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1 <br /> ORANGE COUNTY <br /> BOARD OF COMMISSIONERS <br /> Action Agenda <br /> Item No SV A <br /> ACTION AGENDA ITEM ABSTRACT <br /> Meeting Date: April 20, 1993 <br /> SUBJECT: Introduction of Bond Orders - 1988 Refunding Bonds <br /> DEPARTMENT Finance PUBLIC HEARING YES NO X <br /> ATTACHMENT(S) INFORMATION CONTACT <br /> Correspondence from Bond Counsel Ken Chavious, ext 2450 <br /> Suggested Form of Board Proceedings TELEPHONE NUMBER <br /> Bond Orders Hillsborough 732-8181 <br /> Sworn Statement of Debt Chapel Hill 968-4501 <br /> Mebane 227-2031 <br /> Durham 688-7331 <br /> PURPOSE: To introduce the Bond Orders for the proposed refunding of the <br /> County' s Bonds approved in the 1988 referendum, in accordance with the <br /> Local Government Bond Act. <br /> BACKGROUND: At the March 23, 1993 meeting, the Board of Commissioners <br /> authorized staff to pursue an advance refunding of the bonds approved <br /> in the November 1988 referendum. At the April 5 meeting, the Board <br /> established May 3 as the date for the required public hearing on the <br /> refunding bonds. Provisions of the Local Government Bond Act require <br /> that the Board introduce a Bond Order for the proposed refunding issue. <br /> Subsequent to introduction of the Bond Order, the Finance Director <br /> should execute a sworn statement of debt. The Bond Order and the <br /> public hearing notice must be published by April 22, 1993 in order to <br /> meet the requirements set forth in the timetable outlined by Bond <br /> Counsel. <br /> On March 23, 1993, the Board was provided information regarding the <br /> potential savings which could be realized from the proposed refunding <br /> issue. As stated, the projected savings were based upon market <br /> conditions at that particular time. Since changing conditions in the <br /> bond market could impact savings negatively or positively, staff <br /> recommended and the Board approved the sale of refunding bonds if a <br /> cumulative savings threshhold of $500,000 can be achieved. <br /> The 1988 bonds were sold in three installments ( 1989 - $11.8 million; <br /> 1990- $9 .075 million; and 1991 - $8. 125 million) . The interest rates <br /> varied with each bond sale. As with a home mortgage, a decision to <br /> refinance general obligation bonds is based on whether the refinance <br /> interest rate is sufficiently lower than the original interest rate to <br /> generate savings greater than the administrative costs associated with <br /> the refinancing. The 1991 bonds currently have the lowest rate and <br /> could negatively impact the overall savings if rates in the current <br /> market increase. Therefore, at the suggestion of Bond Counsel, staff <br />