Agenda - 10-15-1996 - 9a - Laserfiche WebLink

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� 3 In response to the concerns expressed by the Chapel Hill/Carrboro City Schools regarding reduced funding in the early years of the capital plan, Staff has made the following adjustments to Option 5A: • In the original plan, the $40 million in bonds were to be sold in two installments of$20 million each. In this latest revision, bonds are assumed to 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 usually prepared by project architects. Although the assumptions in this plan seem reasonable to meet the cash flow requirements of the planned projects, staff will need Board 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 the 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 1998-99, with one third of the total amount included in each of the next three years. Since bond proceeds will be available during fiscal year 1997-98, the first year of appropriation of these funds under Option 5B was advanced one year and the funds distributed to be more in line with the currently adopted Capital Improvements Plan. • Although the revised plan addresses the concerns of the Chapel Hill/Carrboro City Schools, without additional modification, the impact on the Orange County Schools would have been that Orange County Schools would receive about $1 million less-when compared to the same time frame in the current Capital Improvements Plan. This is due to the adjustments in the bond sale schedule, altering the peak year of debt service by pushing it back one year, and slightly reducing the total peak year amount. Because the difference in the peak year amount and the actual debt service payment is allocated to the Orange County Schools, this change in the debt schedule would have negatively impacted the total allocation for Orange County Schools. To adjust for this impact, an additional $1 million in bond funds from the $5 million in County bond funds is allocated under Option 513 to Orange County Schools. This would result in $36 million in bonds for the Schools and $4 million for County/recreation/parks projects. The $1 million that is allocated to the Orange County Schools could be made up for County