Minutes 04-04-2017 - Laserfiche WebLink

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27 Commissioner Burroughs asked if the roughly $200,000 that would be in the cash balance in 2048 is in 2048 dollars. Ted Cole said the model itself is projecting the capital and operating costs associated with these things. He said these are being grown out to dollars in the future, based on some growth factor. He said the tax district revenues are growing based on the projection. He said he would consider those dollars as being the net cash flow of those projected dollars. He said it will be a small amount of money. Commissioner Burroughs asked if margin of error is specifically very small for Orange County, and that there is more cushion for Durham County. Ted Cole said yes, based on all that has been reviewed, Orange County has a very small margin of error. Commissioner Burroughs asked if one way to deal with the low cash flow is to change the cost sharing percentages. Ted Cole said yes, that is one input in the model, which if adjusted, will shift the costs. He said this has evolved over the past few weeks, along with restructuring the debt, and adding in the state of good repair borrowings in the latter years. Commissioner Burroughs said there seems to be difference of opinion about the potential impact on the County's credit rating, and asked if there is more of a risk for Orange County than Durham County. Ted Cole said this is a very significant project, and impact on the credit rating does not necessarily mean it is all negative. He said a big part of local government credit analysis is the local economy, its strength and vibrancy. He said a project like this could improve the economy. He said the potentially negative side is that it is reasonable for the BOCC to expect that this project will be a part of the conversation of Orange County's credit rating moving forward. He said as the financial plan gets firmed up, and as the credit gets better defined, the affect on the County's credit rating will become clear. Commissioner Burroughs said the Moody's forecast was discussed in the public comments, as well as the expected increase in local sales tax, and asked if he had comments on these items. Ted Cole said Moody's data on this, on page 7, picks up with 2017 as a baseline year, and it is growing off of that. He said the first year under the baseline there is 4.7% growth, which evolves every year until 2045. He said what this model requires is that the County has those dollars (tax district revenue dollars) every year. He said when considering percentage growth over a long period of time, one can determine a growth rate that takes the plan from year one to year 40. He said there is some vulnerability with this model, because a temporary period of no growth, or reduced growth, would greatly impact this model. Mitch Brigulio said what year it happens and to what extent such a change may occur is very important. He said cumulative dollars needed is what is being considered. He said there may be years with flat or negative growth, but if there have been years prior with greater than predicted growth, there may be surplus to cover the lower years. Commissioner Rich referred to page 10, which talks about capital reserves, and said she looked at a GoTriangle flow chart, which discussed debt service reserves, and an operating reserve. She asked if the difference between these two reserves could be explained and their relationship to the cash flow. Ted Cole said the debt service reserve is specific to those borrowings that are anticipated to take place, and as part of those individual borrowings, part of what is funded is a reserve that is set aside in order to make a year's worth of payments if there is a problem. He said the amount that is set aside is one year's debt service, and if the money is never needed, it is used at the end of the loan to make the last payment. He said these dollars cannot be