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2 In response to the concerns expressed by the Chapel Hill/Carrboro City Schools regarding reduced funding in the early years of the Capital plan, it was suggested that bonds be sold in three installments of $10 million, $20 million, and $10 million. This change reduces debt service payments in the first several years of the plan thus freeing up funds for on-going projects. The drawback of splitting the bonds into three separate bond sales is the issuance costs, which are approximately $50,000 each sale. However, issuance fees have in the past been paid from interest earnings on bond proceeds sold and not yet expended- Staff proposes to continue this practice. The actual decision on the number and amount of each bond sale is based on cash flow projections which are usually prepared by the project architects. Although the assumptions in this plan seem reasonable to meet the cash flow requirements of the planned projects, staff will need flexibility in how and when these bond sales are actually structured and carried out. The long range funding plan includes bond funds for each school system for renovations/school improvements. The plan includes $3,002,535 for CHCCS and $3,795,953 for the Orange County Schools. In the plan as presented in September, these funds were projected to be appropriated beginning in 1998-1999, with one third of the total amount included in each of the next three years. Since bond proceeds will be available during fiscal year 1997-1998, the first year of appropriation of these funds under Option 5B was advanced one year so that the funds distributed would be more in line with the currently adopted Capital Improvements Plan. The revised plan would have had about a one million dollar negative impact on the Orange County Schools because of the difference in the peak year amount and the actual debt service payment. To adjust for this impact, an additional $1 million in bond funds from the $5 million in County bond funds will be allocated to the Orange County Schools. The Board of Commissioners had earlier expressed concern about using the one cent that is earmarked for a capital reserve account for County projects beginning in 1998-99. The only funding source that could be identified to replace these lost funds for County projects is a one cent increase in the general fund property tax rate. This tax increase would occur in 1998-99. Copies of the slides used in this presentation are in the permanent agenda file in the Clerk's office. The meeting was opened for questions and comments from the Board of Commissioners, members of both School Boards and staff. Those comments follow. • tt is not anticipated that there will by any negative impact on the school systems' schedule to complete new facilities from the $10/20/10 sale of the bonds. • There will be approximately $400 million dollars in statewide school bond funds available across the state each year starting with 1997-98. • An effort needs to be made to find the additional funds for County projects rather than the one cent property tax increase. • This plan is not cast in stone. For example, if the school population in Orange County grows faster than currently anticipated there may need to be a reevaluation of the situation • The Orange County School System would receive about $6 million dollars in State bond funds which could be spent for any capital program identified as acceptable by the State.