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x R? 611 <br />MINUTES <br />ORANGE COUNTY BOARD OF COMMISSIONERS <br />WORK SESSION <br />FUNDING FOR NEW ELEMENTARY SCHOOL SPACE <br />NOVEMBER 30, 1993 <br />The Orange County Board of Commissioners met in special session on <br />Tuesday, November 30, 1993 at 7:30 p.m., in the Orange Water and Sewer <br />Authority's Community Meeting Room, Cariboro, North Carolina. <br />COUNTY COMMISSIONERS PRESENT: Chairman Moses Carey, Jr., and members <br />Stephen H. Halkiotis, Alice M. Gordon and Verla C. Insko. <br />COUNTY COMMISSIONER ABSENT: Commissioner Don Willhoit <br />COUNTY ATTORNEY PRESENT: Geoffrey Gledhill <br />STAFF PRESENT- County Manager John M. Link, Jr., Assistant County <br />Manager Rod Visser, Deputy Clerk to the Board Kathleen Baker, Finance Director <br />Ken Chavious, and Budget Director Sally Kost. <br />FINANCING PLAN FOR ELEMENTARY SCHOOL: County Manager John Link indicated that <br />using Certificates of Participation (COP Is) as a method of financing new <br />schools is a possibility. This is a relatively new method of financing in <br />North Carolina. Six or seven counties have recently used this method. <br />However, in researching this option it has become clear that special local <br />legislation will be required. This could be approved in the short session of <br />the General Assembly if consensus between the Boards is reached. <br />County Attorney Geof Gledhill explained that the term "Certificates of <br />rticipation" describes a form of installment financing. It is a concept <br />.whereby local governments borrow money for construction projects which is paid <br />back with interest over a period of time. Local governments secure the <br />repayment of the loan by pledging the property upon which the facility is <br />constructed. The only thing a local government can provide a lender as <br />security for this type of financing is property. Counties are empowered to <br />secure this type of financing in North Carolina, however, school boards are <br />not. North Carolina law requires that school boards own the property on which <br />their facilities are constructed. This causes a roadblock to the.County using <br />the COP option for financing. The County has the ability to secure the loan <br />and acquire the money for the loan, but they, not the school board, must own <br />the property so it can be used as collateral to secure the loan. In order to <br />allow the COP option to. be used, legislation must be approved that authorizes <br />the County to own property for school construction projects and to authorize <br />the schools to convey the property to the County to accomplish that purpose. <br />Until the loan is paid off, the county would lease the building to, the school <br />board for $1.00 per year. At payoff time, the property would be purchased by <br />the school board for a nominal amount of money. <br />suggested creating a non-profit corporation whicwould borrow the money and <br />handle the leasing of the property to the school board. The county would <br />retain title to the property throughout the life of the loan. The non-profit <br />corporation would handle the financing with the lenders and the County would <br />contract with the non-profit corporation. More information will be requested <br />="om the Bond Counsel to determine why they suggest that the County work <br />ough a non-profit. <br />John Link indicated that the Chapel Hill-Carrboro School System needs