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12 <br /> 1 2) Set maximum parameters <br /> 2 3) Purposes and maximum amounts <br /> 3 4) LGC application <br /> 4 5) Public hearing <br /> 5 He said after these five steps there would be a final vote and a resolution setting the <br /> 6 referendum details. He said currently the November 2016 election date is being considered <br /> 7 Commissioner Jacobs asked if the Manager could please elaborate on the memo at the <br /> 8 Commissioners' places. <br /> 9 Bonnie Hammersley said the CIP is a 10-year plan, and she referenced the memo <br /> 10 below: <br /> 11 <br /> 12 MEMORANDUM <br /> 13 October 6, 2015 <br /> 14 <br /> 15 TO: Board of Orange County Commissioners <br /> 16 <br /> 17 FROM: Bonnie Hammersley, Orange County Manager <br /> 18 <br /> 19 RE: Capital Investment Plan (CIP) Related to Bond Referendum Discussion <br /> 20 <br /> 21 As part of the bond referendum discussions, Commissioners have asked about alternative <br /> 22 financing packages that express the priorities of the Board of Orange County Commissioners <br /> 23 while maintaining an overall bond amount of$125 million. <br /> 24 <br /> 25 Tonight, the Board of Orange County Commissioners (BOCC) will consider a resolution that <br /> 26 establishes the maximum bond referendum amount and the purposes for which those bonds <br /> 27 may be used. In addition to this financing mechanism, the Board may also consider amending <br /> 28 the Capital Investment Plan (CIP) to address the needs that have been emphasized during the <br /> 29 bond discussion. <br /> 30 <br /> 31 The CIP is a ten (10) year plan, with the first five (5) year projects with specific detail <br /> 32 information and the remaining five (5) years (out years) with less detailed information about the <br /> 33 projects. The CIP is reviewed and adopted by the BOCC on an annual basis with appropriated <br /> 34 funds for the current year only. Including funding in the CIP has the advantage of limiting the <br /> 35 overall bond referendum amount and provides additional flexibility to fund projects as they <br /> 36 mature to the stage of needing to be financed as well as determining annual tax rate impacts. <br /> 37 <br /> 38 The difference between the two funding sources is the type of financing that is used to borrow <br /> 39 the funds. The bond referendum allows the County to issue general obligation (GO) bonds, <br /> 40 backed by the full faith and credit of the County, while the CIP would be funded with other types <br /> 41 of borrowing, typically limited obligation bonds (LOB) or installments financing. Using the bond <br /> 42 to finance all of the purposes typically has the advantage of being able to access lower interest <br /> 43 rates. General obligation bonds almost always carry a slightly lower interest rate than limited <br /> 44 obligation financing. <br /> 45 <br /> 46 In either case, the Davenport analysis indicates that the County can support a total financing <br /> 47 package of up to $135 million without violating the County's debt policy for affordability or <br /> 48 exceeding its capacity to issue debt compared to its peers. Although financing projects through <br /> 49 the CIP will have higher interest rates, the Finance Department does not believe that those <br />