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Over Budgeting of 2001 Bond Revenues:
<br />Between June 25, 2001 and June 14, 2010, the Board of County Commissioners approved
<br />amendments to the Lands Legacy Capital Project Ordinance that included $5,250,000 of
<br />proceeds from the 2001 authorized bonds. A total of $3,500,000 of the 2001 Bonds were
<br />ultimately issued for Parks and Open Space. This revenue budget line item in the Lands
<br />Legacy Project Ordinance is overstated by $1,750,000. However, $250,000 of the 2004/05
<br />Capital Investment Plan (CIP) was incorrectly budgeted as 2001 Bond Proceeds and should
<br />have been pay-as-you-go funding. Transferring $250,000 from 2001 Bond Proceeds Budget
<br />line item to pay-as-you-go funding reduces the budget to $5,000,000. The end result is that the
<br />line item budget for 2001 Bonds in the Lands Legacy Project Ordinance is overstated by
<br />$1,500,000.
<br />On June 2, 2009, .the Board of County Commissioners approved a budget amendment to the
<br />Lands Legacy Project Ordinance in the amount of $2,800,000, with the revenues coming from
<br />2009 Alternative Financing. A total of $1,700,000 was subsequently transferred to three other
<br />parks projects on June 16, 2009, leaving $1,100,000 for the Lands Legacy project. The Lands
<br />Legacy Project ordinance needs to be reduced by $1,700,000 to reflect the reallocation to other
<br />parks projects. The remainder of the background outlines the steps taken that led to the need
<br />for this $1,700,000 budget amendment.
<br />On November 6, 2001, the voters of Orange County approved $75,000,000 of General
<br />Obligation Bonds, which included $17,000,000 for Parks and Open Space. As of June 30,
<br />2008, a total of $68,100,000 of the original $75,000,000 had been issued. A total of $6,900,000
<br />original approved 2001 bonds were unissued as of June 30, 2008. The original distribution for
<br />the remaining 2001 authorized bonds was $1,400,000 for Affordable Housing and $5,500.000
<br />for Parks and Open Space. On November 6, 2008 the original authorization expired and the
<br />Board proceeded to issue the remaining $6,900,000 as part of the April 2009 alternative
<br />financing.
<br />The American Recovery and Reinvestment Act of 2009 (ARRA) raised the small issuer
<br />exemption for municipal tax exempt financing to $30 million annually. ARRA allows the banks
<br />to deduct 80% of the interest expense of carrying qualified tax exempt debt. This translates into
<br />substantially lower interest rates from banks for qualified municipal debt obligations. In order for
<br />the County to qualify for the preferred interest rates, the Board approved the issuance of $30
<br />million for the April 2009 issue. To receive lower interest rates, the Board approved the
<br />issuance of only $2,800,000 of Parks and Open Space ($5,500,000 was originally planned).
<br />The remaining $2,700,000 is planned to be issued when financing is sought for elementary #11.
<br />At the meeting of March 17, 2009, the Board of County Commissioners approved the issuance
<br />of $29,917,000 of bank qualified installment financing as authorized under section 160A-20 of
<br />the North Carolina General Statutes to finance capital projects and equipment. As a part of the
<br />total issue, $2,800,000 was issued for Parks and Open Space. The debt was issued on April
<br />24, 2009 at a rate of 3.6% for 15 years. On June 2, 2009, the Board approved the Capital
<br />Project Ordinance Amendments which included $2,800,000 for the Lands Legacy Project.
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