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(o <br />Considerations and Observations <br />Over the last few months, the county attorney and staff have considered various <br />options for how Lottery proceeds may factor into Orange County's current capital <br />funding policy. Examples of options considered include: <br />Dedicate Lottery proceeds to repay debt service on school projects <br />Appropriate Lottery proceeds, on an annual basis separate from pay-as- <br />you-go funds, to each school district to address older facility renovation <br />needs <br />• Replace school construction impact fees currently allocated to debt <br />service repayment for school projects with Lottery proceeds and set aside <br />school construction impact fees in a reserve for future school construction <br />projects. <br />Other observations include: <br />The allowed uses of school construction impact fees are limited to: (1) the <br />creation of school space to accommodate students generated by newly <br />constructed housing, or (2) the repayment of debt service related to school <br />projects that create new school space to accommodate new students <br />generated by newly constructed housing. Based on the November 15, <br />2005 student membership projections generated under SAPFO, there are <br />no anticipated new school construction needs between 2006-07 and 2016- <br />17 for Orange County Schools. On the other hand, there are qualifying <br />debt expenditures that the fees could offset. Additional factors to consider <br />are that, in accordance with the School Construction Impact Fee <br />legislation, the County must expend these impact fees within ten-years <br />following collection or return the monies to the payee on a "first in, first <br />out" basis. <br />• Staff will soon be updating student membership projections that will feed <br />into the upcoming 2007-17 Capital Investment Plan (CIP). The need for <br />new school space may be accelerated or decelerated for one or both of <br />the School systems based on updated membership projections. <br />• Both School districts have expressed on-going needs to up-fit older <br />schools. While renovation projects are not an allowable use of school <br />construction impact fees, they are permitted uses of Lottery proceeds. <br />• Neither School Board has had an opportunity to review and comment on a <br />specific proposal for handling Lottery proceeds. During recent meetings, <br />members of both School Boards have expressed interest in having the <br />School Collaboration Work Group discuss how Lottery proceeds would <br />factor into the County's capital funding policy. <br />• In June 2006, the NC House Rules Committee approved a bill that <br />established a Joint Legislative Lottery Oversight Committee to regularly <br />review the activities of the Lottery and the N.C. Lottery Commission. <br />4