To: Board of County Commissioners
From: Chrystal Simpson, Chief Financial Officer
title
RE: Approval of a request to issue Bonds for capital improvements
recommendation
BOARD ACTION REQUESTED:
Approval of the issuance of Capital Improvement Bonds
BACKGROUND:
Resolution 2024-1182 approved for the notice of intent to issue capital improvement bonds. In order to move forward, we need to approve a resolution to issue the $21,500,000 debt and the term sheet (attached) from Huntington Bank for the private placement.
Capital improvement planning has been a major focus for the County. The Tower project plan included $9,000,000 of bond proceeds. There are additional capital needs included in the capital improvement plan adopted by the Board of Commissioners on September 13, 2023 that are urgent in nature. We are combining the $7,500,000 of those improvements and $5,000,000 of Parks needed improvements with the $9,000,000 for the Tower to issue a bond in the amount of $21,500,000 as it is more economical to go through the bonding process once.
DISCUSSION:
Attached is a resolution authorizing issuance of bonds in the not-to-exceed amount of $21,500,000
IMPACT ON HUMAN RESOURCES:
N/A
IMPACT ON BUDGET:
The timing of issuance of the bonds will allow for interest only payments for the first two years. This will align the principal payments for General Fund to start when the JCI Energy bond is paid off in FYE 2026 which is a cost of approximately $820,000 each fiscal year.
The portion related to the $5,000,000 of parks capital improvements will be paid from Parks millage funds.
IMPACT ON FACILITIES:
The capital plan has put a major focus on consolidation of space and much needed improvements which will allow for facilities and operations to minimize the amount of time spent on fielding emergency repairs and shift to a routine maintenance plan to care for County property.
IMPACT ON TECHNOLOGY:
N/A
CONFORMITY TO COUNTY PRIORITIES:
Long-term financial stability priority is met by consolidating space which result in costs savings from operations and allowing for minimization of emergency repairs which are much more costly than planned projects.
resolution
TO THE HONORABLE CHAIRPERSON AND MEMBERS OF THE GENESEE COUNTY BOARD OF COMMISSIONERS, GENESEE COUNTY, MICHIGAN
LADIES AND GENTLEMEN:
At a regular meeting of the Board of Commissioners of the County of Genesee, Michigan (the “County”), held on November 20, 2024.
PRESENT:___________________________________________________________________________________________________________________________________
ABSENT:______________________________________________________________
The following resolution was offered by _________________________ and seconded by __________________________.
BOND RESOLUTION
Limited Tax General Obligation Bonds, Series 2024
WHEREAS, the Board of Commissioners of the County (the “Board”) does hereby determine that it is necessary to defray all or part of the cost of County capital improvements including, but not limited to, demolishing and renovating existing County facilities and structures; construction and repair of surrounding lands, including parking lots and landscaping; acquiring, constructing, installing, furnishing, and equipping improvements to County facilities and structures, including without limitation, the County Circuit Court, County Jail, County administrative building and offices, and parks and recreational facilities; and such other improvements that the County may determine to make as part of the County’s 2024-2032 Capital Improvement Plan (the “Project”); and
WHEREAS, the cost of the Project is estimated to be not less than Twenty-One Million Five Hundred Thousand Dollars ($21,500,000); and
WHEREAS, the Board has determined to issue bonds and to use the proceeds of the sale of such bonds to finance all or part of the cost of the Project (the “Bonds”).
THEREFORE, BE IT RESOLVED by the Board of Commissioners of the County of Genesee, Michigan, as follows:
1. AUTHORIZATION OF BONDS-- PURPOSE. Bonds of the County aggregating the principal sum of not to exceed Twenty-One Million Five Hundred Thousand Dollars ($21,500,000), or such lesser amount determined by order of the Chief Financial Officer, shall be issued and sold for the purpose of defraying all or part of the cost of acquiring, constructing and installing the Project, including the cost of issuing the Bonds.
2. BOND DETAILS. The Bonds shall be designated “Limited Tax General Obligation Bonds, Series 2024” or such other designation as the Chief Financial Officer may determine, shall be dated the date of their delivery; shall be numbered from 1 upwards; shall be fully registered; shall be in any denomination at the option of the purchaser thereof; shall bear interest at the rate of 4.36% per annum, or such lower rate as approved by the Chief Financial Officer, payable on the first day of June and December in each year commencing on June 1, 2025; and shall be serial and/or term bonds and mature on such dates and in such amounts as shall be determined by order of the Chief Financial Officer; provided, however, that the final principal maturity of the Bonds shall be not later than December 1, 2044. If the original purchaser of the Bonds shall designate certain of the Bonds as term bonds, the principal maturities of the Bonds shall become mandatory redemption requirements in accordance with the provisions of Section 6 and the form of bond set forth in Section 10.
3. METHOD OF SALE. The Bonds shall be sold to Huntington Public Capital Corporation (the “Purchaser”) pursuant to a negotiated sale. The Bonds shall be delivered to the Purchaser in its own name or other name designated by it upon receipt of the purchase price for the Bonds in an amount equal to the par value of the Bonds plus accrued interest, if any. It is hereby determined that this method of sale is in the best interests of the County and is calculated to provide the County with the most flexibility and the lowest cost of borrowing money through the issuance of the Bonds. The actions by the Chief Financial Officer (or any predecessor) in connection with the negotiation of the sale of the Bonds to the Purchaser are ratified and confirmed. The Chief Financial Officer is authorized to do all things necessary to sell the Bonds to the Purchaser in accordance with the terms of this Resolution.
4. PAYMENT OF PRINCIPAL AND INTEREST. The principal of and interest on the Bonds shall be payable in lawful money of the United States. Principal shall be payable upon presentation and surrender of the Bonds to the bond registrar and paying agent as they severally mature; provided, however, if the Bonds are issued in the form of a single bond, the Chief Financial Officer may determine that such presentation and surrender of the Bonds is not required for payment and all other principal installments shall be paid to the registered owner of the Bond as shown on the registration books. Interest shall be paid to the registered owner of each Bond as shown on the registration books at the close of business on the 15th day of the calendar month preceding the month in which the interest payment is due. Interest shall be paid when due by wire transfer or other electronic means acceptable to the registered owner, or by check or draft mailed by the bond registrar and paying agent to the registered owner at the registered address.
5. OPTIONAL REDEMPTION. The Bonds shall be subject to optional redemption prior to maturity upon such terms and conditions as shall be determined by order of the Chief Financial Officer.
6. MANDATORY PRIOR REDEMPTION. If any of the Bonds are designated by the original purchaser as term bonds such Bonds shall be subject to mandatory prior redemption at par and accrued interest in accordance with the maturity schedule determined by the Chief Financial Officer and upon the terms and conditions set forth in the form of Bond contained in Section 10 hereof. The Bonds to be redeemed shall be selected by lot.
7. BOND REGISTRAR AND PAYING AGENT. The Chief Financial Officer shall designate, and may enter into an agreement with, a bond registrar and paying agent for the Bonds that shall be a bank or trust company located in the State of Michigan that is qualified to act in such capacity under the laws of the United States of America or the State of Michigan. The Chief Financial Officer may from time to time as required designate a similarly qualified successor bond registrar and paying agent. Alternatively, the County Treasurer may serve as bond registrar and paying agent for the Bonds if the Chief Financial Officer determines it is in the best interest of the County.
8. EXECUTION, AUTHENTICATION AND DELIVERY OF BONDS. The Bonds shall be executed in the name of the County by the manual or facsimile signatures of the Chairperson of the Board and the County Clerk and authenticated by the manual signature of the bond registrar and paying agent or an authorized representative of the bond registrar and paying agent; provided, however, that such authentication shall not be required so long as the County Treasurer shall serve as bond registrar and paying agent for the Bonds. After the Bonds have been executed and authenticated for delivery to the original purchaser thereof, they shall be delivered by the County Treasurer or the Chief Financial Officer to the Purchaser upon receipt of the purchase price. Additional Bonds bearing the manual or facsimile signatures of the Chairperson of the Board and the County Clerk may be delivered to the bond registrar and paying agent for authentication and delivery in connection with the exchange or transfer of Bonds. The bond registrar and paying agent shall indicate on each Bond the date of authentication.
9. EXCHANGE AND TRANSFER OF BONDS. Any Bond, at the option of the registered owner thereof and upon surrender thereof to the bond registrar and paying agent with a written instrument of transfer satisfactory to the bond registrar and paying agent duly executed by the registered owner or his duly authorized attorney, may be exchanged for Bonds of the same aggregate principal amount and maturity date and bearing the same rate of interest as the surrendered Bond.
Each Bond shall be transferable only upon the books of the County, which shall be kept for that purpose by the bond registrar and paying agent, upon surrender of such Bond together with a written instrument of transfer satisfactory to the bond registrar and paying agent duly executed by the registered owner or his duly authorized attorney.
Upon the exchange or transfer of any Bond, the bond registrar and paying agent on behalf of the County shall cancel the surrendered Bond and shall authenticate and deliver to the transferee a new Bond of the same aggregate principal amount and maturity date and bearing the same rate of interest as the surrendered Bond. If, at the time the bond registrar and paying agent authenticates and delivers a new Bond pursuant to this section, payment of interest on the Bonds is in default, the bond registrar and paying agent shall endorse upon the new Bond the following: “Payment of interest on this Bond is in default. The last date to which interest has been paid is [insert date, if necessary, in the event of transfer].”
The County and the bond registrar and paying agent may deem and treat the person in whose name any Bond shall be registered upon the books of the County as the absolute owner of such bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of the principal of and interest on such Bond and for all other purposes, and all payments made to any such registered owner, or upon such registered owner’s order, in accordance with the provisions of Section 4 of this Resolution shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and neither the County nor the bond registrar and paying agent shall be affected by any notice to the contrary. The County agrees to indemnify and save the bond registrar and paying agent harmless from and against any and all loss, cost, charge, expense, judgment or liability incurred by it, acting in good faith and without negligence hereunder, in so treating such registered owner.
For every exchange or transfer of Bonds, the County or the bond registrar and paying agent may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer, which sum or sums shall be paid by the person requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making such exchange or transfer.
10. FORM OF BONDS. The Bonds shall be in substantially the following form, with such changes thereto as approved by the Chief Financial Officer:
R-__
UNITED STATES OF AMERICA
STATE OF MICHIGAN
COUNTY OF GENESEE
LIMITED TAX GENERAL OBLIGATION BOND, SERIES 2024
|
INTEREST RATE |
MATURITY DATE |
DATE OF ORIGINAL ISSUE |
|
___% |
|
___________, 2024 |
|
|
|
|
Registered Owner:
Principal Amount:
The County of Genesee, State of Michigan (the “County”), acknowledges itself indebted to and for value received hereby promises to pay to the Registered Owner identified above, or registered assigns, the Principal Amount set forth above on the Maturity Date specified above, unless redeemed prior thereto as hereinafter provided, [upon presentation and surrender of this bond at the corporate trust office of _____________________________, ____________, Michigan, the bond registrar and paying agent, or at such successor bond registrar and paying agent as may be designated pursuant to the Resolution (as hereinafter defined),] and to pay to the Registered Owner, as shown on the registration books at the close of business on the 15th day of the calendar month preceding the month in which an interest payment is due, by check or draft drawn upon and mailed by the bond registrar and paying agent by first class mail postage prepaid to the Registered Owner at the registered address, interest on such Principal Amount until the County’s obligation with respect to the payment of such Principal Amount is discharged, at the rate per annum specified above. Interest is payable on the first day of __________ and __________ in each year, commencing on __________ 1, 20__. Principal and interest are payable in lawful money of the United States of America. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
This bond is one of a series of bonds aggregating the principal sum of _____________________ Dollars ($_____________) issued by the County under and pursuant to and in full conformity with the Constitution and Statutes of Michigan (especially Act No. 34, Public Acts of 2001, as amended) and a bond authorizing resolution adopted by the Board of Commissioners of the County (the “Resolution”) for the purpose of defraying all or part of the cost of County capital improvements as part of the County’s 2024-2032 Capital Improvement Plan.
The County has irrevocably pledged its full faith and credit for the prompt payment of the principal of and interest on this bond as the same become due. The principal of and interest on this bond are payable as a first budget obligation of the County from its general funds. The ability of the County to raise such funds is subject to applicable statutory and constitutional limitations on the taxing power of the County. The amount of taxes necessary to pay the principal of and interest on this bond, together with the taxes levied for the same year, shall not exceed the limit authorized by law.
This bond is transferable, as provided in the Resolution, only upon the books of the County kept for that purpose by the bond registrar and paying agent, upon the surrender of this bond together with a written instrument of transfer satisfactory to the bond registrar and paying agent duly executed by the Registered Owner or his attorney duly authorized in writing. Upon the exchange or transfer of this bond a new bond in the same aggregate principal amount and of the same interest rate and maturity, shall be authenticated and delivered to the transferee in exchange therefor as provided in the Resolution, and upon payment of the charges, if any, therein provided.
The bond registrar and paying agent shall not be required to transfer or exchange bonds or portions of bonds which have been selected for redemption.
MANDATORY PRIOR REDEMPTION
Bonds maturing in the year ____ are subject to mandatory prior redemption at par and accrued interest as follows:
|
Redemption Date |
Principal Amount of Bonds to be Redeemed |
|
|
|
Bonds or portions of bonds to be redeemed by mandatory redemption shall be selected by lot.
(REPEAT IF MORE THAN ONE TERM BOND)
OPTIONAL PRIOR REDEMPTION
Bonds maturing prior to __________ 1, 20__, are not subject to redemption prior to maturity. Bonds maturing on and after __________ 1, 20__, are subject to redemption prior to maturity at the option of the County, in such order as shall be determined by the County, on any date on and after __________ 1, 20__. Bonds may be partially redeemed in any amount. If less than all of the bonds maturing in any year are to be redeemed, the bonds or portions of bonds to be redeemed shall be selected by lot. The redemption price shall be the par value of the bond or portion of the bond called to be redeemed plus interest to the date fixed for redemption.
Not less than thirty but not more than sixty days’ notice of redemption shall be given to the Registered Owner of bond called to be redeemed by mail to the Registered Owner at the registered address. Portions of this bond called for redemption shall not bear interest on and after the date fixed for redemption, provided funds are on hand with the bond registrar and paying agent to redeem the same.
It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of this bond, existed, have happened and have been performed in due time, form and manner as required by law, and that the total indebtedness of the County, including this bond, does not exceed any constitutional or statutory limitation.
IN WITNESS WHEREOF, the County of Genesee, Michigan, by its Board of Commissioners, has caused this bond to be executed in its name by manual or facsimile signatures of its Chairperson of the Board of Commissioners and County Clerk and its seal (or a facsimile thereof) to be impressed or imprinted hereon. This bond shall not be valid unless the Certificate of Authentication has been manually executed by the bond registrar and paying agent or an authorized representative of the bond registrar and paying agent.
COUNTY OF GENESEE
By: ____________________________________
Chairperson, Board of Commissioners
And: ____________________________________
County Clerk
[Insert standard form of authentication certificate, if required]
ASSIGNMENT
[Insert standard form of assignment, if required]
[END OF BOND FORM]
11. DEBT SERVICE FUND. There is hereby established for the Bonds a debt service fund which shall be kept in a separate bank account. From the proceeds of the sale of the Bonds there shall be set aside in the debt service fund any accrued interest received from the Purchaser at the time of delivery of the Bonds. Funds of the County to be used to pay the principal and interest on the Bonds when due shall be placed in the debt service fund and so long as the principal or interest on the Bonds shall remain unpaid, no moneys shall be withdrawn from such debt service fund except to pay principal and interest on the Bonds.
12. CONSTRUCTION FUND. The remainder of the proceeds of the sale of the Bonds shall be set aside in a construction fund, which is hereby established for the Project, to be used solely to defray the cost of acquiring, constructing and installing the Project, including any legal and other expenses incidental thereto. The Board expects that all proceeds of the sale of the Bonds set aside in the construction fund will be fully expended for such purpose.
13. DEFEASANCE. In the event cash or direct obligations of the United States or obligations the principal of and interest on which are guaranteed by the United States, or a combination thereof, the principal of and interest on which, without reinvestment, come due at times and in amounts sufficient to pay, at maturity or irrevocable call for earlier optional redemption, the principal of and interest on the Bonds, shall have been deposited in trust, this Resolution shall be defeased and the owners of the Bonds shall have no further rights under this Resolution except to receive payment of the principal of and interest on the Bonds from the cash or securities deposited in trust and the interest and gains thereon and to transfer and exchange Bonds as provided herein.
14. PLEDGE OF FULL FAITH AND CREDIT. The full faith and credit of the County are pledged hereby to the payment of the principal and interest on the Bonds authorized by this Resolution. Each year the County shall include in its budget as a first budget obligation an amount sufficient to pay such principal and interest as the same shall become due. The ability of the County to raise such funds is subject to applicable constitutional and statutory limitations on the taxing power of the County. The amount of taxes necessary to pay the principal of and interest on the Bonds, together with the taxes levied for the same year, shall not exceed the limit authorized by law.
15. ESTIMATES OF PERIOD OF USEFULNESS AND COST. The specifications for and estimated cost of the Project in the amount of not less than $21,500,000 are hereby approved and adopted. The estimated period of usefulness of the Project is hereby determined to be twenty (20) years and upwards.
16. TAX COVENANT. The County covenants to comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”) necessary to assure that the interest on the Bonds will be and will remain excludable from gross income for federal income tax purposes. The Bonds are not designated as a “Qualified Tax-Exempt Obligation” as described in Section 265(b)(3)(B) of the Code.
17. REPLACEMENT OF BONDS. Upon receipt by the County Treasurer of proof of ownership of an unmatured Bond, of satisfactory evidence that the Bond has been lost, apparently destroyed or wrongfully taken and of security or indemnity which complies with applicable law and is satisfactory to the County Treasurer, the County Treasurer may authorize the bond registrar and paying agent to deliver a new executed Bond to replace the Bond lost, apparently destroyed or wrongfully taken in compliance with applicable law. In the event an outstanding matured Bond is lost, apparently destroyed or wrongfully taken, the County Treasurer may authorize the bond registrar and paying agent to pay the Bond without presentation upon the receipt of the same documentation required for the delivery of a replacement Bond. The bond registrar and paying agent, for each new Bond delivered or paid without presentation as provided above, shall require the payment of expenses, including counsel fees, which may be incurred by the bond registrar and paying agent and the County in the premises. Any Bond delivered pursuant the provisions of this section in lieu of any Bond lost, apparently destroyed or wrongfully taken shall be of the same form and tenor and be secured in the same manner as the Bond in substitution for which such Bond was delivered.
18. SALE, ISSUANCE, DELIVERY, TRANSFER AND EXCHANGE OF BONDS. The term sheet of the Purchaser dated October 15, 2024, and submitted to the Board is hereby approved and accepted. The Chairperson of the Board, the County Treasurer, the County Clerk, the Chief Financial Officer and all other officials of the County are authorized to do all things necessary to effectuate the sale, issuance, delivery, transfer and exchange of Bonds in accordance with this Resolution, including without limitation signing and delivering such documents as required by the Purchaser to enable the Purchaser to wire transfer the purchase price of the Bonds to the County.
19. REDUCTION OF PRINCIPAL AMOUNT OF BONDS. If the Chief Financial Officer shall determine that it is not necessary to sell the Bonds in the principal amount of $21,500,000, she may by order reduce the principal amount of the Bonds, and principal maturities of the Bonds, to be sold to that amount deemed necessary.
20. APPROVAL OF MICHIGAN DEPARTMENT OF TREASURY. If the issuance and sale of the Bonds shall be subject to permission being granted therefor by the Michigan Department of Treasury pursuant to Act No. 34, Public Acts of 2001, as amended (“Act 34”), the Chief Financial Officer or the Chairperson of the Board is authorized and directed to make application to the Department of Treasury for permission to issue and sell the Bonds as provided by the terms of this Resolution and by Act 34. The Chief Financial Officer or the Chairperson of the Board is authorized to request such waivers of the requirements of the Department of Treasury or Act 34 as the Chief Financial Officer or the Chairperson of the Board shall determine to be necessary or desirable in connection with the sale of the Bonds, including but not limited to a waiver of the credit rating requirement on the Bonds.
21. APPOINTMENTS. Dickinson Wright PLLC is hereby appointed to serve as bond counsel for the Bonds. The County acknowledges that Dickinson Wright PLLC represents the Purchaser in public finance matters other than with respect to the Bonds. The Chief Financial Officer is authorized to sign an engagement letter with respect to bond counsel and any other consultants necessary or advisable in connection with the Bonds.
22. CONFLICTING RESOLUTIONS. All resolutions and parts of resolutions, insofar as they are in conflict herewith, are rescinded.
YEAS:________________________________________________________________
________________________________________________________________
NAYS:
_________________________________________________________________
ABSENT:
__________________________________________________________________
RESOLUTION DECLARED ADOPTED.
STATE OF MICHIGAN )
) ss
COUNTY OF GENESEE )
I, the undersigned, the Clerk of the County of Genesee, Michigan, do hereby certify that the foregoing is a true and correct copy of a resolution adopted at a regular meeting of the Board of Commissioners of said County held on November 20, 2024, the original of which resolution is on file in my office. I further certify that notice of said meeting was given in accordance with the provisions of the Open Meetings Act, MCL 15.261 et. seq., amended from time to time.
IN WITNESS WHEREOF, I have hereunto affixed my official signature this ____ day of November, 2024.
__________________________________________
Clerk, County of Genesee