Agenda - 10-17-1995 - VI-B2 - Laserfiche WebLink

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ORANGE COUNTY, NORTH CAROLINA 3 TRIANGLE SPORTSPLE% FINANCING Those conditions, met by Orange County, included County Commissioner approval of the financing and agreement to take title to the facility when all debt on the project is retired. While OCCAC is a private non- profit, the County Commissioners retain a significant oversight role in the stewardship of the SportsPlex as a public, community-wide resource by virtue of their appointing one less than a majority of the members of the OCCAC's 13 member Board of Directors. From the County's standpoint, the arrangement was possible because the debt does not belong to the County, which has no obligation in the unlikely event that OCCAC should default on payment of the bonds. The County's agreement to pay OCCAC $400,000 each year for 10 years provided the guaranteed income stream, combined with the tax-exempt interest income, necessary to assure the prospective investors that the deal was financially viable. The financing itself, which is the subject of this NACo award nomination, was consummated at closing in April 1994, with all $10.2 million tax-exempt bonds purchased by a major Boston-based investment management firm, and the $425,000 taxable bonds purchased by another investment management firm. The investors are being paid back from SportsPlex receipts, derived from operating revenues and County payments for the OCCAC's provision of recreational services to Orange County citizens. The County's objectives in undertaking this financing arrangement were multiple, and are leading to benefits from this project in a number of facets. First, it affords the opportunity for citizens in the central and northern parts of the County to have year round access to swimming activities that were previously extremely limited in capacity, variety, duration, and intensity. Second, because of the central location of the SportsPlex, these services are conveniently extended to all County residents, none of whom must travel more than 25 minutes to use the SportsPlex. The location also is convenient for swim teams from both school systems in the County. Third, the facility makes available "bonus" recreational opportunities, in the form of fitness activities, ice sports, and roller sports, that the County would not have been able to provide without the partnership of TYHA. Fourth, for an investment of $4 million over ten years, the County will own this $10 million facility when all the debt is retired, projected to be sometime between the 12th and 15th years of operation. Thereafter, tremendous potential exists for the SportsPlex to serve as a revenue generator for the County, as annual debt service payments of roughly $1 million will end. "63-20 financing" has not been widely used in North Carolina, but was the only realistic option to make this project happen in the short term. First, with an earmarked annual revenue stream of only $1.5 million for all non-school capital projects and equipment, Orange County does not have the ability to finance a $3.5 million pool project through pay-as- you-go revenues. Second, Orange County has significantly increased its issued general obligation debt in the past few years, primarily for new school construction. With a burgeoning student population reflecting