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1 <br />ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: August 17, 2004 <br />Action Agenda <br />Item No. <br />SUBJECT: Refinancing BB&T Installment Purchase Agreement <br />DEPARTMENT: Finance <br />PUBLIC HEARING: (Y/N) No <br />ATTACHMENT(S): <br />Modification Agreement <br />Resolution <br />INFORMATION CONTACT: <br />Ken Chavious /Bob Jessup, ext 2453 <br />TELEPHONE NUMBERS: <br />Hillsborough 732-8181 <br />Chapel Hill 968-4501 <br />Durham 688-7331 <br />Mebane 336-227-2031 <br />PURPOSE: To consider approving a modification agreement and resolution for installment <br />purchase contracts entered into with BB&T to finance school facilities that will result in savings <br />to the County. <br />BACKGROUND: During the past 10 years, the County has effectively used installment <br />purchase contracts as an alternative financing source to fund a number of capital facilities for <br />both School and County projects. Similar to bonds, staff periodically reviews these agreements <br />to assess the potential for savings through refinancing these loans in low interest rate <br />environments. There is an agreement with BB&T Governmental Finance that analysis reveals <br />could result in savings if the County were to pursue a refinancing. <br />In order to accomplish the refinancing, the Board is required to adopt a resolution and approve <br />an agreement that modifies the existing arrangement. The agreement under consideration <br />includes the installment purchase contract for the construction of Scroggs Elementary School. <br />This financing was accomplished in two parts beginning in December 1996 with $5,000,000 and <br />finalized in March 1997 with the addition of another $9,000,000. The remaining balance on this <br />financing is approximately $8.6 million as of August 1, 2004. The original interest rate on this <br />financing was 4.92%. The new rate quoted by BB&T in the refinancing would be 3.90% and <br />would result in savings as outlined in the financial impact section below. A copy of the <br />modification agreement and required Board Resolution is attached. <br />FINANCIAL IMPACT: Current estimates are that savings in the 2004-2005 fiscal year will be <br />approximately $39,000. Annual savings beginning in the 2005-2006 fiscal year are estimated to <br />average approximately $60,000 resulting in overall savings for the remaining term of nearly <br />