Orange County NC Website
Browse       Search
20 <br /> 1 <br /> 2 COLLATERAL: In this type of County installment financing, the County secures its obligations to <br /> 3 the bondholders by mortgage-type interest in some or all the property being acquired or improved <br /> 4 through the financing. The County plans to secure this 2025 financing through a pledge of several <br /> 5 County and school properties. County facilities expected to be included in the collateral package <br /> 6 include the Whitted Building, the Orange County Library in Hillsborough, and Blackwood Farm <br /> 7 Park. These are the same properties that the County has used for three previous Spring <br /> 8 installment financings. <br /> 9 <br /> 10 County staff is working with both school boards to finalize the list of schools to be used as <br /> 11 collateral. The following schools are expected to be used: Ephesus Elementary, Culbreth Middle <br /> 12 (from Chapel Hill—Carrboro City schools), and (from the Orange County schools) Orange Middle, <br /> 13 New Hope, Pathways, and Orange High. <br /> 14 <br /> 15 Bondholders generally require that the County offer collateral equal to at least 50% of the loan <br /> 16 amount (for example, at least $5 million of collateral for a $10 million loan). The prospective <br /> 17 collateral package has an approximate value of $160 million. The collateral package secures <br /> 18 approximately $40 million of outstanding bonds. Adding the proposed $78 million financing takes <br /> 19 the total amount secured to $118 million, which means the collateral package value will be <br /> 20 approximately 136% of the outstanding amount. Using this level of collateral enhances the appeal <br /> 21 of the County's securities to investors, provides flexibility to the County for future borrowings, and <br /> 22 allows the County to release individual schools or County facilities from the collateral package if <br /> 23 that becomes necessary. <br /> 24 <br /> 25 TARIFF ISSUE <br /> 26 The municipal bond market has experienced volatility due to rising concerns over new tariffs and <br /> 27 international trade tensions. These tariffs are causing uncertainty in the broader economy and <br /> 28 leading a few investors to re-evaluate their investment strategies. This has resulted in short-term <br /> 29 fluctuations in bond yields (interest rates). Staff is working with the County's financial advisors to <br /> 30 ensure the County remains well positioned for a successful June bond issuance. The financing <br /> 31 team will closely monitor this situation and will update accordingly if borrowing costs become a <br /> 32 material concern. Recent North Carolina bond financings appear to indicate a return to stability. <br /> 33 <br /> 34 Gary Donaldson, Chief Finance Officer, made the following presentation: <br /> 35 <br /> 36 Slide #1 <br /> ORANGE COUNTY <br /> NORTH CAROLINA <br /> Series 2025 Limited Obligation Bonds <br /> Spring Final Financing Resolution <br /> Gary Donaldson,Chief Financial Officer <br /> May 20, 2025 <br /> 37 <br />