Council Action Requested:
This Ordinance will authorize the County to enter into certain transactions with the Lancaster County Public Facilities Corporation, a South Carolina nonprofit corporation in order to undertake the acquisition, improvement, construction and equipping of certain new county facilities consisting of a detention center and a regional park.
Points to Consider:
County Council has been discussing its desire over the past two years to build a new Detention Facility, which was also supported as part of the Capital Projects Sales Tax 3 ballot initiative, as well as a Regional Park.
The designs and funding projections have been reviewed, with Council input provided for both projects.
In order to proceed to final design and bid stage for both projects, the financing plan needs to be finalized.
Through advice of Bond Counsel and the County's Financial Advisor, the most economical structure to fund both projects at once, recognizing they have different funding streams, is to utilize the Installment Purchase Revenue Bond structure. This funding structure has previously been successfully utilized by the County when it constructed the County Courthouse.
The financing structure call for the creation of a public facilities corporation which agrees to cause to be issued and sold its Installment Purchase Revenue Bonds, in one or more series, for the purposes of defraying the costs of the 2023 Projects.
This type of financing structure will not over extend the amount of borrowing capacity currently available to the County through the General Obligation bonding financing option.
After reviewing various financing alternatives with regard to the 2023 Projects, it has been determined that this finance plan is the most efficient and expeditious manner in which to finance the following 2023 projects: (1) not exceeding $76,000,000 available for the Detention Center and (2) a not exceeding $26,730,000 for the Regional Park.
Bond Council will be Burr Forman, Financial Advisor will be Compass Municipal Advisors, LLC, the Trustee will be Regions Bank, and the Underwriter/Purchaser will be Piper Sandler & Co.
Funding and Liability Factors:
The total project cost for the detention center is anticipated to be $90 million dollars and the total project cost for the Regional Park is anticipated to be $34,730,000.
The funding source for the Detention Center is $30,133,800 from Capital Project Sales Tax 3 funds, plus $14 million in excess funds generated from Capital Projects Sales Tax 2 funds. It is anticipated that County Council will direct any excess funds generated from Capital Projects Sales Tax 3 to the Detention Center Project, as well as include final payoff for the Detention Center as part of a potential Capital Projects Sales Tax 4 initiative, if needed.
Given the anticipated Detention Center Project is $90 million and there is $14 million cash on hand from Capital Project Sales Tax 3, the financing amount needed for this project is $76 million.
The funding source for the Regional Park is the county's hospitality tax. The county has $8 million cash on hand that has been generated from the hospitality tax, and the anticipated annual revenue from the hospitality tax is projected to be sufficient to make the annual bond payments for the project.
Given the anticipated Regional Park project is $34,730,000 and there is $8 million cash on hand, the financing needed for this project is $26,730,000.
Combined the two projects will need financing of $102,730,000 and with bond financing and underwriting costs of potentially $1,100,000 the total bonds issuance will be $103,830,000 or just over 1% of the total project funding amount.
The bonds will be structured to be paid off over twenty years, with an option to pay them off early, if desired based on revenue from the funding streams.
Recommendation:
Approval of the Ordinance.