HomeMy WebLinkAboutAgenda 03-17-2026; 12-3 - Information Item - Memorandum - Proposed Limited Obligation Bond Financing - Orange Grove Fire District 1
ORANGE COUNTY
NORTI I CAROLINA
FINANCE and ADMIMSTRATIVE SERVICES
Gary Donaldson,CTP,Chief Financial Officer I gdonaldson@orangecountync.gov I PO Box 8181,Hillsborough,NC 272781 919.245.2453
INFORMATION ITEM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: March 17, 2026
Re: Proposed Limited Obligation Bond Financing- Orange Grove Fire District
This memorandum provides a briefing on a proposed borrowing to support capital improvements for the Orange
Grove Fire District (OGFD).
Background
The OGFD has formally requested inclusion in the County's upcoming Spring bond issuance to finance renovations
and upgrades to its Rocky Ridge Fire Station #2. The project will convert the existing facility from a garage structure
into a fully functioning fire station with living quarters, office space, and kitchen facilities. The renovation is intended
to support long-term service delivery within the district. The estimated project cost is approximately $1.5 million,
and the Fire Department has demonstrated its ability to incorporate annual debt service payments into its operating
budget. The County's bond counsel, Sanford Holshouser PLLC has confirmed that the County can include OGFD in
our upcoming Series 2026 A Spring Financing pursuant to North Carolina General Statute N.C.G.S 153A-448.
Proposed Financing Structure
Staff proposes to include this project in the County's upcoming Limited Obligation Bond (LOB) issuance (Series 2026
A). Under the current planning scenario:
• Total par amount: $1,515,000
• Assumed interest rate: 5.00% (planning rate)
• Final maturity: June 30, 2047
• Total projected debt service: $2,363,547.92
Debt Service Requirement
Annual debt service is structured to decline over time, beginning at approximately $155,750 in FY 2027-28 and
stepping down gradually to approximately $78,750 in the final year. The first payment (FY 2026-27) reflects interest
only, estimated at $59,547.92. These estimates are preliminary and subject to change based on market conditions at
the time of bond pricing.
2
OGFD Annual Tax Levy
The OGFD will be responsible for reimbursing the County annually for the full amount of debt service through final
maturity. The district adjusted their tax rate in FY 2025-26 from 5.81 cents to 7.00 cents per $100 of assessed
valuation to account for this capital replacement request and other expenditure requirements. The OGFD FY 2025-
26 annual tax levy is projected to generate $1,133,337 for operating and maintenance expenses and the proposed
debt service requirement. OGFD debt service payments to the County will be structured to coincide with the
County's debt service schedule and repayment to the bank trustee.
County Recourse for Annual OGFD Repayment
The County provides annual property tax revenues to OGFD in four equal quarterly payments each fiscal year based
on their district tax levy. The OGFD debt service repayment date will be set for January 15 every fiscal year which
coincides with peak tax collections for OGFD. If debt service payment is not received by January 15, then the County
will deduct and apply, through a right of set-off, an amount from the fourth quarter (March) property tax
distribution to OGFD sufficient to satisfy the annual debt service requirement. The OGFD repayment will be
recorded in our Debt Service Fund.
Bond counsel is currently preparing an Inter-Local Agreement (ILA) pursuant to North Carolina statutory
requirements. The ILA will:
• Formalize the Fire District's obligation to make annual debt service payments to the County;
• Specify the term of repayment through final maturity;
• Address any required security provisions consistent with LOB financing.
Because the OGFD will provide annual payments equal to debt service, the borrowing will not result in a net County
General Fund tax burden. As with all LOB financings, the County's credit will secure the bonds; therefore, careful
documentation and financial review are being undertaken to mitigate risk and ensure statutory compliance.
Next Steps
1. Finalize financing documents, Inter-Local Agreement and CIP Budget Amendment.
2. Include the project in the Series 2026 A LOB financing package.
3. Return to the Board for formal approval actions prior to issuance.
Staff will continue to coordinate with the Fire District and bond counsel and will return with formal ILA and Budget
Amendments at the April Board meetings.
Please let me know if you have any additional questions.
cc: Travis Myren, County Manager
Cait Fenhagen, Deputy Manager
Kirk Vaughn, Budget Director
Enclosures
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Orange Grove Volunteer Fire Department
Oct 10th, 2025
Mr.Travis Myren
Orange County Manager
PO Box 8181
Hillsborough, NC 27278
Dear Mr. Travis Myren,
We are requesting to be included in the upcoming County bond issuance process that the County
handles for capital projects. We will be transforming our Rocky Ridge fire station#2 from a garage
building into a fully functioning fire station to include living quarters, office space and kitchen. This
renovation will provide well into the future for our community's service area.
The renovations and upgrades to the station are estimated to be 1.5 million to complete the
addition and upgrades to this fire station. We are requesting 1.5 million to cover the cost with a
payback period up to 20 years and potentially be able to repay some earlier if funding becomes
available. We have already incorporated this type of payment into our budget planning and used
some funding to complete designing and are now ready to move into the next phases of
construction etc. We plan on starting construction in the spring of 2026 and hopefully complete the
project before the end of the year 2026.
We are looking forward to the opportunity that this partnership with the county will bring savings,
while keeping our operations as needed to maintain the current level of services for our citizens and
continuously progress our department.
As requested, we have attached a copy of Orange Grove Volunteer fire Company's board meeting
minutes.These minutes were approved by vote of our Board of Directors on Oct 6th, 2025.
If we need to meet with you to discuss this request, please do not hesitate to contact us directly.
Thank you for your continuous support of our department and the citizens of Orange Grove,
Sincerely,
Daniel Snipes
Board President
6800 Orange Grove Rd Hillsborough, NC 27278 1919 967-5858
4
NET DEBT SERVICE
Orange County, NC
Limited Obligation Bond,Series 2026(OGFD)
Planning Rate
Preliminary&Subject to Change
Period Total Net
Ending Principal Coupon Interest Debt Service Debt Service
06/30/2027 59,547.92 59,547.92 59,547.92
06/30/2028 80,000 5.000% 75,750.00 155,750.00 155,750.00
06/30/2029 80,000 5.000% 71,750.00 151,750.00 151,750.00
06/30/2030 80,000 5.000% 67,750.00 147,750.00 147,750.00
06/30/2031 75,000 5.000% 63,750.00 138,750.00 138,750.00
06/30/2032 75,000 5.000% 60,000.00 135,000.00 135,000.00
06/30/2033 75,000 5.000% 56,250.00 131,250.00 131,250.00
06/30/2034 75,000 5.000% 52,500.00 127,500.00 127,500.00
06/30/2035 75,000 5.000% 48,750.00 123,750.00 123,750.00
06/30/2036 75,000 5.000% 45,000.00 120,000.00 120,000.00
06/30/2037 75,000 5.000% 41,250.00 116,250.00 116,250.00
06/30/2038 75,000 5.000% 37,500.00 112,500.00 112,500.00
06/30/2039 75,000 5.000% 33,750.00 108,750.00 108,750.00
06/30/2040 75,000 5.000% 30,000.00 105,000.00 105,000.00
06/30/2041 75,000 5.000% 26,250.00 101,250.00 101,250.00
06/30/2042 75,000 5.000% 22,500.00 97,500.00 97,500.00
06/30/2043 75,000 5.000% 18,750.00 93,750.00 93,750.00
06/30/2044 75,000 5.000% 15,000.00 90,000.00 90,000.00
06/30/2045 75,000 5.000% 11,250.00 86,250.00 86,250.00
06/30/2046 75,000 5.000% 7,500.00 82,500.00 82,500.00
06/30/2047 75,000 5.000% 3,750.00 78,750.00 78,750.00
1,515,000 848,547.92 2,363,547.92 2,363,547.92
Prepared by DBC Finance (Orange County, NC:26BLWEB-26LOBS) Page 37