AGENDA #2a
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Hearing to Consider Bond Orders Introduced on August 26, 2003, for Issuance of General Obligation Bonds and Calling for a Public Referendum on the Bond Orders on November 4, 2003.
DATE: September 8, 2003
INTRODUCTION
The purpose of tonight’s public hearing is to provide an opportunity for citizen comment and Council discussion on five Bond Orders for the issuance of General Obligation Bonds for various capital improvement projects as introduced at the Council’s meeting on August 26, 2003.
After conducting and closing the public hearing, the Council could adopt the five Bond Orders as introduced or as amended. Copies of the Bond Orders and the proposed Official Ballot with specific wording of the questions for voters are attached.
Upon adoption of the Bond Orders, the Council could then adopt the attached resolution calling for a special bond referendum on November 4, 2003, and authorizing publication of the Bond Orders as adopted and the publication of a notice regarding the proposed referendum as required by State law.
Also attached are copies of the timetable for completing the authorization process for the referendum and copies of the agenda materials presented to the Council on June 9, 2003, that provide information on the potential debt service costs for the proposed bond projects and the tax rate equivalents of these costs.
BACKGROUND
On June 23, the Council adopted a resolution directing the Manager to begin the process necessary for the Council to authorize a bond referendum on November 4, 2003 for the issuance of General Obligation bonds to finance capital improvements projects that include an expansion of the Town’s Library and green infrastructure projects including: sidewalks, open spaces, greenways, pedestrian improvements and energy improvement projects in Town buildings. Attachment 3 provides information on the categorization and assignment of the green infrastructure bond projects to the individual Bond Orders in accord with State law authorizing the issuance of bonds for various purposes.
On August 26, the Council adopted a resolution ratifying the publication of a Notice of Intent to file an application to the Local Government Commission for the issuance of bonds, introduced five separate Bond Orders for these projects as prepared by bond counsel, and adopted a resolution authorizing the publication of a notice of tonight’s public hearing and publication of the five Bond Orders as introduced. The application to the Commission was filed on August 27, and the notice of tonight’s public hearing and copies of the bonds orders were published in the Chapel Hill Herald on August 27. A sworn statement of the Town’s net debt was also filed in the Clerk’s Office on August 25, 2003.
DISCUSSION
The purpose of tonight’s public hearing is to receive comments from citizens on any aspect of the proposed bonds and capital improvement projects and on the approval process leading to a proposed bond referendum on November 4, 2003. Copies of the five individual Bond Orders as introduced on August 26, 2003, and a copy of the official ballot with specific wording of the questions for the voters are attached for consideration by citizens and the Council.
After hearing from citizens regarding the proposed Bond Orders, the next step in the approval process would be adoption the bond orders as introduced or as amended. This step would be accomplished by having a Council Member move adoption of each of the five Bond Orders; upon receiving a second, the motion could then be voted on. The amount of proposed bonds for each of the five purposes could be reduced, but may not be increased without restarting the process and steps for approval of a bond referendum.
Upon adoption of the Bond Orders as introduced or amended, the next step in the process would be the adoption of the attached Resolution calling for the special referendum on November 4, 2003, and authorizing two publications of the Bond Orders as adopted and publication of the notice of the referendum as required by State law.
At the Council’s last meeting on August 26, Council members raised questions about the wording of the Bond Order for Public Buildings and about the order of the questions for the voters. We note the Bond Order for Public Buildings contains the following wording regarding energy improvements:
“Section 1. The Town Council of the Town of Chapel Hill, North Carolina has ascertained and hereby determines that it is necessary to acquire, construct, equip and install energy efficient facilities in certain existing public buildings, including without limitation the acquisition of lighting, heating, ventilating, air conditioning and related fixtures, machinery and equipment, and to pay the capital costs of such improvements.”
In addition to this wording in the Bond Order, the wording of the questions for voters on the proposed Official Ballot regarding the energy improvements is as follows:
“SHALL the order authorizing $500,000 of bonds secured by a pledge of the faith and credit of the Town of Chapel Hill to pay capital costs to acquire, construct, equip and install energy efficient facilities in certain existing public buildings, including, without limitation, the acquisition of lighting, heating, ventilating, air conditioning and related fixtures, machinery and equipment required therefore and the acquisition of necessary land or rights in land, and a tax to be levied for the payment thereof, be approved?”
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YES
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NO
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We believe that the wording of both the Bond Order and the question for voters provide specific information for citizens that the proposed Public Building bond in the amount of $500,000 is proposed to be used only for energy improvements projects. This is consistent with as recommended by the Town Council’s Committee on Sustainability, Energy and Environment. The Bond Attorney provided the above language and has informed us that the above form of the question meets the requirements of applicable law.
Regarding the order of the questions on the Official Ballot for voters, bond counsel has advised that the order of the questions can be determined by the Council. Therefore, we recommend after bond orders are adopted, the Council discuss the order of questions on the ballot and adopt the attached Resolution B specifying the order desired by the Council.
We have also received an inquiry from the Public Arts Commission regarding the extent to which bonds funds may be used for art in connection with the various bond projects. A response to the Commission’s question has been provided by the Bond Attorney on this matter. A copy of the Attorney’s response is included as Attachment 5.
We believe the following paragraphs from the Attorney’s letter provide a summary opinion on this matter:
“In summary, there are two situations in which the financing of fine art from the proceeds of general obligation bonds is clearly warranted: the purposes outlined in Section 159-48(b)(11) (viz. art galleries, museums, art centers, etc.), and fine art that is incorporated as an integral physical part of the building or other structure being financed under Section 159-48(b). The financing of other fine art from the proceeds of general obligation bonds will depend to a great extent on the specific facts and circumstances of the situation presented and therefore will ultimately be resolved on a case by case basis.”
“The argument for including fine art as a permitted cost of capital improvement project financed with general obligation bonds would be that as long as the Town, as the issuer of the general obligation bonds issued for the capital project, believed that such art was ‘necessary’ or ‘incidental’ to the project as whole, such cost should be an eligible or permissible capital cost under the Act.”
SUMMARY OF PROPOSED ACTIONS
Adoption of the proposed Bond Orders and Resolution A and B as discussed above would complete the formal actions the Council needs to take to authorize the special bond referendum. Notices of the Bond Orders and notice of the referendum would be published in accord with the established bond timetable. The Orange County Board of Elections would be notified of the Council’s actions in order to prepare the Official Ballot for the referendum.
RECOMMENDATION
We recommend that the Council take the following actions in the following order:
1. Conduct the public hearing on the proposed Bond Orders as introduced.
2. Consider adoption of the Bond Orders as introduced or as amended.
3. Adopt Resolution A calling for a special referendum to consider the issuance of bonds to finance the proposed capital improvements projects.
4. Adopt Resolution B specifying the order of the questions for voters on the Official Ballot for the referendum.
ATTACHMENTS
2. Timetable for General Obligation Bonds of the Town of Chapel Hill, Series 2003 (p. 8).
5. Copy of letter from Bond Attorney regarding financing fine art from proceeds of General Obligation bonds (p. 41).