Agenda - 09-20-2016 - 5-a - Approval Pursuant to Internal Revenue Code Section 147(f) of the Issuance of $6,500,000 in Bonds by Carolina Friends School

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1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 20, 2016 Action Agenda Item No. 5-a SUBJECT: Approval Pursuant to Internal Revenue Code Section 147(f) of the Issuance of $6,500,000 Education Facilities Bonds by Carolina Friends School DEPARTMENT: County Attorney ATTACHMENT(S): 1. Resolution INFORMATION CONTACT: 2. Public Notice Jeff Poley, 919-835-4659 3. Extract of Minutes & Certification John Roberts, 919-245-2318 Documents 4. Letter from Planning Department 5. Other North Carolina PFA projects PURPOSE: To hold a public hearing on the proposed issuance of Education Facilities Bonds (the "Bonds") in an amount not to exceed $6,500,000 to be issued by the Public Finance Authority in order for Carolina Friends School (the "Borrower") to meet the requirements of Section 147(f) of the 1986 Internal Revenue Code, as amended. BACKGROUND: The Public Finance Authority ("PFA") is a governmental unit of the State of Wisconsin created for the purpose of issuing tax-exempt and taxable conduit bonds for public and private entities nationwide. PFA is sponsored by the National Association of Counties, the National League of Cities, the Wisconsin Counties Association, and the League of Wisconsin Municipalities. Any debt issued is not debt of the County or PFA, but rather is payable solely from debt service payments received from the Borrower. The Borrower has asked PFA to issue the Bonds in the principal amount of up to $6,500,000. The proceeds of the Bonds will be loaned to The Carolina Friends School to be used to (i) finance and equip a new performing arts center (the "Project"), (ii) finance a debt service reserve fund and (iii) finance certain issuance costs to be incurred in connection with the Bonds. Federal tax law requires that tax exempt bonds issued to finance or, in certain circumstances, refinance, facilities owned by nonprofit organizations be approved by the elected legislative body (or highest elected representative) of the governmental unit that has jurisdiction over the area in which the facility is to be located. Prior to this approval, Internal Revenue Code Section 147(f) requires that a public hearing be held, at which hearing the public is given the opportunity to comment on the project. Because the proceeds of the Bonds will be used to finance and refinance projects located in Orange County, the BOCC is one of the appropriate governing bodies to approve the use of tax- exempt bonds to finance and refinance the projects for the purposes of Section 147(f) of the Internal Revenue Code (the other is Wake County).