Loading...
HomeMy WebLinkAboutAgenda 05-07-24; 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 7, 2024 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) 245-2150 Attachment 2. Resolution Robert Jessup, (919) 933-9891 Attachment 3. Presentation PURPOSE: To conduct a public hearing on the issuance of approximately $23,500,000 to finance capital investment projects, and equipment for the fiscal year; and approve a related resolution supporting the County's application to the Local Government Commission (LGC) for its approval of the financing arrangements. The financing and transaction costs are included in the loan amount. BACKGROUND: County staff estimates that the total amount to be financed for capital investment projects and equipment will be approximately $23,500,000. The North Carolina General Statutes require that the County conduct a public hearing on the proposed financing. A copy of the published notice of this public hearing is provided (Attachment 1). The notice of public hearing was advertised in The Herald Sun and The News of Orange County. After conducting the public hearing and receiving public input, the Board is asked to consider the adoption of the resolution (Attachment 2). The resolution formally requests the required approval from the North Carolina Local Government Commission (LGC) for the County's financing, and makes certain finding of fact as required under the LGC's guidelines. County staff has been in contact with the LGC staff, and staff expects no issues in receiving LGC approval. If the Board adopts the resolution indicating its intent to continue with the financing plan, the Board will be asked to consider a resolution giving final approval to the financing plans at its May 21, 2024 Business meeting. Under the current schedule, County staff expects to set the final interest rates and close by the end of June 2024. 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 2 highest debt service payment of $2.33 million in FY 2026. The tax rate equivalent for the estimated highest debt service payment is approximately 0.67 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 conduct the public hearing, receive comments, and approve the attached resolution supporting the application to the Local Government Commission for approval of the financing. 3 ATTACHMENT 1 Orange County, North Carolina -- Notice of Public Hearing 2024 Installment Financing for Various Projects The Board of Commissioners (the "Board") of Orange County, North Carolina (the "County"), will hold a public hearing on May 7, 2024, 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 $23,500,000 to pay for the various public improvements and acquisitions shown below, and to pay financing costs: Project Est.Amount ($) Research Triangle Logistics Park $1,684,707 Lake Orange Dam Rehabilitation $252,024 Neuse River Rules/Gravelly Hill Middle School $300,000 Solid Waste Equipment Replacement $574,971 501 West Franklin improvements $2,000,000 Whitted Stormwater Improvements $175,000 Bi-Directional Emergency Response K12 Coverage $1,344,674 Assorted Vehicles $805,743 Deferred Maintenance - capital projects for Chapel $5,118,023 Hill-Carrboro City Schools Durham Tech - new building construction $11,000,000 Project Totals $23,255,142 Financing Costs and Contingencies - approx.. $244,858 TOTAL $23,500,000 4 The total amount financed will not exceed the amounts estimated for the project costs and financing costs. 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 primary 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). 5 RES-2024-021 ATTACHMENT 2 Resolution supporting an application to the Local Government Commission for its approval of a County Financing Agreement - 2024 Multiple Project 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 $23,500,000 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 $23,500,000. Some of the financing proceeds may represent reimbursement to the County for prior expenditures on project costs. 6 2. The Board 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. 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 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. 7 (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 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 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. * * * * * * * * * * * * * * * * * 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 7, 2024; 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 May, 2024. [SEAL] Laura Jensen Clerk, Board of Commissioners Orange County, North Carolina 8 Orange County, North Carolina -- Notice of Public Hearing 2024 Installment Financing for Various Projects The Board of Commissioners (the "Board") of Orange County, North Carolina (the "County"), will hold a public hearing on May 7, 2024, 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 $23,500,000 to pay for the various public improvements and acquisitions shown below, and to pay financing costs: [Project list will go here.] The total amount financed will not exceed the amounts estimated for the project costs and financing costs. The hearing will be held in the Board's usual meeting room in the County's Whitted Building, 300 West Tryon Street, Hillsborough, North Carolina. The proposed financing would be secured by a lien on some or all of the property purchased or improved through the financing as well as the County's promise to repay the financing, but there would be no recourse against the County or its property(other than the pledged property) if there were a default on the financing. The County expects that the County's Whitted Building and several schools will serve as the primary collateral. All interested persons will be heard. The County's plans are subject to change based on the comments received at the public hearing and the Board's subsequent discussion and consideration. The County's entering into the financing is subject to obtaining approval from the North Carolina Local Government Commission. Persons wishing to make written comments in advance of the hearing or wishing more information concerning the subject of the hearing may contact Gary Donaldson, Orange County Chief Financial Officer, Post Office Box 8181, Hillsborough, NC 27278 (telephone 919/245-2453, email gdonaldson@orangecountync.gov). 9 Project Est.Amount ($) Research Triangle Logistics Park $1,684,707 Lake Orange Dam Rehabilitation $252,024 Neuse River Rules/Gravelly Hill Middle School $300,000 Solid Waste Equipment Replacement $574,971 501 West Franklin improvements $2,000,000 Whitted Stormwater Improvements $175,000 Bi-Directional Emergency Response K12 Coverage $1,344,674 Assorted Vehicles $805,743 Deferred Maintenance - capital projects for Chapel $5,118,023 Hill-Carrboro City Schools Durham Tech - new building construction $11,000,000 Project Totals $23,255,142 Financing Costs and Contingencies - approx.. $244,858 TOTAL $23,500,000 10 OR- -A-NGE COUNTY NORTH CAROLINA Series 2024 Limited Obligation Bonds Spring Financing Resolution and Public Hearing Gary Donaldson, Chief Financial Officer May 7, 2024 11 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 2024 Limited Obligation Bonds ➢ Funds our FY 2023-24 Capital Investment Plan through this Series 2024 Limited Obligation Bonds are secured by a Deed of Trust, with a security interest in various County and School facilities. ➢ The Series 2024 Limited Obligation Bonds will fund various County projects including: - Vehicles and Equipment (7 Years useful life): $0.8 Million - County Projects (up to 20 years useful life): $6.3 Million - Durham Tech New Wing $11 Million - School Prolects (up to 20 years useful life): $5.1 Million TOTAL: $23.2 Million ORANGE COUNTY NORTH CAROLINA FY 2024 Projects 12 Project LGC Application Amount Debt Amortization 1 2 Planning 3 Research Triangle Logistics Park $ 1,684,707 20-Year Level Principal 4 Lake Orange Dam Rehabilitation 252,024 20-Year Level Principal 5 Planning Total 1,936,731 6 7 DEAPR 8 Neuse River Rules/Gravelly Hill Middle School 300,000 20-Year Level Principal 9 DEAPR Total 300,000 10 11 Solid Waste 12 Solid Waste Equipment Replacement 574,971 8-Year Level Debt Service 13 Solid Waste Total 574,971 14 15 AMS 16 501 West Franklin 2,000,000 15-Year Level Principal 17 Whitted Stormwater Improvements 175,000 20-Year Level Principal 18 AMS Total 2,175,000 19 20 Emergency Services 21 Bi-Directional Emergency Response K12 Coverage 1,344,674 8-Year Level Debt Service 22 Emergency Services Total 1,344,674 23 24 Public Transportation 25 AMS Vehicles 2 E Transit Vans 110,008 7-Year Level Debt Service 26 Animal Services Vehicles(2 E250 Fords) 97,800 7-Year Level Debt Service 27 DEAPR Vehicles(1 F250 and 1 F350) 100,556 7-Year Level Debt Service 28 DSS Vehicles(2 Escapes and 1 Pacifica) 103,659 7-Year Level Debt Service 29 Emergency Services Vehicles 4 Durangos and 1 Transit Van) 334,582 7-Year Level Debt Service 30 Environmental Health Vehicle Rav 4) 29,759 7-Year Level Debt Service 31 Planning Office Vehicles 29,379 7-Year Level Debt Service 32 Public Transportation Total 805,743 33 34 Schools 35 CHCCS 36 Deferred Maintenance 5,118,023 20-Year Level Principal 37 CHCCS Total 5,118,023 38 39 Durham Tech 40 Durham Tech 11,000,000 20-Year Level Principal 41Durham Tech Total 11,000,000 - 42 ORANGE COUNTY 43 LOB Total $ 23,255,142 NORTH CAROLINA Key Financing Terms 13 ➢ 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 ➢ April 1 and October 1 Repayment Dates to Bank Trustee; First Interest Payment on October 1, 2024 and First Principal Payment on October 1, 2025, consistent with the Debt Model ➢ Estimated Interest Rates- Between 3.5% - 4.5% subject to market conditions ➢ Series 2024 Limited Obligation Bonds Maximum Annual Debt Service estimated to be $2.33 million in FY 2026 ➢ Source of Repayment- Property Taxes and Solid Waste Fees ➢ Limited Obligation Bonds are Subordinate Lien to AAA General Obligation Bonds ➢ Current Limited Obligation Bonds- Aa1/AA+/AA+ from Moody's, Standard & Poor's and Fitch Ratings ORANGE COUNTY NORTH CAROLINA LOB Collateral Overview 14 ➢ Security Pledge- County Assets serve as Collateral and subject to Annual County Appropriations ➢ Lenders generally require that the value of the collateral be equal to at least 50% of the financing amount (for example, at least $10 million of collateral for a $20 million loan .) ➢ The Whitted Building, Orange County Library in Hillsborough and a variety of schools serves as the collateral which far exceeds the lender's requirements. ➢ Pursuant to the County's financing document, the County can continue to borrow money against this same collateral pool as longs as a meaningful portion of the amount financed is used to improve property in the collateral pool. ORANGE COUNTY NORTH CAROLINA 15 Debt Service Model Metrics A11 CI P Projects Debt Ratios 10-year Payout Debt to AV DS to GF Revenues 2024 62.88% 1.64% 13.60% 2025 63.63% 1.66% 13.09% 2026 62.82% 1.21% 12.83% 2027 60.37% 1.44% 14.18% 2028 60.43% 1.54% 14.59% 2029 59.66% 1.77% 16.79% 2030 62.10% 1.58% 18.34% 2031 64.39% 1.51% 19.67% 2032 62.42% 1.67% 19.01% 2033 65.05% 1.55% 19.32% 2034 67.52% 1.34% 19.89% ORANGE COUNTY NORTH CAROLINA 16 Questions ORANGE COUNTY NORTH CAROLINA