Agenda - 01-05-1987 - Laserfiche WebLink

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- • Soanttl of(q 181 FINANCE DEPARTMENT rJ „.....) MEMORANDUM ORANGE COUNTY GORDON R. BAKER DIRECTOR TO: Board of County Commissioners FROM: Finance Director/ SUBJECT: Financing Options for Long-Range Capital Needs DATE: December 23, 1986 Some possible sources of funding for long-range capital needs (schools and others) are outlined below for your consideration. These sources, as well as any others that may not be listed, are scheduled to be discussed at the January 5th Board Meeting as a first step in preparing for the County's response to a survey of school capital needs being conducted by the North Carolina Department of Public Instruction. In addition to the school capital requirements, the County faces other long-range capital needs that will be brought to the Board for consideration in the Spring of 1987 as part of the Five Year Capital Improvement Plan. Five Possible Sources of Funding 1. Local bond issue - This would allow major capital projects for the schools and other needs to be undertaken much sooner than under the present pay-as- you-go plan. Also the advantage of bonds is that it spreads the repayment cost over a longer period and to the public that will benefit from the project. The disadvantage of this approach is that passage of the bonds through voter approval is uncertain. Also, costs of a referendum and interest cost make the total outlay higher than a state bond pool or pay-as-you-go approach. 2. State bond pool - Again, major capital projects for schools could be under- taken much sooner and with the beneficiaries paying the cost over the life of the project. Enabling legislation is needed from the General Assembly and then a statewide referendum must be held before this option is available. Advantages of this option over a local bond issue are the elimination of the costs of holding a referendum at the local level and the reduction in interest costs as a result of the debt being issued by the State rather than the County. However, this would only be available for school capital needs and would not address the other needs of the county. 3. Two-thirds net debt reduction bond issue - While this would not require voter approval, the amount of bonds that could be issued each year is small and would hot be sufficient to allow the County to move ahead with the major projects that are needed. Taking last year as an example, were the County to have borrowed in relation to the principal paid in that year it would only have amounted to $330,000.00. 106 EAST MARGARET LANE • HILLSBOROUGH, NORTH CAROLINA 27278 • 919/732-8181