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1 <br /> ORANGE COUNTY <br /> BOARD OF COMMISSIONERS <br /> ACTION AGENDA ITEM ABSTRACT <br /> Meeting Date: May 2, 2017 <br /> Action Agenda <br /> Item No. 8-g <br /> SUBJECT: Two-Thirds General Obligation Bonds <br /> DEPARTMENT: Finance and Administrative <br /> Services <br /> ATTACHMENT(S): INFORMATION CONTACT: <br /> Preliminary Resolution Gary Donaldson, 919-245-2453 <br /> Bob Jessup, 919-933-9891 <br /> PURPOSE: To adopt a preliminary resolution for the issuance of $5.9 million in two-thirds <br /> General Obligation Bonds to support both school systems capital requirements for renovation <br /> and improvement of school facilities, with the two-thirds bond proceeds replacing the General <br /> Fund pay-as-you go funding for both school districts' renovations and facility improvements in <br /> FY 2017-18. <br /> BACKGROUND: Pursuant to North Carolina General Statute 159-48, local governments can <br /> issue General Obligation bonds each year in an amount equal to two-thirds of the principal <br /> amount of debt retired in the previous year. These General Obligation bonds may be issued <br /> without a referendum but are subject to approval by the Local Government Commission in the <br /> same manner as other debt financing methods. <br /> In fiscal year 2016-17, the County will retire $8.8 million in principal on outstanding General <br /> Obligation bonds. The statutes allows the County to issue up to two-thirds of the $8.8 million in <br /> principal retired or an additional General Obligation bond capacity of $5.9 million in FY 2017-18. <br /> This bond capacity cannot be accumulated or carried forward to future years. The County has <br /> issued two-thirds bonds in previous years. For example, the County issued $4.2 million in two- <br /> thirds bonds in 2004 and used the proceeds for Lands Legacy Program acquisitions and various <br /> public building projects. <br /> Two-thirds bonds can be used for substantially all the purposes for which voter-approved bonds <br /> may be issued except to fund auditoriums, coliseums, stadiums, convention centers, art <br /> galleries, museums, historic properties, urban redevelopment, public transportation or cable <br /> television systems. <br /> After review of the County's Capital Investment Plan (CIP), and in consultation with the County's <br /> financial advisor, County staff recommends that the County proceed to authorize and issue the <br /> two-thirds bonds for School renovations, facility improvements, and cost of issuance at both <br /> school systems. The bond proceeds will be allocated on the average daily membership for both <br />