Agenda - 11-19-1997 - 9b - Laserfiche WebLink

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6 MEMORANDUM TO: Orange County Board of Commissioners John Link, County Manager FROM: Rod Visser, Assistant County Manager DATE: November 13, 1997 RE: Skills Development Center Renovations - Financing Options Ken Chavious, Donna Dean, Pam Jones and I have been brainstorming about options for financing the planned Skills Development Center renovations, since funds from the public building bonds are no longer an option. You may recall that the 1997-2007 Recommended Capital Improvements Plan included the assumption that a$500,000 private placement would be sought to finance those renovations. The 1997-98 adopted budget therefore includes a reserve of$70,000 for the first debt service payment, should the County pursue private placement financing. We are reviewing the options the County could consider for how to finance the renovations. These ideas are not fully fleshed out, but here is a preliminary assessment: • 1997 Private Placement- The County has issued $9 million in debt so far in calendar year 1997 (for Southern Village Elementary), so we have $1 million of"bank qualified" debt capacity remaining (we would expect to get interest rates 1.5% to 2% lower if our debt is tax exempt and bank qualified). Our conversations with Local Government Commission(LGC) staff indicate that they are willing to work with us to meet all legal and LGC deadlines and still be able to close the loan before December 31. The private placement option is the one we included in the CIP, so there is some logic in pursuing this if we can work out the details with the LGC. NationsBank, which provided the County with the financing for the building purchase in 1995, has signaled a willingness to work with the County on the renovation financing at very favorable rates • 1998 Private Placement- We could follow the same process, without the time constraints, and close on a private placement loan in early 1998. However, we would be limited to selling less than $10 million of the recently passed bonds in 1998 if we would want a Skills Development Center private placement to remain bank qualified. This point also needs further research, and would depend primarily on cash flow requirements of the various bond funded capital projects, especially construction of the Meadowmont Middle School. • Use of Funds Reserved for Land Acquisition - 1997-98 marks the third year that the proceeds of 1 cent on the tax rate have been earmarked to a reserve for future land acquisition for schools and parks. The amount available exceeds $1.5 million. With the passage of the school and park bonds, the Board may want to examine this reserve fund and determine how the proceeds should be used, or whether they should continue to be held in reserve. A variation on this option would be to borrow funds from this account to pay for the renovation work, and replenish the funds in the reserve over a period of years.