07281992
693
HARNETT COUNTY BOARD OF COMMISSIONERS SPECIAL MEETING, JULY 28, 1992
JOINT MEETING WITH
BOARD OF EDUCATION
ON BUDGET SHORTFALLS
BOARD OF EDUCATION
BUDGET FOR F.Y. 92-93
INCREASED
RESOLUTIO RE:
ACQUISITION OF NE
METRO WATER SYSTEM
ADJOURNMENT
The Harnett County Board of Commissioners met in special session on
Tuesday, July 28, 1992, in the Commissioners Meeting Room, County
Office Building, Lillington, North Carolina, with the following
members present: Beatrice Bailey Hill, Walt Titchener, Bill Shaw,
Mack Reid Hudson, and Chairman Lloyd G. Stewart presiding. Others
present were Dallas H. Pope, County Manager; Vanessa W. Young, Finance
Officer and Clerk to the Board; and Kay S. Blanchard, Recording
Secretary.
Chairman Stewart called the meeting to order at 7 p.m. and
Commissioner Beatrice Bailey Hill offered the invocation.
Mr. Ivo Wortman, Superintendent, Harnett County Schools, was
recognized and requested to brief the Board concerning budget
shortfalls associated with the County's F.Y. 92-93, budget allocations
for the Harnett County Board of Education. Mr. Wortman then briefed
the Board concerning school budget shortfalls on energy, new staff
requirements for Harnett Central Middle School, salary increases,
police school liaison, and teacher supplement increases, which was
identified as a $487,064 deficiency in current County allocations to
the Harnett County Board of Education.
Commissioner Shaw moved that the Board of Education budget for F.Y.
92-93, be increased by $487,064. Commissioner Hudson seconded the
motion and it passed with the following vote: Ayes: 4, Noes: 1,
Absent: O.
Commissioner Titchener moved that the agenda item regarding proposed
resolution concerning the Metro agreement purchase section be tabled
until the next regular Board meeting. The motion received no second.
Mr. John M. Phelps, II, Public Utilities Attorney, was recognized and
requested to brief the Board concerning the purchase of the Northeast
Metropolitan Water System by the County of Harnett. Mr. Phelps then
briefed the Board along with Mr. John Barnes, representing J. Lee
Peeler & Co., Inc., concerning the requirements and procedures for
proceeding with the proposed purchase of the Northeast Metropolitan
Water System.
Commissioner Hill moved for adoption of a Resolution Regarding
Acquisition of the Assets of Northeast Metropolitan Water District of
Harnett County by the County of Harnett. Commissioner Shaw seconded
the motion and it passed with a unanimous vote. The resolution is
copied in full at the end of these minutes as Attachment 1.
There being no further business, the Harnett County Board of
Commissioners special meeting, July 28, 1992, duly adjourned at 9:30
p.m.
~a.J --w. ~
Vanessa W. Young, Cle 0
~~ ,/ ~MJ
Kay! S. Blanchard, Secretary
694
ATTACHMENT 1.
RESOLUTION REGARDING ACQUISITION
OF THE ASSETS OF
NORTHEAST METROPOLITAN WATER DISTRICT OF HARNETT COUNTY
BY THE COUNTY OF HARNETT
WIT N E SSE T H
The Northeast Metropolitan Water District of Harnett County,
North Carolina (the "District") was created on April 14, 1976 by
resolution adopted by the Commission for Health Services of the
Department of Human Resources, State of North Carolina. The
District is governed by the District Board of Northeast
Metropolitan Water District of Harnett County (the "District
Board") as specified by the General Statutes of North Carolina.
Subsequent to its creation, the District completed a water
production and distribution system to provide potable water to
persons living within its boundaries.
The facilities of the
District now provide water services to over forty thousand persons
living within the District as well as within several county water
and sewer districts located throughout Harnett County.
On May 30, 1980, the District Board leased the water
production and distribution facilities owned by the District to the
Utilities since commencement of the lease term.
The lease
County of Harnett (the "County"). The facilities of the District
have been operated by the County and its Department of Public
agreement includes a provision granting the County the exclusive
option to purchase the leased premises upon payment of $1.00 and
a sum of money to the District that is sufficient to enable the
District to pay the outstanding bonded indebtedness of the District
as it comes due and a sum of money sufficient to enable the
District to meet its administrative expenses while the bonded
indebtedness remains unpaid.
The outstanding bonded indebtedness of the District consists
of two debts, a Water Refunding Bond issued in June of 1988 which
has a balance due of $1,857,200 and Water Bond Anticipation Notes
in the amount of $1,080,000 maturing October 21, 1992. The
interest rate applicable to the Water Refunding Bond is a variable
rate equal to the Prime Rate of First Citizens Bank and Trust
Company plus 0.5%, subject to a maximum rate of 10.5% and a minimum
rate of 6.5% per annum.
According to a tabulation of the Bond Buyer's Index, as
compiled for the last thirteen months, issued by the North Carolina
Department of State Treasurer, the index at this time is at its
lowest point during that thirteen month period. Therefore, should
the County desire to exercise its option to purchase the leased
facilities, favorable interest rates on financing arrangements to
fund the costs thereof should be available over the next few
months.
695
I
It is anticipated that funds to acquire the leased facilities
may be obtained by the County pursuant to a financing under N.C.
Gen. Stat. S160A-20. Said statute allows counties to finance the
purchase of real or personal property by installment contracts
where a security interest is created in the property being
purchased. No general obligation bond indebtedness is incurred by
the County and the taxing authority is not pledged. The funds to
pay the debt service under the installment contract will be derived
from operating revenues of the County's water supply system, just
as the revenues are currently obtained for payment of the
District's bonded indebtedness.
The District Board has reviewed and considered the proposal
that the County acquire its assets. At its June 25, 1992 session
the District Board approved the County's acquisition of the
District's assets provided that the District Board remain organized
for the purpose of advising the County Board of Commissioners with
regard to rate structure, budgetary matters and general policies
effecting water utilities.
In order to save the costs associated with the issuance of
additional bond anticipation notes or general obligation bonds of
the District to retire the $1,080,000 Bond Anticipation Notes
maturing October 21, 1992, it is necessary that the sale of the
District's assets be completed prior to said date.
This will
enable the District to have the funds available to retire the notes
on the day the same mature. The required timetable for completing
the sale prior to October 21, 1992 dictates that the making of
financial arrangements commence immediately.
Having reviewed and considered the above matters, the Board
of Commissioners of the County of Harnett now desires to commence
the necessary steps so as to effectuate the acquisition of the
facilities of the District pursuant to and in accordance with its
option to purchase as set forth in the lease heretofore described
and dated May 30, 1980.
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners
of the County of Harnett that:
1. It is the intent of the County of Harnett to exercise its
option to purchase the water production and distribution facilities
of the Northeast Metropolitan Water District of Harnett County as
provided in that Lease between the District and the County dated
May 30, 1980 (as amended).
2. The County of Harnett agrees that the existing District
Board shall remain organized under the applicable general statutes
for the purpose of advising the County Board of Commissioners with
regard to the rate structure effecting the citizens of the
District, the budget making process of the water enterprise fund
and the general policies and procedures of County Water Utilities;
said District Board to exist and continue as described until such
time as a County wide utility advisory board is created.
129
ST"'TEOF ....ORTH C...ROLI.......
NOTE LOCAL GOVERNMENT COMMISSION
ANNUAL S0K1D<PRINCIPAL AND INTEREST REQUIREMENTS
Northeast MetroRo1itan Water Dist. of Harnett Co.
UNIT)
1992-93
(FISCAL YEAR)
OES ....OT INCLUDE ...MORTIZATION REQUIREMENTS OF TERM BONDS. PRINCIP...L DUE D"'TES INDIC...TED BY >I< BESIDE INTEREST DUE DATE
DESCRIPTION OUTSTANDING AT INTEREST PRINCIPAL INTEREST
E JULY 1 DUE DATES INTEREST
",
92 Wa ter BAN $1,080,000.00 10/21 * $1,080,000.00 $20,406.00
I
.-
----
TOT AL. _ _ _ _ _ _ ____ _ _ _ _ __ _ _ _ _ _ _ _ _. $1,080,000.00 ---,jJ-. ----------- $1,080,000.00 $20,406.00 96$;..,
Note ~ .
'or $1,100,406.00
TOTAL -aj)tol~ PRINCIPAL AND INTEREST REQUIREMENTS _ - - - --- I--"'~._----, ------~~ ,
/
697
3. The County of Harnett desires to finance the costs of its
acquisition of the facilities of the District pursuant to a
financing agreement completed in accordance with N.C. Gen. Stat.
S160A-20.
The County desires to obtain, pursuant thereto,
sufficient funds so as to enable it to pay to District an amount
which will allow the District to retire all of its outstanding
bonded indebtedness and to enable the County to pay the costs
associated with said financing.
4. The County of Harnett desires to complete the closing
of its acquisition of the District's facilities prior to October
21, 1992 and as a result thereof desires to immediately select and
retain a financial consultant and underwriter to be associated with
said financing agreement.
In accordance therewith the County
hereby selects and retains the firm of J. Lee Peeler & Company,
Inc. to serve as the County's financial consultant and underwriter
with respect to said financing, the County having worked with said
Company in the past and having determined that said Company has
adequately provided, in similar financial transactions, services
of a nature and sophistication comparable to those required for
said financing and possesses the experience necessary to perform
the services thereby required.
5. The County of Harnett hereby approves of the selection of
LeBoeuf, Lamb, Leiby and MacRae as its bond or special counsel with
respect to the financing agreement herein contemplated, having
utilized the services of said firm in previous financing and having
found that said firm has adequately provided, in similar financial
transactions, services of a nature and sophistication comparable
to those required for said financing and possesses the experience
necessary to perform the services thereby requi~ed.
6. The appropriate representatives of the County are hereby
directed to forthwith meet with representatives of the Local
Government Commission to obtain instruction and advice with respect
to the contemplated financing and acquisition.
7. The Chairman of the Board of Commissioners, the Clerk to
the Board, the Finance Officer of the County and the County's
Public Utilities Attorney and such other representatives of the
County as are required are hereby authorized to take such further
action as may be necessary or advisable to carry out the intent of
this Resolution.
Duly adopted this 28 day of July, 1992, upon motion made by
Commissioner
Hill
, seconded by Commissioner
Shaw
and adopted by the following vote:
Ayes
5
Noes
o
Absent
o
The Board of Commissioners of
the County of Harnett
By
Attest:
~W.~/
Vanessa W. Young, ler
to the Board