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2 <br /> If the tax credit rate is accepted then the interest rate paid by the issuer will be zero. If a higher <br /> i 9 <br /> rate of interest s needed, the issuer would have to agree to pay interest on the debt of the <br /> difference between the tax credit rate and the rate the purchaser requires. The tax credit rates <br /> are lower now than they were earlier in the year. This makes it more likely that some interest <br /> would be paid on QSCB financing. Orange County can anticipate the interest rate for financing <br /> these bonds could be anywhere from 0% to 2.0%, depending on the setting of the rates by the <br /> Treasury Department. <br /> The QCSB is a new federal program and there have been a very limited number of participants <br /> purchasing these bonds. Branch, Banking & Trust (BB&T) is expected to be the purchaser of <br /> this issuance and was also the issuer of the previous QSCB issuance for the Carrboro High <br /> School Arts Wing. The current approach for this type of financing is to negotiate terms directly <br /> with the purchaser. <br /> All QSCB financing for the funds allotted for 2010 must occur by December- 31, 2010 in order to <br /> retain the allotment. This issuance of <br /> QSCB financing must follow the required steps through <br /> the Local Government Commission (LGC). There will be a number of entities seeking to issue <br /> this type of financing prior to the end of the year. There are, at most, two potential financing <br /> sources and it is anticipated there will be many discussion items at the December LGC meeting. <br /> Therefore staff and bond counsel believe it would be prudent to put the County in the position to <br /> complete the financing as early as possible. Staff and bond counsel are proposing a schedule <br /> (see attached) which would enable this financing to be presented to the LGC for approval at its <br /> November meeting which occurs November 16, 2010. <br /> Bond Counsel has prepared the attached resolution which: <br /> 1) Makes a preliminary determination to proceed with financing for the CHCCS and <br /> GCS construction projects; <br /> 2) Makes certain findings of fact to support the financing; <br /> 3) Authorizes the Finance Officer to proceed with an application to the LGC and seek <br /> financing proposals and other steps necessary to move forward with the financing; <br /> 4) Sets a public hearing for November 4, 2010; and <br /> 5) Provides for reimbursement of project expenditures from financing proceeds. <br /> The Board will need to consider an additional resolution approving the financing Which is <br /> scheduled for November 4, 2010. The School Board will also need to hold a public hearing and <br /> approve the financing plan. The School Board may also need to approve a transfer of the <br /> property. <br /> FINANCIAL IMPACT: There is no financial impact until the Board gives final approval to the <br /> financing. It is possible that the financing will require payment of a low rate of interest. The <br /> Board will need to consider this in giving final approval to the financing. Given the fact that the <br /> upcoming budget and ensuing budgets are expected to be difficult the Board may wish to <br /> consider taking the required debt service for this financing from the CHCCS and OCS portion of <br /> pay-as-you-go revenue. This would eliminate any potential tax impact of the financing. <br />