Agenda - 10-21-2014 - 6a - Laserfiche WebLink

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 17 The Board of County Commissioners will need to finalize its decisions regarding outstanding issues such as the need for a future jail and school, and any other potential projects that would be financed with alternative financing and an approved bond referendum. Furthermore, the decision to start an educational campaign and appoint a Capital Needs Advisory Task Force will need to be completed as soon as possible. Clarence Grier said there is not a financial impact with the information being provided. There will be a financial impact in future years as decisions are made to proceed with a bond referendum and issuing debt for future County and School projects. All projects that are being considered are currently in the County's Capital Investment Plan. It is currently expected that projects totaling $100 million will be financed with the issuance of general obligation or limited obligation bonds over a period not to exceed 20 years. At current municipal bond interest rates, the total combined debt service is estimated to be $6.1.million annually. This would represent 4.00 cents on the current property tax rate. Based the County current budget and budgeted revenues, the County could afford an additional $25,000,000 of additional general obligation debt capacity for a potential bond referendum if General Fund revenues remain consistent. At current municipal bond interest rates, the total combined debt service for $125 million is estimated to $7.6 million annually. This would represent 4.67 cents or the current property tax rate. Clarence Grier said as a result of the budget being $200 million staff wanted to look at debt capacity again to see how much additional could be afforded on a bond referendum. He said $10 million was appropriated, so the revenue was $100 million to pay for debt service on the bond. He said the revenues for the 2013/14 fiscal year were approximately $196 million. He said there was a property tax increase of 2 cents, which will add an additional $3.2 million, so the total expected revenue is approximately $197 to $199 million. Clarence Grier discussed the school needs, and said there has also been a request for an additional building on the Durham Tech Orange County campus, as well as needs for affordable housing. He referred to the listing of fiscal year debt capacity. He said, based on what we know now, he would estimate that the County can afford $125 million in debt capacity. He said he will work on whatever the Board would like to do. He said the additional $25 million would add about $1.6 million, based on current interest rates and property tax rates. Clarence Grier said he took the existing debt service in the current County budget and then added on debt service and the new County jail. He reviewed the numbers listed in the spreadsheet Attachment A. He said this basically says that the $10 million in appropriated fund balance may not need to be used. He said the policy for debt service is 15 percent of general fund expenditures and there will potentially be $29 million available. He said right now there is additional debt service capacity of $3.4 million. Clarence Grier said the assumption is that revenues grow at least 1 percent each year. He said the jail is listed at $2 million and the debt service on the jail would not be $2 million. He said there have been discussions that the jail may actually be only half of the amount listed in the CIP, which would free up an additional $15 million in debt capacity. He said this is in the early stages, so it is hard to estimate what can be afforded until all of the components are known. He said if revenue grows or projects are downsized, it frees up debt capacity. Clarence Grier said he would like to highlight that in 2025, their total debt capacity goes up $100 million, and this is based on revenues increasing 1 cent per year and no property tax increase.