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397 4. The lease agreement allows for prepayment of the purchase price after 3 years with a small penalty for 3 additional years. After which, the City can pay the remaining lease payments and terminate the lease without additional penalty. 5. The combination of aggressive interest rates and the minimal cost of issuance can be lower than a third party private placement or even a public sale. We feel that our previous experience and involvement with this financing technique provides us with the ability to successfully complete this financ- ing in an efficient and cost effective way for the County. Also, this experience will allow us to be extremely competitive in providing our services. We are extremely anxious to work with you in making this project a realization and pledge our support and resources. If you have any questions or need our assistance please do not hesitate to call. RAGll2.jdh Enclosures Sincerely, /s/ Richard M. Marvin Richard M. Marvin Vice President/manager Public Finance PUBLIC FINANCE SERVICES I. Executive Summary Understandin~ of Needs Cabarrus County is requesting a proposal on a financing lease to facilitate the construction of a 72,000 square foot administrative complex on property already owned by the County. The County would be the sole occupant of the facility. Included as part of the complex, would be a two story parking deck to provide parking for both employees and visitors. The County has allocated approximately $1.4mm per year for the next 10 years to finance the project. It is our understanding that the County has offered to pledge the following non-tax revenue sources: Inspection, Recording of Legal Instruments, Cabarrus Memorial Hospital Reimbursement for Deputy Services provided, District Court fees, Mt. Pleasant Reimbursement for Deputy Services provided, Ambulance Collections, Landfill and Cable Franchise Fees. The following terms and assumptions have been used in the proposal. Final Maturity: Amount of Lease: Principal Repayment: Interest Repayment: Annual Debt Service: Security: Non-Tax Revenue Pledge: 10 years (1998) $8,500,000 Annual Quarterly $1,219,000 (Approximately) Unrated Specific Non-Tax Revenues II. Description of the Financin~ Lease Financings of jails, parking garages, municipal office buildings, water and sewer improvements, and numerous other projects have been accomplished in states throughout the country via Finance Leases. Several of these trans- actions have been completed in North Carolina such as the parking facilities in both Asheville and Winston-Salem, and the Law Enforcement Center for Harnett County. The Financing Lease is an agreement entered into between two or more parties which is structured similar to a lease purchase transaction where the parties enter into a lease agreement under which the Lessee agrees to lease the facility constructed in accordance with its specifications from the Lessor. The lease payment under the agreement would commence upon the initiation of the project. It is a financing form which allows the Lessee to apply lease payments toward the purchase of the leased facility for a predetermined nominal consideration. When the lease obligation has'been fully discharged the facility can be purchased by the lessee. Since the lease payments under the agreement will be an obligation of the Lessee for federal tax purposes, the interest would not be subject to federal income taxation.