HomeMy WebLinkAboutAgenda - 06-18-2024; 6-c - Proposed Bond Order Authorizing $300 Million in County General Obligation School Bonds, Subject to Voter Approval, and Approve the Details of the Referendum 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: June 18, 2024
Action Agenda
Item No. 6-c
SUBJECT: Proposed Bond Order Authorizing $300 Million in County General Obligation
School Bonds, Subject to Voter Approval, and Approve the Details of the
Referendum
DEPARTMENT: Finance and Administrative
Services
ATTACHMENT(S): INFORMATION CONTACT:
Attachment 1. Bond Order Gary Donaldson, (919) 245-2453
Attachment 2. Resolution Approving Chaz Offenburg, (919) 245-2071
Referendum Details Robert Jessup, (919) 933-9891
Attachment 3. Presentation
PURPOSE: To take final action approving the proposed Bond Order authorizing $300 Million in
County General Obligation School Bonds, subject to voter approval, and to approve a resolution
with the details of the referendum proposed for November 2024.
BACKGROUND: Since the presentation of the Woolpert School Facility Study in December
2023, the Board has considered at several meetings plans to respond to the funding needs
described in the study and how to balance school capital needs, other County capital needs and
the resources available.
At the January 19, 2024 Board retreat, the Board made the determination to start the bond
authorization process based on a referendum amount of$300 million in County general obligation
school bonds for both school districts.
Based on revisions as noted in the Manager's Recommended FY 2024-34 Capital Investment
Plan, the County's assumptions for repaying the $300 million in proposed County general
obligation school bonds and related interest is estimated to have a tax rate impact of 3.41 cents
per $100 of valuation, with all that increase scheduled for the County's 2025-26 Fiscal Year.
At the Board's April 2, 2024 Business meeting, the Board adopted a preliminary resolution stating
its intent to apply to the North Carolina Local Government Commission (LGC) for the LGC's
approval of the bonds (the LGC is a division of the State Treasurer's office that must approve
substantially all local government borrowing). The County published a notice of this intent as
required by law, and the LGC has accepted the County's application. At its May 7, 2024 Business
meeting, the Board introduced the Bond Order (similar to the required first reading that is
sometimes required for an ordinance) and called for the required public hearing. The Board held
that public hearing at the June 4, 2024 Business meeting.
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With this item, the Board is asked to take final action to adopt the Bond Order. The Board is then
asked to consider approval of a resolution to set formally the details of the referendum. These are
the final actions required of the Board to place the question of the school bonds before the voters
in November 2024.
One item covered by the resolution approving the referendum details is the approval of the specific
question that will be on the ballot for the voters. As has been discussed with the Board, most of
the form of the ballot question is set by law, and there is no meaningful leeway to simplify or
shorten the question. The resolution also directs staff to complete certain remaining newspaper
publications the law requires.
The Board must complete its formal authorization process before early August to allow the County
Board of Elections adequate time for ballot printing and other organizational matters for the
referendum. At this point, the Board can reduce the bond amount, but the Board cannot increase
the amount unless the process is re-started.
SECURITY FOR BOND REPAYMENT: A general obligation bond, as proposed, is not secured
by any physical collateral. Instead, the County promises to levy property taxes in whatever amount
is necessary to provide for repaying the bonds, including the interest on the money borrowed
through the bonds.
FINANCIAL IMPACT: If the voters approve, the bonds will provide funds for priority public school
projects that would otherwise have to be paid for out of recurring revenues or borrowed through
more expensive and less flexible means.
County staff has worked closely with the County's financial advisers to estimate the effect on the
County's tax rate that repaying the bonds is likely to have. The estimates are based on a variety
of assumptions, including assumptions about when the bonds would be issued, the interest rates
that the bonds will carry, the repayment period, and growth in the County's tax base over time.
The estimated tax impact is likely to be different from the actual impact.
Based on the County's assumptions, repaying the bonds and related interest is estimated to have
a tax rate impact of 3.41 cents per $100 of valuation, with all that increase scheduled for the
County's 2025-26 Fiscal Year. The County will work to minimize the tax rate impact, in a manner
consistent with moving ahead with the projects and addressing other County needs.
SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to
this item:
• 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
impact is 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 sources; and 4) minimize waste stream
impacts on the environment.
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RECOMMENDATION(S): The Manager recommends that the Board adopt the Bond Order and
the Resolution approving referendum details in the forms presented.
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Attachment l
Proposed Bond Order for adoption
Bond Order Authorizing the Issuance of Orange County General
Obligation School Bonds in the Maximum Amount of
$300,000,000, Subject To Voter Approval
WHEREAS--
The Board of Commissioners of Orange County, North Carolina, has stated
its proposal to issue general obligation bonds to pay capital costs of providing
school facilities.
The County has applied to the North Carolina Local Government
Commission for its approval of such bonds, and the Commission has accepted
the County's application.
BE IT ORDERED by the Board of Commissioners of Orange County, North
Carolina, as follows:
1. There are hereby ordered to be issued general obligation school
bonds of the County to pay capital costs of providing school facilities, together
with related financing and other necessary or incidental costs.
2. The maximum aggregate principal amount of the bonds issued for
such purpose will be $300,000,000.
3. Taxes will be levied in an amount sufficient to pay the principal of
and interest on the bonds so issued.
4. A sworn statement of debt prepared by the County's Finance
Officer has been filed with the Clerk to this Board and is open to public
inspection.
5. This Bond Order will take effect when approved by the County's
voters in the manner provided by law.
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RES-2024-037 Attachment 2
Resolution approving referendum details
WHEREAS, there has been adopted at this meeting a bond order entitled
as follows:
Bond Order Authorizing the Issuance of Orange County
General Obligation School Bonds in the Maximum
Amount of$300,000,000, Subject To Voter Approval
AND WHEREAS, this bond order is to take effect when approved by the
voters;
AND WHEREAS, the General Statutes require certain additional actions
to complete the process of authorizing the bonds and the bond referendum;
BE IT THEREFORE RESOLVED by the Board of Commissioners of
Orange County, North Carolina, as follows:
1. The Clerk to this Board is directed to publish a notice of the
adoption of this Bond Order, in the form provided for in Section 159-58 of the
General Statutes, one time in a newspaper having general circulation in the
County.
2. The Bond Order will be subject to a bond referendum to be held
within the County on November 5, 2024.
3. The Board requests that the Orange County Board of Elections
conduct the referendum in the manner provided for by law.
4. The ballot question will be in substantially the following form:
Orange County School Bonds
(For Orange County Schools and Chapel Hill - Carrboro City Schools).
Additional property taxes may be levied on property located in Orange County
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in an amount sufficient to pay the principal of and interest on bonds if approved
by the following ballot question.
Shall the order authorizing $300,000,000 bonds plus interest to pay capital
costs of providing school facilities and paying related costs and providing that
additional taxes may be levied in an amount sufficient to pay the principal of
and interest on the bonds, as adopted by the County's Board of Commissioners
on June 18, 2024, be approved, in light of the following:
(1) The estimated cumulative cost over the life of the bond, using the highest
interest rate charged for similar debt over the last 20 years, would be
$480,360,000.
(2) The estimated amount of property tax liability increase for each one
hundred thousand dollars ($100,000) of property tax value to service the
cumulative cost over the life of the bond provided above would be $34.10 per
year.
[ ] YES [ ] NO
S. The Board directs the Clerk to this Board to transmit a certified
copy of this resolution to the Orange County Board of Elections within three
days after today.
6. The Board directs the Clerk to this Board to publish notice of the
bond referendum as required by Section 159-61 of the General Statutes.
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ORANGE COUNTY
NORTH GAROLINA
General Obligation School Bonds
Final Action-Adoption of the Bond Order and Resolution
Board of County Commissioners Business Meeting
June 18, 2024
Background 8
■ School Capital Needs Taskforce recommended School Facility Study to prioritize
both School District facilities with Facility Conditions Index as a key measure.
■ At the Board of Commissioners Retreat on January 19, 2024, the County approved
moving forward with a funding plan for County and School Facility Needs. Funding
for this plan includes:
A $300 million General Obligation School Bond Referendum and additional Pay-
Go School Funding of $100 million.
Projects Based Approach identified as basis for fund allocation between both
districts
■ New State Law requires GO Bond Ballot to include Total Debt Service (Principal
and Interest) and GO Bond Tax Rate. Prior Bond Ballots had included the Principal
amount.
■ Local Government Commission has reviewed the County Plan of Finance and Debt
Policies with Staff, Financial Advisors and Bond Counsel to ensure compliance with
the new State Law..
■ Last of the 4 Required Board Actions from April 2 through June 18, 2024
OKANGE COUNTY
NORTH CAROLINA
Total Tax-Supported Debt to Assessed Value 9
and Debt Service to General Fund Revenues
Tax Rate Breakdown of Capital
Improvement Plan
Year Debt to AV DS to GF Tax Rate Base CIP:
Revenues Equivalent 2.790
2024 1.64% 13.60% -
2025 1.66% 13.09% - School
Pay-Go:
2026 1.21% 12.83% 8.88� 2.680
2027 1.44% 14.18% -
2028 1.54% 14.59% - School
GO Bonds:
2029 1.77% 16.79% - 3.410
2030 1.58% 18.34% -
2031 1.51% 19.6 7% -
2032 1.67% 19.01% -
2033 1.55% 19.32% -
2034 1.34% 19.89% -
2035 1.21% 18.89% -
Total Impact 8.88�
ORANGE COUNTY
NORTH CAROLINA
Annual Debt Service Payments on Existing Debt
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
■County Annual Debt Service ■Schools Annual Debt Service ■Durham Tech Annual Debt Service
ORANGE COUNTY
NORTH CAROLINA
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Annual Debt Service Payments on Existing and Proposed CIP Debt
$90,000,000
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
qzt l0 00 O N lzt L0 00 O N ::1- 0 00 O N 1:t
N N N M M M m M lzt IZI- IZI- IZI- Ln Ln Ln
O O O O O O O O O O O O O O O O
N N N N N N N N N N N N N N N N
■ Existing Debt Service ■ Proposed CIP Debt Service Proposed School GO Bond Debt Service
ORANGE COUNTY
NORTH CAROLINA
12
Additional Sc • • l Funding
FY GO Bonds Add] School Pay-Go Total
2024 - - -
2025 - - -
2026 - 10,000,000 10,000,000
2027 AML 100,000,000 10,000,000 110,000,000
2028 - 1070007000 10,000,000
2029 100,000,000 107000,000 110,000,000
2030 - 10,000,000 10,000,000
2031 - 10,000,000 10,0001000
2032 100,000,000 1070007000 110,000,000
2033 - 107000,000 10,000,000
2034 - 1070009000 101000,000
2035 - 10,0007000 109000,000
Total 3001000,000 1009000,000 4009000,000
ORANGE COUNTY
NORTH CAROLINA
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General Obligation Bull . ,
North Carolina General Obligation Financing Key Provisions
General Obligation Bonds
- Voter Approval Required; exception for Refunding and Two-Third Bonds
- Security Pledge- Full faith, credit/taxing power of the County
- Maturity Term- 20 years statute permits 40 years
- Senior position and takes priority to all other County Limited Obligation Bonds and Installment Notes.
- Source of repayment- Property Tax
- Finances; Buildings, School Facilities and Renovations with long useful life
- Ratings-Aaa/AAA/AAA by Moody's, Standard & Poor's and Fitch Ratings
- LGC approval required
ORANGE COUNTY
NORTH CAROLINA
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AAA GO Bond Ratings from the Three Nationally Recognized Rating Agencies
■ Orange County has maintained AAA ratings from Fitch, Moody's and
Standard & Poor's the past ten years; and Reaffirmed June 2024.
■ One of few counties with this distinction nation-wide.
■ AAA rating designation allows for lowest possible borrowing rates.
■ Prior three rating agencies' analyses have cited;
❖ Stable tax and economic base.
❖ Strong financial performance and financial policies.
❖ Regular monitoring of budget versus actuals with quarterly financial
reporting to the Board.
•'• Long-term financial modeling and proactive operating and debt
management strategies.
ORANGE COUNTY
NORTH CAROLINA
15
GO Bond and CIP Total Tax Rates
Home 3.41 GO . . • Tax Rate Per 8.88 CIP Total Tax Rate Per
Value 11 Assessed 11 Assessed Value
$100,000 $34. 10 $88.80
$200,000 $68.20 $177.60
$300,000 $102.30 $266.40
$400,000 $136.40 $355.20
$500,000 $170.50 $444.00 �M
ORANGE COUNTY
NORTH CAROLINA
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Bond Referendum Key Dates
i r
Worr--
TeRtative GO BGRGI PaR jaRwary 19, 2024 , Beard Retreat.
(Not to F=XGeed Amount)
Cuff aR d FinanniRg Team Meets with Le February l� hrard 13, 202-
Geyernmont (1nmmiccinn nn RlaR of
FiRaRGe
DwlimiRary Resell itinn_Intont to Rrnr+oed nn April 2 2024 B ic�js Mee
Net to EYGeed $300 MilliGr
r��
Firm Reading_ AwtheFiZiRg the BORd Orde,r May 7> 2024 , C"Bi ioiReS0 1\Aeet!Rg
ffT
and Call fnr Di blip Hearing
Second Reading- Take Final Action on June 18, 2024, Business Meeting
Bond Order
Bond Education Committee Summer- Autumn 2024
Bond Referendum November 5, 2024
17
2024 SAMPLE BALLC)w"-
Orange County School Bonds
(For Orange County Schools and Chapel Hill - Carrboro City Schools
Additional property taxes may be levied on property located in Orange County
in an amount sufficient to pay the principal of and interest on bonds if
approved by the following ballot question.
Shall the order authorizing $300,000,000 bonds plus interest to pay capital
costs of providing school facilities and paying related costs and providing that
additional taxes may be levied in an amount sufficient to pay the principal of
and interest on the bonds, as adopted by the County's Board of
Commissioners on June 18, 2024, be approved, in light of the following:
(1) The estimated cumulative cost over the life of the bond, using the highest
interest rate charged for similar debt over the last 20 years, would be
$480,360,000.
(2) The estimated amount of property tax liability increase for each one
hundred thousand dollars ($100,000) of property tax value to service the
cumulative cost over the life of the bond provided above would be $34.10 per
year.
[ ] YES [ ] NO
NEW-
ORANGE COUNTY
NORTH CAROLINA
18
201r- BALLP11
Orange County School Bonds
Shall the order authorizing Orange County general obligation
bonds in the maximum amount of $120,000,000 plus interest to
pay capital costs of providing school facilities and paying
related costs, and providing that additional taxes may be levied
in an amount sufficient to pay the principal of and interest on
the bonds, as adopted by the County's Board of
Commissioners on May 5, 2016, be approved? [ ] YES
[ ] NO
ORANGE COUNTY
NORTH CAROLINA