AGENDA DATE: 8/5/2015
TITLE:
Title
Albemarle County Debt Financing - 2015B
BODY
SUBJECT/PROPOSAL/REQUEST: Resolution approving a plan to finance certain public facilities and equipment projects through the issuance of revenue bonds by the Economic Development Authority of Albemarle County.
ITEM TYPE: Regular Action Item
STAFF CONTACT(S): Foley, Letteri, Davis, and Burrell
PRESENTER (S): David Rose, Davenport & Co., Financial Advisors
LEGAL REVIEW: Yes
REVIEWED BY: Thomas C. Foley
BACKGROUND: Beginning in FY09, the County has issued debt on an every-other-year basis, using its cash as a source of funding until such time as the next debt is issued. As authorized by the annually adopted reimbursement resolution, the County reimburses itself from bond proceeds. On June 3, 2015, the Board of Supervisors adopted a reimbursement resolution setting forth the County’s intent to use $43,389,518 in tax exempt bond proceeds to reimburse the County for Capital Improvement Program expenditures. On June 4, 2014, a similar reimbursement resolution was adopted by the Board. On April 1, 2015, the Board approved financing $9.5M specifically for purposes of funding the Schools’ FY15 CIP for expenditures that had already been approved for financing and appropriated in the County’s FY15 budget. Those projects were not included in the FY16 reimbursement resolution. This Executive Summary presents to the Board for its consideration a financing option for the County to finance FY16 capital projects and to reimburse the County for cash it expended for previous years projects.
STRATEGIC PLAN: Mission: To enhance the well-being and quality of life for all citizens through the provision of the highest level of public service consistent with the prudent use of public funds
DISCUSSION: On July 14, 2015, the County’s Financial Advisors, Davenport and Company, presented an overview of the proposed plan of public facility bond financing to the Economic Development Authority of Albemarle County, Virginia (EDA), which is enabled to assist the County in financing local government facilities and equipment. If the Board approves moving forward with the proposed financing, the EDA Board would be asked to approve the financing plan at its August 11, 2015 meeting. Under the proposed strategy, the EDA, as a conduit issuer, would issue debt through a Public Sale in a principal amount not to exceed $45,750,000 (project costs, cost of issuance, capitalized interest, and a reserve equal to up to one year’s debt service, if required) and would loan the proceeds to the County. This bond sale would include capitalized interest because in order to take advantage of the nearly historical low interest rate environment, the County is undertaking this debt issuance earlier than was initially planned and budgeted. The EDA Bonds will be secured under a master trust agreement structure and master financing agreement structure described in Attachment A, prepared by Hunton & Williams LLP, the County’s bond counsel. The security for the EDA Bonds will be the County’s promise, subject to appropriation, to make payments to the EDA to enable it to make debt service payments associated with this debt issuance. Based on the County’s excellent triple-AAA credit rating, but without the security of offering additional leased collateral, it is expected that the debt would be issued with credit ratings in the high AA category. The resolution necessary to advance this borrowing plan is also attached (Attachment B). All financial documents referenced are available for Board and public review in the Board Clerk’s Office.
BUDGET IMPACT: Interest rates at the time of preparing this Executive Summary are at favorably low levels. The County may realize budgeted debt service savings if interest rates remain favorable. This financing adheres to the County’s financial policies regarding debt limits, debt capacity, debt affordability, and debt repayment standards.
RECOMMENDATION:
Recommendation
Staff recommends that the Board adopt the attached Resolution (Attachment B) authorizing the proposed plan of financing through the EDA.
ATTACHMENTS:
Attachment A - Master Financing Agreement
Attachment B - Resolution