Agenda - 06-06-2017 - 8-a - Minutes

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3 1 2 BACKGROUND: 3 On April 4, 2017, the Manager's Recommended FY 2017-22 Capital Investment Plan (CIP)was 4 presented to the Board of County Commissioners (See Attachment 1). The Five-Year Plan 5 includes County Capital projects, School Capital projects (including Chapel Hill-Carrboro City 6 Schools, Orange County Schools, and Durham Technical Community College — Orange County 7 Campus), as well as Proprietary projects (including Water and Sewer, Solid Waste Enterprise 8 Fund, and Sportsplex Enterprise Fund). 9 10 The projects listed in the FY 2017-22 CIP totaled $274,423,538, with Debt Capacity Ratios 11 (Debt Service to General Fund revenues) ranging from 12.8% in FY 2017-18 to 17.4% in FY 12 2021-22. The County has a Debt Management Policy, which states, "The County will strive to 13 maintain its annual debt service costs at a level no greater than fifteen percent of general fund 14 revenues, including installment purchase debt". This policy is consistent with the Government 15 Finance Officers Association best practice. 16 17 On September 10, 2015, the Board of County Commissioners held a work session to review 18 potential General Obligation Bond Referendum packages and its impact on the CIP related to 19 Debt Capacity and Debt Affordability. The County's financial advisor, Davenport and Company, 20 presented a series of potential cases related to the Bond Referendum amount. As part of the 21 presentation, the CIP funding case included the FY 2015-20 Approved CIP and a $125 million 22 referendum. (See Attachment 3) 23 24 Tonight's discussion will be focused on prioritizing Capital projects to achieve the Debt Capacity 25 of 15%, to restructure debt to fund the scheduled CIP projects within the policy threshold, and 26 to reflect tax rate equivalent impacts to achieve Debt Affordability by minimizing or eliminating 27 cash flow shortfalls. 28 29 County staff has made an attempt to help remedy exceeding its policy and/or addressing the 30 cash flow shortfall by delaying or removing County Capital projects until they can be funded 31 within the parameters of the adopted policy. Also, consistent with Year 1 of the Manager 32 Recommended FY 2017-22 CIP, it includes substituting pay-as-you-go funds for school projects 33 to debt financing in Years 2-5. The following are the adjustments made to County Capital 34 projects, as reflected in FY 2017-22 CIP Alternative 1: 35 36 • Parking Lot Improvements - $1,625,000 moved from Year 5 to Year 6 related to OPT/ 37 AMS North and Passmore Center improvements; and removed $300,000 for Efland- 38 Cheeks Community Center as it is included in the construction of a new Efland-Cheeks 39 Community Center in Year 3. 40 • Southern Orange Campus Expansion - changed funding source to $3,269,500 in 41 Medicaid Maximization funds for the Health clinics portion, and $1,555,500 in debt 42 financing. 43 • Information Technology Fiber Connectivity— moved $1,045,675 out of both Years 2 44 and 3 to Years 6-10. 45 • Information Technology Governance Council Initiatives — removed $500,000 in 46 Years 2 and 4. 47 • EMS Substations — moved $700,000 from Year 3 to Year 5; moved $1,500,000 from 48 Year 4 to Years 6-10, and moved $600,000 from Year 5 to years 6-10. 49 • Orange County Radio/Paging System Upgrades — removed $1,400,000 as there are 50 current funds within this project to cover this expense.