AG 1993 12 06 - Laserfiche WebLink

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\Xhchovia Bank of North Carolina. N.A. 31)1 North -Main Street ~'inston-Salem? .NC 271.50-3099 WACHOVIA November 8, 1993 Mr. Blair D. Bennett Finance Director County of Cabarrus Cabarrus County Government Center 2nd Floor 65 Church Street, S.W. Concord, NC 28025-07076 Re: Refunding Cabarrus County Government Center $8,500,000 Series 1988 Dear Blair: I wish to update you on the status of the above-referenced refunding issue. As you may recall, Wachovia had been monitoring the feasibility of refunding the County's general obligation bonds as well as the lease on the County Government Ce9ter in order to determine the appropriate time to proceed with the possible refunding of these issues. 'As you know, the decision was made to proceed with the refunding of the general obligation bonds which were sold on October 12th and closed on November 2nd. As a result of this decision, given the requirements of current tax law, Cabarrus County for calendar year 1993 would be considered a large issuer (issuing in excess of $10 million) and therefore the bank would not be able to loan funds to the County as aggressively due to the inability to deduct the cost of carry. Consequently, the refunding on the Government Center would not provide a satisfactory savings to the County if the .issue_ were closed before D~ember 31, 1993. The only exception to this scenario is if the County were willing to make a cash contribution to the refunding in order that the principal outstanding not be increased. Given current law, bond counsel is of the opinion that since the original financing was closed in a year in which the County was a small issuer (incurring less than $10 million in debt during the calendar year), that this status would be grandfathered for the refunding if the County does not increase the amount of principal outstanding nor increase the average life of the financing. Since this may not be a viable solution, we recommend the County delay closing the refunding on the Government Center until early January 1994. This recommendation is qualified however, since the County will be required to sign a "reasonable expectations" clause as a part of the closing documents on the refunding issue. By signing this clause, the County and any of its subordinate entities pledge that they do not reasonably expect to issue more than $10 million in debt during calendar year 1994. It should be noted that since the refunding of the County Government Center will be considered a "current refunding," the amount of