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NOSTH CA~OLIN~ <br /> <br />To: Board of Commissioners <br />From: Blair Bennett <br />Date: June 13, 1996 <br /> <br />Subject: School Bond Issue <br /> <br />Through meeting and phone conversations with school officials, we have discussed basically two <br />scenarios for issuance of the $49 million in school bonds. One scenario is to sell all $49 million of <br />the bonds in January 1997. Some positives resulting from this scenario are savings of <br />approximately $40,000 in fixed cost by having only one sale. Also, the architects believe that <br />approximately $400,000 in construction costs resulting from inflation and other variables could <br />be realized Finally, this would give the school system more flexibility to move funds saved on one <br />project to another project. The debt service relating to the sale of $49 million would be <br />$4,591,000 annually. Based on our new tax valuation used for budget purposes of $6.1 billion, at <br />an estimated collection rate of 97.75%, one cent would generate $596,275. Therefore the tax rate <br />equivalent needed for annual debt service would be $.0770. <br /> <br />The second scenario discussed would anticipate selling $36 million in January 1997, then selling <br />the remaining $13 million 1 - 2 years later. The direct cost to the schools would obviously be the <br />additional fixed cost relating to the second issuance. The attached schedule indicates the fixed <br />cost relating to a first and second sale. The debt service relating to the sale of $36 million would <br />be $3,424,000 annually. The tax rate needed for annual debt service would be $.0574. <br /> <br />In both cases, I have asked for assurances that spending guidelines relating to arbitrage rebate be <br />followed. Summarized are those guidelines: <br /> a. At least 10% of the Available Construction Proceeds must be spent for the governmental <br /> purposes for which the Bonds were issued within the 6-month period beginning on the <br /> date the Bonds are issued. <br /> b. At least 45% of the Available Construction Proceeds must be spent for the governmental <br /> purposes for which the Bonds were issued within the l-year period beginning on the date <br /> the Bonds are issued. <br /> <br /> Finance Department <br /> <br />P.O. Box 707 · Concord, NC 28026-0707 · (704) 788-8104 <br /> <br /> <br />