Loading...
HomeMy WebLinkAboutAgenda - 11-16-1999 - 5aORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No. ~ - Q ACTION AGENDA ITEM ABSTRACT Meeting Date: November 16, 1999 SUBJECT: Sale of 1997 Bonds and Two Thirds Net Debt Reduction Bond Issuance DEPARTMENT: Finance/Manager PUBLIC HEARING: (Y/N) ATTACHMENT(S): Resolution Projects for Bond Sale Tentative Bond Sale Schedule INFORMATION CONTACT: Ken Chavious -extension 2453 Rod Visser, extension 2308 Pam Jones, extension 2652 Donna Dean, extension 2151 TELEPHONE NUMBERS: - - Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 227-2031 PURPOSE: To consider the initial sale of bonds approved by the voters in 1997 and adopt a resolution authorizing staff to pursue the issuance of two-thirds net debt reduction bonds. BACKGROUND: 1997 Voter Approved Bond Sale In 1997, Orange County. voters approved a $56 million bond referendum for School and County capital projects. School projects represent $47 million of the. approved bonds. County projects, including affordable housing, parks and Efland sewer system expansion, total. $9 million. During the past several months, County staff has worked with each school system to determine the amount of the initial bond sale required to provide cash for school projects. The total projected cash flow requirements for bond funded school projects is $34.5 million in the upcoming year. It is imperative. that the funds be in hand by Spring 2000 in order to accommodate both school systems construction schedules, for the opening of the new schools as well as the renovation of existing schools.. The cash. requirements of specific projects are listed on the attached Projects for Bond Sale spreadsheet (page 6 of this abstract). Bond amounts for each project are consistent with the County's adopted CIP and the plans presented to voters for the November 1997 referenda. The remaining $12.5 million in school bond. funds will be issued in one or more subsequent bond sales, depending on future cash flow requirements. 2 Staff has also reviewed plans for bond funded County projects and determined that $2.828 million will be needed in the upcoming year for parks projects. The remaining parks bond funds will be issued in future bond sales. In addition, bond funds for the Efland Sewer System Expansion ($1.2 million) and Affordable Housing ($1.8 million) will be included in future bond sales. While the Board of Commissioners will be considering recommendations from the Affordable Housing Bond Committee in the near future regarding specific projects that should receive bond funds, it is not necessary to sell bonds for these projects now. Any projects approved by the Commissioners can be budgeted and expended with cash on hand, with the County reimbursing itself from future bond sales. Considering the projected cash flow information outlined above, an initial bond sale of $37.328 million will provide sufficient cash for project expenditures. This leaves $18.672 to be sold in subsequent years. Two-Thirds Net Debt Reduction Bond Sale In addition to the voter-approved bond projects, the 1999-2009 Capital Investment Plan (CIP) approved by the Board of Commissioners contained major renovation projects for Whiffed Human Services Center and Northern Human Services Center. Both of these facilities are aged and in need of costly renovations such as heating and air conditioning installation or replacement. As outlined in the CIP, the major funding source for these renovation projects is two-thirds net debt reduction bonds. This financing approach is beneficial because it offers the lowest possible interest rates, and is .financially secure because it is backed by the "full faith and credit" of Orange County. N.C. General Statutes provide authority for a County to issue bonds up to two thirds of the amount of bonded debt retired in the previous fiscal year. In the 1998-1999 fiscal year the County retired $4,270,000 in bonded debt. This means that the Board of Commissioners has the authority, subject to formal approval by the Local Government Commission, to issue slightly more than $2,846,000 in "two-thirds" bonds. Opportunity for Issuance Cost and Administrative Savings Bond sales are intensive and require a significant commitment of staff time and resources. Instead of pursuing two separate bond sales, it is advantageous for the County to "piggy back" the two-thirds issuance along with the sale of the 1997 bonds. The County's bond counsel advises that it is permissible to arrange for the sale of two-thirds bonds immediately followed by the sale of .the County's first installment of 1997 bonds. A resolution required by the Local Government Commission for the issuance of two-thirds bonds (pages 4-5) and a tentative schedule for milestones in the bond sale process (page7) are included with this abstract. FINANCIAL IMPACT: Due to the timing of the bond sale there will be no financial impact in the 1999-2000 fiscal year.. It is anticipated that debt service .payments will increase significantly in the 2000-2001 budget. Projected annual debt service costs associated with the 1997 bonds could range from $2.7 to $3.2, million depending on the interest rate and the repayment structure recommended by the LGC. Annual debt service costs on the two- thirds bonds .could range from $200,000 to $230,000. All debt service costs have been factored into the County's adopted CIP and plans for the 2000-2001 operating budget. RECOMMENDATION(S): The Manager recommends that the Board authorize staff to carry out all administrative steps associated the sale of the 1997 bonds in the amount of $37,328,000; and adopt the resolution related to the issuance of two-thirds bonds in the amount of $2,846,000. NORTH CAROLINA ORANGE COUNTY BOARD OF ORANGE COUNTY COMMISSIONERS RESOLUTION WHEREAS growth in Orange County has been, and is predicted to continue to be significant; and WHEREAS with the growth there has been and continues to be an ever-increasing demand for County services; and WHEREAS County facilities are inadequate to provide the space necessary to deliver the demanded County services or to provide certain opportunities to County citizens; and 4 WHEREAS the Orange County Commissioners have initiated, reviewed and received public comment on a ten-year Capital Improvement Plan. (hereinafter referred to as CIP) in order to address the facilities needs of the County; and WHEREAS it is impractical to fund the facilities construction and improvements necessary to implement the CIP and County policies with "pay as you go" revenues generated wholly from the current property taxes, current sales taxes, and other current revenue; and WHEREAS the Board of Commissioners proposes funding for certain major projects in the implementation of the CIP and County policies with the proceeds of two-thirds net debt reduction general obligation bonds, voter-approved bonds and with proceeds of current property taxes, current sales taxes, impact fees and other current revenue; and WHEREAS projects are proposed in the CIP to be implemented with proceeds of two- thirds net debt reduction general obligation bonds totaling $2,846,000 for renovations and improvements to the Whiffed Human Services Center and the Northern Human Services Center and, WHEREAS project cost estimates based upon assessments and evaluations made by Staff including the County Engineer, Public Works Director and others as well as review of financing options and repayment ability evaluated by the Finance Director supports the conclusion that, in combination with other designated County capital funds, the amount of bonds proposed are adequate and not excessive for the intended purposes, and WHEREAS it is the intent of the Orange County Board of Commissioners to seek approval of the Local Government Commission for the County to issue two-thirds net debt reduction bonds IT IS RESOLVED THAT: 1. Orange County intends to seek approval of the Local Government Commission for Orange County to issue two-thirds net debt reduction bonds in a total amount not to exceed $2,846,000, as detailed above in order to implement the CIP and County policies. 2. Orange County has made all debt service payments on existing debt on a timely basis as evidenced by its audit report for the year ended June 30, 1999, and for the period since June 30, 1999 as confirmed by the County. Finance Director. 3. According to Orange County's audit report for the year ended June 30, 1999, its budgetary and fiscal management policies have been carried out in compliance with all applicable laws, requirements and other guidelines. 4. In order to meet the increase in debt service occasioned by the repayment of the proposed bonds no tax increase is necessary. Debt service will be funded principally from sales tax and other revenues committed by the Orange County Board of Commissioners for. that purpose. 5. The Orange County Finance Director shall prepare and submit an application to the .North Carolina Local Government Commission for approval of the proposed bonds. 6. The Board of Commissioners shall hold a public hearing to receive comment on the propose bond issuance and the Clerk shall publish a notice of such hearing within the required time frames. 7. The County Manager is hereby authorized to employ Robert M. Jessup, Jr, of Chapel Hill, North Carolina, and Nexsen Pruet Jacobs & Pollard, LLP, of Columbia, South Carolina, to represent Orange County as bond counsel in the authorization and issuance of the proposed bonds. Upon motion duly made and seconded, the foregoing Resolution was adopted by the Board of Commissioners of Orange County, this the 16th day of November, 1999. Ayes: Noes: 6 PROJECTS FOR SPRING 2000. BOND SALE Chanel Hill-Carrboro Schools East Chapel Hill High School 3,000,000 New Middle School 18,000,000 Renovations 3,000,000 Total Chapel Hill-Carrboro Schools 24,000,000 Orange Coun Schools New Elementary School 5,800,000 Renovations 4,700,000 Total Orange County Schools 10,500,000 Parks Efland Cheeks 718,000 Land Acquistition (NHSC) 110,000 Northern Community Park 1,000,000 Southern Village 1,000,000 Total Parks 2,828,000 Total Sale - 1997 Bonds 37,328,000 7 Orange County, North Carolina -Sample Timetable for Band Sale {including authorization and issuance of two-thirds bonds -- items in bol ace relate colely ~o the two-thirds bonds proc 1 Event Date 1. County makes preliminary deternunation as As soon as possible to proposed amount and projects for two- thirds bonds and approved referendum bonds, and preferred schedule for sale and closing. 2. County Board adopts resolution stating in At 11/16 BOCC meeting its own words the desirablllty of proceeding with an issue oftwo-thirds bonds for specified projects, aad authorizing application to LGC. 3. Preliminary LGC meeting to discuss general As soon as possible terms of issue -schedule, amount, purposes, and prior to Event 4 possible maturity structures, and including plans to combine referendum bonds and two- thirds bonds 4. County completes and files As soon as possible aflter Event 3 LGC application and prior to Event S 5. County Board introduces bond order and formally schedules public hearing At 12/7 BOCC meeting 6. Finance Oflacer 51es sworn statement of debt with Clerk 7. Publish notice of public hearing As soon as possible after Event 5 and prior to Event 7 After Event 6 and at least six days prior to Event 8 8. Hold public hearing and adopt bond order 9. Publish bond order as adopted 10. LGC sends request for OS information to County 11. County responds to LGC request for OS information 12. LGC produces draft OS from County information 13. LGC. working group meeting to discuss bond terms and draft OS ("due diligence" meeting) I4. County Board adopts resolutions {1) approving amount of bonds and maturity structure and (2) approving form of OS and terms for continuing disclosure 15. County and LGC put OS in final form 16. LGC mails OS 17. LGC bond sale 18. Closing 8 At first January BOCC meeting, or in any event first BOCC meeting after Event 5 for which (here is sufficient time to publish the notice in Event 7 (with '96 referendum bonds, we separated hearing date from date of Snal action, but m$ny units take final action immediately after the hearing, especially for non-voted bonds) As soon as possible after Event 8; no closings allowed unti130 days have passed from this publication [One to two weeks] [One to two weeks] [Two weeks] [This brings us to about mid-February) By 2/15 [prior to Event 14] [First March BOCC meeting] [prior to Event 15) Approx. 3/10 Approx. 3/16 4/4 4/18