restrictions and Provisions for Private Road Maintenance recorded in Book 376 at Page 552. 11 20 10.Easement recorded in Book 376 at Page 555, Orange County Registry. 11.Easement(s) and/or Right(s) of Way to Hillsboro Power and Light Co. recorded in Book 87 at Page 437, Orange County Registry. 12.Easement(s) and/or Right(s) of Way to State Highway Commission recorded in Book 183 at Page 512, Orange County Registry. 13.Terms and conditions and rights of others in and to that Buffer Easement recorded in Book 6625 at Page 2007, Orange County Registry. 14.Buffer Easement recorded in Book 6625 at Page 2012, Orange County Registry. As to Tract 3: 1. Restrictions appearing of record in Book 654, Page 517 and amended in Book 1081 at Page 425. 2. Subject to matters shown on plat recorded in Plat Book 75, Page 146. 3. Easement(s) to Town of Hillsborough recorded in Book 804, Page 444. 4. Easement(s) to Duke Power Company recorded I Book 676, Page 500. 5. Easement(s) to Public Service Company of North Carolina recorded in Book 1083, Page 235. 6. Title to that portion of the Land within the right-of-way of Meadowland Drive. 7. Termination Agreement recorded in Book 4126, Page 346. 8. Town of Hillsborough Conditional Use Permit #2007-04 recorded in Book 4416, Page 496. 9. Sand Filter SCM (Stormwater Control Measure) Operation and Maintenance Agreement recorded in Book 6468 at Page 214, Orange County Registry. 10.Stormwater Control Measure Access and Maintenance Easement to the Town of Hillsborough recorded in Book 6616 at Page 1294, Orange County Registry. Tract 4 - Intentionally omitted As to Tract 5: 1. Special Needs Housing Program Deed of Trust, Assignment of Rents and Leases, and Security Agreement from Inter-Faith Council for Social Service, Inc. to A. Robert Kucab, Trustee for North Carolina Housing Finance Agency to secure a note in the amount of$150,000.00 and recorded in Book 1636, page 285, Orange County Registry. As modified by Modification to Promissory Note, Deed of Trust and Declaration of Deed Restrictions recorded in Book 5911, page 372, Orange County Registry. 2. Orange County Home Program Deed of Trust and Security Agreement from Interfaith Council for Social Services, Inc. to Geoffrey E. Gledhill, Trustee for the benefit of Orange County to secure a note in the amount of $50,000.00 and recorded in Book 1731, Page 1, Orange County Registry. As affected by 12 21 that Request for Notice recorded in Book 2358, Page 156, Orange County Registry. 3. Lease from Orange County, North Carolina as Lessor and Inter-Faith Council for Social Service, Inc. recorded in Book 1579, Page 152, Orange County Registry. 4. Agreement between Interfaith Council for Social Service, Inc., Orange County, and Orange Water and Sewer Authority recorded in Book 1543, Page 313, Orange County Registry. S. Restrictions appearing in that Declaration of Deed Restrictions between Inter-Faith Council for Social Service, Inc. and North Carolina Housing Finance Agency recorded in Book 1636, Page 300, Orange County Registry. 6. Matters shown on plat recorded in: a. Plat Book 59, Page 96; b. Plat Book 78, Page 51; c. Plat Book 78, page 88; d. Plat Book 80, Page 179; and e. Plat Book 102, Page 99, Orange County Registry. 7. Easement(s) and/or Right(s) of way to Duke Power Company as recorded in Book 131 at Page 368 and Book 1610 at Page 213, Orange County Registry. 8. Easement(s) and/or Right(s) of Way to University of North Carolina recorded in Book 136 at Pages 341 and 528, Orange County Registry. 9. Ordinance to Extend the Corporate Limits of the Town of Chapel Hill recorded in Book 725, Page 436, Orange County Registry and adopted Ordinance to Extend the Corporate Limits of the Town of Chapel Hill recorded in Book 818, Page 223, Orange County Registry. 10.Deed of Easement to Orange Water and Sewer Authority recorded in Book 1684, Page 47 and Book 1684, Page 50, Orange County Registry. 11.Right of Way Agreement between Orange County and Duke Energy Corporation recorded in Book 3800, Page 116 and Book 4162, Page 547, Orange County Registry. 12.Stormwater Operations and Management Plan recorded in Book 4349, Page 234, Orange County Registry. 13.Orange Water and Sewer Authority Dedication recorded in Book 4504, Page 77, Orange County Registry. 14.Town of Chapel Hill Special Use Permit recorded in Book 1283, Page 256, Orange County Registry as modified by that Modification of Special Use Permit recorded in Book 1437, Page 33; by Special Use Permit Modification recorded in Book 4349, Page 228; and by that Special Use Permit Modification recorded in Book 5878, Page 49, Orange County Registry. 13 22 Attachment 3 s*h draft of March 9 Third Supplemental Trust Agreement by and between Orange County, North Carolina and The Bank of New York Mellon Trust Company, N.A., as Trustee Relating to the issuance of [$45,000,000] Limited Obligation Bonds Series 2020 23 THIS THIRD SUPPLEMENTAL TRUST AGREEMENT is dated as of May 1, 2020 (this "Supplemental Agreement"), is between ORANGE COUNTY, NORTH CAROLINA, a political subdivision of the State of North Carolina (the "County"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association having an office in Jacksonville, Florida, as trustee (the "Trustee"), and relates to the issuance of [$45,000,000] Limited Obligation Bonds, Series 2020 (the "2020 Bonds"). RECITALS The County and the Trustee executed and delivered a Trust Agreement dated as of June 1, 2018 (the "2018 Agreement"). The 2018 Agreement provides for the issuance of a 2018 series of limited obligation bonds (the "2018 Bonds"), and allows for the issuance of additional series of limited obligation bonds. The 2018 Agreement provides that the parties will enter into a supplemental agreement for each issue of limited obligation bonds. The County and the Trustee are now entering into this Supplemental Agreement to supplement the 2018 Agreement and provide for the issuance of the 2020 Bonds as additional bonds under the Trust Agreement. The 2020 Bonds are issued and secured on a parity with the 2018 Bonds. The County is issuing the 2020 Bonds to provide funds to be used, together with other available funds, on a project (the "2020 Project") to acquire, construct, equip and otherwise improve a variety of County facilities and assets, including those described in Exhibit A, and to pay financing costs and other related costs. Each of the 2020 Bonds represents an "installment contract" within the meaning of Section 160A-20 of the North Carolina General Statutes, between the County and the owner of that Bond. The Trustee serves under this Supplemental Agreement for and on behalf of the bondholders. Unless the context clearly requires otherwise, capitalized terms used in this Supplemental Agreement and not otherwise defined have the meanings set forth in Exhibit B or in the 'Prior Agreement,"as defined in Exhibit B. NOW, THEREFORE, in consideration of the covenants contained in this Supplemental Agreement, the parties agree as follows: 1 24 ARTICLE I THE 2020 Bonds Section 1.01. Provision for 2020 Bonds; Advance. (a) The County will issue, and the Trustee will authenticate and deliver, 2020 Bonds in an aggregate principal amount of[$45,000,000]. (b) The County acknowledges that the amount paid to it from the issuance and sale of the 2020 Bonds is equal to the face amount of the 2020 Bonds (i) reduced by the amount of a discount for the underwriting of the 2020 Bonds and (ii) increased by the net original issue premium in the offering of the 2020 Bonds. This total amount is $ . The County will use the amount paid as provided in this Supplemental Agreement to pay 2020 Project Costs. Section 1.02. Bonds Constitute Installment Contracts. Each of the 2020 Bonds, together with the County's corresponding obligations under the Trust Agreement and the Deed of Trust, constitutes a separate "installment contract" within the meaning of Section 160A-20 between the County and the owner of that Bond. The County's payment obligations, and its other obligations under this Agreement and with respect to the Bonds, are secured by the lien on the Mortgaged Property created under the Deed of Trust and by the other security provided for in the Trust Agreement. Section 1.03. Agreement Supplements 2018 Agreement; 2020 Bonds Are Additional Bonds. (a) This Supplemental Agreement is a "supplemental agreement" for the issuance of Additional Bonds as provided in the 2018 Agreement, and the 2020 Bonds are "Additional Bonds" as defined in the 2018 Agreement. (b) Except as modified by this Supplemental Agreement, all terms of the Prior Agreement remain in effect and apply with respect to the 2020 Bonds to the same extent as to all Prior Bonds. The continuing disclosure obligations set out in Section 4.01 of the First Supplemental Trust Agreement between the County and the Trustee dated as of May 1, 2019 apply to the County with respect to the 2020 Bonds. 2 25 Section 1.04. Form and Details; Payments. The 2020 Bonds will be designated "Limited Obligation Bonds, Series 2020," and will be in substantially the form of Exhibit C, with changes as the Trust Agreement may permit or require. The 2020 Bonds will be numbered R-1 upward for identification. The 2020 Bonds are payable as to interest semiannually on each Payment Date at the following rates (calculated based on a 360-day year consisting of twelve 30-day months), and are payable as to principal on October 1 in the following years and amounts: Maturity Date Principal (October 11 Amount ($1 Rate JO [To come] Exhibit D shows a schedule of payments due on the 2020 Bonds with respect to each Payment Date. Upon any redemption of the 2020 Bonds, the County will recalculate the schedule of payments to reflect the redemption, and will then deliver a substitute Exhibit D to the Trustee reflecting the recalculated payment schedule. Section 1.05. Redemption Dates and Prices. The 2020 Bonds are subject to redemption as described in Section 2.01. Section 1.06. Delivery of 2020 Bonds. The Trustee will authenticate and deliver the 2020 Bonds when it has received the following items: a) Certified copies of County Board resolutions (i) approving the terms and conditions under which the 2020 Bonds are to be executed and delivered and (ii) authorizing the execution, delivery and issuance of the 2020 Bonds, this Supplemental Agreement, and Deed of Trust Supplement #3 (as described in Exhibit B) b) Evidence satisfactory to the Trustee that the LGC has approved the issuance of the 2020 Bonds 3 26 c) An executed copy of this Supplemental Agreement d) An executed copy of Deed of Trust Supplement #3 , which extends the benefit of the security provided to the Trustee under the Prior Deed of Trust to secure the County's performance of its obligations under this Supplemental Agreement and 2020 Bonds, as contemplated by Section 1.06(iv) of the 2018 Agreement e) An Opinion of Bond Counsel to the effect that the execution and delivery of the 2020 Bonds as Additional Bonds is permitted under the terms of the Prior Agreement and has been duly authorized f) A County Certificate directing the Trustee as to the application of the proceeds from the sale of the 2020 Bonds g) Evidence of the issuance or proposed issuance of one or more lender's title insurance policies (or an appropriate endorsement to an existing policy) in favor of the Trustee, in an aggregate face amount of insurance equal to the total amount of Outstanding Bonds plus the principal amount of the 2020 Bonds, and including the instrument referenced in (d) above as an insured instrument Section 1.07. Limited Obligation. The 2020 Bonds are limited obligations of the County, as provided and described in Section 4.05 of the 2018 Agreement. ARTICLE II REDEMPTION Section 2.01. Redemption Dates and Prices. The 2020 Bonds maturing on or after October 1, 2031, are subject to redemption at the County's option, in whole or in part on any date on or after October 1, 2030, upon payment of the principal amount to be redeemed plus interest accrued to the redemption date, without premium. 4 27 Section 2.02. Selection of 2020 Bonds for Redemption. (a) If less than all the 2020 Bonds are to be redeemed, they will be redeemed among maturities in any manner the County chooses. (b) If less than all of the 2020 Bonds of any maturity are to be redeemed, the Trustee must select the 2020 Bonds to be redeemed by lot; provided, however, that so long as a book-entry system with DTC is used for determining beneficial ownership of 2020 Bonds, if less than all of the 2020 Bonds within a maturity are to be redeemed, the parties agree that DTC may determine which of the 2020 Bonds within the maturity are to be redeemed in accordance with DTC's then-current rules and procedures. (c) In any case, (i) the portion of any 2020 Bond to be redeemed must be in the principal amount of $5,000 or some integral multiple thereof, and (ii) in selecting 2020 Bonds for redemption, each 2020 Bond will be considered as representing that number of 2020 Bonds which is obtained by dividing the principal amount of that 2020 Bond by $5,000. If a portion of a 2020 Bond is called for redemption, the County will prepare, and the Trustee will deliver, a new 2020 Bond in principal amount equal to the unpaid portion to the registered owner upon the surrender of the 2020 Bond. Section 2.03. Redemption Notices. (a) The Trustee, at the County's direction, upon being satisfactorily indemnified with respect to expenses, and with at least two Business Days' notice, will send notice of redemption no less than 30 nor more than 60 days prior to the redemption date, as follows: (i) For any 2020 Bonds being called for redemption for which DTC or its nominee is the registered owner, to DTC, in whatever manner may be provided for under DTC's standard operating rules as then in effect (and if the Trustee is unable to determine those rules, by registered or certified mail, return receipt requested); (ii) For any 2020 Bonds for which no book-entry-only system of registration is in effect, to each of the registered owners of those 2020 Bonds at their addresses as shown on the Trustee's registration books, by registered or certified mail; and 5 28 (iii) In any case, both (A) to the MSRB for posting on the EMMA System and (B) to the LGC. The County, however, acknowledges and agrees that the Trustee is not acting as the disclosure or dissemination agent for purposes of Rule 15c2-12 in connection with any notice to be posted with the MSRB via the EMMA System. Notwithstanding anything in this Supplemental Agreement to the contrary, the only remedy for the Trustee's failure to post any notice (not limited to redemption notices) with the EMMA System will be an action by the holders of the 2020 Bonds, as applicable, for specific performance or similar remedy to compel performance. Failure to give any notice specified in (i) or (ii), as applicable, or any defect in that notice, will not affect the validity of any proceedings for the redemption of any 2020 Bonds with respect to which no failure has occurred. Failure to give any notice specified in (iii), or any defect in that notice, will not affect the validity of any proceedings for the redemption of any 2020 Bonds with respect to which the notice specified in (i) or (ii) is correctly given. Any notice mailed as provided in this Supplemental Agreement will conclusively be presumed to have been given regardless of whether received by any Owner. (b) Any redemption notice may state that the redemption to be effected is conditioned upon -- (i) the Trustee's receipt on or prior to the redemption date of moneys sufficient to pay the principal of and interest on the 2020 Bonds to be prepaid; or (ii) any other condition not unacceptable to the Trustee. If a notice contains a condition and the Trustee either (i) does not receive moneys sufficient to pay the principal of and interest on the 2020 Bonds on or prior to the redemption date, or (ii) the stated condition is not fulfilled, in either case on or prior to the redemption date, then redemption will not be made, and the Trustee must, within a reasonable time, give notice the same way the redemption notice was given that the moneys 6 29 were not so received (or condition was not fulfilled) and the redemption was not made. (c) Each redemption notice must specify (i) the complete designation of the 2020 Bonds to be redeemed, (ii) the CUSIP numbers of the 2020 Bonds to be redeemed, (iii) the dated dates, maturity dates and interest rates of the 2020 Bonds to be redeemed, (iv) the date fixed for redemption, (v) any conditions to the redemption, as contemplated by subsection (b) above, (vi) the principal amount of 2020 Bonds or portions thereof to be redeemed, (vii) the applicable redemption price, (viii) the address of the place or places of payment, (ix) the Trustee's name and telephone number, and the name of a contact person, (x) that interest accrued to the date fixed for redemption will be paid as specified in the notice, and (xi) that on and after the established redemption date, interest on 2020 Bonds which have been redeemed will cease to accrue. The Trustee must also include in any redemption notice any additional information provided by the County for use in the notice. Section 2.04. 2020 Bonds Payable on Redemption Date; Interest Ceases To Accrue. If on or before the date fixed for redemption funds are deposited with the Trustee to pay the principal of and interest accrued to the redemption date on 2020 Bonds called for redemption, the 2020 Bonds (or portions of 2020 Bonds) called for redemption cease to accrue interest from and after the redemption date. Thereafter, those 2020 Bonds (a) are no longer entitled to the benefits provided by the Trust Agreement and (b) are not deemed to be Outstanding under the Trust Agreement. ARTICLE III DEPOSIT AND USE OF 2020 PROCEEDS; OTHER FUNDS Section 3.01. Disbursement of Proceeds. The Trustee will apply proceeds from the sale of the 2020 Bonds as provided in the certificate described in Section 1.06(f). Section 3.02. Creation and Use of 2020 Proceeds Fund. The Trustee will establish a special fund designated as the "Orange County 2020 Proceeds Fund." 7 30 The Trustee will keep this Fund separate and apart from all other funds and moneys held by it, and will hold and administer this Fund as provided in this Supplemental Agreement. Moneys in the 2020 Proceeds Fund will be expended only as described in Sections 3.03 and 3.04. The Trustee is not required to disburse any moneys from the 2020 Proceeds Fund during the continuation of any Event of Default. Section 3.03. Deposits to 2020 Proceeds Fund; Payment of Project Costs. (a) The Trustee will deposit into the 2020 Proceeds Fund the amount specified in the certificate referenced in Section 1.06(f) and all other amounts paid to it for deposit in the 2020 Proceeds Fund. (b) The Trustee will disburse moneys in the 2020 Proceeds Fund from time to time, either to pay 2020 Project Costs directly or to reimburse the County for previous expenditures on any of those costs, upon receipt of a requisition substantially in the form of Exhibit E. The Trustee will accept requisitions that the County submits by electronic mail or by facsimile transmission. The Trustee may rely conclusively on requisitions as authorization for payments, and the Trustee has no duty or responsibility to verify any matters in the requisitions. (c) Unless otherwise directed by the County, the Trustee will disburse moneys from the 2020 Proceeds Fund that are due to the County by wire transfer to any bank account in the United States as the County may designate to the Trustee from time to time. Section 3.04. Transfer of Unexpended Proceeds. Upon the first to occur of (a) July 1, 2023, or (b) receipt of a County Certificate stating that there are no more 2020 Project Costs to be paid from the 2020 Proceeds Fund, the Trustee will withdraw all remaining moneys in the 2020 Proceeds Fund and deposit those moneys in the Payment Fund. The Trustee will then apply those moneys to Bond payments as directed by a County Representative. In the absence of any direction from the County, the Trustee will deposit those moneys in the Interest Account and use them to pay interest on the 2020 Bonds as the same becomes due. Section 3.05. Use of Funds and Accounts from 2018 Agreement. The Trustee is to maintain and administer the Bond Payment Fund (and its principal and interest accounts) and the Net Proceeds Fund established under the 2018 8 31 Agreement to the same effect and purpose as provided in the 2018 Agreement with respect to the 2020 Bonds as to the 2018 Bonds and all Bonds generally. ARTICLE IV MISCELLANEOUS PROVISIONS Section 4.01. Notices. (a) Any communication provided for in this Supplemental Agreement or the 2020 Bonds must be in writing (not to include facsimile transmission or electronic mail, except as provided in Section 3.03). (b) Any communication sent under this Agreement must also be sent to the County and the Trustee, along with any other parties to which the communication may be addressed. Any party sending a communication under this Supplemental Agreement that relates to amendments or defaults must also send a copy to the LGC. (c) Any communication under this Supplemental Agreement will be deemed given on the delivery date shown on a United States Postal Service certified mail receipt, or a delivery receipt (or similar evidence) from a national commercial package delivery service, if addressed as follows: (i) if to the County, to Orange County Manager, Re: Notice under 2020 LOBs Trust Agreement, Post Office Box 8181, Hillsborough, NC 27278 (ii) if to the Trustee, to The Bank of New York Mellon Trust Company, N.A., Re: Notice for 2020 Financing for Orange County, 10161 Centurion Parkway North, Jacksonville, FL 32256 (iii) If to the LGC, to the North Carolina Local Government Commission, Attn: Secretary of the Commission, Re: Notice for 2020 Orange County LOBs Financing, Longleaf Building, 3200 Atlantic Ave., Raleigh, NC 27604 9 32 (d) Any addressee (including the LGC) may designate additional or different addresses for communications by notice given under this Section to each of the others. (e) Whenever this Supplemental Agreement requires the giving of a notice, the person entitled to receive the notice may waive the notice, in writing. The giving or receipt of the notice will then not be a condition to the validity of any action taken in reliance upon the waiver. Section 4.02. Definition of "Restricted Yield." With respect to the 2020 Bonds, a "Restricted Yield" means a "yield," within the meaning of Treas. Regs. Secs. 1.103-13(c), -13(d), 1.148-9T(a), or any successor or other provision that may be applicable, not in excess of a "yield" equal to %. Section 4.03. Consent to jurisdiction. The Trustee consents to jurisdiction in the State of North Carolina for any lawsuit arising from this Supplemental Agreement, or arising from any of the related transactions contemplated by this Supplemental Agreement. Section 4.04. Binding Effect; Limitation of Rights. This Supplemental Agreement is binding upon, inures to the benefit of and is enforceable by the parties and their respective successors and assigns. Nothing expressed or implied in this Supplemental Agreement or the 2020 Bonds gives any person other than the Trustee, the County and the Owners any right, remedy or claim under or with respect to this Supplemental Agreement. Section 4.05. Severability. If any provision of this Supplemental Agreement is determined to be unenforceable, that does not affect any other provision of this Supplemental Agreement. Section 4.06. Counterparts. This Supplemental Agreement may be signed in several counterparts, including separate counterparts. Each will be an original, but all of them together constitute the same instrument. Section 4.07. Definitions; Rules of Interpretation. Unless the context clearly requires otherwise, capitalized terms used as defined terms in this Supplemental Agreement and not otherwise defined have the meanings set forth in 10 33 Exhibit B, and if not defined there will have the meanings set forth in the Prior Agreement. This Supplemental Agreement will be interpreted in accordance with the rules of interpretation set forth in the 2018 Agreement. [The remainder of this page has been left blank intentionally.] 11 34 IN WITNESS WHEREOF, the parties have caused this Third Supplemental Trust Agreement to be executed in their corporate names by their duly authorized officers, all as of May 1, 2020. (SEAL) ATTEST: ORANGE COUNTY, NORTH CAROLINA By: Donna S. Baker Bonnie B. Hammersley Clerk, Board of Commissioners County Manager The Bank of New York Mellon Trust Company, N.A., as Trustee By: Terence Rawlins,Vice President [Third Supplemental Trust Agreement dated as of May 1, 2020] 12 35 Exhibit A - list of projects to be financed with estimated amounts [To come] The County also expects to use financing proceeds to pay Financing Costs. The amounts stated above are estimates only. The County may use any portion of the 2020 Bond proceeds for any of the 2020 Project Costs, subject to the County's obligation to undertake and complete those components of the project related to the "Mortgaged Property," as defined in the Deed of Trust, and the limitation on the use of funds only for 2020 Project Costs. Components of the 2020 Project related to the Mortgaged Property include the following: • The Northern Campus improvements described in the table above • The Link Center and Emergency Services Building remediations referenced in the table above 13 36 EXHIBIT B - Definitions: Rules of Construction For all purposes of this Supplemental Agreement, unless the context requires otherwise, the following terms have the following meanings. "2020 Bonds" means the County's Limited Obligation Bonds, Series 2020, originally issued in the aggregate principal amount of [$45,000,000] pursuant to the Prior Agreement and this Supplemental Agreement. "2020 Proceeds Fund" means the Orange County 2020 Proceeds Fund established pursuant to Section 3.02. "2020 Project" has the meaning assigned in the preambles to this Supplemental Agreement. "2020 Project Costs" means "Project Costs," as defined in the 2018 Agreement, related to the 2020 Project. "Deed of Trust" means the Prior Deed of Trust as modified by the "Deed of Trust Supplement #3" dated as of May 1, 2020, also granted by the County for the Trustee's benefit. "Payment Date" with respect to the 2020 Bonds means each April 1 and October 1, beginning October 1, 2020. "Prior Agreement" means the Trust Agreement dated as of June 1, 2018, between the County and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by (a) a First Supplemental Trust Agreement dated as of May 1, 2019, between the County and the Trustee, and (a) a Second Supplemental Trust Agreement dated as of November 1, 2019, also between the County and the Trustee. "Prior Deed of Trust" means the Deed of Trust and Security Agreement dated as of June 1, 2018, from the County to a Deed of Trust Trustee for the County's benefit, as supplemented by (a) a Deed of Trust Supplement #1 dated as of May 1, 2019, and (b) a Deed of Trust Supplement#2 dated as of November 1, 2019. 14 37 "Supplemental Agreement" means this Third Supplemental Trust Agreement, as it may be properly amended or supplemented from time to time. "Trust Agreement" means the Prior Agreement as modified and supplemented by this Supplemental Agreement, as it may be further amended or supplemented from time to time. All other capitalized terms used in this Third Supplemental Trust Agreement and not otherwise defined have the meanings ascribed thereto in the Prior Agreement. 15 38 Exhibit C - Form of 2020 Bond Number R- REGISTERED REGISTERED LIMITED OBLIGATION BOND, SERIES 2020 ORANGE COUNTY, NORTH CAROLINA INTEREST RATE MATURITY DATE DATED DATE CUSIP % October 1, 20xx May—, 2020 684566 XXX REGISTERED OWNER: *****CEDE & CO.***** PRINCIPAL AMOUNT: **** DOLLARS ($ )**** ORANGE COUNTY, NORTH CAROLINA (the "County"), for value received, promises to pay, but solely from the sources and in the manner provided, to the registered owner hereof, or registered assigns or legal representative, the principal amount stated above on the maturity date stated above, and to pay interest on this Bond semiannually on each April 1 and October 1, beginning October 1, 2020, at the annual rate stated above. Interest is payable (a) from the Dated Date stated above, if this Bond is authenticated prior to October 1, 2020, or (b) otherwise from the April 1 or October 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 which case this Bond will 16 39 bear interest from the date to which interest has been paid). Principal and interest are payable in lawful money of the United States of America. This Bond is one of an issue of [$45,000,000] Limited Obligation Bonds, Series 2020 (the "Bonds"), of like date and tenor, except as to number, denomination, rate of interest, privilege of redemption and maturity. The Bonds are issued under, and are equally and ratably secured by, a Trust Agreement dated as of June 1, 2018, between the County and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), as previously supplemented and as supplemented by a Third Supplemental Trust Agreement between the County and the Trustee and dated as of May 1, 2020 (as supplemented, the "Trust Agreement"). This Bond constitutes an installment contract within the meaning of Section 160A-20 of the North Carolina General Statutes between the County and the owner (from time to time) of this Bond. The Bonds are payable solely from funds appropriated on an annual basis by the County's governing Board of Commissioners and other funds available for the purpose of payment pursuant to the Trust Agreement, such as certain net insurance and condemnation awards and the proceeds of remedial action, which revenues and other moneys have been pledged as described in the Trust Agreement to secure payment of the Bonds. Neither the County's faith and credit nor its taxing power is pledged to the payment of any amounts due under the Bonds. As provided for under that Section 160A-20, no deficiency judgment may be rendered against the County in any action for breach of a contractual obligation under the Bonds or the Trust Agreement. To further secure its obligations under the Trust Agreement, the County has granted, for the benefit of the Trustee on behalf of the owners of the Bonds, a security interest in certain public facilities and the related real property, and certain other property, pursuant to the Trust Agreement and a Deed of Trust and Security Agreement dated as of June 1, 2018, as previously supplemented and as supplemented by a Deed of Trust Supplement #3 dated as of May 1, 2020, delivered by the County for the Trustee's benefit (as supplemented, the "Deed of Trust"). The security provided to owners of the Bonds under the Deed of Trust and otherwise is on parity with the security provided to owners of prior bonds issued under the Trust Agreement. Additional Bonds secured by a parity interest in the 17 40 property securing the Bonds may be issued under the terms and conditions set forth in the Trust Agreement. Reference is made to the Trust Agreement and the Deed of Trust referenced above for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the County and the Trustee, the rights of the Owners of the Bonds and the terms upon which the Bonds are executed, delivered and secured, to all of which provisions the owner of this Bond, by the acceptance of this Bond, agrees. The Bonds are issued by means of a book-entry system, with one 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 to DTC or its nominee as registered owner of the Bonds. Neither the Trustee nor the County is responsible or liable for the transfer of ownership or payments or for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. If (a) DTC determines not to continue to act as securities depository for the Bonds or (b) the County so elects, the County and the Trustee will discontinue the book-entry system with DTC. If the County does not identify another qualified securities depository to replace DTC, the County will prepare and execute, and the Trustee will authenticate and deliver in exchange, replacement Bonds in the form of fully-registered Bonds. Prior to any transfer of any Bonds outside of the book-entry only system as contemplated above (including, but not limited to, the initial transfer outside the book-entry only system), the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under the United States Internal Revenue Code Section 6045, as amended. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information. 18 41 The Bonds may not be redeemed prior to maturity except as provided in this Bond and in the Trust Agreement. The Bonds maturing on or after October 1, 2031, are subject to redemption at the County's option in whole or in part on any date on or after October 1, 2030, upon payment of the principal amount to be prepaid plus interest accrued to the redemption date, without premium. If less than all the Bonds are to be redeemed pursuant to this provision, they will be redeemed among maturities in any manner the County chooses. If less than all the Bonds of any maturity are called for redemption, the Trustee will select the Bonds to be redeemed by lot; provided, however, that so long as a book-entry system with DTC is used for recording 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. In any case, (1) the portion of any Bond to be prepaid will be in the principal amount of $5,000 or some integral multiple thereof, and (2) 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 that Bond by $5,000. If a portion of a Bond is called for redemption, a new Bond in principal amount equal to the unpaid portion will be issued to the registered owner upon the surrender of the Bond. The Trustee will send notice of redemption to DTC or its nominee as the Owner of the Bonds as provided in the Trust Agreement. The Trustee will send the notice not more than 60 days nor less than 30 days prior to the date fixed for redemption. Neither the Trustee nor the County is responsible for sending notices of redemption to anyone other than DTC or its nominee, so long as all the Bonds to be redeemed are held in a book-entry-only form with DTC. If on or before the date fixed for redemption funds have been deposited with the Trustee to pay the principal and interest accrued to the redemption date with respect to the Bonds called for redemption, the Bonds or portions thereof thus called for redemption will cease to accrue interest from and after the redemption 19 42 date, will no longer be entitled to the benefits provided by the Trust Agreement, and will not be deemed to be Outstanding under the Trust Agreement. The Owner of this Bond has no right to enforce the provisions of the Trust Agreement or to institute action to enforce the covenants therein, or to take any action with respect to any event of default thereunder, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Trust Agreement. Changes to or supplements of the Trust Agreement may be made to the extent and in the circumstances permitted by the Trust Agreement. Ownership of this Bond will be registered on the Bond Register (as defined in the Trust Agreement) kept for that purpose by the Trustee, which will act as Bond registrar for the Bonds. This Bond may be exchanged, and its transfer may be effected, only by its Owner in person or by attorney duly authorized in writing at the designated office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement, and upon surrender and cancellation of this Bond. Upon exchange or registration of such transfer a new registered Bond or Bonds of the same maturity and interest rate and of authorized denomination or denominations for the same aggregate principal amount will be issued in exchange therefor. The County and the Trustee may deem and treat the person in whose name this Bond is registered on the Bond Register as the absolute owner of this Bond for the purpose of receiving payment of or on account of principal of and interest due on this Bond and for all other purposes, and neither the County nor the Trustee will be affected by any notice to the contrary, except that interest payments will be made to the persons shown as Owners on the Trustee's registration books on the Record Date, which is the end of the calendar day on the 15th day of the month (whether or not a business day) preceding each Payment Date. 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 execution and delivery of this Bond have happened, exist and have been performed. This Bond and the issue of which it is a part are issued with the intent that North Carolina law will govern this Bond and all matters of its interpretation. 20 43 This Bond will not be entitled to any benefit under the Trust Agreement or be valid or obligatory for any purpose until the Trustee has executed the Certificate of Authentication appearing on this Bond. IN WITNESS WHEREOF, the County has caused this instrument to be signed, sealed and delivered by duly authorized officers, as of the day and year first above written. (SEAL) ORANGE COUNTY ATTEST: NORTH CAROLINA By: Donna S. Baker Bonnie B. Hammersley Clerk, Board of Commissioners County Manager [Orange County, North Carolina [$45,000,000] Limited Obligation Bonds, Series 20201 21 44 This Bond has been approved under the provisions of Section 160A-20 and Article 8, Chapter 159 of the General Statutes of North Carolina. Greg C. Gaskins Secretary, North Carolina Local Government Commission By [Greg C. Gaskins or Designated Assistant] CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds referred to in the Third Supplemental Trust Agreement dated as of May 1, 2020, between Orange County, North Carolina, and The Bank of New York Mellon Trust Company, N.A., as trustee. Date of Authentication: THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Authorized Officer [Orange County, North Carolina [$45,000,000] Limited Obligation Bonds, Series 2020] 22 45 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 OF TRANSFEREE: the within bond and all rights thereunder, hereby irrevocably constituting and appointing , Attorney, to transfer said certificate on the books kept for the registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: (Signature of Owner) NOTICE: The signature above must NOTICE: Signature(s) must be correspond with the name the Owner as guaranteed by a participant in the it appears on the front of this certificate Securities Transfer Agent Medallion in every particular without alteration or Program ("STAMP") or similar program enlargement or any change whatsoever. 23 46 EXHIBIT D - Schedule of Payments on 2020 Bonds Principal is payable in the amounts and on the dates as shown below, subject to redemption of the 2020 Bonds as provided in this Supplemental Agreement. Interest is payable on the dates shown below. The 2020 Bonds will bear interest from the Closing Date until paid. Interest is calculated at the rates shown in Section 1.04. The schedule below shows the expected interest payment amounts. The County's obligation with respect to the 2020 Bonds on each Payment Date is the amount shown below as the "total payment" for that date, subject to adjustment as provided in Section 3.05(c) of the 2018 Agreement. Payments are due to the Bondholders on the indicated Payment Dates. The County will deposit the amounts required for payment with the Trustee by the 25tn day of the month preceding the Payment Date. Payment Date Principal Interest Total Payment [To come] 24 47 Exhibit E - Form of Requisition [Date] The Bank of New York Mellon Trust Company, N.A., as Trustee Attention: Corporate Trust Regarding: Requisition under 2020 Supplemental Trust Agreement for Orange County, North Carolina RE: Request by Orange County, North Carolina (the "County"), for disbursement of funds from a Bond Proceeds Fund created under a Third Supplemental Trust Agreement dated as of May 1, 2020 (the "2020 Agreement"), with Orange County, North Carolina (the "County") To the Trustee: Pursuant to the terms and conditions of the 2020 Agreement, the County authorizes and requests the disbursement of funds from the "Orange County 2020 Proceeds Fund" established under that 2020 Agreement for the costs described below. Capitalized terms used in this requisition and not otherwise defined have the meanings ascribed in the 2020 Agreement. This is requisition number 2020 - from the 2020 Proceeds Fund. Total Amount for Disbursement Payee Payee's address 25 48 Orange County makes this requisition pursuant to the following representations: 1. The County has appropriated in its current fiscal year funds sufficient to pay the Bond Payments and estimated Additional Payments due in the current fiscal year. 2. The purpose of this disbursement is for payment of 2020 Project Costs as provided for in the Trust Agreement. 3. The requested disbursement has not been subject to any previous requisition. 4. No notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable herein to any of the persons, firms or corporations named herein has been received, or if any notice of any such lien, attachment or claim has been received, such lien, attachment or claim has been released or discharged or will be released or discharged upon payment of this requisition. S. This requisition contains no items representing payment on account of any percentage entitled to be retained on the date of this requisition. 6. No Event of Default is continuing, and no event or condition is existing which, with notice or lapse of time or both, would become an Event of Default. 7. The County has insurance in place that complies with the insurance requirements of the Trust Agreement. 8. No portion of the amounts set forth in this requisition represents amounts paid or payable as North Carolina state sales taxes. ORANGE COUNTY, NORTH CAROLINA By: !Exhibit Form Only-Do Not Sign] Title: County Representative 26 49 Attachment 4 = y PRELIMINARY OFFICIAL STATEMENT DATED APRIL 2020 � NEW ISSUE BOOK-ENTRY ONLY Ratings:Moody's: S&P: (_] W .o Fitch: ,U In the opinion of Bond Counsel, under existing law and subject to conditions described under "TAX TREATMENT" herein, interest on the 2020 Bonds paid by the County(1)is not includable in the recipient's gross income for federal income tax o purposes, (2)is not an item of tax preference for purposes of the federal alternative minimum income tax, and(3)is exempt from current State of North Carolina income taxes. See "TAX TREATMENT"herein for additional information regarding other federal, State and local tax consequences arising from ownership or receipt of interest on the 2020 Bonds. O � 7 $f 1° ORANGE COUNTY,NORTH CAROLINA o r s LIMITED OBLIGATION BONDS,SERIES 2020 0 Dated:Date of Delivery Due: October 1,as shown on the inside front cover w o This Official Statement has been prepared by Orange County,North Carolina(the"County")to provide information on the Orange County,North Carolina,Limited Obligation Bonds,Series 2020(the"2020 Bonds"). Selected information is presented on this cover page for the convenience of the user. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. ° Security: The payment by the County of the principal of and interest on the 2020 Bonds is limited to aEi funds appropriated for that purpose by the Board of Commissioners for the County in its sole r discretion, except to the extent payable from Bond proceeds, investment earnings, Net Proceeds related to casualty or condemnation proceeds, or amounts derived from the o o enforcement of remedies on default. U As security for the 2020 Bonds,the Prior Bonds and all other Bonds issued under the Trust Agreement(as such terms are defined herein),the County has executed and delivered a deed oof trust,as amended,and will execute and deliver a supplement to such deed of trust granting, CIO Co among other things, a lien of record on the Mortgaged Property subject to Permitted o y Encumbrances(as such terns are defined herein). o THE OBLIGATION TO MAKE PAYMENTS WITH RESPECT TO THE 2020 BONDS IS NOT A GENERAL y r.� ,o •� OBLIGATION OF THE COUNTY,AND THE TAXING POWER OF THE COUNTY IS NOT PLEDGED x DIRECTLY OR INDIRECTLY TO SECURE ANY MONIES DUE TO THE OWNERS OF THE 2020 BONDS. q See the caption"SECURITY AND SOURCES OF PAYMENT OF 2020 BONDS"herein. o Redemption: The 2020 Bonds are subject to redemption as described herein. O o U ti Pur-ppose: Proceeds of the 2020 Bonds will be used to(1)finance the acquisition,construction,equipping o .2 and improvement of certain County facilities as further described herein and(2)pay certain costs incurred in connection with the issuance of the 2020 Bonds. Interest Payment Dates: April 1 and October 1 of each year,commencing October 1,2020. 2 ° Denomination: $5,000 or integral multiples thereof xo Delivery: On or about May_,2020. ti 8 .y 2 1� Bond Counsel: Sanford Holshouser LLP � � o F o County Attorney: John L.Roberts,Esq. Financial Advisor: Davenport&Company LLC pn Underwriters'Counsel. McGuireWoods LLP CIO N I Trustee: The Bank of New York Mellon Trust Company,N.A. o o ti BAIRD FHN Financial Capital Markets h o The date of this Official Statement is April 2020. h '� o *Preliminary,subject to change. 50 MATURITY SCHEDULE FOR 2020 BONDS* Due Principal Interest October 1 Amount Rate Yield CUSIP" Preliminary,subject to change. ..CUSIP®is a registered trademark of the American Bankers Association. CUSIP Global Services is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright©2020 CUSIP Global Services. All rights reserved. CUSIP data herein is provided by S&P Capital IQ,a division of McGraw-Hill Financial,Inc. The CUSIP data herein is provided solely for the convenience of reference only. Neither the County nor the Underwriters are responsible for selection or use of these CUSIP numbers,and no representation is made as to their correctness on the 2020 Bonds or as indicated above. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2020 Bonds as a result of various subsequent actions including, but not limited to,a refunding in whole or in part of the 2020 Bonds. 51 IN CONNECTION WITH THIS OFFERING, ROBERT W. BAIRD & CO. INCORPORATED AND FHN FINANCIAL CAPITAL MARKETS (THE "UNDERWRITERS") MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2020 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,IF COMMENCED,MAY BE DISCONTINUED AT ANY TIME. No dealer, broker, salesman or other person has been authorized to give any information or to make any representation other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy,nor shall there be any sale of the 2020 Bonds by any person in any jurisdiction in which it is not lawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the County and other sources that are deemed to be reliable. NEITHER THE 2020 BONDS NOR THE TRUST AGREEMENT(AS SUCH TERMS ARE DEFINED HEREIN)HAVE BEEN REGISTERED OR QUALIFIED WITH THE SECURITIES AND EXCHANGE COMMISSION BY REASON OF THE PROVISIONS OF SECTION 3(a)(2)OF THE SECURITIES ACT OF 1933,AS AMENDED AND SECTION 304(a)(4)OF THE TRUST INDENTURE ACT OF 1939,AS AMENDED. THE REGISTRATION OR QUALIFICATION OF THE 2020 BONDS OR THE TRUST AGREEMENT IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAW OF THE STATES IN WHICH THE 2020 BONDS HAVE BEEN REGISTERED OR QUALIFIED, IF ANY, AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES,SHALL NOT BE REGARDED AS A RECOMMENDATION THEREOF. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE TERMS OF THE OFFERING,INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. All quotations from and summaries and explanations of laws and documents herein do not purport to be complete,and reference is made to such laws and documents for full and complete statements of their provisions. Any statements made in this Official Statement involving estimates or matters of opinion, whether or not expressly so stated, are intended merely as estimates or opinions and not as representations of fact. THE INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE,AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALE OF THE 2020 BONDS SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COUNTY SINCE THE DATE HEREOF. References to web site addresses presented herein (including the appendices hereto) are for informational purposes only and may be in the form of hyperlinks solely for the reader's convenience. Unless specified otherwise, such web sites and the information or links contained therein are not intended to be active hyperlinks or incorporated into,and are not part of,this Official Statement for purposes of,and as that term is defined in,Rule 15c2-12 under the Securities Exchange Act of 1934,as amended. The information set forth herein has been obtained from sources which are believed to be reliable and is in a form deemed final by the County for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (except for certain information permitted to be omitted under Rule 15c2-12(b)(1)). The information contained herein is subject to change after the date of this Official Statement,and this Official Statement speaks only as of its date. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction,but the Underwriters do not guarantee the accuracy or completeness of such information. 52 ORANGE COUNTY,NORTH CAROLINA BOARD OF COMMISSIONERS Penny Rich, Chair Renee Price,Vice-Chair Jamezetta Bedford Mark Dorosin Sally Greene Mark Marcoplos Earl McKee COUNTY STAFF Bonnie B. Hammersley........................................................................................................County Manager Travis Myren........................................................................................................... Deputy County Manager Gary Donaldson.........................................................................................................Chief Financial Officer Paul Laughton..........................................................Deputy Director, Finance and Administrative Services John L. Roberts,Esq............................................................................................................County Attorney BOND COUNSEL Sanford Holshouser LLP FINANCIAL ADVISOR Davenport&Company LLC 53 TABLE OF CONTENTS Page INTRODUCTION.......................................................................................................................................I TheCounty.....................................................................................................................................I Purpose ...........................................................................................................................................I Security...........................................................................................................................................I The2020 Bonds..............................................................................................................................2 AdditionalBonds............................................................................................................................3 Book-Entry Only.............................................................................................................................3 TaxStatus .......................................................................................................................................3 Professionals...................................................................................................................................3 AdditionalInformation...................................................................................................................3 THE2020 BONDS......................................................................................................................................4 Authorization..................................................................................................................................4 General ...........................................................................................................................................4 RedemptionProvisions...................................................................................................................4 SECURITY AND SOURCES OF PAYMENT OF 2020 BONDS .............................................................6 General ...........................................................................................................................................6 Payment of Bonds;Limited Obligation; Budget and Appropriations.............................................6 TrustAgreement.............................................................................................................................6 Deedof Trust..................................................................................................................................6 Enforceability..................................................................................................................................8 AdditionalBonds............................................................................................................................8 Useof Net Proceeds........................................................................................................................8 AVAILABLE SOURCES FOR PAYMENT...............................................................................................9 General ...........................................................................................................................................9 General Fund Revenues..................................................................................................................9 THE PLAN OF FINANCE..........................................................................................................................9 TheProjects....................................................................................................................................9 TheRefunded Obligations............................................................................................................10 TheMortgaged Property...............................................................................................................10 ESTIMATED SOURCES AND USES OF FUNDS .................................................................................12 TOTAL ANNUAL DEBT SERVICE REQUIREMENTS........................................................................12 CERTAIN RISKS OF 2020 BOND OWNERS.........................................................................................13 Insufficiency of Payments.............................................................................................................13 Riskof Nonappropriation.............................................................................................................13 Valueof Collateral........................................................................................................................13 UninsuredCasualty.......................................................................................................................14 Outstanding General Obligation Debt of the County....................................................................14 EnvironmentalRisks.....................................................................................................................14 AdditionalBonds..........................................................................................................................14 Bankruptcy....................................................................................................................................15 THECOUNTY..........................................................................................................................................15 General .........................................................................................................................................15 FinancialInformation....................................................................................................................15 LEGALMATTERS...................................................................................................................................15 Litigation.......................................................................................................................................15 Opinionsof Counsel .....................................................................................................................15 TAXTREATMENT..................................................................................................................................16 i 54 TABLE OF CONTENTS (continued) Page Opinionof Bond Counsel.............................................................................................................16 DiscountBonds.............................................................................................................................16 PremiumBonds.............................................................................................................................17 OtherTax Consequences..............................................................................................................18 CONTINUING DISCLOSURE OBLIGATION.......................................................................................18 The County's Continuing Disclosure Compliance.......................................................................21 UNDERWRITING....................................................................................................................................21 RATINGS..................................................................................................................................................22 MISCELLANEOUS..................................................................................................................................22 Appendix A The County Appendix B Management's Discussion and Analysis and the Basic Financial Statements of Orange County,North Carolina Appendix C Summary of Principal Legal Documents Appendix D Form of Opinion of Bond Counsel Appendix E Book-Entry Only System ii 55 $[ ] Orange County,North Carolina Limited Obligation Bonds, Series 2020 INTRODUCTION The purpose of this Official Statement,which includes the Appendices hereto,is to provide certain information in connection with the Orange County,North Carolina Limited Obligation Bonds, Series 2020 in the aggregate principal amount of$[ ]* (the"2020 Bonds"). The 2020 Bonds will be issued pursuant to a Trust Agreement dated as of June 1, 2018 (the"2018 Trust Agreement"), as previously supplemented and as supplemented by a Third Supplemental Trust Agreement dated as of May 1, 2020 (the "Third Supplemental Trust Agreement" and, together with the 2018 Trust Agreement,as previously supplemented,the"Trust Agreement"),each between Orange County, North Carolina (the "County") and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). Pursuant to the Trust Agreement, the County has previously issued its (1) $7,510,000 Limited Obligation Bonds, Series 2018 (the "2018 Bonds"), of which $6,715,000 in principal amount is currently Outstanding, (2) $14,135,000 Limited Obligation Bonds, Series 2019A(the"2019A Bonds"), all of which remain Outstanding, and (3) $29,745,000 Limited Obligation Bonds, Series 2019B (the "2019B Bonds" and, together with the 2018 Bonds and the 2019A Bonds, the "Prior Bonds"), all of which remain Outstanding. Capitalized terms used in this Official Statement, unless otherwise defined herein, have the meanings set out in Appendix C hereto under the caption"DEFINITIONS." This Introduction provides only certain limited information with respect to the contents of this Official Statement and is expressly qualified by the Official Statement as a whole. Prospective investors should review the full Official Statement and each of the documents summarized or described herein. This Official Statement speaks only as of its date, and the information contained herein is subject to change. THE COUNTY The County is a political subdivision of the State of North Carolina(the"State"). See Appendix A, "THE COUNTY,"hereto for certain information regarding the County. The County's most recent audited financial statements are contained in Appendix B hereto. PURPOSE The 2020 Bonds are being issued in order to (1)finance the acquisition, construction, equipping and improvement of certain County facilities as further described herein and (2) finance certain costs incurred in connection with the execution and delivery of the 2020 Bonds. See "THE PLAN OF FINANCE"and"ESTIMATED SOURCES AND USES OF FUNDS"herein. SECURITY The payment by the County of the principal of and interest on the 2020 Bonds is limited to funds appropriated for that purpose by the Board of Commissioners for the County in its sole discretion, except 'Preliminary,subject to change. 56 to the extent payable from Bond proceeds, investment earnings, Net Proceeds related to casualty or condemnation proceeds, or amounts derived from the enforcement of remedies on default. As security for the 2020 Bonds, the Prior Bonds and any additional bonds issued under the Trust Agreement on a parity therewith(the"Additional Bonds"and,together with the 2020 Bonds and the Prior Bonds, the "Bonds"), the County has executed and delivered to a deed of trust trustee (the "Deed of Trust Trustee"), for the benefit of the Trustee, a Deed of Trust dated as of June 1, 2018 (as previously supplemented and amended, the "Existing Deed of Trust"), granting a lien of record on the site of the County's Government Services Annex located in Hillsborough,North Carolina(the"Government Services Annex"), the County's Meadowlands Emergency Operations Center located in Hillsborough, North Carolina(the"Emergency Operations Center"),land owned by the County in Hillsborough,North Carolina, which will be the site of the County's Northern Campus(the"Northern Campus"),the County's Link Center (the"Link Center"),the County District Attorney's office building(the"District Attorney's Building"),the site of the County's Southern Campus (the"Southern Campus"), and the real estate improvements thereon and appurtenances thereto, all as more particularly described in the Existing Deed of Trust (collectively, the"Mortgaged Property"), subject only to Permitted Encumbrances(as defined in Appendix C hereto). As security for the Bonds and in connection with the issuance of the 2020 Bonds,the County will execute and deliver to the Deed of Trust Trustee,for the benefit of the Trustee,a Deed of Trust Supplement #3 dated as of May 1, 2020 (the "Third Deed of Trust Supplement"), supplementing the Existing Deed of Trust(as so supplemented,the"Modified Deed of Trust"),to provide that the Modified Deed of Trust shall also secure the 2020 Bonds. The Modified Deed of Trust authorizes future obligations evidenced by Additional Bonds as described below, to be secured by the Modified Deed of Trust, provided that the total amount of present and future obligations secured by the Modified Deed of Trust at any one time does not exceed$200,000,000 and such future obligations are incurred not later than 30 years from June 1, 2018. In addition, the County will grant to the Trustee a lien on and security interest in all moneys held by the Trustee in the funds and accounts created under the Trust Agreement. If a default occurs under the Trust Agreement,the Trustee is authorized to direct the Deed of Trust Trustee to foreclose on the Mortgaged Property and apply the proceeds received as a result of any such foreclosure to the payment of the amounts due to the owners of the 2020 Bonds and the Prior Bonds,subject to the rights of the owners of any other Bonds. No assurance can be given that any such proceeds will be sufficient to pay the principal of and the interest on the Bonds. In addition,no deficiency judgment can be rendered against the County if the proceeds from any such foreclosure sale (together with other funds that may be held by the Trustee under the Trust Agreement)are insufficient to pay the Bonds in full. The 2020 Bonds do not constitute a pledge of the County's faith and credit within the meaning of any constitutional provision. See the caption"SECURITY AND SOURCES OF PAYMENT OF 2020 BONDS"herein. THE 2020 BONDS The 2020 Bonds will be dated as of their date of delivery. Interest is payable on April 1 and October 1 of each year,beginning October 1,2020,at the rates set forth on the inside front cover page of this Official Statement. Principal is payable, subject to redemption as described herein, on October 1 in the years and in the amounts set forth on the inside front cover page of this Official Statement. 2 57 ADDITIONAL BONDS Under the conditions described in the Trust Agreement, without the approval or consent of the Owners of the then-outstanding Bonds and without notice to such Owners, Additional Bonds may be delivered and secured on parity with the 2020 Bonds and the Prior Bonds to provide funds(a)to expand or improve the Pledged Facilities,(b)to construct further improvements to the Pledged Sites,(c)to refund any Outstanding Bonds, (d)to pay financing costs or establish reserves in connection with the issuance of Additional Bonds, (e) for any other purpose that may be allowed by law from time to time, including the acquisition and construction of additional public facilities,whether or not those facilities are related to the Pledged Facilities or the Pledged Sites, or(f) for any combination of such purposes. BOOK-ENTRY ONLY The 2020 Bonds will be delivered in book-entry form only without physical delivery of certificates to beneficial owners of the 2020 Bonds. Payments to beneficial owners of the 2020 Bonds will be made by The Depository Trust Company("DTC"),New York,New York,and its participants. See Appendix E, "BOOK-ENTRY ONLY SYSTEM"hereto. So long as Cede & Co. is the registered owner of the 2020 Bonds,references herein to registered owner or Owners of the 2020 Bonds means Cede& Co. and not the beneficial owners of the 2020 Bonds. TAx STATUS In the opinion of Bond Counsel,under existing law and subject to conditions described under"TAX TREATMENT" herein, interest on the 2020 Bonds paid by the County (1) is not includable in the recipient's gross income for federal income tax purposes, (2) is not an item of tax preference for purposes of the federal alternative minimum income tax, and (3) is exempt from current State of North Carolina income taxes. See"TAX TREATMENT." PROFESSIONALS Robert W. Baird&Co. Incorporated and FHN Financial Capital Markets (the"Underwriters") are underwriting the 2020 Bonds. The Bank of New York Mellon Trust Company,N.A. is serving as Trustee with respect to the 2020 Bonds. Davenport & Company LLC is serving as financial advisor. Sanford Holshouser LLP is serving as Bond Counsel. John L. Roberts, Esq. is the County Attorney. McGuireWoods LLP is serving as counsel to the Underwriters. ADDITIONAL INFORMATION Summaries of the Trust Agreement and the Modified Deed of Trust, including a list of definitions of certain terms, are included as Appendix C. All quotations from and summaries and explanations of the Trust Agreement and the Modified Deed of Trust contained in this Official Statement, including in Appendix C, do not purport to be complete. Reference is made to such documents for full and complete statements of their respective provisions. Additional information and copies in reasonable quantity of the principal financing documents may be obtained from the County at 200 South Cameron Street,Hillsborough,North Carolina 27278,Attention: Chief Financial Officer. Copies of such documents can also be obtained during the offering period from Robert W. Baird& Co. Incorporated at 380 Knollwood Street, Suite 440, Winston-Salem,North Carolina 27103 or FHN Financial Capital Markets at 845 Crossover Lane, Memphis, Tennessee 38117. After the offering period, copies of such documents may be obtained from the Trustee at 10161 Centurion Parkway, Jacksonville,Florida 32256. 3 58 THE 2020 BONDS AUTHORIZATION The County is issuing the 2020 Bonds pursuant to the provisions of Section 20 of Chapter 160A of the North Carolina General Statutes and Article 8 of Chapter 159 of the North Carolina General Statutes, each as amended(collectively, the "Act"), and a resolution of the Board of Commissioners of the County adopted on April 7,2020. Each 2020 Bond will be deemed an"installment contract"under the Act. In addition, the County's issuance of the 2020 Bonds received the approval of the North Carolina Local Government Commission (the "LGC") on April 7, 2020. The LGC is a division of the State Treasurer's office charged with general oversight of local government finance in the State of North Carolina (the "State"). LGC approval is required for substantially all bond issues and other local government financing arrangements in the State. Before approving an installment financing (which includes the financing arrangement for the 2020 Bonds), the LGC must determine, among other things, that (1) the proposed financing is necessary and expedient, (2)the financing,under the circumstances, is preferable to a general obligation or revenue bond issue for the same purpose, and (3) the sums to fall due under the proposed financing are not excessive for the local government. GENERAL Payment Terms. The 2020 Bonds will be dated their date of delivery. Interest on the 2020 Bonds is payable on each April 1 and October 1 (the "Payment Dates"), beginning October 1, 2020, at the rates set forth on the inside front cover page of this Official Statement(calculated on the basis of a 360-day year consisting of twelve 30-day months). Interest payments will be made to the person shown as the owner of the 2020 Bond as of the applicable Record Date. "Record Date"means the end of the calendar day on the 15th day of the month(whether or not a Business Day)preceding a Payment Date. Principal on the 2020 Bonds is payable on October 1 in the years and amounts set forth on the inside front cover page of this Official Statement. Payments will be effected through DTC. See Appendix E, "BOOK-ENTRY ONLY SYSTEM"hereto. Registration and Exchange. So long as DTC or its nominee is the registered owner of the 2020 Bonds, transfers and exchanges of beneficial ownership interests in the 2020 Bonds will be available only through DTC Participants and DTC Indirect Participants. See Appendix E, "BOOK-ENTRY ONLY SYSTEM" hereto. The Trust Agreement describes provisions for transfer and exchange applicable if a book-entry system is no longer in effect. These provisions generally provide that the transfer of the 2020 Bonds is registrable by the Owners thereof, and the 2020 Bonds may be exchanged for an equal aggregate, unredeemed principal amount of 2020 Bonds of the authorized denomination and of the same maturity and interest rate, only upon presentation and surrender of the 2020 Bonds to the Trustee at the principal corporate trust office of the Trustee together with an executed instrument of transfer in a form approved by the Trustee in connection with any transfer. The Trustee may require the person requesting any transfer or exchange to reimburse it for any shipping and tax or other governmental charge payable in connection therewith. REDEMPTION PROVISIONS Optional Redemption. The 2020 Bonds maturing on or after October 1, 20 are subject to redemption at the County's option,in whole or in part on any date on or after October 1,20_,upon payment of the principal amount to be redeemed plus interest accrued to the redemption date,without premium. 4 59 Selection. If less than all of the 2020 Bonds are to be optionally redeemed as described above,the County in its discretion may elect which maturities of 2020 Bonds are to be redeemed. If less than all the 2020 Bonds of any maturity are to be redeemed,the Trustee shall select the 2020 Bonds to be redeemed by lot; provided, however, that so long as a book-entry system with DTC is used for determining beneficial ownership of 2020 Bonds, if less than all the 2020 Bonds within a maturity are to be redeemed,the parties agree that DTC may determine which of the 2020 Bonds within the maturity are to be redeemed in accordance with DTC's then-current rules and procedures. In any case, (1) the portion of any 2020 Bond to be redeemed must be in the principal amount of $5,000 or some multiple thereof, and(2) in selecting 2020 Bonds for redemption, each 2020 Bond will be considered as representing that number of 2020 Bonds which is obtained by dividing the principal amount of that 2020 Bond by$5,000. If a portion of a 2020 Bond is called for redemption, a new 2020 Bond of the same maturity in principal amount equal to the unpaid portion will be delivered to the registered owner upon the surrender of the 2020 Bond. Effect of Call for Redemption. If on or before the date fixed for redemption funds are deposited with the Trustee to pay the principal and interest accrued to the redemption date with respect to the 2020 Bonds called for redemption,the 2020 Bonds or portions of the 2020 Bonds called for redemption cease to accrue interest from and after the redemption date,and thereafter those 2020 Bonds(1)are no longer entitled to the benefits provided by the Trust Agreement and(2) are not deemed to be Outstanding under the Trust Agreement. Notice of Redemption. The Trustee, at the County's direction, upon being satisfactorily indemnified with respect to expenses and with at least two Business Days' notice, will send notice of redemption no less than 30 nor more than 60 days prior to the redemption date,as follows: (1)with respect to any 2020 Bonds being called for redemption for which DTC or its nominee is the registered owner, to DTC,in whatever manner may be provided for under DTC's standard operating rules as then in effect(and if the Trustee is unable to determine those rules, by registered or certified mail, return receipt requested); (2)with respect to any 2020 Bonds for which no book-entry only system of registration is in effect,to each of the registered owners of those 2020 Bonds at their addresses as shown on the Trustee's registration books,by registered or certified mail; and(3)in any case,both(A)to the Municipal Securities Rulemaking Board for posting on its "EMMA" continuing disclosure system, or any successor system, and (B) to the LGC. Failure to give any notice specified in(1)or(2), as applicable, or any defect in that notice,will not affect the validity of any proceedings for the redemption of any 2020 Bonds with respect to which no failure has occurred. Failure to give any notice specified in (3), or any defect in that notice, will not affect the validity of any proceedings for the redemption of any 2020 Bonds with respect to which the notice specified in(1)or(2) is correctly given. Any notice mailed as provided in the Trust Agreement will conclusively be presumed to have been given regardless of whether received by any Owner. Notwithstanding anything in the Trust Agreement to the contrary,the only remedy for the Trustee's failure to post any notice with the EMMA system will be an action by the holders of the 2020 Bonds, as applicable, in mandamus for specific performance or similar remedy to compel performance. Any redemption notice,except a redemption notice in respect of a sinking fund payment date,may state that the redemption to be effected is conditioned upon (1) the Trustee's receipt on or prior to the redemption date of moneys sufficient to pay the principal of and premium, if any, and interest on the 2020 Bonds to be redeemed; or (2) any other condition not unacceptable to the Trustee. If a notice contains a condition and the Trustee either(i)does not receive moneys sufficient to pay the principal of and premium, if any, and interest on the 2020 Bonds on or prior to the redemption date, or(ii)the stated condition is not 5 60 fulfilled,in either case on or prior to the redemption date,then redemption will not be made and the Trustee must,within a reasonable time, give notice in a manner in which the redemption notice was given that the moneys were not so received(or condition was not fulfilled)and the redemption was not made. SECURITY AND SOURCES OF PAYMENT OF 2020 BONDS GENERAL The 2020 Bonds are payable from payments to be made by the County pursuant to the Trust Agreement and from certain other moneys, including certain Net Proceeds, if any, and certain amounts realized from any sale or lease of the Mortgaged Property, which payments and other moneys have been pledged to such payment as provided in the Trust Agreement. PAYMENT OF BONDS;LIMITED OBLIGATION;BUDGET AND APPROPRIATIONS The County shall cause to be paid,when due,the principal of(whether at maturity,by acceleration, or otherwise) and the premium, if any, and interest on the Bonds at the places, on the dates and in the manner described in the Trust Agreement. The County is obligated to pay Additional Payments in amounts sufficient to pay the fees and expenses of the Trustee,taxes or other expenses required to be paid pursuant to the Trust Agreement. Additional Payments are to be paid by the County directly to the person or entity to which such Additional Payments are owed. In the Trust Agreement,the County agrees to include in the initial proposal for each of the County's annual budgets for review and consideration by the Board of Commissioners for the County, in any Fiscal Year, items for all Bond Payments and the reasonably estimated Additional Payments coming due in such Fiscal Year. Notwithstanding that the initial proposed budget includes an appropriation for Bond Payments and Additional Payments,the Board of Commissioners may determine not to include such an appropriation in the final County budget for such Fiscal Year;further,the Board of Commissioners may amend an adopted budget to reduce or delete an approved appropriation. An Event of Nonappropriation constitutes an Event of Default under the Trust Agreement, which entitles the Trustee to exercise its remedies under the Trust Agreement, including its rights to foreclose on the Mortgaged Property under the Modified Deed of Trust. IN CONNECTION WITH THE BOND PAYMENTS AND THE ADDITIONAL PAYMENTS, THE APPROPRIATION OF FUNDS THEREFOR IS WITHIN THE SOLE DISCRETION OF THE BOARD OF COMMISSIONERS OF THE COUNTY. TRUST AGREEMENT Under the Trust Agreement,the County has granted to the Trustee for the benefit of the Owners of the Bonds a lien on and security interest in all moneys and securities from time to time held by the Trustee under the Trust Agreement. DEED OF TRUST General. In connection with the execution and delivery of the Prior Bonds, the County executed and delivered the Existing Deed of Trust,to provide security for its obligations under the Trust Agreement by granting a lien of record on the Mortgaged Property. In connection with the execution and delivery of the 2020 Bonds, the County will execute and deliver the Third Deed of Trust Supplement,to provide that the Modified Deed of Trust shall also secure the 2020 Bonds. The Modified Deed of Trust secures the Prior Bonds,the 2020 Bonds and any Additional Bonds issued under the Trust Agreement. 6 61 ONLY THE SITES ON WHICH (1) THE GOVERNMENT SERVICES ANNEX, (2) THE EMERGENCY OPERATIONS CENTER,(3)THE LINK CENTER(4)THE DISTRICT ATTORNEY'S BUILDING,(5)THE NORTHERN CAMPUS, AND (6) THE SOUTHERN CAMPUS ARE LOCATED WILL BE INCLUDED IN THE DEFINITION OF "MORTGAGED PROPERTY" AND, CONSEQUENTLY, SUCH REAL PROPERTY AND ANY IMPROVEMENTS THEREON WILL BE SUBJECT TO THE LIEN CREATED BY THE MODIFIED DEED OF TRUST. See "THE PLAN OF FINANCE"herein. The Modified Deed of Trust authorizes future obligations evidenced by Additional Bonds executed and delivered under the Trust Agreement to be secured by the Modified Deed of Trust, provided that the total amount of present and future obligations secured thereby at any one time does not exceed $200,000,000 and such future obligations are incurred not later than 30 years from June 1,2018. The Modified Deed of Trust will be recorded in the office of the Register of Deeds of Orange County,North Carolina, and the liens created thereby will be insured by a title insurance policy. The title insurance policy is subject to certain exceptions described therein,including a survey exception with respect to certain portions of the Mortgaged Property. Release of Security. The Trustee is required, upon the County's direction and at any time, to execute and deliver all documents necessary to effect the release of all or a portion of the Mortgaged Property from the lien of the Modified Deed of Trust upon the County's compliance with the following requirements: (a) The County must file with the Trustee a certificate executed by a County Representative, (i) stating that(A)no Event of Default is continuing, (B)that the grant or release will not materially impair the intended use of the property remaining subject to the Modified Deed of Trust and(C)the release complies with the requirements of the Modified Deed of Trust, (ii) providing a copy of the proposed instrument of grant or release, including a complete legal description of the property to be released, (iii) providing a written application signed by a County Representative requesting such instrument be executed and delivered, and (iv)providing evidence of compliance with (b) or(c) below, and. (b) In the case of a proposed release of all the Mortgaged Property,the County must pay to the Trustee(or other fiduciary)an amount(i)which is sufficient to provide for the payment in full of all Outstanding Bonds in accordance with the Trust Agreement and (ii)which is required to be used for such payment. (c) In connection with the release of a portion (but less than all) of the Mortgaged Property, the County must provide evidence to the Trustee that the appraised, tax or insured value of that portion of the Mortgaged Property that is proposed to remain subject to the lien of the Modified Deed of Trust is not less than 50% of the aggregate principal component of the Bonds Outstanding at the time the release is effected. In addition to the provisions for release described above, the County may from time to time grant easements, licenses, rights-of-way and other similar rights with respect to any part of the Mortgaged Property, and the County may release such interests, with or without consideration, and the County may dispose of any undesirable or unnecessary Fixture, so long as such grant or disposition does not materially impair the intended use of the Mortgaged Property. See"THE DEED OF TRUST—Restriction on Transfers; Releases; Grants of Easements"in Appendix C hereto. 7 62 ENFORCEABILITY The enforceability of the parties' obligations under the Trust Agreement and the Modified Deed of Trust are subject to bankruptcy, insolvency, reorganization and other laws related to or affecting the enforcement of creditors' rights generally and, to the extent that certain remedies under such instruments require or may require enforcement by a court,to such principles of equity as the court having jurisdiction may impose. NOTWITHSTANDING ANYTHING THEREIN TO THE CONTRARY,THE DELIVERY OF THE 2020 BONDS SHALL NOT BE CONSTRUED OR INTERPRETED AS CREATING A PLEDGE OF THE FAITH AND CREDIT OF THE COUNTY WITHIN THE MEANING OF ANY CONSTITUTIONAL DEBT LIMITATION. IN ADDITION,NEITHER THE 2020 BONDS NOR THE TRUST AGREEMENT DIRECTLY OR INDIRECTLY OR CONTINGENTLY OBLIGATES THE COUNTY TO MAKE ANY PAYMENTS BEYOND THOSE APPROPRIATED IN THE SOLE DISCRETION OF THE BOARD OF COMMISSIONERS FOR ANY FISCAL YEAR IN WHICH THE 2020 BONDS ARE OUTSTANDING. IF THE COUNTY FAILS TO MAKE PAYMENTS OF PRINCIPAL OF OR INTEREST ON THE BONDS, THE TRUSTEE MAY DECLARE THE ENTIRE UNPAID PRINCIPAL OF THE BONDS TO BE IMMEDIATELY DUE AND PAYABLE AND DIRECT THE DEED OF TRUST TRUSTEE TO INSTITUTE FORECLOSURE PROCEEDINGS UNDER THE MODIFIED DEED OF TRUST AND PROCEED IN ACCORDANCE WITH LAW TO ATTEMPT TO DISPOSE OF THE MORTGAGED PROPERTY AND APPLY THE PROCEEDS OF SUCH DISPOSITION TOWARD ANY BALANCE, OWING BY THE COUNTY ON THE BONDS. NO ASSURANCE CAN BE GIVEN THAT SUCH PROCEEDS WILL BE SUFFICIENT TO PAY ALL PRINCIPAL OF AND INTEREST ON THE BONDS. IN ADDITION, SECTION 160A-20(f)OF THE NORTH CAROLINA GENERAL STATUTES PROVIDES THAT NO DEFICIENCY JUDGMENT MAY BE RENDERED AGAINST THE COUNTY FOR BREACH OF ANY CONTRACTUAL OBLIGATION AUTHORIZED UNDER SECTION 160A-20 AND THAT THE TAXING POWER OF THE COUNTY IS NOT AND MAY NOT BE PLEDGED DIRECTLY OR INDIRECTLY TO SECURE ANY MONEYS DUE FROM THE COUNTY. See "THE TRUST AGREEMENT— Defaults and Remedies under the Trust Agreement - Acceleration" and "— Other Remedies" and "THE DEED OF TRUST—Defaults and Remedies;Foreclosure"in Appendix C hereto and the caption "CERTAIN RISKS OF 2020 BOND OWNERS"herein. ADDITIONAL BONDS Under the conditions described in the Trust Agreement, without the approval or consent of the Owners of the then Outstanding 2020 Bonds, Additional Bonds may be delivered and secured on parity with the 2020 Bonds and the Prior Bonds to provide funds(a)to expand or improve the Pledged Facilities, (b)to construct further improvements to the Pledged Sites, (c)to refund any Outstanding Bonds, (d)to pay financing costs or establish reserves in connection with the issuance of Additional Bonds, (e) for any other purpose that may be allowed by law from time to time, including the acquisition and construction of additional public facilities,whether or not those facilities are related to the Pledged Facilities or the Pledged Sites, or (f) for any combination of such purposes. See "THE TRUST AGREEMENT—Additional Bonds"in Appendix C hereto. USE OF NET PROCEEDS The County must elect to use Net Proceeds and other funds available therefor,subject to provisions of the Trust Agreement,to repair and restore the Mortgaged Property or to redeem or defease the Bonds in whole (but not in part) pursuant to the optional redemption provisions described above or the defeasance provisions of the Trust Agreement, as appropriate. The County has no option to redeem the 2020 Bonds from Net Proceeds other than in accordance with the optional redemption provisions described above (which provide for no optional redemption prior to October 1,20_). 8 63 AVAILABLE SOURCES FOR PAYMENT GENERAL The County may pay its obligations under the Trust Agreement from any source of funds,including revenues generated by the projects financed under the Trust Agreement and other facilities in the County, available to it in each year and appropriated therefor until maturity of the 2020 Bonds. GENERAL FUND REVENUES The County's general fund revenues for the fiscal year ended June 30, 2019 were approximately $220.7 million and for the fiscal year ending June 30,2020 are budgeted to be$225.2 million.General fund revenues are derived from various sources,including property taxes(which account for approximately 72% of the general fund revenues), sales taxes,fees and charges,as well as intergovernmental revenues. For the fiscal year ended June 30,2019,the County imposed a property tax of$0.8504 per$100 of assessed value, all of which was appropriated to the General Fund by the County's Board of Commissioners. For the fiscal year ending June 30, 2020, the County will impose a property tax of$0.8679 per$100 of assessed value. A rate of$0.8504 per$100 of assessed value in the fiscal year ended June 30,2019 generated approximately $158.9 million. A rate of$0.8654 per $100 of assessed value in the fiscal year ending June 30, 2020 is estimated to generate approximately$162.9 million.The General Statutes of North Carolina permit counties to impose property taxes of up to $1.50 per $100 of assessed value for certain purposes without the requirement of a voter referendum. See Appendix B hereto for a description of the uses of the County's general fund revenues for the fiscal year ended June 30,2019. THE PLAN OF FINANCE The 2020 Bonds are being issued to provide funds to (1) finance the acquisition, construction, equipping and improvement of certain County facilities as further described below and(2) finance certain costs incurred in connection with the execution and delivery of the 2020 Bonds. THE PROJECTS Proceeds of the 2020 Bonds will be used to finance a variety of County projects. The County has adopted a practice of completing an annual financing to finance a broad range of acquisitions and improvements, so as to reduce its frequency of transactions and to handle projects that do not lend themselves conveniently to separate financings. The projects included in the current financing can be summarized, and the current estimates of the costs thereof, as follows: 9 64 Project Estimated Cost Total $ THE MORTGAGED PROPERTY The 2020 Bonds, the Prior Bonds and any Additional Bonds will be secured by the Mortgaged Property. The Mortgaged Property includes the County's Government Services Annex, the Emergency Operations Center, the Link Center, the District Attorney's Building, the County's Southern Campus (all as described below), and the associated real estate, and the planned site for the County's proposed new Northern Campus(as further described below). The"Mortgaged Property"is defined in the Modified Deed of Trust to include these facilities and real estate,and any additional improvements to the facilities and real estate,but generally does not include any equipment or furnishings associated with the property. Government Services Annex. The Government Services Annex is a one-story building consisting of approximately 12,000 square feet on an approximately 9.32-acre site located at 208 South Cameron Street in Hillsborough, North Carolina. The Government Services Annex currently houses the County's Board of Elections and related functions. The County has owned this property since it was built in 1968. The County estimates the insured value of this building (not including the equipment associated with the building,which is generally not part of the Mortgaged Property)to be approximately$1.6 million. Meadowlands Emergency Operations Center. The Emergency Operations Center is a two-story building consisting of approximately 22,000 square feet on an approximately three-acre site located in the Meadowlands Office Park in Hillsborough,North Carolina. This facility serves as the headquarters for the County's Emergency Management Services, including Public Safety Answering Point and all other E-911 operations. The County used a portion of the proceeds of the 2019A Bonds to finance certain repairs to the Emergency Operations Center necessary to address water intrusion. The County has owned this property since 2005.The County estimates the insured value of this building(not including the equipment associated with the building,which is generally not part of the Mortgaged Property) at approximately$4.6 million. Link Center. The Link Center is located at 200 South Cameron Street in Hillsborough, North Carolina. The County used a portion of the proceeds of the 2019A Bonds, and intends to use a portion of the proceeds of the 2020 Bonds, to finance improvements to the Link Center. The County estimates the value of this building(not including equipment,which is generally not part of the Mortgaged Property) at approximately$3.7 million. 10 65 DistrictAttorney's Building.The District Attorney's Building is located at 144 East Margaret Lane in Hillsborough,North Carolina. The County used a portion of the proceeds of the 2019A Bonds to finance certain repairs to the District Attorney's Building to remediate water intrusion. The County estimates the value of this building(not including equipment,which is generally not part of the Mortgaged Property) at approximately$1.1 million. The Government Services Center, the Link Center and the District Attorney's Building are all located on a single 9.2-acre parcel that has a listed tax value of$690,000. Southern Campus. The County's Southern Campus is located at 2551 Homestead Road in Chapel Hill, North Carolina. The Southern Campus is the site of the County's Seymour Senior Center and the Southern Human Services Center. The County is using a portion of the proceeds of the 2019B Bonds to construct and equip additional parking spaces and improvements to the driveway and access road into the Southern Campus and to construct and equip an expansion to the Seymour Senior Center,which expansion will include additional programming space. The insured value of the buildings located on the Southern Campus(not including equipment,which is generally not part of the Mortgaged Property)is approximately $7.9 million. The real estate on which the Southern Campus sits has a tax value, according to County tax records,of approximately$6.1 million. Together with the improvements and expansions financed with the 2019B Bonds, the County estimates the total value of the Southern Campus to be approximately $19.7 million. The County has leased an approximately 3-acre portion of the Southern Campus site and certain improvements located thereon to a nonprofit corporation to be used to provide short-term housing for homeless families and individuals. The nonprofit has mortgaged its leasehold interest in the property under two deeds of trust and has agreed to certain restrictive covenants related to the use of the property in connection with one such mortgage. If there were to be a foreclosure on the Southern Campus, the purchaser in such foreclosure would take title to the property subject to such lease and leasehold deeds of trust. The lease and the restrictive covenants are currently scheduled to expire on July 1,2020,but may be extended. Northern Campus Site. The County acquired approximately 19 acres of land off U.S. Highway 70 in the northern section of the County in April 2018 to be the site of a new "Northern Campus" for the County. There are no structures currently on this property. The County intends to use a portion of the proceeds of the 2020 Bonds to build several buildings on this site,including a new 144-bed detention center, an agricultural and environmental center, and a parks and recreation administration building. The County financed site preparation related to such planned buildings with the proceeds of the 2019B Bonds. Such buildings will become part of the collateral for the Bonds. The County paid approximately $394,500 for this property, and after providing for the rezoning of the property from an agricultural-residential classification to an institutional classification(to allow for the construction of the detention center and other buildings), the County estimates the current value of this property to be approximately $1.2 million. The County commissioned an independent environmental evaluation of the Northern Campus before completing the acquisition, and this evaluation called for no additional environmental action to be undertaken by the County prior to construction. NO OTHER FACILITY OR IMPROVEMENT FINANCED WITH THE 2020 BONDS WILL BE INCLUDED AS PART OF THE MORTGAGED PROPERTY. The Trust Agreement and the Modified Deed of Trust generally allow the County to direct the release of any portion of the Mortgaged Property, in the County's discretion, so long as the taxable, appraised or insured value of the property remaining subject to the lien of the Modified Deed of Trust following such release is at least equal to 50% of the principal amount of the Outstanding Bonds. See "THE DEED OF TRUST—No Transfers; Releases; Grants of Easements"in Appendix C hereto. 11 66 ESTIMATED SOURCES AND USES OF FUNDS The County estimates the sources and uses of funds for the plan of finance to be as follows: SOURCES: Par Amount of the 2020 Bonds Net Original Issue Premium/Discount TOTAL SOURCES OF FUNDS USES: Deposit to Project Fund Costs of Issuance' TOTAL USES OF FUNDS ' Includes legal fees,underwriters'compensation,financial advisor fees,rating agency fees,fees and expenses of the Trustee and miscellaneous fees and expenses. TOTAL ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth for each Fiscal Year of the County, the debt service required to be paid by the County under the Trust Agreement with respect to the 2020 Bonds and the Prior Bonds. 2020 Bonds Total Prior Bonds Fiscal Year Principal Total Principal (Ended June 30) and Interest and Interest' Total 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 TOTAL' 'Includes debt service on the 2018 Bonds,2019A Bonds and the 2019B Bonds. Note:Totals may not foot due to rounding. 12 67 CERTAIN RISKS OF 2020 BOND OWNERS INSUFFICIENCY OF PAYMENTS If the County fails to pay any payments on the Bonds as the same become due or if another event of default occurs under the Trust Agreement, the Trustee may accelerate the principal with respect to the Bonds, direct the Deed of Trust Trustee to foreclose on the Mortgaged Property under the Modified Deed of Trust,take possession of the Mortgaged Property and attempt to dispose of the Mortgaged Property. See "THE DEED OF TRUST" in Appendix C hereto. Zoning restrictions and other land use factors relating to the Mortgaged Property may limit the use of the Mortgaged Property and may affect the proceeds obtained on any disposition by the Deed of Trust Trustee. THERE CAN BE NO ASSURANCE THAT THE MONEYS AVAILABLE IN THE FUNDS AND ACCOUNTS HELD BY THE TRUSTEE AND THE PROCEEDS OF ANY SUCH DISPOSITION OF THE MORTGAGED PROPERTY WILL BE SUFFICIENT TO PROVIDE FOR THE PAYMENT OF THE PRINCIPAL AND INTEREST WITH RESPECT TO THE BONDS. SECTION 160A-20(f) OF THE GENERAL STATUTES OF NORTH CAROLINA PROVIDES THAT NO DEFICIENCY JUDGMENT MAY BE RENDERED AGAINST THE COUNTY FOR ANY AMOUNTS THAT MAY BE OWED BY THE COUNTY UNDER THE TRUST AGREEMENT, AND THE TAXING POWER OF THE COUNTY IS NOT AND MAY NOT BE PLEDGED DIRECTLY OR INDIRECTLY OR CONTINGENTLY TO SECURE ANY MONEYS OWING BY THE COUNTY UNDER THE TRUST AGREEMENT. THE REMEDIES AFFORDED TO THE TRUSTEE AND THE OWNERS OF THE BONDS ON A DEFAULT BY THE COUNTY UNDER THE TRUST AGREEMENT ARE LIMITED TO THOSE OF A SECURED PARTY UNDER THE LAWS OF THE STATE OF NORTH CAROLINA,INCLUDING FORECLOSING ON THE MODIFIED DEED OF TRUST. RISK OF NONAPPROPRIATION The appropriation of moneys to make payments pursuant to the Trust Agreement is within the sole discretion of the Board of Commissioners of the County. If the Board of Commissioners fails to appropriate such moneys, the only sources of payment for the Bonds will be the moneys, if any, available in certain funds and accounts held by the Trustee under the Trust Agreement and the proceeds of any attempted foreclosure on the County's interest in the Mortgaged Property under the Modified Deed of Trust. VALUE OF COLLATERAL The County's estimated value of the Mortgaged Property (as further described under the caption above "THE PLAN OF FINANCE — The Mortgaged Property") is at least $[35.9] million, which is approximately [_]*of the aggregate principal amount of the 2020 Bonds and the outstanding Prior Bonds. This value is based in part on the County's own estimates,and the County has not commissioned or obtained any appraisals for the purpose of this valuation. The amount of proceeds received through foreclosure of the County's interest in the Mortgaged Property may be affected by a number of factors, including(1)the costs and expenses in enforcing the lien and security, (2) the condition of the Mortgaged Property, (3)the occurrence of any damage, destruction, loss or theft of the Mortgaged Property which is not repaired or replaced and for which there are not received from insurance policies or appropriated moneys from any risk management program, (4)problems relating to the paucity of alternative uses of the facilities arising from their design, zoning restrictions,use restrictions, easements and encumbrances on the Mortgaged Property and(5) environmental problems and risks with respect to the Mortgaged Property. The Trust Agreement permits the issuance of Additional Bonds without regard to the value of the Mortgaged Property, and the Modified Deed of Trust allows for up to $200 million in principal amount of Bonds to be secured thereby. To the extent that Additional Bonds are issued and no additional property is 'Preliminary,subject to change. 13 68 subject to the Modified Deed of Trust,the value of the collateral as a percentage of the outstanding principal amount of Bonds should be expected to decrease,which decrease may be material. NO REPRESENTATION IS MADE AS TO THE VALUE OF,OR THE AMOUNT OF PROCEEDS THAT MAY BE REALIZED FROM, THE COUNTY'S INTEREST IN THE MORTGAGED PROPERTY IN THE EVENT OF A FORECLOSURE. UNINSURED CASUALTY If all or any part of the Mortgaged Property is damaged or destroyed by any casualty or taken by any governmental authority,the County is obligated under the Trust Agreement to apply any Net Proceeds from insurance or condemnation (1)to repair, restore or rebuild the Mortgaged Property or(2)to provide for the redemption or defeasance of all, but not less than all, of the Bonds. If the County applies any Net Proceeds to repair, restore or rebuild the Mortgaged Property and such Net Proceeds are not sufficient to repair,restore or rebuild the Mortgaged Property to its condition prior to such damage,destruction or taking, then the value of the Mortgaged Property would be reduced. The Trust Agreement requires that certain insurance be maintained with respect to the Mortgaged Property. Such insurance may not,however, cover all perils to which the Mortgaged Property is subject. OUTSTANDING GENERAL OBLIGATION DEBT OF THE COUNTY The County has issued general obligation bonds and may issue general obligation bonds and notes in the future. The County will pledge its faith and credit and taxing power to the payment of its general obligation bonds and notes to be issued. See Appendix A,"THE COUNTY—DEBT INFORMATION" attached hereto. FUNDS WHICH MAY OTHERWISE BE AVAILABLE TO PAY BOND PAYMENTS OR ADDITIONAL PAYMENTS OR TO MAKE OTHER PAYMENTS TO BE MADE BY THE COUNTY UNDER THE TRUST AGREEMENT MAY BE SUBJECT TO SUCH FAITH AND CREDIT PLEDGE BY THE COUNTY AND THEREFORE MAY BE REQUIRED TO BE APPLIED TO THE PAYMENT OF ITS GENERAL OBLIGATION INDEBTEDNESS. ENVIRONMENTAL RISKS A Phase I environmental site assessment was performed on the site of the Northern Campus in 2018, which revealed no recognized environmental conditions. The sites of the Government Services Annex and the Emergency Operations Center have been owned by the County since 1968 and 2005, respectively. The sites of the Link Center and the District Attorney's office have been owned by the County since 1967 and 1992,respectively. The site of the Southern Campus has been owned by the County since 1992. The County is not aware of any material environmental contamination on such sites. Undiscovered or future environmental contamination could have a material adverse effect on the value of the Mortgaged Property;however,the County is required under the Trust Agreement to undertake whatever environmental remediation may be required by law. ADDITIONAL BONDS The County may execute and deliver Additional Bonds under the Trust Agreement that are secured by the Mortgaged Property, thereby diluting the relative value of the collateral with respect to the 2020 Bonds and the Prior Bonds. In addition, remedies under the Trust Agreement and the Modified Deed of Trust are controlled by the Majority Owners. [Upon issuance of the 2020 Bonds, the Owners of the 2020 Bonds will be Majority Owners, but may not continue to be the Majority Owners if Additional Bonds are issued or if a portion of the 2020 Bonds are redeemed or discharged prior to maturity.][Upon issuance of the 2020 Bonds,the Owners of the 2020 Bonds will not own a majority of the Bonds.] 14 69 BANKRUPTCY Under current North Carolina law, a local governmental unit such as the County may not file for bankruptcy protection without(1)the consent of the LGC and(2)the satisfaction of the requirements of§ 109(c) of the United States Bankruptcy Code. If the County were to initiate bankruptcy proceedings with the consent of the LGC and satisfy the requirements of 11 U.S.C. § 109(c), the bankruptcy proceedings could have material and adverse effects on holders of the 2020 Bonds, including (a) delay in enforcement of their remedies, (b) subordination of their claims to claims of those supplying goods and services to the County after the initiation of bankruptcy proceedings and to the administrative expenses of bankruptcy proceedings and (c) imposition without their consent of a plan of reorganization reducing or delaying payment of the 2020 Bonds. The effect of the other provisions of the United States Bankruptcy Code on the rights and remedies of the holders of the 2020 Bonds cannot be predicted and may be affected significantly by judicial interpretation, general principles of equity(regardless of whether considered in a proceeding in equity or at law)and considerations of public policy. THE COUNTY GENERAL The County is located in the north-central portion of the State. The Town of Chapel Hill is the largest municipality in the County and is the home of The University of North Carolina at Chapel Hill. See Appendix A for a description of the County. FINANCIAL INFORMATION The financial statements of the County have been audited by certified public accountants for the fiscal year ended June 30, 2019. Excerpts from the financial statements of the County for the fiscal year ended June 30, 2019 are available in Appendix B hereto. Copies of the complete financial statements containing the unqualified report of the independent certified public accountants are available in the office of Gary Donaldson, Chief Financial Officer,200 South Cameron St.,Hillsborough,North Carolina 27278. LEGAL MATTERS LITIGATION [County to confirm] To the best of the knowledge of the County, no litigation is now pending or threatened against or affecting the County which seeks to restrain or enjoin the authorization, execution or delivery of the 2020 Bonds, the Trust Agreement or the Modified Deed of Trust, or which contests the County's creation, organization or corporate existence, or the title of any of the present officers thereof to their respective offices or the authority or proceedings for the County's authorization, execution and delivery of the 2020 Bonds,the Trust Agreement or the Modified Deed of Trust,or the County's authority to carry out its obligations thereunder or which would have a material adverse impact on the County's condition, financial or otherwise. OPINIONS OF COUNSEL Legal matters related to the execution, sale and delivery of the 2020 Bonds are subject to the approval of Sanford Holshouser LLP. Certain legal matters will be passed upon for the County by its counsel, John L. Roberts, Esq., and for the Underwriters by their counsel, McGuireWoods LLP. The opinion of Sanford Holshouser LLP, as Bond Counsel, substantially in the form set forth in Appendix D hereto,will be delivered at the time of the delivery of the 2020 Bonds. 15 70 Bond Counsel's approving legal opinion expresses Bond Counsel's professional judgment as to the legal issues explicitly addressed in the opinion. By rendering a legal opinion, an opinion giver does not become an insurer or guarantor of that expression of professional judgment,of the transaction opined upon, or of the future performance of parties to the transaction. Additionally, the rendering of an opinion does not guarantee the outcome of any legal dispute that may arise out of the transaction, and a bond opinion is not a statement (either expressly or by implication) concerning the marketability, value or likelihood of payment of the bonds. Bond Counsel has not been engaged to investigate the County's operations or condition or the County's ability to provide for payments on the 2020 Bonds. Bond Counsel will express no opinion(1) as to the County's financial condition or its ability to provide for payments on the 2020 Bonds,or(2)as to the accuracy, completeness or fairness of any information that may have been relied on by anyone in making a decision to purchase 2020 Bonds,including this Official Statement. Bond Counsel has,however,provided the sample legal opinion form that appears as Appendix D,prepared the document summaries that appear as Appendix C,and approved the descriptions in this Official Statement of(1)the terms of the 2020 Bonds and the financing documents and (2) its legal opinion. In this transaction, Bond Counsel serves only as bond counsel to the County. TAX TREATMENT OPINION OF BOND COUNSEL In the opinion of Sanford Holshouser LLP,Carrboro,North Carolina,Bond Counsel for the County ("Bond Counsel"), under existing law, interest on the 2020 Bonds paid by the County (1) will not be included in gross income for federal income tax purposes, (2)will not be a specific item of tax preference for purposes of the federal alternative minimum income tax, and(3)will be exempt from existing State of North Carolina income taxes. The proposed form of Bond Counsel's opinion is attached as Appendix D. Bond Counsel's opinion does not address the tax-exempt status of payments on the 2020 Bonds derived from parties other than the County(for example,payments derived from proceeds of a foreclosure on the Mortgaged Property), even if those payments are denominated as interest with respect to the 2020 Bonds. Bond Counsel will give its opinion in reliance upon certifications by County representatives and others as to certain facts relevant to the opinion. The County has covenanted to comply with the provisions of the Internal Revenue Code of 1986, as amended(the "Code"),regarding, among other matters, the use, expenditure and investment of the proceeds derived from the sale of the 2020 Bonds and the timely payment to the United States of any arbitrage profit with respect to the 2020 Bonds. The County's failure to comply with its covenants could cause interest on the 2020 Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the 2020 Bonds. DISCOUNT BONDS The initial public offering prices of the 2020 Bonds maturing on October 1, 20_through October 1,20_,inclusive (collectively,the"Discount Bonds"), are less than the amounts payable at maturity. An amount not less than the difference between the initial offering prices to the public(excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents, wholesalers or other intermediaries)of the Discount Bonds and the amounts payable at maturity constitutes original issue discount. Under existing federal income tax law and regulations,the original issue discount 16 71 on a Discount Bond is interest not includable in the gross income of an owner who purchases such Discount Bond in the original offering at the initial public offering price thereof and holds it to maturity, and such owner will not realize taxable gain upon payment of such Discount Bond at maturity. Owners who purchase Discount Bonds at a price other than the initial offering price or who do not purchase Discount Bonds in the initial public offering should consult their tax advisors with respect to the consequences of the ownership of such Discount Bonds. An owner who purchases a Discount Bond in the initial offering at the initial offering price and holds such Discount Bond to maturity is deemed under existing federal tax laws and regulations to accrue original issue discount on a constant yield basis under Section 1288 of the Code from the date of original issue. An owner's adjusted basis in a Discount Bond is increased by accrued original issue discount for purposes of determining gain or loss on sale, exchange or other disposition of such Discount Bond. Accrued original issue discount may be taken into account as an increase in the amount of tax-exempt interest received or deemed to have been received for purposes of determining various other tax consequences of owning a Discount Bond, including in the calculation of adjusted current earnings of corporations for purposes of computing the alternative minimum tax imposed by the Code on corporations, even though there will not be a corresponding cash payment. Bond Counsel's opinion will not address issues relating to the treatment of original issue discounts on Discount Bonds. Owners and prospective purchasers of Discount Bonds should consult their own tax advisors regarding the calculation of accrued original issue discount for federal income tax purposes and any North Carolina or other state and local tax consequences in connection with the ownership or disposition of Discount Bonds. PREMIUM BONDS The initial public offering prices of the 2020 Bonds maturing on October 1, 20_through October 1, 20 , inclusive (collectively, the "Premium Bonds"), are greater than the amounts payable at maturity. The difference between (a) the initial offering prices to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents, wholesalers or other intermediaries) at which a substantial amount of each maturity of the Premium Bonds is sold and(b) the principal amount payable at maturity of such Premium Bonds constitutes original issue premium. In general, an owner of a Premium Bond must amortize the bond premium over the remaining term of the Premium Bond based on the owner's yield over the remaining term of the Premium Bond,determined based on constant yield principles(in certain cases involving a Premium Bond callable prior to its stated maturity date,the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such Premium Bond). An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner's regular method of accounting against the bond premium allocable to that period and subtract such bond premium from the owner's basis in such Premium Bond. If the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner's original acquisition cost. Bond Counsel's opinion will not specifically address any issues relating to the treatment of premium paid on, or attributable to, Premium Bonds. Owners and prospective purchasers of Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for federal income tax purposes and any North Carolina or other state and local tax consequences in connection with receipt of bond premium or otherwise with respect to the ownership and disposition of Premium Bonds. 17 72 OTHER TAX CONSEQUENCES Ownership or transfer of, or the accrual or receipt of interest on, the 2020 Bonds may result in collateral federal, State of North Carolina, and other state or local tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States,certain S corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, taxpayers who may be eligible for the federal earned income tax credit, and taxpayers subject to franchise, estate, inheritance, gift or capital gains taxes. Owners and prospective purchasers of the 2020 Bonds should consult their tax advisors as to any such possible tax consequences. Except to the extent covered in its legal opinion,Bond Counsel expresses no opinion regarding any such collateral tax consequences. Interest on the 2020 Bonds may or may not be subject to state or local taxation in jurisdictions other than North Carolina. Owners and prospective purchasers of the 2020 Bonds should consult their own tax advisors as to the status of interest on the 2020 Bonds under the tax laws of any such jurisdiction other than North Carolina. Bond Counsel will express no opinion as to any such matters. No assurance can be given that future legislation, including amendments to the Code or interpretations thereof, if enacted into law, or certain litigation or judicial decisions, if upheld, will not contain provisions or produce results which could, directly or indirectly, reduce the benefit of the excludability of interest on the 2020 Bonds from gross income for federal income tax purposes. The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. No assurances can be given as to whether or not the Service will commence an audit of the 2020 Bonds. Interest paid on tax-exempt obligations, such as the 2020 Bonds, will be subject to information reporting in a manner similar to interest paid on taxable obligations. Although such reporting requirement does not, in and of itself, affect the excludability of interest with respect to the 2020 Bonds from gross income for federal income tax purposes, such reporting requirement causes the payment of interest with respect to the 2020 Bonds to be subject to backup withholding if such interest is paid to beneficial owners who (a) are not"exempt recipients," and(b) either fail to provide certain identifying information(such as the beneficial owner's taxpayer identification number) in the required manner or have been identified by the Service as having failed to report all interest and dividends required to be shown on their income tax returns. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. Amounts withheld under the backup withholding rules from a payment to a beneficial owner would be allowed as a refund or credit against such beneficial owner's federal income tax liability provided the required information is furnished to the Service. CONTINUING DISCLOSURE OBLIGATION In accordance with the requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934 ("Rule 15c2-12"), the County has undertaken in the Trust Agreement to provide, or cause to be provided through the Trustee, to the Municipal Securities Rulemaking Board(the"MSRB"): (1) by not later than seven months after the end of each fiscal year, beginning with the fiscal year ending June 30, 2020,the audited financial statements of the County 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 18 73 from time to time, or any successor statute, or if such audited financial statements are not then available, unaudited financial statements of the County for such fiscal year to be replaced subsequently by audited financial statements of the County to be delivered within 15 days after such audited financial statements become available for distribution; (2) by not later than seven months after the end of each fiscal year, beginning with the fiscal year ending June 30, 2020, the financial and statistical data as of a date not earlier than the end of the preceding fiscal year for the type of information included under the captions "THE COUNTY—DEBT INFORMATION"and"—TAX INFORMATION"in Appendix A relating to the 2020 Bonds(excluding any information on overlapping or underlying debt)to the extent such items are not included in the audited financial statements referred to in(1) above; (3) 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 2020 Bonds: (a) principal and interest payment delinquencies; (b) non-payment related defaults, if material; (c) unscheduled draws on debt service reserves reflecting financial difficulties; (d) unscheduled draws on credit enhancements reflecting financial difficulties; (e) substitution of credit or liquidity providers, or their failure to perform; (f) 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 2020 Bonds,or other material events affecting the tax status of the 2020 Bonds; (g) modifications to rights of holders of the 2020 Bonds,if material; (h) calls for redemption of 2020 Bonds (other than calls pursuant to sinking fund redemption), if material, and tender offers; (i) defeasances; (j) release, substitution, or sale of property securing repayment of the 2020 Bonds, if material; (k) rating changes; (1) 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 2020 Bonds(collectively,the"Obligated Persons"); (m) 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 agreement relating to any such actions,other than pursuant to its terms, if material; 19 74 (n) appointment of a successor or additional trustee or the change of name of a trustee, if material; (o) incurrence of a financial obligation of the County, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the County or any Obligated Person, any of which affect security holders, if material; and (p) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the County,any of which reflect financial difficulties; and (4) in a timely manner, notice of a failure of the County to provide required annual financial information described in(1) or(2) above on or before the date specified. For purposes of the foregoing, "financial obligation" means a (a) debt obligation, (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation,or(c)a guarantee of(a)or(b). The term"financial obligation"shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12. For the purposes of the event identified in subparagraph(1)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. The County shall provide the document 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. The County may discharge its undertaking described above by transmitting the documents referred to above to any entity and by any method authorized by the U.S. Securities and Exchange Commission. At present, Section 159-34 of the General Statutes of North Carolina requires that the County's financial statements be prepared in accordance with generally accepted accounting principles and that they be audited in accordance with generally accepted auditing standards. The County has acknowledged in the Trust Agreement that its undertaking pursuant to Rule 15c2- 12 is intended to be for the benefit of the registered owners of the 2020 Bonds and is enforceable by the Trustee or by any registered owner of the 2020 Bonds. THE RIGHT TO ENFORCE THE PROVISIONS OF THE COUNTY'S RULE 15C2-12 UNDERTAKINGS IS LIMITED TO A RIGHT TO OBTAIN SPECIFIC PERFORMANCE OF THE COUNTY'S OBLIGATIONS AND A FAILURE BY THE COUNTY TO COMPLY WITH ITS RULE 15C2-12 UNDERTAKINGS WILL NOT BE AN EVENT OF DEFAULT UNDER THE TRUST AGREEMENT AND WILL NOT RESULT IN ACCELERATION OF THE INSTALLMENT PAYMENTS. The County may modify from time to time,consistent with Rule 15c2-12,the information provided or the format of the presentation of such information,to the extent necessary or appropriate in the judgment 20 75 of the County; provided that(1) 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; (2)the information to be provided, as modified,would have complied with the requirements of the Rule 15c2-12 as of the date of this Official Statement,after taking into account any amendments or interpretations of the Rule 15c2-12, as well as any changes in circumstances; and (3) any such modification does not materially impair the interest of the Owners or the beneficial owners, as determined by the Trustee or nationally recognized bond counsel or by the approving vote of the Owners of a majority in principal amount of the 2020 Bonds. Any annual financial information containing modified operating data or financial information will explain,in narrative form,the reasons for the modification and the impact of the change in the type of operating data or financial information being provided. The County's Rule 15c2-12 undertakings will terminate on payment, or provision having been made for payment in a manner consistent with the Rule 15c2-12, in full of the principal and interest with respect to the 2020 Bonds. THE COUNTY'S CONTINUING DISCLOSURE COMPLIANCE [To be reviewed/confirmed] During the past five years,the County has not failed to comply in all material respects with the terms of its prior undertakings under Rule 15c2-12, except as described in the following paragraphs. The County had certain disclosure information that was due to be posted by January 31,2017,with respect to the fiscal year ended June 30, 2016. At that deadline, however, the County's CAFR(including its audit) for the fiscal year ended June 30, 2016, was not yet available. Prior to the deadline, the County posted certain unaudited financial statements as called for by the terms of its continuing disclosure undertakings. In this posting, however, by oversight, the County did not post its adopted budget or the supplemental financial information as required by its continuing disclosure undertakings. The County posted such required supplemental financial information in March 2017 and its adopted budget in October 2017. Additionally,for some years,while the County timely posted its annual disclosures on EMMA,such annual disclosures were not always properly linked to each of the County's CUSIP numbers. In April 2019,the County determined that it had in some circumstances inadvertently failed to post on the EMMA system information regarding its approved County budget for the 2018-19 fiscal year, as required by some of the County's continuing disclosure obligations,although the County's CAFR included some budget information.Upon becoming aware of this issue,the County promptly moved to properly link the required budget information to all relevant CUSIP numbers. The County has filed notices of failure to file the items described above as required by Rule 15c2- 12,which describe the occasions of non-compliance and corrected compliance. The County is not aware of any other occasions in which it was in material noncompliance with any of its continuing disclosure undertakings.The County has not knowingly failed to comply with its prior continuing disclosure undertakings. The County believes that at this point, it has filed all the financial information that its previous commitments require,and that all required financial information is posted with regard to all relevant CUSIP numbers. UNDERWRITING The Underwriters have agreed under the terms of a Bond Purchase Agreement (the "Purchase Agreement")to purchase all of the 2020 Bonds,if any of the 2020 Bonds are to be purchased,at a purchase price equal to 100% of the principal amount of the 2020 Bonds, plus/less net original issue 21 76 premium/discount of$ , less an Underwriters' discount of$ The Underwriters' obligation to purchase the 2020 Bonds is subject to certain terms and conditions set forth in the Purchase Agreement. FHN Financial Capital Markets is a division of First Horizon Bank and First Horizon Advisors, Inc.,is a wholly owned subsidiary of First Horizon Bank. FHN Financial Capital Markets has entered into a distribution agreement with First Horizon Advisors, Inc., for the distribution of the offered Bonds at the original issue prices. Such arrangement generally provides that FHN Financial Capital Markets will share a portion of its underwriting compensation or selling concession with First Horizon Advisors,Inc. The Underwriters may offer and sell the 2020 Bonds to certain dealers(including dealers depositing the 2020 Bonds into investment trusts) and others at prices lower than the initial public offering prices stated on the inside front cover page hereof. The public offering prices may be changed from time to time by the Underwriters. RATINGS Moody's Investors Service, Inc., S&P Global Ratings and Fitch Ratings Inc. have assigned ratings of"[_]," "[_]" and "[_]," respectively, to the 2020 Bonds. These ratings reflect only the view of such rating agencies, and an explanation of the significance of such ratings may be obtained from such rating agencies. Certain information and materials not included in this Official Statement were furnished to such rating agencies. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely if, in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2020 Bonds. MISCELLANEOUS All quotations from and summaries and explanations of the Trust Agreement and the Modified Deed of Trust contained herein or in Appendix C hereto do not purport to be complete, and reference is made to such documents for full and complete statements of their respective provisions. The Appendices attached hereto are a part of this Official Statement. The information contained in this Official Statement has been compiled or prepared from information obtained from the County and other sources deemed to be reliable and,although not guaranteed as to completeness or accuracy, is believed to be correct as of this date. Any statements involving matters of opinion,whether or not expressly so stated, are intended as such and not as representations of fact. 22 77 APPENDIX A THE COUNTY GENERAL DESCRIPTION Orange County,founded in 1752,is located in the north-central portion of the State on the Piedmont Plateau. The County lies approximately midway between the cities of Atlanta, Georgia and Washington, D.C. Interstate Highway 40 connects to Interstate Highway 85 within the County. Interstate Highway 85 connects the region west through Greensboro to Charlotte and Atlanta,and connects to Interstate Highway 95 just south of Richmond,Virginia. There are four municipalities in the County: the Towns of Chapel Hill and Carrboro in the southeastern part of the County and the Town of Hillsborough and the City of Mebane in the central corridor of the County along Interstate Highway 85 and Interstate Highway 40. The Town of Chapel Hill is the largest municipality in the County and the home of The University of North Carolina at Chapel Hill. The Town of Hillsborough is the County seat. The County is part of the Durham-Chapel Hill Metropolitan Statistical Area, which also includes the Research Triangle Park, a major complex of research and research-oriented manufacturing facilities. Interstate Highway 40 connects the County directly with the Research Triangle Park and Raleigh-Durham International Airport. The City of Mebane,home of most of the County's major manufacturing employers, is on the westernmost boundary of the County. A major portion of the City of Mebane lies in neighboring Alamance County. North of Interstate Highway 85 the County is mostly rural,with a mixture of farming, residential and light industrial and commercial uses. The County is approximately 401 square miles in area, of which approximately 177 square miles are unincorporated, 39 square miles are farmland, 132 square miles are forested, and 53 square miles are urbanized. New York,New York 438 Miles Vicinity Map(50 We Radius) Washington,D.C.251 Miles 47 nY M0. \ m °T - Vlrylll Ja.atl - - - ed-. -- ' dll.map• wane.' CIe� 61 n9 __�__—///-peand Maya - _—__-._^i�4+*-a •f_ ' ` .Yfl a' ��� - n ,�s HeFv°N�{HII RrL. � Y e•.cx Rourn �eJ.m. . i e - Y.I dl I Sbn31 IV Oak HIII C A S W E L R +O N; G R A\N V 1 M1 ai9nlam 4 ° .ur.11l• 15e + Hmnlvanrs • 1 /. Lama 1SSI B.m tlnnle I a .16 ° 8 i nlaiMn�ib:k nmbari.w � �O u � e Fran ns T(j. `ram=__ Wel®manor.! M__. S P X-1 a Guraurtan dA� +5 S] M°H.bl �M�-� a �� R.n mr 11 Karr a ° e 0. g.m.n -1 - �ruma dam, M.nticelb din `- -�"." In.. • +�c.a.r sro.. seiner 1 �Butoe.Y iaaemr � F O R O uninn/van O R A N G E + x�n 0 r,a.n a+bmn'n Elun ^'�° '-rW .J 70' i hlubpnan Er a� Illsb+o�au�l a �� 15 •�� + F .r.,. L M N - vdeo 421 n Chap®i NiiiBi 70r'. FNN �_ ua"____ •inn ., i 403 la .,:l .w �, • Rai cna+en.n.l o -- -'-- --��—._ ''•°Jya. sail f���, raei� a" '�'�;��� ,naH.nlr cnx=re, - `•viMw �• 51 •MO �IuIII a '� �K 427 � Sill rww +a F '►7. 'a�i is fs�`� - - -_�`* _ L FnnM1lipNlr__u ,B �. I `_T3h��Cary` +�m��m.. �_• I.._._..._ � a .. ~ ��Aj�Cig:M�+- .c', ..r�.11y a,.l�l r n I Atlanta,Georgia 351 Miles 78 DEMOGRAPHIC CHARACTERISTICS The United States Department of Commerce, Bureau of the Census, has recorded the County's population to be as follows: 1990 2000 2010 93,851 118,227 133,801 The North Carolina Office of State Budget and Management has estimated the County's population at July 1 of each of the past five years to be as follows: 2015 2016 2017 2018 2019 140,678 142,148 142,597 145,574 147,093 According to the North Carolina Office of State Budget and Management, as of July 1, 2018, the Town of Chapel Hill (the portion located in the County)had an estimated population of 59,874, the Town of Carrboro had an estimated population of 20,715,the Town of Hillsborough had an estimated population of 7,483 and the City of Mebane (the portion located in the County)had a population of 2,154. The following table presents per capita personal income figures for the County, the State and the United States: Year Coun State U.S. 2014 $55,089 $40,064 $47,658 2015 58,216 41,851 48,978 2016 60,044 42,651 49,870 2017 63,460 44,180 51,885 2018 67,385 46,117 54,446 Source:United States Department of Commerce,Bureau of Economic Analysis(most recent data available). Commercial, Industrial and Institutional Profile The County's economy is characterized by a high degree of institutional and public-sector activity, plus office, commercial and service-oriented business. According to the Orange County Economic Development Commission,the leading industries in the County are educational,health and social services, professional, scientific, management, administrative and waste management services and arts, entertainment, recreation, accommodation and food services. The County's most common occupations, according to the Orange County Economic Development Commission, are management,professional and related occupations (54%), sales and office occupations (19.5%) and service occupations (16.4%). Manufacturing and agriculture are smaller portions of the County's economy. The University of North Carolina at Chapel Hill and UNC Health Care System,both located in the Town of Chapel Hill, are the largest employers in the County. As of June 30, 2019, they employed approximately 12,274 and 12,742 employees, respectively. Established in 1789, The University of North Carolina at Chapel Hill occupies 729 acres in the County and had an enrollment of approximately 30,100 undergraduate, graduate and professional students for the 2019-20 academic year. UNC Health Care System opened in 1952 and occupies over 2 million square feet of leased and owned floor space. UNC Health Care System has approximately 901 beds, 1,700 attending physicians and 816 residents and interns. 24 79 In 2015, UNC Health Care System opened a new medical campus in Hillsborough. The new campus includes 50 acute care beds, an 18-bed intensive care unit, six operating rooms, two procedure rooms, an emergency department and outpatient medical and surgical specialty services, including urgent care, imaging and oncology. The new facilities were constructed at a cost of approximately$200 million. The County is also the place of residence for many technical, professional and executive people who work in the Research Triangle Park and neighboring cities of Durham, Raleigh, and Burlington. The Research Triangle refers to an area located among three municipalities: Chapel Hill,Durham and Raleigh. In addition to The University of North Carolina at Chapel Hill,universities located in these municipalities include Duke University and North Carolina Central University in the City of Durham and North Carolina State University in the City of Raleigh. The proximity of these universities makes the Research Triangle area well-suited to many types of research activities. The Research Triangle Park(the"Park"),located ten miles east of the County,contains 7,000 acres of land which has been reserved for research and research-oriented manufacturing. Since its inception in the 1950's, approximately 250 private and governmental organizations have located facilities in the Park and currently employ approximately 50,000 people.Approximately 87%of the employees in the Park work for multinational corporations. The largest employers in the Park include: IBM Corporation, G1axoSmithKline,Cisco Systems,Inc.,Nortel,Credit Suisse,Cree,Inc.,Grifols,RTI International,Fidelity Investments, US Environmental Protection Agency,National Institute of Environmental Health Sciences, NetApp,and BASF Corporation.Because of its close proximity to the County and the fact that many of the Park's employees reside in the County,the impact of the Park on the County's economy is significant. In addition to the Park,the County has several areas within its borders that are focused on industry and manufacturing. Several manufacturing firms are located along Interstate Highway 85 in the western portion of the County, and the County is targeting this area for future growth of industrial and commercial concerns.Additionally,the County has designated over 2,450 acres in three strategically-placed areas along Interstates 85 and 40 as Economic Development Districts. The County's location, midway between the Piedmont Triad and Research Triangle metropolitan areas, makes these sites extremely attractive. The districts offer development potential for light industrial, warehouse/flex space, office, retail and business service.Numerous tracts,ranging in size from 20 to 100 acres or more, are available. The County is also seeking to spur economic development by providing funds through the Article 46 Sales Tax to finance the development of utility extensions for commercial entities. The County uses the Article 46 Sales Tax to provide a portion of the upfront water/sewer infrastructure costs for businesses. The first project funded by the County was a $4 million water and sewer infrastructure project in the MebaneBuckhorn area, on land owned by the County. The site is being developed as an industrial park. Morinaga American Foods, Inc., the American affiliate of the Japanese candy maker of Hi-Chew candies purchased 21 acres of land and has constructed a manufacturing plant that initially employed 90 people. The 100,000 square foot plant opened in 2015,representing a$48 million investment within the County. In July 2019,Swiss-Swedish company ABB announced an expansion to its existing 400,000 square foot manufacturing facility in the County. The company said it would spend$40 million over five years to build a new 200,000 square foot manufacturing facility and create approximately 400 new manufacturing jobs at the site. ABB has its United States headquarters in nearby Cary,North Carolina. In September 2019, Medline Industries, a distributor and manufacturer of medical supplies announced plans to invest$65 million to construct an approximately 1.2 million square foot facility located near the City of Mebane in the County. The company anticipates the creation of 250 new jobs in its first five years, and Medline ultimately expects to employ up to 700 full time workers. Construction on the company's new facility began in fall 2019,with the facility expected to open in late 2020. 25 80 The following table lists the ten largest employers in the County as of June 30,2019: Number of Percentage of Total COMPM Indusqy Employees County Employment UNC Health Care Health Services 12,742 16.07% INC Chapel Hill Higher Education 12,274 15.48 Chapel Hill-Carrboro City Schools Education 1,776 2.24 Orange County Government Public Administration 1,135 1.43 Orange County Schools Education 1,031 1.30 Town of Chapel Hill Public Administration 949 1.20 UNC Physicians Network LLC Health Services 697 0.88 ABB (formerly General Electric) Manufacturing 552 0.70 AKG of America Manufacturing 446 0.56 Aramark Services Food,Facilities &Uniform Services 379 0.48 Source:Comprehensive Annual Financial Report of the County for the year ended June 30,2019. Construction activity in the County for the past five calendar years is indicated by the number and construction value of building permits as set forth in the following table: (Value in Thousands) Year Number Non-Residential Residential Total 2015 4,075 $66,669 $255,542 $322,211 2016 2,135 94,406 216,131 310,537 2017 2,383 32,874 185,102 217,976 2018 1,819 26,320 136,323 162,643 2019 1,872 77,506 137,555 215,061 Source:County Permits and Inspections Division. Note:Does not include permits issued in Chapel Hill,Carrboro and Mebane. 1 For the period ending December 31,2019. Total taxable retail sales in the County for the past five fiscal years and for a portion of the current fiscal year are shown in the following table: Fiscal Year Taxable Increase Over Ended June 30 Retail Sales Previous Year 2015 $1,476,943,491 3.8% 2016 1,567,807,425 6.2 2017 1,726,191,488 10.1 2018 1,765,771,319 2.3 2019 1,923,461,091 8.9 2020' 1,206,085,140 - Source:North Carolina Department of Revenue. 1 For the seven months ended January 31,2020. Taxable sales for the seven months ended January 31,2019 were$1,129,184,065. 26 81 Sales tax revenue of the County for past five fiscal years is shown in the following table: Fiscal Year Sales Tax Increase Over Ended June 30 Revenue Previous Year 2015 $25,021,116 9.1% 2016 26,207,817 4.7 2017 28,004,172 6.9 2018 29,403,519 5.0 2019 31,832,526 8.3 Source: Comprehensive Annual Financial Reports of the County. The Article 46 one-quarter cent sales tax (the "Article 46 Sales Tax") was approved by Orange County voters in a November 2011 referendum, and became effective April 1, 2012. A Special Revenue Fund was established to account for the Article 46 Sales Tax. The Article 46 Sales Tax was initially estimated to generate $2,500,000 annually. Article 46 sales tax revenue for the fiscal year ended June 30, 2019 was approximately $4.0 million, and the County has estimated Article 46 sales tax revenue for the fiscal year ended June 30, 2020 to be approximately $3.9 million. The Board of County Commissioners approved a ten-year commitment which authorized equal distribution of the one-quarter cent sales tax to support Schools and Economic Development. Fifty percent of the one-quarter cent sales tax is allocated to both County school systems on an average daily membership percent basis to fund capital projects. The other 50% is allocated to economic development initiatives including supporting water and sewer infrastructure funding in the County's three economic development districts. The County's other sales and use taxes(Articles 39,40,42,and 44 Sales Taxes)are reported in the County's General Fund and are included in the above table with Article 46 Sales Tax. The County's Articles 40 and 42 one-half cent local option sales and use taxes, which were authorized by the North Carolina General Assembly in 1983 and 1986,comprise significant funding sources for the County's school capital requirements and school debt retirement. Employment The North Carolina Department of Commerce has estimated the percentage of unemployment in the County to be as follows: 2015 2016 2017 2018 2019 January 4.8% 4.4% 4.2% 3.5% 3.8% February 4.5 4.3 4.0 3.6 3.6 March 4.4 4.3 3.9 3.3 3.6 April 4.1 3.9 3.3 3.0 3.0 May 5.0 4.1 3.6 3.1 3.6 June 5.1 4.6 4.0 3.7 4.0 July 5.4 4.6 4.2 3.6 3.9 August 5.1 4.7 4.3 3.5 3.9 September 4.2 4.0 3.4 2.7 2.9 October 4.4 4.1 3.3 3.0 3.0 November 4.3 3.9 3.4 3.0 2.7 December 4.3 4.0 3.3 3.1 2.7 Note: Not seasonally adjusted. Source:N.C.Department of Commerce:Labor and Economic Analysis Division. 27 82 The County's unemployment rate in December 2019 was 2.7%, as compared to 3.3%for the State and 3.4% for the United States. Government and Major Services Government Structure. The County has a commission-manager form of government with a seven- member Board of Commissioners comprising the governing body. The commissioners are elected on a partisan basis for staggered four-year terms.The County manager is appointed by and serves at the pleasure of the Board of Commissioners. The Board of Commissioners annually adopts a balanced budget and establishes a tax rate for the support of the County's programs. The County Manager has the responsibility of administering these programs in accordance with the policies and the annual budget adopted by the Board of Commissioners. Education. Two separate school administrative units, Chapel Hill-Carrboro City Schools ("CHCCS")and Orange County Schools("OCS"),provide public education in the County. CHCCS serves the Towns of Chapel Hill and Carrboro and a small area outside the Towns, and OCS serves the remainder of the County. CHCCS has the highest average SAT scores in the State for public school systems and its high schools have been recognized in national publications for its excellent academic performance. Non- partisan elected boards of education administer both units. The State pays for the basic minimum education program for each school administrative unit. Funding for this basic program is provided by appropriations from the State Public School Fund.Additional funding is provided by special State and federal grants. The County also appropriates funds to each school system, which provides for program expansions beyond the State basic minimum. The County has consistently maintained among the highest per pupil appropriations of any county in the State. A special school district tax is levied in CHCCS. This tax is a significant revenue source for the CHCCS system. (See the section"Tax Information"below.) The County Commissioners have adopted a policy of allocating approximately 50%of unrestricted locally-generated revenues to public school purposes. The following table reflects average daily membership ("ADM")' and the number of schools for both OCS and CHCCS for the past five academic years. Chapel Hill-Carrboro City Schools Elementary Intermediate Secondary Grades K-5 Grades 6-8 Grades 9-12 School No. of No. of No. of Total Year Schools ADM Schools ADM Schools ADM ADM 2015-16 11 5,480 4 2,838 3 3,686 12,004 2016-17 11 5,547 4 2,834 3 3,756 12,137 2017-18 11 5,545 4 2,835 3 3,855 12,235 2018-19 11 5,483 4 3,003 3 3,988 12,474 2019-20 11 5,354 4 3,051 3 3,950 12,355 Orange County Schools Elementary Intermediate Secondary Grades K-5 Grades 6-8 Grades 9-12 School No. of No. of No. of Total Year Schools ADM Schools ADM Schools ADM ADM 2015-16 7 3,255 3 1,743 2 2,528 7,526 2016-17 7 3,317 3 1,730 2 2,503 7,551 28 83 2017-18 7 3,265 3 1,778 2 2,501 7,544 2018-19 7 3,179 3 1,723 2 2,443 7,345 2019-20 7 3,216 3 1,805 2 2,367 7,388 1 ADM or average daily membership,determined by actual records at the schools,is computed by the North Carolina Department of Public Instruction on a uniform basis for all public school units in the State. The ADM computations are used as a basis for teacher allotments. Source: Orange County Board of Education and the Chapel Hill-Carrboro City Schools Board of Education Finance Offices. Enrollment growth for both OCS and CHCCS has been dampened by the rise,seen across the State, in enrollment growth among private schools,public charter schools and homeschooling. The County is home to two institutions of higher learning. The University of North Carolina at Chapel Hill is the flagship university in the State's 17 institution system and is consistently ranked one of the top public universities in the country. Enrollment at The University of North Carolina at Chapel Hill rose from 8,791 in 1960 to 30,100 for the 2019-20 academic year. The University is planning a new living and learning community in Chapel Hill, called Carolina North, which will occupy over 250 acres of land in the County. Durham Technical Community College is a public two-year accredited institution of higher education and technical training school primarily located in Durham, North Carolina that has a 20-acre Orange County campus located outside the Town of Hillsborough. Durham Tech serves approximately 18,500 students and offers programs leading to over 110 degrees, certificates and diplomas. The County contributed $655,144 toward operating expenses of Durham Technical Community College in the fiscal year ended June 30, 2019 and has budgeted $723,256 toward such operating expenses for the fiscal year ended June 30, 2020. Additionally, the County is located within a one-hour drive of several other colleges and universities. These include Alamance Community College, Duke University,Elon University,High Point University,North Carolina Agricultural and Technical State University,North Carolina Central University, North Carolina State University and the University of North Carolina at Greensboro. Transportation. Major expansion and maintenance of primary and secondary highways within the County are primarily the responsibility of the State.Municipalities within the County bear the responsibility for local street systems. The County has no responsibility for the construction or maintenance of streets or highways. The County is served by two interstate highways, which merge in the center of the County. Interstate Highway 85 connects the County to the cities of Greensboro, Charlotte and Atlanta to the south and west, and the cities of Durham, Richmond and Washington, D.C. to the north and east. Interstate Highway 40 connects the County to the cities of Winston-Salem, Greensboro and Asheville to the north and west, and the Research Triangle Park and the City of Raleigh to the south and east. Other major highways include U.S. highways 15-501 and 70 and N.C. highways 54, 57 and 86. The Town of Chapel Hill operates a local bus system that provides public transportation services to the Town and adjacent areas, including services to the Town of Carrboro and the University of North Carolina at Chapel Hill on a contractual basis. Effective January 1, 2002, the Town instituted the State's first fare free transportation system for passengers on all regular routes and services. Bus routes and stops are located so that 90% of all households are within one quarter mile of a bus stop. Two park-ride lots are established on the western perimeter of the Town to facilitate transportation in and out of the University and downtown area, and the Town completed construction of additional park-ride lots on the northern and 29 84 southern perimeters in 1995. The system operates 99 buses during weekday peak periods, and shared-ride, demand responsive programs to provide evening services. The bus system is the second largest transit system in the State by ridership,providing over seven million rides per year. The bus system is financed primarily with a special ad valorem tax levy,federal and State operating and capital assistance, and contractual contributions from the Town of Carrboro and the University. The Town receives federal operating assistance from the Federal Transit Administration and State operating assistance which combined equals about 30%of eligible operating costs for the system. Orange County Public Transportation provides a continuum of locally-accessible transportation services, which includes pick-up and drop-off services for the elderly and disabled. The Hillsborough circulator connects major destinations throughout Hillsborough with hourly service Monday through Friday. This service is free to all passengers. In addition, Triangle Transit Authority operates a bus system that provides commuter services to County residents. Air transportation is provided by various major, commuter and commercial airlines at the Raleigh- Durham International Airport("RDU"), approximately ten miles from the County. RDU is serviced by ten major airlines and 6 regional airlines. Approximately 14.2 million people boarded or deplaned aircraft at this airport in calendar year 2019, as compared to 12.8 million passengers in calendar year 2018. Rail freight service is provided by Norfolk Southern Railway. Railway passenger service is provided by Amtrak through its terminals located in Durham, Cary and Raleigh. Human Services Social Services Programs. Social Services programs are provided for by a combination of federal, state and local funds. Among the programs provided are: Work First, Temporary Aid to Needy Families Child Protective Services, Daycare Administrative, Foster Care, Energy Assistance, Medicaid, Child Support Enforcement and programs for the elderly. Health Pro rg ams. The County provides environmental, sanitation, family planning, dental and nursing services throughout the County. Clinics are offered in the towns of Hillsborough and Chapel Hill and in the public schools. The County has access to the services of the schools of medicine, dentistry, nursing and public health at The University of North Carolina at Chapel Hill and the University Hospitals, as well as Duke University Medical Center and a U.S. Veterans Administration Hospital within five miles of the County. No County investment in hospital or major medical facilities is anticipated. Mental Health Programs.The County provides funding for mental health,development disabilities, and substance abuse services through Cardinal Innovations Healthcare Solutions, a Managed Care Organization. The Departments of Health and Social Services collaborate with Cardinal Innovations to ensure program priorities for Clinical Social Work, Child Mental Health, Undocumented Residents and Criminal Justice Resources. Other Human Services.In addition to social service,health and mental health programs,the County provides agricultural services, housing and community development services, library services aging services, criminal justice resources and support to various private non-profit agencies located within the County. Parks, Recreation and Open Space. The North Carolina Department of Natural and Cultural Resources works to conserve and manage the natural and cultural resources of the County. Included within this "green infrastructure" are natural areas and nature preserves, open spaces, parks and recreation 30 85 facilities,water resources, and agricultural and resource lands. Programs ranging from athletics to fine arts are offered to residents of all ages at several park sites and community centers. Public Service Enterprises Water and Sewer Services.Water and sewer services are provided to the majority of the population of the County by the Orange Water and Sewer Authority (the "Authority"). The Authority was created in 1975 by the Board of Commissioners for the County and the boards of aldermen of the towns of Chapel Hill and Carrboro for the purpose of acquiring, consolidating, improving, and operating the existing water and sewer systems in the southern portion of the County. Prior to the formation of the Authority, water service was provided by the University of North Carolina at Chapel Hill and the Town of Carrboro and sewer service was provided by the towns of Chapel Hill and Carrboro in conjunction with the University. The Authority began utilities operations in 1977 when the Towns of Chapel Hill and Carrboro and the University of North Carolina at Chapel Hill conveyed their water and sewer facilities to the Authority. Under the terms of the transfer, the Authority provides and maintains sewage collection and treatment facilities and water supply,treatment and distribution facilities. The Town of Hillsborough and the City of Mebane, which is partly located within the corporate limits of the County, also own and operate water and sanitary sewer systems. The County issued water and sanitary sewer bonds in the late 1960s to finance the construction of the Lake Orange reservoir, which serves the water system of the Town of Hillsborough, and the construction of improvements which serve the water and sanitary sewer systems of the City of Mebane. In addition, the Orange Alamance Water System, a private corporation,utilizes Lake Orange and provides water service to a part of the west central portion of the County. The County's water supply has been supplemented by the addition of the Cane Creek Reservoir, which was built by the Authority in 1989. Increased water supply has also resulted from the renovations to the dam at Lake Orange,which is owned by the County. Sanitary Landfill. The County owns and operated a sanitary landfill serving County residents until that landfill closure in June 2013. On July 1, 2013, the County entered into an inter-local agreement with the nearby City of Durham, North Carolina, for certain solid waste purposes. The City of Durham has agreed to allow the County to deliver solid waste to a City-operated transfer station in Durham through June 2023. The agreement provides the opportunity to renew the agreement upon written execution by both parties. The County continues to evaluate other options for solid waste disposal. Other Public Service Enterprises. Telephone service in the County is provided by Sprint, BellSouth,Mebtel and Verizon Communication.Electric service is provided by Duke Energy and Piedmont Electric Membership Corporation. Gas service is provided by Public Service Gas Company. Other Services. Fire and police protection are provided by the Towns of Chapel Hill, Carrboro, Hillsborough and Mebane within their respective jurisdictions. In the unincorporated areas of the County fire protection is provided in 12 fire districts pursuant to contracts between the County, the municipalities and various fire departments.Police protection in the unincorporated areas of the County is provided by the County Sheriff's Department. The County's Emergency Services Department provides four general areas of countywide emergency assistance, emergency communications (911), emergency medical services, fire marshal and emergency management. Volunteer rescue squads work jointly with the County to provide a significant amount of such services. 31 86 DEBT INFORMATION Legal Debt Limit In accordance with the provisions of the State Constitution and The Local Government Bond Act, as amended, the County had the statutory capacity to incur additional net debt in an approximate amount of$1.2 billion as of June 30,2019. Outstanding General Obligation Debt General Obligation Bonds June 30,2016 June 30, 2017 June 30, 2018 June 30,2019 School Bonds - - $26,900,000 $90,800,000 Refunding Bonds $59,280,000 $50,430,000 41,785,000 33,410,000 Sanitary Sewer Bonds - - - - Other Bonds - - 2,500,000 1,530,000 Total Outstanding Debt $59,280,000 $50,430,000 $71,185,000 $125,740,000 32 87 General Obligation Debt Ratios Total GO Debt Total GO Total Outstanding Assessed To Assessed Debt June 30, GO Debt Valuation Valuation Population) Per Capita 2015 $68,355,000 $16,501,943,134 0.41% 140,144 $487.75 2016 59,280,000 16,778,182,392 0.35 142,364 416.40 2017 50,430,000 17,024,519,084 0.30 142,830 353.08 2018 71,185,000 18,330,900,870 0.39 145,574 489.00 2019 125,740,000 18,709,028,333 0.67 145,5742 863.75 1 Estimate of North Carolina Office of State Budget and Management. General Obligation Debt Service Requirements and Maturity Schedule as of June 30, 2019 Outstanding GO Debt Fiscal Year Principal and Ending June 30, Principal Interest 2020 $10,010,000 $14,771,990 2021 10,045,000 14,478,215 2022 13,53 0,000 17,529,875 2023 10,305,000 13,730,625 2024 7,610,000 10,586,625 2025 5,050,000 7,671,725 2026 5,050,000 7,419,225 2027 5,050,000 7,166,725 2028 5,050,000 6,914,225 2029 5,050,000 6,692,058 2030 5,050,000 6,521,313 2031 5,050,000 6,384,163 2032 5,045,000 6,213,538 2033 5,045,000 6,046,150 2034 5,045,000 5,895,535 2035 5,045,000 5,744,185 2036 5,045,000 5,588,525 2037 5,045,000 5,427,661 2038 5,045,000 5,264,275 2039 3,575,000 3,633,094 Total $125,740,000 $163,679,725 Note:Totals may not foot due to rounding. General Obligation Bonds Authorized and Unissued as of June 30, 2019 Date Authorized Puri°Se Approved and Unissued Refunding 04/01/2015 $1,550,000 Schools2 11/08/2016 34,600,000 Affordable Housing 11/08/2016 2,500,000 $38,650,000 1 The County has no current plans to issue any of the remaining authorized Refunding Bonds,but may offer additional refunding bonds if market opportunities arise. 2 The County plans to issue$20,060,000 of General Obligation School Bonds on or about May 7,2020. 33 88 General Obligation Debt Information for Underlying Units as of June 30, 2019 Bonds Authorized and Unissued Total GO Debt' Total GO Debt Assessed Tax Rate Per Unit Population' Valuation Per$100 iaWAY Other iaWAY Other Capita Carrboro 20,715 $2,389,985,868 $0.5944 $-- $-- $-- $3,100,000 $149.65 Chapel Hill 63,178 8,223,292,265 0.5280 -- 20,400,000 -- 38,093,000 602.95 Hillsborough 7,483 1,088,855,671 0.6200 -- -- -- -- -- Mebane3 13,850 2,181,876,039 0.4700 -- -- -- --'Estimates of North Carolina Office of State Budget and Management. 2 Does not include installment financing agreements,revolving loans and revenue bonds as these obligations are not general obligations. 'Approximately 15.5%of this population resides in Orange County and 84.5%resides in Alamance County. Other Long-Term Commitments The County currently has a variety of financing agreements for vehicles and other equipment.In addition, the County has financed school, public buildings, landfill and water and sewer projects through installment financing agreements which, as of June 30, 2019, had a combined principal balance of approximately$126 million. Annual requirements to service these obligations are as follows: Fiscal Year Landfill and Sportsplex Governmental Purposes Totals Ending Principal Principal Principal June 30 Principal and Interest Principal and Interest Principal and Interest 2020 $1,080,279 $1,508,149 $15,297,253 $12,923,414 $16,805,402 2021 1,118,624 1,509,461 12,462,847 16,577,863 13,581,471 18,087,324 2022 1,137,669 1,478,899 12,570,883 16,146,294 13,708,552 17,625,193 2023-2027 4,720,031 5,771,768 50,605,876 61,091,633 55,325,907 66,863,401 2028-2032 1,802,269 2,144,705 16,189,032 19,468,334 17,991,301 21,613,039 2033-2037 1,049,605 1,946,290 7,365,395 8,415,000 8,415,000 10,361,290 2038-2043 60,000 63,600 1,945,000 2,050,413 2,005,000 2,114,013 TOTALS $10,968,477 $14,422,872 $112,982,168 $139,046,790 $123,950,645 $153,496,662 Additionally,the County is obligated to the North Carolina Department of Environmental Quality under State Revolving Loans for sewer projects with the following annual requirements as of June 30,2019: Fiscal Year Principal Ending June 30, Principal and Interest 2020 $145,640 $194,233 2021 145,640 191,977 2022 145,640 186,536 2023 145,640 183,225 2024-2028 728,200 860,788 2029-2033 728,200 722,695 2034 58,077 59,238 Totals $2,097,037 $2,398,692 Debt Outlook The County has an extensive ten-year capital improvement program underway to provide public safety, school facilities, government facilities, affordable housing, and park improvements. County voters approved a referendum in November 2016 for$125 million in general obligation bonds.The County issued 34 89 general obligation bonds in the amounts of$21,000,000 in November 2017 and$64,400,000 in July 2018, and anticipates issuing general obligation bonds in the amount of$20,060,000 in May 2020. The County expects to issue the remaining $17,040,000 of voter-approved, but unissued, general obligation bonds within the next four years. The County's ongoing capital investment program will be funded through bond proceeds, installment purchase proceeds, and pay-as-you-go funds for specific County capital projects. The County Manager's recommended five-year capital investment program contemplates total borrowings of approximately$146.9 million. TAX INFORMATION General Information Fiscal Year Ended or Ending June 30, 2016 2017 2018 2019 Assessed Valuation Assessment Ratiol 100% 100% 100% 100% Real Property $15,020,157,254 $15,168,750,327 $16,385,248,774 $16,603,198,106 Personal Property 1,442,897,338 1,620,578,558 1,711,150,366 1,821,061,820 Public Service Companiesz 382,744,805 306,434,830 315,583,138 337,735,426 Less Tax-Exempt Property (67,617,005) (71,244,631) (81,081,408) (80,381,765) Total Assessed Valuation $16,778,182,392 $17,024,519,084 $18,330,900,870 $18,681,613,587 Tax Rate per$1003 0.878 0.878 0.838 0.8504 Levy $ 147,312,441 $ 149,475,278 $ 153,612,949 $ 159,101,577 1 Percentage of appraised value has been established by statute. 2 Valuation of railroads,telephone companies and other utilities as determined by the North Carolina Property Tax Commission. 'Revaluation of real property became effective with the 2017-18 tax levy. Real property was previously reappraised for 2009-10. In addition to the County-wide rate shown in the previous chart, all taxable property within the Chapel Hill-Carrboro City School Administrative Unit is subject to a special school district tax. The special school district tax rates per$100 assessed valuation for the past five fiscal years are as follows: Fiscal Year Ended or Ending June 30, 2016 2017 2018 2019 2020 Special School District Chapel Hill-Carrboro City Schools $.2084 $.2084 $.2018 $.2018 $.2018 Special Fire Districts. Most property in the unincorporated portions of the County is also subject to an additional tax rate for one of the 12 fire districts,which range from$0.0592 to $0.1237 for the fiscal year ending June 30,2020. Tax Collections Fiscal Year Prior Year's Current Year's Percentage Ended June 30, Levy Collections Levy Collections Collected 2015 $1,504,945 $143,903,487 99.08% 2016 1,309,964 145,747,667 99.17 2017 1,155,219 148,358,015 99.19 2018 1,179,696 152,424,863 99.12 2019 1,332,779 157,743,510 99.14 35 90 Source:Comprehensive Annual Financial Report of the County for fiscal year ended June 30,2019. Ten Largest Taxpayers for the Fiscal Year ended June 30, 2019 Percentage Assessed of Assessed Name Type of Enterprise Valuation Value Duke Energy Carolinas LLC Public Utility $136,245,251 0.73% Chapel Hill Foundation Real Estate Holdings Inc Apartments/Retail 101,301,200 0.54 BIR Chapel Hill LLC Apartments/Retail 68,603,700 0.37 Piedmont Electric Membership Public Utility 62,225,565 0.33 Northwestern Mutual Life Insurance Co. Apartment Rentals 57,323,501 0.31 State Employees Credit Union Bank 50,353,425 0.27 Public Service Co. of NC Inc. Public Utility 50,339,464 0.27 East 54 Office Retail LLC Office/Retail 40,135,700 0.21 Granville Towers LLC Apartment Rentals 37,337,524 0.20 Chapel Hill at the Pointe Villager LLC Apartment Rentals 36,842,700 0.20 $640,708,030 3.43% Source:Comprehensive Annual Financial Report of the County for fiscal year ended June 30,2019. FISCAL YEAR 2018-19 BUDGET COMMENTARY The fiscal year 2018-19 General Fund budget totaled $226.7 million, which represented a $7.1 million or 3.2% increase over the fiscal year 2017-18 adopted budget. The County tax rate increased from $0.8377 per$100 of assessed valuation to $0.8504 per $100 of assessed valuation in fiscal year 2018-19. The tax base and tax rate increase resulted in a 3.6% growth over prior fiscal year property taxes, for an increase of$5.5 million. The fiscal year 2018-19 audited financial statements indicate property tax revenues were $158 million,or 72%of General Fund revenues. Sales tax revenues comprised$27.8 million or 12.6%of General Fund revenues. The remaining 15.4% of General Fund revenues are comprised of Intergovernmental Revenues, Charges for Services,Licenses and Permit and Miscellaneous revenues. General Fund revenues were $220.6 million, compared to General Fund expenditures of$216.3 million. Actual revenues were above the final revenue budget by 1.5%and actual expenditures were below the final expenditure budget by 3.5%at June 30,2019. The total fund balance increased from$63.5 million or 29.9%of expenditures,to $66.2 million or 30.6% of expenditures. The unassigned fund balance ended at$35.7 million or 16.5%of General Fund expenditures. FISCAL YEAR 2019-20 BUDGET OUTLOOK The Board of Commissioners adopted the budget for the fiscal year ending June 30, 2020 on June 18,2019. The approved General Fund budget for the fiscal year ending June 30,2020 totals$237.1 million, which represents a $10.4 million or 4.5% increase over the fiscal year 2018-19 adopted budget. The increase is primarily due to increased debt service and school appropriations. As of December 31, 2019, the County has received 64.2% of budgeted revenues as compared to 62.6%in the previous fiscal year. The property tax base which is growing by 2% and projected collection rate are forecasted to meet the budgeted amount. Sales tax has experienced solid growth primarily attributed to the NC Department of Revenue enforcement of online sales tax transactions.The County incurred 45.3% of budgeted general fund expenditures compared to 45.5%in the previous year.Expenditures are projected 36 91 to be within budget primarily attributed to personnel savings and prudent management of non-personnel expenditures. The County estimates slightly better than breakeven financial performance resulting in stable fund balance consistent with previous years fund balance performance. PENSION PLANS The County participates in the North Carolina Local Governmental Employees'Retirement System (the "LGERS"). The North Carolina Local Governmental Employees' Retirement System is a service agency administered through a board of trustees(the"Board of Trustees")by the State for public employees of counties,cities,boards,commissions and other similar governmental entities. While the State Treasurer is the custodian of system funds,administrative costs are borne by the participating employer governmental entities. The State makes no contributions to the system. The system provides, on a uniform system-wide basis, retirement and, at each employer's option, death benefits from contributions made by employers and employees. Employee members contribute six percent of their individual compensation. Each new employer makes a normal contribution plus, where applicable,a contribution to fund any accrued liability over a 24-year period. The normal contribution rate, uniform for all employers for fiscal year 2019-20, is 8.95 percent of eligible payroll for general employees and 9.70 percent of eligible payroll for law enforcement officers ("LEO"). The accrued liability contribution rate is determined separately for each employer and covers the liability of the employer for benefits based on employees' service rendered prior to the date the employer joins the system. Additional rates, such as rates associated with death benefits or past service liabilities,will be added to the base rate to determine the actual contribution percentage for each employer. The Board of Trustees'policy anticipates increases in the base rates effective July 1,2020 and July 1,2021 equal to 1.20 percent of reported compensation for each year as follows: General LEO Effective Date Employee Base Rate Base Rate July 1,2020 10.15 10.90 July 1,2021 11.25 12.10 Members qualify for a vested deferred benefit at age 50 with at least 20 years of creditable service; at age 60 after at least five years of creditable service to the unit of local government. Unreduced benefits are available: at age 65, with at least five years of service; at age 60, with at least 25 years of creditable service; or after 30 years of creditable service,regardless of age. Benefit payments are computed by taking an average of the annual compensation for the four consecutive years of membership service yielding the highest average. This average is then adjusted by a percentage formula, by a total years of service factor, and by an age service factor if the individual is not eligible for unreduced benefits. Contributions to the system are determined on an actuarial basis. For information concerning the County's participation in the North Carolina Local Governmental Employees' Retirement System and the Supplemental Retirement Income Plan of North Carolina see the Notes to the County's Audited Financial Statements in Appendix B. Financial statements and required supplementary information for the North Carolina Local Governmental Employees'Retirement System are included in the Comprehensive Annual Financial Report ("CAFR")for the State. Please refer to the State's CAFR for additional information. 37 92 OTHER POST-EMPLOYMENT BENEFITS The County administers a single employer defined benefit Retiree Healthcare Benefits Plan. This plan provides post-employment health care benefits to retirees of the County. A Permanent Employee employed on or before June 30,2012 and who commences retirement and meets the following conditions receives an annual retirement medical allowance. A participant must be eligible and approved to receive retirement benefits in accordance with the regulations of the North Carolina Local Government Employees Retirement System and meet one of the following conditions: 1) A minimum of ten years of service with the County, 2) Age 65 with a minimum of five years of service with the County, or 3) Disabled retirement with a minimum of five years of service with the County. A Permanent Employee employed after June 30, 2012 and who commences retirement and meets the following conditions receives an annual retirement medical allowance. A participant must be eligible and approved to receive retirement benefits in accordance with the regulations of the North Carolina Local Government Employees Retirement System and meet one of the following conditions: 1) A minimum of 20 years of service with the County, 2) Age 65 with a minimum of ten years of service with the County, or 3) Disabled retirement with a minimum of ten years of service with the County. The County contributes to the cost of health insurance premiums for both non-Medicare eligible retirees and Medicare eligible retirees based on the years of service with Orange County using the following schedule: If hired on or before June 30,2012: Years of Service at Retirement Age at Retirement Countv Contribution 10 or more Any Age 100% 5-9 65 50% If hired after June 30,2012: Years of Service at Retirement Age at Retirement County Contribution 20 or more Any Age 100% 10-19 65 50% Per resolution, the County is required to contribute the projected pay-as-you financing requirements, with an additional amount to prefund benefits as determined annually by the Board. For the fiscal year ended June 30,2019, current year benefit payments made by the County were $2,477,527. The County estimates its Net OPEB Obligation at $41.8 million. The Net OPEB Obligation is the cumulative difference between Annual OPEB Cost and the Employer Contributions to the Plan. The Annual OPEB Cost (AOC) is equal to the Annual Required Contribution (ARC), one year's interest on the Net OPEB Obligation,and an adjustment to the ARC to offset the effect of actuarial amortization of past under or over contributions. 38 93 The County funds its OPEB healthcare benefits on a pay as you go basis as part of the annual budget process. The County paid approximately $2.7 million in OPEB benefits in the 2019 fiscal year, and has budgeted approximately$2.7 million for these payments in the current fiscal year. In addition to these annual payments, the County has reserved approximately $7.5 million of committed fund balance toward its OPEB obligations, and has established an irrevocable trust for OPEB benefits that is funded for fiscal year 2019-20 at$0. The following table presents additional information on the County's OPEB liabilities. Actuarial Net OPEB NOL as % of Valuation Date Liability(NOL) Covered Payroll December 31,2019 $106,718,695 225.9% December 31,2018 95,924,108 209.0 GASB 74 requires the presentation of the Net OPEB Liability ("NOL") effective as of June 30, 2017. The GASB 74 required NOL actuary methodology and assumptions results in a higher liability than the unfunded actuarial accrued liability("UAAL"). Actuarial UAAL as % of Valuation Date Unfunded UAAL Covered Payroll December 31,2015 $83,542,665 181.2% December 31,2013 65,152,273 167.5 CONTINGENT LIABILITIES The County is not aware of any contingent liabilities that it expects would materially adversely affect its ability to meet its financial obligations. 39 94 APPENDIX B MANAGEMENT'S DISCUSSION AND ANALYSIS AND THE BASIC FINANCIAL STATEMENTS OF ORANGE COUNTY,NORTH CAROLINA 95 [THIS PAGE INTENTIONALLY LEFT BLANK] 96 Management's Discussion and Analysis The Management's Discussion and Analysis of the financial activities of the County, lifted from the Comprehensive Annual Financial Report for the County for the fiscal year ended June 30, 2019, is included in this Appendix. Management's Discussion and Analysis provides an objective and easily readable short and long-term analysis of the County's financial activities based on currently known facts, decisions or conditions. Management's Discussion and Analysis is not a required part of the Basic Financial Statements but is supplementary information required by the Governmental Accounting Standards Board. The independent auditors of the County have applied certain limited procedures, which consist primarily of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, they did not audit this information and did not express an opinion on it. B-1 97 Financial Information The financial statements of the County have been audited by certified public accountants for the fiscal year ended June 30, 2019. Copies of these financial statements containing the unqualified report of the independent certified public accountant are available in the office of the Chief Financial Officer at 200 South Cameron St., Hillsborough,North Carolina 27278. The following financial statements are the Basic Financial Statements of the County, the notes thereto and certain required supplementary information, lifted from the Comprehensive Annual Financial Report of the County for the fiscal year ended June 30, 2019. B-2 98 APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS 99 [THIS PAGE INTENTIONALLY LEFT BLANK] 100 APPENDIX D FORM OF OPINION OF BOND COUNSEL 101 [THIS PAGE INTENTIONALLY LEFT BLANK] 102 APPENDIX E BOOK-ENTRY ONLY SYSTEM 103 [THIS PAGE INTENTIONALLY LEFT BLANK] 104 APPENDIX E BOOK-ENTRY ONLY SYSTEM Beneficial ownership interests in the 2020 Bonds will be available only in a book-entry system. The actual purchasers of the 2020 Bonds (the `Beneficial Owners") will not receive physical certificates representing their interests in such 2020 Bonds purchased. So long as The Depository Trust Company ("DTC"), New York, New York, or its nominee is the registered owner of the 2020 Bonds, references in this Official Statement to the Owners of the 2020 Bonds shall mean DTC or its nominee and shall not mean the Beneficial Owners of the 2020 Bonds. The Trust Agreement contains provisions applicable to periods when DTC or its nominee is not the registered owner. The following description of DTC, its procedures and record keeping with respect to beneficial ownership interests in the 2020 Bonds, payment of interest and other payments with respect to the 2020 Bonds to DTC Participants or to beneficial owners, confirmation and transfer of beneficial ownership interests in the 2020 Bonds and/or other transactions by and between DTC,DTC Participants and beneficial owners is based on information furnished by DTC. DTC will act as securities depository for the 2020 Bonds. The 2020 Bonds will be registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate in the aggregate principal amount of each maturity of the 2020 Bonds will be deposited with DTC or its designee. So long as Cede&Co. is the registered owner of the 2020 Bonds, as DTC's Partnership nominee, reference herein to the Owners or registered owners of the 2020 Bonds shall mean Cede & Co. and shall not mean the beneficial owners of the 2020 Bonds. DTC,the world's largest securities depository,is a limited-purpose trust company organized under the New York Banking Law,a"banking organization"within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a"clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers,banks,trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust&Clearing Corporation("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation,Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation as well as by the New York Stock Exchange, Inc.,the American Stock Exchange,and the National Association of Securities Dealers,Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,banks trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly(the "Indirect Participants" and collectively with the Direct Participants, the "Participants"). DTC has a Standard&Poor's rating of AA+. The DTC rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtce.com. Purchases of 2020 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for 2020 Bonds on DTC's records. The ownership interest of each actual E-1 105 purchaser of the 2020 Bonds (the `Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants'records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction,as well as periodic statements of their holdings,from the Direct or Indirect Participants through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2020 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners of such 2020 Bonds. Beneficial Owners will not receive certificates representing their ownership interests in 2020 Bonds, except in the event that use of the book-entry system for such 2020 Bonds is discontinued. To facilitate subsequent transfers, all 2020 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such name as may be requested by an authorized representative of DTC. The deposit of 2020 Bonds with DTC and their registration in the name of Cede&Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the identities of the actual Beneficial Owners of the 2020 Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts such 2020 Bonds are credited,which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the 2020 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to such 2020 Bonds, such as redemptions, defaults and proposed amendments to the security documents. For example, Beneficial Owners of the 2020 Bonds may wish to ascertain that the nominee holding such 2020 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the 2020 Bonds within a maturity are being redeemed,DTC's practice is to determine by lot the amount of the interest of each Direct Participant in the 2020 Bonds of such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee)will consent or vote with respect to the 2020 Bonds unless authorized by a Direct Participant in accordance with DTC's procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting and voting rights to those Direct Participants to whose accounts such 2020 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Because DTC is treated as the owner of the 2020 Bonds for substantially all purposes under the Trust Agreement,Beneficial Owners may have a restricted ability to influence in a timely fashion remedial action or the giving or withholding of requested consents or other directions. In addition, because the identity of Beneficial Owners is unknown to the County, to DTC or to the Trustee, it may be difficult to transmit information of potential interest to Beneficial Owners in an effective and timely manner. Beneficial Owners should make appropriate arrangements with their broker or dealer regarding distribution of information regarding the 2020 Bonds that may be transmitted by or through DTC. Principal,premium, if any, and interest payments on the 2020 Bonds will be made to Cede&Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to E-2 106 credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Trustee, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participants and not of DTC (nor its nominee), the Trustee or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal,premium,if any, and interest to Cede&Co. (or such other nominee as may be requested by an authorized representative of DTC) is the Trustee's responsibility, disbursement of such payments to Direct Participants is DTC's responsibility, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. The County cannot and does not give assurance that Direct and Indirect Participants will promptly transfer payments to Beneficial Owners. DTC may discontinue providing its services as securities depository with respect to the 2020 Bonds at any time by giving reasonable notice to the County and the Trustee. Under such circumstances, in the event that a successor depository is not obtained,physical certificates representing interests in 2020 Bonds are required to be printed and delivered. The County may decide to discontinue use of the system of book- entry only transfers through DTC (or a successor securities depository). In that event,physical certificates will be printed and delivered to DTC. The County and the Trustee have no responsibility or obligation to DTC, the Direct Participants, the Indirect Participants or the Beneficial Owners with respect to(1)the accuracy of any records maintained by DTC or any Participant, or the maintenance of any records; (2)the payment by DTC or any Participant of any amount due to any Beneficial Owner in respect of the 2020 Bonds,or the sending of any amount due to any beneficial owner in respect to the 2020 Bonds or the sending of transaction statements; (3) the delivery or timeliness of delivery by DTC or any Participant of any notice to any Beneficial Owner which is required or permitted under the Trust Agreement to be given to Owners;(4)the selection of the Beneficial Owners to receive payments upon any partial redemption of the 2020 Bonds; or(5) any consent given or other action taken by DTC or its nominee as the registered owner of the 2020 Bonds, including any action taken pursuant to an omnibus proxy. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources the County believes to be reliable, but the County takes no responsibility for the accuracy thereof. E-3 107 Attachment 5 $[ 1 ORANGE COUNTY,NORTH CAROLINA LIMITED OBLIGATION BONDS,SERIES 2020 BOND PURCHASE AGREEMENT April [_],2020 Orange County,North Carolina Hillsborough,North Carolina Ladies and Gentlemen: The undersigned, Robert W. Baird & Co. Incorporated ("Baird") on its own behalf and as representative of FHN Financial Capital Markets (together, the "Underwriters"), offers to enter into the following purchase agreement(this"Bond Purchase Agreement")with Orange County,North Carolina(the "County"), which, upon the County's acceptance of this offer, will be binding upon the County and the Underwriters. This offer is made subject to the County's acceptance of this Bond Purchase Agreement, which acceptance shall be evidenced by the execution and delivery(manually or by facsimile transmission) of this Bond Purchase Agreement by a duly authorized officer of the County on or before 12:00 P.M., Eastern Time, on the date hereof. Upon such acceptance, execution and delivery, this Bond Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the County and the Underwriters. Except as expressly otherwise defined herein, capitalized terms used herein shall have the same meanings as set forth in the Preliminary Official Statement(as defined below). (1) Purchase and Sale. (a) Upon the terms and conditions and based on the representations, warranties and covenants hereinafter set forth,the Underwriters hereby agree to purchase from the County, and the County hereby agrees to sell to the Underwriters, all (but not less than all) of the $[ ] aggregate principal amount of the County's Limited Obligation Bonds, Series 2020 (the "Bonds"), dated the date of payment for and the delivery of the Bonds(such payment and delivery being herein sometimes called the "Closing"). The purchase price for the Bonds shall be $[ ] (representing the principal amount of the Bonds, plus/less [net] original issue premium/discount of $[ ], and less underwriters' discount of$[ ]) (the "Purchase Price"). The Underwriters shall pay the Purchase Price for the Bonds on the day of the Closing by wiring $[ ], at the County's direction, to the Trustee(as defined below). (b) The Bonds shall be issued and secured under and pursuant to a Trust Agreement dated as of June 1, 2018 (the "2018 Trust Agreement"), and a Third Supplemental Trust Agreement dated as of May 1, 2020 (the "Third Supplemental Trust Agreement" and, collectively with the 2018 Trust Agreement, as previously supplemented,the"Trust Agreement"), each between the County and The Bank of New York Mellon Trust Company,N.A., as trustee(the"Trustee"). The County is authorized pursuant to Section 20 of Chapter 160A of the General Statutes of North Carolina(the"Act"),to issue the Bonds for the purpose of providing funds to the County to(i)acquire,construct,equip and otherwise improve a variety of County facilities and assets and(ii) pay certain costs incurred in connection with the sale and issuance of the Bonds. The County's issuance of the Bonds has been authorized by a resolution adopted by the Board of Commissioners of the County on April 7, 2020 (the "Approving Resolution"). As security for performance of the County's obligations under the Trust Agreement, the County will execute and deliver to a deed of trust trustee (the "Deed of Trust Trustee"), for the benefit of the Trustee, a Deed of Trust Supplement #3 dated as of May 1, 2020 (the "Third Deed of Trust Supplement"), supplementing the 108 Existing Deed of Trust(as so supplemented, the "Modified Deed of Trust"), granting a first lien of record on the Mortgaged Property, subject to Permitted Encumbrances. (c) The Bonds shall be dated the date of the Closing, shall mature on the dates and in the amounts, shall bear interest at the rates and shall have the terms stated in Exhibit A attached hereto. (2) Sale of All the Bonds; Offering. It shall be a condition to the County's obligation to sell and deliver the Bonds to the Underwriters,and to the obligation of the Underwriters to purchase and accept delivery of the Bonds, that the entire principal amount of the Bonds is sold and delivered by the County, and accepted and paid for by the Underwriters at the Closing. The Underwriters intend to make a bona fide public offering of all the Bonds at a price or prices not in excess of the initial public offering price or prices set forth in Exhibit A. The Bonds may be offered and sold to certain dealers (including dealers depositing such Bonds into investment trusts or mutual funds) at prices lower than such public offering prices. The Underwriters reserve the right to make such changes in such prices as the Underwriters shall deem necessary in connection with the offering of the Bonds. (3) Establishment of Issue Price. (a) Baird,on behalf of the Underwriters,agrees to assist the County in establishing the issue price of the Bonds and shall execute and deliver to the County at Closing an"issue price" or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of Baird, the County, and Sanford Holshouser LLP ("Bond Counsel"), to accurately reflect,as applicable,the sales price or prices or the initial offering price or prices to the public of the Bonds. (b) [Except as otherwise set forth in Exhibit B attached hereto,] [t]he County will treat the first price at which 10%of each maturity of the Bonds(the"10%test")is sold to the public as the issue price of that maturity(if different interest rates apply within a maturity,each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Bond Purchase Agreement,Baird shall report to the County the price or prices at which the Underwriters have sold to the public each maturity of the Bonds. If at that time the 10%test has not been satisfied as to any maturity of the Bonds, Baird agrees to promptly report to the County the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date (as hereinafter defined)has occurred, until the 10%test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public. (c) [Baird confirms that the Underwriters have offered the Bonds to the public on or before the date of this Bond Purchase Agreement at the offering price or prices(the"initial offering price"), or at the corresponding yield or yields, set forth in Exhibit B attached hereto, except as otherwise set forth therein. Exhibit B also sets forth, as of the date of this Bond Purchase Agreement,the maturities,if any,of the Bonds for which the 10%test has not been satisfied and for which the County and Baird, on behalf of the Underwriters,agrees that the restrictions set forth in the next sentence shall apply,which will allow the County to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the "hold-the-offering-price rule"). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds,the Underwriters will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) the close of the fifth(5"')business day after the sale date; or -2- 109 (2) the date on which the Underwriters have sold at least 10%of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The Underwriters shall promptly advise the County when the Underwriters have sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth(5th)business day after the sale date.] (d) Baird confirms that any selling group agreement and any retail distribution agreement(to which Baird is a parry)relating to the initial sale of the Bonds to the public,together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable,to(A)report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by Baird that either the 10%test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the public and(B) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Baird. The County acknowledges that, in making the representation set forth in this subsection, Baird will rely on(i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public,the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires,and(ii)in the event that a retail distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule, if applicable,as set forth in the retail distribution agreement and the related pricing wires. The County further acknowledges that the Underwriters shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail distribution agreement, to comply with its corresponding agreement regarding the hold-the-offering-price rule as applicable to the Bonds. (e) The Underwriters acknowledge that sales of any Bonds to any person that is a related party to either of the Underwriters shall not constitute sales to the public for purposes of this section. Further, for purposes of this section: i. "public"means any person other than an underwriter or a related party, ii. "underwriter"means(A)any person that agrees pursuant to a written contract with the County (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A)to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), iii. a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly,to(i)at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another),(ii)more than 50%common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or(iii)more than 50%common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity -3- 110 is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and iv. "sale date" means the date of execution of this Bond Purchase Agreement by all parties. (4) Official Statement. The County hereby ratifies and approves the Preliminary Official Statement dated April L], 2020 (the "Preliminary Official Statement"), and consents to its distribution and use by the Underwriters prior to the date hereof in connection with the public offering and sale of the Bonds. The County confirms that the Preliminary Official Statement was"deemed final"by the County as of its date for purposes of Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934(the"Rule"). Upon acceptance of this offer,the County shall prepare a final Official Statement and shall, within the earlier of seven(7)business days following the date hereof or two business days prior to the Closing Date(as hereinafter defined), deliver to the Underwriters printed copies of such final Official Statement (such final Official Statement, together with any amendment or supplement thereto,being the"Official Statement")in sufficient quantity as may reasonably be required by the Underwriters in order to comply with the Rule and any applicable rules of the Municipal Securities Rulemaking Board(the"MSRB"). The County hereby authorizes and approves the Official Statement and consents to the use and distribution of the Official Statement by the Underwriters in connection with the public offering and sale of the Bonds. At the time of or prior to the Closing,the Underwriters will file, or cause to be filed, the Official Statement with the MSRB. In addition, the County hereby approves and authorizes the Underwriters to coordinate the printing of the Official Statement and consents to the electronic distribution of the Official Statement. (5) Representations of the County. The County hereby represents, warrants and covenants that: (a) The County is a political subdivision duly organized and validly existing under the Constitution and laws of the State of North Carolina(the"State"), and is authorized pursuant to the laws of the State, including the Act, and the Approving Resolution to issue the Bonds. (b) The County has full legal right, power and authority to (i) adopt the Approving Resolution,(ii)execute,deliver and perform its obligations under this Bond Purchase Agreement,the Trust Agreement,the Bonds,and the Modified Deed of Trust;(iii)issue and deliver the Bonds to the Underwriters as provided in this Bond Purchase Agreement;(iv)approve and authorize the distribution of the Preliminary Official Statement and the Official Statement; and (v) carry out and consummate all other transactions contemplated by this Bond Purchase Agreement, the Approving Resolution, the Trust Agreement, the Bonds,the Modified Deed of Trust and the Official Statement. (c) The Approving Resolution has been duly adopted by the County, and the County has duly authorized all necessary action to be taken by the County for: (i) the offering, issuance, sale, and delivery of the Bonds upon the terms set forth herein and in the Official Statement, (ii) the execution and delivery by the County of the Bonds, this Bond Purchase Agreement, the Trust Agreement, the Modified Deed of Trust,and the performance of its obligations under the Bonds,this Bond Purchase Agreement,the Trust Agreement,the Modified Deed of Trust and any and all such other agreements and documents as may be required to be executed, delivered, and received by the County in order to carry out, give effect to, and consummate the transactions contemplated hereby and by the Official Statement (the Bonds, this Bond Purchase Agreement, the Trust Agreement, the Modified Deed of Trust and such other agreements and documents being collectively referred to herein as the"County Documents"), and(iii)the authorization of the use and distribution of the Official Statement. -4- 111 (d) The Approving Resolution was duly adopted at a meeting of the Board of Commissioners of the County called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and is in full force and effect and has not been amended or repealed. (e) This Bond Purchase Agreement,the Trust Agreement,the Modified Deed of Trust and any other instrument or agreement to which the County is a party in connection with the consummation of the transactions contemplated by the foregoing documents, when executed and delivered by the parties thereto, and assuming such documents are enforceable against the parties thereto other than the County, will constitute legal,valid and binding obligations of the County(subject,as to the enforcement of remedies, to the valid exercise of judicial discretion, the sovereign police powers of the State and constitutional powers of the United States of America and to any valid applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the rights of creditors generally and the exercise of judicial discretion in accordance with general principles of equity). (f) When delivered to and paid for by the Underwriters at the Closing, in accordance with the provisions of this Bond Purchase Agreement,the Bonds will have been duly authorized, executed and delivered by the County and will constitute legal,valid and binding special obligations of the County, enforceable in accordance with their terms(subject,as to the enforcement of remedies,to the valid exercise of judicial discretion,the sovereign police powers of the State and constitutional powers of the United States of America and to any valid applicable bankruptcy,insolvency,moratorium,reorganization or other similar laws affecting the rights of creditors generally and the exercise of judicial discretion in accordance with general principles of equity) and will be entitled to the benefits of, and secured as provided in, the Trust Agreement. (g) The County has complied,and will at the Closing be in compliance,in all material respects,with the Approving Resolution,the Trust Agreement and the Act and all other agreements relating to projects undertaken by the County or with respect to which the County has assumed responsibility. (h) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court,public board or body,pending or,to the knowledge of the County,threatened against or affecting the County(or, to the knowledge of the County, any meritorious basis therefor) (i) attempting to limit, enjoin or otherwise restrict or prevent the County from functioning or contesting or questioning the existence of the County or the titles of the present officers of the County to their offices or(ii)wherein an unfavorable decision,ruling or finding would(A) adversely affect the existence or powers of the County or the validity or enforceability of the Bonds, the Approving Resolution, the Trust Agreement, this Bond Purchase Agreement,the Modified Deed of Trust or any agreement or instrument to which the County is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby including, without limitation, the County Documents and the Official Statement; or(B)materially adversely affect(1)the transactions contemplated by the County Documents or the Official Statement, or (2)the exemption of the interest on the Bonds from federal or State income taxation. (i) The County's adoption of the Approving Resolution,its execution and delivery of the County Documents and the Bonds, and compliance with the provisions thereof and hereof, do not and will not conflict with or constitute, on the County's part, a violation of, breach of or default under any material statute, existing law, administrative regulation, filing, decree or order, state or federal, or any provision of the Constitution or laws of the State, or any rule or regulation of the County, or any material indenture, mortgage, lease, deed of trust, note, resolution, or other agreement or instrument to which the County, or its properties, are subject or by which the County, or its properties, are or may be bound or, to the knowledge of the County, any order, rule or regulation of any regulatory body or court having jurisdiction over the County or its activities or properties. -5- 112 (j) The County is not in default in the payment of the principal of or interest on any of its indebtedness for borrowed money and is not in default in any material respect under any document or instrument under and subject to which any indebtedness for borrowed money has been incurred which default would affect materially and adversely the transactions contemplated by any of the County Documents. No event has occurred or is continuing under the provisions of any such document or instrument that,with the lapse of time or the giving of notice, or both,would constitute an event of default thereunder, which event of default would affect adversely the transactions contemplated by any of the County Documents. (k) The County is not in material breach of or in default under the Approving Resolution, any applicable law or administrative regulation of the State or the United States, or any applicable judgment or decree, or any loan agreement,note,resolution or other agreement or instrument to which the County is a party or is otherwise subject, which breach or default would in any way materially adversely affect the authorization or issuance of the Bonds and the transactions contemplated hereby, and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute such a breach or default. (1) On and as of the Closing,all authorizations,consents,and approvals of,notices to, registrations or filings with,or actions in respect of any governmental body,agency,or other instrumentality or court required to be obtained, given, or taken on behalf of the County in connection with the execution, delivery and performance by the County of the County Documents,and any other agreement or instrument to which the County is a party and which has been or will be executed in connection with the consummation of the transactions contemplated by the foregoing documents,will have been obtained,given, or taken and will be in full force and effect. (m) Any certificate signed by an authorized officer of the County delivered to the Underwriters shall be deemed a representation and warranty by the County to the Underwriters as to the truth of the statements made therein. (n) The County has and will cooperate with the Underwriters and their counsel in any endeavor to qualify the Bonds for offering and sale under the securities or "Blue Sky" laws of such jurisdictions of the United States as the Underwriters may request;provided,however,that the County will not be required to execute a general or special consent to service of process or qualify to do business in connection with any qualification or determination in any jurisdiction. (o) The audited financial statements of the County for the period ended June 30,2019, present fairly the County's financial condition as of such date and the results of its operations for the respective periods set forth therein and have been prepared in accordance with generally accepted accounting principles consistently applied. There has been no material change in the financial affairs of the County since June 30,2019, except as disclosed specifically in the Official Statement. (p) If between the date of this Bond Purchase Agreement and the date 25 days after the "end of the underwriting period" for the Bonds, as defined in the Rule, any event occurs which might or would cause the Official Statement to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the County shall promptly provide written notice to the Underwriters thereof, and if, in the opinion of the County or the Underwriters, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the County shall at its expense supplement or amend the Official Statement in a form and in a manner approved by the Underwriters. For purposes of this Bond Purchase Agreement,the"end of the underwriting period" -6- 113 shall be deemed to be the Closing Date(as hereinafter defined),unless the Underwriters shall have notified the County to the contrary on or before the Closing Date. (q) If the Official Statement is supplemented or amended pursuant to subsection(p)of this Section, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subsection)at all times subsequent thereto up to and including the Closing Date, the County shall take all steps necessary to ensure that the Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein,in the light of the circumstances under which they were made, not misleading. (r) The information in the Preliminary Official Statement (excluding therefrom the information under the captions "INTRODUCTION—Book-Entry Only" and"UNDERWRITING" and in Appendix E, as to which no representations or warranties are made), including its attachments and appendices,at the time of acceptance hereof is correct in all material respects,and such Preliminary Official Statement does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and the information in the Official Statement (excluding therefrom the information under the captions "INTRODUCTION — Book-Entry Only" and "UNDERWRITING" and in Appendix E, as to which no representations or warranties are made) as of its date and as of the Closing Date, will be true and correct and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made,not misleading. (s) Between the date hereof and the Closing, the County shall not, without the prior written consent of the Underwriters, offer or issue in any material amount any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, except in the course of normal business operations of the County or except for such borrowings as may be described in or contemplated by the Official Statement. (t) Except as described in the Official Statement,during the last five years,the County has not failed to materially comply with any previous undertaking relating to continuing disclosure of information pursuant to Rule 15c2-12. The execution and delivery of this Bond Purchase Agreement by the County shall constitute a representation by the County to the Underwriters that the representations, warranties and covenants contained in this Section 5 are true as of the date hereof, provided that no officer of the County shall be individually liable for the breach of any representation,warranty or covenant made by the County in this Section 5. (6) Closing. At 10:00 a.m.,Eastern Time, on May [_],2020, or at such other time or date as the County and the Underwriters shall mutually agree upon (the "Closing Date"), the County shall (a) deliver or cause to be delivered, through the custody of The Depository Trust Company,New York,New York("DTC"),or at such place as the County and Underwriters shall mutually agree upon, for the account of the Underwriters,the Bonds duly executed by the County in fully registered form,bearing proper CUSIP numbers, and registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the Bonds; and(b) deliver or cause to be delivered, to the Underwriters at Winston-Salem, North Carolina, or at such other place as the County and Underwriters may mutually agree upon, the documents described in Section 7(d)hereof.Concurrently with the delivery of the Bonds and the documents mentioned in Section 7(d)hereof at the Closing,subject to the conditions contained herein,the Underwriters will accept such delivery and will pay the purchase price of the Bonds in the amount set forth in Section 1 -7- 114 hereof by wire transfer in immediately available funds to the Trustee for the account of the County. The Closing shall take place at the offices of the County. The Bonds shall be available for inspection by the Underwriters at least two business days prior to Closing. (7) Closing Conditions/Right to Cancel. The Underwriters enter into this Bond Purchase Agreement in reliance upon the County's representations and agreements herein and the performance by the County of its obligations hereunder, both as of the date hereof and as of the date of Closing. The Underwriters' obligations under this Bond Purchase Agreement are and shall be subject to the following additional conditions: (a) At the time of the Closing, the Approving Resolution, the Trust Agreement, and the Modified Deed of Trust shall be in full force and effect and none of the Approving Resolution,the Trust Agreement, the Modified Deed of Trust or the Official Statement shall have been amended, modified or supplemented,except as may have been approved in writing by the Underwriters,and the County shall have duly adopted, and there shall be in full force and effect, such other resolutions as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated hereby. (b) The Bonds,as set forth in Section 6, shall be delivered to the Trustee to be held by the Trustee under DTC's FAST program. (c) The Underwriters shall have the right to cancel its obligation to purchase the Bonds at the time of Closing if any of the documents, certificates or opinions to be delivered to the Underwriters hereunder is not delivered at the time of Closing or if,between the date hereof and the time of Closing, one or more of the following occurs: (i) Legislation(whether or not yet introduced in Congress of the United States ("Congress")) shall be enacted or be actively considered for enactment by the Congress or recommended to the Congress by the President of the United States or favorably reported for passage to either House of Congress by any committee of such House, or a conference committee of both Houses, to which such legislation had been referred for consideration, or a decision by a federal court of the United States or the United States Tax Court shall be rendered, or an order, ruling, regulation or official statement by or on behalf of the Treasury Department of the United States or the Internal Revenue Service or other governmental agency shall be made or proposed,or a release or official statement made by the President of the United States or by the Treasury Department of the United States or the Internal Revenue Service, with respect to federal taxation upon revenues or other income of the general character to be derived by the County or upon interest received on obligations of the general character of the Bonds which in the Underwriters'judgment, materially adversely affects the market for the Bonds; or (ii) Legislation shall hereafter be enacted or actively considered for enactment or introduction, with an effective date on or prior to the Closing, or a decision by a court of the United States shall be rendered or a stop order, ruling,regulation or proposed regulation by or on behalf of the Securities and Exchange Commission or other agency having jurisdiction shall be made,to the effect that the issuance,sale and delivery of the Bonds,or any other obligations of any similar public body of the general character of the County is in violation of the Securities Act of 1933, as amended, of the Securities Exchange Act of 1934, as amended, or of the Trust Indenture Act of 1939, as amended or with the purpose or effect of otherwise prohibiting the issuance, sale or delivery of the Bonds, as contemplated hereby, or of obligations of the general character of the Bonds; or -8- 115 (iii) There shall have occurred any outbreak or escalation of hostilities or other national or international calamity or crisis, the effect of such outbreak, calamity or crisis on the financial markets of the United States being such as, in the Underwriters' judgment, would materially adversely affect the market for, or market price of,the Bonds; or (iv) There shall be in force a general suspension of trading on the New York Stock Exchange or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction; or (v) A general banking moratorium shall have been declared by federal, State or New York authorities having jurisdiction,and be in force,or a major financial crisis or a material disruption in commercial banking or securities settlement or clearances services shall have occurred such as to make it, in the judgment of the Underwriters, impractical or inadvisable to proceed with the offering of the Bonds as contemplated in the Official Statement; or (vi) an event shall occur which makes untrue or incorrect in any material respect, as of the time of such event, any statement or information contained in the Official Statement or which is not reflected in the Official Statement but should be reflected therein in order to make the statements contained therein not misleading in any material respect and requires an amendment of or supplement to the Official Statement and the effect of which, in the judgment of the Underwriters, would materially adversely affect the market for the Bonds or the sale, at the contemplated offering prices(or yields),by the Underwriters of the Bonds; or (vii) any of Fitch Ratings Inc. ("Fitch"), Moody's Investors Service, Inc. ("Moody's)or S&P Global Ratings, a business unit of Standard&Poor's Financial Services LLC ("S&P") shall have taken any action to lower, suspend or withdraw their respective ratings on the Bonds and such action,in the opinion of the Underwriters,would adversely affect the market price or marketability of the Bonds. (d) At the Closing,the Underwriters shall receive the following documents: (i) Duly executed or certified copies of each of the Trust Agreement and Deed of Trust; (ii) The approving opinion of Bond Counsel in the form set forth in Appendix D of the Official Statement together with a supplemental opinion in form and substance satisfactory to the Underwriters, and a reliance letter addressed to the Underwriters, each of which shall be dated the Closing Date; (iii) The opinion of John L. Roberts,Esq., County Attorney,dated the Closing Date and addressed to the Underwriters and Bond Counsel in form and substance satisfactory to the Underwriters; (iv) An opinion of McGuireWoods LLP,as counsel to the Underwriters,dated the Closing Date and addressed to the Underwriters in form and substance satisfactory to the Underwriters; (v) A certificate, dated the Closing Date, of the duly authorized representative(s) or officer(s) of the County and in form and substance satisfactory to the -9- 116 Underwriters, to the effect that (A) the representations and agreements of the County herein are true and correct in all material respects as of the date of Closing; (B) there are not pending or, to such officials' knowledge, threatened legal proceedings that will materially adversely affect the transactions contemplated hereby or by the Trust Agreement, or the validity or enforceability of the Bonds,or the security therefor; (C)the financial information relating to the County provided to the Underwriters presents fairly the financial position of the County as of the date indicated therein and the results of its operations for the period specified therein and the financial statements from which such information was derived have been prepared in accordance with applicable law with respect to the period involved; (D) since June 30, 2019, there has not been any material adverse change in the financial condition of the County taken as a whole or no increase in the County's indebtedness for borrowed money, other than as disclosed in the Official Statement or otherwise disclosed in writing to the Underwriters; (E)the information contained in the Official Statement as of the Closing Date is true and correct in all material respects and did not and does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (F) the County has complied with all agreements and satisfied all the conditions on its part required to be performed or satisfied at or prior to the Closing,other than those specified hereunder that have been waived by the Underwriters; (vi) A photocopy of the Official Statement; (vii) One counterpart original of a transcript of all proceedings taken by the County relating to the authorization and issuance of the Bonds; (viii) Specimen Bonds; (ix) A certificate, dated the date of the Closing, of the duly authorized representative(s) or officer(s)of the County,with a copy of the Approving Resolution attached,to the effect that the Approving Resolution has been duly adopted and remains in full force and effect; (x) A certificate, dated on or before the closing date, evidencing the property insurance required by the Trust Agreement; (xi) A pro forma title insurance policy or other evidence of title insurance satisfactory to the Underwriters issued by Investors Title Insurance Company,relating to the Deed of Trust and naming the Trustee as a beneficiary; (xii) Federal tax form 8038-G prepared with respect to the Bonds and ready for filing; (xiii) A tax certificate of the County in form and content reasonably satisfactory to the Underwriters; (xiv) Evidence that Moody's, S&P and Fitch have issued ratings for the Bonds of not less than"[_],""[---- ill and"[_]",respectively; and (xv) Such additional legal opinions, certificates,proceedings, instruments and other documents, as the Underwriters or legal counsel to the Underwriters may reasonably request to evidence compliance by the County with legal requirements relating to the issuance of the Bonds, the truth and accuracy,as of the date of Closing,of all representations contained herein and the due performance or satisfaction by the County at or prior to the date of Closing of all agreements then -10- 117 to be performed and all conditions then to be satisfied as contemplated under this Bond Purchase Agreement and the Trust Agreement. If the County shall be unable to satisfy the conditions to the obligations of the Underwriters contained in this Bond Purchase Agreement or if the obligations of the Underwriters shall be terminated for any reason permitted by this Bond Purchase Agreement,this Bond Purchase Agreement shall terminate and neither the County nor the Underwriters shall have any further obligations hereunder, except that Sections 9 and 10 and the representations and warranties of the County contained herein (as of the date made)will continue in full force and effect. (8) Survival. All representations,warranties and agreements of the County set forth in or made pursuant to this Bond Purchase Agreement shall remain operative and in full force and effect,regardless of any investigations made by or on behalf of the Underwriters and shall survive the delivery of and payment for the Bonds. (9) Payment of Expenses. The County shall pay, out of the proceeds of the Bonds or from its own funds, any expenses incident to the performance of the obligations of the County or the Underwriters hereunder, including but not limited to: (i)the cost of the preparation, reproduction,printing, distribution, and mailing,of the Official Statement;(ii)the fees and disbursements of Bond Counsel and counsel for the County;(iii)the fees and disbursements of any experts retained by the County or the Underwriters;(iv)fees charged by the rating agencies for the rating of the Bonds; and(v) the cost of qualifying the Bonds under the laws of such jurisdictions as the Underwriters may designate, including filing fees and fees and disbursements of counsel for the Underwriters in connection with such qualification and the preparation of Blue Sky Memoranda. If the Bonds are not delivered to the Underwriters pursuant to this Bond Purchase Agreement, the County shall pay all expenses incident to the performance of the County's and the Underwriters' obligations hereunder as provided in this Section. The Underwriters shall pay (i) any fees of the MSRB in connection with the issuance of the Bonds, (ii)the cost of obtaining CUSIP number(s) assigned for the Bonds, and (iii) the fees and disbursements of counsel for the Underwriters. (10) Indemnification. To the extent permitted by law,the County agrees to indemnify and hold harmless the Underwriters, the directors, officers, employees and agents of each Underwriter and each person who controls any Underwriter within the meaning of either the Securities Act of 1933, as amended (the "Securities Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act") against any and all losses,claims,damages or liabilities,joint or several,to which they or any of them may become subject under the Securities Act,the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact (except statements pertaining to the Underwriters) contained in the Preliminary Official Statement, the Official Statement (or in any supplement or amendment thereto), or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except omissions or alleged omissions pertaining to the Underwriters). This indemnity agreement will be in addition to any liability which the County may otherwise have. Each Underwriter severally and not jointly agrees to indemnify and hold harmless the County, and its officials, directors, officers, and employees, and each person who controls the County within the meaning of either the Securities Act or the Exchange Act, to the same extent as the foregoing -11- 118 indemnity from the County to each Underwriter, but only with reference to written information furnished by the Underwriters to the County or information provided by the Underwriters specifically for inclusion in the Preliminary Official Statement or the Official Statement (or in any amendment or supplement thereto). Promptly after receipt by an indemnified party of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party(i)will not relieve it from liability unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought provided, however, that such counsel shall be satisfactory to the indemnified party.Notwithstanding the indemnifying parry's election to appoint counsel to represent the indemnified party in an action,the indemnified party shall have the right to employ separate counsel(including local counsel), and the indemnifying party shall bear the reasonable fees,costs and expenses of such separate counsel if(i)the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in,or targets of,any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party.An indemnifying party will not,without the prior written consent of the indemnified parties,settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder(whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. In the event that the indemnity provided herein is unavailable or insufficient to hold harmless an indemnified party for any reason the County and the Underwriters agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending the same) to which the County and one or more of the Underwriters may be subject in such proportion as is appropriate to reflect the relative benefits received by the County on the one hand and by the Underwriters on the other from the offering. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the County and the Underwriters shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the County on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, as well as any other relevant equitable considerations. In no case shall any Underwriter(except as may be provided in any agreement among the Underwriters relating to the offering)be responsible for any amount in excess of the purchase discount or fee applicable to the Bonds purchased by such Underwriter hereunder. Benefits received by the County shall be deemed to be equal to the total net proceeds from the offering(before deducting expenses)received by it, and benefits received by the Underwriters shall be deemed to be equal to the total purchase discounts and commissions in each case set forth on the cover of the Official Statement. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the County on the one hand or the Underwriters on the other, the intent of the parties and their relative -12- 119 knowledge, information and opportunity to correct or prevent such untrue statement or omission. The County and the Underwriters agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph no person guilty of fraudulent misrepresentation(within the meaning of Section I I(f)of the Securities Act)shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Each person who controls an Underwriter within the meaning of either the Securities Act or the Exchange Act and each director, officer, employee and agent of an Underwriter shall have the same rights to contribution as the Underwriter, and each person who controls the County within the meaning of either the Securities Act or the Exchange Act and each official,director,officer and employee of the County shall have the same rights to contribution as the County, subject in each case to the applicable terms and conditions of this paragraph. (11) Notices. Any notice or other communication to be given to the County under this Bond Purchase Agreement must be given in writing(not to include facsimile transmission or electronic mail)to the applicable address shown below, and any notice under this Bond Purchase Agreement to the Underwriters may be given by delivering the same in writing to Baird as follows: Orange County,North Carolina 200 South Cameron Street Hillsborough,North Carolina 27278 (Attention: County Manager) Robert W. Baird&Co. Incorporated 380 Knollwood Street, Suite 440 Winston-Salem,North Carolina 27103 (Attention: Ryan Maher,Managing Director) (12) Governing Law. This Bond Purchase Agreement shall be governed by and construed in accordance with the laws of the State. (13) Effectiveness. This Bond Purchase Agreement shall become effective upon the acceptance hereof by the County. (14) Arm's-Length Transaction. The County acknowledges and agrees that the purchase and sale of the Bonds pursuant to this Bond Purchase Agreement is an arm's-length commercial transaction between the County and the Underwriters, acting solely as principals and not as municipal advisors, financial advisors or agents of the County. The Underwriters have not assumed a financial advisory responsibility in favor of the County with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriters, or any affiliate of the Underwriters, has advised or is currently advising the County on other matters)or any other obligation to the County except the obligations expressly set forth in this Bond Purchase Agreement,it being the County's understanding that a financial advisory relationship shall not be deemed to exist when, in the course of acting as an underwriter, a broker, dealer or municipal securities dealer,a person renders advice to an issuer,including advice with respect to the structure,timing, terms and other similar matters concerning a new issue of municipal securities. The Underwriters have provided to the County prior disclosures regarding their role as underwriters, their compensation, any potential or actual material conflicts of interest,and material financial characteristics and material financial risks associated with the transaction to the extent required by MSRB rules. The Underwriters hereby notify the County that the Underwriters are not acting as Municipal Advisors (as defined in Section 15B of the Securities Exchange Act of 1934, as amended), the Underwriters are not agents of the County, and the Underwriters do not have a fiduciary duty to the County in connection with the matters contemplated by -13- 120 this Bond Purchase Agreement.The County has consulted its own legal,financial,and other advisors to the extent it has deemed appropriate. (15) Miscellaneous. (a) If any provision of this Bond Purchase Agreement shall be held or deemed to be or shall, in fact, be inoperative, invalid or unenforceable as applied in any particular case in any jurisdiction or jurisdictions because it conflicts with any provisions of any constitution, statute,rule or public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question inoperable or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Bond Purchase Agreement invalid, inoperative or unenforceable to any extent whatever. (b) This Bond Purchase Agreement may be signed in any number of counterparts,each of which shall which shall be an original,but all of which shall constitute but one and the same instrument. (c) This Bond Purchase Agreement is made solely for the benefit of and is binding on the County and the Underwriters(including successors or assigns of the Underwriters)and no other person shall acquire or have any right hereunder or by virtue hereof. It is the entire agreement of the parties, superseding all prior agreements, and may not be modified except in writing signed by both of the parties hereto. (d) Under this Bond Purchase Agreement, the Underwriters are acting as principals and not as agents or fiduciaries, and the Underwriters' engagement is as independent contractors and not in any other capacity. The County agrees that it is solely responsible for making its own judgments in connection with the offering of the Bonds regardless of whether the Underwriters have or are currently advising the County on related or other matters. [Remainder of Page Intentionally Left Blank] -14- 121 Very truly yours, ROBERT W.BAIRD & CO.INCORPORATED, on its own behalf and on behalf of FHN Financial Capital Markets By: Ryan Maher,Managing Director Approved, accepted and agreed to: ORANGE COUNTY,NORTH CAROLINA By: Bonnie B. Hammersley,County Manager [Signature Page for Bond Purchase Agreement] 122 EXHIBIT A Terms of the Bonds Principal Amounts,Interest Rates and Prices Maturity Date (October 1) Principal Amount Interest Rate Yield Price * Yield to October 1, 20[_] call date at par. Redemption Provisions A-1 123 EXHIBIT B $[ ] Orange County,North Carolina Limited Obligation Bonds, Series 2020 ISSUE PRICE CERTIFICATE The undersigned, on behalf of Robert W. Baird & Co. Incorporated ("Baird"), on behalf of itself and FHN Financial Capital Markets (together, the "Underwriting Group"), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations(the"Bonds"). 1. [Sale of the Bonds. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10%of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.][Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities,the first price at which at least 10%of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.] 2. [Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) The Underwriting Group offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the "Initial Offering Prices") on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B. (b) As set forth in the Bond Purchase Agreement, the members of the Underwriting Group have agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, they would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity(the"hold-the-offering-price rule"),and(ii)any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule. Baird has not offered or sold any Maturity of the Bonds at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period. Each of the other members of the Underwriting Group [and each selling group member] has represented that it would not offer or sell any Maturity of the Hold the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.] 3. Defined Terms. (a) [General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the"General Rule Maturities."] (b) [Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the"Hold-the-Offering-Price Maturities."] (c) [Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of(i) the close of the fifth business day after the Sale Date(April [_],2020),or(ii)the date on which the Underwriters have sold at least 10%of such Hold-the- Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.] B-1 124 (d) Issuer means Orange County,North Carolina. (e) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities. (f) Public means any person (including an individual, trust, estate, partnership, association, company,or corporation)other than an Underwriter or a related party to an Underwriter. The term"related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is April L], 2020. (h) Underwriter means(i)any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate)to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Baird's interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of Internal Revenue Service Form 8038-G, and other federal income tax advice it may give to the Issuer from time to time relating to the Bonds. The representations set forth herein are not necessarily based on personal knowledge and, in certain cases, the undersigned is relying on representations made by other members of the Underwriting Group. B-2 125 ROBERT W.BAIRD& CO.INCORPORATED, on its own behalf and as representative of FHN Financial Capital Markets By: Ryan Maher,Managing Director Dated: May_, 2020 B-3 126 Schedule A Sale Prices of the [Bonds][General Rule Maturities and Initial Offering Prices of the Hold-the-Offering Price Maturities] B-4 127 [Schedule B Pricing Wire or Equivalent Communication (Attached)] B-5 128 Attachment 6 Explanation of School Capital Funding Schools—Recurring Capital • Schools must use Recurring Capital outlay funds in one or more of the following categories: o Category I—Facility Improvements o Category II—Equipment and Furnishings o Category III—Vehicles and Bus Purchases Schools—Improvements to Older Facilities • When the 2016 Bond Referendum was approved for$120 million for Schools,the Board of County Commissioners also approved $5 million ($1 million over a 5-year period)for Schools to use towards improvements to their older facilities, as outlined in the Assessment studies of Older Facilities. This funding began in FY 2016-17 and the final year of this funding is scheduled for FY 2020-21. Schools—Other Various Projects • These funds are part of the annual funding provided to Schools to go towards their long range capital needs as outlined in the Capital Investment Plan. 129 114%��W-MMOMM. ORANGE COUNTY NORTH CAROLIN Series 2020 Limited Obligation Bonds Final Financing Resolution includes Northern Campus Gary Donaldson, Chief Financial Officer April 7, 2020 130 Pu rp ose ➢ Limited Obligation Bonds pursuant to NC Statute Section 160A-20 ➢ Payments for the Limited Obligation Bonds, Series 2020 will be made to Trustee by March 25 (for April 1 debt service) and by September 25 (for October 1 debt service); estimated interest rate not to exceed 4% ➢ The Series 2020 Limited Obligation Bonds are secured by a Deed of Trust, with a security interest in various County buildings and land with a total collateral value estimated at $40 million ➢ The Series 2020 Limited Obligation Bonds will fund various County projects including: - Northern Campus: $29.07 Million - Schools Capital Improvements: $6.72 Million - Other County Projects: $3.63 Million - Solid Waste-Admin Building: $0.28 Million - Vehicle Replacements (7 Years): $0.79 Million -Total: $40.49 Million - ORANGE COUNTY NORTH CAROLINA 131 Northern Campus Renderings N Deter Von Center Northern Campuz J _ Errvir-opment and Agracukarai Center& Parks Operations Baee ORANGE COUNTY NORTH CAROLINA Com onent Estimated Cost 132 Final Projects to be Financed Facility,Accessibility,Safety and Security Projects212,634 Generator Projects 0 HVAC Projects230,218 Major Plumbing Repairs50,885 Northern Campus—Detention Center21,989,681 Northern Campus—EAC5,677,065 Northern Campus—Parks Operations1,404,810 581,503 Government Services (Link) Remediation Skill Development Relocation- Europa Center Upfits254,953 Roofing and Facade Projects686,167 Parks and Recreation Facility Renovations. Repairs,Safety Improvements246,500 Conservation Easements 259,514 River Park, Phase II118,509 ITGC Initiatives197,826 IT Infrastructure489,910 Communication Systems273,221 Solid Waste- Equipment and Vehicles717,228 Solid Waste-Administrative Building Remediation281,324 Sportsplex Capital Items- 2 Vans70,090 Schools- Recurring Capital Needs3,000,000 Schools- Improvements to Older Facilities472,941 Schoolewe liffilVarious Projects3,242,252 Total Project Costs40,490,231 COUNTYuKArqut NORTHA' • Key Financing Terms 133 ➢ Security Pledge- County collateral Government Services Annex, Government Services Link Center, District Attorney Building, Emergency Operations Center and the Northern Campus Collateral value totals $65 Million; and Subject to Annual Appropriations ➢ Payments made to the Trustee no lather than March 25 (for April 1 payment) and no later than September 25 (for October payments) ➢ Maturity Term- 7- 20 Year maturities matches with 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 ➢ Subordinate Lien and Pledge to General Obligation Bonds ➢ Rating Affirmations- AA1/AA+/AA+ from Moody's, Standard & Poor's and(DRAN fgCOUNTY NORTH CAROLINA 134 Key Debt Model Metrics Debt Ratios 10-Year Payback Debt to Assessed Value IDS to GF Revenues 2020 65.17% 1.63% 13.26% 2021 64.61% 1.69% 14.33% 2022 62.52% 1.88% 16.75% 2023 62.33% 1.88% 16.49% 2024 64.14% 1.82% 16.66% 2025 65.88% 1.69% 15.79% 2026 68.11% 1.53% 15.07% Note: Includes the Spring 2020 Financing plus future 2021-2026 CIP projects as of March 23, 2020. ORANGE COUNTY NORTH CAROLINA 135 Debt Service Retirement and Additional Debt Capacity Existing and Proposed Tax Supported Debt Service 45.0 .2 40.0 — 35.0 ■- 30.0 25.0 - 20.0 - 15.0 - 10.0 - - - - - - - - - - -, ■ ■ ■ ■ ■ — 11 ■ e o � 0 C C10C) IDo0iDoCDIDCDC1OoI NC14 " " C%j • Existin g • 2020 Note: Additional Debt Capacity beginning FY 2025; with proposed GO Bond Referendum November 2024 ORANGE COUNTY NORTH CAROLINA 136 Questions/Comments ORANGE COUNTY NORTH CAROLINA