Carol Stamper, Chief Operating OfficerPeggy Hey, Executive Director of Facility Planning and Management
The Board of Education and the Mecklenburg County Board of Commissioners have previously approved funding for certain new school projects and expansion projects at existing schools through certificates of participation (COPS). Mecklenburg County is in the process of "refunding" (refinancing) 2006 and 2008 COPS. The new issue is being called Limited Obligation Bonds, but essentially is a COPS issue by another name since the County needs to provide collateral just like the existing COPS. The plan is to sell these limited obligations bonds in September. The maximum size of the refunding issue is $140,000,000 and the County needs to provide adequate collateral. The exact amount of the refunding (up to the $140,000,000 maximum) will be determined by County staff in accordance with the Resolution approved by the Board of County Commissioners on July 11, 2017 (copy attached). The purpose of the refunding is to reduce the amount of variable rate debt held by the County and replace it with fixed rate debt or a lower interest rate.
As required for this type of financing, Mecklenburg County must own the property used as collateral for the money borrowed. School properties are then leased back to the Board of Education. The school properties proposed to be used for collateral are schools currently used as collateral for the existing COPS, Hopewell High School, Ballantyne Elementary School and Sedgefield Middle School. CMBE needs to approve the use of the school sites as collateral.
Mecklenburg County already owns Hopewell High School that is currently used as collateral and Sedgefield Middle School is currently used as collateral (and these sites are intended to be "leased-back" to CMBE). All properties will be conveyed back to CMBE after the financing has been paid. No more schools will be used as collateral than is necessary to meet the rating agency's requirement that collateral value be adequate (i.e. if the County refinances less than the $140,000,000 maximum amount, one or more of the school sites contemplated to be used as collateral may not be needed).
Certain documents, including but not limited to a Deed, Lease and an Administrative Agreement, must be approved by CMBE and Mecklenburg County. The documents are in substantially the same form as were used for previous COPS transactions and are available for review and inspection in the legal department.
The requested action item is approval of the resolution as presented.
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