Agenda Package - 10-12-09 Jt. Meeting

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We have been working with our financial consultants, Davenport & Associates, and our bond council, Womble Carlyle, in an effort to put forward the best financial package possible for this issuance. Before we can go any further, we need to decide an amount that the County is willing to borrow or how much of the project the County is willing to fund. Without a clear understanding of this, the final package cannot be put to market and developed. We have discussed scenarios with Davenport for funding the entire project as part of the '/4 cent sales tax referendum. After consulting with them, we believe that the entire project can be completed without a property tax increase if the cent sales tax passes. The '/4 cent may or may not cover the entire debt payment, but we won't know for sure until the project is bid and we solicit bids for the financing package. This is because the financing package will have to be blended which will allow some flexibility in establishing our debt repayment schedule. Our financial models show that we will be able to cover most if not all of the debt payment. Any shortage will be small and can be covered by general fund revenues or lottery proceeds until the economic recovery begins to increase our sales tax revenues again. We believe that a blended financing package of zero interest, low interest and regular lease purchase financing or certificates of participation can be structured so that the new Y cent will be able to cover these debt payments for the life of the loan once the recovery gains momentum. The first step in moving this project forward is the support of the Hite plan by the Commissioners- Once this is done, and at the appropriate time, the next step would be to authorize staff with assistance from Davenport and Womble Carlyle to put forth the best financing package possible. WE WILL NOT KNOW EXACTLY HOW MUCH THIS PROJECT WILL COST UNTIL THE PROJECT AND FINANCIAL PACKAGES ARE BID. This is normal. We always use estimates and then adjust as the bids are received. No one can ever guarantee what the cost of a project of this size will be; we can only estimate, and we believe our estimates are sound. Another step in the process is for the Commissioners to guarantee funding - whether it be the cent sales tax or other general fund revenues. When the Commissioners are ready to borrow the funds, the commitment will come in the form of a resolution that makes application to the LGC for approval of our financing package. There are several attachments to this memo. They explain the most updated situation in relation to the status of the Recovery Bonds. If there are any questions, I will be happy to answer them-