AGENDA #4b
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Authorization for the Sale of $4,250,000 of General Obligation Bonds on March 25, 2003
DATE: February 10, 2003
The attached resolution prepared by our bond counsel, Womble Carlyle Sandridge & Rice, PLLC, would authorize the final phase sale of $4,250,000 in General Obligation bonds to continue implementation of bond projects approved by referendum in November 1996. The resolution authorizes the Mayor, Manager, Finance Director, Town Attorney and Town Clerk to take the actions necessary to sell the bonds on March 25, 2003.
BACKGROUND
In 1996, the voters approved a referendum for the sale of General Obligation bonds totaling $13.5 million to be used for various public improvements projects in five bond categories as follows:
Parks and Recreational Facilities $ 5,000,000
Open Space 3,000,000
Public Safety 2,000,000
Public Works Facility Improvements 500,000
Streets 3,000,000
Total $13,500,000
By State tatute, the period authorized for General Obligation bonds is for seven years from the date of approval in the referendum.
In 1996, the Council approved a tentative schedule for selling these bonds and implementing public improvements over a six to seven year period, with a phased sale of bonds beginning in 1998. In accord with that plan, the Council authorized the sale of $4.5 million in 1998, followed by $4.7 million in 2000. The final sale of authorized bonds of $4.25 million to complete the various bonds projects was originally scheduled for last year, but was postponed due to the budget crisis and uncertainty of State-shared revenues for the current year. Attachment 1 (excerpted from the current year’s budget document) provides a summary of the bonds sold over the last six years and the balance of bonds not yet sold.
DISCUSSION
The table in Attachment 2 includes the current status of the five bond project categories showing the following: the detailed project budgets approved by the Council for each project over the last six years; actual expenditures and commitments for each project through December 31, 2002; the unspent budget balance for each project; the total bonds sold to date for each project; and the balance of bonds not yet sold in each project category.
In summary, this table indicates bond expenditures to date total $10.2 million and bonds sold to date total $9.25 million. In order to continue implementation of the approved bond projects, the balance of bonds totaling $4,250,000 now need to be sold. In addition, the authorization for issuing the remaining bonds would expire in November 2003, seven years from the approval date of November 1996.
The $4,250,000 in bonds to be sold include $1,230,000 reserved for the aquatic center, $1,185,000 for open space purchases, $500,000 to continue implementation of the approved Streetscape plan, and $760,000 for curb and gutter improvements and reimbursements for bridges and drainage projects already completed.
Based on the need to sell the remaining bonds to complete the bond projects, we have tentatively reserved March 25, 2003 with the Local Government Commission as a date for a potential bond sale. We propose a normal maturity of 20 years for these bonds and estimate new debt service on these bonds would be about $425,000 in the first year, and would decline about $20,000 each year over the next 20 years. The estimated additional debt service payments were included in the budget outlook information presented to the Council at the January 17 planning session.
The attached resolution prepared by bond counsel would authorize the Mayor, Town Manager, the Finance Director, the Town Attorney and Town Clerk to take all actions necessary or appropriate to sell bonds in amounts as discussed above. The bonds would be sold for the Town by the Local Government Commission. Another resolution regarding the bond sale is scheduled for adoption by the Council on February 24, 2003.
That the Council adopt the attached resolution authorizing the Mayor, Town Manager, Town Attorney, Finance Director and Town Clerk to take necessary actions for the sale of $4,250,000 in General Obligation bonds on March 25, 2003.
A RESOLUTION AUTHORIZING THE FINANCING OF CERTAIN CAPITAL IMPROVEMENTS THROUGH THE ISSUANCE OF $4,250,000 GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS, SERIES 2003 OF THE TOWN OF CHAPEL HILL, NORTH CAROLINA AND AUTHORIZING AND DIRECTING THE TOWN MANAGER, THE DIRECTOR OF FINANCE AND THE TOWN ATTORNEY TO TAKE ALL ACTIONS NECESSARY OR APPROPRIATE FOR THE ISSUANCE OF SUCH BONDS (2003-02-10/R-3)
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WHEREAS, the following Bond Orders, each of which was adopted by the Town Council (the “Town Council”) of the Town of Chapel Hill, North Carolina (the “Town”) on September 23, 1996 and approved by a majority of the qualified voters of the Town who voted thereon at a referendum duly called and held on November 5, 1996, has taken effect:
“BOND ORDER AUTHORIZING THE ISSUANCE OF $5,000,000 RECREATION FACILITIES BONDS OF THE TOWN OF CHAPEL HILL, NORTH CAROLINA”;
“BOND ORDER AUTHORIZING THE ISSUANCE OF $3,000,000 OPEN SPACES AND AREAS BONDS OF THE TOWN OF CHAPEL HILL, NORTH CAROLINA”;
“BOND ORDER AUTHORIZING THE ISSUANCE OF $2,000,000 PUBLIC SAFETY BONDS OF THE TOWN OF CHAPEL HILL, NORTH CAROLINA”;
“BOND ORDER AUTHORIZING THE ISSUANCE OF $3,000,000 STREET AND SIDEWALK BONDS OF THE TOWN OF CHAPEL HILL, NORTH CAROLINA”;
“BOND ORDER AUTHORIZING THE ISSUANCE OF $500,000 PUBLIC BUILDING BONDS OF THE TOWN OF CHAPEL HILL, NORTH CAROLINA”; and
WHEREAS, on March 24, 1998, the Town pursuant to the authority of such Bond Orders issued $4,550,000 in aggregate principal amount of its General Obligation Public Improvement Bonds, Series 1998 (the “Series 1998 Bonds”), which Series 1998 Bonds are currently outstanding; and
WHEREAS, on March 1, 2000, the Town pursuant to the authority of such Bond Orders issued $4,700,000 in aggregate principal amount of its General Obligation Public Improvement Bonds, Series 2000 (the “Series 2000 Bonds”), which Series 2000 Bonds are currently outstanding; and
WHEREAS, the Town Council has determined that the following additional capital improvements (collectively, the “Improvements”) to the existing facilities of the Town should be made at the proposed costs set forth below:
Improvements Proposed Cost
Construction of recreational
facilities $1,315,000
Acquisition of open space and greenway
facilities $1,185,000
Renovation of existing law enforcement
facilities $ 100,000
Renovation and improvements to
existing public works facilities $ 290,000
Repair and construction of
streets, sidewalks and bridges $1,360,000
WHEREAS, the Town Council has determined that it is in the best interests of the Town to issue an additional $4,250,000 in aggregate principal amount of the Bonds authorized by such Bond Orders in order to finance the costs of the Improvements;
NOW, THEREFORE, BE IT RESOLVED by the Town Council as follows:
Section 1. Bond Orders. In order to finance the costs of the Improvements, the Town shall issue its General Obligation Public Improvement Bonds, Series 2003 in the aggregate principal amount of $4,250,000 (collectively the “Bonds”) pursuant to and in accordance with the Bond Orders described above.
Section 2. Other Actions Authorized. The Town Manager, the Director of Finance and the Town Attorney of the Town and such other officers or employees of the Town as are designated by any of them are hereby authorized and directed to take all action necessary or appropriate to effect the issuance of the Bonds by the Town subject only to adoption of a Bond Resolution by the Town Council.
Section 3. Resolution Effective Immediately. This Resolution shall take effect immediately upon its passage.
This the 10th day of February, 2003.