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HomeMy WebLinkAbout07281992 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