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6 <br />Most counties do not use the f nancing nonprofits for anything other than serving <br />in these financings. There are some issues with the rating agencies that discourage you <br />from having a financing nonprofit carry out any other substantive function, but we can <br />work around those concerns if we have to. The County can certainly use the same <br />financing nonprofit to serve the same role in future COPS public offerings for other <br />projects with no trouble (but there can be a problem, again related to rating agency <br />concerns, once you get beyond five or six outstanding financings). <br />The corporation needs to have legal counsel for the financing. Counsel will <br />prepaze the organizing documents, review the financing documents on the corporation's <br />behalf, organize and carry out, the corporation's board meeting and deliver certain <br />opinions at closing concerning the corporation. Because the Board members will need to <br />approve the financing documents without having much incentive to review them <br />independently, and generally without having played an active role in negotiating the <br />documents, it is important to have an effective counsel. Other lawyers in the transaction <br />can play this role; but in my experience the process works better if the nonprofit has at <br />least a particulaz individual designated to serve as its counsel. I have worked with a <br />lawyer in Durham who has effectively represented financing nonprofits for several other <br />counties, but we can certainly look at some options if that's the County's pleasure. <br />I have discussed this matter briefly with Kai, and we agree that it would be fair to <br />estimate the total expense to the County for forming the corporation and taking it through <br />the financing, including legal fees, at $5,000. There would also be annual expenses for <br />legal fees and filing fees necessary to keep the corporation in good legal working order, <br />but it would be unlikely for those expenses to exceed $1,000 a year. The County would <br />probably have to pick up this expense, but otherwise the County would need to have no <br />on-going involvement with the nonprofit. <br /> <br />The required steps related to this corporation's participation in your COPS <br />financing should not add to the timetable at all, and I certainly do not think that the need <br />for such a corporation is any reason not to proceed with a COPS financing. We would <br />want to get the nonprofit formed fairly eazly in the financing process, at least so that we <br />could get the nonprofit's lawyer in place to. review the financing documents. <br />I hope this memorandum ,provides you with some helpful information. Please let <br />me know if you want to talk in more detail about the nonprofit's role, or if you have any <br />further questions or comments about the COPS financing process. <br />- ~J <br />cc: Geoffrey E. Gledhill, Esq. <br />Kai Nelson/David Fischer, BB&T Capital Markets <br />