HomeMy WebLinkAboutAgenda - 05-02-2023; 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 2, 2023
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 Chaz Offenburg, (919) 245-2071
Attachment 2. Resolution Robert Jessup, (919) 933-9891
Attachment 3. PowerPoint Presentation
PURPOSE: To conduct a public hearing on a financing contract for up to $16.5 million to pay for
capital investment projects and equipment for the fiscal year, and to approve a related resolution
supporting the County's application to the Local Government Commission (LGC) for its approval
of the financing arrangements. The financing and transaction costs are included in the loan
amount.
BACKGROUND: County staff estimates that the total amount to be financed for capital
investment projects and equipment will be not exceed $16.5 million. The law requires that the
County conduct a public hearing on the proposed financing. A copy of the published hearing notice
is provided at Attachment 1.
The notice of public hearing was advertised in The Herald Sun.
After conducting the public hearing and receiving public input, the Board will consider the adoption
of the resolution (Attachment 2). This resolution formally requests the required LGC approval,
makes certain "finding of fact" as required under the LGC's guidelines, and authorizes County
staff to continue the process. The Finance Officer has been in contact with the LGC staff, and
expects no issues in receiving LGC approval.
If the Board adopts the resolution indicating its intent to continue with the financing plan, the Board
will be asked to consider a resolution giving final approval to the financing plans at its Business
meeting on May 16, 2023. Under the current schedule, County staff expects to set the final interest
rates and close by the end of June.
Collateral: For this type of County installment financing, the County secures its obligations to the
lender by a mortgage-type interest in some or all of the property being acquired or improved
through the financing. The County plans to secure this 2023 financing through a pledge of several
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school properties. County staff is discussing with both school boards the particular schools to be
used. The school boards will convey the selected schools to the County for the financing term so
that the County can utilize them as collateral. The Board will be asked to approve the transfer of
the particular schools as part of a May 16, 2023 Business meeting agenda item.
Lenders generally require that the County offer collateral equal to at least 50% of the loan amount.
The County expects to offer collateral well in excess of the loan amount, but transferring schools
to the County now will facilitate future school improvements and financings over the next several
years. The County has flexibility to release schools individually from the financing lien if that
becomes appropriate.
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 this financing would require the highest debt service payment of
approximately $2.01 million in FY 2025 (based on the lowest interest rates provided by potential
bank lenders and the $16.5 million Not-to-Exceed financing amount). The tax rate equivalent for
the estimated highest debt service payment based on the current (FY 2023) tax value of one cent
($2,212,097) is approximately $0.0091 (0.91 cents). These debt service amounts are well within
the County's debt model parameters.
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; and
3) Adopt the resolution supporting the application to the Local Government Commission for
approval of the financing.
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Attachment 1
Orange County, North Carolina -- Notice of Public Hearing
2023 Installment Financing for Various Projects
The Board of Commissioners (the "Board") of Orange County (the "County"),
North Carolina, will hold a public hearing on May 2, 2023, 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 not to exceed $16,500,000 to pay for the various public
improvements and acquisitions shown below, and to pay financing costs:
Project Est.Amount ($)
School Projects (Combined for both Orange
County and Chapel Hill - Carrboro Schools) 9,449,740
County Vehicles 1,742,927
Roof and Building Facade Projects 1,431,681
HVAC Projects 1,084,341
County IT Projects 897,070
Emergency Services Warehouse 583,757
County Communications System/Radio Upgrades 556,447
Facility Accessibility, Safety and Security
Improvements 331,215
Emergency Services Renewals and Replacements 110,997
Project Totals 16,188,175
Financing Costs and Contingencies 311,825
TOTAL $16,500,000
The total amount financed will not exceed the amounts estimated for the
project costs and financing costs.
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The hearing will be held in the Board's usual meeting room in the County's
Whitted Building, 300 West Tryon Street, Hillsborough, North Carolina.
The proposed financing would be secured by a lien on some or all of the
property purchased or improved through the financing as well as the County's
promise to repay the financing, but there would be no recourse against the County or
its property (other than the pledged property) if there were a default on the financing.
The County expects that the County's Whitted Building and several schools will serve
as 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 gdonaldson@orangecountync.gov).
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RES-2023-032 Attachment 2
Resolution supporting an application to the Local Government
Commission for its approval of a County Financing Agreement
- 2023 Multiple Proiect Installment Financing
Introduction --
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 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.
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 LGC's guidelines, 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 $16,500,000 to pay capital costs of public improvements and
acquisitions,and in particular those described in Exhibit A, and to pay financing costs.
(b) The Board will determine the final amount to be financed by a later
resolution. The final amount financed may be slightly lower or slightly higher than
$16,500,000. Some of the financing proceeds may represent reimbursement to the
County for prior expenditures on project costs.
2. The Board makes the following findings of fact in support of the
County's application to the LGC:
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(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. It is appropriate for the County to balance its capital
program between various types of financings, and the County has made extensive use
of voter-approved and two-thirds general obligation bonds. 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
the County's financial adviser. All amounts financed will reflect either approved
contracts, previous actual expenditures, or professional estimates.
(d) As confirmed by the County's Finance Officer, (i) the County's debt
management procedures and policies are sound and in compliance with law, and (ii)
the County is not in default under any of its debt service obligations.
(e) Although the County expects there will be tax increases associated with
the County's overall ten-year capital improvement program, there will be no tax
increase directly attributable to the current proposed financing.
(f) The County Attorney is of the opinion that the proposed projects are
authorized by law and are purposes 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
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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 County Manager and the Finance Officer to take
all appropriate steps toward the completion of the financing, including (i) completing
an application to the LGC for its approval of the proposed financing, and (ii) soliciting
one or more proposals from financial institutions to provide the financing. The Board
ratifies all prior actions of County representatives in this regard.
(c) This resolution takes effect immediately.
* * * * * * * * * * * * * * * * *
I certify as follows: that the foregoing resolution (which includes the attached
Exhibit A) was properly adopted at a meeting of the Board of Commissioners of
Orange County, North Carolina;that this meeting was properly called and held on May
2, 2023; that a quorum was present and acting throughout this meeting; and that this
resolution has not been modified or amended, and remains in full effect as of today.
Dated this day of , 2023.
[SEAL]
Laura Jensen
Clerk, Board of Commissioners
Orange County, North Carolina
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Exhibit A - tentative project list with amounts to be financed
Project Est.Amount ($)
School Projects (Combined for both Orange
County and Chapel Hill - Carrboro Schools) 9,449,740
County Vehicles 1,742,927
Roof and Building Facade Projects 1,431,681
HVAC Projects 1,084,341
County IT Projects 897,070
Emergency Services Warehouse 583,757
County Communications System/Radio Upgrades 556,447
Facility Accessibility, Safety and Security
Improvements 331,215
Emergency Services Renewals and Replacements 110,997
Project Totals 16,188,175
Financing Costs and Contingencies 311,825
TOTAL $16,500,000
OR- -A-NGE COUNTY
NORTH CAROLINA
Series 2023 Limited Obligation Bonds
Spring Financing Resolution
Gary Donaldson, Chief Financial Officer
May 2, 2023
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Purpose
➢ Conduct Public Hearing for Limited Obligation Bonds pursuant to NC Statute Section 160A-20
➢ Close Public Hearing
➢ Obtain Board Approval of Resolution to Proceed with Filing Local Government Commission Application for
Series 2023 Limited Obligation Bonds
➢ Funds our FY 2022-23 Capital Investment Plan through this Series 2023 Limited Obligation Bonds are
secured by a Deed of Trust, with a security interest in various County and School facilities.
➢ The Series 2022 Limited Obligation Bonds will fund various County projects including:
- Vehicles and Equipment (7 Years useful life): $1.7 Million
- County Projects (up to 20 years useful life): $5 Million
- School Prolects (up to 20 years useful life): $9.4 Million
TOTAL: $16.1 Million
ORANGE COUNTY
NORTH CAROLINA
FY 2023 Projects 11
Project LGC Application Amount Amortization Project Status
1 AMS
2 Facility Accessibility,Safety and Security Improvements $ 331,215 20-Year Level Principal Reimbursment Resolution/Purchase Order
3 HVAC Projects 1,084,341 15-Year Level Principal Reimbursment Resolution/Purchase Order
4 Emergency Services Warehouse 583,757 20-Year Level Principal Reimbursment Resolution/Purchase Order
5 Roofing/Fayade Projects 1,431,681 20-Year Level Principal Reimbursment Resolution/Purchase Order
6 AMS TOTAL 3,430,995
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9 Emergency Services
10 Communication System Improvements 207,561 8-Year Level Debt Service Quote/Purchase Order
11 Orange County Radio/Paging Upgrades
12 BDA Testing Engineering 50,904 8-Year Level Debt Service Quote/Purchase Order/Awaiting Invoice
13 Paging Equipment Replacements/Upgrades 297,982 8-Year Level Debt Service Quote Received 12-2/Under Legal Review
14 ES Renewals and Replacements 110,997 15-Year Level Principal Quote/Puchase Orders/Invoices/Payments
15 EMERGENCY SERVICES Total 667,444
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17 Information Technologies
18 ITGC 21,621 5-Year Level Debt Service Full Details to Come
19 IT Infrastructure 875,449 5-Year Level Debt Service Full Details to Come
20 Information Technologies Total 897,070
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22 Public Transportation
23 DEAPR Vehicles 97,801 7-Year Level Debt Service Reimbursment Resolution/Purchase Order
24 DSS Vehicles 29,945 7-Year Level Debt Service Reimbursment Resolution/Purchase Order
25 Emergency Services Vehicles 1,555,291 7-Year Level Debt Service Reimbursment Resolution/Purchase Order
26 Health Vehicles 59,890 7-Year Level Debt Service Reimbursment Resolution/Purchase Order
27 Public Transportation Total 1,742,927
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29 Schools
30 CHCCS
31 Classroom Improvements 301,374 20-Year Level Principal Reimbursment Resolution/Purchase Order
32 Fire Safety 155,001 20-Year Level Principal Reimbursment Resolution/Purchase Order
33 Athletice Facilities 13,766 20-Year Level Principal Reimbursment Resolution/Purchase Order
34 Recurring Capital 1,058,040 8-Year Level Principal Reimbursment Resolution/Purchase Order
35 Technology 1,065,991 20-Year Level Principal Reimbursment Resolution/Purchase Order
36 Deferred Maintenance 555,430 20-Year Level Principal Reimbursment Resolution/Purchase Order
37 CHCCS Total 3,149,602
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39 OSC
40 Recurring Capital 1,920,060 8-Year Level Principal Reimbursment Resolution/Purchase Order
41 Deferred Maintenance 4,227,420 20-Year Level Principal Reimbursment Resolution/Purchase Order
42 Fire Safety 53,800 20-Year Level Principal Reimbursment Resolution/Purchase Order
43 Classroom/Building Improvements 61,794 20-Year Level Principal Reimbursment Resolution/Purchase Order
44 Athletic Facilities 20,081 20-Year Level Principal Reimbursment Resolution/Purchase Order
45 Mechanical Systems 8,531 20-Year Level Principal Reimbursment Resolution/Purchase Order
46 Food Services 8,452 20-Year Level Principal Reimbursment Resolution/Purchase Order
47 OSC Total 6,300,138
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49 LOB Total $ 16,188,176.02
ORANGE COUNTY
NORTH CAROLINA
Key Financing Terms 12
➢ Security Pledge- County Assets serve as Collateral and subject to Annual County
Appropriations
➢ Maturity Term- 7- 20 Year maturities matches the useful life of the assets
➢ February 1 and August 1 Repayment Dates to Bank Trustee; First Interest Payment
February 2024 consistent with the Debt Model
➢ Estimated Interest Rates- Between 3-4% subject to market conditions
➢ Series 2023 Limited Obligation Bonds Maximum Annual Debt Service not exceeding $2.01
million in FY 2025 (based on current market interest rates)
➢ Source of Repayment- Property Taxes, there is no Enterprise Fund Projects with this
financing.
➢ Limited Obligation Bonds are Subordinate Lien to AAA General Obligation Bonds
➢ Current Limited Obligation Bonds- AA1/AA+/AA+ from Moody's, StandarQ NG&CL 3UNTY
Fitch Ratings NORTH CAROLINA
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Debt Service Model Metrics
Debt Ratios iG-year Payout Debt to ASV DG to GF Revenues
2023 65.42% 1.42% 14.63%
2424 67.05 ► 1.61% 13.65%
2025 68.63% 1.75% 12.79%
2026 70:88% 1.63% 14.16%
2027 73.92% 1.76% 15.02%
2028 77.53% 1.69% 14.17%
2029 B2.37% 1.80% 15.04%
2030 97.43% 1.66% 15.17%
2031 91.10% 1.71% iii
2432 94.83% 1.61% 15.60%
2033 97.15 ► 1.500% 15.686
ORANGE COUNTY
NORTH CAROLINA
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Questions
ORANGE COUNTY
NORTH CAROLINA