Orange County NC Website
Browse       Search
2 <br />Staff has also reviewed plans for bond funded County projects and determined that $2.828 <br />million will be needed in the upcoming year for parks projects. The remaining parks bond <br />funds will be issued in future bond sales. In addition, bond funds for the Efland Sewer <br />System Expansion ($1.2 million) and Affordable Housing ($1.8 million) will be included in <br />future bond sales. While the Board of Commissioners will be considering <br />recommendations from the Affordable Housing Bond Committee in the near future <br />regarding specific projects that should receive bond funds, it is not necessary to sell bonds <br />for these projects now. Any projects approved by the Commissioners can be budgeted <br />and expended with cash on hand, with the County reimbursing itself from future bond <br />sales. <br />Considering the projected cash flow information outlined above, an initial bond sale of <br />$37.328 million will provide sufficient cash for project expenditures. This leaves $18.672 <br />to be sold in subsequent years. <br />Two-Thirds Net Debt Reduction Bond Sale <br />In addition to the voter-approved bond projects, the 1999-2009 Capital Investment Plan <br />(CIP) approved by the Board of Commissioners contained major renovation projects for <br />Whiffed Human Services Center and Northern Human Services Center. Both of these <br />facilities are aged and in need of costly renovations such as heating and air conditioning <br />installation or replacement. As outlined in the CIP, the major funding source for these <br />renovation projects is two-thirds net debt reduction bonds. This financing approach is <br />beneficial because it offers the lowest possible interest rates, and is .financially secure <br />because it is backed by the "full faith and credit" of Orange County. <br />N.C. General Statutes provide authority for a County to issue bonds up to two thirds of the <br />amount of bonded debt retired in the previous fiscal year. In the 1998-1999 fiscal year the <br />County retired $4,270,000 in bonded debt. This means that the Board of Commissioners <br />has the authority, subject to formal approval by the Local Government Commission, to <br />issue slightly more than $2,846,000 in "two-thirds" bonds. <br />Opportunity for Issuance Cost and Administrative Savings <br />Bond sales are intensive and require a significant commitment of staff time and resources. <br />Instead of pursuing two separate bond sales, it is advantageous for the County to "piggy <br />back" the two-thirds issuance along with the sale of the 1997 bonds. The County's bond <br />counsel advises that it is permissible to arrange for the sale of two-thirds bonds <br />immediately followed by the sale of .the County's first installment of 1997 bonds. A <br />resolution required by the Local Government Commission for the issuance of two-thirds <br />bonds (pages 4-5) and a tentative schedule for milestones in the bond sale process <br />(page7) are included with this abstract. <br />FINANCIAL IMPACT: Due to the timing of the bond sale there will be no financial impact <br />in the 1999-2000 fiscal year.. It is anticipated that debt service .payments will increase <br />significantly in the 2000-2001 budget. Projected annual debt service costs associated with <br />the 1997 bonds could range from $2.7 to $3.2, million depending on the interest rate and <br />the repayment structure recommended by the LGC. Annual debt service costs on the two- <br />thirds bonds .could range from $200,000 to $230,000. All debt service costs have been <br />factored into the County's adopted CIP and plans for the 2000-2001 operating budget. <br />