HomeMy WebLinkAboutAgenda - 05-04-2021; 5-a - Public Hearing on the Financing of Various Capital Investment Plan Projects 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: May 4, 2021
Action Agenda
Item No. 5-a
SUBJECT: Public Hearing on the Financing of Various Capital Investment Plan Projects
DEPARTMENT: Finance and Administrative
Services
ATTACHMENT(S): INFORMATION CONTACT:
Attachment 1 . Copy of Public Hearing Gary Donaldson, (919) 245-2453
Notice Paul Laughton, (919) 245-2152
Attachment 2. Resolution Robert Jessup, (919) 933-9891
Attachment 3. PowerPoint
PURPOSE: To conduct a public hearing on borrowing approximately $18,700,000 to finance
capital investment projects and equipment for the fiscal year; and up to approximately
$18,070,000 to refinance existing County loans and approve a related resolution supporting the
County's application to the Local Government Commission (LGC) for its approval of the financing
arrangements. The amount for refinancing may vary as staff further refines the analysis, and the
financing and transaction costs are included in the loan amount.
BACKGROUND: County staff estimates that the total amount to be financed for capital
investment projects and equipment will be approximately $18,700,000 consistent with the
County's Capital Improvement Program. The statutes require that the County conduct a public
hearing on the proposed financing. A copy of the published notice of this hearing is provided
(Attachment 1).
The notice of public hearing was advertised in The Herald Sun and the News of Orange.
After conducting the public hearing and receiving public input, staff proposes that the Board
consider adoption of the resolution (Attachment 2). This resolution formally requests the required
approval from the North Carolina Local Government Commission (LGC) for the County's
financing, and makes certain finding of fact as required under the LGC's guidelines. County staff
has been in contact with the LGC staff, and staff expects no issues in receiving LGC approval.
If the Board adopts the resolution indicating its intent to continue with the financing plan, the Board
will be asked to consider a resolution giving final approval to the financing plans at the May 18,
2021 Business meeting. Under the current schedule, County staff expects to set the final interest
rates and close by the end of June.
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FINANCIAL IMPACT: There is no financial impact related to this action. However, there will be
a financial impact in proceeding with the financing. A preliminary estimate of maximum debt
service applicable to the capital investment projects and equipment financing would require the
highest debt service payment of$1.9 million in FY 2023 (based on current market interest rates).
The tax rate equivalent for the estimated highest debt service payment is approximately $0.90
(0.9 cents).
SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable
to this item:
• GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND
INEQUITY
The fair treatment and meaningful involvement of all people regardless of race or color;
religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic
background; age; military service; disability; and familial, residential or economic status.
• GOAL: CREATE A SAFE COMMUNITY
The reduction of risks from vehicle/traffic accidents, childhood and senior injuries, gang
activity, substance abuse and domestic violence.
• GOAL: ENABLE FULL CIVIC PARTICIPATION
Ensure that Orange County residents are able to engage government through voting and
volunteering by eliminating disparities in participation and barriers to participation.
ENVIRONMENTAL IMPACT: The following Orange County Environmental Responsibility Goal
impacts are applicable to this item:
• ENERGY EFFICIENCY AND WASTE REDUCTION
Initiate policies and programs that: 1) conserve energy; 2) reduce resource consumption;
3) increase the use of recycled and renewable resources; and 4) minimize waste stream
impacts on the environment.
• RESULTANT IMPACT ON NATURAL RESOURCES AND AIR QUALITY
Assess and where possible mitigate adverse impacts created to the natural resources of
the site and adjoining area. Minimize production of greenhouse gases.
RECOMMENDATION(S): The Manager recommends that the Board:
1) conduct the public hearing;
2) close the public hearing;
3) adopt the resolution supporting the application to the Local Government Commission for
approval of the financing; and
4) Authorize the acceptance of written comment(s) via e-mail to the Board at
ocboccC@orangecountync.gov or by delivery to the Finance and Administrative Services'
office at 405 Meadowlands Drive, Hillsborough, North Carolina 27278, until 9:00 a.m. on
Thursday, May 6, 2021. If written comments are received before this deadline, the
resolution will be brought back to the BOCC at the May 18, 2021 Business meeting for
further consideration. If no written comments are received, the decision of the Board
approving the resolution shall become effective at 9:01 a.m. on Thursday, May 6, 2021.
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Notice of Public Hearing-Orange County,North Carolina
Financing for Various Public Improvements and Acquisitions
The Board of Commissioners of Orange County,North Carolina,will hold a public hearing
on Tuesday,May 4,2021,at 7:00 p.m.(or as soon thereafter as the matter may be heard).The purpose
of the hearing is to take public comment concerning a proposed financing contract,under which the
County would borrow an amount expected to not exceed$18,700,000 to pay for the various public
improvements and acquisitions shown here:
Component Estimated Cost
Court Street Annex Renovations $ 188,600
Criminal Justice Resource Department Expansion/Renovation $ 205,779
Accessibility&Security Improvements $ 194,643
Government Services Annex Stormwater&Renovations $ 375,000
HVAC Projects $ 714,203
Major Plumbing Repairs $ 195,343
Justice Facility Improvements $ 43,221
Parking Lot Improvements $ 57,280
Roofing&Building Fagade Improvements $ 1,130,353
Whined Building Stormwater&Renovations $ 942,372
Link Center Remediation $ 282,377
IT Fiber Connectivity $ 302,532
ITGC Initiatives&IT Infrastructure $ 372,097
Solid Waste—Improvements&Vehicle Replacement $ 319,952
Emergency Services Vehicle Replacements $ 801,802
Sheriff vehicle replacements $ 107,104
Communication System Improvements $ 150,000
Blackwood Farm Park Construction $ 2,935,000
Parks—Renovations&Easements $ 420,486
Sportsplex—Maintenance&Repairs $ 698,304
Land Banking—Affordable Housing $ 628,313
Orange County Schools—Recurring Capital Projects $ 1,200,300
Orange County Schools—Maintenance&Improvements $ 651,586
Chapel Hill-Carrboro Schools—Recurring Capital Projects $ 1,799,700
Chapel Ell-Carrboro Schools—IT Infrastructure $ 1,519,261
Chapel Hill-Carrboro Schools—Supplemental Deferred Maintenance $ 631,740
Chapel Hill-Carrboro Schools—Various Maintenance&Improvements $ 1,808,454
Total Project Costs $ 18,675,802
The County also expects to use up to approximately$18,060,000 of loan proceeds to refinance
existing County loan obligations,and additional loan proceeds to pay financing costs.
The hearing will be held in the Commissioners' usual meeting room in the County's Whitted
Building,300 West Tryon Street,Hillsborough,North Carolina.
The proposed financing would be secured by a lien on some or all of the property purchased
or improved through the financing as well as the County's promise to repay the financing,but there
would be no recourse against the County or its property(other than the pledged property)if there
were a default on the financing. The refinancings are designed to provide savings to the County
without extending the terms of the existing loans.
The County expects that the collateral for the financing will include property acquired or
improved through the proceeds of the new borrowing, as well as potentially property acquired or
improved through the proceeds of the borrowings to be refinanced.In particular,the County expects
that the Whirred Building on West Tryon Street in Hillsborough will be part of the collateral.
All interested persons will be heard. The County's plans are subject to change based on the
comments received at the public hearing and the Board's subsequent discussion and consideration.
The County's entering into the financing is subject to obtaining approval from the North Carolina
Local Government Commission.
Persons wishing to make written comments in advance of the hearing or wishing more
information concerning the subject of the hearing may contact Gary Donaldson, Orange County
Chief Financial Officer,Post Office Box 8181,Hillsborough,NC 27278(telephone 919/245-2453,
email gonaldson@orangecountync.gov).
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FES-2021-021 Attachment 2
Resolution supporting an application to the Local Government
Commission for its approval of a County financing agreement
WHEREAS--
The Orange County 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 in Exhibit A. The County has also been
advised that the County may be able to save money at the same time by refinancing
some of its outstanding loans, as described in Exhibit B.
The Board has also determined to finance the costs of these projects through
an installment financing, as authorized under Section 160A-20 of the North Carolina
General Statutes. In an installment financing, the County's repayment obligation is
secured by a mortgage-type interest in all or part of the property being financed, but
not by any pledge of the County's taxing power or any specific revenue stream. In this
case, the County expects to place that mortgage on the Whitted Building, Blackwood
Farm Park and possibly other facilities originally financed with loans now to be
refinanced.
North Carolina law requires that the County's financing be approved by the
North Carolina Local Government Commission (the "LGC"), a division of the North
Carolina State Treasurer's office. Under the guidelines of the North Carolina Local
Government Commission, this governing body must make certain findings of fact to
support the County's application for the LGC's approval of the County's financing
arrangements.
1. THEREFORE, BE IT RESOLVED by the Orange County Board of
Commissioners, as follows:
(a) The County makes a preliminary determination to finance
approximately $18,700,000 to pay capital costs of public improvements and
acquisitions, and in particular those described in Exhibit A.
(b) In addition,the County makes a preliminary determination to finance an
amount estimated as up to approximately$18,060,000 to refinance existing loans and
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in particular those described in Exhibit B.The amount for refinancing may be reduced
depending on which County loans can be efficiently refinanced.
(c) The Board will determine the final amount to be financed by a later
resolution. The final amount financed may be slightly lower or slightly higher than a
total of $36,760,000. The final amount financed will include funds to pay financing
costs and other related costs.
2. The Board of Commissioners makes the following findings of fact in
support of the County's application to the LGC:
(a) The proposed projects are necessary and appropriate for the County
under all the circumstances.
(b) The proposed installment financing is preferable to a bond issue for the
same purposes.
The County has no meaningful ability to issue non-voted general obligation
bonds for these projects, other than the school projects. The County is in the midst of
a program for issuing voter-approved bonds for school purposes and affordable
housing purposes. It is appropriate for the County to balance its capital program
between various types of financings. The County expects that in the current interest
rate environment for municipal securities there would be no material difference in
the overall financing costs between general obligation bonds and installment
financings for these projects. These projects will produce no revenues that could be
used to support a self-liquidating financing.
(c) The estimated sums to fall due under the proposed financing contract
are adequate and not excessive for the proposed purpose. The County will closely
review proposed financing rates against market rates with guidance from the LGC and
in consultation with the County's financial adviser. All amounts financed will reflect
either approved contracts, professional estimates, or previous actual expenditures.
(d) As confirmed by the County's Finance Officer, (i) the County's debt
management procedures and policies are sound and in compliance with law, and (ii)
the County is not in default under any of its debt service obligations.
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(e) Although the County expects there will be tax increases associated with
the County's overall capital improvement program, any tax increase directly
attributable to the current proposed financing will be minimal. The County will
manage the projects and its borrowing plans so as to minimize the tax impact while
still allowing the projects to proceed. The County believes that the tax rate impact of
this financing is reasonable under all the circumstances. Furthermore, the
refinancings will result in a lower debt service burden for the County.
(f) The County Attorney is of the opinion that the proposed project is
authorized by law and is a purpose for which public funds of the County may be
expended pursuant to the Constitution and laws of North Carolina.
3. Additionally, the Board resolves as follows:
(a) The County intends that the adoption of this resolution will be a
declaration of the County's official intent to reimburse project expenditures from
financing proceeds. The County intends that funds that have been advanced for
project costs, or which may be so advanced, from the County's general fund, or any
other County fund, may be reimbursed from the financing proceeds.
(b) The Board directs the Finance Officer to take all appropriate steps
toward the completion of the financing, including completing an application to the
LGC for its approval of the proposed financing. The Board ratifies all prior actions of
County representatives in this regard.
(c) This resolution takes effect immediately.
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Exhibit A - list of projects to be financed with estimated amounts
Component Estimated Cost
Court Street Annex Renovations $ 188,600
Criminal Justice Resource Department Expansion/Renovation $ 205,779
Accessibility & Security Improvements $ 194,643
Government Services Annex Stormwater & Renovations $ 375,000
HVAC Projects $ 714,203
Major Plumbing Repairs $ 195,343
Justice Facility Improvements $ 43,221
Parking Lot Improvements $ 57,280
Roofing & Building Facade Improvements $ 1,130,353
Whitted Building Stormwater& Renovations $ 942,372
Link Center Remediation $ 282,377
IT Fiber Connectivity $ 302,532
ITGC Initiatives & IT Infrastructure $ 372,097
Solid Waste— Improvements &Vehicle Replacement $ 319,952
Emergency Services Vehicle Replacements $ 801,802
Sheriff vehicle replacements $ 107,104
Communication System Improvements $ 150,000
Blackwood Farm Park Construction $ 2,935,000
Parks— Renovations & Easements $ 420,486
Sportsplex— Maintenance & Repairs $ 698,304
Land Banking—Affordable Housing $ 628,313
Orange County Schools— Recurring Capital Projects $ 1,200,300
Orange County Schools—Maintenance & Improvements $ 651,586
Chapel Hill-Carrboro Schools— Recurring Capital Projects $ 1,799,700
Chapel Hill-Carrboro Schools—IT Infrastructure $ 1,519,261
Chapel Hill-Carrboro Schools—Supplemental Deferred
Maintenance $ 631,740
Chapel Hill-Carrboro Schools—Various Maintenance &
Improvements $ 1,808,454
Total Project Costs $ 18,675,802
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Exhibit B - list of potential refinancings, with estimated amounts
Component Estimated Cost
2014 IPC Bank of America $ 3,600,000
2014 NC DEQ Loan $ 760,000
Series 2012 Limited Obligation Bonds $ 3,805,000
2017 IFC (Sterling) $ 9,895,000
Total Loan Amounts Refinanced $ 18,060,000
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ORANGE COUNTY
NORTH CAR I1IN
Series 2021 Limited Obligation Bonds
Spring Financing Resolution
Gary Donaldson, Chief Financial Officer
May 4, 2021
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Purpose
➢ Conduct Public Hearing for Limited Obligation Bonds pursuant to NC Statute Section 160A-20
➢ Obtain Board Approval to Proceed with Filing Local Government Commission Application for Series 2021
Financing
➢ Funds our FY 2020-21 Capital Investment Plan through this Series 2021 Limited Obligation Bonds are
secured by a Deed of Trust, with a security interest in the Whitted Building, Main Library, Blackwood Farms
and Culbreth Middle School.
➢ The Series 2021 Limited Obligation Bonds will fund various County projects including:
- Vehicles and Equipment (5-8 Years useful life): $908,906
- County Projects (up to 20 years useful life): $10.2
- School Projects (up to 20 years useful life): $7.5 Million
TOTAL: $18.6 Million
➢ Potential Refinancing of up to four Bond Series totaling $19 million; Series 2012, 2014 Loan, 2014 Bank of
America and 2017 Sterling Bank.
➢ Bond Refinancing Net Savings of$664,427 or 3% of the Refinanced Bonds over the maturity life of the Bonds.
ORANGE COUNTY
NORTH CAROLINA
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Spring Financing Projects
Court Street Annex Renovations $188,600
Criminal Justice Resource Department Expansion/Renovation $205,779
Accessibility & Security Improvements $194,643
Government Services Annex Stormwater& Renovations $375,000
HVAC Projects $714,203
Major Plumbing Repairs $195,343
Justice Facility Improvements $43,221
Parking Lot Improvements $57,280
Roofing & Building Facade Improvements $1,130,353
Whitted Building Stormwater & Renovations $942,372
Link Center Remediation $282,377
IT Fiber Connectivity $302,532
ITGC Initiatives & IT Infrastructure $372,097
Solid Waste— Improvements & Vehicle Replacement $319,952
Vehicle Replacements— Emergency Services $801,802
Vehicle Replacements—Sherriff $107,104
Communication System Improvements $150,000
Blackwood Farm Park Construction $2,935,000
Parks— Renovations & Easements $420,486
Sportsplex— Maintenance & Repairs $698,304
Orange County Schools — Recurring Capital Projects $1,200,300
Orange County Schools — Maintenance & Improvements $651,586
Chapel Hill-Carrboro Schools — Recurring Capital Projects $1,799,700
Chapel Hill-Carrboro Schools — IT Infrastructure $1,519,261
Chapel Hill-Carrboro Schools —Supplemental Deferred Maintenance $631,740
Chapel Hill-Carrboro Schools —Various Maintenance & Improvements $1,808,454
Affordable Housing Land Banking $628,313
Grand Total $18,675,802
0�4NGE COUNTY
NORTH CAROLINA
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Refinancing Savings Analysis
A 1# C D
2014 IPC(Bank of 2014 Revolving Loan 2DV lFC(Sterling)
Refunding Tax Status Tax-Exempt Tax-Exempt Taxable Taxable
Refunding Type Current Current Advance Advance
Summary of Bonds Refunded'.
Maturities 2/1/2022-2/1/2029 5/1/2022-5/1/2034 10/V2023-10/1/2024 6/1/2023-6/V2037 5/V2021-6/1/2037
Refunded Bonds $3,596,D04 $754,997 $3,865,DDD $9,$89,DOD $15,104,997
Refunded Bonds Call Date 8/1/2021 Current 10/1/2022 12/V2022
Call Price 1DD.Cr% 100.0°% LD1D.0% 101-0% IM0%-10L096
Average Coupon of Refunded Bonds 2.423% 2.000% 5.000% 2.83M 3.627%
Par Amount $ 3,250,DDO $ 650,DDD $ 4,215,DDD $ 10,525,00D $ 18,640,DDD
Premium 432,694 117,483 - $ 550,177
Total Sources S 3,682,694 S 76T,483 $ 4,215,DD4 $ 10,525,004 $ 191190,177
Refunding Escrow Deposits-Cash Deposit $ 0.54 $ 757,220 $ o.D7 $ OM $ 757,221
Refunding Escrow Deposits-SLGS Purchases 3,639,565 - 4,151521 10,373,D72 1$,153,958
Cost of Issuance 30,607 6,121 39,695 99,12D 175,543
Underwriter's Discount 16,250 3,250 2LD75 52.625 93,2DO
Additional Proceeds {3,729) 892 2,909 183 255
Total Uses S 3,882,694 S 787,483 $ 4,215,00- $ 10,525,000 $ 19,190,17T
True Interest Cost 0.CM% 1.189% 0.530% L875% L521%
Arbitrage Yield 1.264% 1.264% 1_264% 1.264% L264%
Final Maturity 11/15/2028 11/1.5/2033 11/15/2024 11/15/2036 11/15/2036
Refunding Statistics:
Gross Savings $ 224.979 $ 39,113 $ 189.991 $ 210.344 $ 664.427
NPV Savings($)* $ 203.195 $ 33,213 $ 1-93,682 $ 125,238 $ 555.318
NPV Savings(%of Refunded Par) 5.650% 4.399% 5.011% L266% 3,067%
ORANGE COUNTY
NORTH CAROLINA
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Key Debt Model Metrics
Debt Ratios 10-year Payout Debt to AV DS to GF Revenues
2022 63.36% 1.63% 16.02%
2023 62.14% 1.69% 15.33%
2024 64.02% 1.61% 16.00%
2025 65.78% 1.51% 15.40%
2026 67.95% 1.41% 14.58%
2027 70.83% 1.27% 14.73%
2028 74.22% 1.13% 12.80%
2029 78.71% 1.01% 11.86%
Note: Includes the Spring 2020 Financing plus future 2021-2026 CIP projects..
ORANGE COUNTY
NORTH CAROLINA
Key Financing Terms 14
➢ Security Pledge- County assets and annual County appropriations
➢ Maturity Term- S- 20 Year maturities matches the useful life of the assets
➢ Estimated Interest Rates- 2-3% subject to market conditions
➢ Series 2021 Limited Obligation Bonds Maximum Annual Debt Service not exceeding $1.9
Million (FY 2022-23)
➢ Source of Repayment- Property Tax, Solid Waste Fees and Sportsplex Fees
➢ Limited Obligation Bonds are Subordinate Lien to AAA General Obligation Bonds
➢ Anticipated Limited Obligation Bonds- AA1/AA+/AA+ from Moody's, Standard & Poor's and
Fitch Ratings
ORANGE COUNTY
NORTH CAROLINA
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Questions/Comments
ORANGE COUNTY
NORTH CAROLINA