Orange County NC Website
Browse       Search
S <br />Robert M. Jessup Jr. <br />Memorandum <br />To: Kenneth T. Chavious <br />Finance Director, Orange County <br />Date: Apri119, 2000 <br />Regarding: Issues related to forming a nonprofit financing corporation <br />in connection with a COPS public offering <br />If the County proceeds with a COPS public offering for the proposed high school <br />financing, we will need to establish a nonprofit corporation to play a role in the <br />financing. This is because the legal structure most commonly used for these financings <br />requires that such a corporation serve as the counterparty to the County's primary <br />financing contract. The County needs to enter into its financing contract with some <br />entity, and it helps keep the lines of authority and responsibility clear if we do not have <br />any of the other substantive participants in the process play that role. <br />Creating the corporation requires (1) prepazing articles of incorporation and <br />bylaws, and (2) identifying people to serve as directors of the corporation. None of this <br />requires formal action by the County Commissioners. I would suggest we handle matters <br />related to this nonprofit as we handled the formation of the nonprofit for the small <br />business loan program -- we would (a) tell the Commissioners up front, in connection <br />with the informal approval to proceed with a public offering, that we would be farming <br />the nonprofit, (b) proceed to put the nonprofit in place, and (c) have the County Board <br />approve the formation as part of that Boazd's final approval of the financing. <br />Other counties have usually had three- or five-member boards of directors for <br />these financing nonprofits. We want to avoid having a majority of Board members be <br />County Board members or officers -perhaps two of five, or one of three, would be <br />County folks. The other board members can come from anywhere. One county <br />appointed three former county board chairmen as the nonprofit Boazd. I would expect <br />there to be informal consultation with the Commissioners about the members of the <br />nonprofit's board. <br />Toward the end of the financing process, I would expect there to be one meeting <br />of the nonprofit's board to adopt the bylaws, elect officers (we should avoid having the <br />County folks as officers) and approve the financing documents. <br />