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Agenda - 04-10-2007-6b
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Agenda - 04-10-2007-6b
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8/29/2008 4:01:42 PM
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8/28/2008 11:34:41 AM
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BOCC
Date
4/10/2007
Document Type
Agenda
Agenda Item
6b
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Minutes - 20070410
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\Board of County Commissioners\Minutes - Approved\2000's\2007
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2 <br />The remaining question regarding lottery proceeds centers around how the Board of County <br />Commissioners chooses to use the monies. In accordance with NC General Statutes, a county <br />may use lottery monies to pay for school construction and renovation projects and to retire <br />indebtedness incurred for school construction projects incurred on or after January 1, 2003. <br />Over the last few months, staff has analyzed various ways to balance school needs and fiscal <br />responsibility with regard to use of future years lottery proceeds. The Board may recall that <br />during the March 20 work session both the Chapel Hill Carrboro City Schools (CHCCS) and the <br />Orange County Schools (OCS) presented their long-range capital needs to Commissioners. A <br />common thread between the two districts is the need for updating their older facilities. <br />Examples of areas that each district identified as priority needs include replacement of aged <br />mechanical systems and windows with newer, more efficient ones. The requests from both <br />districts totaled $25.3 million ($14.4 million for CHCCS and $10.9 million for OCS) excluding <br />new facilities construction and technology upgrades. It is important to note that the County's <br />current debt issuance plans of $96.6 million includes about $5.1 million for CHCCS to address <br />renovation needs identified during the 2001 bond and alternative financing planning process; <br />however those plans do not include financing to address the school facility needs identified by <br />the districts on March 20. <br />It is fair to say that, based on first year experiences with the lottery, it is not likely that the $2 <br />million in annual lottery revenues passed on to the County will allow either district to make a <br />huge dent in meeting the needs of their older facilities. On the other hand, it is a valid point that <br />assuming afifteen-year financing arrangement at an annual interest rate of between 5 and 6 <br />percent, $2 million in annual debt service would equate to somewhere between $17 million and <br />$19 million in face value debt. <br />During the March 20 work session, the Board Commissioners directed the Manager to discuss <br />the use of lottery proceeds with school district officials. The use of lottery proceeds was a topic <br />of discussion during the March 27, 2007 Manager and Superintendents meeting. In addition, the <br />School Collaboration Work Group plans to discuss the topic during its April 9, 2007 meeting. <br />The Manager will update the Board of the outcome of that meeting during discussion of this <br />agenda item on April 10. <br />Funding for Recurring Capital <br />In accordance with the current Capital Funding Policy, the equivalent of four cents on the annual <br />ad valorem property tax is dedicated to funding recurring capital expenditures for schools (three <br />cents) and county (1 cent). As mentioned during recent capital related work sessions, <br />Commissioners have deferred fully funding the recurring capital portion of the policy since the <br />adoption of the pay-as-you-go funding formula in 2005 due to fiscal constraints. The Board's <br />plan has been to phase in full funding of recurring capital over time. To that end, the Board has <br />allocated the equivalent of two cents, for each of the last two fiscal years, to school recurring <br />capital. The additional two cents needed to fully fund the policy (one additional cent for schools <br />and one cent for County) has not been funded to date. <br />During the March 20 work session, Commissioners agreed that the Policy should declare the <br />Board's intent to fully implement funding but also recognize the fact that there will be times when <br />the County will be bound fiscally and unable to achieve full funding. During those times, <br />Commissioners may find it necessary to depart from the Policy. <br />
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