OUR CAPITAL IMPROVEMENTS STORY: IT’S NOT A FAIRY TALE!6 December NCLGBA Winter Conference

First, a little quiz

Locate Chatham County on the map:

Once Upon a TimeOnce Upon a Time

Cows, chickens and goats Cows, chickens and goats GO bonds and revenue sharingGO bonds and revenue sharing Retirees, employees of UNC and Retirees, employees of UNC and

RTPRTP The old woman and the shoeThe old woman and the shoe

Once Upon a TimeOnce Upon a Time

GO or COPs?GO or COPs? $113 million in debt!$113 million in debt! A 6-fold increase in debt per A 6-fold increase in debt per

capitacapita

Enter the WizardEnter the Wizard

Doug Carter and Associates (DEC)

The debt model BOC unanimously adopts CIP

Projects begin

And we all lived And we all lived happily ever after…happily ever after…

……for a couple of yearsfor a couple of years

But is a success story

6 years later We have a lot to show for it In spite of (because of?) the recession

Before the Recession

Set aside 4 cents on the tax rate to fund the debt model

Set up the debt reserve Authorized DSS expansion, business park

construction, and new elementary school These projects were nearly complete before

recession began Funded through COPs Design work for community college buildings,

middle school and library complete

During the Great Recession

At first, no funds were available Financing was difficult to obtain, but we

were able to obtain bank loans and, eventually, an ARRA loan

Construction bids were significantly below budget: Library13% below bids received in August 2008 Community college building19% below budget School 13% below budget Justice center 17% below budget

Debt Model/Reserve

The reserve has held up through 2 complete BOC changes

Smoothes out contributions to the debt reserve Currently, 5.5 cents contribution to debt service fund

(for example, in FY 13, 5.7 cents needed for debt service)

High of 12.7 cents needed in 2019 Funds accumulated up front—favorable view from

rating agencies No tax increase is needed to fund debt service for

existing and future projects (does not include operating)

Debt Model Includes

Projection of revenues (property tax, impact fees, lottery)

Retired debt (must be put back into reserve)

Debt service, plus projection of debt for new projects

Fund balance in debt reserve Property tax equivalent of debt service

Debt Model

Debt Model

DEC is happy to share a copyDEC Associates, Inc.Douglas CarterPresident & Managing Director704.334.7478dcarter@decassociatesinc.com

Debt Model

Updated annually: To ensure projections are on target To include new projects or to give BOC options to delay

projects We are on Version 32B of the model But it has held up remarkably well considering it

was developed before the Great Recession. Tweaks include: Added lottery proceeds Lowered annual property tax growth to 2% (from 5%) Lowered projections for other revenues, impact fees

dramatically affected

Our CIP is not a “Wish List” Every project scheduled in the CIP is funded (or

a source of funding identified) Projects without a funding source are classified

as “future projects” and are not scheduled This category has been useful:

Alleviates need for “pie-in-the-sky” projects Alerts the board to needs on the horizon that may

compete with scheduled project for funds Provides a mechanism for funding planning costs

We spend much time on identifying operating costs—now used as basis for expansion requests

Funding Strategy

Fund large, needed facilities through debt Fund smaller needs through fund balance Maximize grant opportunities (parks) Fund parks through grants, recreation fee,

and parks capital reserve (have funded 3 parks through these sources)

Fund other projects through capital reserves