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Home My WebLink AboutMinutes 04-16-2026-Budget Work Session 1 APPROVED 5/19/26 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION -CIP April 16, 2026 7:00 p.m. The Orange County Board of Commissioners met for a Budget Work Session on the CIP on Thursday,April 16, 2026, at 7:00 p.m. at the Whiffed Human Services Center in Hillsborough, NC. COUNTY COMMISSIONERS PRESENT: Chair Jean Hamilton, Vice-Chair Amy Fowler, and Commissioners Marilyn Carter,Jamezetta Bedford, and Earl McKee COUNTY COMMISSIONERS ABSENT: Commissioners Sally Greene and Phyllis Portie-Ascott COUNTY ATTORNEYS PRESENT: John Roberts COUNTY STAFF PRESENT: County Manager Travis Myren, Deputy County Manager Caitlin Fenhagen, and Clerk to the Board Laura Jensen. (All other staff members will be identified appropriately below) Chair Hamilton called the meeting to order at 7:00 p.m. All commissioners were present except Commissioner Greene and Commissioner Portie-Ascott. 1. Discussion of Manager's Recommended FY 2026-36 Capital Investment Plan (CIP) The Board discussed the Manager's Recommended FY 2026-36 Capital Investment Plan. BACKGROUND: Each year,the County produces a Capital Investment Plan (CIP)that establishes a budget planning guide related to capital needs for the County and Schools.The 10-Year CIP is evaluated annually to include year-to-year changes in priorities, needs,and available resources. Approval of the CIP commits the County to the first year funding only of the capital projects; all other years are used as a planning tool and serves as a financial plan Capital Investment Plan—Overview The FY 2026-36 CIP includes County Projects, School Projects, and Proprietary Projects. The School Projects include Chapel Hill-Carrboro City Schools, Orange County Schools, and Durham Technical Community College—Orange County Campus projects. The Proprietary Projects include Water and Sewer, Solid Waste Enterprise Fund, and Sportsplex projects. The CIP has been prepared anticipating moderate economic growth of approximately 2% in property tax growth and 4%in sales tax growth annually over the next ten years. The CIP will rely substantially on debt financing to fund the projects and these required debt amounts are fully integrated in the County's Long- Term Debt Model (page 45 provides a bar chart of the ten year funding plan). The meeting discussion will focus on the specific projects in the County and Proprietary CIP. Note: Page numbers are referenced below as they appear in the CIP document. See Attachment A for the Overall CIP Summary (page 41), County CIP Projects Summary (page 53), the Proprietary CIP Summaries (page 121) and School CIP Summary(page 132).There will also be a general overview of the School Major Projects. Discussion at this meeting will also be directed to the Debt Service and Debt Capacity — General Fund (page 161), the Water and Sewer Debt Service requirements paid with Article 46 Quarter Cent Sales Tax 2 proceeds (page 163), and Debt Service requirements for Solid Waste (page 164) and Sportsplex (page 165). Travis Myren made the following PowerPoint presentation: Slide#1 ORANGE COUNTY NORTH CAROLINA ORANGE COUNTY CAPITAL INVESTMENT PLAN FY2026-36 Board of Commissioners'Work Session April 16, 2026 1 Slide#2 Purpose • Purpose of the Capital Investment Plan — Board Approves Year 1 of the Plan as the FY2026-27 Capital Budget — Ten Year Planning Horizon (FY2026-36) • Imposes Planning Discipline • No Surprises — Debt Service Requirements • Amount of Funds Required in the Operating Budget • Measures Debt Capacity—Debt Service Compared to Expected General Fund Revenue • Predicts Potential Tax Increases Required to Pay Debt Service ORANGE COUNTY 2 NORTH CARC LINA 3 Travis Myren explained that the purpose of the CIP is to approve year one as the capital budget, establish a ten-year planning horizon to avoid future surprises, and project what will be needed in the operating budget to finance large capital projects. Slide#3 FY2026-36 Recommended Capital Investment Plan • Implementation of Guiding Plans — Long-Range School Optimization Plan — County Long-Range Facilities Plan • Projects Aligned with Strategic Plan - Strategic Plan Priorities — Responsive Projects • Environmental Protection and Climate Action Climate Action Plan Projects Healthy Community Emergency Services Projects Housing for All Affordable Housing •Multi-modal Transportation Transit Plan Update,Bus Shelters • • School Construction and Planning and Design • Public Education/Learning Community Piedmont Food Processing Center • Diverse and Vibrant Economy ORANGE COUNTY 3 NORTH CAROLINA Travis Myren noted that the projects in the CIP are aligned with the Long-Range School Optimization Plan, the County Long-Range Facilities Plan, and the County's Strategic Plan. Slide#4 FY2026-36 Recommended Capital Investment Plan • Year 1 — FY2026-27— Focus of Work Session Presentation Recommended FY2026-27 Capital Expenditures-$150.8 million County Capital $29.5 million (19.6%) Proprietary Funds $2.5 million (1.7%) School Capital $118.8 million(78.7%) FY2026-36 Recommended Expenditures by Year lfio,000,000 $1fi 5,259,1J8 160,000,000 $150,757,889 $142,263,444 140,009,000 120p00,000 46% ■Schaal Band Projects 100,000,000 $98,199,962 ■Schaal Capital 80,000,000 $J5,851,489 •ProprietaryW ds $SJ,80J,120 •County[appal $47,139,491 $44,752,559 $48,734,735 TOTAL $40,824,052 40,000,000 20,000,o00 a FY 2024-Z] FY 2027-28 FY 2028-29 FY 2029-30 FY 203431 FY 2031-32 FY 2032-33 FY 2033-30 FY 203435 FY 2035-36 4 Travis Myren said county capital, propriety funds, and school capital make up 19.6%, 1.7%, and 78.7%of year one of the CIP respectively. He said the graph on slide#4 demonstrates the split across these categories as well as the school bond projects over time. He explained that the high proportion of school capital in year one reflects the two elementary school builds currently underway, and that the split shifts in year two to approximately 46% schools and 51% county projects, owing to the planned Emergency Services Headquarters and the Viper radio system. Commissioner McKee asked whether the$118 million projected for schools in FY 2026-27 would be drawn immediately upon construction commencement or in tranches. Travis Myren clarified that borrowing occurs when the Guaranteed Maximum Price (GMP) is received from the schools and bids are in hand, at which point the full amounts for both construction projects are borrowed simultaneously. Vice-Chair Fowler asked whether debt service on the proprietary funds is paid from those funds rather than from the general fund. Travis Myren confirmed this, specifying that Sportsplex revenue covers the Sportsplex, and the Solid Waste Fund revenue covers Solid Waste,with some Article 46 debt service also flowing through that is not general fund money. Slide#5 FY2026-36 Recommended Capital Investment Plan • 2700 Homestead Rd Facility $339,500 (p.55) Housing For All Objectives Resilient Community Goals — Lease pending approval by UNC Board of Trustees and Board of Commissioners • Sublease—30%of facility to Town of Carrboro Public Works • Town would share operating costs and cost of system improvements :Tr — Renovation for Cold Weather Cots for fall/winter 2026/27- $30,000 M — Design of HVAC, roof replacement, renovation for housing human services resources-$309,500 • Pending concept plan to the Board of Commissioners in Pall 2026 • Create spaces for broader use for Housing and Social Services ' resources 2700 Homestead Road,Chapel Hill — Renovation costs estimated at$3.3 million in FY2027-28 ORANGE COUNTY 5 NORTH CAROLINA Travis Myren introduced the 2700 Homestead Road project, reminding the Board that this UNC- owned facility had been identified in September as the primary southern location for the county's cold weather cot program. He noted the lease is a ten-year ground lease at effectively no cost, pending approval by the UNC Board of Trustees, after which it would return to the Board of Commissioners for approval. Start-up costs for the cold weather cot program were estimated at $30,000, requiring no additional renovations. He further proposed bringing back a concept plan in the fall for other potential uses of the facility, at which point planning funds might be requested. 5 Commissioner Bedford said she is leery about committing$300,000 in year one for planning costs. She asked if the timing could be handled differently. Travis Myren offered to remove the planning funds from the CIP entirely and instead bring them back as a budget amendment in the fall if the Board preferred that approach. He confirmed the relatively small amount would have no impact on the debt model. The Board reached consensus on removing this cost from the CIP. Slide#6 FY2026-36 Recommended Capital Investment Plan Environmental Protection and Climate Action • Climate Change Mitigation $211,110 All Climate Action Plan Focus Areas , 1p 59) Urban Sustainability Solutions — Climate mitigation grants to non-profit and public agencies through a formal competitive grant process I� J f — General fund support decreased by$62,000 to support Sustainability staffing in Operating }rl Budget 0 f — Future years assume 2/o annual growth in grant funds Students planting a rain garden as pan of Urban Sustainability Solutions Community Climate Action Grant Project ORANGE COUNTY a NORTH CAROLINA Travis Myren presented the Climate Change Mitigation grant program, which historically funds nonprofits and the schools for sustainability initiatives. He signaled that the operating budget would propose reducing the grant program by approximately$62,000 to fund staffing needs in the sustainability office, leaving approximately$211,000 for climate change grants,growing at the standard 2%annually. He noted this was being flagged now so it would not come as a surprise when the operating budget is formally presented. 6 Slide#7 FY2026-36 Recommended Capital Investment Plan • Climate Change Mitigation Project Status FY2024-25 Awards FY2025-26 Awards Shade for Schools Trees for the Triangle $50,000 In progress Tree planting program with Trees for the Triangle $30,000 In progress educational workshops Green Infrastructure Workforce Urban Sustainability $58,100 Completed Green Infrastructure Workforce Urban Sustainability Development Program Solutions Development Program Solutions $38,000 In progress Rooftop Solar on St.Joseph's Solar Equity $50,000 In progress Renewable energy CME Church infrastructure Red Hawk Farm $30,000 In progress Electrical Panel for Solar EMPOWERment $19,800 In progress Carolina Community Project Compost program expansion $21,300 In progress Prairie Restoration and Compost Reforestation Projects Eno River Association $22,600 In progress Energy Efficient Windows Weaver Community $61,305 In progress Housing Association Food Forest Jubilee Healing Farm $12,000 In progress Rooftop solar installation Solar Equity $28,000 In progress Rooftop Solar on Habitat Homes Habitat for Humanity $50,000 Completed Carrboro Energy EfficiencyProgram for Residents Town ofCarrboro $29,145 In progress Twin Creeks Farm expansion to provide locally sourced food Table Ministries $30,000 In progress for children served by Table. ORANGE COUNTY NORTH CAROLINA Travis Myren acknowledged that some projects take time to complete after the award is made, drawing a comparison to the lag seen in some housing projects, and characterized this as not uncommon for this type of project. Commissioner Carter asked about the workforce development program. Travis Myren said staff will provide a description of that. Commissioner McKee asked whether staff tracks how far along grantees are toward completion, expressing concern that the same organizations should not be eligible for new grants while an existing award remains uncompleted. Travis Myren indicated staff would follow up with more detail, noting that "in progress" status means the contract has been let and funds are available, but the project is not yet complete. 7 Slide#8 FY2026-36 Recommended Capital Investment Plan onmental Protection and Climate Actinn Built Environment and Energy Goals • Electrical Upgrades $350,000 (p.61) — Server Room Uninterruptable Power Supply (UPS) replacement-$300,000 — Energy Efficiency LED Upgrades-$50,000 • Primary focus on West Campus Office Building �1 ORANGE COUNTY NORTH CAROLINA 8 Slide#9 FY2026-36 Recommended Capital Investment Plan Pnvironmental Protection am!Climale Actiuri Mission Support • Facades $71,040 (p.64) — Animal Control replacement of vehicular access gate to secure Animal Control vehicles-$13,040 — Efland Cheeks Community Center dumpster enclosure for new dumpster- $58,000 �1 ORANGE COUNTY s NORTH CAROLINA Commissioner Carter questioned the$58,000 figure for the dumpster enclosure on slide#9. Angel Barnes, Capital Projects Manager, responded that the estimate is based on recent builds and costs of similar enclosures, such as the enclosure behind the current facility,though a firm contractor quote has not yet been obtained. 8 Commissioner Bedford asked how trash is currently being managed at the location. Alan Dorman, Asset Management Director, responded that trash is currently taken to the street, and that a permanent dumpster has long been desired given heavy use of the facility for weekend events. Commissioner McKee questioned whether a chain link fence would suffice rather than a full enclosure. Alan Dorman indicated the enclosure is primarily a beautification and code requirement rather than a security issue but agreed to verify the applicable code requirements. Commissioner McKee said he's concerned about such a high cost for an enclosure. Slide#10 FY2026-36 Recommended Capital Investment Plan Environmental Protection and Climate Action Mission Support • Facility Accessibility, Safety, and Fire Alarm and Fire Suppression System Security Improvements - $100,000 Replacements - $25,000 (p.69) (p.66) — Chapel Hill Courthouse security system and — Fire door replacements Countywide- cameras—$36,000 $25,000 — Drakeford access control for staff parking, Building code requires annual inspections leading to elevator, and stairwell -$39,000 more replacements — Countywide accessibility improvements- $25,000 ORANGE COUNTY 10 NORTH CAROLINA Travis Myren presented several facility accessibility projects. He noted that the Chapel Hill Courthouse houses traffic court, misdemeanor court, and several treatment courts.The Drakeford access control project addresses issues of individuals accessing stairwells and elevators after hours when staff are not present. Commissioner Carter said the Board received an email recently about security at the Historic Courthouse in Hillsborough. She asked if those concerns would be addressed in the CIP. Travis Myren said staff has reached out to Chief Superior Court Judge about that issue, but it won't be addressed in the CIP. Commissioner McKee affirmed the need for improvements at the Drakeford Complex, noting he had received constituent comments about unauthorized individuals being in the facility. Vice-Chair Fowler asked if those improvement costs for the Drakeford will be shared with Carrboro. Travis Myren said yes. Chair Hamilton asked how much the county portion will be. Alan Dorman said the total price of$39,000 will be shared between both jurisdictions. Slide#11 9 FY2026-36 Recommended Capital Investment Plan ^i.nr1r lmiec,tion rinrl CI .hrtion Mission Support • Fuel Station — Pump, Tanks &Tank Monitoring Replacement - $297,200 (p.71) — Replacement of underground fuel storage tanks at the end of life with above-ground fuel storage with barriers �1 ORANGE COUNTY NC)R f H CARC71-INA 11 Travis Myren explained the proposal to replace underground fuel tanks at the motor pool with aboveground tanks. He said it is the environmentally right thing to do, as it eliminates the risk of undetected soil contamination. He said barriers would also be constructed around the new aboveground tanks, and spill detection equipment would be replaced. Commissioner Bedford asked whether testing for soil contamination would be required. Travis Myren indicated the underground tanks would be left in place but filled with an inert material rather than removed. Slide#12 FY2026-36 Recommended Capital Investment Plan Environmental Protection and Climate Action an Community Goais • Historic Courthouse Square - $371,243 ' (p.74) — Historic Courthouse design • Exterior restoration and structural repairs • Interior upgrades to elevator,electrical system,HVAC system,fire alarm,audiolvisual devices and lighting — Construction costs in Year 2-$4.5 million �1 ORANGE COUNTY NCIRTH CARC?LINA 12 10 Travis Myren said the planning funds detailed on the slide will lead to construction costs in year 2 of the plan. Commissioner Carter asked if the Town of Hillsborough is a financial partner in this project. Travis Myren said no. Slide#13 FY2026-36 Recommended Capital Investment Plan Environmentai Protection and Climate Action 1,•;+'Frwirnnmpnt s nr?FnnrnI� I, • Heating, Ventilation, and Cooling (HVAC) Projects - $1,472,540 (p.75) — Countywide component replacement- $50,000 — Efland Cheeks Community Center HVAC replacement- $37,380 — Justice Facility- Fan Coil Unit, Unit Heater Replacements -$198,400 — West Campus Server Room HVAC replacement-$285,000 — Whitted professional services Phase 1 of comprehensive HVAC replacement -$42,000 — Whitted Complex Phase 1 HVAC Replacement- Boilers & Pumps -$859,760 • Total four-year project cost-$6.1 million ORANGE COUNTY s NORTH CAROLINA Travis Myren reviewed the various HVAC improvements at county facilities. He identified the Justice Facility,West Campus Server Room,and Whitted Complex as the highest cost projects. He indicated that the remaining phases of the Whitted complex improvements will take place over 4 years. Commissioner Bedford asked if Medicaid reimbursement dollars the Health Department receives could be used to offset costs. Travis Myren said staff will investigate that option for the medical and dental clinics specifically. 11 Slide#14 FY2026-36 Recommended Capital Investment Plan ,,vironmental Protection and Climax Built Environment and Energy Goa,. • Interior Finish Replacements - $157,000 (p.77) - Passmore Center to replace movable partition wall -$115,000 - AMS assistance required to close existing partition - Fleet Services renovation to create office i I� space-$42,000 - Fleet Manager and Supervisor do not currently have private office space ORANGE COUNTY N"R'TII CARCPI INA 14 Travis Myren presented two interior finish replacements. The first is a replacement movable partition at the Passmore Center gymnasium —the partition between two usable spaces has deteriorated to the point that staff cannot operate it themselves, requiring Asset Management Services assistance. Travis Myren noted the partition could be used as frequently as weekly to allow two simultaneous programs in the space, but that difficulty in using it has reduced that frequency significantly. Commissioner McKee expressed concern about the cost, asking what it costs in AMS staff time to open and close the partition, suggesting those ongoing costs might be weighed against the capital investment. Travis Myren acknowledged that AMS staff resources are primarily dedicated to cleaning and repair functions rather than event operations. Commissioner McKee questioned why regular staff could not perform the task. Travis Myren responded that those staff have other duties. Commissioner Carter noted that no rental revenue is foregone, as the space is not rented out. Commissioner Bedford framed the benefit in terms of service capacity — enabling two senior programs simultaneously rather than one. Vice-Chair Fowler said she assumes from this proposal that the current partition is not reparable. Travis Myren said that's right. Chair Hamilton agreed the cost is high and suggested looking into alternative options to achieve the desired outcome. Regarding the project for Fleet Services, Commissioner Bedford asked where it is located. Travis Myren said the motor pool offices. Commissioner McKee asked why staff couldn't continue without private offices. Travis Myren said this would certainly be an improvement to the space because managers and supervisors are not currently able to talk to staff privately. Commissioner Bedford said it is worth the money to provide private office spaces. Commissioner Carter advocated for private office space for Fleet Services but agreed with the discussion about the partition at the Passmore Center. Slide#15 12 FY2026-36 Recommended Capital Investment Plan nvuorimentai Piotectron and Cinnate Ac;bor, Built Environment and Enr.rgv Goals • Link Center Renovations - $15,514,576 (p.81) Link Building renewal to relocate the Sheriffs office, providing more adequate and functional - - space o Creates vacant space in the Justice Facility for District Attorney's Office, Public Defender's Office, and Criminal Justice Resource Department o Justice Facility renovation to backfill prior Sheriff's Office is scheduled in Years 2 and 3 at a cost of$3.9 million ORANGE COUNTY $ NORTH CAROLINA Travis Myren described a"renewal"of the Link Center,explaining it would involve a transformation of both the interior and exterior to accommodate the Sheriff's Office, which would relocate from the Justice Center. He said relocation would initiate a sequence of other improvements: the Public Defender would move out of leased space into the vacated Sheriff's Office space, and the District Attorney would move from a building in need of significant repairs into the space backfilled by the Sheriff.The remodel of backfill offices at the Justice Center is estimated at approximately $3.9 million in years two and three of the plan. Commissioner McKee observed that the Link Center work might have been done several years ago at a lower cost. Travis Myren acknowledged that the prior estimate related only to exterior work, whereas this project creates an entirely new space for the Sheriff's Office. 13 Slide#16 FY2026-36 Recommended Capital Investment Plan Healthy Community, Multi-modal Transportation Built Environment and Energy Goals • OCTS Bus Shelters- $68,750 (p.82) - Funds the procurement and installation of two (2) bus shelters to improve access to transit services • One shelter will serve the Crisis Diversion Facility • Second shelter prioritized based on need �..t..t - Partially funded ($55,000) by Federal Transit Administration (FTA) Section 5339 grant • County cost-$13,750 - Future funding programmed to install two (2) bus shelters annually over the next four years Orange County Public Transportation Bus Stop in Hillsborough,NC ORANGE COUNTY e NORTH CAROLINA Slide#17 FY2026-36 Recommended Capital Investment Plan Mission Support _ - • OCTS Grant Funded Vehicles - --�. low $367,919 (p.83) Now - Funds 2 replacement ADA minivans for Mobility on Demand/Demand Response and 1 replacement ADA bus for Fixed Route F� t Services - 80% of cost is reimbursable through Federal - o Transit Administration (FTA) Section 5307 and North Carolina Department of Transportation (NCDOT) FTA 5339 grants s - County cost-$73,584 -- ORANGE COUNTY 7 NORTH CAROLINA 14 Slide#18 FY2026-36 Recommended Capital Investment Plan Environmental Protection and Climate Action Environmental Protection and Climate Action Resilient Community Goals Built Environment and Energy Goals • Parking Lot Improvements - $55,000 Piedmont Food Processing Center (p.85 ) $98,944 (p.87 ) — Animal Services study for potential parking — Replace the condensing units for the walk-in expansion -$25,000 freezers and update the existing security camera system — Other Repair, Patching, Striping, Sealing - Currently no security system in place for facility in $30,000 continuous use — Funded from Article 46 Sales Tax Proceeds. ORANGE COUNTY 1e NORTH CAROLINA Travis Myren explained that the front parking lot at Animal Services is routinely full, and that during clinics such as rabies or spay/neuter events, overflow parking creates safety hazards on Eubanks Road,which has led to the request of a study for potential parking expansion. Chair Hamilton noted that if Article 46 funds are used for the Piedmont Food Processing Center project, less will be available for other projects that are eligible. Travis Myren said that is how he is recommending it be paid for, but that can be changed. Slide#19 FY2026-36 Recommended Capital Investment Plan Environmental Protection and Climate Action Mission Support Resource Conservation Goals • Plumbing Repairs - $38,400 (p.89) Register of Deeds Automation - $80,000 (p.92) — Cedar Grove Community Center sewage pump ejector-$3,400 — Multiyear account to finance technology improvements in Register of Deeds Office — Seymour Center shower drains-$15,000 — Collection of funds is mandated under — Seymour Center dedicated water heater for General Statute showers-$20,000 ORANGE COUNTY 5 NORTH CAROLINA 15 Commissioner Bedford asked whether the Seymour Center's fund balance might cover some of the costs for improvements at that facility. Travis Myren agreed that can be explored. Vice-Chair Fowler asked if Cedar Grove has showers. She recalled that a prior renovation at Cedar Grove involved a $148,000 discussion about whether the septic system could handle additional capacity. Travis Myren said it has been explored but is not feasible. Commissioner Carter asked whether the Tax Assessment Work Group's efforts might create an integration opportunity between the Register of Deeds recording system and the Tax Office's system. Travis Myren said the Register of Deeds software is not up for replacement, and that a direct interface between the two systems would need to be examined. Vice-Chair Fowler noted that some of the issues raised in the work group appeared to involve data entry errors rather than systemic software deficiencies. Travis Myren said they were related to human error. Slide#20 FY2026-36 Recommended Capital Investment Plan Environmental Protection and Climate Action Built Environment and Energy Goals • Roofing - $55,000 (p.94) — Annual inspections and repair program - $55,000 ORANGE COUNTY 20 JVORTH CAROLINA 16 Slide#21 FY2026-36 Recommended Capital Investment Plan County Fleet EV Charging Stations Environmental Protection and Climate Action Transportation Goals _ � �- • Electric Vehicle Charging Stations for County Vehicles - $373,321 (p.99) ; — Install six (6) charging stations at ` Southern Human Services — Install four (4) stations at Whitted Human Services — Install one (1) station at the Parks ~® _ Operations Base =wi _ Funding in future years will be guided by the charging station feasibility study �^^ •InelelkiE P 2 2I GIP Commissioner McKee asked if these charging stations are available for public use as well. Travis Myren said these charging stations are going to be installed in places that are intended to be used by county vehicles. Commissioner McKee said he would like to explore billing users who use the charging stations intended for county vehicles. He said he believes that someone who can afford an electric vehicle should not be using county resources to fuel it. Alan Dorman added that the new charging stations will be smart chargers to prevent unauthorized users from using them. Travis Myren agreed to price out the software required to enable billing at public chargers and provide a return-on-investment analysis. Alan Dorman clarified that the current feasibility study is focused primarily on staff chargers rather than public chargers, but that the analysis Commissioner McKee requested could be added. Vice-Chair Fowler raised the related climate benefit consideration. Commissioner Bedford noted that some installation funding for public chargers had previously come from state dollars that may no longer be available. 17 Slide#22 FY2026-36 Recommended Capital Investment Plan Multi-modal Transportation Mission Support • Transit Plan Update- $300,000 (p.100 ) — Update the Orange County Transit Plan — Long range vision plan for local and regional transit services in Orange County — Update cycle every five years — Annual Work Plan authorizes expenses and projects for each fiscal year — Funded with Article 43 Transit Sales Tax Proceeds ORANGE COUNTY zz NORTH CAROLINA Travis Myren described an update to the Orange County Transit Plan, noting it is on a five-year update cycle as required by the interlocal agreement (ILA) with the MPO, Go Triangle, and municipal partners, and that this is the year it is due. The estimated cost is $300,000, funded through the transit sales tax fund (Article 43), which does not flow through the general fund and therefore has no direct impact on the property tax rate. Commissioner Carter asked about the distinguishing part of this project that makes it capital. Travis Myren said it is because of the use of Article 43 tax proceeds, and it could lead to capital expenses, but could be part of operating budget just as easily. Commissioner Carter asked whether the$300,000 could be split across two fiscal years. Travis Myren acknowledged this could be explored, as the update schedule is self-imposed. Kirk Vaughn noted that splitting the cost over two years would have no impact on property tax rate directly because it would be funded through the transit sales tax fund (Article 43), which does not flow through the general fund and therefore has no direct impact on the property tax rate. Sarah Williamson, Interim Transportation Director, noted that the ILA with the MPO and Go Triangle requires the plan to be updated every five years,and that until a new plan is approved,the county is restricted as a stakeholder in the projects it can implement. She added that without a new transit plan, there would be no additional projects sequenced for years beyond the current plan's fifth year. Chair Hamilton questioned whether the plan update needs to cost $300,000, expressing a sense that transit plans are more plentiful than almost any other area of government planning, and asking whether the scope could be tightened. Commissioner McKee suggested the ILA itself might be amendable by the partners. Travis Myren committed to a competitive solicitation process to ensure the scope and cost are appropriate. He said a lot of the cost has to do with the amount of public engagement required. Commissioner Fowler expressed support for updating the plan given the county's growth, the near-completion of the bike-ped plan, and recent transportation corridor adoptions. 18 Commissioner Bedford asked whether bus shelters are funded through the transit plan funds. Sarah Williamson clarified that shelters are funded separately through state and federal grant dollars and are purchased on state contract. Slide#23 FY2026-36 Recommended Vehicle Replacements Environmental Protection and Climate Actior Transportation Goals • Vehicle Replacements - $2,399,424 total (p. 101) — Public Safety Priorities • Emergency Services $806,480 — Ambulances(1)-$480,000 — Administrative Vehicles(3)—$326,480 • Hillsborough Fire Marshall(reimbursed) $9,000 • Sheriff's Office vehicles $602,954 • Total Public Safety $1,418,434 ORANGE COUNTY 23 NORTH CAROLINA Slide#24 FY2026-36 Recommended Vehicle Replacements Environrnenial Protection and Clhnate Acbon Transportation Goals — Administrative Vehicles Electric Vehicles in County Flq�� Current With FY27 • AMS Service Vehicles(2) $129,950 Recommended 'ents{1? Total County Fleet 363 365 • DEAPR Vehicle Replacement(2) $125,334 Less Public Safety 188 188 OSS Vehicle Replacement(3) $177,341 • Health Vehicle Replacement(4) $189,133 Total Non-Public Safety 175 177 • IT Vehicle Replacement(1) $57,539 Total EV and Hybrids 61 74 PBMIfi': Hts(2) EV and Hybrid%of County 35% 42% • Taxes,Tags, Registration $49,706 Fleet • Total Administrative $980,990 Total EV Only 45 57 EV Only%of County Fleet 26% 32% Strategic Plan performance measure to replace at least 8 non-public safety vehicles per year with electric FY2026-27 CIP recommends a total of 12 electric vehicles and 1 hybrid vehicle ORANGE COUNTY NORTH CAROLINA 24 Travis Myren noted that the administrative vehicles are electric and hybrid. 19 Slide#25 FY2026-36 Recommended Emergency Services Projects Healthy Community Built Environment and Energy Goals • Emergency Services Headquarters — $3,900,000 (p.103) — Professional design services to construct new Emergency Services Headquarters - Provides enhanced hardened/secure space for Communications and Emergency Operations Embeds EMS Substation to serve Northern Orange County - Backfill of 510 Meadowlands for AMS, Civil Rights and Civic Life,and County Attorney, — Year 2 construction cost-$44.5 million - Cost escalated based on experience from other counties that have renovated spaces for like functions ORANGE COUNT` 25 NORTH CAROLINA Travis Myren emphasized that this project would initiate a beneficial sequence of facility consolidations: Emergency Services would vacate its location at 510 Meadowlands Drive, allowing the County Attorney to move from leased space into that building; Asset Management Services and Civic Rights and Civic Life— both currently at Revere Road —could then move to Meadowlands,and the Revere Road property could potentially be made available for affordable housing, given its connection to municipal services and its central location. Slide#26 FY2026-36 Recommended Emergency Services Projects Healthy Community Mission Support • Emergency Services Replacement and Renewal —$533,817 (p.104) — Replacement of Emergency Medical Services Equipment • EMS video laryngoscopes and hardened laptop replacement-$106,095 • Animal Services new portable radios to move to the Viper/800mHz.-$123,771 • Sheriff's Office portable radio replacement-$145,430 • Emergency Services portable radio and consolette replacement-$158,521 ORANGE COUNTY 26 NORTH CAROLINA 20 Travis Myren described a consolidation of radio purchase tracking across county departments into a single Emergency Services renewal and replacement account. Items in year one includes radios for Animal Services, the Sheriff's Office, and Emergency Services, as well as replacement of EMS video equipment including video laryngoscopes and field laptops. Vice-Chair Fowler noted appreciation for the video laryngoscopes, recalling performing the procedure without video assistance. Slide#27 FY2026-36 Recommended Emergency Services Projects Mission Support' • VIPER Radio Tower Construction — $1,365,292 (p.107) Project is programmed to be completed over a four-year period in two phases at a total cost of$25 million — FY2026-27-$1,365,292 • Project management, permit development,technical bid specifications,and pre-construction engineering services — FY2027-28-$11,270,478 • Funds for construction and equipment costs for Phase 1: Replacement of the Eno Mountain Tower and equipment upgrades at existing tower sites — FY2028-29 request-$1,875,333 • Phase 2 professional services — FY2029-30-$10,431,853 • Construction and equipment for three(3)new tower sites ORANGE COUNTY 27 NOR-FH CAROLINA Travis Myren reminded the Board that some of the cost of the VIPER project has been reduced but is still a $25 million project over four years. Commissioner McKee asked if it's possible to rent space on these towers to private entities. Travis Myren said yes and confirmed it is consistent with the county's practice with other vertical assets, noting that public safety equipment retains priority in terms of tower placement. 21 Slide#28 FY2026-36 Recommended Information Technology Projects Mission Support • Information Technology Governance Council Initiatives - $197,128 (p.108) Advanced aerial imagery and change detection softwa re — Primarily used by the Tax Office for assessment purposes — Updated imagery for most recent construction activity — Identifies changes to size and scale of improvements -- - Highlights parcels that may require additional field verification New technology initiatives are programmed for up to $250,000 annually Operating costs of software maintenance included by year ORANGE COUNTY :\'(7RTh1 CAR4LINA 28 Travis Myren described this year's IT Governance Council recommendation to fund EagleView, an aerial imagery and change detection product primarily for the Tax Office. The product provides updated aerial imagery more frequently than the state's orthophotography program — two updates every three years — and includes change detection software that identifies new structures, changes in structure size or scope, or structures that have been removed or significantly damaged.This would trigger field reviews by assessors to ensure accurate assessment of changed properties. Commissioner Carter asked whether a cost-sharing arrangement with other local governments might be possible,given that the product could benefit multiple jurisdictions. Travis Myren said he would look into it. Commissioner Bedford described a practical application for Planning. She described when her children purchased a home in Carrboro and an unpermitted three-story deck was discovered. Travis Myren said that Planning and the 9-1-1 System, would benefit from this technology, with updated building footprints available to first responders entering structures,though the primary impetus is for tax purposes and to improve assessments. Commissioner Carter asked whether the system could detect major condition changes relevant to the depreciation question raised in the Tax Assessment Work Group. Travis Myren said it would if there was any evident external issue but noted that most of the deferred maintenance is interior. Commissioner McKee said would be a benefit to pick up any additions or major structure changes that were not reported properly. 22 Slide#29 FY2026-36 Recommended Information Technology Projects Mission Support • Information Technologies Infrastructure - (p.109) - FY2026-27 expenditures of $1,089,000 will be funded using balances from prior year appropriations - Server upgrades, laptop replacements, data storage, software implementation, network improvements, wireless expansion and replacements, time clock devices and cybersecurity prevention and mitigation ORANGE COUNTY 29 NORTH CAROLINA Slide#30 FY2026-36 Recommended Parks, Open Space, and Trail Development Projects Healthy Community Green Community Goals • Hollow Rock Nature Park - $224,000 (p.112) ., - Accessible loop trail, restroom facilities, and barn - conversion for nature programming - Costs are shared equally with Durham County x rx - Orange County share$112,000 I �1 ORANGE COUNTY ao NORTH CAROLINA 23 Slide#31 FY2026-36 Recommended Parks, Open Space, and Trail Development Projects Environmental Protection and Climate Action • Neuse River Rules for Nutrient Management - $175,000 (p. 116) - Projects to reduce total nitrogen and phosphorus levels in Falls Lake Reservoir according to the Upper Neuse River Basin Association implementation approach Includes a mix of stormwater control or wetlands creation improvements,conservation acquisitions and practices r, 31 Slide#32 FY2026-36 Recommended Parks, Open Space, and Trail Development Projects Healthy Community Green Community Goat: • Park and Recreation Facility Renovations, Repairs, and Safety Improvements - (p. 117) FY2026-27 expenditures of$215,000 will be funded using balances from prior year appropriations Funds ongoing safety, lighting, park infrastructure, signage, preventive maintenance in the County's ten parks identified in the 2030 Parks & Recreation Master Plan ORANGE COUNTY 32 NORTH CAROLINA 24 Slide#33 FY2026-36 Recommended Parks, Open Space, and Trail Development Projects Healthy Community (-n Community Goals • Twin Creeks District Park- $325,000 (p.119) - Renovations& repairs to the farmstead buildings to maintain historic features _ e • - Permitting&replacement of a culvert for the main - - east-west entry driveway , — - Y z - Farmhouse could be rented to a Caretaker to prevent future vandalism - Rental income could offset renovation and repair expenses b ►.,p • 20-year borrowing could be offset by$2,173 monthly rent ORANGE COUNTY 33 NORTH CAROLINA Travis Myren described a proposal to renovate and repair the historic farmstead buildings on the Twin Creeks District Park property along with installation of an east-west driveway. Park development funds for the property itself are beyond the 10-year planning horizon. The renovated house could accommodate a caretaker who would pay rent and provide an on-site presence Commissioner McKee asked about the mechanics of the caretaker arrangement, expressing concern about how compensation and rent would interact. David Stancil, Department of Environment, Agriculture, Parks, and Recreation described the existing caretaker model at Little River Regional Park, where a house was relocated from Dogwood Acres and a caretaker has lived there for many years paying nominal rent in exchange for opening and closing gates and other minor duties. He indicated the Twin Creeks house, once renovated, could command meaningful rental revenue given its location on the north side of Carrboro. Commissioner McKee acknowledged the conflict-of-interest considerations inherent in a caretaker arrangement with county employees David Stancil confirmed there is an established process for structuring such arrangements to avoid conflicts of interest. Chair Hamilton asked whether the property is currently open to the public. David Stancil responded that the greenway connecting Morris Grove Elementary to Lake Hogan Farms is open, but the farmstead portion is not, though hikers do occasionally reach the house despite signage. He described various security measures that had been tried, including alarm systems with voice messages, but concluded that on-site human presence is what is ultimately needed. Commissioner Bedford suggested using this property for affordable housing or short-term housing options. Chair Hamilton suggested exploring what a chain link fence around the structures would cost as an alternative or interim measure. 25 David Stancil said, unfortunately, that isn't a strong deterrent either, but agreed to price out fencing options. Slide#34 FY2026-36 Recommended Solid Waste Projects Enviraan entai Protection,cirri Climate Action • Solid Waste Vehicle and Equipmentlip Replacements - $544,636 (p. 123) • Replace Hook Truck#2023- $318,890 • Replace Walking Floor Trailer#1963- $112,873 - • New Walking Floor Trailer- $112,873 � w 3a Slide#35 FY2026-36 Recommended Sportsplex Projects Healthy Community • Sportsplex Projects - $1,940,000 Parking Lot Resurfacing, Replacement of Entrance Doors, Installation of 2 Electric Fast Chargers, and Updated Exterior Signage-$640,000(p.125) — 3-Year Replacement of Cardio/Exercise Equipment-$125,000(p.126) 3 Ice-Resurfacing Replacement-$200,000(p.127) Renovation of Pool &Fitness Locker room and Additional New Family Change "'° ,` - Area -$900,000 (p. 129) — Recreation Pool Plaster Replacement-$75,000(p. 130) ORANGE COUNTY 35 NOR"I'I-I CAROLINA 26 Slide#36 Funding the FY2026-36 Recommended CIP Debt Service Schedule through 2026-36 $ea,000,000 $82,972,2e1 i84,432,6e7 $83,030,144 $81,213,277 $6g000,000 374,9s0,00a $70,815,663 $71,632,373 $70,000,000 $62,902,683 $60,000xoo $50,000,000 $45,543 $40,611,813 540,000.000 Sorrow first Bond $30,000,0M Pr leots $20,000,000 $20,W0.000 rV2025-27 F,2027-28 rY2028-29 W029-30 FY2030-31 rV2031-32 MOV-33 PY2033-34 MOM 3, rY203s-36 ORANGE COUNTY 36 NORTH C:AROLINA Slide#37 Funding the FY2026-36 Recommended CIP • Total FY2026-27 Capital Budget Impact—2.90 cents per$100 of value Pay-Go—0.89 cent tax rate equivalent increase — Debt—2.01 cent tax rate equivalent increase • FY2028-29—Increase of 4.58 cents per$100 of value Fiscal Year Incremental Tax Rate Equivalent — Principal and interest payments on FY2026-27 borrowing 2026-27 2.01 • $190 million—Carrboro Elementary,New OCS Elementary 2027-28 1.09 Link Center Renovation Authorized county or school projects that have not 2028-29 4.58 been borrowed 2029-30 1.61 Interest payments on FY2027-28 borrowing 2030-31 • $150 million—Estes Hills Elementary ES Headquarters 2031-32 Viper Radio System 2032-33 1.48 Historic Courthouse Total 10.77 2700 Homestead 37 ORANGE COUNTY 27 Slide#38 Options to Smooth the FY2028-29 Increase in Debt Service 1. Delay Authorized Projects — County Manager can delay projects that have been authorized in prior Capital Investment Plans — Examples include: Vehicle Replacements Facility Improvement Projects — Carrboro Elementary and the new OCS Elementary projects have already incurred planning and design expenses in connection with planned construction • If those design funds are not financed with the construction;the county would have to use pay-go funds for those soft costs 38 ORANG EA OUNA Y Travis Myren transitioned to a discussion of options for smoothing the projected tax rate increase of over 4.5 cents in FY 2028-29 associated with debt service. He explained that delaying borrowing for year one projects is largely not feasible because design funds for the two elementary school projects are already spent or obligated and canceling those projects would require the county to find cash to cover approximately$11 million in design costs. Slide#39 Options to Smooth the FY2028-29 Increase in Debt Service 2. Delay$123.7 million in Major Projects from Year 2 to Year 3 — Estes Hills Elementary $59.5 million Fiscal Year Current CIP Delay Major — ES Headquarters $48.4 million Projects Viper Phase 1 $11.3 million 2026.27 2.01 2.01 — Historic Courthouse $4.5 million 2027.28 1.09 1.09 2028-29 4.58 3.27 — Impact of Delaying Projects 2029-30 1.61 0.85 Adds--3%inflation to project budgets 2030-31 1.78 Delays projects contingent on ES Headquarters 2031.32 0.33 — Cedar Grove Storage 2032.33 1.48 1.58 — 510 Meadowlands Retrofit • Cumulative tax impact increases from 10.77 cents per Total 10.77 10.91 $100 of value to 10.91 cents �1 ORANGE COUNTY 39 NORTH EAROLINA 28 Travis Myren indicated that the more meaningful options lie in deferring projects currently programmed in year two — namely, Estes Hills Elementary School (design in year one,construction in year two),the Emergency Services Headquarters($48.4 million in year two),the Viper system first phase($11.3 million), and the Historic Courthouse renovations ($4.5 million) — from year two to year three. Planning funds currently in year one associated with those deferred projects would similarly shift to year two. Commissioner Bedford expressed interest in modeling what a two-year delay of Estes Hills Elementary in particular would do to the tax rate,noting that such a delay remains within the bond window and the LGC parameters, and that the school districts may benefit from additional time to better understand enrollment trends — for example, whether a middle school deconstruction might affect planning for Estes Hills. She also noted the need to evaluate pay-go competition with Orange Middle School's pre-design scoping if projects overlap. Chair Hamilton stated she would like to see what other projects could also be pushed out, not just the school projects. Travis Myren said this proposal captures everything over$1 million but can look again. Commissioner McKee supported the idea of pushing projects out. He said the potential 4.58-cent increase is an extreme imposition on lower-wealth residents, especially given that this figure represents only the CIP-related portion of any potential tax increase, with cumulative increases potentially approaching six or seven cents when operating budget pressures are included. He recalled measures taken after 2008 recession. Commissioner Bedford raised the RENA Community Center as a project that she believed should be removed from the plan entirely, rather than merely deferred. She noted that even after reducing the scope from two stories to one, costs remained at approximately $2.5 to 2.7 million due to requirements for a commercial kitchen and other features. Commissioner Carter disagreed with acting too quickly on that project, citing significant community feedback over the years, and suggested it could be moved further in the plan. Chair Hamilton agreed that conversations with the community about the realities and necessary trade-offs would need to take place. 29 Slide#40 Options to Smooth the FY2028-29 Increase in Debt Service 3. Explore Bond Anticipation Notes(BAN's)for School Construction Projects — Total construction costs are typically financed when bids are received,but on large construction projects,actual construction costs are incurred over the subsequent next two or three years — BAN's allow county to borrow for projects as cash flow requirements dictate — BAN's are paid off using bond proceeds when General Obligation Bonds are issued — County would incur additional interest at a cost to be quantified as analysis proceeds — BANs are only allowed for voter approved General Obligation Bonds ORANGE COUNTY 40 NORTH CAROLINA Travis Myren described bond anticipation notes (BANS) as a financing tool available for general obligation bonds that would allow the county to borrow short-term for cash flow purposes and then retire those notes when the full GO bond borrowing occurs, at some additional interest cost. Commissioner McKee described his experience with commercial draw-down lending. Kirk Vaughn confirmed that while analogous mechanisms exist in the private sector,governmental restrictions largely preclude that approach except in the limited case of General Obligation Bond anticipation notes. Kirk Vaughn, Budget Director, made the following PowerPoint presentation: Slide#1 ORANGE COUNTY NORTH CAROLINA School Capital Investment Plan FY 2026-36 April 16, 2026 Board of Commissioners Work Session 30 Slide#2 What has changed from prior School CI Ps Adoption of the School Capital Funding Policy(Page 168)&Major Project Planning Addendum (Page 172). - School CIP has been reorganized into three sections(Major Projects,High Priority bleeds,Other Capital Uses) - All parties have also signed CORE Team lnterlocal Agreement,which will provide updates to Board on construction progress. Inclusion of Major Project plans by both school districts,with county staff assisted sequencing. • Phasing in of Pay-Go funds to assist Major Project funding -$3.5 M in FY 27, $6.5 M in FY 28, full $10 M in FY 29. Slight inflation to$94.8 M over 10-year plan. ORANGE COUNTY 2 INC3k l 11 (_AR[Y1 DNA Kirk Vaughn explained that the county restructured its approach from project-based allocations to organizing spending into three categories: major projects, high-priority needs, and other capital uses, with the core team presenting project progress updates to the Board each year. Slide#3 Woolpert Report to Current CIP Plan Back in 2023, Woolpert did a systematic review of both school districts; both the condition and the educational adequacy of the facilities. Woolpert also made recommendations for replacements and renovations of facilities over multiple bonds, requiring more funds than the county could afford. The recommendations assumed each facility would be replaced or renovated over time,and enrollment was flat—no closures for decreased enrollment. The County funding policy requires schools use the limited bond funds to replace old buildings and improve the educational adequacy of the district. So long as the projects are in line with that requirement, the county only reflects the school replacements as requested by the district. - The County's CIP can be amended to change which schools are being replaced each year at school district request. ORANGE COUNTY 3 NORTH CAROLINA Kirk Vaughn noted that when Woolpert reviewed the school facilities in 2023,they recommended replacing or renovating all schools over multiple bond cycles, with enrollment assumed to be essentially flat and no closures contemplated. He clarified that the county is only reflecting the school replacements 31 that the districts are requesting, and that if districts change their plans, they can submit revised projects at any time through budget amendments. Slide#4 Major Projects — Projects and Sequencing Carrboro Design Construction Chapel Hill-Elementary Carrboro Estes Hills Design Construction City SchoolsElementary Frank Porter p.133-135 Graham Design Construction Close Out Elementary Orange New Elementary Design Construction County School Schools Orange Middle Pre-Design Design Construction Close Out 147-48 Renovation Scope - OCS may not be able to fund third major project due to increased cost of Orange Middle School County used the following rules to sequence these plans - Bonds must be borrowed within 7 years of referendum-FY 2031. May ask for 3-year extension with LGC. - Once borrowed,funds must be drawn down for actual expenses within 3 years. - Funds are allocated between the districts fairly ORANGE COUNTY 4 NORTH CAROLINA Kirk Vaughn noted that in the current project sequence, the Orange Middle School project is the only renovation, and requires pre-design phase to determine what is needed to meet educational adequacy needs. Vice-Chair Fowler asked why Estes Hills Elementary was sequenced so closely behind the Carrboro and OCS elementary projects. Kirk Vaughn explained that sequencing projects one at a time allows pay-go funds to be fully dedicated to a single large project, avoids competition between projects for limited cash, and reflects school staff considerations about redistricting timing. He also noted that the schools receiving the first projects are also getting the last project, which helps even out the average timing of funding across both districts. Commissioner Bedford said she doesn't believe there will be enough money to fund a third school. Kirk Vaughn acknowledged the uncertainty but noted that the pay-go is flexible and that districts could choose to direct more pay-go toward the major projects rather than smaller district building repairs. 32 Slide#S Major Projects — Project Costs and Funding Source • Major Projects are funded using a combination of Pay-Go and Bond Funds CHCCS Projects Bond Funds Pay-Go Total Funds OCS Projects Bond Funds Pay-Go Total Funds Funds Funds Carrboro Elementary Elementary $53,000,000 $0 $53,000,000 Replacement $54,500,000 $2,500,000 $57,000,000 Estes Hills Elementary Orange Middle $59,510,937 $3,319,063 $62,830,000 Renovation $67,700,000 $12,300,000 $80,000.000 Frank Porter Graham $61,189,063 $8,952,237 $70,141,300 Contingency+HPN 1 000 000 $38,482,699 $39,482,699 Contingency+HPN $3,100,000 $19,246,001 $22,346,001 Total $174,700,000 $50,753,999 $225453,999 Total $125,300,000 $34,046,001 $159,346,001 ORANGE COUNTY 5 NORTH CAROLINA Kirk Vaughn explained that pay-go is essential to the bond program because there is not enough bond money to do the projects without it. Slide#6 Major Projects — Project Costs and Funding Source • Pay-Go funds provide four major uses to support the Bond Program: - Absorb soft costs like Design, Project Management Project Management included in separate$1 M/year project, - Extend project budgets above what the Bond could support on its own. - Improve County debt metrics once county debt exceeds 15%of GF revenues - Once bond projects are done, support the districts' High Priority Needs ORANGE COUNTY 6 NORTH CAROLINA 33 Slide#7 Major Projects — Pay-Go Phase-in To spread out tax burden, the Manager's Recommended CIP splits Pay-Go introduction into three steps, so no increase is larger than 1 cent on the tax rate. Last year's CIP had incremental increases to offset recommended phase-in, so total increases by$240k years 5-9. Not increased in year 10 pending discussion Year 1 Year 2 Year 3 Year 4 Year 5 Year6 Year7 Year8 Year9 Year10 Ten Use of Pay-Go By Project I . I I I 1 1 1 r 1 1 I2035-36 Year Total CS Major Projects 2,500,OOC 500,00 4,000,OOC 5,468,70C 2,331,30C 14,800,00 .L.Stanback-HVAC Replacement 2,180,937 2,180,93 CS-Remaining Bond and Pay-Go 2,378,816 2,000,OOC 569,515 3,028,78 3,007,947 6,080,00C 17,065,06 ejects HCCS Major Projects 3,319,062 3,771,30C 4,280,937 900,00C 12,271,30 HCCS-Remaining Bond and Pay-Go 6,121,184 5,000,00 867,76 8,250,48 6,931,21 7,192,05 4,120,00 38,482,69 rojects ajor School Construction Project 1,000,00 1,()00,()GC 1,000,000 1,009,00 1:000.00 1,00,00C 1,000,00 1,000,000 U00,066 1.000.006 10,000,00 anagement Total 3,500,00 6,500,00 10,000,000 10,000,00 10,240,00 10,480,000 10,720,00 10,960,000 111,200,00 11,200,000 94,800,00 ORANGE COUNTY 7 NORTH CAROLINA Kirk Vaughn presented the pay-go allocation schedule,showing increases from$3.5 million to$6.5 million to$10 million and then annual increments of approximately$240,000 per year through year nine, before leveling off. He noted this structure had been designed to reach a target of$100 million over ten years in a prior plan but acknowledged the county is not at that level. Commissioner Bedford noted that the pay-go assumptions had not yet accounted for the fact that two to three fewer schools would need renovation or pay-go support after the major replacements are completed,though she acknowledged there might be deconstruction costs for older buildings. Kirk Vaughn suggested that one use of pay-go in the outer years could be a new facility condition assessment to refresh the data and drive investment decisions. He noted that both school districts typically conduct their own assessments, but that a county-funded coordinated assessment would provide equal insight into both systems. Vice-Chair Fowler suggested aligning any county-sponsored assessment with each district's independent assessment schedule to avoid duplication. Kirk Vaughn agreed that if the county covered the cost and communicated that,the districts would not need to conduct their own separately. 34 Slide#8 Major Projects — Board Options to adjust projects Current Pay-Go Phase-in structure sufficient for current district bond plans with small margins. Reducing or delaying implementation of pay-go from this amount would require asking school districts to submit new bond plans with smaller scopes. Instead of reducing Pay-Go, the County can lower upcoming tax rate increases and the cumulative tax increase by pushing back the upcoming school projects. Inflationary cost increases from delaying construction projects would reduce the amount of pay-go funds available for High Priority Needs. ORANGE COUNTY 8 NORTH CAROLINA Kirk Vaughn noted that if Estes Hills were pushed back specifically by two years rather than one, the pay-go would then have to compete between Estes Hills and the pre-design scoping phase of Orange Middle School. He said one of the things is trying to segment them such that there's one project at a time, so that the pay-go can be best delivered to that big project. Commissioner Bedford emphasized the flexibility of the pay-go each year. Commissioner Carter agreed. Chair Hamilton said the Board will be having continuous conversations with the school boards. Slide#9 High Priority Needs High Priority Needs—$6.4 million • Appropriated by Project • Specific Projects Enumerated Annually for Flexibility • Financed Using Annual Debt,Lottery Proceeds,and Remaining Bond or Supplemental Pay-Go High Priority Needs Recommended East Chapel Hill High Roof Replacement $3.0 million Carrboro High Roof Replacement $1.2 million Mary Scroggs Elementary Trailer HVAC Replacement $56,400 AL Stanback Middle HVAC Replacement—Paired with$5.28 M Major $2.1 million Project Funding in FY 2028 based on$7.4 M total project cost TOTAL $6.4 million ORANGE COUNTY 9 NORTH CAROLINA 35 Kirk Vaughn clarified that the small amount for Scroggs Elementary is for a trailer and that the Standback Middle project is more than $7 million in total cost, with different funding buckets being combined to reach that figure. Slide#10 Other Capital Uses Other Capital Uses—$6.5 million Chapel Hill Carrboro City Schoo€s-$3.9 million Orange County Schools-$2.6 million • Appropriated by Category • Financed Using Recurring Capital and Article 46 Sates Tax Proceeds — Rental Space — Technology Plans — Equipment Replacement — Lifecycle Capital Replacements ORANGE COUNTY 10 NORTH CAROLINA Slide#11 Questions? ORANGE COUNTY NORTH C:AROLINA 36 2. Operating Budget Model Update The Board received an update on the Operating Budget model since the January 16, 2026 Board Retreat. BACKGROUND: At the January 161" Retreat, the Board received a budget update that estimated a $21.5 million gap between estimated revenue growth and known cost factors. Since then, the County has refined multiple estimates going into the budget, which has decreased the estimated gap to approximately $15 million, and the County Manager continues to work with departments to close that gap as much as possible before considering a recommendation to increase the tax rate. Below are some of the largest changes to the operating model that will be detailed in the presentation: Property Tax: The property tax base has stabilized since the January Retreat. At that time, the property tax base was estimated to grow by 2% from FY 2025-26. Since that time, valuation appeals have been finalized,and large exemptions have been recognized. The County had assumed a tax base loss of 3%due to valuation appeals; however, based on informal and formal appeal decisions, the actual loss is 1.47%. Although the lower percentage has a positive impact on the tax base, the County also lost significant tax base due to complex exemptions of properties that qualify as affordable housing and properties that have been redeveloped on brownfields. The FY 2026-27 tax base is also affected by property damage from Tropical Storm Chantal.When taken together,those fluctuations result in a new growth estimate of 2.27% from FY 2025-26. Sales Tax: Based on new data related to the County's Hold Harmless payment, the sales tax revenue projection has been decreased by $500,000 as State Medicaid expenses significantly exceeded sales tax growth in FY 2025-26. Other sales tax categories are left unchanged since the Retreat. Although FY 2025- 26 actual collections are exceeding estimated growth, uncertainty about the global economy requires caution in projecting future growth. Living Wage:Since the presentation at the Retreat,the County has reviewed its living wage requirements. The living wage calculation is directly tied to fair market rent in Orange County and surrounding counties in which employees are likely to live. Based on average rent in Orange County and its adjacent counties, the living wage will be $20.02 in FY 2026-27. This represents an increase of $1.84 per hour from the current year. The new living wage will drive increases in temporary and seasonal budgets for departments like Environment,Agriculture, Parks and Recreation (DEAPR)and Library and will impact the first four(4)salary grades on the pay scale for permanent employees. Adjusting to the new living wage rate is estimated to cost $500,000 for both temporary and permanent employees. The increase in the wage scale for permanent employees does cause some wage compression within the impacted salary grades, but the Recommended Budget will likely not include sufficient funding to correct that compression. Recommended Capital Investment Plan: The Recommended Capital Investment Plan changed the planned phase-in of pay-go for the school capital plan. The retreat presentation assumed that pay-go would be funded at $6 million in FY 2026-27. Due to operating budget constraints, the Recommended pay-go amount was reduced to $3.5 million in FY 2026-27. Debt Model: Between the time of the Retreat and the introduction of the Manager's Recommended Budget, County staff assess the progress of School and County capital projects and determine which projects are ready to recommend for financing. The amount of projects that are included in the financing package influences the amount of debt service required in the subsequent year's operating budget. Based 37 on the set of projects that are ready for financing in FY 2025-26, the tax rate equivalent to fund debt service in FY 2026-27 decreases from 2.53 cents discussed during the Retreat presentation to 2.01 cents to fund impending debt obligations. Strategies: The County Manager is reviewing several strategies to reduce the gap between expected revenues and expenditures. Some of those strategies include increasing user fees to more fully represent the cost of providing services, reducing operating costs through service modifications, and reducing funding to partner agencies that may be duplicating services to residents. The County Manager is also carefully reviewing all vacant positions in an effort to reduce employee headcount and long term cost pressures. Travis Myren made the following PowerPoint presentation. Slide#1 ORANGE COUNTY NORTH CAROLINA Operating Budget Model Update as of April 15, 2026 April 16, 2026 Board Work Session Travis Myren presented updates to the operating budget model reflecting new information received since the January retreat. 38 Slide#2 FY2026-27 Operating Budget Model Update Updates to Operating Budget Model - Initial Operating Budget Gap of$21.45 million • Property Tax Base • Sales Tax Projection • Living Wage Pay-Go Funding • Debt Service • Crisis Diversion Operating Costs • Health Insurance Costs 2 ORAN GE�AROLINA COUNTY Slide#3 FY 2026-27 Property Tax Base FY 2026-27 Property Tax Base—($400,000) savings to model Real Property Tax Actual FY 26 Finof Tox Bose $ 30,620,975,377 . Final FY2025-26 Tax Base includes FY 27 Growth $ 435,594,941 • 1.47%lax base loss due to FY 27 Exemptions $ (91,783,000) appeals--$460 million Chantal Property Loss $ (10,000,000) $50 million loss from affordable FY 27 Appeals.005% $ (154,773,937) housing exemptions FY 27 Real Tax Base $ 30,800,013,381 $62 million Brownfield Exemption - $435.6 million in natural growth due to new construction Natural growth has declined from 2% in prior years to 1.4% Growth in Motor Vehicles(10.6%)increases total tax base to 227%_$400,000 in new property tax revenue - $91.8 million additional exemptions for properties qualifying as affordable housing - $10 million loss in value due to Tropical Storm Chantal damage as of January 1, 2026 - $154.8 million loss assumed for additional appeals of 2025 values ORANGE COUNTY 3 NORTH CAROCINA Travis Myren reported that the appeals process has largely stabilized,with all informal and formal appeals for the current tax year processed, and a small number still pending before the Property Tax Commission. He said the final FY 2025-26 tax base is approximately $30.6 billion, reflecting a 1.7% reduction due to appeals. He identified two significant exemption categories affecting the base:affordable housing exemptions totaling approximately$50 million in FY 2025-26, and a brownfield exemption under 39 a DEQ agreement totaling approximately$60 million. He said new affordable housing exemptions will bring total exemptions in FY 2026-27 to approximately$90 million, resulting in approximately$1 million in lost property tax revenue. Commissioner Carter asked about the loophole being examined by the House Select Committee on property tax reform related to ownership structures for LIHTC properties. Travis Myren confirmed exposure of approximately $120 million in removed valuation, equating to approximately$750,000 in lost tax revenue. Commissioner Carter also noted that motor vehicle tax growth appeared high in the notes. Kirk Vaughn explained that motor vehicles are reappraised annually rather than every four years, so growth reflects both reappraisal activity and any shift to newer, more valuable vehicles. Travis Myren also noted that properties damaged by Tropical Storm Chantal did not receive tax relief in FY 2025-26 because property condition is assessed as of January 1st, but those reduced values will be reflected in the FY 2026-27 base at approximately $10 million. An additional approximately$154- 155 million in appeals of the FY 2025 values is anticipated for the FY 2026-27 base. Overall, largely driven by motor vehicle tax growth,the county anticipates approximately$400,000 more in property tax revenue than projected at the January retreat. Slide#4 FY 2026-27 Sales Tax FY 2026-27 Sales Tax Assumptions—$500,000 cost to model - Projecting$1.7 M increase from FY2025-26 Budget with significant uncertainty. - Reduction in Hold Harmless payment—($500,000) - Resulting sales tax projection is$1.2 million or 2.7%over FY2025-26 Budget - When State Medicaid Expenses Grow faster than Sales Tax Revenue, Hold Harmless revenue decreases Orange County Hold Harmless Trends 250% 20 M% f5.00% i0.00% 5.00% 0 pp% ¢I'' eery e�ry e°ry 4'ry 4ary 4ary k�ry Fay` ¢LL FLU' zo.00% Sales Taw Revenue YOY% -Sla Medicaid Expenses Y.Y% ORANGE COUNTY 4 NORTH CAROLINA Travis Myren said the county is now anticipating at least a$500,000 reduction to its hold-harmless payment in FY 2026-27 based on current trends, representing a new and adverse change from the January model. 40 Slide#5 FY 2026-27 Living Wage • Living Wage -$500,000 cost to model - Living Wage=Hourly rate required to rent a one bedroom apartment so that no more than 30%of income is used for housing - Rent=Prior Four Year Average Fair Market Rent(FMR)as defined by HUD for a One Bedroom Apartment Orange County Living Wage=blended rate using six adjacent counties where 86%of County employees currently live County Monthly Fair Hourly Rate @ i Market Rent Income for Rent Burlington MSA FMR Alamance $919 $17.67 Caswell County FMR Caswell $724 $13,92 Chatham $1,305 $25.10 Durham-chapel Hill MSA Durham $1,305 $25.10 FMR Orange $1,305 $25.10 Person County FMR person $688 $13.23 6 County $1 041 $20.02 �1 Average ORANGE COUNTY 5 NORTH CAROLINA Travis Myren said departments like DEAPR and Solid Waste will be most impacted by the increase to the living wage, and indicated fee increases in those departments are likely to be recommended to offset living wage costs. Slide#6 FY 2026-27 Pay-As-You-Go Funding • Pay-Go for Schools and County Projects—($3 million) savings to model - January Budget Model included $6 million in Pay-Go for School Projects - Manager's Recommended CIP includes$3.5 million in Pay-Go for School Projects=$2.5 million savings to model - Pay-Go also reduced for County IT Infrastructure and Parks Facility Renovation, Repair, and Safety Projects where prior balances were applied = $500,000 savings to the model Amended Pay-Go increases in FY 26-36 Manager Recommended Budget $3 million increase in FY2026-27 $3 million increase in FY2027-28 $3.5 million increase in FY 2028-29 OR 6 AN I CAROUNTY 41 Slide#7 FY 2026-27 Debt Service • Debt Service—($2.8 million) savings to model - January Retreat estimated$9.5 million in new debt expenses based on maximum potential borrowing of $100 million - Project list refined for spring financing based on bids-in-hand down to$55 million Reduces debt service increase to$6.7 million in FY2026-27 - Remaining $45 million of authorized projects carried forward for potential financing in spring 2027 ORANGE COUNTY 7 NORTH CAROLINA Travis Myren reported that the spring borrowing package has been refined and reduced from approximately $100 million to approximately $45-55 million, anchored by the Durham Tech expansion ($11 million, Series A) and the Crisis Diversion Facility (approximately $30-plus million, Series B). This reduction yields approximately$2.8 million in savings to the operating model. Commissioner Carter asked about the typical timing and frequency of debt offerings. Travis Myren explained the county generally executes one spring borrowing per year to minimize transaction costs, which include attorney, bond counsel, and financial advisor fees, though a second borrowing could occur in a favorable market. He noted that LGC requirements mandate having a bid in hand before borrowing is authorized,which tends to concentrate activity in the spring. 42 Slide#8 rY 2026-27 Crisis Diversion Operating Expenses Crisis Diversion Operating Costs—($800,000) savings to the model - Crisis Diversion Facility had anticipated operating costs beginning in 41h Quarter of FY2026-27 - Startup costs(provider)is delayed to beginning of FY2027-28 due to construction schedule Results in an$800,000 savings to the Operating Budget model - Alliance Health to contract with provider—Request for Proposal to be issued in May 2026 County to lease facility directly to provider Provider start-up costs begin in FY2027-28 Approximately$3 million in annual operating costs ORANGE COUNTY 8 NORTH CAROLINA Slide#9 FY 2026-27 Employee Health Insurance Employee Health Insurance—($400,000)savings to model - Implementation of Rx Save Card for GLP-1 medications - Spousal surcharge of$200 per month for spouses/domestic partners with access to other insurance coverage $70,000 in new revenue to the Health Plan Serves as a disincentive for spousal migration to the County plans from other options available to them— decreases premium equivalent and claims costs - Plan costs increase limited to 9%or$1.3 million 9 ORANGE COOUNA Y 43 Slide#10 FY 2026-27 Operating Model Update Summary Updated Operating Model—April 2026 Initial Model Gap-January 2026 1 $21.45.!Ilion Property Tax Base Update ($400,000) Sales Tax Hold Harmless $500,000 Living wage $500,000 Pay-Go Funding ($3 million) Debt Service ($2.8 million) Crisis Diversion Operating Costs ($800,000) Health Insurance ($400,000) Other Changes Net ($50,000) Updated Operating Model Gap $15 million Tax Rate Equivalent 4.45 cents per$100 of value ORANGE COUNTY 10 NORTH CAROLINA Travis Myren reported that, accounting for all the changes in slide#10, the current gap between revenues and expenses stands at approximately$15 million, equivalent to approximately 4 to 4.5 cents on the tax rate. He noted that work with department directors is ongoing and is expected to reduce that figure further. Slide#11 FY 2026-27 Balancing the Budget Options for Reducing Tax Increase County Manager is reviewing a variety of options as tools to reduce the gap and potential tax increase Education Current Expense Each 1%=$1 million Per pupil funding increase is based on total enrollment of 18,492 Percent Increase Per-Pupil FY2026-27 enrollment is 451 less Current Expense Total Funding Increase .......--- than FY2025-26 budgeted enrollment Base Amount $111,328,011 2.4% This represents a 2.4%decrease from FY2025-26 1% $112,441,291 3.5% 1.5% $112,997,931 4.0% 2% $113,554,571 4.5% 2.5% $114,111,211 5.0% 3% $114,667,851 5.59/6 ORANGE COUNTY 11 NC�12"1'1 i CARD LINA 44 Slide#12 FY 2026-27 Balancing the Budget Existing Personnel Cost Drivers Across the Board Wage Adjustment-$930,000 for each 1% Step Increases(Department of Social Services, Sheriff's Office, Emergency Services)—($410,000) Developed as recruitment and retention incentive in highly competitive labor market Employees on the Step Program continue to receive across the board increase as well as lump sum merit payment of up to $1,144 based on performance evaluation Merit Increases-$455,000 - Wage increases based on performance up to$1,144 ORANGE COUNTY 12 NORTH CAROLINA Slide#13 FY 2026-27 Balancing the Budget - Vacant Positions and Service Levels 42 vacant positions currently under hiring freeze $3.7 million salary and benefits Department of Vacancies I Department Aging 1 Housing 2 Animal Services 1 Human Resources 1 Arts Commission 1 Library 2 Asset Management 1 Planning 3 Emergency Services 3 Register of Deeds 2 DEAPR 1 Sheriff 8 Finance 1 Social Services 6 Health 8 Solid Waste 1 TOTAL 42 13 ORAN GE COUNTY Travis Myren reported that he froze all hiring about a month ago to stabilize the vacancy count.As of that date, approximately 42 vacancies exist across county government, proportionally concentrated in the largest departments — Health, DSS, and the Sheriff's Office. He said recommendations will likely include eliminating some vacancies and shifting positions from general fund to non-general fund sources 45 where possible, with an acknowledgment that some service-level reductions will result. He emphasized the goal of avoiding a reduction in force affecting occupied positions, while not ruling it out entirely as a tool of last resort. He also stressed the importance of preserving flexibility during the coming fiscal year given broader economic uncertainty. Vice-Chair Fowler asked whether the hiring freeze is generating savings in the current fiscal year that might be applied toward next year's budget via fund balance. Travis Myren confirmed that the model already assumes applying approximately$7 million in fund balance,consistent with prior years,and that the hiring freeze is additionally intended to build up a surplus at fiscal year-end. Commissioner Bedford noted that high vacancies in some departments may reflect inadequate compensation rather than overstaffing,and that eliminating multiple vacancies in a large department may be more feasible to absorb than eliminating even one or two in a small essential-services department. Slide#14 FY 2026-27 Balancing the Budget - User Fees Why use fees to pay for services... - Beneficiary Pays: The cost of a service is paid by those who use it,rather than being subsidized by the general public - Voluntary Access: user fees are generally paid voluntarily by those choosing to use a service - Equity Consideration: user fees can create barriers to access for residents with lower ability to pay County fee study provided a framework to calculate cost recovery for services,focusing on Planning and Inspections, DEAPR,and Emergency Services Other departments provide nonessential programming with direct benefits to individuals Aging - Arts Commission Animal Services ORANGE COUNTY 14 NQRTH CAROLINA Travis Myren noted that as property tax revenue is increasingly dedicated to mandated essential services, user fees will become the only mechanism for sustaining discretionary programs. 46 Slide#15 FY 2026-27 Balancing the Budget Partner Funding Analyze Funding to External Organizations for Effectiveness, Necessity,and Duplication - Payments to Towns - Payments to Nonprofits in Department Budgets - Payments to Outside Agencies - Memberships and Dues to External Organizations ORANGE COUNTY 15 NORTH CAROLINA Slide#16 FY 2026-27 Balancing the Budget - Other Operating Costs Limitations on operational costs like utility expenses and some contractual obligations Conference and Training Budgets $409,000 total in the General Fund Analyze necessity of out of state travel and training - Preserving Flexibility to Respond to Economic Uncertainty Uncertainty around the global economy,inflation and fuel costs Options used to reduce the tax increase in FY2026-27 will not be available to respond to a recession or other economic shocks during the fiscal year as ORAN GE COUNTY Commissioner Carter raised the question of cost-sharing with municipalities for Tax Administration Office services. 47 Kirk Vaughn indicated that preliminary discussions have not yielded significant progress and that the existing interlocal agreement structure would require approximately one year's notice before changes could take effect. He noted that Board direction to give that notice had not been previously provided. Chair Hamilton said that the municipalities should hear about these fiscal pressures from both staff and their elected counterparts, and suggested that the county needs to have those conversations in a timely fashion to position itself for the following year. Travis Myren said staff is cognizant of additional staffing resources that will need to be allocated to Tax. He offered to bring this back as an agenda item at a future meeting. Adjournment A motion was made by Commissioner McKee,seconded by Commissioner Bedford,to adjourn the meeting at 9:25 p.m. VOTE: UNANIMOUS Jean Hamilton, Chair Recorded by Tara May, Deputy Clerk to the Board Submitted for approval by Laura Jensen, Clerk to the Board