Orange County NC Website
Browse       Search
2 <br />The developers of the Project have asked the County to consider alternate funding sources for <br />the County's $1,000,000 commitment to the Project, so that the Project may qualify for a higher <br />level of tax credits. Specifically, the developers' representatives have asked that the County <br />consider issuing a portion of the remaining authorized housing bonds as taxable bonds and <br />structuring the loan in the form of a 0% interest direct loan deferred for a period of 30 years. <br />The original principal of $1 M would be payable in a balloon payment at the end of the loan <br />period. A copy of the Project Proforma is attached to this abstract. <br />The County has $1,300,000 of housing bonds that have been approved by the voters, but not <br />yet issued by the County that, if the Board elects, could be so issued as taxable bonds. County <br />staff, with the assistance of bond counsel, has evaluated the cost difference to the County of <br />issuing taxable bonds to provide a contribution to the Project.. A bank that is a frequent lender <br />to the County and other North Carolina local governments has estimated the interest rate <br />difference between taxable and tax-exempt bonds (assuming a 15-year payment period) as <br />approximately 215 basis points (2.15% difference in the nominal annual interest .rate). It is <br />estimated that the use of taxable debt will increase the County's general fund debt service costs <br />approximately $216,000 over the life of a 15 year financing. This increased cost will be paid by <br />the developer from the developer fees for the project under a separate agreement. <br />FINANCIAL IMPACT: There is no immediate financial impact to the County since the <br />increased cost for debt service associated with the taxable bond will be paid by the developer. <br />A positive financial impact will be realized at the end of the loan period of 30 years when the full <br />investment of $1 M will be repaid to the County. <br />RECOMMENDATION(S): The Manager recommends that the Board approve the issuance of <br />a portion of the remaining authorized housing bonds as taxable bonds for the proposed Eno <br />Haven multi-family rental complex. <br />