Loading...
HomeMy WebLinkAboutAgenda - 06-06-2000-5d:~ ORANGE COUNTY BOARD O~ COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 6, 2000 Action Agenda Item No. ~~ SUBJECT: Hi h School Financin Plan and Resolution -Oran a Count Schools DEPARTMENT: Finance PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Proposed Timetable for Public Offering Resolution Authorizing Staff to Proceed Public Hearing Notice 5/30/00 Memo from OCS Superintendent INFORMATION CONTACT: Ken Chavious, ext 2453 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To consider a plan and process far financing a new high school in the Orange County School District and adoption of resolution authorizing staff to proceed. BACKGROUND: Current Capital Plans include the construction of a new faigh school in the Orange County School District at an estimated cost of $25 million. The Bond Referendum approved by the voters in November 1997 included $12.5 million in bond funds for this project. . During the bond referendum planning process, the Orange County School Board committed to funding the remainder of the project from their pay-as-you-go funds in the form of an installment purchase financing. Before it would approve the inclusion of the high school project in the bond package, the North Carolina Local Government Commission (LGC) required a letter from the County Manager and School Superintendent reinforcing the plans to have all other financing in place prior to issuing the bonds. The High School Project is underway and securing financing approval from the LGC far the non-bond portion of the project is now necessary. The amount requested for financing by the School Board is $13.5 million, which exceeds the original amount by $1 million. The County Manager received a memorandum from the Orange Gounty School Superintendent on May 30, 2000, providing information on the high school project. The memorandum is attached to this abstract. The Orange County Board of Education took official action on May 29, 2000 that increased the proposed funding for the high school from $25 million to $27.9 million. Sources for the additional funds proposed are outlined in the memorandum and include adding $1 million to the amount to be provided by installment purchase . The Superintendent will be available at this June 6 meeting to discuss the proposal in more detail, if the Board so desires. Counsel and is attached. The County's recent $40 million bond sale and the proposed amount of the high school financing places the County above the $10 million threshold for "bank qualification". This means that a private placement financing would have significantly higher interest rates than the County normally receives on "bank qualified" installment purchases. In addition, rising interest rates make taxable and other non-bank qualified financings less attractive. The LGC has recommended that County staff pursue a public offering in the form of Certificates of Participation (COPs). While this type of financing is more complicated and time consuming, the interest rates are lower and the overall costs to the County would be significantly less. The timetable mentioned above is for the issuance of COPS and Bab Jessup, the County's Bond Counsel, will be on hand to discuss in detail the process. Similar to private placement financing, the issuance of COPs also requires a public hearing. The proposed timetable has established June 29, 2000 as the date for that public hearing. FINANCIAL IMPACT: There is no impact resulting from actions taken by the Board at this meeting. However, if the Board approves an underwriting proposal and installment purchase contract, semi annual debt payments will be required. Funding for annual debt service will be provided by Orange County Schools out of their pay-as-you-go allocations in the ten year Capital Investments Plan. RECOMMENDATION{S): The Manager recommends that the Board authorize staff to proceed with the financing by adoption of the Resolution; establish the public hearing date for June 29, 2000; and instruct the Clerk to publish the hearing notice by June 16, 2000. 3 Orange County, North Carolina Proposed Financing for New Orange County High School Proposed_Timetable for a„Public Offering ent 1. Preliminary conference between County and LGC staff to discuss general terms of issue and financing alternatives 2. County Board makes preliminary determination to proceed with f nancing and authorizes public hearing for a particular amount of financing and a particular hearing date 3. County sends out RFPs for investment bankers 4. Underwriting proposals due back to County; County staff makes informal selection of underwriter 5. Publish notice of public hearing Time As soon as possible BOCC meeting of 6/6 Promptly after 6/6 BOCC meeting By 6/16 By 6/16 for hearing on 6/29 6. County School Board adopts resolution 6/19 school board meeting (prior to requesting financing for project and County's public hearing) approving, in principle, property transfer to County 7. County Board holds public hearing; adapts resolution making "findings" required by LGC guidelines, formally selecting underwriter and authorizing staff to proceed with financing process 8. County completes and files LGC application At 6/29 BOCC meeting Promptly after 6/29 BOCC meeting 4 9. Parties work on financing documents, Between 6/29 preliminary Board usually including a working group approval and LGC approval date meeting at LGC for review of financing plan and draft Official Statement 10. County provides for creating nonprofit f nancing corporation by selecting board members and providing for preparation of necessary paperwork (including articles of incorporation and bylaws) and an organizational meeting of the nonprofit's board Prior to LGC approval date is preferred; certainly must be done prior to distribution of official statement 11. LGC approves financing 12. School Board adopts resolution providing final approval of property transfer and financing documents that affect School Board LGC meeting in August (probably August 1) First August school board meeting 13. School Board conveys property to Any time after preceding step; must County be done prior to or coincident with closing on financing 14. Nonprofit board adopts resolution providing final approval of financing documents that affect nonprofit Between LGC approval and mailing official statement; generally preferred if prior to final BOCC action (maybe combined with organization meeting referenced in step 10) 15. County and underwriter put OS in final form 16. County Board adopts final resolution to approve substantially final documents. and financing terms Between LGC approval and final BOCC action $/15 BOCC meeting (as soon as convenient after LGC approval and construction bids are in hand, and documents have been substantially agreed upon by County and underwriter) 5 17. County and underwriter mail. official statement to prospective investors Promptly after final County Board action 1$. Offering/sale period 19. School Board takes construction bids on project Usually the two-week period after mailing the official statement Prior to COPS sale date, to insure that amount financed is adequate 20. COPS sale date; underwriter and County 8/29 (a single day agreed to in agree on final interest rates advance by County and underwriter, generally about two weeks after mailing of official statement) 21. Closing 9/12 (usually about two weeks after sale date) 6 Resolution making certain findings of fact and authorizing staff work for a proposed installment financing for the planned new Urange County high school WHEREAS, Orange County has previously approved in principle a plan to finance a portion of the construction costs far a new high school far the Orange County school district through an installment financing contract, as authorized under Section 160A-20 of the North Carolina General Statutes; WHEREAS, the Board of Commissioners has been advised by the Finance Officer, after consultation with school board representatives, that installment financing for project construction costs will be required in an amount not to exceed $13,500,000, and the Board has determined now to proceed with the installment financing; WHEREAS, under the guidelines of the North Carolina Local Government Commission (the "LGC"}, this governing body must make certain findings of fact to support the County's application for the LGC's approval of the County's proposed financing arrangements for the project; NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of Orange County, North Carolina, makes the fallowing findings of fact: 1. The proposed project is necessary and appropriate far the County under all the circumstances. The County accepts the determination in this regard initially made by the Orange County School Board. 2. The proposed installment financing is preferable to a band issue far the same purpose. The County's long-range capital improvement plan for the County schools has contemplated an installment financing for a portion of this project's cast for same time, and the Board has determined that. the ,capital improvement plan represents the preferred program for combining the various types of financing available to the County in light of the various capital needs facing the County: The Board notes that approximately one-half of the project's cost will be paid for from proceeds of general obligation bonds approved by the County's voters in November, 1997: The County has no ability to issue non-voted general obligation bands for this project, and this project will produce na revenues that could be used to support aself-liquidating financing. 3. The sums to fall due under the contract are adequate and not excessive for the proposed purpose. The County will obtain competitive proposals for the financing now to be approved and the County expects that ,its high credit rating will enable, it to obtain favorable financing terms. In addition, general obligation bond proceeds will pay approximately one-half of ,the project's construction cost, and County pay-as-you-go capital funds will pay additional project costs. 4. The Finance Officer has confirmed to the Board at this meeting that (a) the County's debt management procedures and policies are sound and in compliance with law 7 and (b) the County is not in default under any of its debt service obligations. 5. There will be no increases in taxes necessary to meet debt obligations under the proposed financing arrangements. The County expects that interest rates to be payable by the County an the proposed financing, and the expected term of the financing, will allow the County to repay the financing within current resources. 6. The County Attorney is of the opinion that the proposed project is authorized by law and is a purpose for which public funds of the County may be expended pursuant to the Constitution and laws of North Carolina. BE IT FURTHER RESOLVED that the Finance Officer and all other County officers and employees are authorized and directed to proceed with the installment financing contemplated by this resolution and as described to the Board, and to take all such further action as they may consider necessary or desirable in that connection. BE IT FURTHER RESDLVED that the Finance Officer is specifically authorized and directed to provide for the filing of an application to the LGC .for its required approval of the project and the proposed financing arrangements. BE IT FURTHER RESOLVED that the Clerk to this Baard is authorized and directed to provide far the publication of a notice of public hearing on the proposed financing, in the farm and manner prescribed by statute, with the hearing to be held at the Board's meeting on June 29, 2000. BE IT FURTHER RESOLVED that this Baard's determination to proceed with an installment financing shall be subject to the Board's further consideration in light of any public comment received at the public hearing. 8 Notice of Public Hearing - Financing by grange County n C o Take notice that the Board of Commissioners of Orange County, North Carolina, will hall a public hearing on V4~ednesday, June 29, 2000, at 7:30 p.m. (ar as soon thereafter as the matter may be heard). The purpose of the hearing will be to take public comment concerning a proposal far the County to finance. an amount not to exceed $ l 4,000,000 far the construction of a new high school for the Orange County schoal district. The proposed financing would be secured by a lien on the new high school (and the associated land} and the County's pmmise to repay the financing, but, there would be na recourse against the County yr its property (other than the high schoal and the associated .land) if there were a default on the financing. The County's entering into the financing is subject to obtaining approval from the North Carolina Local Government Commission and final approval from the Board of Commissioners. The hearing will be held in the in the meeting room of the County's Southern Human Services Center, 2501 Homestead Road, Chapel Hill, North Carolina, All interested persons will be heard. The County's plans are subject to change based on the comments received at the public hearing and the Board's subsequent discussion and consideration. Persons wishing to make written comments in advance of the hearing or wishing more information concerning the subject of the hearing may contact Kenneth T. Chavivus, Orange County Finance Officer; 208 South Cameron St., Hillsborough, NG 27278 (telephone 732-8181). ®rattge wurttp ~aar~ of ~D-utatiart . RANDY BRIDGES, SUPERINTENDENT 9 ~trr~~IdTDUQ~, ~~ 27278 - BOARD MEMBERS 200 EAST KING STREET SUSAN FIALKIOTIS, CHAIR HILLSBOROUGH NC 27278 KEITH COOK, VICE CHAIR , TELEPHONE: 819-732-812fi ROBERT H. GATEMAN FAX: 919-732-8120 RICHARD KENNEDY DAVID KOLGINSKY DELORE5 51MPSON BRENDA 5TEPHEN5 MEMORANDUM TO: John Link FROM: Randy Bridges ~ RE: Funding for the New High School DATE: May 30, 2000 The Orange County Board of Education rnet on May 29, 2000 to discuss the construction costs of the new high school scheduled to open in August 2002. As you are aware, this project received $12.5 million from the November 1997 bond passage, and by installment purchase the Orange County Board of Education is responsible for matching that amount. We were very concerned in 1997 as to whether $25 million would be enough to construct this school. As we are now well into the process, our concerns were valid. The Orange County Board of Education unanimously approved requesting from the County Commissioners approval to increase the $12.5 million dollazs to $13.5 million to complete this project. The projected cost of the high school at this time is $27,992,650. Listed below is how we intend to capture the additional funding: $1,000,000 Additional Irstallmer.± Purchase 197,650 . Funding from the sale of timber from the site 250,000 CIP Technology 245,000 Building Deletions 1,300,000 Pathways Elementary Savings $2,992,650 Total T am listing below selected items we have encountered since the project began which have increased the overall cost of the school: 10 John Link -2- May 30, 2000 • The original budget was based on 199b prices. Assuming a very conservative inflation factor of 3%, the budget based on 2000 costs would be $28,137,720. Based on 5%, the budget would be $30,387,656. • The Board of Education originally proposed that the size of the high school would be based on 1000 students and a core capacity of 1200 students. Based on the recommendations of the Construction Standards Committee, the core capacity was changed from 1200 to 1500 students thaC increased the square footage by 10.64%. The Construction Standards Committee recommended a 1997 budget of $29,920,112 fora 1000 student high school. • The original budget did not anticipate lighting the baseball field, softball field, tennis courts, or practice fields----the approximate cost $310,000. • The original budget did not include the cost of water and sewer----estimated cost approximately $850,000. • The original cost did not include the recommendation by the North Carolina Department of Transportation for the widening of Orange Grove Road and Grady Brown Road----estimated cost approximately $250,000. • The original cast did not anticipate a thermal ice storage system---estimated cost approximately $150,000. If you have questions, please feel free to call. We look forward to meeting with you and the Commissioners on June 6`h to discuss this request. /ha cc: Orange County Board of Education