HomeMy WebLinkAbout2016-11-28-Meeting Minutes Finance Committee Meeting Commission Chamber - 11/28/2016
ATTENDANCE:
Present: Hons. Guilfoyle, Chairman; Sias, Vice Chairman; Frantom and
Hasan, members.
Absent: Hon. Hardie Davis, Jr., Mayor.
FINANCE
1.Motion to approve General Obligation Bonds (SPLOST) Series 2016 bond
resolution and authorize the Mayor and Clerk to sign all necessary documents.
Item
Action:
Approved
Motions
Motion
Type Motion Text Made By Seconded By Motion
Result
Approve
Motion to
approve.
Motion Passes
4-0.
Commisioner Sean
Frantom
Commissioner Ben
Hasan Passes
2. Motion to approve the minutes of the Finance Committee held on November 8,
2016.
Item
Action:
Approved
Motions
Motion
Type Motion Text Made By Seconded By Motion
Result
Approve
Motion to
approve.
Motion Passes
4-0.
Commisioner Sean
Frantom
Commissioner Ben
Hasan Passes
3. Motion to approve transfer of funds to cover Workers’ Compensation expenses
through the end of 2016.
Item
Action:
Approved
www.augustaga.gov
Motions
Motion
Type Motion Text Made By Seconded By Motion
Result
Approve
Motion to
approve.
Motion Passes
4-0.
Commissioner
Sammie Sias
Commissioner Ben
Hasan Passes
Finance Committee Meeting
11/28/2016 1:05 PM
Attendance 11/29/16
Department:
Presenter:
Caption:
Background:
Analysis:
Financial Impact:
Alternatives:
Recommendation:
Funds are Available
in the Following
Accounts:
REVIEWED AND APPROVED BY:
Sale Resolution_20161115.2
A BOND RESOLUTION AUTHORIZING THE ISSUANCE OF
$[____________] IN AGGREGATE PRINCIPAL AMOUNT OF AUGUSTA,
GEORGIA GENERAL OBLIGATION BONDS, SERIES 2016, ADOPTING
A FORM FOR THE BONDS, AUTHORIZING THE EXECUTION OF THE
BONDS, ESTABLISHING THE DATE, DENOMINATIONS, AND RATE
OR RATES OF INTEREST FOR THE BONDS, LEVYING AN ANNUAL
AD VALOREM TAX ON THE TAXABLE PROPERTY WITHIN
AUGUSTA, GEORGIA SUFFICIENT TO PAY THE PRINCIPAL OF AND
INTEREST ON THE BONDS AS THE SAME BECOME DUE,
AUTHORIZING THE SALE OF THE BONDS TO THE SUCCESSFUL
BIDDER, DESIGNATING A PAYING AGENT AND BOND REGISTRAR
FOR THE BONDS, AUTHORIZING THE EXECUTION AND DELIVERY
OF A CONTINUING DISCLOSURE CERTIFICATE, AND FOR OTHER
RELATED PURPOSES.
WHEREAS, the Augusta-Richmond County Commission (the “Commission”) is the
governing authority of Augusta, Georgia (the “Consolidated Government”), a political
subdivision and a consolidated city-county government created and existing under the laws of
the State of Georgia, and is charged with the duties of levying taxes, contracting debts, and
managing the affairs of the Consolidated Government; and
WHEREAS, on September 1, 2015, the Commission adopted, at a meeting duly called
and held, a resolution (the “Referendum Resolution”) entitled:
A REFERENDUM RESOLUTION TO REIMPOSE A
SPECIAL ONE PERCENT SALES AND USE TAX,
SUBJECT TO REFERENDUM APPROVAL; TO
REGULATE AND PROVIDE FOR THE CALLING OF AN
ELECTION AND TO CALL AN ELECTION TO
DETERMINE THE REIMPOSITION OR
NON-REIMPOSITION OF THE SALES AND USE TAX; TO
SPECIFY THE PURPOSES FOR WHICH THE PROCEEDS
OF THE SALES AND USE TAX ARE TO BE USED AND
MAY BE EXPENDED; TO SPECIFY THE ESTIMATED
COST OF THE PROJECTS THAT WILL BE FUNDED
FROM THE PROCEEDS OF THE SALES AND USE TAX;
TO SPECIFY THE MAXIMUM AMOUNT OF REVENUE
TO BE RAISED BY THE SALES AND USE TAX; TO
AUTHORIZE THE ISSUANCE OF $30,000,000 IN
AGGREGATE PRINCIPAL AMOUNT OF GENERAL
OBLIGATION DEBT OF AUGUSTA, GEORGIA IN
CONJUNCTION WITH THE REIMPOSITION OF THE
SALES AND USE TAX; TO SPECIFY THE PURPOSE FOR
WHICH THE DEBT IS TO BE ISSUED, THE MAXIMUM
INTEREST RATE OR RATES THAT SUCH DEBT IS TO
BEAR, AND THE AMOUNT OF PRINCIPAL TO BE PAID
IN EACH YEAR DURING THE LIFE OF SUCH DEBT; TO
-2-
Sale Resolution_20161115.final
PROVIDE FOR THE LEVY AND COLLECTION OF AD
VALOREM TAXES TO SERVICE SUCH DEBT, TO THE
EXTENT THE PROCEEDS OF THE SALES AND USE TAX
ARE NOT SUFFICIENT FOR SUCH PURPOSE; AND FOR
OTHER PURPOSES; and
WHEREAS, the Referendum Resolution called an election to be held in all the precincts
in Richmond County for the purpose of submitting to the qualified voters of Richmond County
the question of whether or not a special one percent sales and use tax should be reimposed within
the special district of Richmond County (which includes the geographic areas within the
Consolidated Government and the City of Blythe, Georgia (“Blythe”) and the City of Hephzibah
(“Hephzibah”) (each a “City” and collectively the “Cities”)) created by Section 48-8-110.1(a) of
the Official Code of Georgia Annotated, upon the termination of the special one percent sales
and use tax then in effect, for the raising of not more than $215,550,000 for the following
purposes pursuant to an Intergovernmental Sales Tax Agreement, dated as of September 1, 2011,
among the Consolidated Government, Blythe, and Hephzibah: (1)(a) capital outlay projects,
which are estimated to cost $207,150,000, to be owned or operated or both by Augusta or by one
or more local authorities within such special district pursuant to intergovernmental contracts with
the Consolidated Government (the “Consolidated Government Projects”): (i) Road, Street,
Bridge, and Drainage Improvements, (ii) Acquisition, Improvement, and Renovation of
Administrative Facilities, (iii) Library and Museum Improvements and Renovations, (iv)
Acquisition of Renovated Municipal Building pursuant to an Intergovernmental Agreement with
the Urban Redevelopment Agency of Augusta, (v) Public Safety Facilities, Equipment, and
Vehicles, (vi) Information Technology, and (vii) Parks, Recreation, and Cultural Facilities; and
additional estimated costs allocable to all such projects specified in subparagraphs (i) through
(vii) above, as follows: (A) Sales Tax Program and Project Administration, and (B) Interest
Expense on Obligations Issued to Finance Projects; (b) capital outlay projects, which are
estimated to cost $1,300,000, to be owned or operated or both by Blythe: (i) Water System
Improvements, (ii) Drainage, Storm Water, and Bike Path Improvements, (iii) Public Safety
Equipment, (iv) Community Building, Library, and Park Facilities, (v) Information Technology,
(vi) Renovations to City Hall and Administrative Facility, (vii) Road Improvements, and (viii)
Vehicles and Related Equipment; and (c) capital outlay projects, which are estimated to cost
$6,500,000, to be owned or operated or both by Hephzibah: (i) Parks, Recreational, and Cultural
Facilities, (ii) Hephzibah Agricultural Center, (iii) Water System Upgrades, Equipment, and
Vehicles, (iv) Public Safety Equipment and Vehicles, (v) Fire Department Facilities, Vehicles
and Equipment, (vi) Road Improvement Projects, (vii) Alternative Energy Facilities, and (viii)
City Hall Expansion; and
WHEREAS, the ballots used in the election provided that if the reimposition of the sales
and use tax is approved by the voters in the referendum described above, such vote shall also
constitute approval of the issuance of general obligation debt (in the form of general obligation
bonds, promissory notes, or other instruments, as the Commission may approve) of the
Consolidated Government in the aggregate principal amount of $30,000,000 in conjunction with
the reimposition of the sales and use tax, to be payable first from the separate account in which
are placed the proceeds received by the Consolidated Government from the sales and use tax and
then from the general funds of the Consolidated Government, for the purpose of providing funds
to pay the costs of any one or more of the Consolidated Government Projects; and
-3-
Sale Resolution_20161115.final
WHEREAS, the Referendum Resolution called the election for November 3, 2015, and
authorized and directed publication of notice of the election (in the form specified in the
Referendum Resolution) in the newspaper in which sheriff’s advertisements for Richmond
County are published for a period of not less than thirty (30) days preceding the date of the
election; and
WHEREAS, notice of the election was duly published in The Augusta Chronicle, which
is the newspaper in which sheriff’s advertisements for Richmond County are published, as
required by law; and
WHEREAS, at the election duly called and held on November 3, 2015, a majority of the
qualified voters of Richmond County, voting in the election, voted in favor of the reimposition of
the sales and use tax, which vote also constituted approval of the issuance of general obligation
debt (in the form of general obligation bonds, promissory notes, or other instruments, as the
Commission may approve) of the Consolidated Government in the aggregate principal amount of
$30,000,000, such general obligation debt to be dated as of the date of delivery or such other
date(s) as the Commission may approve, to be in such denomination or denominations as the
Commission may approve, and to bear interest from date at such rate or rates as the Commission
may approve but not exceeding five percent (5.00%) per annum in any year, all interest to be
payable semiannually on April 1 and October 1 in each year, beginning April 1, 2016, and the
principal to mature (by scheduled maturity or by mandatory redemption, as the Commission may
approve) on the dates and in the amounts as follows:
October 1 of the Year Amount
2019 $15,000,000 2020 15,000,000
WHEREAS, on March 1, 2016, the Commission adopted, at a meeting duly called and
held, a resolution entitled:
A RESOLUTION OF THE AUGUSTA-RICHMOND
COUNTY COMMISSION DECLARING THE RESULTS OF
AN ELECTION HELD ON NOVEMBER 3, 2015 TO
DETERMINE THE REIMPOSITION OR NON-
REIMPOSITION OF A SPECIAL ONE PERCENT SALES
AND USE TAX; AND FOR OTHER RELATED PURPOSES
declaring the results of the election to be in favor of the reimposition of the sales and use tax; and
WHEREAS, because the Consolidated Government may wish to issue all of such
general obligation debt so authorized in the aggregate principal amount of $30,000,000, in the
form of general obligation bonds of the Consolidated Government, on March 1, 2016, the
Commission adopted, at a meeting duly called and held, a resolution entitled:
-4-
Sale Resolution_20161115.final
A RESOLUTION OF THE AUGUSTA-RICHMOND
COUNTY COMMISSION AUTHORIZING THE
COMMENCEMENT OF VALIDATION PROCEEDINGS
FOR ITS GENERAL OBLIGATION BONDS; AND FOR
OTHER RELATED PURPOSES; and
WHEREAS, on July 11, 2016, the Superior Court of Richmond County entered a
judgment validating such bonds in the case of STATE OF GEORGIA vs. AUGUSTA,
GEORGIA, Civil Action File No. 2016-RCCV-00277; and
WHEREAS, the Referendum Resolution provides that the bonds so authorized may be
issued in one or more series and on one or more dates of issuance as the Commission may
approve; and
WHEREAS, the Consolidated Government now wishes to issue [a portion of] such
bonds so authorized and validated in the aggregate principal amount of $[______________]; and
WHEREAS, pursuant to an Official Notice of Sale with respect to such bonds circulated
by the Consolidated Government (the “Notice of Sale”), providing for the receipt by the
Consolidated Government of sealed bids for the purchase of such bonds on December 6, 2016,
the Consolidated Government has received sealed bids for the purchase of such bonds; and
WHEREAS, representatives of the Consolidated Government opened the bids, submitted
via the Parity electronic bidding system, at the Consolidated Government’s offices at 535 Telfair
Street, Suite 800, Augusta, Georgia, at 11:00 a.m., on December 6, 2016, in the presence of
various officials of the Consolidated Government; and
WHEREAS, the Notice of Sale provided that such bonds would be sold to the
responsible bidder specifying interest rates and prices that would result in the lowest true interest
cost to the Consolidated Government for such bonds, and the bids were as follows:
Bidder True Interest Cost Bid
[____________________________] [_________]%
[____________________________] [_________]
[____________________________] [_________]
[____________________________] [_________]
[____________________________] [_________]
[____________________________] [_________]
-5-
Sale Resolution_20161115.final
WHEREAS, the bid of a responsible bidder resulting in the lowest true interest cost to
the Consolidated Government was submitted by [______________________________] (the
“Purchaser”), and a copy of such bid is attached to this Resolution as Exhibit B and incorporated
herein by reference; and
WHEREAS, after due consideration it is deemed advisable and in the best interest of the
Consolidated Government that such bonds be sold to the Purchaser, the Purchaser having in all
respects complied with the terms of the Notice of Sale; and
WHEREAS, in order to issue and deliver such bonds, it is necessary to adopt a form for
such bonds, to authorize the execution of such bonds, to establish the date, denominations, and
rate or rates of interest for such bonds, to levy an annual ad valorem tax on the taxable property
within the Consolidated Government sufficient to pay the principal of and interest on such bonds
as the same become due, to authorize the acceptance of an offer to purchase such bonds from,
and the sale of such bonds to, the Purchaser, to designate a paying agent and bond registrar for
such bonds, and to authorize the execution and delivery of a Continuing Disclosure Certificate;
NOW, THEREFORE, BE IT RESOLVED by the Augusta-Richmond County
Commission, and it is hereby resolved by authority of the same, as follows:
Section 1. There is hereby authorized to be issued, executed, and delivered
[$_______________] in original aggregate principal amount of bonds designated “Augusta,
Georgia General Obligation Bonds, Series 2016” (the “Bonds”). The Bonds shall be dated as of
the date of their issuance and delivery, shall be issued only as fully registered bonds without
coupons in denominations of $5,000 or any integral multiple thereof, and shall bear interest from
date at the rates per annum specified below (computed on the basis of a 360-day year consisting
of twelve 30-day months). Interest shall be payable semiannually on April 1 and October 1 in
each year, beginning April 1, 2017, and the principal shall mature on October 1 in the years and
amounts as follows:
Year Amount Interest Rate
2019 $[_____________] ______% 2020 [_____________] ____
Section 2. Interest on the Bonds shall be payable by the Paying Agent (designated
below) by check or draft mailed to the registered owner of record as of the March 15 or
September 15 immediately preceding the applicable interest payment date, at such owner’s
address as it appears on the registration books of the Consolidated Government, maintained by
the Bond Registrar (designated below), or at such other address as is furnished in writing by such
registered owner to the Bond Registrar. The principal of and redemption premium, if any, on the
Bonds shall be payable upon the presentation and surrender of the Bonds at the principal
corporate trust office of the Paying Agent. Both the principal of and interest on the Bonds shall
be payable in lawful money of the United States of America. U.S. Bank National Association,
Atlanta, Georgia, is hereby designated as Paying Agent and Bond Registrar (the “Paying Agent”
or the “Bond Registrar”) for the Bonds. The Mayor of the Consolidated Government and the
Clerk of Commission of the Consolidated Government are hereby authorized to execute and
-6-
Sale Resolution_20161115.final
deliver, for and on behalf of the Consolidated Government, a paying agency and registrar
agreement between the Consolidated Government and U.S. Bank National Association. The
execution and delivery of a paying agency and registrar agreement by the Mayor and the Clerk of
Commission shall constitute conclusive evidence of the ratification, confirmation, and approval
by the Consolidated Government of the terms and conditions of the paying agency and registrar
agreement.
Section 3. The Bonds are transferable only on the books and records maintained by the
Bond Registrar for that purpose. The Consolidated Government, the Paying Agent, and the
Bond Registrar may deem and treat the registered owner of any Bond as the absolute owner of
such Bond for the purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Bond, and for all other purposes whatsoever, and neither the
Consolidated Government, the Paying Agent, nor the Bond Registrar shall be affected by any
notice to the contrary. The Bonds may be transferred upon surrender thereof to the Bond
Registrar, at the principal corporate trust office of the Bond Registrar, together with an
assignment duly executed by the registered owner or such registered owner’s attorney duly
authorized in writing, in the form imprinted on the Bonds or in any other form satisfactory to the
Bond Registrar. Upon any such transfer of ownership, the Bond Registrar shall cause to be
executed and delivered a new Bond or Bonds registered in the name of the transferee in the same
aggregate principal amount, maturity, and interest rate as the Bond or Bonds surrendered for
transfer and in any authorized denomination. Bonds may be exchanged for a like aggregate
principal amount of Bonds of the same maturity and interest rate and of authorized
denominations. The Bond Registrar shall not be required to transfer or exchange any Bond after
notice of redemption of such Bond has been given.
Upon surrender for transfer of any Bond at the principal corporate trust office of the
Bond Registrar, the Bond Registrar shall authenticate and register a new fully registered Bond or
Bonds for the same aggregate principal amount, maturity, and interest rate, shall execute the
Certificate of Authentication and Registration on each such Bond, and shall deliver such Bond or
Bonds to the transferee or transferees.
For every exchange or registration of transfer of Bonds, the Bond Registrar may make a
charge sufficient to reimburse it for any tax or other governmental charge required to be paid
with respect to such exchange or registration of transfer, but no other charge may be made to the
owner for any exchange or registration of transfer of Bonds.
In case any Bond shall become mutilated or be destroyed or lost, the Consolidated
Government may cause to be executed and delivered a new Bond of like type, date, number, and
tenor in exchange and substitution for and upon cancellation of such mutilated Bond, or in lieu of
and in substitution for such Bond destroyed or lost, upon the registered owner of such Bond
paying the reasonable expenses and charges of the Consolidated Government in connection
therewith and, in case of a Bond destroyed or lost, the registered owner’s filing with the
Consolidated Government evidence satisfactory to it that such Bond was destroyed or lost, and
of the registered owner’s ownership thereof, and furnishing the Consolidated Government, the
Paying Agent, and the Bond Registrar with indemnity satisfactory to them. If any such Bond
shall have matured, instead of issuing a new Bond, the Consolidated Government may pay the
same.
-7-
Sale Resolution_20161115.final
Section 4. The Bonds shall be initially issued in the name of Cede & Co., as nominee
for The Depository Trust Company, New York, New York, or its nominee, or its successors and
assigns, or any other depository performing similar functions under this Resolution (“DTC”), as
registered owner of the Bonds, and held in the custody of DTC. A single certificate will be
issued and delivered to DTC for each maturity of the Bonds. The actual purchasers of the Bonds
(the “Beneficial Owners”) will not receive physical delivery of Bond certificates except as
provided herein. Beneficial Owners are expected to receive a written confirmation of their
purchase providing details of each Bond acquired. For so long as DTC shall continue to serve as
securities depository for the Bonds as provided herein, all transfers of beneficial ownership
interests will be made by book-entry only, and no investor or other party purchasing, selling, or
otherwise transferring beneficial ownership of Bonds is to receive, hold, or deliver any Bond
certificate.
For every transfer and exchange of the Bonds, the Beneficial Owner may be charged a
sum sufficient to cover such Beneficial Owner’s allocable share of any tax, fee, or other
governmental charge that may be imposed in relation thereto.
Bond certificates are required to be delivered to and registered in the name of the
Beneficial Owner, under the following circumstances:
(a) DTC determines to discontinue providing its service with respect to the Bonds (such
a determination may be made at any time by giving 30 days’ notice to the Consolidated
Government and the Bond Registrar and discharging its responsibilities with respect thereto
under applicable law), or
(b) the Consolidated Government determines that continuation of the system of book-
entry transfers through DTC (or a successor securities depository) is not in the best interests of
the Beneficial Owners.
The Consolidated Government and the Bond Registrar will recognize DTC or its nominee
as the registered owner of the Bonds for all purposes, including notices and voting.
The Consolidated Government and the Bond Registrar covenant and agree, so long as
DTC shall continue to serve as securities depository for the Bonds, to meet the requirements of
DTC with respect to required notices and other provisions of the Blanket Issuer Letter of
Representations between the Consolidated Government and DTC.
The Bond Registrar is authorized to rely conclusively upon a certificate furnished by
DTC as to the identity of, and the respective principal amount of Bonds beneficially owned by,
the Beneficial Owner or Beneficial Owners.
Whenever, during the term of the Bonds, the beneficial ownership thereof is determined
by a book entry at DTC, the requirements in this Resolution of holding, delivering, or
transferring Bonds shall be deemed modified to require the appropriate person to meet the
requirements of DTC as to registering or transferring the book entry to produce the same effect.
-8-
Sale Resolution_20161115.final
If at any time, DTC ceases to hold the Bonds, a supplemental resolution amending the
provisions of this Resolution shall be adopted and thereafter all references in this Resolution to
DTC in connection with the Bonds shall be of no further force or effect.
Section 5. The Bonds shall be payable first from the separate account in which are
placed the proceeds received by the Consolidated Government from the sales and use tax and
then from the general funds of the Consolidated Government. No part of the net proceeds from
the sales and use tax received in any year shall be used for any purposes other than to pay debt
service on the Bonds until all debt service requirements on the Bonds for that year have first
been satisfied from the account in which the proceeds of the sales and use tax are placed. An
amount of net proceeds of the sales and use tax received in each year sufficient to satisfy all debt
service requirements on the Bonds for that year are hereby irrevocably pledged and appropriated
to the payment of the principal of and interest on the Bonds as the same become due and
payable.
Section 6. There shall be and is hereby levied a continuing direct annual ad valorem tax
for the years 2016 through 2019, without limitation as to rate or amount, upon all property
subject to taxation for general obligation bond purposes within the territorial limits of the
Consolidated Government, sufficient to provide moneys required to pay the principal (including
principal payable upon mandatory redemption, if any, of the Bonds) of and interest on the Bonds,
as more fully set forth in Exhibit A attached hereto and incorporated herein by this reference, to
the extent such principal and interest is not satisfied from the proceeds of the sales and use tax.
The sums hereby levied are hereby irrevocably pledged and appropriated to the payment of the
principal (including principal payable upon mandatory redemption, if any, of the Bonds) of and
interest on the Bonds as the same become due and payable. The amount to be levied for each
year is the amount specified to pay principal, if any, and interest coming due in the following
year, to the extent such principal and interest is not satisfied from the proceeds of the sales and
use tax. These sums shall be collected by the tax collector of the Consolidated Government, in
each of the years levied, and shall be paid into a sinking fund to be maintained for, and shall be
applied to, the payment of the principal of and interest on the Bonds as the same become due and
payable, and provisions to meet the requirements of this Section 6 shall be made annually
hereafter.
Section 7. The Bonds, the Certificate of Authentication and Registration, the Validation
Certificate, and the Assignment and Transfer shall be substantially in the following forms,
provided that some of the text of each such Bond may appear on the reverse side of the Bond,
with such variations, omissions, substitutions, and insertions as may be required or permitted by
this Resolution:
-9-
Sale Resolution_20161115.final
[FORM OF BOND]
Unless this Bond is presented by an authorized representative of The Depository Trust
Company (“DTC”), a New York corporation, to the Consolidated Government or its
agent for registration of transfer, exchange, or payment, and any Bond issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.
UNITED STATES OF AMERICA
STATE OF GEORGIA
AUGUSTA, GEORGIA
GENERAL OBLIGATION BOND, SERIES 2016
Number R- $
Maturity
Date
Interest
Rate Dated CUSIP
October 1, ____ ________, 2016
Registered Owner: CEDE & CO.
Principal Amount:
AUGUSTA, GEORGIA (the “Consolidated Government”), for value received, hereby
promises to pay to the registered owner identified above, or registered assigns, on the Maturity
Date stated above, without option of prior redemption, the principal amount identified above and
to pay interest from the date of this Bond, or from the most recent interest payment date to which
interest has been paid, on the balance of such principal sum from time to time remaining unpaid
at the interest rate per annum shown above (computed on the basis of a 360-day year consisting
of twelve 30-day months) on April 1 and October 1 in each year, commencing April 1, 2017,
until the payment of the principal amount of this Bond in full.
The interest on this Bond shall be payable by check or draft mailed to the registered
owner of this Bond of record as of the March 15 or September 15 immediately preceding the
applicable interest payment date, at such owner’s address as it appears on the registration books
of the Consolidated Government (the “Bond Register”) maintained by The Bank of New York
-10-
Sale Resolution_20161115.final
Mellon Trust Company, N.A., Atlanta, Georgia, as Bond Registrar (the “Bond Registrar”), or at
such other address as is furnished in writing by the registered owner to the Bond Registrar. The
principal of and redemption premium, if any, on this Bond shall be payable upon the presentation
and surrender of this Bond at the principal corporate trust office of U.S. Bank National
Association, Atlanta, Georgia, as Paying Agent (the “Paying Agent”). Both the principal of and
interest on this Bond shall be payable in lawful money of the United States of America.
This Bond is one of a duly authorized issue of like tenor (the “Bonds”), except as to
numbers, interest rates, dates of maturity, and denominations, in the original aggregate principal
amount of $30,000,000, issued by the Consolidated Government for the purpose of providing
funds to pay the cost of any one or more of the following capital outlay projects to be owned or
operated or both by the Consolidated Government or by one or more local authorities pursuant to
intergovernmental contracts with the Consolidated Government: road, street, bridge, and
drainage improvements; acquisition, improvement, and renovation of administrative facilities;
library and museum improvements and renovations; acquisition of renovated municipal building
pursuant to an intergovernmental agreement with the Urban Redevelopment Agency of Augusta;
public safety facilities, equipment, and vehicles, information technology; and parks, recreational,
and cultural facilities. The Bonds are authorized by the Constitution and statutes of the State of
Georgia and are being issued pursuant to a resolution (the “Bond Resolution”) duly adopted by
the Augusta-Richmond County Commission on December 6, 2016.
The Bonds are issuable only as fully registered bonds without coupons in denominations
of $5,000 or any integral multiple thereof. The Bonds may be exchanged for a like aggregate
principal amount of Bonds of the same maturity and interest rate and of authorized
denominations, all in accordance with the provisions of the Bond Resolution.
The Consolidated Government has established a book-entry system of registration for the
Bonds. Except as specifically provided otherwise in the Bond Resolution, an agent will hold this
Bond on behalf of the beneficial owner hereof. By acceptance of a confirmation of purchase,
delivery, or transfer, the beneficial owner of this Bond shall be deemed to have agreed to such
arrangement. While the Bonds are in the book-entry system of registration, the Bond Resolution
provides special provisions relating to the Bonds that override certain other provisions of the
Bond Resolution. This Bond is transferable by the registered owner hereof in person or by such
registered owner’s attorney duly authorized in writing at the principal corporate trust office of
the Bond Registrar in the manner provided in the Bond Resolution and upon surrender of this
Bond. Upon such transfer a new registered Bond or Bonds in the same aggregate principal
amount, maturity, and interest rate as the Bond surrendered for transfer, and in any authorized
denomination, shall be issued to the transferee in exchange therefor.
The Consolidated Government, the Paying Agent, and the Bond Registrar may deem and
treat the registered owner of this Bond as the absolute owner hereof for the purpose of receiving
payment of or on account of the principal of, premium, if any, and interest hereon, and for all
other purposes whatsoever, and neither the Consolidated Government, the Paying Agent, nor the
Bond Registrar shall be affected by any notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, AND DECLARED that all acts, conditions,
and things required by the Constitution and statutes of the State of Georgia to exist, happen, and
-11-
Sale Resolution_20161115.final
be performed precedent to and in the issuance of this Bond do exist, have happened, and have
been performed in due time, form, and manner as required by law, that provision has been made
for the collection of a sales and use tax and a direct annual ad valorem tax, without limitation as
to rate or amount, sufficient to pay the principal of and interest on this Bond in accordance with
its terms, and that the total indebtedness of the Consolidated Government, including the Bonds,
does not exceed any limitation prescribed by the Constitution and statutes of the State of
Georgia.
This Bond shall not be valid or become obligatory for any purpose or be entitled to any
benefit until this Bond shall have been authenticated and registered upon the Bond Register.
Such authentication and registration shall be evidenced by the execution by the manual signature
of a duly authorized signatory of the Bond Registrar of the Certificate of Authentication and
Registration on this Bond.
IN WITNESS WHEREOF, Augusta, Georgia has caused this Bond to be executed by
the Mayor of the Consolidated Government and has caused the official seal of the Consolidated
Government to be impressed hereon and attested by the Clerk of Commission of the
Consolidated Government.
AUGUSTA, GEORGIA
(SEAL) By: Mayor
Attest:
Clerk of Commission
-12-
Sale Resolution_20161115.final
CERTIFICATE OF AUTHENTICATION
AND REGISTRATION
This Bond is one of the above-described Augusta, Georgia General Obligation Bonds,
Series 2016.
U.S. BANK NATIONAL ASSOCIATION,
Date of Authentication
and Registration:
as Bond Registrar
__________, ____ By:
Authorized Signatory
VALIDATION CERTIFICATE
STATE OF GEORGIA
COUNTY OF RICHMOND
The undersigned Clerk of the Superior Court of Richmond County, Georgia does hereby
certify that this Bond was validated and confirmed by judgment of the Superior Court of
Richmond County, Georgia on the 11th day of July 2016, in Civil Action File No. 2016-RCCV-
00277 that no intervention or objection was filed opposing the validation of this Bond, and that
no appeal of such judgment of validation has been taken.
IN WITNESS WHEREOF, I have hereunto set my hand and have impressed hereon the
official seal of the Superior Court of Richmond County, Georgia.
(SEAL)
Clerk, Superior Court of
Richmond County, Georgia
-13-
Sale Resolution_20161115.final
The following abbreviations, when used in the inscription on this Bond or in the
assignment below, shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common and not as community property
UNIF TRANS
MIN ACT - _____________________ Custodian _______________________
(Custodian) (Minor)
under Uniform Transfers to Minors Act _____________________
(State)
Additional abbreviations may be used although not in the above list.
ASSIGNMENT AND TRANSFER
FOR VALUE RECEIVED, the undersigned sells, assigns, and transfers unto
(Name and Address of Assignee)
(Insert Social Security or Taxpayer
Identification Number of Assignee)
the within Bond of Augusta, Georgia and does hereby irrevocably constitute and appoint
_____________________ attorney to transfer the Bond on the books kept for registration thereof
with full power of substitution in the premises.
Dated:
__________________________________
(Signature Guaranteed) Registered Owner
Notice: Signature(s) must be guaranteed
by an eligible guarantor institution (such
as banks, stockbrokers, savings and loan
associations, and credit unions) with
membership in an approved Signature
Guarantee Medallion Program pursuant to
S.E.C. Rule 17Ad-15.
Notice: The signature(s) on this assignment
must correspond with the name as it appears
on the face of the within Bond in every
particular without alteration or enlargement
or any change whatsoever.
-14-
Sale Resolution_20161115.final
[END OF FORM OF BOND]
-15-
Sale Resolution_20161115.final
Section 8. The Bonds shall be executed for and on behalf of the Consolidated
Government by the manual signature of the Mayor of the Consolidated Government, and the
Consolidated Government’s seal shall be impressed thereon and attested by the manual signature
of the Clerk of Commission of the Consolidated Government. In case any officer whose
signature shall appear on any Bond shall cease to be such officer before delivery of any Bonds,
such signature shall nevertheless be valid and sufficient for all purposes the same as if such
officer remained in office until such delivery.
No Bond shall be valid or become obligatory for any purpose or be entitled to any benefit
until such Bond shall have been authenticated and registered upon the bond registration books of
the Consolidated Government maintained for that purpose. Such authentication and registration
shall be evidenced by the execution by the manual signature of a duly authorized signatory of the
Bond Registrar of the Certificate of Authentication and Registration contained on the Bond.
Section 9. The bid submitted by the Purchaser to purchase the Bonds, attached hereto as
Exhibit B, is hereby accepted, and all other bids so received are hereby rejected, and the actions
of the Administrator of the Consolidated Government, for and on behalf of the Consolidated
Government, are hereby ratified and approved relating to her earlier notification to all bidders of
the acceptance and rejection of such bids by the Consolidated Government and the return to the
unsuccessful bidders of their good faith checks, if any. The Bonds shall, in due course, be
delivered to the Purchaser against payment for the Bonds in accordance with the Notice of Sale
and the Purchaser’s bid accepted by the Consolidated Government.
Section 10. The use and distribution of the Notice of Sale, the Preliminary Official
Statement, and the Official Statement with respect to the Bonds shall be and is hereby
authorized, ratified, confirmed, and approved, and execution and delivery of the Official
Statement in final form shall be and is hereby authorized, ratified, confirmed, and approved. The
Mayor of the Consolidated Government is hereby authorized and directed to ratify, confirm,
approve, execute, and deliver the Official Statement on behalf of the Consolidated Government,
and the execution of an Official Statement by the Mayor shall constitute conclusive evidence of
the Mayor’s ratification, confirmation, approval, and delivery thereof on behalf of the
Consolidated Government.
Section 11. All actions taken or to be taken by the Mayor of the Consolidated
Government, the Clerk of Commission of the Consolidated Government, and the Administrator
of the Consolidated Government relating to the authorization, issuance, and sale of the Bonds,
shall be, and the same are hereby, ratified, confirmed, and approved.
Section 12. The Consolidated Government recognizes that the purchasers and owners of
Bonds will have accepted the Bonds on, and paid for the Bonds a price that reflects, the
understanding that interest on such Bonds is not included in the gross income of the owners for
federal income tax purposes under laws in force at the time the Bonds shall have been delivered.
The Consolidated Government shall take any and all action that may be required from
time to time in order to assure that interest on the Bonds shall remain excludable from the gross
income of the owners of the Bonds for federal income tax purposes and shall refrain from taking
any action that would adversely affect such status.
-16-
Sale Resolution_20161115.final
Prior to or contemporaneously with delivery of the Bonds, the Mayor of the Consolidated
Government and the Clerk of Commission of the Consolidated Government shall execute a
Certificate as to Arbitrage Matters on behalf of the Consolidated Government respecting the
investment of the proceeds of the Bonds. Such certificate shall be a representation and
certification of the Consolidated Government, and an executed copy thereof shall be delivered to
the Bond Registrar. The Consolidated Government shall not knowingly invest or participate in
the investment of any proceeds of the Bonds if such investment would cause interest on any
Bonds to become included in gross income for federal income tax purposes.
The Mayor or the Clerk of Commission may also execute and deliver, on behalf of the
Consolidated Government: (i) such agreements, filings, and other writings as may be necessary
or desirable to cause or bind the Consolidated Government to comply with any requirements for
rebate under Section 148(f) of the Internal Revenue Code of 1986, as amended (the “Code”), or
(ii) such certificate or other writing as may be necessary or desirable to qualify for exemption
from such rebate requirements.
The Consolidated Government shall calculate, from time to time, as required in order to
comply with the provisions of Section 148(f) of the Code, the amounts required to be rebated
(including penalties) to the United States and shall pay or cause to be paid to the United States
any and all of such amounts on or before the due date.
The Consolidated Government hereby covenants and agrees that it will not use or permit
any use of the proceeds of the sale of any Bonds, or use or permit the use of any of the facilities
being financed thereby, which would cause any Bonds or any portion thereof to be “private
activity bonds” within the meaning of Section 141 of the Code.
The covenants, certifications, representations, and warranties contained in this Section 12
shall survive payment in full or provision for payment in full of the Bonds.
Section 13. The issuance of the Bonds shall not exceed any debt limitation prescribed by
the Constitution of the State of Georgia.
Section 14. The Consolidated Government hereby covenants and agrees that it shall, to
the extent allowed by applicable law, comply with and carry out all of the provisions of the
Continuing Disclosure Certificate to be executed by the Consolidated Government and to be
dated as of the date of the issuance and delivery of the Bonds, as originally executed and as it
may be amended from time to time in accordance with its terms (the “Disclosure Certificate”).
Notwithstanding any other provision of this Resolution, failure of the Consolidated Government
to comply with the Disclosure Certificate shall not be considered a default hereunder. It is
expressly provided, however, that any beneficial owner of the Bonds may take such action, to the
extent and in such manner as may be allowed by applicable law, as may be necessary and
appropriate, including seeking mandamus or specific performance by court order, to cause the
Consolidated Government to comply with its obligations under this Section 14. The cost to the
Consolidated Government of performing its obligations set forth in this Section 14 shall be paid
solely from funds lawfully available for such purpose.
-17-
Sale Resolution_20161115.final
Section 15. All resolutions and parts of resolutions in conflict with this Resolution, if
any, shall be and the same are hereby repealed.
Section 16. The Mayor of the Consolidated Government and the Clerk of Commission
of the Consolidated Government are hereby authorized and directed to execute, for and on behalf
of the Consolidated Government, such other agreements, certificates (including, without
limitation, the Disclosure Certificate), or documents as may be necessary or desirable in
connection with the issuance, sale, and delivery of the Bonds or the investment of the proceeds
of the Bonds.
Section 17. Notwithstanding anything herein to the contrary, any action that the Mayor
of the Consolidated Government is required, permitted, or otherwise authorized to take in
connection with the Bonds may be taken by the Mayor Pro Tempore of the Consolidated
Government, in the absence at the time or in the event of the vacancy in the office of the Mayor
or the incapacity at the time of the Mayor. These actions shall include execution, delivery, or
performance of any certificate, agreement, contract, instrument, document, or other writing
relating to the Bonds, including the execution of the Bonds. To this end, this Resolution shall be
construed so that all references to the Mayor may also be considered to be references to the
Mayor Pro Tempore. The Clerk of Commission of the Consolidated Government shall
determine whether the Mayor is absent or incapacitated or whether there is a vacancy in the
office of Mayor so that the Mayor Pro Tempore may act under this Section 17, and the
determination of the Clerk of Commission shall be binding and conclusive upon the
Consolidated Government.
PASSED, ADOPTED, SIGNED, APPROVED, AND EFFECTIVE this 6th day of
December 2016.
AUGUSTA, GEORGIA
(SEAL) By: Mayor
Attest:
Clerk of Commission
Sale Resolution_20161115.final
EXHIBIT A
DEBT SERVICE SCHEDULE
Payment
Date
Principal Interest Total Debt Service
04/01/17 $_______________ $_______________ $_______________
10/01/17 _______________ _______________ _______________
04/01/18 _______________ _______________ _______________
10/01/18 _______________ _______________ _______________
04/01/19 _______________ _______________ _______________
10/01/19 _______________ _______________ _______________
04/01/20 _______________ _______________ _______________
10/01/20 _______________ _______________ _______________
$ ______________ $ ______________ $ ______________
Sale Resolution_20161115.final
EXHIBIT B
PURCHASER’S BID
[Attached]
Sale Resolution_20161115.final
STATE OF GEORGIA
RICHMOND COUNTY
CLERK’S CERTIFICATE
I, LENA J. BONNER, Clerk of Commission of Augusta, Georgia, DO HEREBY
CERTIFY that the foregoing pages constitute a true and correct copy of a resolution adopted by
the Augusta-Richmond County Commission (the “Commission”) at an open public meeting duly
called and lawfully assembled at 2:00 p.m., on the 6th day of December 2016, in connection with
the issuance and sale of $[____________] in aggregate principal amount of Augusta, Georgia
General Obligation Bonds, Series 2016, the original of such resolution being duly recorded in the
Minute Book of the Commission, which Minute Book is in my custody and control.
I do hereby further certify that the following members of the Commission were present at
such meeting:
Mayor Hardie Davis, Jr.
William Fennoy
Dennis Williams
Mary Davis
Sammie Sias
Bill Lockett
Ben Hasan
Sean Frantom
Wayne Guilfoyle
Marion Williams
Grady Smith
and that the following members were absent:
and that such resolution was duly adopted by a vote of:
Aye ___ Nay ___
WITNESS my hand and the official seal of Augusta, Georgia, this the 6th day of
December 2016.
(SEAL) Clerk of Commission
99268384\V-5
DRAFT 11/15/16
PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER __, 2016
NEW ISSUE RATING
(Book-Entry Only) Moody’s: Aa2 See “MISCELLANEOUS - Rating” herein.
In the opinion of Co-Bond Counsel, under existing law, (a) interest on the Bonds is excluded from gross income for federal income tax purposes, (b) interest on the Bonds is not an enumerated “item of tax preference” for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (c) interest on the
Bonds is exempt from State of Georgia income taxation, subject to the conditions and limitations described herein. The opinion contains greater detail, and is subject to exceptions, as noted in “LEGAL MATTERS - Opinion of Co-Bond Counsel” herein.
30,000,000*
AUGUSTA, GEORGIA General Obligation Bonds, Series 2016
Dated: Date of Issuance Due: October 1, as shown below
The General Obligation Bonds, Series 2016 (the “Bonds”) are being issued by Augusta, Georgia (the
“Consolidated Government”), for the purpose of financing a portion of the costs of acquiring, constructing, and equipping various public facilities and renovating, expanding, and equipping various existing public facilities. See
“PLAN OF FINANCING” herein.
Interest on the Bonds is payable semiannually on April 1 and October 1 of each year, commencing on April 1,
2017. All Bonds bear interest from their date of issuance. See “INTRODUCTION - Description of the Bonds” herein.
The Bonds will be issued as fully registered bonds, registered in the name of Cede & Co., as nominee of The
Depository Trust Company, New York, New York (“DTC”), to which payments of principal, premium, if any, and
interest will be made. Purchasers will acquire beneficial interests in the Bonds in book-entry form only. DTC will remit such payments to its participants who will be responsible for remittance to beneficial owners. See
“INTRODUCTION - Description of the Bonds” herein.
The Bonds are not subject to redemption prior to maturity.
MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES, PRICES OR YIELDS, AND CUSIPS
Maturity
Principal
Amount*
Interest
Rate
Price
or Yield CUSIP†
2019 $15,000,000 2020 15,000,000
This cover page contains certain information for quick reference only. It is not a summary of this Official
Statement. Investors must read the entire Official Statement to obtain information essential to making an
informed investment decision.
The Bonds are offered when, as, and if issued by the Consolidated Government, subject to prior sale and to withdrawal or modification of the offer without notice, and are subject to the approving opinions of Dentons US
LLP and Nowell Sparks, LLC, both of Atlanta, Georgia, Co-Bond Counsel. Certain legal matters will be passed on
for the Consolidated Government by its special counsel, Shepard, Plunkett & Hamilton, LLP, Augusta, Georgia, and for the Consolidated Government by its disclosure counsel, Dentons US LLP, Atlanta, Georgia. Davenport &
Company LLC, Atlanta, Georgia, has been employed as Financial Advisor to the Consolidated Government in
connection with the issuance of the Bonds. The Bonds are expected to be available for delivery in book-entry form
only through the facilities of DTC in New York, New York on or about ___________, 2016.
The Consolidated Government will receive sealed bids on Tuesday, December 6, 2016, at 11:00 A.M., Eastern
Standard Time, as set forth in the Official Notice of Sale.
Dated: ___________, 2016
________________________
* Preliminary; subject to change.
† CUSIP data herein is provided by Standard & Poor’s, CUSIP Services Bureau, a division of the McGraw-Hill Companies, Inc. The Consolidated Government is not responsible for the selection of CUSIP numbers, nor is any representation made as to their correctness on the Bonds or as indicated above.
Th
i
s
P
r
e
l
i
m
i
n
a
r
y
O
f
f
i
c
i
a
l
S
t
a
t
e
m
e
n
t
a
n
d
t
h
e
i
n
f
o
r
m
a
t
i
o
n
c
o
n
t
a
i
n
e
d
h
e
r
e
i
n
a
r
e
s
u
b
j
e
c
t
t
o
c
o
m
p
l
e
t
i
o
n
o
r
a
m
e
n
d
m
e
n
t
w
i
t
h
o
u
t
n
o
t
i
c
e.
T
h
e
s
e
s
e
c
u
r
i
t
i
e
s
m
a
y
n
o
t
b
e
s
o
l
d
n
o
r
ma
y
o
f
f
e
r
s
t
o
b
u
y
b
e
a
c
c
e
p
t
e
d
p
r
i
o
r
t
o
t
h
e
t
i
m
e
th
e
O
f
f
i
c
i
a
l
S
t
a
t
e
m
e
n
t
i
s
d
e
l
i
v
e
r
e
d
i
n
f
i
n
a
l
f
o
r
m
.
U
n
d
e
r
n
o
c
i
r
c
u
m
s
t
a
n
c
e
s
s
h
a
l
l
t
h
i
s
P
r
e
l
i
m
i
n
a
r
y
O
f
f
i
c
i
a
l
S
t
a
t
e
m
e
n
t
c
o
n
s
t
i
t
u
te
a
n
o
f
f
e
r
t
o
s
e
l
l
o
r
t
h
e
s
o
l
i
c
i
t
a
t
i
o
n
o
f
a
n
o
f
f
e
r
t
o
b
u
y
n
o
r
s
h
a
l
l
t
h
e
r
e
b
e
a
n
y
s
al
e
o
f
t
h
e
s
e
se
c
u
r
i
t
i
e
s
i
n
a
n
y
j
u
r
i
s
d
i
c
t
i
o
n
i
n
w
h
i
c
h
s
u
c
h
o
f
f
e
r
,
s
o
l
i
c
i
t
a
t
i
o
n
,
o
r
s
a
l
e
w
o
u
l
d
b
e
u
n
l
a
w
f
u
l
p
r
i
o
r
t
o
r
e
g
i
s
t
r
a
t
i
o
n
o
r
q
u
a
l
i
f
i
c
at
i
o
n
u
n
d
e
r
t
h
e
s
e
c
u
r
i
t
i
e
s
l
a
w
s
o
f
a
n
y
s
u
c
h
j
u
r
i
s
d
i
c
t
i
o
n
.
Th
i
s
P
r
e
l
i
m
i
n
a
r
y
O
f
f
i
c
i
a
l
S
t
a
t
e
m
e
n
t
a
n
d
t
h
e
i
n
f
o
r
m
a
t
i
o
n
c
o
n
ta
i
n
e
d
h
e
r
e
i
n
a
r
e
s
u
b
j
e
c
t
t
o
c
o
m
p
l
e
t
i
o
n
o
r
a
m
e
n
d
m
e
n
t
w
i
t
h
o
u
t
n
o
t
i
c
e
.
T
h
e
s
e
s
e
c
u
r
i
t
i
e
s
m
a
y
n
o
t
b
e
s
o
l
d
n
o
r
m
a
y
o
f
f
e
r
s
t
o
b
u
y
be
a
c
c
e
p
t
e
d
p
r
i
o
r
t
o
t
h
e
t
i
m
e
th
e
O
f
f
i
c
i
a
l
S
t
a
t
e
m
e
n
t
i
s
d
e
l
i
v
e
r
e
d
i
n
f
i
n
a
l
f
o
r
m
.
U
n
d
e
r
n
o
c
i
r
c
u
m
s
t
a
n
c
e
s
s
h
a
l
l
t
h
i
s
P
r
e
l
i
m
i
n
a
r
y
O
f
f
ic
i
a
l
S
t
a
t
e
m
e
n
t
c
o
n
s
t
i
t
u
t
e
a
n
o
f
f
e
r
t
o
s
e
l
l
o
r
t
h
e
s
o
l
i
c
i
t
a
t
i
o
n
o
f
a
n
o
f
f
e
r
t
o
b
u
y
n
o
r
s
h
a
l
l
t
h
e
r
e
b
e
a
n
y
s
a
l
e
o
f
t
h
e
s
e
se
c
u
r
i
t
i
e
s
i
n
a
n
y
j
u
r
i
s
d
i
c
t
i
o
n
i
n
w
h
i
c
h
s
u
c
h
o
f
f
e
r
,
s
o
l
i
c
i
t
a
t
i
o
n
,
o
r
s
a
l
e
w
o
u
l
d
b
e
u
n
l
a
w
f
u
l
p
r
i
o
r
t
o
r
e
g
i
s
t
r
a
t
i
o
n
o
r
q
u
a
l
i
f
i
c
at
i
o
n
u
n
d
e
r
th
e
s
e
c
u
r
i
t
i
e
s
l
a
w
s
o
f
a
n
y
s
u
c
h
j
u
r
i
s
d
i
c
t
i
o
n
.
99268384\V-5
AUGUSTA, GEORGIA
ELECTED OFFICIALS
Augusta-Richmond County Commission
Hardie Davis, Jr., Mayor Grady Smith, Mayor Pro Tempore Mary Davis William Fennoy Sean Frantom Wayne Guilfoyle Ben Hasan Bill Lockett Samie Sias Dennis Williams Marion Williams
__________________________
APPOINTED OFFICIALS
Janice Allen Jackson, Administrator Donna B. Williams, Finance Director Lena J. Bonner, Clerk of Commission Andrew G. Mackenzie, General Counsel
__________________________
SPECIAL SERVICES
Auditors
Mauldin & Jenkins, LLC Macon, Georgia
Special Counsel
Shepard, Plunkett & Hamilton, LLP Augusta, Georgia
Co-Bond Counsel
Dentons US LLP Atlanta, Georgia
Nowell Sparks, LLC Atlanta, Georgia
Disclosure Counsel
Dentons US LLP Atlanta, Georgia
Financial Advisor
Davenport & Company LLC Atlanta, Georgia
99268384\V-5
(i)
TABLE OF CONTENTS
Page
INTRODUCTION ......................................................................................................................................................... 1
The Consolidated Government ............................................................................................................................... 1 Security and Sources of Payment for the Bonds..................................................................................................... 1 Purpose of the Bonds .............................................................................................................................................. 1 Description of the Bonds ........................................................................................................................................ 2 Tax Exemption ....................................................................................................................................................... 2 Bond Registrar and Paying Agent .......................................................................................................................... 2 Professionals Involved in the Offering ................................................................................................................... 2 Authority for Issuance ............................................................................................................................................ 2 Offering and Delivery of the Bonds ....................................................................................................................... 3 Continuing Disclosure ............................................................................................................................................ 3 Other Information ................................................................................................................................................... 3
PLAN OF FINANCING ................................................................................................................................................ 5
Estimated Sources and Applications of Funds ....................................................................................................... 5 Capital Projects ....................................................................................................................................................... 5 Change of Use of Bond Proceeds ........................................................................................................................... 6
THE BONDS ................................................................................................................................................................. 6
Description ............................................................................................................................................................. 6 Non-Callable .......................................................................................................................................................... 6 Security and Sources of Payment for the Bonds..................................................................................................... 6 Book-Entry Only System ....................................................................................................................................... 7 Authority for Issuance ............................................................................................................................................ 9 Disbursement and Investment of Bond Proceeds and Other Moneys ..................................................................... 9 Principal and Interest Requirements ..................................................................................................................... 12
THE CONSOLIDATED GOVERNMENT ................................................................................................................. 12
Introduction .......................................................................................................................................................... 12 Consolidated Government Administration and Officials ..................................................................................... 12 Consolidated Government Services ...................................................................................................................... 14 Consolidated Government Facilities..................................................................................................................... 14 Demographic Information .................................................................................................................................... 15 Economic Information .......................................................................................................................................... 15 Employees, Employee Relations, and Labor Organizations ................................................................................. 18
CONSOLIDATED GOVERNMENT DEBT STRUCTURE ...................................................................................... 18
Summary of Consolidated Government Debt By Category ................................................................................. 18 Proposed Debt ...................................................................................................................................................... 20 Debt Service Requirements .................................................................................................................................. 21 Overlapping Debt ................................................................................................................................................. 22 Debt Ratios ........................................................................................................................................................... 22 Debt History ......................................................................................................................................................... 23 Limitations on Consolidated Government Debt ................................................................................................... 23
THE SALES TAX ....................................................................................................................................................... 24
Description ........................................................................................................................................................... 24 Sales Subject to Taxation ..................................................................................................................................... 25 Sales Tax Collections ........................................................................................................................................... 25 Permitted Uses ...................................................................................................................................................... 25 Historical Sales Tax Data ..................................................................................................................................... 26
CONSOLIDATED GOVERNMENT AD VALOREM TAXATION ......................................................................... 27
99268384\V-5
(ii)
Introduction .......................................................................................................................................................... 27 Property Subject to Taxation ................................................................................................................................ 27 Assessed Value ..................................................................................................................................................... 27 Annual Tax Levy and Limitation on Annual Tax Levy ...................................................................................... 28 Property Tax Collections ...................................................................................................................................... 29 Historical Property Tax Data ................................................................................................................................ 30 Ten Largest Taxpayers ......................................................................................................................................... 32
CONSOLIDATED GOVERNMENT FINANCIAL INFORMATION ...................................................................... 33
Accounting System and Policies .......................................................................................................................... 33 Five Year General Fund History .......................................................................................................................... 34 Management Comments Concerning Material Trends in Revenues and Expenditures ........................................ 35 Budgetary Process ................................................................................................................................................ 35 General Fund Budgets .......................................................................................................................................... 36 Capital Improvements .......................................................................................................................................... 39 Sources of Tax Revenues ..................................................................................................................................... 39 Employee Benefits................................................................................................................................................ 40 Insurance Coverage and Governmental Immunity ............................................................................................... 43
LEGAL MATTERS .................................................................................................................................................... 44
Pending Litigation ................................................................................................................................................ 44 Opinion of Co-Bond Counsel ............................................................................................................................... 45 Validation Proceedings ......................................................................................................................................... 48 Closing Certificates .............................................................................................................................................. 48
MISCELLANEOUS .................................................................................................................................................... 48
Rating ................................................................................................................................................................... 48 Sale at Competitive Bidding ................................................................................................................................. 48 Financial Advisor ................................................................................................................................................. 48 Independent Auditors ........................................................................................................................................... 48 Summary of Continuing Disclosure Certificate.................................................................................................... 49 Additional Information ......................................................................................................................................... 52
CERTIFICATION ....................................................................................................................................................... 53
APPENDIX A: FINANCIAL STATEMENTS OF THE CONSOLIDATED GOVERNMENT ............................. A-1
APPENDIX B: FORM OF LEGAL OPINION ........................................................................................................ B-1
99268384\V-5
_____________________
* Throughout this Preliminary Official Statement, the asterisk indicates information that is preliminary and subject to change.
OFFICIAL STATEMENT
of
AUGUSTA, GEORGIA
relating to its
$30,000,000*
GENERAL OBLIGATION BONDS,
SERIES 2016
________________________________
INTRODUCTION
The purpose of this Official Statement, which includes the cover page and the Appendices hereto, is to furnish
certain information in connection with the sale by Augusta, Georgia of $30,000,000* in aggregate principal amount of its General Obligation Bonds, Series 2016 (the “Bonds”).
This Introduction is not a summary of this Official Statement and is intended only for quick reference. It is only a brief description of and guide to, and is qualified in its entirety by reference to, more complete and detailed
information contained in the entire Official Statement, including the cover page and the Appendices, and the
documents summarized or described herein. Potential investors should fully review the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement, including the
Appendices hereto. No person is authorized to detach this Introduction from the Official Statement or to otherwise
use it without the entire Official Statement, including the Appendices hereto.
The Consolidated Government
Augusta, Georgia (the “Consolidated Government”), the issuer of the Bonds, is a political subdivision of the
State of Georgia, created on January 1, 1996 pursuant to Acts of the General Assembly of the State of Georgia that
authorized the consolidation of the municipal corporation known as “The City Council of Augusta” (the “City”) and the political subdivision known as “Richmond County, Georgia” (the “County”). The Consolidated Government is
located in the central eastern portion of the State of Georgia bordering the South Carolina state line, approximately
155 miles east of Atlanta, Georgia and 75 miles southwest of Columbia, South Carolina. For more complete information, see “THE CONSOLIDATED GOVERNMENT” herein.
Security and Sources of Payment for the Bonds
The Bonds are general obligations of the Consolidated Government and are payable, as to both principal and
interest, (1) first from the separate account in which are placed the proceeds received by the Consolidated Government from a special one percent sales and use tax (the “Sales Tax”), and (2) second from the general funds of
the Consolidated Government, including ad valorem taxes that may be levied, without limitation as to rate or
amount, upon all taxable property located within the territorial limits of the Consolidated Government. For more complete and detailed information, see “THE BONDS - Security and Sources of Payment for the Bonds,” “THE
SALES TAX,” and “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION” herein.
Purpose of the Bonds
The proceeds of the Bonds, net of underwriter’s discount and other issuance costs, will be used to pay a portion
of the costs of acquiring, constructing, and equipping various public facilities and renovating, expanding, and
equipping various existing public facilities. For more complete information, see “PLAN OF FINANCING” herein.
99268384\V-5
-2-
Description of the Bonds
Non-Callable. The Bonds are not subject to redemption prior to maturity.
Denominations. The Bonds are issuable in denominations of $5,000 or any integral multiple thereof.
Book-Entry Bonds. Each of the Bonds will be issued as fully registered bonds in the denomination of one bond per aggregate principal amount of the stated maturity thereof, and, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York, an automated depository for securities and clearing house for securities transactions, which will act as securities depository for the Bonds. Purchasers will not receive certificates representing their ownership interest in the Bonds purchased. Purchases of beneficial interests in the Bonds will be made in book-entry only form (without certificates), in authorized denominations, and, under certain circumstances as more fully described in this Official Statement, such beneficial interests are exchangeable for one or more fully registered bonds of like principal amount and maturity in authorized denominations. For more complete information, see “THE BONDS - Book-Entry Only System” herein.
Payments. So long as DTC or its nominee, Cede & Co., is the registered owner of the Bonds, payments of the principal of, premium, if any, and interest on the Bonds will be made directly to Cede & Co., which will remit such payments to the DTC participants, which will in turn remit such payments to the beneficial owners of the Bonds.
For a more complete description of the Bonds, see “THE BONDS” herein.
Tax Exemption
In the opinion of Co-Bond Counsel, under existing law, (a) interest on the Bonds is excluded from gross income for federal income tax purposes, (b) interest on the Bonds is not an enumerated “item of tax preference” for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (c) interest on the Bonds is exempt from State of Georgia income taxation, subject to the conditions and limitations described herein. See Appendix B hereto for the form of the opinion Co-Bond Counsel proposes to deliver in connection with the issuance of the Bonds. For a more complete discussion of such opinion and certain other tax consequences of owning the Bonds, including certain exceptions to the exclusion of the interest on the Bonds from gross income, see “LEGAL MATTERS - Opinion of Co-Bond Counsel and - Collateral Federal Tax Consequences” herein.
Bond Registrar and Paying Agent
U.S. Bank National Association, Atlanta, Georgia, will act as Bond Registrar and as Paying Agent for the Bonds.
Professionals Involved in the Offering
Certain legal matters pertaining to the Consolidated Government and its authorization and issuance of the Bonds are subject to the approving opinion of Dentons US LLP and Nowell Sparks, LLC, both of Atlanta, Georgia, Co-Bond Counsel. Copies of such opinion will be available at the time of delivery of the Bonds, and a copy of the proposed form of such opinion is attached hereto as Appendix B. Certain legal matters will be passed on for the Consolidated Government by its special counsel, Shepard, Plunkett & Hamilton, LLP, Augusta, Georgia, and for the Consolidated Government by its disclosure counsel, Dentons US LLP, Atlanta, Georgia. Davenport & Company LLC, Atlanta, Georgia, has been employed as Financial Advisor to the Consolidated Government in connection with the issuance of the Bonds. The basic financial statements of the Consolidated Government as of December 31, 2015 and for the year then ended, attached hereto as Appendix A, have been audited by Mauldin & Jenkins, LLC, Macon, Georgia, independent certified public accountants, to the extent and for the period indicated in its report thereon which appears in Appendix A hereto. See “MISCELLANEOUS - Financial Advisor and - Independent Auditors” herein.
Authority for Issuance
The Bonds are being issued in accordance with the Constitution of the State of Georgia and pursuant to the authority granted by the laws of the State of Georgia and a resolution of the Augusta-Richmond County Commission authorizing the issuance of the Bonds adopted on __________, 2016 (the “Bond Resolution”). The issuance of the Bonds was approved by a majority vote of voters in Richmond County voting in an election held on November 3, 2015. For more complete information, see “THE BONDS - Authority for Issuance” herein.
99268384\V-5
-3-
Offering and Delivery of the Bonds
The Bonds are offered when, as, and if issued by the Consolidated Government, subject to prior sale and to withdrawal or modification of the offer without notice. The Bonds are expected to be available for delivery in book-entry form only through the facilities of DTC in New York, New York on or about __________, 2016.
Continuing Disclosure
The Consolidated Government has covenanted in the Bond Resolution and a Continuing Disclosure Certificate (the “Disclosure Certificate”) for the benefit of the beneficial owners of the Bonds to provide certain financial information and operating data relating to the Consolidated Government (the “Annual Report”) by not later than the last day of the seventh month after the end of each fiscal year (currently July 31), commencing with fiscal year 2016, and to provide notices of the occurrence of certain enumerated events (“Event Notices”). The Annual Report will be filed by the Consolidated Government with the Municipal Securities Rulemaking Board (the “MSRB”) in an electronic format as prescribed by the MSRB (which, as of the date hereof, is the Electronic Municipal Market Access (“EMMA”) system of the MSRB). The notices of certain events will be filed by the Consolidated Government with the MSRB in an electronic format as prescribed by the MSRB (which, as of the date hereof, is EMMA). The specific nature of the information to be contained in the Annual Report or the notices of certain events is summarized herein under the caption “MISCELLANEOUS - Summary of Continuing Disclosure Certificate.” These covenants have been made in order to assist the underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).
The Consolidated Government has previously entered into undertakings similar to the Disclosure Certificate in connection with the issuance of other obligations of the Consolidated Government (the “Prior Consolidated Government Undertakings”). The Prior Consolidated Government Undertakings required that the Consolidated Government file (a) its audited financial statements and certain operating and financial data on EMMA and (b) Event Notices on EMMA. There have been instances in the previous five fiscal years in which the Consolidated Government has failed to make filings in accordance with the Prior Consolidated Government Undertakings, as described in more detail below.
With respect to the Consolidated Government’s General Obligation Bonds, Series 2010, the annual report for fiscal year 2011 was filed 16 days late. With respect to the Urban Redevelopment Agency of Augusta Taxable Revenue Bonds (Laney-Walker and Bethlehem Project), Series 2010, the annual report for fiscal year 2013 was filed one day late and the annual report for fiscal year 2014 was filed three days late. The Consolidated Government failed to timely file Event Notices that were required to be filed with respect to changes in credit ratings of the Consolidated Government and with respect to changes in credit ratings of Financial Security Assurance Inc. and Assured Guaranty Municipal Corp., which insure certain of the Consolidated Government’s bonds. These rating changes were posted to EMMA on July 29, 2014 and September 12, 2014.
The Consolidated Government has retained Digital Assurance Certification, L.L.C. to assist with continuing disclosure compliance matters, and the Consolidated Government plans in the future to comply in all material respects with its continuing disclosure undertakings.
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to change without notice.
This Official Statement contains forecasts, projections, and estimates that are based on current expectations but are not intended as representations of fact or guarantees of results. If and when included in this Official Statement, the words “expects,” “forecasts,” “projects,” “intends,” “anticipates,” “estimates,” and analogous expressions are intended to identify forward-looking statements as defined in the Securities Act of 1933, as amended, and any such statements inherently are subject to a variety of risks and uncertainties, which could cause actual results to differ materially from those contemplated in such forward-looking statements. These forward-looking statements speak only as of the date of this Official Statement. The Consolidated Government disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in the Consolidated Government’s expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based.
This Official Statement and the Appendices hereto contain brief descriptions of, among other matters, the Consolidated Government, the Bonds, and the security and sources of payment for the Bonds. Such descriptions and information do not purport to be comprehensive or definitive. The summaries of various constitutional provisions, statutes, the Bond Resolution, the Disclosure Certificate, and other documents are intended as summaries only and are qualified in their entirety by reference to such documents and laws, and references herein to the Bonds
99268384\V-5
-4-
are qualified in their entirety to the form thereof included in the Bond Resolution. Copies of the Bond Resolution, the Disclosure Certificate, and other documents and information are available, upon request and upon payment to the Consolidated Government of a charge for copying, mailing, and handling, from Donna B. Williams, Finance Director, Augusta, Georgia, 535 Telfair Street, Suite 800, Augusta, Georgia 30901, telephone (706) 821-2429. During the period of the offering of the Bonds copies of such documents are available, upon request and upon payment to the Financial Advisor of a charge for copying, mailing, and handling, from Davenport & Company LLC, 901 East Cary Street, 11th Floor, Richmond, Virginia 23219, telephone (804) 697-2900.
The Bonds have not been registered under the Securities Act of 1933, and the Bond Resolution has not been qualified under the Trust Indenture Act of 1939, in reliance on exemptions contained in such Acts.
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale.
No dealer, broker, salesman, or other person has been authorized by the Consolidated Government to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations should not be relied upon as having been authorized by the Consolidated Government. Except where otherwise indicated, all information contained in this Official Statement has been provided by the Consolidated Government. The information set forth herein has been obtained by the Consolidated Government from sources that are believed to be reliable but is not guaranteed as to accuracy or completeness by the Consolidated Government. The information contained herein is subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the affairs of the Consolidated Government or the other matters described herein since the date hereof or the earlier dates set forth herein as of which certain information contained herein is given.
Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Bonds or reviewed or passed upon the adequacy or accuracy of this Official Statement. Any representation to the contrary may be a criminal offense.
The order and placement of information in this Official Statement, including the appendices, are not an indication of relevance, materiality, or relative importance, and this Official Statement, including the appendices, must be read in its entirety. The captions and headings in this Official Statement are for convenience only and in no way define, limit, or describe the scope or intent, or affect the meaning or construction, of any provision or section in this Official Statement.
THIS OFFICIAL STATEMENT IS BEING PROVIDED TO PROSPECTIVE PURCHASERS EITHER IN BOUND PRINTED FORM (“ORIGINAL BOUND FORMAT”) OR IN ELECTRONIC FORMAT ON THE FOLLOWING WEBSITE: _____________. THIS OFFICIAL STATEMENT MAY BE RELIED UPON ONLY IF IT IS IN ITS ORIGINAL BOUND FORMAT OR IS PRINTED IN ITS ENTIRETY DIRECTLY FROM SUCH WEBSITE.
99268384\V-5
-5-
PLAN OF FINANCING
Estimated Sources and Applications of Funds
The sources and applications of funds in connection with the issuance of the Bonds are estimated below.
Estimated Sources of Funds*: Proceeds of Bonds1 Estimated Interest Earnings During Construction2 Sales Tax Collections for Capital Projects3
Total Sources of Funds
Estimated Applications of Funds*: Capital Projects3 Costs of Issuance4 Underwriting Discount5
Total Applications of Funds
________________________
1 After adding premium of $_________.
2 Based on estimated earnings on the unexpended construction funds at an investment rate of ____% over a period of __ months.
3 See “PLAN OF FINANCING - Capital Projects” herein.
4 Includes legal and accounting fees, initial Bond Registrar’s and Paying Agent’s fees, Financial Advisor’s fees, printing costs, validation court costs, and other costs of issuance.
5 _______% of the principal amount of the Bonds. See “MISCELLANEOUS - Sale at Competitive Bidding” herein.
Capital Projects
The Consolidated Government plans to acquire, construct, and equip various public facilities and renovate, expand, and equip various existing public facilities (collectively the “Capital Projects”), as follows:
(1) Approximately $15.0 million of the money to be spent on the Capital Projects will be used acquire construct and install a new P25 radio system [INSERT BRIEF DESCRIPTION]
(2) Approximately $5.0 million of the money to be spent on the Capital Projects will be used acquire, construct, and install two new fire stations. [INSERT BRIEF DESCRIPTION]
(3) The Consolidated Government plans to use approximately $3.5 million of the money to be spent on the Capital Projects to implement a recreation master plan. [INSERT BRIEF DESCRIPTION]
(4) Approximately $5.0 million of the money to be spent on the Capital Projects will be used acquire, construct, and install new offices for the Augusta Judicial Circuit Office of the Public Defender. [INSERT BRIEF DESCRIPTION]
The Consolidated Government has developed a plan to finance the Capital Projects which relies on a combination of proceeds of the Bonds, investment earnings, and Sales Tax collections. The Consolidated Government expects that these sources of funds will be sufficient to provide funding for the Capital Projects. The expected categories of sources and expenditures of funds related to the Capital Projects are set forth below:
Uses of Funds*:
P25 Radio System $15,000,000 2 New Fire Stations 5,000,000 Recreation Master Plan 3,500,000 Public Defender Offices 5,000,000
Total $28,500,000
99268384\V-5
-6-
The Consolidated Government anticipates that it will solicit bids from design consultants, engineers, and architects for the various components of the Capital Projects and from contractors for construction of the various components of the Capital Projects as the different phases of construction progress. The Consolidated Government expects to complete the new public defender offices by December 31, 2017 and to complete the installation of the new P25 radio system, the new fire stations, and the recreation master plan by December 31, 2019.
Change of Use of Bond Proceeds
The notice of the election regarding the issuance of the Bonds stated that the purpose for which the Bonds are being issued is to provide funds to pay or be applied toward the cost of (1) the following capital outlay projects: (1) road, street, bridge, and drainage improvements, (2) acquisition, improvement, and renovation of administrative facilities, (3) library and museum improvements and renovations, (4) acquisition of renovated municipal building pursuant to an intergovernmental agreement with the Urban Redevelopment Agency of Augusta, (5) public safety facilities, equipment, and vehicles, (6) information technology, and (7) parks, recreational, and cultural facilities.
Section 36-82-4.2 of the Official Code of Georgia Annotated allows the Augusta-Richmond County Commission, subsequent to the issuance of the Bonds, to adopt a resolution by a two-thirds’ majority vote of the Augusta-Richmond County Commission declaring that (1) a portion of the proceeds of the Bonds remain after the purpose stated in the election notice has been accomplished, (2) the purpose stated in the election notice is no longer necessary, or (3) circumstances have changed such that expenditure of all or part of the proceeds of the Bonds is no longer practicable or feasible. Such resolution must (a) set forth the reason the proceeds of the Bonds were not expended for the purpose stated in the election notice and (b) state the purpose for which the proceeds of the Bonds will be expended. Upon the adoption of such a resolution, the Augusta-Richmond County Commission will be authorized to expend such proceeds of the Bonds, including interest earnings thereon, for purposes of a nature substantially similar to the purpose stated in the election notice or to reduce the bonded indebtedness of the Consolidated Government; provided the Consolidated Government, not earlier than ten days prior to expending such Bond proceeds, publishes the resolution described above once in the official organ of the Consolidated Government. In addition, the Consolidated Government must send a copy of the resolution described above by registered or certified mail or statutory overnight delivery to the Paying Agent for the Bonds.
THE BONDS
Description
The Bonds, as initially issued, will be dated as of their date of issuance and delivery and will bear interest at the rates specified on the cover page of this Official Statement, computed on the basis of a 360-day year of twelve 30-day months, payable semiannually on each April 1 and October 1, commencing April 1, 2017. Interest on the Bonds is payable by check or draft mailed to the registered owner of record as of the March 15 or September 15 immediately preceding the applicable interest payment date, at such owner’s address as it appears on the registration books of the Consolidated Government maintained by the Bond Registrar, or at such other address as is furnished in writing by such registered owner to the Bond Registrar. The Bonds will mature on the dates and in the amounts set forth on the cover page of this Official Statement. The principal of the Bonds will be payable upon the presentation and surrender of the Bonds at the principal corporate trust office of U.S. Bank National Association, Atlanta, Georgia, as Paying Agent.
The Bonds are issuable only as fully registered bonds, without coupons, in the denomination of $5,000 or any integral multiple thereof. Purchases of beneficial ownership interests in the Bonds will be made in book-entry form, and purchasers will not receive certificates representing interests in the Bonds so purchased. If the book-entry system is discontinued, Bonds will be delivered as described in the Bond Resolution, and beneficial owners will become the registered owners of the Bonds. See “THE BONDS - Book-Entry Only System” herein.
Non-Callable
The Bonds are not subject to redemption prior to maturity.
Security and Sources of Payment for the Bonds
The Bonds will constitute valid and legally binding general obligations of the Consolidated Government, and the principal of and interest on the Bonds will be payable (1) first from the separate account in which are placed the proceeds received by the Consolidated Government from the Sales Tax, and (2) second from the general funds of the Consolidated Government, including ad valorem taxes levied, without limitation as to rate or amount, upon all
99268384\V-5
-7-
taxable property within the Consolidated Government, including real and personal property, privately owned utilities, motor vehicles, and mobile homes.
Prior to the issuance of the Bonds, the Augusta-Richmond County Commission, as required by law, will levy an ad valorem tax on all taxable property within the Consolidated Government in an amount sufficient to pay the principal of and interest on the Bonds as the same become due and payable.
See “CONSOLIDATED GOVERNMENT DEBT STRUCTURE” herein for a discussion of the Consolidated Government’s outstanding debt and legal ability to incur future indebtedness. See “THE SALES TAX” and “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION” herein for a discussion of the Sales Tax and Consolidated Government ad valorem taxation.
The realization of value from the pledge of the taxing power of the Consolidated Government to the payment of the Bonds upon any default will depend upon the exercise of various remedies specified by Georgia law. These remedies may require judicial actions, which are often subject to discretion and delay and which may be difficult to pursue. The enforceability of rights or remedies with respect to the Bonds may be limited by state and federal laws, rulings, and decisions affecting remedies and by bankruptcy, insolvency, or other laws affecting creditors’ rights or remedies heretofore or hereafter enacted.
Section 36-80-5 of the Official Code of Georgia Annotated provides that no political subdivision created under the Constitution or laws of the State of Georgia shall be authorized to file a petition for relief from payment of its debts as they mature or a petition for composition of its debts under any federal statute providing for such relief or composition or otherwise to take advantage of any federal statute providing for the adjustment of debts of political subdivisions and public agencies and instrumentalities. Section 36-80-5 of the Official Code of Georgia Annotated also provides that no chief executive, mayor, board of commissioners, or other governmental officer, governing body, or organization shall be empowered to cause or authorize the filing by or on behalf of any political subdivision created under the Constitution or laws of the State of Georgia of any petition for relief from payment of its debts as they mature or a petition for composition of its debts under any federal statute providing for such relief or composition or otherwise to take advantage of any federal statute providing for the adjustment of debts of political subdivisions and public agencies and instrumentalities. Section 36-80-5 of the Official Code of Georgia Annotated does not constitute a statutory covenant with the owners of any Bonds and may be amended or repealed at any time without the consent of any owners of the Bonds.
Book-Entry Only System
The Depository Trust Company (“DTC”), New York, New York, or its successor, will act as securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond will be issued for each maturity, in the aggregate principal amount of such maturity, and will be deposited with DTC.
So long as DTC or its nominee is the registered owner of the Bonds, payments of the principal and redemption premium of and interest due on the Bonds will be payable directly to DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
99268384\V-5
-8-
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (a “Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co., or such other DTC nominee, do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Paying Agent as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, premium, and interest payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Consolidated Government or the Paying Agent, on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Consolidated Government, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Consolidated Government or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Consolidated Government or the Paying Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered.
The Consolidated Government may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered.
The information concerning DTC and DTC’s book-entry system set forth above has been obtained from sources that the Consolidated Government believes to be reliable, but the Consolidated Government takes no responsibility for the accuracy thereof.
SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE SOLE BONDHOLDER, THE CONSOLIDATED GOVERNMENT SHALL TREAT CEDE & CO. AS THE ONLY BONDHOLDER FOR ALL PURPOSES, INCLUDING RECEIPT OF ALL PRINCIPAL AND PREMIUM OF AND INTEREST ON THE BONDS, RECEIPT OF NOTICES, VOTING, AND REQUESTING OR DIRECTING THE CONSOLIDATED GOVERNMENT AND THE PAYING AGENT TO TAKE OR NOT TO TAKE, OR CONSENTING TO, CERTAIN ACTIONS. THE CONSOLIDATED GOVERNMENT HAS NO RESPONSIBILITY OR OBLIGATION TO THE DIRECT OR INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH
99268384\V-5
-9-
RESPECT TO (A) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT OR INDIRECT PARTICIPANT; (B) THE PAYMENT BY ANY DIRECT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AND PREMIUM OF AND INTEREST ON THE BONDS; (C) THE DELIVERY OR TIMELINESS OF DELIVERY BY ANY DIRECT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE BOND ORDINANCE TO BE GIVEN TO BONDHOLDERS; OR (D) OTHER ACTION TAKEN BY DTC OR CEDE & CO. AS BONDHOLDER.
Beneficial Owners of the Bonds may experience some delay in their receipt of distributions of principal and interest on the Bonds since such distributions will be forwarded by the Paying Agent to DTC and DTC will credit such distributions to the accounts of Direct Participants which will thereafter credit them to the accounts of Beneficial Owners either directly or indirectly through Indirect Participants.
Issuance of the Bonds in book-entry form may reduce the liquidity of the Bonds in the secondary trading market since investors may be unwilling to purchase Bonds for which they cannot obtain physical certificates. In addition, since transactions in the Bonds can be effected only through DTC, Direct Participants, Indirect Participants, and certain banks, the ability of a Beneficial Owner to pledge Bonds to persons or entities that do not participate in the DTC system, or otherwise to take action in respect of such Bonds, may be limited due to lack of a physical certificate. Beneficial Owners will not be recognized by the Paying Agent as registered owners for purposes of the Bond Ordinance, and Beneficial Owners will be permitted to exercise the rights of registered owners only indirectly through DTC and the Direct or Indirect Participants.
Authority for Issuance
Paragraph I(a) of Section V of Article IX of the Constitution of the State of Georgia provides (1) that no political subdivision may incur any new debt without the assent of a majority of the qualified voters of such political subdivision voting in an election held for that purpose as provided by law and (2) that the debt incurred by any political subdivision may never exceed 10 percent of the assessed value of all taxable property within such political subdivision. Paragraph VI of Section V of Article IX of the Constitution of the State of Georgia requires a political subdivision, at or before the time of incurring bonded indebtedness, to provide for the assessment and collection of an annual tax sufficient in amount to pay the principal of and interest on the debt within 30 years from its incurrence.
The Bonds were authorized to be issued pursuant to an election in Richmond County held on November 3, 2015, called under a resolution adopted by the Augusta-Richmond County Commission on September 1, 2016, and are being issued pursuant to the authority granted by (i) Part 1 of Article 3 of Chapter 8 of Title 48 of the Official Code of Georgia Annotated, (ii) Article 1 of Chapter 82 of Title 36 of the Official Code of Georgia Annotated, and (iii) a resolution adopted by the Augusta-Richmond County Commission on __________, 2016. The resolution calling the election and the notice of the election stipulated an interest rate for the Bonds not exceeding 5.00% per annum. The canvass of the election showed 9,594 “Yes” votes and 6,006 “No” votes, an approximately 61% approval by those who voted in the election.
Disbursement and Investment of Bond Proceeds and Other Moneys
The proceeds of the sale of the Bonds will be held by and under the control of the Consolidated Government and will be disbursed by the Consolidated Government, as the Consolidated Government desires, to pay the costs of issuing the Bonds and to pay the costs of the Capital Projects described in “PLAN OF FINANCING - Capital Project” herein.
Section 36-82-7 of the Official Code of Georgia Annotated provides that the proceeds of the Bonds may be invested and reinvested by the governing authority of the Consolidated Government in the following investments, and no others:
(1) the local government investment pool created in Chapter 83 of Title 36 of the Official Code of Georgia Annotated;
(2) bonds or obligations of the Consolidated Government or bonds or obligations of the State of Georgia or other counties, municipal corporations, and political subdivisions of the State of Georgia;
(3) bonds or other obligations of the United States or of subsidiary corporations of the United States government which are fully guaranteed by such government;
99268384\V-5
-10-
(4) obligations of and obligations guaranteed by agencies or instrumentalities of the United States government, including those issued by the Federal Land Bank, Federal Home Loan Bank, Federal Intermediate Credit Bank, Bank for Cooperatives, and any other such agency or instrumentality now or hereafter in existence; provided, however, that all such obligations must have a current credit rating from a nationally recognized rating service of at least one of the three highest rating categories available and have a nationally recognized market;
(5) bonds or other obligations issued by any public housing agency or municipal corporation in the United States, which such bonds or obligations are fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States government, or project notes issued by any public housing agency, urban renewal agency, or municipal corporation in the United States which are fully secured as to payment of both principal and interest by a requisition, loan, or payment agreement with the United States government;
(6) securities of or other interests in any no-load, open-end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, or any common trust fund maintained by any bank or trust company which holds such proceeds as trustee or by an affiliate thereof so long as:
(A) the portfolio of such investment company or investment trust or common trust fund is limited to the obligations described in clause (3) and (4) above and repurchase agreements fully collateralized by any such obligations,
(B) such investment company or investment trust or common trust fund takes delivery of such collateral either directly or through an authorized custodian,
(C) such investment company or investment trust or common trust fund is managed so as to maintain its shares at a constant net asset value, and
(D) securities of or other interests in such investment company or investment trust or common trust fund are purchased and redeemed only through the use of national or state banks having corporate trust powers and located within the State of Georgia;
(7) interest-bearing time deposits, repurchase agreements, reverse repurchase agreements, rate guarantee agreements, or other similar banking arrangements with a bank or trust company having capital and surplus aggregating at least $50 million or with any government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York having capital aggregating at least $50 million or with any corporation which is subject to registration with the Board of Governors of the Federal Reserve System pursuant to the requirements of the Bank Holding Company Act of 1956, provided that each such interest-bearing time deposit, repurchase agreement, reverse repurchase agreement, rate guarantee agreement, or other similar banking arrangement must permit the moneys so placed to be available for use at the time provided with respect to the investment or reinvestment of such moneys; and
(8) certificates of deposit of national or state banks located within the State of Georgia which have deposits insured by the Federal Deposit Insurance Corporation and certificates of deposit of federal savings and loan associations and state building and loan or savings and loan associations located within the State of Georgia which have deposits insured by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation or the Georgia Credit Union Deposit Insurance Corporation, including the certificates of deposit of any bank, savings and loan association, or building and loan association acting as depository, custodian, or trustee for any such bond proceeds.
The portion of the certificates of deposit described in clause (8) above in excess of the amount insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation, or the Georgia Credit Union Deposit Insurance Corporation, if any, must be secured by deposit, with the Federal Reserve Bank of Atlanta, Georgia, or with any national or state bank or federal savings and loan association or state building and loan or savings and loan association located within the State of Georgia or with a trust office within the State of Georgia, of one or more of the following securities in an aggregate principal amount equal at least to the amount of such excess: direct and general obligations of the State of Georgia or other states or of any county or municipal corporation in the State of Georgia, obligations of the United States or subsidiary corporations described in clause (3) above, obligations of the agencies and instrumentalities of the United States government described in clause (4) above, or bonds, obligations, or project notes of public housing agencies, urban renewal agencies, or municipalities described in clause (5) above.
99268384\V-5
-11-
In addition, Section 36-83-4(a)(1) of the Official Code of Georgia Annotated authorizes the governing authority of the Consolidated Government, or the financial officer of the Consolidated Government to whom investment authority is delegated, to invest and reinvest any money subject to its control and jurisdiction in:
(1) obligations of the State of Georgia or of other states;
(2) obligations issued by the United States government;
(3) obligations fully insured or guaranteed by the United States government or a United States government agency;
(4) obligations of any corporation of the United States government;
(5) prime bankers’ acceptances;
(6) the local government investment pool established by Section 36-83-8 of the Official Code of Georgia Annotated;
(7) repurchase agreements; and
(8) obligations of other political subdivisions of the State of Georgia.
Paragraph VI of Section V of Article IX of the Constitution of the State of Georgia requires the proceeds of the tax assessed and collected to pay the principal of and interest on the Bonds, together with any other moneys collected for this purpose, to be placed in a sinking fund to be used exclusively for paying the principal of and interest on the Bonds and to be held and kept separate and apart from all other revenues collected by the Consolidated Government.
Section 36-80-3 of the Official Code of Georgia Annotated provides that the governing body of the Consolidated Government, or the financial officer of the Consolidated Government to whom investment authority is delegated pursuant to Section 36-80-4 of the Official Code of Georgia Annotated, may invest and reinvest money subject to its control and jurisdiction in:
(1) obligations of the United States and of its agencies and instrumentalities;
(2) bonds or certificates of indebtedness of the State of Georgia and of its agencies and instrumentalities; and
(3) certificates of deposit of banks which have deposits insured by the Federal Deposit Insurance Corporation; provided, however, that portion of such certificates of deposit in excess of the amount insured by the Federal Deposit Insurance Corporation must be secured by direct obligations of the State of Georgia or the United States which are of a par value equal to that portion of such certificates of deposit which would be uninsured.
Section 45-8-14 of the Official Code of Georgia Annotated provides that the Augusta-Richmond County Commission shall designate one or more solvent banks, insured federal savings and loan associations, or insured state chartered building and loan associations as depositories of moneys belonging to the school funds of the Consolidated Government. Section 45-8-12 of the Official Code of Georgia Annotated prohibits the Consolidated Government from having on deposit at any one time in any depository for a time longer than ten days a sum of money which has not been secured by a surety bond, by federal deposit insurance, or by pledged securities, with a market value of not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance. Section 45-8-11 of the Official Code of Georgia Annotated allows the Director of Finance of the Consolidated Government, in his or her discretion, to waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.
The Consolidated Government presently deposits its general funds with Bank of America, N.A., Augusta, Georgia, and plans to deposit the proceeds of the sale of the Bonds with ________________, Augusta, Georgia. The Consolidated Government may, in its discretion, but subject to the provisions of Georgia law described in the above paragraph, deposit these funds with other financial institutions.
99268384\V-5
-12-
Principal and Interest Requirements
Set forth below are the principal and interest payment requirements with respect to the Bonds for the years shown below. For purposes of calculating the principal payable in any year, the relevant maturity or mandatory redemption amount is used.
Total Year Ending Interest Debt Service December 31 Principal* Rate Interest Requirements 2017 $ --- 2018 --- 2019 15,000,000 2020 15,000,000
Totals $30,000,000
THE CONSOLIDATED GOVERNMENT
Introduction
The consolidated government of Augusta-Richmond County is a political subdivision created and existing under the laws of the State of Georgia and presently has as its formal or legal name “Augusta, Georgia.” The Consolidated Government was created on January 1, 1996 pursuant to Acts of the General Assembly of the State of Georgia (collectively the “Consolidation Act”) which authorized the consolidation of the municipal corporation known as “The City Council of Augusta” and the political subdivision known as “Richmond County, Georgia.” The Consolidation Act and the consolidation of the City and the County were separately approved by a majority of the qualified voters of the City and the County at an election held on June 20, 1995. On January 1, 1996, the Consolidated Government became a consolidated city-county government, with territorial limits covering all of what was formerly Richmond County. This geographic area is hereinafter referred to as “Richmond County.” The Cities of Blythe and Hephzibah, small communities with populations of approximately 721 and 4,011, respectively, still hold their own municipal charters within the consolidated territory. The relationship between the Consolidated Government and the Cities of Blythe and Hephzibah is similar to that of counties to municipalities located within the territorial limits of such counties.
The Consolidated Government, as a consolidated city-county government, has all of the governmental and corporate powers of both municipal corporations and counties under Georgia law. Under the terms of the Consolidation Act, the Augusta-Richmond County Commission may exercise and is subject to all of the rights, powers, duties, and obligations previously applicable to the governing authorities of the City and the County. Consolidation is intended to result in the removal of duplicate services formerly rendered by the City and County governments. As a result of consolidation, the Consolidated Government provides, under one management, public services throughout its territorial limits, which services would have been provided separately by the City and the County.
The City was originally chartered in 1789 by the General Assembly of the State of Georgia, making it Georgia’s second oldest city. As a city, the Consolidated Government would rank as the second largest by population in the State of Georgia. The Consolidated Government is located in the central eastern portion of the State of Georgia on the south bank of the Savannah River, which is the Georgia-South Carolina state boundary, approximately 155 miles east of Atlanta, Georgia and 75 miles southwest of Columbia, South Carolina. Richmond County has a land area of approximately 325 square miles. At its highest point, Richmond County is situated at 520 feet above sea level. Richmond County is located on the Fall Line, which is the natural division of the Piedmont Plateau and the Coastal Plain of Georgia. Its physical features include rolling slopes in the north, transitioning to more level terrain in the south. Average rainfall is 43 inches per year, and average temperatures range from a high of 91 degrees in the summer to a low of 34 degrees in the winter.
Consolidated Government Administration and Officials
The form of government of the Consolidated Government is the municipal form of government. Under the Consolidation Act, the governing authority of the Consolidated Government is a board of commissioners designated
99268384\V-5
-13-
as the Augusta-Richmond County Commission (the “Commission”). The Commission consists of a Mayor and ten commissioners. The members of the Commission serve terms of office of four years and until a successor is elected and qualified. All members of the Commission are full voting members, except for the Mayor, who has the right to vote only to make or break a tie vote on any matter. Under the terms of the Consolidation Act, seven members of the Commission constitute a quorum for the transaction of ordinary business, and an affirmative vote of at least six members is required for the Commission to take action.
For the purpose of electing members of the Commission, Richmond County is divided into ten commission districts. Each commissioner is elected by the voters residing within such commissioner’s commission district. Commission district 9 encompasses all of commission districts 1, 2, 4, and 5. Commission district 10 encompasses all of commission districts 3, 6, 7, and 8. No person will be eligible to serve as a commissioner unless he or she: (1) has been a resident of the commission district from which elected for a period of one year immediately prior to the date of the election, (2) continues to reside within the commission district from which elected during his or her term of office, (3) is a registered and qualified elector of Richmond County, and (4) meets the qualification standards required for members of the Georgia House of Representatives. No person who has served two consecutive full four-year terms of office as commissioner will again be eligible to hold office as commissioner until after the expiration of four years from the conclusion of that person’s last term of office as commissioner.
The Mayor is the chief executive officer of the Consolidated Government and is elected on a county-wide basis by the voters of the entire county. No person will be eligible to serve as Mayor unless he or she (1) has been a resident of Richmond County for a period of one year immediately prior to the date of the election, (2) continues to reside within Richmond County during his or her term of office, (3) is a registered and qualified elector of Richmond County, and (4) meets the qualification standards required for members of the Georgia House of Representatives. No person who has served two consecutive full four-year terms of office as Mayor will again be eligible to hold office as Mayor until after the expiration of four years from the conclusion of that person’s last term of office as Mayor. Under the Consolidation Act, the Mayor presides at all meetings of the Commission, but has no power to veto ordinances, resolutions, or other actions of the Commission.
Information concerning the current Mayor and commissioners is set forth below:
Name and Office Held Expiration of Term Principal Occupation
Hardie Davis, Jr., Mayor December 31, 2018 Full-Time Mayor William Fennoy, District 1 December 31, 2016 Retired Dennis Williams, District 2 December 31, 2018 Retired Mary Davis, District 3 December 31, 2016 School Development Director Sammie Sias, District 4 December 31, 2018 Retired Bill Lockett, District 5 December 31, 2016 Retired Ben Hasan, District 6 December 31, 2018 Business Owner Sean Frantom, District 7 December 31, 2016 Nonprofit Development Director Wayne Guilfoyle, District 8 December 31, 2018 Business Owner Marion Williams, District 9 December 31, 2016 Pastor Grady Smith, District 10 December 31, 2018 Business Owner
The daily operation of the Consolidated Government is directed by an Administrator, who is appointed by and serves at the pleasure of the Commission. The Administrator is the administrative officer and head of the administrative branch of the Consolidated Government, responsible to the Commission for the proper administration of all affairs of the Consolidated Government.
Janice Allen Jackson has been the Administrator of the Consolidated Government since November 2014. Prior to her appointment as Administrator, Ms. Jackson owned her own consulting business in Charlotte, North Carolina. She previously served as the General Manager for Mecklenburg County, North Carolina, and as the City Manager for Albany, Georgia. She is a graduate of the College of William and Mary and holds a Master’s degree in Public Policy from Duke University.
Donna Williams, C.G.F.M, has served as the Director of Finance of the Consolidated Government since November 2007. She has been employed by the County and the Consolidated Government for approximately 30 years and served as the Assistant Director of Finance from 1984 until she assumed the position of Interim Director of Finance on March 1, 2006 and the position of Director of Finance on November 8, 2007. Ms. Williams earned a Certified Governmental Financial Manager certificate in 1997 and received a B.B.A. degree in Accounting from Augusta State University in 1979.
99268384\V-5
-14-
Consolidated Government Services
The Consolidated Government provides several services. The Consolidated Government provides police protection services to residents of the Consolidated Government, the cost of which is financed by General Fund revenues. The Consolidated Government provides fire protection services to most of the residents of the Consolidated Government, the cost of which is financed by a special ad valorem property tax. The Consolidated Government also provides planning and zoning, library, recreational, cultural, ambulance, transit, building permits and code enforcement, animal control, animal shelter, jail, court, and other general governmental services to its residents and acquires, constructs, and maintains roads and infrastructure, the cost of which is financed by General Fund revenues. The Consolidated Government acquires, constructs, and maintains roads, bridges, infrastructure, and other public facilities, the cost of which is financed by General Fund revenues, a special ad valorem property tax for capital expenditures, and special one percent sales and use tax proceeds. The Consolidated Government provides enhanced municipal services within the area consisting of the former City, designated as the “Urban Services District.” These enhanced services include fire protection, garbage collection, and street light maintenance, the cost of which is financed by a special ad valorem property tax and other revenues generated within the Urban Services District. The Consolidated Government provides water and sewer services to a portion of its residents, the cost of which is financed primarily by charges to the Consolidated Government’s water and sewer customers. The Consolidated Government operates a commercial airport and a general aviation airport, the cost of which is financed primarily by revenues generated at the airports.
Consolidated Government Facilities
The Consolidated Government maintains more than 1,063 miles of roads. The Consolidated Government’s sheriff’s department, a full-service sheriff’s department, has 27 facility locations, a training facility, 525 sworn officers, 533 vehicles, and one jail and maintains a 24-hour uniformed patrol. The Consolidated Government’s fire department has 19 fire stations, 92 vehicles, 28 pumpers ranging from 1,250 to 1,500 gallons per minute, three 1,500 gallon tankers, 10 aerial apparatus, two air and light support vehicle, two hazardous material vehicles, and 329 firefighters. The National Board of Fire Underwriters’ fire insurance rating for the Consolidated Government is Class 3-3X. The Consolidated Government’s fire department is also a licensed emergency medical services first response organization and has two light rescue vehicles with emergency medical transport capability and 12 emergency response command vehicles. The Consolidated Government owns and operates six libraries.
The Consolidated Government’s recreation and parks department maintains numerous recreational facilities, including 70 public parks and other facility locations containing approximately 1,500 acres.
The Consolidated Government owns the Augusta Convention Center, which is consists of a trade, exhibit, and event center and a related parking deck. The convention center is an approximately 110,000 square foot facility located in downtown Augusta. The convention center is operated and managed by a private manager pursuant to a contract with the Consolidated Government.
The Consolidated Government’s utilities department operates a water supply, treatment, and distribution system serving approximately 70,903 customers. The average daily consumption of water from the Consolidated Government’s water system for the year ended December 31, 2015 was 34.8 million gallons per day. The Consolidated Government also operates a sanitary sewer collection and treatment system serving approximately 57,968 customers. The average daily use of the Consolidated Government’s sewer system for the year ended December 31, 2015 was 36.4 million gallons per day.
The Consolidated Government owns two airports: the Augusta Regional Airport at Bush Field (“Augusta Regional”) and Daniel Field Airport (“Daniel Field”). Augusta Regional is operated and managed by the Augusta Aviation Commission and Daniel Field is operated by the General Aviation Commission. Each aviation commission is an agency of the Consolidated Government. Augusta Regional is a regional commercial service, non-hub airport located approximately seven miles south of downtown Augusta. Augusta Regional presently consists of approximately 1,248 acres of land, a primary all-weather runway, a crosswind runway, a weather service station, an air traffic control tower, a main terminal building completed in 2008, six aircraft gates utilized for passenger loading, public parking facilities consisting of 1,589 parking spaces on surface lots around the terminal building, general aviation facilities, and approximately 180,000 square feet of other rented buildings occupied by businesses involved in aeronautical activities. Delta Air Lines and American Airlines presently provide scheduled service to and from Augusta Regional. Daniel Field is operated and managed by the General Aviation Commission, which is an agency of the Consolidated Government. Daniel Field is a general aviation airport with fixed base operations and is located approximately five miles east of downtown Augusta. Daniel Field presently consists of approximately 0.474 square miles of land, two asphalt runways with parallel taxiways, a general aviation terminal building, public and private aircraft parking, vehicle parking, and a fixed base operations facility providing general aviation services.
99268384\V-5
-15-
Demographic Information
Set forth below is selected demographic data for Richmond County.
Median Household
Per Capita Income2 Income3 Median
Year Population1 County State County State Age1
2015 201,793 $ n/a $40,511 $37,704 $ n/a n/a
2014 201,149 32,549 38,980 37,793 49,321 33.3
2013 201,156 31,637 37,596 35,649 47,829 33.2
2012 201,850 31,436 37,254 37,154 47,209 33.1
2011 200,509 32,174 36,588 38,928 46,007 33.2
2010 200,549 30,108 34,487 39,152 46,430 33.3
2000 199,775 22,437 28,531 n/a n/a 32.3
________________________
Sources:
1 U.S. Department of Commerce, Bureau of the Census. All population figures for years other than 2010 and 2000 are estimates by the U.S. Department of Commerce, Bureau of the Census.
2 U.S. Department of Commerce, Bureau of Economic Analysis.
3 United States Census Bureau, 2013 American Community Survey 1-Year Estimates.
Economic Information
The following information is provided to give prospective investors an overview of the general economic conditions in Richmond County. These statistics have not been adjusted to reflect economic trends.
Summary of Richmond County Building Permits
Commercial/ Residential2
Industrial/Other1 Single Family Multi-Family
Year Permits Value Permits Value Units Value
2015 $ 423 $79,610,899 298 $8,821,291
2014 345 68,179,666 376 11,220,000
2013 102 150,844,923 385 94,892,156 23 15,568,843
2012 63 97,306,839 375 65,908,783 225 11,156,023
2011 446 180,773,110 122 21,578,022 78 4,743,521 ________________________
Sources:
1 Augusta License and Inspection Department. Numbers for the cities of Hephzibah and Blythe are not included.
2 U.S. Department of Commerce, Bureau of the Census, Manufacturing and Construction Division. Numbers for the cities of Hephzibah and Blythe are not included.
99268384\V-5
-16-
Set forth below are the percentages of land use for various purposes within Richmond County, computed based upon the assessed value shown on Richmond County’s consolidation and evaluation tax digest sheets for the various categories for ad valorem property tax purposes.
Category of Land Use
Year Residential Agricultural Commercial Industrial Other1
2015 49.43% 0.83% 35.22% 11.00% 3.52% 2014 49.70 0.77 34.77 11.08 3.68 2013 49.87 0.79 35.19 10.66 3.49 2012 49.81 0.80 35.51 10.23 3.65 2011 50.53 0.82 35.20 9.96 3.49 ________________________
1 Includes preferential, conservation use, utility, and miscellaneous.
Source: State of Georgia Department of Revenue, Property Tax Division.
Following is a table showing the percentage of the 2015 payroll distribution in Richmond County for each major sector of the local economy.
Percentage of 2015 Payroll Distribution in Richmond County by Sector
Industry Percentage of 2015 Payroll Distribution
Forestry, Fishing, Hunting, and Agricultural Support; Mining; Utilities; Unclassified Establishments 0.10% Construction 3.80 Manufacturing 6.90 Utilities 0.20 Wholesale Trade 2.80 Retail Trade 10.80 Transportation and Warehousing 2.20 Information 1.90 Finance and Insurance 1.70 Real Estate and Rental and Leasing 0.90 Professional, Scientific, and Technical Services 4.10 Management of Companies and Enterprises 0.30 Administrative, Support, Waste Management, and Remediation Services 8.60 Educational Services 0.70 Health Care and Social Assistance 17.00 Arts, Entertainment, and Recreation 1.60 Accommodation and Food Services 10.10 Other Services (Except Public Administration) 2.60
Total 100.00%
________________________
Source: Georgia Department of Labor, Labor Market Analysis.
99268384\V-5
-17-
Set forth below are the ten largest employers, other than the Consolidated Government, located in Richmond County, their industries, and their approximate number of employees. There can be no assurance that any employer listed below will continue to be located in Richmond County or will continue employment at the level stated. No independent investigation has been made of, and no representation can be made as to, the stability or financial condition of the companies listed below.
Largest Employers in Richmond County
Employer Industry Employees
U.S. Army Signal Center & Fort Gordon Military 11,463 Richmond County School System Education 5,725 Augusta University Higher Education 5,001 University Hospital Hospital 3,200 VA Medical Center Medical Services 2,082 East Central Regional Hospital Hospital 1,488 Textron Specialized Vehicles Inc. Golf Cart Manufacturer 1,277 Doctors Hospital Hospital 1,210 ________________________
Source: Georgia Department of Labor, Workforce Information and Analysis
In addition to the employers listed above, the Savannah River Site, which is a nuclear reservation owned and operated by the U.S. Department of Energy, is a major regional employer with approximately 13,260 employees. The Savannah River Site occupies approximately 310 square miles adjacent to the Savannah River acres in south-central South Carolina and is approximately 25 miles southeast of Richmond County.
Set forth below are labor statistics for Richmond County for the past five years, with comparative data for the State of Georgia.
2011 2012 2013 2014 2015
Employment 78,543 78,988 78,219 78,341 78,063 Unemployment 9,966 9,389 8,522 7,436 6,146 Total Labor Force 88,509 88,377 86,741 85,777 84,209 County Unemployment Rate 11.3% 10.6% 9.8% 8.7% 7.3% State Unemployment Rate 10.2% 9.2% 8.2% 7.2% 5.9% ________________________
Source: State of Georgia Department of Labor.
According to the State of Georgia Department of Labor, the preliminary September 2016 unemployment rate for Richmond County was 6.7 percent, compared to 5.3 percent for the State of Georgia.
Total Deposits in Financial Institutions as of June 30
Richmond County Year (in millions)
2016 $3,527 2015 3,424 2014 3,252 2013 3,164 2012 3,129 ________________________
Source: Federal Deposit Insurance Corporation.
99268384\V-5
-18-
According to the State of Georgia Department of Banking and Finance, as of June 30, 2016, Richmond County had 12 financial institutions with a total of 41 branch offices.
Employees, Employee Relations, and Labor Organizations
The Consolidated Government employed 2,817 persons in all departments of government as of September 1, 2016, 2,476 full-time and 341 part-time and temporary. No employees of the Consolidated Government are represented by labor organizations or are covered by collective bargaining agreements, and the Consolidated Government is not aware of any union organizing efforts at the present time. The Administrator of the Consolidated Government believes that employee relations are good.
CONSOLIDATED GOVERNMENT DEBT STRUCTURE
Summary of Consolidated Government Debt By Category
Set forth below is information concerning debt of the Consolidated Government as of November 1, 2016. The information set forth below should be read in conjunction with the Consolidated Government’s financial statements included as Appendix A hereto.
Category of Debt
Amount Authorized
but Unissued
Amount Outstanding
(less Sinking Fund
Installments Paid)
Amount to be
Outstanding Upon
Issuance of Bonds
General Obligation Bonds1 $30,000,000 $ -0- $30,000,000*
Intergovernmental Contracts2
Solid Waste Management Authority
of Augusta (securing its Revenue
Bonds) -0- 7,775,000 7,775,000
Augusta Urban Redevelopment
Agency (securing its Revenue
Bonds) -0- 39,985,000 39,985,000
Augusta-Richmond County
Coliseum Authority (securing its
Revenue Bonds) -0- 17,190,000 17,190,000
Revenue Bonds3
Water and Sewerage System -0- 459,165,000 459,165,000
Augusta Regional Airport -0- 10,525,000 10,525,000
Notes4 -0-
Capital Leases5 -0-
Total $30,000,000
________________________
1 General obligations of the Consolidated Government to which its full faith and credit and taxing power are pledged.
2 General obligations of the Consolidated Government to which its full faith and credit and taxing power are pledged. Each of these obligations is represented by one or more intergovernmental contracts with the named public entity pledged to the payment of one or more series of revenue bonds issued by such public entity. The Consolidated Government’s obligation to levy an ad valorem tax to make payments to each public entity pursuant to the related intergovernmental contract is subject to the legal limit described in “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION - Annual Tax Levy and Limitation on Annual Tax Levy” herein. These obligations do not constitute debt of the Consolidated Government for purposes of the constitutional debt limit described in “CONSOLIDATED GOVERNMENT DEBT STRUCTURE - Limitations on Consolidated Government Debt” herein and do not count against the Consolidated Government’s debt limitation.
3 Limited obligations of the Consolidated Government and payable solely from revenues derived from the named enterprise owned and operated by the Consolidated Government. These obligations do not constitute debt of the Consolidated Government for purposes of the constitutional debt limit described in “CONSOLIDATED
99268384\V-5
-19-
GOVERNMENT DEBT STRUCTURE - Limitations on Consolidated Government Debt” herein and do not count against the Consolidated Government’s debt limitation.
[Footnotes continued on the following page]
4 General obligations of the Consolidated Government to which its full faith and credit and taxing power are pledged. These obligations are represented by (i) two notes payable to the Georgia Environmental Facilities Authority, and (ii) one note payable to the United States federal government. Although the intent of the Consolidated Government is to pay these obligations from revenues of the Consolidated Government’s water and sewer system, these obligations constitute general obligations of the Consolidated Government to which its full faith and credit and taxing power are pledged. These obligations do not constitute debt of the Consolidated Government for purposes of the constitutional debt limit described in “CONSOLIDATED GOVERNMENT DEBT STRUCTURE - Limitations on Consolidated Government Debt” herein and do not count against the Consolidated Government’s debt limitation.
5 The financial obligations of the Consolidated Government under the capital leases do not constitute general obligations of the Consolidated Government to which its faith and credit or taxing power are pledged, but are subject to and dependent upon lawful appropriations of general revenues being made by the Mayor and Council to pay the payments due in each fiscal year under the instruments. The Consolidated Government’s obligations under the instruments are from year to year only and do not constitute a mandatory payment obligation of the Consolidated Government in any fiscal year in which funds are not appropriated by the Consolidated Government to pay the payments due in such fiscal year. The Consolidated Government’s obligations under the instruments do not constitute debt of the Consolidated Government for purposes of the constitutional debt limit described in “CONSOLIDATED GOVERNMENT DEBT STRUCTURE - Limitations on Consolidated Government Debt” herein and do not count against the Consolidated Government’s debt limitation. Amount shown includes a capital lease obligation in the principal amount of $16,888,000 through the lease pool program of the Georgia Municipal Association.
In June 1998, the Consolidated Government entered into a lease pool agreement (the “GMA Lease”) with Georgia Municipal Association, Inc. (“GMA”). The lease pool was funded through the issuance by GMA of $150,126,000 principal amount of Certificates of Participation bearing interest at 4.75% (the “COPS”). The Consolidated Government’s share of the lease pool proceeds totaled $16,888,000. The principal is due on June 1, 2028 and interest is paid semi-annually. The GMA Lease requires the Consolidated Government to make lease payments into an account to fund the principal and interest requirements of its allocable share of the COPS. In connection with entering into the GMA Lease, the Consolidated Government entered into an interest rate swap agreement (the “Swap Agreement”) with JP Morgan Chase, successor to Morgan Guaranty Trust Company of New York (the “Counterparty”). The notional amount of the Swap Agreement as of the date hereof is $16,888,000 and the Swap Agreement expires on June 1, 2028. Under the Swap Agreement, the Consolidated Government is required to pay semi-annually a floating rate of interest based on The Securities Industry and Financial Markets Association™ Municipal Swap Index (the “SIFMA Index”) plus 31 basis points and the Counterparty pays the Consolidated Government a semi-annual payment based on a rate equal to the fixed rate on the COPS (4.75%) times a notional amount specified in the Swap Agreement, but generally equal to the outstanding principal amount of the COPS allocable to the Consolidated Government less any reserves for the payment of such COPS. The Consolidated Government’s obligation to pay floating payments to the Counterparty in any calendar year may not exceed an amount equal to the SIFMA Index plus 5%. Identical swap agreements were entered into with each municipality that participated in the COPS issue. MBIA Insurance Corporation (now National Public Finance Guarantee Corporation) (the “Insurer”) issued its swap insurance policy guaranteeing payments by the COPs participants under their respective swap agreements, including the Consolidated Government’s payments under its Swap Agreement. At December 31, 2015, the mark-to-market valuation of the Swap Agreement was $________, which is reported as an asset (deferred inflow of revenue) on the Consolidated Government’s statement of net position.
The Swap Agreement includes certain provisions under which it is subject to early termination, including certain events of default pursuant to which the parties thereunder may be required or allowed to establish an early termination date, and in the event of early termination, amounts may be due to the Counterparty or the Consolidated Government depending on certain circumstances described in the Swap Agreement. One possible termination event described in the Swap Agreement is the event that the Insurer is downgraded below a AA- or Aa3 rating by S&P or Moody’s, respectively. However, the Counterparty agrees not to suspend any payments under the Swap Agreement unless the Insurer is in default with respect to any of its payment obligations. Another possible termination event includes the downgrade of the Counterparty of its long-term senior unsecured debt rating below A+ or A1 by S&P or Moody’s, respectively. In such event, the Counterparty is required to post collateral in the amount provided in the Swap Agreement within 30 days of the downgrade to prevent an early termination. The Counterparty’s rating was downgraded by S&P to “A” on November 30, 2011 and by Moody’s to “A2” on June 21, 2012 and further lowered by Moody’s to “A3” on November 14, 2013 [UPDATE]. The Swap Agreement remains in place and the
99268384\V-5
-20-
required collateral has been posted. See Note 7A of the basic financial statements of the Consolidated Government included as Appendix A for additional information.
Reference is made to Note 12 of the basic financial statements of the Consolidated Government included as Appendix A for a discussion of the commitments and contingencies of the Consolidated Government.
There has never been a default in payment of the principal of or interest on any general obligation bonds issued by the Consolidated Government.
Proposed Debt
The Consolidated Government is presently considering a proposal to enter into one or more additional intergovernmental contracts (similar to the Intergovernmental Contracts described in “CONSOLIDATED GOVERNMENT DEBT STRUCTURE - Summary of Consolidated Government Debt by Category” herein) with the Augusta Urban Redevelopment Agency. These contracts would be pledged to the payment of revenue bonds issued by the Augusta Urban Redevelopment Agency to finance an approximately $___ million economic development project consisting of new multifamily housing facilities located in the Laney-Walker and Bethlehem neighborhood. Although the project is expected to be self-supporting, the contracts would provide for repayment of the revenue bonds by the Consolidated Government in the event that revenues generated by the project are insufficient for that purpose. The Consolidated Government may consider other economic development proposals supported by intergovernmental contracts in the future but is not actively considering other proposals at this time.
In addition, the Consolidated Government expects to issue revenue bonds in 2017 to refund for debt service savings certain outstanding water and sewer revenue bond issues and to provide approximately $_________ for capital improvements to the Consolidated Government’s water and sewer system. These bonds payable solely from revenues derived from the water and sewer system.
The Consolidated Government has no other present plans to incur additional debt in the next five years.
[Remainder of Page Intentionally Left Blank]
99268384\V-5
-21-
Debt Service Requirements
Set forth below are the debt service requirements of the Consolidated Government for all categories of debt upon the issuance of the Bonds.
Revenue Bonds Total
Debt Service
Requirements
Year Ending
December 31
General
Obligation
Intergovernmental
Contracts
Water and
Sewerage System
Augusta
Regional Airport Notes
Capital
Leases1
2016 $ --- $ --- $ ---
2017 4,150,200 31,646,560 867,500
2018 5,420,850 31,647,010 864,625
2019 5,417,803 31,647,910 865,875
2020 15,210,313 31,646,060 866,125 ---
2021 --- 4,610,556 31,645,360 865,375 ---
2022 --- 4,612,019 31,646,848 863,625 ---
2023 --- 4,612,919 31,648,773 865,750 ---
2024 --- 4,608,919 31,643,743 861,750 ---
2025 --- 4,610,019 31,642,543 861,625 ---
2026 --- 4,610,719 31,647,958 850,500 ---
2027 --- 4,578,119 31,647,773 853,250 ---
2028 --- 4,600,544 31,644,323 849,625 ---
2029 --- 4,611,019 31,643,888 849,625 --- ---
2030 --- 4,614,669 31,665,238 848,125 --- ---
2031 --- 2,196,319 30,239,925 845,125 --- ---
2032 --- 2,195,850 30,238,125 845,500 --- ---
2033 --- 2,196,013 29,179,025 844,125 --- ---
2034 --- 2,194,063 27,292,850 845,875 --- ---
2035 --- --- 27,293,200 845,625 --- ---
2036 --- --- 27,293,500 --- --- ---
2037 --- --- 27,286,950 --- --- ---
2038 --- --- 27,291,975 --- --- ---
2039 --- --- 27,291,100 --- --- ---
2040 --- --- 15,547,525 --- --- ---
2041 --- --- 15,557,525 --- --- ---
2042 --- --- 16,265,025 --- --- ---
Total $85,050,909 $743,840,708 $16,259,625
________________________
1 Includes the GMA Lease, described under the heading “CONSOLIDATED GOVERNMENT DEBT STRUCTURE - Limitations on Consolidated Government Debt” herein. Amounts shown assume an interest rate of 1.13% per annum (which is the current 10-year running average of SIFMA Index (0.82%) plus 0.31%) on the GMA Lease, based on the floating interest rate that the Consolidated Government is required to pay under the Swap Agreement. No assurance can be given that actual interest rates will match the assumed interest rate.
99268384\V-5
-22-
Overlapping Debt
In addition to the Consolidated Government’s debt obligations, property owners in Richmond County are responsible for any debt obligations of other taxing entities in the proportion to which the jurisdiction of the Consolidated Government overlaps such entities. Set forth below is the estimated overlapping general obligation debt and estimated overlapping property tax supported or guaranteed revenue debt of the Consolidated Government as of September 1, 2016. Although the Consolidated Government has attempted to obtain accurate information as to the outstanding overlapping debt, it does not warrant its completeness or accuracy, as there is no central reporting entity that has this information available, and the amounts are based on information supplied by others.
Name of Overlapping Entity
Amount of of Authorized but Unissued Debt
Amount of Outstanding Debt (less Sinking Fund)
Percent of Outstanding Debt Chargeable to Property in the Richmond County1
Richmond County School District $-0- $52,880,000 100% ________________________
1 The percentage of each overlapping entity’s outstanding debt chargeable to property in Richmond County is calculated by dividing the gross assessed valuation of property in the Richmond County by the gross assessed valuation of property in the overlapping entity.
Debt Ratios
Set forth below is the property tax supported debt per capita of the Consolidated Government as of the end of each of the Consolidated Government’s past five fiscal years.
Year Ended December 31 Direct Tax Supported Debt Overlapping Tax Supported Debt Overall Tax Supported Debt
2015 $435.28 $262.05 $ 697.33 2014 522.34 397.57 919.91 2013 468.64 525.89 994.53 2012 552.97 646.59 1,199.56 2011 577.21 159.59 736.80
Set forth below is the property tax supported debt of the Consolidated Government expressed as a percentage of total assessed value of taxable property within Richmond County as of the end of each of the Consolidated Government’s past five fiscal years.
Year Ended December 31 Direct Tax Supported Debt Overlapping Tax Supported Debt Overall Tax Supported Debt
2015 1.65% 0.99% 2.64% 2014 1.97 1.50 3.47 2013 1.77 1.99 3.76 2012 2.12 2.48 4.60 2011 2.25 0.62 2.87
99268384\V-5
-23-
Set forth below is the property tax supported debt of the Consolidated Government expressed as a percentage of total estimated market value of taxable property within Richmond County as of the end of each of the Consolidated Government’s past five fiscal years.
Year Ended December 31 Direct Tax Supported Debt Overlapping Tax Supported Debt Overall Tax Supported Debt
2015 0.66% 0.40% 1.06% 2014 0.79 0.60 1.39 2013 0.71 0.79 1.50 2012 0.85 0.99 1.84 2011 0.90 0.25 1.15
Set forth below is the property tax supported debt per capita of the Consolidated Government expressed as a percentage of per capita income as of the end of each of the Consolidated Government’s past five fiscal years.
Year Ended December 31 Direct Tax Supported Debt Overlapping Tax Supported Debt Overall Tax Supported Debt
20151 1.34 0.81% 2.15% 2014 1.60 1.22 2.82 2013 1.48 1.66 3.14 2012 1.76 2.06 3.82 2011 1.82 0.50 2.32 ________________________
1 Based upon most recent available figures.
Debt History
Set forth below is information concerning the different categories of liabilities (excluding interfund payables and payables to component units) of the Consolidated Government outstanding as of the past five years.
Category of Liabilities Amount Outstanding as of December 31
2011 2012 2013 2014 2015
Short-Term $ 91,453,451 $ 102,589,439 $ 80,492,064 $ 97,481,910 $ 71,484,519 Long-Term 596,848,486 628,196,227 663,052,345 672,163,662 709,831,632
Total $688,301,937 $730,785,666 $743,544,409 $769,645,572 $781,316,151
Limitations on Consolidated Government Debt
The Constitution of the State of Georgia provides that the Consolidated Government may not incur long-term obligations payable out of general property taxes without the approval of a majority of the qualified voters of the Consolidated Government voting at an election called to approve the obligations. In addition, under the Constitution of the State of Georgia, the Consolidated Government may not incur long-term obligations payable out of general property taxes in excess of 10 percent of the assessed value of all taxable property within the Consolidated Government.
Short-term obligations (those payable within the same calendar year in which they are incurred), lease and installment purchase obligations subject to annual appropriation, and intergovernmental obligations (such as the Capital Leases and Intergovernmental Contracts described in “CONSOLIDATED GOVERNMENT DEBT STRUCTURE - Summary of Consolidated Government Debt by Category” herein) are not subject to the legal limitations described above. In addition, refunded obligations cease to count against the Consolidated Government’s debt limitation upon being refunded. Georgia law provides, however, that no lease or installment purchase contract subject to annual appropriation may be delivered if the principal portion of such contract, when added to the amount of debt subject to the debt limitation described above, exceeds 10 percent of the assessed value of all taxable property within the Consolidated Government. Georgia law also provides that no lease or installment purchase contract subject to annual appropriation with respect to real property may be developed and executed or renewed, refinanced, or restructured if the lesser of either of the following is exceeded:
99268384\V-5
-24-
(1) the average annual payments on the aggregate of all such outstanding contracts exceed 7.5 percent of the governmental fund revenues of the Consolidated Government for the calendar year preceding the delivery of such contract plus any available special county one percent sales and use tax proceeds collected; or
(2) the outstanding principal balance on the aggregate of all such outstanding contracts exceeds $25 million.
As computed in the table below, based upon its 2016 assessed value and after issuance of the Bonds, the Consolidated Government could incur (upon necessary voter approval) approximately $448,554,853* of long-term obligations payable out of general property taxes (or general obligation bonds).
Computation of Legal Debt Margin
Assessed Value of Taxable Property as of September 1, 2016 $4,785,548,532
Debt Limit (10% of Assessed Value) $478,554,853 Amount of Debt Applicable to Debt Limit 30,000,000*
Legal Debt Margin $448,554,853*
THE SALES TAX
Description
Georgia law authorizes the governing authority of each county in the State of Georgia, including each consolidated government created by the consolidation of a county and one or more municipalities, by resolution to reimpose within the county a special sales and use tax, to be known as the county special purpose local option sales tax, at the rate of one percent and for a limited period of time, conditioned upon approval by a majority of the qualified voters of the county voting in a referendum thereon. When imposed by a consolidated government, the tax is not subject to any maximum period of time for which it may be levied if general obligation debt is to be issued in conjunction with the imposition of the tax. The resolution calling for the imposition of the tax, however, must state the maximum amount of revenue to be raised by the tax, and the tax will terminate as of the end of the calendar quarter during which the Revenue Commissioner of the State of Georgia (the “Revenue Commissioner”) determines that the tax will have raised revenues equal to or greater than such maximum amount.
The Sales Tax was authorized to be reimposed pursuant to an election in the Consolidated Government held on November 3, 2015, called under a resolution adopted by the Commission on September 1, 2015. The canvass of the election showed 9,594 “Yes” votes and 6,006 “No” votes, an approximately 61% approval by those who voted in the election.
The resolution calling the election and the notice of the election authorized the reimposition of the Sales Tax, upon termination of the special one percent sales and use tax then in effect (the “Prior Sales Tax”), for the raising of not more than $215,550,000 for the following purposes pursuant to an Intergovernmental Sales Tax Agreement, dated as of September 1, 2015, among the Consolidated Government, the City of Blythe, Georgia (“Blythe”), and the City of Hephzibah (“Hephzibah”): (a) capital outlay projects, which are estimated to cost $207,150,000, to be owned or operated or both by the Consolidated Government or by one or more local authorities within such special district pursuant to intergovernmental contracts with the Consolidated Government (the “the Consolidated Government Projects”): (1) Road, Street, Bridge, and Drainage Improvements, (2) Acquisition, Improvement, and Renovation of Administrative Facilities, (3) Library and Museum Improvements and Renovations, (4) Acquisition of Renovated Municipal Building pursuant to an Intergovernmental Agreement with the Urban Redevelopment Agency of Augusta, (5) Public Safety Facilities, Equipment, and Vehicles, (6) Information Technology, and (7) Parks, Recreational, and Cultural Facilities; (b) capital outlay projects, which are estimated to cost $1,900,000, to be owned or operated or both by Blythe: (1) Water System Improvements, (2) Drainage, Storm Water, and Bike Path Improvements, (3) Public Safety Equipment and Vehicles, (4) Community Building, Library, and Park Facilities, (5) Information Technology, (6) Renovations to City Hall and Administrative Facility, (7) Road Improvements, and (8) Vehicles and Related Equipment; and (c) capital outlay projects, which are estimated to cost $6,500,000, to be owned or operated or both by Hephzibah (the “Hephzibah Projects”): (1) Parks, Recreational, and Cultural Facilities, (2) Hephzibah Agricultural Center, (3) Water System Upgrades, Equipment and Vehicles, (4) Public Safety Equipment and Vehicles, (5) Fire Department Facilities, Vehicles and Equipment, (6) Road Improvement Projects, (7) Alternative Energy Facilities, and (8) City Hall Expansion. The resolution calling the election and the notice of the election also authorized the issuance of $30,000,000 in aggregate principal amount of general
99268384\V-5
-25-
obligation debt of the Consolidated Government in conjunction with the reimposition of the Sales Tax for the purpose of providing funds to pay the costs of any one or more of the Consolidated Government Projects and retiring the notes.
The Sales Tax began to be reimposed on April 1, 2016 and will cease to be reimposed as of the end of the calendar quarter during which the Revenue Commissioner determines that the Sales Tax will have raised revenues equal to or greater than $215,550,000 (expected to be December 31, 2021), which is the maximum amount of revenue to be raised by the Sales Tax specified in the resolution calling for the reimposition of the Sales Tax.
Pursuant to the Sales Tax Contract, the Consolidated Government must apply the proceeds of the Sales Tax to fund the following capital outlay projects in the following order of priority:
(i) first, a sufficient amount must be set aside to pay the semiannual interest requirements and annual principal requirements next coming due in the current year on not to exceed $30,000,000 in aggregate principal amount of obligations issued to finance any one or more of the Consolidated Government Projects;
(ii) second, during calendar years 2016 and 2017, Sales Tax collections shall be disbursed ratably to Blythe and Hephzibah as soon as practicable as follows: (1) up to $950,000 of Sales Tax collections shall be disbursed to Blythe for each such calendar year to fund its capital outlay projects, in the priority set forth in the Sales Tax Contract; and (2) up to $3,250,000 of Sales Tax collections shall be disbursed to Hephzibah for each such calendar year to fund in equal priority any one or more of its capital outlay projects; and
(iii) third, all remaining Sales Tax collections shall be applied by the Consolidated Government to fund in equal priority those Consolidated Government Projects not otherwise financed by the obligations described in paragraph (i) above.
The Revenue Commissioner will remit monthly receipts of the Sales Tax, representing collections from the immediately preceding month, to the Consolidated Government. The Consolidated Government will then disburse to Blythe and Hephzibah their portion of the monthly receipts, if any, in accordance with the Sales Tax Contract.
Sales Subject to Taxation
The Sales Tax will be reimposed on the retail purchase, retail sale, rental, storage, use, or consumption of tangible personal property and on services within Richmond County, subject to numerous exemptions, including sales to certain governmental entities and to certain non-profit organizations, professional, insurance, and personal service transactions, sales of certain agricultural products, sales to and by certain agricultural enterprises, sales of certain types of manufacturing equipment, the sale or use of certain types of industrial materials, and sales of prescription drugs, certain medical devices and equipment, and lottery tickets.
Sales Tax Collections
The Sales Tax will be generally reimposed on the purchaser of tangible personal property or services and will be generally collected by the seller of tangible personal property or services from the purchaser at the time of sale. Sellers of tangible personal property or services will be generally required to file tax returns with the Revenue Commissioner on or before the 20th day of each month, showing taxable sales during the preceding calendar month, and to remit the Sales Tax shown due on the return with the return. Sellers of tangible personal property or services will be allowed the following deductions from Sales Taxes timely remitted to the Revenue Commissioner: (1) 3 percent of the first $3,000 of Sales Tax reported due on each monthly return (other than Sales Tax on motor fuel), (2) 0.50 percent of Sales Tax in excess of $3,000 reported due on each monthly return (other than Sales Tax on motor fuel), and (3) 3 percent of Sales Tax on motor fuel reported due on each monthly return. When any seller fails to make any return or to pay the full amount of the Sales Tax, there will be imposed a penalty to be added to the Sales Tax in the amount of 5 percent or $5.00, whichever is greater, if the failure is for not more than 30 days and an additional 5 percent or $5.00, whichever is greater, for each additional 30 days or fraction of 30 days during which the failure continues. The penalty for any single violation will not exceed 25 percent or $25.00 in the aggregate, whichever is greater.
Permitted Uses
Georgia law provides that the Sales Tax shall be exclusively administered and collected by the Revenue Commissioner for the use and benefit of the Consolidated Government. The proceeds of the Sales Tax collected by the Revenue Commissioner must be disbursed to the Consolidated Government as soon as practicable after collection, after deducting one percent of the amount collected for the state treasury in order to defray the costs of administration.
99268384\V-5
-26-
Georgia law provides that the proceeds received by the Consolidated Government from the Sales Tax shall be used by the Consolidated Government exclusively for the purpose or purposes specified in the resolution calling for reimposition of the Sales Tax. Such proceeds are required by Georgia law to be kept in a separate account from other funds of the Consolidated Government and may not in any manner be commingled with other funds of the Consolidated Government prior to expenditure. Georgia law provides that no part of the net proceeds from the Sales Tax received in any year may be used for capital outlay projects until all debt service requirements on the Bonds for that year have first been satisfied from the account in which the proceeds of the Sales Tax are placed.
Historical Sales Tax Data
Set forth below are the historical collections of county special one percent sales and use tax in Richmond County for calendar years 2011 through 2015 and for the eight months ended August 31, 2016.
Year Ended
December 31 Sales Tax Collections1
2011 $37,535,751
2012 37,776,116
20132 35,559,961
2014 36,931,266
2015 36,674,958
20163 [21,927,703]
________________________
1 Net of deductions allowed to dealers and net of commission allowed to the Revenue Commissioner. Amounts shown represent aggregate amounts disbursed to the Consolidated Government, Blythe, and Hephzibah. Collections from January 1, 2011 through March 31, 2016 represent the Prior Sales Tax. Collections from April 1, 2016 through the present represent the Sales Tax. The Consolidated Government’s share of the Sales Tax is determined pursuant to the Sales Tax Contract described in “THE SALES TAX - Description” herein.
2 Decrease in collections from 2012 to 2013 due in part to implementation of tax reform legislation known as House Bill 386 (the “Tax Reform Act”) enacted by the Georgia General Assembly during the 2012 legislative session. The Tax Reform Act provides a number of changes to Georgia’s tax laws that impact local governments in Georgia, including the elimination of the state and local sales tax (and the ad valorem tax) on motor vehicles and the replacement of such taxes with onetime state and local title fees whenever any motor vehicle changes ownership on or after March 1, 2013. For more information, see “LEGAL MATTERS - State of Georgia Tax Reform Legislation” herein.
3 Collections for eight months ended August 31, 2016. Collections for the eight months ended August 31, 2015 were $25,082,525.
Source: State of Georgia Department of Revenue.
99268384\V-5
-27-
CONSOLIDATED GOVERNMENT AD VALOREM TAXATION
Introduction
An important source of revenue to fund the operations of the Consolidated Government is ad valorem property taxes. Ad valorem property taxes accounted for an annual average of approximately 36.6% of Consolidated Government General Fund revenues for the years ended December 31, 2011 to 2015 and are budgeted to account for approximately 34.2% of General Fund revenues for the year ending December 31, 2016. Ad valorem property taxes are levied annually in mills (one tenth of one percent) upon each dollar of assessed property value.
Property Subject to Taxation
Ad valorem property taxes are levied, based upon value, against real and personal property within the Consolidated Government. There are, however, certain classes of property which are exempt from taxation, including public property, religious property, charitable property, property of nonprofit hospitals, nonprofit homes for the aged, and nonprofit homes for the mentally handicapped, college and certain educational property, public library property, certain farm products, certain air and water pollution control property, and personal effects.
In addition, the Consolidated Government allows exemptions from ad valorem taxation for (1) homesteads, or owner-occupied residences, of all persons, in the amount of $5,000 of assessed value (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (2) homesteads, or owner-occupied residences, of persons who are over age 65 and whose net income from all sources (including the spouse’s income) does not exceed $10,000, in the amount of $10,000 of assessed value (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (3) homesteads, or owner-occupied residences, of disabled veterans and certain un-remarried surviving spouses of disabled veterans, not to exceed the greater of $50,000 or an amount determined under federal law, (4) homesteads, or owner-occupied residences, of persons who are totally disabled with net income from all sources (including the spouse’s income) not exceeding $20,000, for the full value of that homestead (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (5) homesteads, or owner-occupied residences, of persons who are totally disabled, in the amount of $10,000 of assessed value (this exemption, however, is inapplicable to taxes levied to pay bonded indebtedness), (6) homesteads, or owner-occupied residences, of un-remarried surviving spouses of peace officers or firefighters who were killed in the line of duty, for the full value of that homestead, and (7) the inventory of companies that manufacture or warehouse goods in Richmond County, known as the “freeport” exemption.
In the 2012 legislative session, the Georgia General Assembly enacted House Bill 48 (“HB 48”). Georgia Governor Nathan Deal signed HB 48 into law on April 17, 2012. HB 48 gives cities and counties the option to exempt some or all of business inventory from ad valorem property taxation (the “Inventory Exemption”). HB 48 mirrors the freeport inventory exemption described above. Like the freeport inventory exemption, the Inventory Exemption has to be approved by the voters of the Consolidated Government in a local referendum before taking effect. If approved in such a referendum, the Consolidated Government may exempt 20, 40, 60, 80, or 100% of business inventory from ad valorem taxation. The Consolidated Government has not to date held a local referendum to approve the Inventory Exemption within the Consolidated Government.
In its 2012 legislative session, the Georgia General Assembly enacted House Bill 386 (the “Tax Reform Act”). Georgia Governor Nathan Deal signed the Tax Reform Act into law on April 19, 2012. The Tax Reform Act provides a number of changes to Georgia’s tax laws that impact local governments in Georgia, including the elimination of the ad valorem tax on motor vehicles and the replacement of such ad valorem tax with onetime state and local title fees whenever any motor vehicle changes ownership on or after March 1, 2013. For more information, see “LEGAL MATTERS - State of Georgia Tax Reform Legislation” herein.
Assessed Value
Assessed valuation, which represents the value upon which ad valorem property taxes are levied, is calculated as a percentage of fair market value. Georgia law requires taxable tangible property to be assessed, with certain exceptions, at 40 percent of its fair market value and to be taxed on a levy made by each tax jurisdiction according to 40 percent of the property’s fair market value. Georgia law requires certain agricultural real property to be assessed for ad valorem property tax purposes at 75 percent of the value of which other real property is assessed, requires certain historical property to be valued at a lower fair market value for ad valorem property tax purposes, and requires certain agricultural, timber, and environmentally sensitive real property and certain single-family real property located in transitional developing areas to be valued at their “current use value” (as opposed to fair market value).
The chief appraiser of the Consolidated Government is required to submit a certified list of assessments for all taxable property, except motor vehicles and property owned by public utilities, within Richmond County to the
99268384\V-5
-28-
Richmond County Board of Tax Assessors. The Richmond County Tax Commissioner is required to present the tax returns to the Board of Tax Assessors by April 11 of each year. The Board of Tax Assessors is required to complete its revision and assessment of returns and to forward the completed digest to the Tax Commissioner by June 1 of each year. The Tax Commissioner then has to forward the digest to the State of Georgia Revenue Commissioner for examination and approval. The State of Georgia Revenue Commissioner has the authority to examine the digest for the purpose of determining if the valuations of property are reasonably uniform and equalized between and within counties. Assessments may also be subject to review at various stages by the Richmond County Board of Equalization and by state courts.
The State of Georgia Motor Vehicle Tax Unit assesses the value of motor vehicles by make, model, and year by county and provides this information to each county tax office. The State of Georgia Property Tax Unit assesses the value of the property of public utilities and divides the assessment into two parts, assessed value of property and assessed value of franchise, and provides these amounts to the Consolidated Government, which bills these taxes to the utilities.
Annual Tax Levy and Limitation on Annual Tax Levy
The Consolidated Government determines a rate of levy for each fiscal year by computing a rate which, when levied upon the assessed value of taxable property within its territorial limits, will produce the necessary amount of property tax revenues. The Consolidated Government then levies its ad valorem property taxes.
In 1980, the voters of Richmond County approved a local amendment to the Constitution of the State of Georgia that prohibits any taxing jurisdiction in Richmond County from levying or collecting ad valorem taxes in any tax year at a mill rate higher than the ad valorem tax mill rate described below, unless the mill rate is approved by the voters. The maximum mill rate each such local taxing jurisdiction (including the Consolidated Government) may levy in any tax year without a referendum is determined as follows: (1) multiply the mill rate levied by the local taxing jurisdiction for the tax year beginning January 1, 1979, exclusive of any grants from the State of Georgia that may have been used to reduce the net millage rate for 1979, by 107%; (2) then multiply the mill rate determined in (1) above by a fraction the numerator of which is the net taxable digest for the local taxing jurisdiction for the tax year preceding the year the tax is to be levied rounded off to the nearest $10,000,000, and the denominator of which is the net taxable digest for the local taxing jurisdiction for the tax year in which the levy is to be made, rounded off to the nearest $10,000,000; (3) then, reduce the mill rate determined in (2) above by the mill rate that, if levied against the taxable property within the local taxing jurisdiction, would produce an amount of revenue equal to the amount of any proceeds received by the local taxing jurisdiction in the immediately preceding tax year from a local sales and use tax. The mill rate determined after the reduction provided for in (3) above is the maximum mill rate that may be levied in the applicable tax year by the local taxing jurisdiction except as described in the first sentence of this paragraph.
In the event the Consolidated Government desires to seek approval at a referendum for the levy in any tax year of a mill rate greater than the mill rate determined as described above, the Consolidated Government must hold not less than three public hearings on the proposed mill rate at different locations within the limits of the Consolidated Government prior to the date of the referendum. Notice of each such public hearing must be published in the legal organ of Richmond County for at least three consecutive weeks immediately preceding the week the meeting is to be held and must also be made as may otherwise be required by law.
The tax limitation described above excludes any expenditures made or caused to be made by the Consolidated Government as determined from time to time on a case by case basis for the following express purposes: (a) bonded indebtedness incurred as a result of a referendum by the voters approving such bonded indebtedness, and (b) any expenditure for the replacement of or provision for any direct loss suffered by the Consolidated Government as the result of any peril, catastrophe, or emergency that includes, but is not limited to, fire, lightning, wind, hail, water, storm, war, insurrection, riot, earthquake, nuclear occurrence, seizure, explosion, freezing, aircrafts, vehicles, or other similar catastrophe or acts of God; with the amount to be levied to cover such emergency not to exceed the actual cash outlay, considering all insurance payments from other sources to which the Consolidated Government may be entitled, which the Consolidated Government actually incurs as the result of said loss, including professional fees and other similar expenses required to place the Consolidated Government in the same position in which it would have been had such perils, catastrophe, or emergency not occurred; provided, however, the Consolidated Government declares by a two-thirds majority that the emergency does exist and the expenditures are in fact to be made as the result of the emergency. The General Assembly of the State of Georgia is permitted by local law, to authorize the levy of additional assessments to provide for capital improvements, judicial commands and precepts, or mandated programs not funded by state or federal funds.
Under Georgia law, there is no limitation on the annual rate of levy for the payment of principal of and interest on bonded indebtedness of the Consolidated Government, including the Bonds. Ad valorem property
99268384\V-5
-29-
taxes received for the payment of debt service on general obligation bonds of the Consolidated Government are required by law to be held and accounted for separately from other funds of the Consolidated Government. See “THE BONDS - Disbursement and Investment of Bond Proceeds and Other Moneys” herein.
Property Tax Collections
The Consolidated Government bills and collects its own property taxes. Real and personal property taxes, except motor vehicle taxes, are levied in July of each year on the assessed value listed as of January 1. Taxes levied by the Consolidated Government in July are normally billed on September 15 and are normally payable on or before November 15. Motor vehicle taxes are levied, due, and collected on a staggered basis throughout the entire calendar year; however, as of March 1, 2013, only motor vehicles titled prior to March 1, 2013 are subject to ad valorem tax. For more information, see “LEGAL MATTERS - State of Georgia Tax Reform Legislation” herein. Interest of 12% per annum applies to taxes paid after the due date, and a one-time penalty of 10% applies to taxes paid more than 90 days after the due date.
All taxes levied on real and personal property, together with interest thereon and penalties for late payment, constitute a perpetual lien on and against the property taxed arising after January 1 in the year in which taxed. The lien normally becomes enforceable on March 20 of the following year. Georgia law provides that taxes must be paid before any other debt, lien, or claim of any kind, except for certain claims against the estate of a decedent and except that the title and operation of a security deed is superior to the taxes assessed against the owner of property when the tax represents an assessment upon property of the owner other than the property specifically subject to the title and operation of the security deed.
Collection of delinquent real property taxes is enforceable by tax sale of such realty. Delinquent personal property taxes are similarly enforceable by seizure and sale of the taxpayer’s personal property. There can be no assurance, however, that the value of property sold, in the event of a tax sale, will be sufficient to produce the amount required to pay in full the delinquent taxes, including any interest or penalties thereon.
When the last day for the payment of taxes has arrived, the tax collector may notify the taxpayer in writing of the fact that the taxes have not been paid and that, unless paid, an execution will be issued. At any time after thirty days from giving the notice described in the preceding sentence, the Clerk of the Consolidated Government may issue an execution for nonpayment of taxes to the Sheriff, or the Tax Commissioner, as ex-officio Sheriff. The Sheriff, or the Tax Commissioner, as ex-officio Sheriff, may then publish a notice of the sale in a local newspaper weekly for four weeks and give the taxpayer ten days written notice by registered or certified mail. A public sale of the property may then be made by the Sheriff, or the Tax Commissioner, as ex-officio Sheriff, at the Richmond County Courthouse on the first Tuesday of the month after the required notices are given.
[Remainder of Page Intentionally Left Blank]
99268384\V-5
-30-
Historical Property Tax Data
Set forth below is information concerning the assessed (40% of fair market value) and estimated actual value of taxable property within the Consolidated Government for calendar years 2011 through 2016.
Assessed Values General Maintenance Maintenance Estimated
Calendar Real & Personal Public Motor Mobile Gross Bond Obligation Bond & Operation & Operation Actual
Year Property Utilities Vehicles1 Homes Tax Digest Exemptions Tax Digest2 Exemptions Tax Digest3 Value
2011 $4,660,645,980 $140,306,302 $318,763,820 $19,985,635 $5,139,701,737 $267,151,120 $4,872,550,617 $608,123,796 $4,531,577,941 $12,849,253,843
2012 4,746,686,280 150,294,484 338,312,190 18,756,473 5,254,049,427 269,061,495 4,984,987,932 603,772,664 4,650,276,763 13,135,123,568
2013 4,799,582,972 143,796,930 364,089,090 18,944,271 5,326,413,263 283,351,265 5,042,881,998 640,326,662 4,686,086,601 13,316,033,158
2014 4,863,021,048 150,379,467 311,397,550 17,837,393 5,342,635,458 276,298,564 5,066,336,984 627,710,156 4,714,925,302 13,356,588,645
2015 4,948,962,023 151,719,571 221,670,460 16,849,509 5,339,201,563 284,109,385 5,053,782,422 633,436,210 4,705,765,353 13,344,729,518
2016 __________________________
1 As of March 1, 2013, only motor vehicles titled prior to March 1, 2013 are subject to ad valorem tax. Motor vehicles titled after that date are subject instead to a one-time state and local title fee. As a result of this change in law, the assessed value of motor vehicles subject to ad valorem tax decreased by approximately $____ million from 2013 to 2016, and the Consolidated Government expects the assessed value of motor vehicles to continue to decrease in future years as motor vehicles subject to ad valorem tax come out of service. For more information, see “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION - Property Subject to Taxation” and “LEGAL MATTERS - State of Georgia Tax Reform Legislation” herein.
2 Total assessed value, after deducting exemptions, for purposes of levying tax for Consolidated Government general obligation bonds.
3 Total assessed value, after deducting exemptions, for purposes of levying tax for Consolidated Government maintenance and operation.
Sources: State of Georgia Department of Revenue, Property Tax Division; Richmond County Tax Commissioner.
[Remainder of Page Intentionally Left Blank]
99268384\V-5
-31-
Set forth below is information concerning the rate of levy of property taxes per $1,000 of assessed value, or millage rates, of the Consolidated Government and all overlapping governments for calendar years 2011 through 2016.
Calendar
Year
Consolidated Government
Richmond
County
School System
State of
Georgia
Inside USD
Total
Outside USD
Total6
Maintenance
& Operation1
Debt
Service2
Capital
Outlay1
Urban Services
District
(“USD”)3
Fire
District4
Blythe Fire
District5
2011 8.075 0.00 0.784 8.002 1.602 2.808 19.110 0.25 36.221 29.821
2012 8.085 0.00 0.785 8.026 2.152 3.538 19.110 0.25 36.256 30.382
2013 8.042 0.00 0.781 7.987 2.140 3.349 19.982 0.15 36.942 30.945
2014 9.788 0.00 0.781 5.200 2.139 3.358 19.972 0.10 35.841 32.780
2015 9.792 0.00 0.781 5.208 2.139 3.353 19.972 0.05 35.753 32.734
2016 ________________________
1 Applies to entire territorial limits of Richmond County and is subject to legal limit described in “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION - Annual Tax Levy and Limitation on Annual Tax Levy” herein.
2 Applies to entire territorial limits of Richmond County.
3 Applies to the area consisting of the former City, designated as the “Urban Services District,” and is subject to legal limit described in “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION - Annual Tax Levy and Limitation on Annual Tax Levy” herein.
4 Applies to the area consisting of the former unincorporated area of Richmond County and is subject to legal limit described in “CONSOLIDATED GOVERNMENT AD VALOREM TAXATION - Annual Tax Levy and Limitation on Annual Tax Levy” herein.
5 Applies to the area consisting of the City of Blythe.
6 Represents aggregate millage rate for area consisting of the former unincorporated area of Richmond County. The Cities of Blythe and Hephzibah did not levy property taxes for the years shown.
Source: Richmond County Tax Commissioner.
Set forth below is information concerning property tax levies and collections of the Consolidated Government for the past five calendar years.
Tax Collections
Percentage of Collection Percentage Delinquent
of Current of Total Tax Taxes Calendar Current Prior Year’s Levy Collections to Outstanding
Year Tax Levy Year’s Levy Years Total to Tax Levy Tax Levy as of Year End
2011 $36,432,868 $33,237,560 $3,195,308 $36,432,868 91.2% 100.0% $4,140,365
2012 37,238,163 34,281,485 2,956,678 37,238,163 92.1 100.0 4,599,462 2013 34,596,234 31,092,089 2,791,520 33,883,609 89.9 98.4 4,289,059
2014 46,084,688 40,395,089 3,392,424 43,787,513 87.8 95.0 5,051,352 2015 52,281,462 39,577,785 --- 39,577,785 75.7 75.7 --- ________________________
Source: Richmond County Tax Commissioner.
Set forth below is the estimated value of total tax executions (or fi fas) owned by the Consolidated Government for the past five calendar years. The amounts set forth below are cumulative amounts from all preceding years.
Estimated Value as of December 31
2011 2012 2013 2014 2015
$4,140,365 $4,599,462 $4,289,059 $5,051,352 ________________________
Source: Richmond County Tax Commissioner.
99268384\V-5
-32-
Delinquent property taxes of the Consolidated Government are written off when the statute of limitations for their collection (7 years) expires or if no property is found to levy upon, if earlier. The delinquent taxes written off are usually for personal property, which are more difficult to collect than taxes on real property.
Ten Largest Taxpayers
Set forth below are the ten largest taxpayers of the Consolidated Government for calendar year 2015. A determination of the largest taxpayers within the Consolidated Government can be made only by manually reviewing individual tax records. Therefore, it is possible that owners of several small parcels may have an aggregate assessment in excess of those set forth in the table below. Furthermore, the taxpayers shown in the table below may own additional parcels within the Consolidated Government. No independent investigation has been made of, and consequently no representation can be made as to, the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the Consolidated Government.
Taxpayer Nature of Business
Maintenance &
Operation Taxes
Levied
Net Assessed
Valuation
Percent of
Net Tax Digest
Georgia Power Company Electric Utility $ 884,091.93 $ 90,287,166 1.69%
PCS Nitrogen Fertilizer Fertilizer 849,854.30 86,790,676 1.63
International Paper Paper 754,674.36 77,070,502 1.44
Augusta National Golf 545,410.36 55,699,587 1.04
DSM Chemical Company Chemicals 437,795.18 44,709,475 0.84
Doctors Hospital Hospital 430,885.50 44,003,829 0.82
Bellsouth Communications Utility 368,699.61 37,653,146 0.71
Augusta Newsprint Newspaper 289,573.00 29,572,406 0.55
Augusta Life and Accident Insurance Insurance 199,884.43 20,413,034 0.38
Augusta Riverfront Limited Hotel 148,257.91 15,104,718 0.28
Totals $4,760,868.67 $501,304,538 9.38%
________________________
Source: Richmond County Tax Commissioner.
99268384\V-5
-33-
CONSOLIDATED GOVERNMENT FINANCIAL INFORMATION
Accounting System and Policies
The accounting practices and policies of the Consolidated Government conform to generally accepted accounting principles as applied to governments. The Consolidated Government’s accounting system is organized and operated on a fund basis. The Consolidated Government’s funds are segregated for the purpose of accounting for the operation of specific activities or attaining certain objectives. The Consolidated Government’s primary fund is the General Fund, which contains all Consolidated Government revenues except those that are specifically allocated for other purposes. The Consolidated Government may appropriate money from the General Fund for all ordinary Consolidated Government expenses. The Richmond County Department of Health, the Augusta Downtown Development Authority, the Augusta Canal Authority, and the Augusta-Richmond County Coliseum Authority are accounted for as discretely presented component units of the Consolidated Government. The Consolidated Government also maintains several other funds to account for specific activities or to attain certain objectives.
The funds of the Consolidated Government are grouped into three broad categories:
(1) Governmental Funds - This category includes the General Fund, the Special Revenue Funds, the Capital Projects Funds, and the Debt Service Fund. The General Fund is the principal operating fund of the Consolidated Government and is used to account for all activities of the Consolidated Government not otherwise accounted for in a specified fund. The Consolidated Government has 23 Special Revenue Funds, which account for specific revenues that are legally restricted to expenditures for specified purposes. The Consolidated Government has six Capital Projects Funds, which account for collections of the special one percent sales and use tax to be used for the acquisition or construction of major capital facilities. The Debt Service Fund accounts for the accumulation of resources for the payment of principal and interest on general obligation bonds.
(2) Proprietary Funds - This category includes the Enterprise Funds and the Internal Service Funds. The Consolidated Government has seven Enterprise Funds, which are the Water and Sewer System Fund, the Augusta Regional Airport at Bush Field Fund, the Waste Management Fund, the Municipal Golf Course Fund, the Transit Fund, the Daniel Field Airport Fund, and the Garbage Collection Fund. The Consolidated Government has seven Internal Service Funds, which account for operations that provide services to other departments or agencies of the Consolidated Government on a cost-reimbursement basis. The Enterprise Funds and the Internal Service Funds account for Consolidated Government operations that are designed to be self-supporting.
(3) Fiduciary Funds - This category includes the Pension Trust Funds, the Private Purpose Trust Fund, and the Agency Funds, which account for assets held by the Consolidated Government in a fiduciary capacity. The Consolidated Government has three Pension Trust Funds, one Private Purpose Trust Fund, and five Agency Funds.
Reference is made to Note 1 of the basic financial statements of the Consolidated Government included as Appendix A for a detailed discussion of the Consolidated Government’s significant accounting policies.
99268384\V-5
-34-
Five Year General Fund History
Set forth below is an historical, comparative summary of the revenues, expenditures, and changes in fund balance of the Consolidated Government’s General Fund for the past five fiscal years. Information in the following table for fiscal years 2011 to 2015 has been extracted from audited financial statements of the Consolidated Government for the years ended December 31, 2011 to 2015. Although taken from audited financial statements, no representation is made that the information is comparable from year to year, or that the information as shown taken by itself presents fairly the financial condition of the Consolidated Government for the fiscal years shown. For more complete information, reference is made to the audited financial statements for fiscal years 2011 to 2015, copies of which are available from the Consolidated Government upon request.
Consolidated Government General Fund
Years Ended December 31 (Audited)
2011 2012 2013 2014 2015
Revenues Taxes - Property $ 37,392,940 $ 37,843,518 $ 41,139,309 $ 51,469,886 $ 52,104,322
Taxes - Other than Property 54,490,431 56,223,480 56,348,080 56,870,778 57,556,961 Licenses and Permits 1,420,144 1,602,197 1,608,943 1,711,765 1,740,283
Charges for Current Services 18,489,911 19,077,818 17,566,881 17,983,693 18,732,502 Fines and Forfeitures 5,019,818 5,039,481 4,703,891 4,816,120 5,796,995
Intergovernmental 5,485,456 3,725,545 4,202,605 12,670,860 6,233,781 Contributions and Donations 313,383 209,967 314,611 255,884 347,540
Other 930,881 1,497,741 1,533,951 1,470,148 1,266,912
Total Revenues 123,542,964 125,219,747 127,418,271 147,249,134 143,779,296
Expenditures Current:
General Government 30,743,213 32,990,454 30,603,006 27,396,704 34,504,731 Judicial 16,144,428 16,735,580 17,879,023 20,177,411 19,642,181
Public Safety 55,219,088 57,288,606 57,260,065 61,815,768 59,638,526 Public Works 7,251,717 6,494,298 6,451,523 25,022,613 7,099,532
Health and Welfare 2,189,447 2,466,034 2,522,599 2,311,106 2,341,192 Culture and Recreation 12,656,582 12,253,723 12,494,590 13,529,319 13,493,941
Housing and Development 1,505,180 2,300,766 1,615,686 1,723,153 1,519,054
Total Expenditures 125,709,655 130,529,461 128,826,492 151,976,074 138,239,157
Excess (Deficiency) of Revenues Over Expenditures (2,166,691) (5,309,714) (1,408,221) (4,726,940) 5,540,139
Other Financing Sources (Uses)
Transfers In 6,044,188 5,512,320 1,894,092 2,626,992 2,319,076
Transfers Out (2,632,056) (3,434,372) (1,745,628) (5,031,280) (5,374,165) Proceeds from Capital Leases 447,763 165,974 481,436 248,661 190,823
Total Other Financing Sources (Uses) 3,859,895 2,243,922 629,900 (2,155,627) (2,864,266)
Net Change in Fund Balance 1,693,204 (3,065,792) (778,321) (6,882,567) 2,675,873
Fund Balance,
Beginning of Year 33,371,284 35,064,488 31,998,969 31,220,375 24,337,808
Fund Balance,
End of Year $ 35,064,488 $ 31,998,696 $ 31,220,375 $ 24,337,808 $ 27,013,681
99268384\V-5
-35-
Management Comments Concerning Material Trends in Revenues and Expenditures
For a narrative overview and analysis of the financial activities of the Consolidated Government for fiscal year 2015, see “Management’s Discussion and Analysis” included in Appendix A to this Official Statement. The Management’s Discussion and Analysis is not a required part of the basic financial statements of the Consolidated Government but is supplementary information required by the Governmental Accounting Standards Board that has not been audited by the Consolidated Government’s auditor.
Budgetary Process
Georgia law requires each county and municipality to operate under an annual balanced budget adopted by resolution. A budget resolution is balanced when the sum of estimated net revenues and appropriated fund balances is equal to appropriations.
The Consolidated Government adopts annual appropriated budgets for its General Fund, its Special Revenue Funds, and its Debt Service Fund using the modified accrual basis of accounting, which is in conformity with generally accepted accounting principles and which is consistent with the basis of accounting used in the Consolidated Government’s General Fund financial statements. The Consolidated Government adopts project-length budgets for its Capital Project Funds. Annual budgets are adopted for the Consolidated Government’s Proprietary or Fiduciary Funds; however, they are not legally required. The Consolidated Government prepares operating budgets for its Proprietary Funds for planning, control, cost allocation, and evaluation purposes.
In July of each year, information is transmitted to the various departments to enable them to prepare their operating budget requests for the next fiscal year. Approximately one month later, the budgetary requests are returned and are reviewed by the Administrator and the Director of Finance of the Consolidated Government. The Administrator then prepares a proposed line item operating budget and submits it to the Commission in October. The operating budget includes proposed expenditures and the means for financing them. Public hearings are then conducted in the Consolidated Government to obtain taxpayer comments on the proposed budget. The budget is legally adopted no later than the third Thursday in the November prior to the beginning of the fiscal year to which it applies through adoption of a resolution by the Commission. Budget amendments must be authorized by the Commission through a budget revision.
Budgetary control (the level at which expenditures may not legally exceed appropriations) is maintained at the departmental level. The Consolidated Government maintains administrative budgetary control internally at an object of expenditure level within the department or function. The Administrator of the Consolidated Government is authorized to transfer budgeted amounts among accounts within a department’s budget, except that transfers of budgeted amounts involving capital outlay or salaries require the approval of the Commission. Budget revisions that would alter the total expenditures of any department or fund require the approval of the Commission.
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of moneys are recorded in order to reserve that portion of the applicable appropriation, is employed as a technique of accomplishing budgetary control in the General Fund, the Special Revenue Funds, the Debt Service Fund, and the Capital Project Funds. Encumbrances outstanding at year-end are reported as reservations of fund balances under generally accepted accounting principles, since they do not constitute expenditures or liabilities. Unencumbered appropriations lapse at the end of the Consolidated Government’s fiscal year. Encumbrances are reappropriated in the following fiscal year.
99268384\V-5
-36-
General Fund Budgets
Set forth below is a summary of the Consolidated Government’s adopted budget for its General Fund for the year ending December 31, 2016. This budget is based upon certain assumptions and estimates of the Consolidated Government regarding future events, transactions, and circumstances. Realization of the results projected in this budget will depend upon implementation by management of the Consolidated Government of policies and procedures consistent with the assumptions. There can be no assurance that actual events will correspond with such assumptions, that uncontrollable factors will not affect such assumptions, or that the projected results will be achieved. Accordingly, the actual results achieved could materially vary from those projected in the budget set forth below.
General Fund Budget for Year Ending December 31, 20161
Revenues
Taxes - Property $ 43,005,790
Taxes - Other Than Property 69,090,600
Licenses and Permits 1,673,500
Use of Money and Property 410,500
Charges for Services 20,153,500
Fines and Forfeitures 5,203,400
Intergovernmental 2,923,980
Contributions and Donations 35,000
Other 1,401,410
Total Revenues 143,897,680
Expenditures
Current:
General Government 28,229,820
Judicial 20,279,370
Public Safety 66,499,840
Public Works 5,617,890
Health and Welfare 2,274,200
Culture and Recreation 13,991,670
Housing and Development 1,675,680
Non Departmental 234,350
Total Expenditures 138,802,820
Excess (Deficiency) of Revenues
Over Expenditures 5,094,860
Other Financing Sources (Uses)
Operating Transfers In 9,652,200
Operating Transfers Out (14,747,060)
Total Other Financing Sources (Uses) (5,094,680)
Net Change in Fund Balance $ -0-
______________________
1 Budget is shown as originally adopted.
99268384\V-5
-37-
Set forth below is an historical, comparative summary of the revenues and expenditures, budget and actual, of the Consolidated Government’s General Fund for the years ended December 31, 2011 to 2015.
Consolidated Government General Fund
Years Ended December 31
2011 2012 2013 2014 2015
Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual
Total Revenues $126,002,871 $123,542,964 $135,461,317 $125,219,747 $133,948,110 $127,418,271 $154,872,080 $147,249,134 $142,907,575 $143,779,296
Total Expenditures 130,941,421 125,709,655 138,807,907 130,529,461 134,082,330 128,826,492 154,243,680 151,976,074 138,971,375 138,239,157
Excess (Deficiency) of
Revenues Over (Under)
Expenditures (4,938,550) (2,166,691) (3,346,590) (5,309,714) (134,220) (1,408,221) 628,400
(4,726,940) 3,936,200 5,540,139
Other Financing Sources
(Uses) 4,938,550 3,859,895 3,346,590 2,243,992 134,220 629,900 (1,427,930) (2,155,627) (2,963,700) (2,864,266)
Net Change in Fund Balance $ -0- $ 1,693,204 $ -0- $ (3,065,792) $ -0- $ (788,321) $ (799,530) $ (6,882,567) $ 972,500 $ 2,675,873
[Remainder of Page Intentionally Left Blank]
99268384\V-5
-38-
The Consolidated Government has, with some exceptions, conformed to its General Fund budgets for the years ended December 31, 2011 to 2015. Set forth below is a summary of unfavorable variances between budgeted and actual amounts for the General Fund for the years ended December 31, 2011 to 2015.
General Fund Unfavorable Variances
Years Ended December 31
2011 2012 2013 2014 2015
Revenues
Taxes - Property $ --- $(268,172) $ --- $ --- $ ---
Sales Tax --- (60,754) (1,194,863) (1,973,416) (1,356,253)
Franchise Taxes (809,783) --- (1,645,894) (11,700) ---
Other Taxes --- --- (39,583) --- (16,477)
Licenses and Permits (94,436) --- --- --- ---
Use of Money and Property --- --- --- --- ---
Charges for Current Services (417,239) (799,362) (546,509) (533,637) (244,668)
Fines and Forfeitures --- --- (391,859) (301,880) ---
Intergovernmental (1,157,125) (2,091,661) (947,435) (8,904,350) ---
Contributions and Donations --- --- (10,000) --- ---
Interest and Penalties (407,617) (290,783) --- --- (3,210)
Other (2,071,319) (7,285,329) (3,739,249) --- ---
Expenditures
Current
General Government --- --- (3,682,486) --- ---
Other Financing Sources (Uses)
Operating Transfers In (3,494,357) (3,302,185) --- --- (324,934)
Operating Transfers Out --- --- --- --- ---
Proceeds from Sale of Assets (1,659,257) (999,026) --- (851,339) (329,177)
Net Cumulative Variance
Favorable (Unfavorable) $ 1,693,204 $(3,065,792) $(778,321) $(6,083,037) $ ---
The Consolidated Government undertakes periodic budget revisions in which the Consolidated Government’s adopted budget is amended to reflect actual events that have occurred during the Consolidated Government’s current fiscal year. The Consolidated Government last amended its adopted budget for fiscal year 2016 on _________, 2016. The Consolidated Government expects to conform to its adopted budget, as amended, for its General Fund for fiscal year 2016.
99268384\V-5
-39-
Capital Improvements
The following table summarizes capital outlay for the Consolidated Government’s governmental capital assets (excluding capital assets accounted for in the Enterprise Funds) for the past five fiscal years.
Years Ended December 31
Function and Activity 2011 2012 2013 2014 2015
Land $ --- $ 74,270 $ --- $ 373,433 $ 478,366
Site Improvements 130,965 35,649 20,803 9,467 5,860
Buildings --- 513,948 --- --- ---
Building Improvements 96,562 79,926 316,755 126,696 606,098
Vehicles 2,210,655 640,692 1,111,214 762,031 6,422,710
Machinery and Equipment 262,961 441,711 1,575,108 714,461 699,476
IT - Hardware 204,710 450,696 94,910 63,256 416,011
IT - Software 76,110 29,402 113,098 210,868 130,403
Furniture and Fixtures --- --- --- 59,487 151,830
Other Capital --- --- --- --- ---
Infrastructure 109,822 --- 646,474 --- 44,785
Construction in Progress -
Additions 64,980,601 45,832,855 45,831,829 44,479,529 60,156,416
Construction in Progress -
Placed into Service (763,058) (5,457,064) (4,092,671) (3,046,583) ---
Total $67,309,328 $42,642,085 $45,617,520 $43,752,645 $60,156,416
The Consolidated Government presently does not have in effect a multi-year capital improvements plan, except for capital expenditures funded from special purpose one percent sales tax proceeds.
Sources of Tax Revenues
Set forth below are the Consolidated Government’s General Fund tax revenues by source for the past five fiscal years.
Governmental Fund Tax Revenues By Source
Fiscal
Year
Ended
Property
Tax
Sales
Tax
Alcoholic
Beverage
Tax
Insurance
Premium
Tax
Hotel/Motel
Tax
Franchise
Tax
Excise
Tax
Other
Taxes1 Total
2011 $54,522,654 $74,551,668 $3,296,075 $10,506,999 $4,258,143 $22,198,697 $578,861 $8,758,508 $178,671,605
2012 57,108,355 74,530,210 3,441,585 9,756,969 4,500,243 24,098,240 585,180 9,036,914 183,057,696
2013 59,474,339 74,230,510 3,274,529 10,102,412 4,712,844 22,717,526 586,110 9,329,650 184,427,920
2014 69,764,291 85,008,914 3,321,766 10,652,802 5,449,084 21,800,964 665,843 3,246,578 199,820,242
2015 69,028,701 86,002,017 3,262,384 11,284,618 5,574,471 24,880,891 542,720 1,274,545 201,850,347 ____________________________________
1 Includes penalties and interest.
Pursuant to the Georgia Local Option Sales Tax Act, the former County instituted a one percent (1%) local sales and use tax effective April 1, 1976, which is a source of revenue for the Consolidated Government. The Revenue Commissioner of the State of Georgia administers and collects the tax. Pursuant to the provisions of the Local Option Sales Tax Act, the Consolidated Government and the Cities of Blythe and Hephzibah receive percentages of these tax proceeds based upon their populations established by the most recent decennial census and as set forth in an agreement the terms of which are negotiated between the Consolidated Government and the Cities of Blythe and Hephzibah after each such decennial census is conducted. The Consolidated Government currently receives approximately 97% of total tax proceeds. Monthly receipts are remitted to the political subdivisions, representing collections for the second preceding month.
99268384\V-5
-40-
Employee Benefits
[TO BE UPDATED]
General
The Consolidated Government presently maintains one agent multiple-employer (the “GMEBS Plan”), and six single-employer defined-benefit pension plans (the “General Retirement Plan,” the “1945 Plan,” the “General Pension Plan,” the “Policemen’s Pension Plan,” the “Firemen’s Pension Plan,” and the “City Employees’ Pension Plan”), described below, covering certain employees of the Consolidated Government. The Consolidated Government also presently maintains a defined-contribution plan and a deferred compensation plan, each described below, covering certain employees of the Consolidated Government, and provides certain other employee and post-employment benefits, which are described below, to certain employees of the Consolidated Government.
Pension Plans
The GMEBS Plan is administered through the Georgia Municipal Employees Benefit System (“GMEBS”), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for cities in the State of Georgia. Effective January 1, 2008, the Consolidated Government revised the plan provisions governing the GMEBS and transferred all participants in the single-employer defined-benefit pension plan known as the “1977 Plan,” which covered certain former County employees, into the GMEBS Plan. In addition, the Consolidated Government offered all participants in its defined-contribution plan described below the option to transfer their contributions from that plan to the revised GMEBS Plan. All but 290 of the participants in the defined-contribution plan elected to transfer their contributions to the GMEBS Plan.
The General Retirement Plan, the General Pension Plan, the Policemen’s Pension Plan, the Firemen’s Pension Plan, and the City Employee’s Pension Plan cover former City employees. The 1945 Plan covers certain former County employees. The funding methods and determination of benefits payable for the defined-benefit plans in general provide that pension funds are to be accumulated from employee contributions, employer contributions, and income from the investment of accumulated funds. Former City policemen and firemen hired before 1945 are covered under the General Pension Plan. Former City policemen hired between 1945 and 1949 are covered under the Policemen’s Pension Plan. Former City firemen hired between 1945 and 1949 are covered under the Firemen’s Pension Plan. Other former City employees hired between 1945 and 1949 are covered by the City Employees’ Pension Plan. Former City employees hired after March 1, 1949 and before March 1, 1987, whose age did not exceed 35 at the time of their employment, are covered by the General Retirement Plan. Former City employees hired on or after March 1, 1987 and before consolidation of the City and County governments are covered by the GMEBS Plan. Former County employees hired prior to October 1, 1975 are covered by the 1945 Plan. Former County employees not covered by the 1945 Plan, whose age did not exceed 60 at the time of their employment, were covered by the 1977 Plan until January 1, 2008 and are now covered by the GMEBS Plan.
Consolidated Government employees who are not covered by another plan are covered by the defined- contribution plan described below. All of the Consolidated Government’s pension plans, except for the GMEBS Plan, are closed to new employees.
99268384\V-5
-41-
Set forth below is selected information about the Consolidated Government’s defined-benefit pension plans.
Contributions to Defined-Benefit Pension Plans
Years Ended December 31
2011 2012 2013 2014 2015
1945 Plan Employee Contributions $ 6,253 $ 6,569 $ 6,617 $ 6,661 Employer Contributions 390,996 291,502 299,605 290,565
General Retirement Plan Employee Contributions $ 291,737 $ 219,125 $ 202,735 $ 185,458 Employer Contributions 1,543,071 2,826,791 1,924,332 2,256,722
GMEBS1 Employee Contributions $2,913,475 $3,052,262 $3,022,920 3,377,580 Employer Contributions 4,893,018 5,082,322 5,170,685 5,297,640 ________________________
1 The 1977 Plan was terminated effective January 1, 2008 when all participants in the 1977 Plan were transferred to the GMEBS Plan.
Analysis of Funding Progress of Defined-Benefit Pension Plans
Actuarial Valuation Date Actuarial Value of Assets
Actuarially Accrued Liability
(Funded) Unfunded Actuarially Accrued Liability
Funded Ratio
Covered Payroll
(Funded) Unfunded Actuarially Accrued Liability as a Percentage of Covered Payroll
1945 Plan 12/31/11 $7,152,239 $9,398,563 $2,246,324 76.1% $125,222 $1,793.9 12/31/12 6,403,803 9,209,859 2,806,056 69.5 131,602 2,132.2 12/31/13 6,423,808 8,756,203 2,332,395 73.4 132,346 1,762.3 12/31/14 12/31/15
General Retirement Plan 12/31/11 $64,785,966 $83,583,477 $18,797,511 77.5% $3,152,905 $596.2 12/31/12 61,776,481 81,888,596 20,112,115 75.4 2,877,191 699.0 12/31/13 64,261,414 82,674,584 18,413,170 77.7 2,906,852 633.4 12/31/12 12/31/13
GMEBS1 07/01/11 $67,421,898 $ 90,451,936 $23,030,038 74.5% $73,830,249 31.2% 07/01/12 76,659,093 99,440,605 22,781,512 77.1 73,908,657 30.8 07/01/13 87,884,346 110,942,833 23,058,487 79.2 79,574,939 29.0 07/01/14 99,509,643 119,742,080 20,232,437 83.1 82,687,047 24.5 07/01/15 ________________________
1 The 1977 Plan was terminated effective January 1, 2008 when all participants in the 1977 Plan were transferred to the GMEBS Plan.
99268384\V-5
-42-
Membership in Defined-Benefit Pension Plans as of January 1, 2014
Retirees and Beneficiaries Receiving Benefits
Terminated Plan Members Entitled to But Not Yet Receiving Benefits
Active Plan Members 1945 Plan 25 -0- 2 Policemen’s Pension Plan 1 -0- -0- Firemen’s Pension Plan 2 -0- -0- City Employees’ Pension Plan 6 -0- -0- General Retirement Plan 182 10 71 GMEBS 393 96 2,047
Total 609 106 2,120
The Consolidated Government is required by Georgia law to have an actuarial valuation of its defined-benefit pension plans done once every two years. The Consolidated Government met the minimum funding levels prescribed by state law through January 1, 2015.
The Consolidated Government has an actuarial valuation of the GMEBS Plan, the General Retirement Plan, and the 1945 Plan done once every two years. The actuarial report prepared by The Segal Group, Inc. (“Segal”), dated August 7, 2014, presents the results of the July 1, 2014 actuarial valuation of the GMEBS Plan. The actuarial reports prepared by the CBIZ Benefits & Insurance Services, Inc. (“CBIZ”), dated June 30, 2014, present the results of the January 1, 2014 actuarial valuations of the General Retirement Plan and the 1945 Plan. For more complete information, reference is made to these actuarial reports, copies of which are available from the Consolidated Government upon request.
Note 6 of the audited financial statements included as a part of Appendix A to this Official Statement contains a detailed description of the Consolidated Government’s defined-benefit pension plans covering employees of the Consolidated Government. This description includes the principal actuarial assumptions used by Segal in preparing the actuarial valuation of the GMEBS Plan as of July 1, 2014, and used by CBIZ in preparing the actuarial valuations of the General Retirement Plan and the 1945 Plan as of January 1, 2014.
INFORMATION INCLUDED IN THIS SECTION REGARDING THE CONSOLIDATED GOVERNMENT’S DEFINED-BENEFIT PENSION PLANS RELIES ON INFORMATION PRODUCED BY THESE PENSION PLANS AND THEIR INDEPENDENT ACCOUNTANTS AND ACTUARIES. ACTUARIAL ASSESSMENTS ARE “FORWARD-LOOKING” INFORMATION THAT REFLECT THE JUDGMENT OF THE FIDUCIARIES OF THESE PENSION PLANS. ACTUARIAL ASSESSMENTS ARE BASED UPON A VARIETY OF ASSUMPTIONS, ONE OR MORE OF WHICH MAY PROVE TO BE INACCURATE OR BE CHANGED IN THE FUTURE, AND WILL CHANGE WITH THE FUTURE EXPERIENCE OF THESE PENSION PLANS.
Defined Contribution Plan
The Consolidated Government maintains a single employer, defined-contribution plan created in accordance with Internal Revenue Code Section 401(a) for certain of its full-time employees. In a defined-contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The Consolidated Government has no liability under this plan except for contributions established and made each year. Employees are eligible to participate in the plan after one month of employment. Participants in the plan are required to contribute 4% of their salary, and the Consolidated Government is required to contribute 2% of the participant’s salary to the plan. The Consolidated Government’s contributions for each employee are fully vested after five years of continuous employment. The plan is administered by Nationwide Life Insurance. As of December 31, 2014, there were approximately 164 participants in the plan. For the year ended December 31, 2014, participants in the plan contributed approximately $296,222 and the Consolidated Government contributed approximately $148,112. The plan is currently closed to new participants.
Deferred Compensation Plan
The Consolidated Government also offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457(b). The plan is available to all employees and permits them to defer income taxation of a portion of their salary to future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency, but employees do not incur a penalty for early withdrawal. All of the contributions into the plan come from employee
99268384\V-5
-43-
contributions. In accordance with Internal Revenue Code Section 457, plan assets are held in trust for the exclusive benefit of plan participants. Accordingly, the assets and liabilities of the trust are not reflected in the City’s financial statements.
Other Employee Benefits
Consolidated Government employees accrue vacation and sick leave in different amounts, depending upon the period of time the Consolidated Government has employed them. The maximum amount of vacation leave that employees may accumulate is 43 days. The Consolidated Government pays accrued vacation leave upon termination of employment and has reflected a liability for accumulated vacation pay in its financial statements. The maximum amount of sick leave that Consolidated Government employees (other than firefighters) may accumulate is 132 days. The Consolidated Government, however, does not pay accrued sick leave upon termination of employment and has not reflected accumulated sick leave as a liability in the Consolidated Government’s financial statements.
Other Post-Retirement Benefits
In addition to pension benefits, the Consolidated Government provides certain medical and death benefits for eligible retired employees of the Consolidated Government and their spouses. The Consolidated Government’s employees who are also participants in one of the retirement plans are eligible for these post-employment retirement benefits if they reach normal retirement age or are totally disabled while employed by the Consolidated Government. The cost of these benefits is recognized as expenditures as claims and premiums are paid. For the year ended December 31, 2014, the Consolidated Government contributed $3,274,460 to post-employment retirement benefits costs. The Consolidated Government currently funds and intends to continue to fund these benefits on a pay-as-you-go basis. No trust fund has been established for future funding of these benefits. As of January 1, 2013, the most recent date for which an actuarial valuation is available, the actuarial accrued liability for benefits was $95,489,631 and the actuarial value of assets was $-0-, resulting in an unfunded actuarial accrued liability of $95,489,631. As of the January 1, 2013 actuarial valuation, there were 556 retirees and spouses of retires receiving these post-employment retirement benefits. See Note __ of the audited financial statements of the Consolidated Government included as a part of Appendix A to this Official Statement for further information concerning the Consolidated Government’s post-retirement benefits.
Accounting Changes Impacting Defined Benefit Pension Plan and OPEB Reporting
Beginning with the fiscal year ended December 31, 2015, the Consolidated Government will be required to adopt GASB Statement No. 68 (“Statement 68”), Accounting and Financial Reporting for Pensions. Statement 68 requires governments providing defined benefit pensions to recognize their long-term obligations for pension benefits as a liability for the first time on its government-wide statement of net position and to more comprehensively and comparably measure the annual costs of pension benefits and provides methodologies required to make such calculations. Currently, the Consolidated Government reports such liability in the notes to its respective audited financial statements. The assumptions required under GASB 68 to make such calculations will differ from the current actuarial assumptions used to calculate such liabilities that are reported in the notes to the audit; however, at this time, no assessment of the impact of GASB 68 has been made by the Consolidated Government.
GASB has indicated in its 2014 plan that it expects to release an exposure draft of a statement regarding other postemployment benefit (“OPEB”) accounting and financial reporting, which is expected to become final in the second quarter of 2015. Currently, as with pension liabilities, OPEB liabilities are reported in the notes to the audited financial statements and are not reported in the audited financial statements.
Insurance Coverage and Governmental Immunity
Under Georgia law, the defense of sovereign immunity is available to the Consolidated Government, except for actions for the breach of written contracts and actions for the recovery of damage for any claim for which liability insurance protection has been provided, but only to the extent of the liability insurance provided. The Consolidated Government, however, may be unable to rely upon the defense of sovereign immunity and may be subject to liability in the event of suits alleging causes of action founded upon various federal laws, such as suits filed pursuant to 42 U.S.C. § 1983 alleging the deprivation of federal constitutional or statutory rights of an individual and suits alleging anti-competitive practices and violations of the federal antitrust laws by the Consolidated Government in the exercise of its delegated powers.
99268384\V-5
-44-
The Consolidated Government carries liability insurance for the types of claims and in amounts that are customary for similar entities for those categories of claims that are not subject to the defense of sovereign immunity. The Consolidated Government also carries property and casualty damage insurance on buildings and other physical assets.
Present insurance coverage is summarized below:
Type Amount in Force
Building and Contents1
Employee Blanket Bond 100,000
Public Official Bond for
each Commissioner 10,000
Limits of Liability
Type Each Occurrence Aggregate
Public Officials’ Liability $2,000,000 None ________________________
1 Includes boiler and machinery and valuable papers.
The Consolidated Government maintains four Risk Management Funds to account for and finance its self-insured risks of loss. The Risk Management Funds are maintained to provide general and automobile liability insurance, workers’ compensation coverage, and unemployment coverage for the Consolidated Government. As of December 31, 2009, the net assets of the Risk Management Funds totaled $1.035 million. In addition, the Consolidated Government designated approximately $4.7 million of its unreserved fund balance in its general fund for risk management. The Consolidated Government is also self-insured for its workers’ compensation coverage through a self-insurance program that is administered under contracts with third party administrators. For a description of the Consolidated Government’s self-insurance programs, see Note 4.A to the basic financial statements of the Consolidated Government included as Appendix A to this Official Statement.
A summary of the Consolidated Government’s self-insured retention and excess liability insurance coverage is set forth below:
Excess Liability Insurance Self-Insured Retention Limits of Liability
Type Each Occurrence Aggregate Each Occurrence Aggregate
Workers’ Compensation $600,000 None $1,000,000 None
The Consolidated Government requires payment and performance surety bonds and builders’ risk insurance of all contractors and subcontractors involved in construction related to the System. The Consolidated Government requires the surety bonds to be issued by surety firms listed on the U.S. Treasury-approved list and the builders’ risk insurance to be in the amount of the contract sums.
LEGAL MATTERS
Pending Litigation
The Consolidated Government, like other similar bodies, is subject to a variety of suits and proceedings arising in the ordinary conduct of its affairs. The Consolidated Government, after reviewing the current status of all pending and threatened litigation with its special counsel, Shepard, Plunkett & Hamilton, LLP, believes that, while the outcome of litigation cannot be predicted, the final settlement of all lawsuits which have been filed and of any actions or claims pending or threatened against the Consolidated Government or its officials in such capacity are adequately covered by insurance or will not have a material adverse effect upon the financial position or results of operations of the Consolidated Government.
99268384\V-5
-45-
There is no litigation now pending or, to the knowledge of the Consolidated Government, threatened against the Consolidated Government that (i) restrains or enjoins the issuance or delivery of the Bonds, the reimposition of the Sales Tax, the levy of an ad valorem tax for the payment of the Bonds, or the use of the proceeds of the Bonds or (ii) questions or contests the validity of the Bonds or the proceedings and authority under which they are to be issued and the Sales Tax is to be reimposed and an ad valorem tax is to be levied to pay the Bonds. Neither the creation, organization, or existence of the Consolidated Government, nor the title of the present members or other officials of the Board of Commissioners to their respective offices, is being contested or questioned.
Opinion of Co-Bond Counsel
Legal matters incident to the authorization, validity, and issuance of the Bonds are subject to the unqualified approving opinion of Dentons US LLP and Nowell Sparks, LLC, both of Atlanta, Georgia, Co-Bond Counsel, whose opinion will be available at the time of delivery of the Bonds. It is anticipated that the approving opinion will be in substantially the form attached to this Official Statement as Appendix B.
In the opinion of Co-Bond Counsel, under existing law, interest on the Bonds is excluded from gross income for federal income tax purposes (including the tax imposed by Chapter 2A of Subtitle A of the Code) and is not an enumerated “item of tax preference” for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted current earnings. For purposes of Chapter 2A of Subtitle A of the Code, interest on the Bonds, by virtue of being excluded from gross income under Chapter 1 of Subtitle A of the Code, is excluded from the modified adjusted gross income of individuals, from the adjusted gross income of estates and trusts, and from the net investment income of taxpayers that are subject to the tax imposed pursuant to Section 1411 of the Code (the “Affordable Care Tax”). The foregoing opinions are subject to the condition that the Consolidated Government complies with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements may cause the inclusion of the interest on the Bonds in gross income for federal income tax purposes (including the tax imposed by Chapter 2A of Subtitle A of the Code) to be retroactive to the date of issuance of the Bonds.
In concluding that interest on the Bonds is excluded from gross income for federal income tax purposes (including the tax imposed by Chapter 2A of Subtitle A of the Code), Co-Bond Counsel will rely, as to questions of fact material to its opinion, upon the following items, without undertaking to verify any of them by independent investigation: (a) certified proceedings and other certifications of public officials furnished to it, (b) certifications furnished to it by or on behalf of the Consolidated Government (including certifications made in the tax certificate of the Consolidated Government and the certificate as to arbitrage matters of the Consolidated Government), and (c) representations of the Consolidated Government contained in such proceedings and in documents delivered in connection with the issuance of the Bonds. If certain of these items are incorrect, interest on the Bonds may become included in gross income for federal income tax purposes (including the tax imposed by Chapter 2A of Subtitle A of the Code) retroactive, in some cases, to the date of issuance of the Bonds.
The Affordable Care Tax is imposed on individuals at the rate of 3.8% on the lesser of (1) net investment income and (2) any excess of the modified adjusted gross income over the applicable threshold amount. For individuals filing joint federal tax returns or as surviving spouses, the applicable threshold is $250,000; for married individuals filing separate returns, the applicable threshold is $125,000; and for other individuals, the applicable threshold is $200,000. This 3.8% tax is also imposed on estates and trusts on the lesser of (1) their undistributed net investment incomes and (2) any excess of their adjusted gross incomes over the dollar amount at which the highest tax bracket in Section 1(e) of the Code begins for the taxable year. Subject to the exceptions, conditions, and limitations set forth in the opinion of Co-Bond Counsel, interest on the Bonds is excluded from modified adjusted gross income, adjusted gross income, and net investment income for purposes of the Affordable Care Tax. Gain, however, if any, from the sale or other disposition of Bonds will be taken into account in such calculations.
Co-Bond Counsel expresses no opinion regarding any other federal tax consequences arising with respect to the Bonds.
In the further opinion of Co-Bond Counsel, the interest on the Bonds is exempt from State of Georgia income taxation. Co-Bond Counsel has not opined as to whether interest on the Bonds is subject to state or local income taxation in jurisdictions other than Georgia; interest on the Bonds may or may not be subject to state or local income taxation in jurisdictions other than Georgia under applicable state or local laws. Each purchaser of the Bonds should consult its own tax advisor regarding the tax-exempt status of the interest on the Bonds in a particular state or local jurisdiction other than Georgia.
99268384\V-5
-46-
Collateral Federal Tax Consequences
Ownership of the Bonds may result in collateral federal tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain recipients of Social Security or railroad retirement benefits, foreign corporations operating branches in the United States, certain Subchapter S corporations, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the Bonds. The following is a general description of certain of these consequences:
1. Interest on the Bonds is included in the adjusted current earnings of corporations, and such corporations may therefore be required to include as an adjustment in their calculation of alternative minimum taxable income 75% of the excess of adjusted current earnings over alternative minimum taxable income (determined without regard to this adjustment and prior to reduction for certain net operating losses).
2. No deduction is allowable for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion of the owner’s interest expense allocated to interest on the Bonds.
3. Property and casualty insurance companies are required to reduce the amount of their deductible underwriting losses by 15% of their amount of tax-exempt interest, including interest on the Bonds. If the amount of this reduction exceeds the amount otherwise deductible as losses incurred, such excess may be includable in income.
4. Certain recipients of Social Security benefits and railroad retirement benefits will be required to include a portion of such benefits within gross income by reason of receipt or accrual of interest on the Bonds.
5. A branch-level tax is imposed on certain earnings and profits of foreign corporations operating branches in the United States, and interest on the Bonds may be included in the determination of such domestic branches’ taxable base on which this tax is imposed.
6. Passive investment income, including interest on the Bonds, may be subject to federal income taxation for any Subchapter S corporation that has Subchapter C earnings and profits at the close of the taxable year, if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income.
7. Payments of interest on the Bonds are subject to reporting to the Internal Revenue Service (the “IRS”) and to payees on Form 1099-INT (or successor form), and the Paying Agent (or its agent) may be required to withhold federal tax (referred to as “backup withholding”) from any such payment on a Bond, which is imposed at the rate of 28% of the gross amount of any such payment, if (i) the owner fails to furnish the Paying Agent (or its agent) his or her taxpayer identification number (“TIN”), the accuracy of which has been certified under the penalty of perjury, (ii) the Paying Agent (or its agent) has been notified by the IRS that the owner of the Bond has supplied an incorrect TIN, (iii) the IRS has notified the Paying Agent (or its agent) that the owner of the Bond has failed properly to report certain income to the IRS, or (iv) when required to do so, the owner of the Bond fails to certify under the penalty of perjury that he or she is not subject to backup withholding.
The foregoing is not intended as a detailed or comprehensive description of all possible consequences of purchasing or holding the Bonds. Persons considering the purchase of the Bonds should consult with their tax advisor as to the consequences of buying or holding the Bonds in their particular circumstances.
Changes in Federal and State Tax Law
From time to time, legislative proposals may be made to change federal or state law that, if enacted, would eliminate the exclusion of interest on tax-exempt bonds from gross income for federal income tax purposes or any state law exemption or that would otherwise diminish the advantages of ownership of tax-exempt bonds for one or more categories of taxpayers for federal or state law purposes. Any such proposal could, in certain circumstances, even become effective with respect to tax-exempt bonds issued or purchased prior to enactment or announcement of the proposal. Recent federal tax proposals have included a surtax on a measure of income that included interest on tax-exempt bonds and a proposal that diminished the “tax value” of the tax exemption for higher-income taxpayers whose income as adjusted would be subject to federal income tax at higher marginal rates. Among these proposals is one included in the Obama Administration’s Fiscal Year 2017 Revenue Proposals. This Obama proposal would, in effect, limit the “tax value” of specified deductions and exclusions, including interest on federally tax-exempt bonds, to 28% of such items. These items would be added as modifications to a taxpayer’s adjusted gross income. If the marginal federal income tax rate(s) on this measure of income exceeds 28% for an affected taxpayer, an additional tax would be imposed on the amount of such items at a rate (or rates) equal to the excess of the taxpayer's abovementioned margin rate(s) over 28%. As so proposed, this proposal would be effective for taxable years beginning after 2016, including with respect to tax-exempt bonds issued before that date. This proposal, and
99268384\V-5
-47-
possibly other proposals, if enacted, would adversely affect the ownership of federally tax-exempt bonds, including the ownership of federally tax-exempt bonds issued or purchased prior to enactment or announcement of the proposal.
In addition, from time to time, administrative actions, including regulations, rulings, and other administrative authorities, may be announced or proposed and litigation may be commenced or threatened that, if they become a legal authority, could eliminate or diminish the advantages of ownership of tax-exempt bonds for one or more categories of taxpayers for federal or state law purposes. The mere existence or announcement of any such legislative proposal or commencement or threatening of any such administrative action or litigation could impair the marketability or market value of the Bonds, at least temporarily, whether or not it is ultimately enacted into law or becomes a legal authority.
The opinion expressed by Co-Bond Counsel is based upon the U.S. Constitution and the Constitution of the State of Georgia, implemented by statutes enacted thereunder, and as interpreted by judicial, regulatory, and other administrative authorities existing as of the date of issuance and delivery of the Bonds. Co-Bond Counsel expresses no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation or proposed, pending, or threatened administrative actions or litigation. Potential purchasers of the Bonds should consult their tax advisors regarding any pending or proposed legislation, administrative action, or litigation of the type referred to or characterized above as part of their investment decision and thereafter, as appropriate.
State of Georgia Tax Reform Legislation
During the 2012 legislative session, the Georgia General Assembly enacted legislation known as House Bill 386 (the “Tax Reform Act”). Georgia Governor Nathan Deal signed the Tax Reform Act into law on April 19, 2012. The Tax Reform Act provides a number of changes to Georgia’s tax laws that impact local governments in Georgia, including the Consolidated Government. These changes include the following:
Elimination of the state and local sales tax and the ad valorem tax on motor vehicles and the replacement of such taxes with onetime state and local title fees whenever any motor vehicle changes ownership on or after March 1, 2013. These title fees equaled 6.5% of the “fair market value” of the motor vehicle (less any trade-in value) for vehicles titled from March 1, 2013 through December 31, 2013, equaled 6.75% of the “fair market value” of the motor vehicle (less any trade-in value) for vehicles titled in 2014, and equal 7% of the “fair market value” of the motor vehicle (less any trade-in value) for vehicles titled in 2015 and thereafter. The revenues from these fees are allocated among state and local governments by formula.
Elimination of the state and local sales tax (except for any local sales tax for educational purposes) on the sales, use, storage, or consumption of energy used in manufacturing, subject to a four year phase in of 25% per year that began on January 1, 2013 and reached the full exemption on January 1, 2016; however, the Tax Reform Act permits each county to adopt an ordinance to levy and collect an excise tax upon the sale or use of energy used in manufacturing to make up for the sales tax revenues lost as a result of the imposition of the sales tax exemption described above.
Expansion of the definition of “dealer” required to collect local and state sales tax on internet transactions to include out-of-state vendors with affiliate relationships with Georgia vendors if gross sales in Georgia during the preceding 12 months exceeded $50,000.
Comprehensive revision of the income tax credit for the qualified donation of conservation real property, including the reduction of the cap of the conservation easement tax credit to $500,000. The Tax Reform Act also prohibits counties, cities, and consolidated governments from holding a conservation easement unless the encumbered property is located at least partly within the boundaries of such local government.
Reinstitution of sales tax holidays for the purchase of school supplies and energy-efficient or water efficient products. The Georgia General Assembly eliminated similar sales tax holidays for 2010 and 2011 as a result of the economic downturn.
99268384\V-5
-48-
The Consolidated Government is currently uncertain as to the long-term impact that the Tax Reform Act will have on its revenues in future years as the various provisions of the Tax Reform Act become effective and the Tax Reform Act is fully implemented. In a letter dated March 19, 2012 addressed to the Georgia House Ways and Means Committee one day prior to the vote by the Georgia House of Representatives on the Tax Reform Act, the Department of Audits and Accounts of the State of Georgia cited a report from the Georgia State University Fiscal Research Center that estimated that the Tax Reform Act would result in a revenue decline for Georgia local governments of approximately $200 million in the aggregate during fiscal years 2013 through 2015, although actual results are not available. No assurance can be given that the revenue impact of the Tax Reform Act on Georgia local governments, including the Consolidated Government, will not be greater than such estimate.
Validation Proceedings
The State of Georgia instituted proceedings in the Superior Court of Richmond County, Georgia to validate the Bonds. The State of Georgia was the plaintiff in the proceeding, and the Consolidated Government was the defendant. A final judgment confirming and validating the Bonds was entered on July 11, 2016. Under Georgia law, the judgment of validation will be final and conclusive with respect to the validity of the Bonds against the Consolidated Government.
Closing Certificates
At closing of the sale of the Bonds, the Consolidated Government will deliver to the purchasers a certificate (1) that no litigation is pending or threatened against it which would have a material effect on the issuance or validity of the Bonds, the reimposition of the Sales Tax, or the levy and collection of an ad valorem tax to pay the Bonds or on the financial condition of the Consolidated Government and (2) that the information contained in this Official Statement does not contain any misstatement of a material fact and does not omit to state any material fact necessary to make the statements herein contained, in light of the circumstances under which they were made, not misleading.
MISCELLANEOUS
Rating
Moody’s Investors Service, Inc. has assigned a rating of “Aa2” to the Bonds. The rating reflects only the view of the rating agency, and any desired explanation of the significance of the rating should be obtained from the rating agency at the following address: Moody’s Investors Service, Inc., 7 World Trade Center, 250 Greenwich Street, New York, New York 10007. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There is no assurance that such rating will remain unchanged for any given period of time or that it will not be revised downward or withdrawn entirely by the rating agency, if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the liquidity and market price of the Bonds.
Sale at Competitive Bidding
The Bonds were offered by the Consolidated Government at competitive bidding on ____________, 2016, in accordance with the Notice of Sale. The interest rates shown on the cover page of this Official Statement are the interest rates to the Consolidated Government resulting from the award of the Bonds at a competitive bidding. The prices shown on the cover page of this Official Statement were furnished by the successful bidder for the Bonds. All other information concerning the nature and terms of any re-offering should be obtained from the successful bidder for the Bonds and not from the Consolidated Government.
Financial Advisor
The Consolidated Government has employed Davenport & Company LLC, Atlanta, Georgia, as its Financial Advisor in connection with the issuance of the Bonds.
Independent Auditors
The basic financial statements of the Consolidated Government as of December 31, 2015 and for the year then ended, attached hereto as Appendix A, have been audited by Mauldin & Jenkins, LLC, Macon, Georgia, independent certified public accountants, to the extent and for the period indicated in its report thereon, which appears in Appendix A. Such financial statements have been included herein in reliance upon the report of Mauldin & Jenkins, LLC
99268384\V-5
-49-
Summary of Continuing Disclosure Certificate
Definitions
The following capitalized terms have the following meanings for purposes of the Disclosure Certificate:
“Annual Report” means any Annual Report provided by the Consolidated Government pursuant to the provisions of the Disclosure Certificate described herein under the caption “MISCELLANEOUS - Summary of Continuing Disclosure Certificate -- Provision of Annual Reports and -- Content of Annual Reports.”
“Bondholders” means the beneficial owners of the Bonds.
“Dissemination Agent” means any Dissemination Agent designated in writing by the Consolidated Government and that has filed with the Consolidated Government a written acceptance of such designation.
“EMMA” means the Electronic Municipal Market Access system of the MSRB.
“Fiscal Year” means any period of twelve consecutive months adopted by the Consolidated Government as its fiscal year for financial reporting purposes and initially means the period beginning on beginning on January 1 of each calendar year and ending on December 31 of the same calendar year.
“Listed Events” means any of the events listed in the provisions of the Disclosure Certificate described herein under the caption “MISCELLANEOUS - Summary of Continuing Disclosure Certificate -- Reporting of Significant Events.”
“MSRB” means the Municipal Securities Rulemaking Board.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
Provision of Annual Reports
The Consolidated Government agreed in the Disclosure Certificate to, or to cause the Dissemination Agent to, not later than the last day of the seventh month after the end of each Fiscal Year (currently July 31), commencing with Fiscal Year 2016, provide to the MSRB in an electronic format as prescribed by the MSRB (which, as of the date hereof, is EMMA) an Annual Report that is consistent with the requirements of the provisions of the Disclosure Certificate described below under the caption “MISCELLANEOUS - Summary of Continuing Disclosure Certificate -- Content of Annual Reports.” Not later than fifteen business days prior to such date, the Consolidated Government agreed to provide the Annual Report to the Dissemination Agent (if other than the Consolidated Government). The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in the provisions of the Disclosure Certificate described below under the caption “MISCELLANEOUS - Summary of Continuing Disclosure Certificate -- Content of Annual Reports”; provided that the audited financial statements of the Consolidated Government may be submitted separately from the balance of the Annual Report.
If the Consolidated Government is unable to provide to the MSRB an Annual Report by the date required as described above, the Consolidated Government must send a notice to the MSRB in an electronic format as prescribed by the MSRB (which, as of the date hereof, is EMMA) of such failure. The Dissemination Agent is required to:
(i) determine each year prior to the date for providing the Annual Report the appropriate electronic format prescribed by the MSRB for filing with the MSRB and the proper form for such filing; and
(ii) if the Dissemination Agent is other than the Consolidated Government, file a report with the Consolidated Government certifying that the Annual Report has been provided pursuant to the Disclosure Certificate and stating the date it was provided.
The Consolidated Government is required to promptly file a notice of any change in its Fiscal Year with the MSRB in an electronic format as prescribed by the MSRB (which, as of the date hereof, is EMMA). If the audit report specified in clause (1) of the provisions of the Disclosure Certificate described below under the caption “MISCELLANEOUS - Summary of Continuing Disclosure Certificate -- Content of Annual Reports” is not submitted as part of the Annual Report to the MSRB pursuant to the Disclosure Certificate, the Consolidated Government agreed to, or to cause the Dissemination Agent to, provide to the MSRB in an electronic format as
99268384\V-5
-50-
prescribed by the MSRB (which, as of the date hereof, is EMMA) such audit report, together with the audited basic financial statements to which such audit report relates, when they are available to the Consolidated Government.
Content of Annual Reports
The Disclosure Certificate requires the Consolidated Government’s Annual Report to contain or incorporate by reference the following:
(1) the Consolidated Government’s basic financial statements for the preceding Fiscal Year, which must be prepared in accordance with generally accepted accounting principles, as in effect from time to time, and which must be accompanied by an audit report, if available at the time of submission of the Annual Report to the MSRB pursuant to the Disclosure Certificate, resulting from an audit conducted by an independent certified public accountant or firm of independent certified public accountants in conformity with generally accepted auditing standards;
(2) if generally accepted accounting principles have changed since the last Annual Report was submitted pursuant to the Disclosure Certificate and if such changes are material to the Consolidated Government, a narrative explanation describing the impact of such changes on the Consolidated Government; and
(3) information for the preceding Fiscal Year regarding the following categories of financial information and operating data of the Consolidated Government: (A) the legal debt margin of the Consolidated Government, (B) the property tax digest of the Consolidated Government, (C) the millage rates of the Consolidated Government, (D) the property tax levies and collections of the Consolidated Government, (E) the estimated value of total tax executions owned by the Consolidated Government, (F) the ten largest taxpayers of the Consolidated Government, (G) the Consolidated Government’s General Fund tax revenues by source, (H) the analysis of funding progress of the Consolidated Government’s defined-benefit pension funds, and (I) the insurance coverage of the Consolidated Government.
Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Consolidated Government or related public entities, which are available to the public on the MSRB’s Internet Web site or filed with the Securities and Exchange Commission. The Consolidated Government must clearly identify each such other document so incorporated by reference.
Reporting of Significant Events
The Disclosure Certificate governs the giving of notices of the occurrence of any of the following events with respect to the Bonds:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;
(7) Modifications to rights of Bondholders, if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds, if material;
(11) Rating changes;
99268384\V-5
-51-
(12) Bankruptcy, insolvency, receivership, or similar event of the Consolidated Government;
(13) The consummation of a merger, consolidation, or acquisition involving the Consolidated Government or the sale of all or substantially all of the assets of the Consolidated Government, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to such actions, other than pursuant to its terms, if material; and
(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
For purposes of the event identified in clause 12, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Consolidated Government in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Consolidated Government, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Consolidated Government.
If the Consolidated Government obtains knowledge of the occurrence of a Listed Event, the Consolidated Government has agreed to file in a timely manner not in excess of ten business days after such occurrence a notice of such occurrence with the MSRB in an electronic format as prescribed by the MSRB (which, as of the date hereof, is EMMA). Notwithstanding the foregoing, notice of Listed Events described in clauses 8 (other than tender offers) and 9 need not be given under the Disclosure Certificate any earlier than the notice (if any) of the underlying event is given to the owners of the affected Bonds pursuant to the Bond Resolution.
Termination of Reporting Obligation
The Consolidated Government’s obligations under the Disclosure Certificate will terminate upon the legal defeasance, prior redemption, or payment in full of all of the Bonds.
Dissemination Agent
The Consolidated Government may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.
Amendment; Waiver
Notwithstanding any other provision of the Disclosure Certificate, the Consolidated Government may amend the Disclosure Certificate, and any provision of the Disclosure Certificate may be waived, if
(a) such amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the obligor on the Bonds, or type of business conducted;
(b) such amendment or waiver does not materially impair the interests of the Bondholders, as determined either by an unqualified opinion of nationally recognized bond counsel filed with the Consolidated Government or by the approving vote of the Bondholders owning more than two-thirds in aggregate principal amount of the Bonds outstanding at the time of such amendment or waiver; and
(c) such amendment or waiver is supported by an opinion of counsel expert in federal securities laws, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings in the Disclosure Certificate to violate the Rule if such amendment or waiver had been effective on the date of the Disclosure Certificate but taking into account any subsequent change in or official interpretation of the Rule, as well as any change in circumstances.
If any provision of the Disclosure Certificate described herein under the caption “MISCELLANEOUS - Summary of Continuing Disclosure Certificate -- Content of Annual Reports” is amended or waived, the first Annual Report containing any amended, or omitting any waived, operating data or financial information must explain, in narrative form, the reasons for the amendment or waiver and the impact of the change in the type of operating data or financial information being provided.
99268384\V-5
-52-
If the provisions of the Disclosure Certificate described herein under the caption “MISCELLANEOUS - Summary of Continuing Disclosure Certificate -- Content of Annual Reports” specifying the accounting principles to be followed in preparing the Consolidated Government’s financial statements are amended or waived, the Annual Report for the year in which the change is made must present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison must include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to the Bondholders to enable them to evaluate the ability of the Consolidated Government to meet its obligations. To the extent reasonably feasible, the comparison must also be quantitative. The Consolidated Government must file a notice of the change in the accounting principles with the MSRB in an electronic format as prescribed by the MSRB (which, as of the date hereof, is EMMA) on or before the effective date of any such amendment or waiver.
Additional Information
Nothing in the Disclosure Certificate will prevent the Consolidated Government from disseminating any other information, using the means of dissemination set forth in the Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by the Disclosure Certificate. If the Consolidated Government chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by the Disclosure Certificate, the Consolidated Government will have no obligation under the Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Default
In the event of a failure of the Consolidated Government to comply with any provision of the Disclosure Certificate, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order, to cause the Consolidated Government to comply with its obligations under the Disclosure Certificate. A default under the Disclosure Certificate will not be deemed an “event of default” or “default” under the Bond Resolution, and the sole remedy under the Disclosure Certificate in the event of any failure of the Consolidated Government to comply with the Disclosure Certificate will be an action to compel performance. A court may decide not to order the specific performance of the covenants contained in the Disclosure Certificate.
Identifying Information
All documents provided to the MSRB pursuant to the Disclosure Certificate will be accompanied by identifying information prescribed by the MSRB.
Additional Information
Use of the words “shall,” “must,” or “will” in this Official Statement in summaries of documents or laws to describe future events or continuing obligations is not intended as a representation that such event will occur or obligation will be fulfilled but only that the document or law contemplates or requires such event to occur or obligation to be fulfilled.
Any statements made in this Official Statement involving estimates or matters of opinion, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates or matters of opinion will be realized. Neither this Official Statement nor any statement which may have been made orally or in writing is to be construed as a contract with the owners of the Bonds.
99268384\V-5
-53-
CERTIFICATION
The execution and delivery of this Official Statement, and its distribution and use, have been duly authorized and approved by the Consolidated Government.
AUGUSTA, GEORGIA
By:
Mayor
99268384\V-5
APPENDIX A FINANCIAL STATEMENTS OF THE CONSOLIDATED GOVERNMENT
The basic financial statements of the Consolidated Government as of December 31, 2015 and for the year then ended, included as this Appendix A, have been audited by Mauldin & Jenkins, LLC, Macon, Georgia, independent certified public accountants, to the extent and for the period indicated in its report thereon, which appears in this Appendix A. Such financial statements have been included herein in reliance upon the report of Mauldin & Jenkins, LLC
[Remainder of Page Intentionally Left Blank]
99268384\V-5
APPENDIX B FORM OF LEGAL OPINION
The form of Legal Opinion included as this Appendix B has been prepared by Dentons US LLP and Nowell Sparks, LLC, both of Atlanta, Georgia, Co-Bond Counsel, and is substantially the form to be given in connection with the delivery of the Bonds.
[Remainder of Page Intentionally Left Blank]
99268384\V-5
SUMMARY OF CONTENTS
1
Page Introduction ............................................................................ 1 Plan of Financing ..................................................................... The Bonds ................................................................................ The Consolidated Government ................................................ Consolidated Government Debt Structure ............................... The Sales Tax........................................................................... Consolidated Government Ad Valorem Taxation .................... Consolidated Government Financial Information .................... Legal Matters ........................................................................... Miscellaneous .......................................................................... Certification ............................................................................. Appendix A: Financial Statements of the Consolidated Government .................................. A-1 Appendix B: Form of Legal Opinion ................................ B-1
$[AMOUNT]* AUGUSTA, GEORGIA General Obligation Bonds, Series 2016
OFFICIAL STATEMENT
No dealer, broker, salesman, or other person has been authorized to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations should not be relied upon as having been authorized by the Consolidated Government. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale. The delivery of this Official Statement at any time does not imply that the information herein is correct as of any time subsequent to this date.
Dated: ___________, 2016
1 See detailed “TABLE OF CONTENTS” on pages (i) and (ii). *Preliminary, subject to change.
Finance Committee Meeting
11/28/2016 1:05 PM
General Obligation Bonds (SPLOST) Series 2016 bond resolution
Department:Finance
Presenter:Timothy Schroer
Caption:Motion to approve General Obligation Bonds (SPLOST) Series
2016 bond resolution and authorize the Mayor and Clerk to sign
all necessary documents.
Background:On November 3, 2015 the SPLOST 7 referendum was approved
by the citizens of Augusta Georgia. The vote also constituted
approval of the issuance of general obligation debt in the
aggregate principal amount of $30,000,000. On February 19, 2016
the commission approved the projects that would be funded as pay
as you go and identified projects that would funded with bond
proceeds. Additionally, on March 1, 2016 the commission adopted
a resolution authorizing the commencement of the validation
proceedings for its general obligation bonds. The Superior Court
of Richmond County entered a judgment validating such bonds on
July 11, 2016. As part of the process of issuing bonds a review of
August's financial condition is performed by a national bond
rating agency. The firm Moody's Investors Service participated in
a credit review presentation on November 2, 2016. Moody's
assigned a credit rating of Aa2 to this bond issuance on November
14, 2016. As part of the review Moody's also affirmed the Aa2
rating to the outstanding tax backed debt that had been previously
issued.
Analysis:This is the last step in the process in issuing the 2016 series bonds.
The bonds will be priced (sold) on December 6, 2016. On the date
the commission will be apprised of the results.
Financial Impact:Funding for SPLOST project in the amount of $28.5 million.
Alternatives:n/a
Recommendation:approve bond resolution
Funds are Available
in the Following
Accounts:
n/a
REVIEWED AND APPROVED BY:
Finance.
Law.
Administrator.
Clerk of Commission
Finance Committee Meeting Commission Chamber - 111812016
ATTENDANCE:
Present: Hons. Hardie Davis, Jr., Mayor; Sias, Vice Chainnan; Frantom
and Hasan, members.
Absent: Hon. Guilfoyle, Chairman.
FINANCE
1. Present the financial report for the nine month period ended September 30, Item
2016. Action:
Approved
Motions
+'#:" Motion Text Made By seconded By fffil
Motion to approve commissioner commisionerApprove receiving this item as Passes.. ljen ttasan sean lrantomlnlorrnallon.
2. Motion to approve the minutes of the Finance Committee held on October 25, Item2016. Action:
Approved
Motions
Motion
Type Motion Text Made By
3. Request to approve a Resolution to support the Fiscal Year 2018 Federal Transit Item
Administration (FTA) Section 5303 Metropolitan Planning Grant Application. Action:
Approved
^ Motion to Commissioner BenAPProve approve. Hasan
Motions
ryJ:"" Motion rext
Seconded By
Commisioner Sean
Frantom
Motion
Result
Passes
Motion
ResultMade By Seconded By
Motion to approve
A ___^-_^ concurring with Public Commissioner CommisionerApprove Services on the action Ben Hasan sean Frantom Passes
on this item.
www.auqustaqa.gov
Finance Committee Meeting
11/28/2016 1:05 PM
Minutes
Department:Clerk of Commission
Presenter:
Caption:Motion to approve the minutes of the Finance Committee held on
November 8, 2016.
Background:
Analysis:
Financial Impact:
Alternatives:
Recommendation:
Funds are Available
in the Following
Accounts:
REVIEWED AND APPROVED BY:
Finance Committee Meeting
11/28/2016 1:05 PM
Motion to approve transfer of funds to cover Workers’ Compensation claim expenses through the end of
2016
Department:Finance
Presenter:Donna Williams
Caption:Motion to approve transfer of funds to cover Workers’
Compensation expenses through the end of 2016.
Background:Due to a number of serious injuries occurring in several
departments during the last 2-3 years as well as the general
increased cost of medical expenses, we are experiencing a
substantial increase in medical treatment costs (hospital
stays/major surgeries) and indemnification expenditures (loss time
benefits). All available resources for reducing costs are in place,
i.e. bill review, use of generic drugs, returning employees to
modified duty, etc. While the number of claims through October is
comparable to the same time frame last year, the costs have
increased from $1.8 million in 2015 to $2.4 million this year.
Analysis:Workers’ Compensation is a State mandated program and all
associated costs must be paid within a specific time frame.
Financial Impact:Estimated amount of funding necessary to cover 2016 claims
through year end is $600,000.
Alternatives:No alternatives; the payment of claims is mandated by state law.
Recommendation:Approve requested transfer of funds in order to pay Workers’
Compensation claims/settlement for the remainder of 2016 up to
$600,000. Approve reallocation from Risk Management Damage
Expense budget to help offset the overage. With 2 months
remaining, this amount may be $100,000 depending on actual
expenses.
Funds are Available
in the Following Necessary transfers from fund balance: 101 General Fund
$198,000 273 Law Enforcement $204,000 274 Fire Protection
Accounts:$132,000 506 Utilities $ 66,000
REVIEWED AND APPROVED BY:
Finance.
Law.
Administrator.
Clerk of Commission