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AC4..,f 4 <br />To: Board of County Commissioners <br />Rod Visser, Interim County Manager <br />From: Donna Dean Coffey, Budget Director <br />Re: Capital and Debt Related Matters <br />Date: October 11, 2006 <br />0 10/11/06 <br />The attached materials are offered as additional information that will hopefully clarify lingering questions about <br />capital and debt-related materials that you received during August and September. Pages 1 through 3 of this <br />memo summarize staffs understanding of capital and debt-related actions and endorsements that the Board <br />has made since the beginning of the fiscal year. Page 4 offers a guide for understanding the Annual Debt <br />Service Capacity and Tax Rate Impact spreadsheet (page 6). Feel free to contact me if there are questions or if <br />my understanding of the Board's recent actions differ from yours. <br />Background Information <br />Orange County's major funding sources for school and County capital projects Include pay-as-you-go monies <br />(examples include dedicated sales and property taxes, school construction Impact fees and Public School <br />Building Funds) and debt financing. The County has several capital-related policies in place that govern <br />planning and funding capital projects and debt management. <br />Recently the Board has focused discussions on school and County capital projects that require funding beyond <br />the amount of money that pay-as-you-go resources generate - i.e. projects that require debt financing. Most <br />recent discussions have centered around "affordability" - what capital projects can the County afford to fund with <br />respect to debt service as well as on-going annual costs? <br />The August 31 BOCC Work Session was the first step In providing a picture of what the County could afford <br />with regard to funding capital and operating costs of future County and School capital projects. Therefore, <br />materials prepared for that work session offered a wholistic view of total amounts of debt that the County could <br />afford In future years without regard to individual project timelines or cash needs. <br />At the August 31 Work Session, the Board provided direction regarding specific projects. That direction allowed <br />staff to take the next step and project specific cash flow requirements and funding needs for individual projects <br />with face value debt of $92.2 million that the Board wished to pursue over the next three or so years. Chart <br />1 identifies those projects. The outcome of that step was the Capital and Debt Work Book presented at the <br />September 14, 2006 work session. In addition to providing historical data, the work book also offered financial <br />data including projected annual costs (including debt service and tax rate Impacts) for individual school and <br />county projects. <br />Page 1 of 5