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HomeMy Public PortalAbout05-11-2009 Regular MeetingS MINUTES HILLSBOROUGH TOWN BOARD May 11, 2009 7:00 PM, Town Barn PRESENT: Mayor Tom Stevens and Commissioners Frances Dancy, Mike Gering, L. Eric Hallman, Evelyn Lloyd, and Brian Lowen. PLANNING BOARD MEMBERS PRESENT: Chair Bryant Warren, Dan Barker, Tom Campanella, Kate Faherty, Stephen Whitlow, and Elizabeth Woodman. STAFF PRESENT: Town Manager Eric Peterson, Assistant Town Manager /Public Works Director Nicole Ard, Town Clerk /Director of Administration and Human Resources Donna Arnnbrister, Planning Director Margaret Hauth, Town Engineer /Utilities Director Kenny Keel, Police Chief Clarence Birkhead, Public Works Supervisor Ken Hines, Finance Director Greg Siler, Budget Analyst Emily Bradford, and Town Attorney Bob Hornik. Mayor Stevens called the meeting to order at 7:02 PM. 1. PUBLIC CHARGE Mayor Stevens did not read the Public Charge but noted it would be followed. 2. PRESENTATIONS May I I, 2009 Regular Meeting Approved: June 8, 2009 Page I OI 88 A. Presentation of Special Resolution honoring Sylvester V. Brown on his retirement from the Town of Hillsborough after 36 years of service 7:02:17 PM Mayor Stevens read the Resolution of Commendation for Sylvester V. Brown, recognizing his long and productive career of almost 36 years at Hillsborough's Wastewater Treatment Plant. Sylvester Brown offered to the Town Board, Mr. Peterson, the staff, and citizens his thanks, noting it had been a pleasure to serve Hillsborough through all those years. He said he had seen many changes and thanked God that he had been allowed to render his service to the Town. B. Presentation of the NC Local Government Budget Association's Certified Budget Evaluation Officer Recognition to Town Budget Management Analyst (Presentation by UNC School of Government Professor Bill Rivenbark) 7:06:11 PM Mr. Peterson introduced Professor Bill Rivenbark, noting he had assisted the Town with the Balanced Scorecard process, and was a nationally recognized leader in budgeting, financing, and performance measurement. May I I, 2009 Regular Meeting Approved: June 8. 2009 Page 2 of 88 Professor Rivenbark provided a brief background on the NC Local Government Budget Association and its purpose. He said that in 2008 the Association had created a voluntary certification program to continue to enhance local government budget and evaluation, and explained the requirements of the certification. Professor Rivenbark stated that to date only three individuals had met the required three standards, one of which was Emily Bradford, the Town's Budget Analyst. He then read the Certification document designating Ms. Bradford as a Certified Budget and Evaluation Officer and then presented it to Ms. Bradford. 7:10:25 PM Mayor Stevens offered his congratulations on behalf of the entire Town Board, and thanked her for the service she was providing. 3. PUBLIC HEARING: Special Joint Public hearing with Planning Board to hear public comments on Modifications to the approved Special Use Permit for Bellevue Mill; including the relocation of the driveway access from Bellevue Ave to Eno Street and increase the dwelling units from 85 to 104 (TMBL 4.34.E.21, 21c, and 4.35.H.10) 7:10:44 PM Mayor Stevens turned the Public Hearing over to the Planning Board Chair. 7:10:57 PM Planning Board Chair Bryant Warren opened the Joint Public Hearing regarding the Modifications to the approved Special Use Permit for Bellevue Mill. Planning Director Margaret Hauth, after having been sworn, provided a brief overview of the approved Special Use Permit that was still valid, noting the owner was now requesting some modifications to those plans and the Town Board had determined that a public hearing was necessary due to the scale of those requested modifications. She said speakers would need to be sworn in order to provide evidence during the public hearing. Ms. Hauth said the two main modifications were to relocate the driveway access from Bellevue Avenue to Eno Street, and to increase the dwelling unit count from 85 to 104. She said part of the parking was proposed to be addressed by sharing parking with A Southern Season on the adjacent property. 7:13:57 PM Eddie Belk, speaking as one of the applicants and after having been sworn, stated the SUP had been approved less than two years ago and since that time an additional partner had been brought in to the mix. He explained the different aspects of the plan using the site plan to point out elements of the proposed project. Mr. Belk said that they had had as criteria to lay the apartments out so that the buildings retained the "mill village" character, which had allowed them to more accurately relate to the rhythm of the buildings and put in 104 apartments and still remain sensitive to the architectural heritage than with the original 85 units. He said as Ms. Hauth had said, they had been able to rework the parking plan on the eastern side of the stream and its buffer and use the drive going past A Southern Season to connect to Eno Drive. Mr. Belk said they were still working out the details to straighten that drive up to keep personal vehicle traffic separated from truck traffic. May I I, 2009 Regular Meeting Approved: June 8, 2009 Page3 of 8S Mr. Belk said the increase in units had increased the number of parking spaces, and explained how the parking would be shared with A Southern Season. He said part would be accommodated through the parking reserved for seasonable overflow in addition to an existing gravel parking area on the western side of the stream as well as an existing gravel parking for 18 vehicles on the southeast corner below the warehouse. Mr. Belk said they wanted to add parking without getting too close to residential home sites and without encroaching into the stream buffer in any additional fashion, noting that the existing gravel parking area that already existed encroached slightly into the stream buffer. Mr. Belk said the parking being added was centered between the stream buffer and the residential home sites, and there was an upper level of parking on top of the hill to allow for pick up and drop off. He said other parking plans had not changed nor had the location of dumpsters and recycling. Mr. Belk stated their engineers had conducted a reassessment of the traffic, highlighting their efforts to keep the traffic on Eno Street. He stated the report indicated that even with the increase in the number of units it did not detrimentally affect any of the intersections that the traffic would serve into and out of the complex. Mr. Belk stated the intersections were rated as good, functional intersections and would remain that way even after the development was occupied. Mr. Belk stated they remained dedicated to doing the project as a Historic Tax Credit project, and the apartments would be rentals. He stated that the market study indicated that there was a strong market for this type of character and quality of units. 7:23:13 PM DeWayne Anderson with The Landmark Group, after having been sworn, provided additional information regarding the proposed project. He said that the real estate market had suffered during the current recession but they now believed they had a window of opportunity to move forward. Mr. Anderson shared the following information: They believed this project was a community revitalization project, noting such projects tended to revitalize the neighborhoods surrounding it. It was important for residents to know that because they did not "give their projects away" they did in effect become long -tern residents of the community in which they built. Proposed rent for 18 one bedroom apartments would be $978 including utilities for about 800 square feet. Proposed rent for 69 two bedroom apartments would be $1,190 including utilities. Proposed rent for the 17 three bedroom units would be about 1,300 square feet for about $1,406 including utilities. Total budget per year of $353,600 for operating expenses, including utilities, maintenance, taxes, and a manager. Total cost of the project was estimated to be $136,218.27 per unit, or around $15 million. Bank of America had conducted the audit to arrive at the per unit cost, and would most likely be financing the project. 7:34:45 PM Commissioner Hallman asked about the impervious surface and stormwater runoff estimates. Mr. Belk stated at the current time they did not have enough detail to carefully address that, but they had reduced the impervious surface with the changes by taking out the core of the building added to the property in the 1960's and turned it back into a pervious courtyard. May 1 1.2009 Regular Meeting Approved: June 8, 2009 Page 4 of 88 He said they had also suggested taking the current gravel lot closest to the stream and changing it from a pressure run compacted gravel lot which was considered to be impervious and make a pervious paved lot. Mr. Belk said that would help to balance the slight increase in impervious surface with the new application. Mr. Anderson said in an earlier meeting it was suggested that they review the Town's Connectivity Plan and try to incorporate foot paths through their site that would work with that Plan. He said they had done that on the new plans, noting the foot paths came from Bellevue on King Street down towards the stream, and another one from Bellevue, which joined where there was an existing steel bridge over the stream and then continued on to Eno Drive. Mr. Anderson said from either the west or the north you would have connectivity through the foot path through their site down to Eno Drive and then the Town could connect it to the park on the other side of the railroad tracks. 7:36:40 PM Mr. Belk said that the Community Connectivity Plan showed on Nash Street a sidewalk link, and their proposed plan would include that sidewalk link with curb and gutter. He said that would cover all of the issues that were in that Connectivity Plan. 7:37:42 PM Mayor Stevens said it was a minor point but the rents mentioned were slightly different than originally proposed, but since it included utilities that perhaps accounted for the different. Mr. Anderson said that was correct. Commissioner Hallman asked since this was an approved SUP, what was the scope of the discussion on changes. Ms. Hauth responded that the discussion was to be limited to the items that were being modified, so that would be the number of units, the parking, and the impacts of the changed driveway location. She stated that the remainder of the project was not subject to discussion or negotiation. 7:38:35 PM Emily McNalley, after having been sworn, said she was "thrilled" with the proposed change to the driveway, noting she lived on the corner of Benton and Bellevue and it was a remarkable change for her. She asked if the walkable path just off of Bellevue could be connected north to the Knight Street location, noting she believed it would be a safer passage and a more direct route to the downtown. Mr. Belk responded it actually connected across the steel bridge, which would prevent them from having to encroach into the stream buffer with a new bridge at a more northern point. 7:40:07 PM Upon a motion by Commissioner Gering, seconded by Commissioner Dancy, the Board moved to close the Public Hearing. The vote was unanimous. Mr. Warren turned the meeting back over to Mayor Stevens. Mayor Stevens thanked the Planning Board and excused them from the remainder of the Town Board meeting. May 1 I, 2009 Regular Meeting Approved: June 8, 2009 Page 5 of 88 4. INTERVIEW CANDIDATE TO FILL A VACANCY ON THE TREE BOARD 7:43:11 PM Ken Hines introduced Karen MacAulay, noting the Tree Board had voted to recommend her appointment to the Tree Board, and that if appointed Ms. MacAulay would become the sixth member with one vacancy remaining to meet the new seven member requirement. He stated that Ms. MacAulay had a unique background as an educator which was a direction the Tree Board wanted to move towards for the future; that is, to contribute to Tree Board activities involving public education regarding trees. Karen MacAulay provided the Board with some brief comments regarding her background and interests, including encouraging healthy tree practices which would in turn improve the air quality and air temperature in Hillsborough. She stated she had a genuine interest in becoming an active member of the Tree Board. 5. AUDIENCE COMMENTS REGARDING MATTERS NOT ON THE PRINTED AGENDA 7:46:23 PM Edna Ellis said that she approved of the Kenion Grove speed limit changes, and also wanted to add some items for discussion to future agendas. She said she would be relating those items and her concerns to the Board via a letter. Ben Block said that he had rented a home in Hillsborough and had experienced multiple problems with the property management company, leading them to eventually break the lease. He stated the most severe problem was the appearance of black mold, and then improper clean -up had left behind strong chemical residues rendering the home unlivable for them. Mr. Block stated the one lingering problem with breaking that lease concerned the Town's water bill. He stated they had experienced a water leak earlier in the year for which the bill was adjusted and the later a second leak elsewhere, at which time they had learned that only two bill adjustments were allowed each year. Mr. Block said the first adjustment was for a water heater leak which had been immediately addressed, and the second leak unfortunately had occurred in the main line underground between the meter and the home, which had not been detected for some time and had spanned two billing periods. He stated they had immediately contacted the property management company who had taken a number of days before addressing the problem. Mr. Block said what they were left with were two "gigantic" water bills due to that leak, and after talking with Mr. Siler and other staff he had been referred to the Town Board since the Board was the only way to get a waiver from the Code requirement. He said he was not asking for a change in policy, that he was only asking for a de facto waiver. Mr. Block said he wanted to pay his bill based on regular water usage and not the underground leak that was due to negligence not his own. 7:51:09 PM Mayor Stevens asked Mr. Siler for his recommendation. Finance Director Greg Siler said he had not felt that staff had the authority to provide the waiver due to the size of the bill, noting the charge was for 30,000+ gallons. He stated they had tried to negotiate the bill based on water only since the water clearly had not gone into the sewer system, noting Mr. Block was asking for an adjustment to a just over $500 fee. Mr. Peterson asked how much had been forgiven with the first water bill adjustment. Mr. Block said his normal water bill was between $40 and $70, and did not know how much it was adjusted because the adjustment had taken place before he received it. Mr. Peterson stated they could retroactively go back and swap the two outstanding bills for the one that had been adjusted previously, and have Mr. Block pay the previous bill although they did not know what that amount had been. Or, he said, the Board could make an exception in this case based on the circumstances. Mr. Block stated he had contacted the property management company for help but had received no response. 7:53:25 PM Commissioner Hallman stated he would agree with Mr. Peterson's suggestion. Commissioner Lowen stated he would as well, noting the previous bill may have been high but certainly would not be $500. Mr. Siler said he believed the gallon usage on that previous bill had been around 12,000 gallons, so the bill would be around $200. Commissioner Lowen stated he believed that was far better than $500. 7:54:06 PM Upon a motion by Commissioner Lowen, seconded by Commissioner Lloyd, the Board moved to retroactively go back to December 2008 and have Mr. Block pay that unadjusted bill, and then adjust the two current bills based on Mr. Block's regular water usage by a vote of 5- 0. The motion was declared passed. 6. AGENDA CHANGES AGENDA APPROVAL 7:54:54 PM Commissioner Gering removed Item 1 1.K, Consider Approval of Special Use Permit extensions for single- family and townhouse portions of Waterstone, from the Consent Agenda for discussion. Mr. Peterson removed Item 11.F, Consider Approval of Reservoir Refinance Contract with BB &T, from the Consent Agenda for discussion. He stated that Mr. Siler had indicated that some additional information had been received this afternoon regarding that refinancing. Upon a motion by Commissioner Lowen, seconded by Commissioner Lloyd, the Board moved to approve the Agenda as amended to remove Items 11.K and 11.F from the Consent Agenda by a vote of 5 -0. The motion was declared passed. 7. APPOINTMENTS May I I. 2009 Regular Meeting Approved: June 8, 2009 Page 6 of 88 A. Consider appointment of Karen MacAulay to serve a three year term on the Tree Board with an Term Expiration of May 2012 7:56:09 PM Upon a motion by Commissioner Lloyd, seconded by Commissioner Dancy, the Board moved to appoint Karen MacAulay to serve a three -year tern on the Tree Board with a term expiration date of May, 2012 by a vote of 5 -0. The motion was declared passed. B. Consider appointment of two Elected Officials to serve on the Chatham /Orange Joint Planning Task Force May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 7 of 88 7:56:55 PM Commissioner Hallman volunteered to serve. Mayor Stevens volunteered to serve as an alternate. Upon a motion by Commissioner Gering, seconded by Commissioner Lowen, the Board moved to appoint Commissioner Hallman and Mayor Stevens to serve on the Chatham /Orange Joint Planning Task Force by a vote of 5 -0. The motion was declared passed. 8. COMMITTEE REPORTS (Critical) 7:58:12 PM Commissioner Hallman stated the Public Access Channel 18 was up and running, noting he was enjoying it. Ms. Hauth stated over the last three weeks they had had ten reservations for use of Gold Park picnic shelters, half in -Town and half out -of -Town residents. She said the Parks and Recreation Board was considering whether to recommend a nominal fee for use of the shelters, noting so far there had been no problems in that people were taking good care of the Park. 7:59:17 PM Commissioner Lloyd discussed the Hillsborough Tourism Board Logos, noting she did not like any of the three options provided. Commissioner Gering suggested providing that feedback to the Tourism Board. He stated that Board would likely make its choice based on such feedback. 9. REPORT FROM THE TOWN MANAGER 8:00:36 PM Mr. Peterson indicated he had no report to offer. 10. DEPARTMENTAL REPORTS 8:00:42 PM There were no departmental reports offered at this tune. 11. ITEMS FOR DECISION CONSENT AGENDA A. Consider Approval of the Minutes of the March 23, 2009 Monthly Workshop; the March 23, 2009 Monthly Workshop Closed Session; the April 13, 2009 Regular Town Board Meeting; and the April 13, 2009 Regular Town Board Meeting Closed Session B. Consider Approval of resolution authorizing the 2009 -2010 HOME Program Design C. Consider Approval of resolution authorizing the submittal of the 2009 -2010 Annual Update of FY 2005 -2010 Consolidated Housing Plan for Orange County D. Consider Approval of Contract from Dixon Hughes, PLLC, to perform the Town of Hillsborough audit for fiscal year ending June 30, 2009 E. Consider Adoption of Various Budget Amendments F. Removed. May 11. 2009 Regular Meeting Approved: June 8, 2009 Page 8 of 88 G. Consider Approval of an Ordinance to Amend Chapter 4 of the Town Code to change Holidays falling on a Saturday to be observed by the Town on Friday; and Holidays falling on a Sunday, to be observed by the Town on Monday H. Consideration of Re- Design of Police Operations to allow for the transfer of two positions from Community Policing to Uniform Patrol; and covert three Police Officer Positions to Police Corporal Positions I. Consideration of an Ordinance to Amending Chapter 6, Motor Vehicles and Traffic, Sections 6 -A5 and 6-Al2 of the Hillsborough Town Code to adjust Traffic Regulations in Kenion Grove and Granview Subdivisions, including establishing stop signs in Kenion Grove J. Consider Approval of a National Public Works Week Proclamation K. Removed. 8:00:53 PM Upon a motion by Commissioner Lowen, seconded by Commissioner Hallman, the Board moved to approve the Consent Agenda as amended by a vote of 5 -0. The motion was declared passed. 12. ITEMS FOR DECISION REGULAR AGENDA A. Presentation of Proposed FY 2010 Budget and FY 2010 -2016 Financial Plan 8:02:34 PM Mr. Peterson provided the following overview and highlights of the recommended FY 2010 budget and the FY 2010 -2016 Financial Plan: Budget process had begun in August 2008 due to the recession and expected shortfalls. Economic landscape financially and economically was much more difficult that what had been expected, but early start had helped to address that. Goals included not have a tax rate increase or a water /sewer rate increase, which had been accomplished. Minimal impact to service delivery expected. No employee layoffs. Protecting savings a high priority, with at least one more tight year expected. Savings provided for more options, and federal stimulus funding was providing grant opportunities which would not have been seen otherwise. Departments have shaved training budgets but budgets had remained intact in order to keep key training levels at acceptable levels. Complimented all department heads and management team and to employees for working so hard to avoid rate increases but still trim costs by making wise choices on how to allocate funds. All departments had proven to be very frugal, and there had been cases where items were put back into department budgets at the discretion of the Manager. Orange Rural Fire Department had reduced their budget about 2 in line with what Town departments had been asked to do, with Chief Cabe making available other options that could be considered. No vehicle or equipment replacement scheduled for the coming year. No merit or COLA increases for employees. Some personnel reductions: a half -time FTE in the General Fund and an FTE in the Water /Sewer Fund. Hiring freeze would remain in force, with exceptions granted only when absolutely necessary to retain service levels. May I I. 2009 Regular Meeting Approved: June 8, 2009 Page 9 of 88 General fund operating capital down about $260,000 less, which was equivalent to about 4 cents on the tax rate. Water Fund revenues down as well. Large reduction in expenditures of about 12% in the General Fund and 21 in the Water /Sewer Fund. General Fund expected to have a $750,000 deficit and the Water /Sewer Fund was expected to have a $1.2 million deficit. Revenue neutral tax rate dropped about 8 Projecting a small amount of property tax growth of $29,000. Fund balance level at 30 Health insurance increased 5.6 well below the market average increase of 8% 12 Projects and key items: Nash Street sidewalk more expensive than planned, but stimulus funds and DOT funds had made the project possible; Fleet Maintenance Facility moving forward; street repaving set at $100,000; and, expect to hear about PARTF Grant for Riverwalk in July, although there was $50,000 in get design work started. Personnel longevity program, recognition program, tuition reimbursement and other small programs remain funded. No rate increases for water and sewer. Compliments to Kenny Keel and staff had all done a very good job in providing lean budgeting in order to avoid rate increases. Sewer line repairs estimated at $60,000 with savings in refinancing. Over $1.2 million in Capital Facility Fees on the Water side; lean on the Sewer side. Over 140 ideas submitted by employees to improve the budget, departmental process or procedures. Many were either incorporated, were held for future consideration, or were judged to be worth considering in the very near future. For example, one change was to freeze all expenditures for the month of June unless purchase orders had already been issued, allowing the Finance Department to gather end of the year encumbrances, which in turn streamlined the process and saved the Finance Department time. Another example was a change in the holiday pay structure for employees who work shifts which would result in a savings of $40,000 a year. Some changes that would be brought to the Board for discussion in June included when employees became eligible for longevity pay, the take -home vehicle policy, and a proposal to create a reinvestment policy so that should a department saved an amount of money, for instance $40,000, that one half of that savings could be carried forward into the next fiscal year to be used at that department's discretion and the other half going back to Fund Balance. Reinvestment policy proposed to be a one -year experiment. Proposed elimination of Petty Leave policy, and adding six hours of vacation leave to compensate for the loss. Proposed discussing and trying to quantify changing the bulk item pickup, not to include loose leaf pickup. For instance, not collecting every day but only the first 24 days of each month; that system would save one week of costs each month. Also consider charging for more than one roll -out cart. Adopt an internal policy requiring all employees to be on direct deposit beginning in January 2010. Projections for FY 2011 showed capital expenses of $834,000, or 12 cents on the tax rate, and of course they would not consider a 12 cent tax rate increase. So, they had to continue their efforts to reduce costs and trim expenses, although they would not be able to avoid a tax increase in 2011. May 1 1, 2009 Regular Meeting Approved: June 8, 2009 Page 10 of 88 $30 million in planned new development would generate about $180,000 in additional property tax revenue. 8:35:18 PM Commissioner Lowen stated the overview had been very helpful and beneficial. Commissioner Lloyd stated she believed the early start on the budget and the steps that had been taken during that time had been successful in preparing them for the effects of the recession. Mayor Stevens said he believed he spoke for the Board when saying that it was a privilege to be working in the community with the Manager and staff, and thanked him and the Board for the thoughtful long -term financial care that they had taken as well as the care taken in budgeting and managing the Town's finances and investments for the long term. He said that care had allowed them to take the bad news regarding the recession and make it manageable. Mayor Stevens commended everyone for the incredible effort and hard work that had gone into the budget and the Town Board was now challenged to do its part. Mr. Peterson stated it was now the staff's job to make the Board's job as easy as possible as they went through the budget, and asked them not to hesitate to ask questions or challenge them on any point, noting that was how they would make progress. B. Receive fiscal impact report on annexation request from East West Partners regarding 29.42 acres at the southeast quadrant of 1 -85 and NC 86 8:38:06 PM Ms. Hauth explained that if the Board was interested in moving forward with the request for annexation from East West Partners, the next step in the process was to request a formal petition for annexation from the applicant so that the item could be scheduled for public hearing. She stated that July was the next available hearing date for the project. Ben Perry, Project Manager with East West Partners, stated he was present only to answer any questions the Town Board might have. 8:38:49 PM Commissioner Gering said he was not surprised about the positive outlook of the financial forecast, and said as he had said before it was appropriate that the property be developed and annexed into the Town limits. He said he believed this was an opportunity the Town Board should investigate. Commissioner Hallman concurred with Commissioner Gering's comments. Commissioner Lloyd stated her biggest concern was how they would address traffic over 1 -85. Mr. Perry stated that was their biggest concern was well, noting they had hired a traffic engineer who was working with DOT to look into that issue. He said based on the capacity the engineer had indicated they would need to widen the bridge by one lane, which should be achievable with the existing bridge at a cost they believed the project could bear. Mr. Perry said the problem was DOT's future plans for I -85 may not be compatible and they may not allow that bridge improvement. He said if they required a new bridge then that was an expense that the project could not bear. Mr. Perry said they continued to investigate that issue. May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 1 1 01 88 8:40:56 PM Commissioner Lowen stated he was concerned about that traffic issue as well. He asked would the requirement for a new bridge be an absolute deal breaker for East West Partners, when there was a proposed widening of I -85 and replacement of the bridge by DOT when that widening took place. Commissioner Lowen asked would that put this project on hold until that widening and bridge replacement took place. Mr. Perry stated he could not answer that at this time, noting they were still searching for solutions that would not delay the project. Commissioner Lowen stated there would need to be a significant amount of discussion by East West Partners with DOT before the Town Board could make any determinations. He said the bridge was likely already at capacity, and this Board would need to see a plan that was doable. Mr. Perry said they understood that very well, and would be working closely with DOT to reach a workable solution. Commissioner Dancy agreed with Commissioner Lowen, noting that would have to be done before the Town Board could make any decisions. 8:44:05 PM Upon a motion by Commissioner Gering, seconded by Commissioner Lowen, the Board moved to receive the Formal Petition for Annexation from East West Partners regarding 29.42 acres at the southeast quadrant of I -85 and NC 86 by a vote of 5 -0. The motion was declared passed. Ms. Hauth stated her question had been if East West Partners still wanted to seek a July public hearing, but the answer was no since they had to work out the issues with DOT prior to scheduling a public hearing. C. Discuss request from Habitat for Humanity regarding implementation of the Strategic Growth Plan Interlocal agreement with Orange County 8:45:18 PM Ms. Hauth said that Habitat had provided a letter with their request which was contained in the packet materials along with a map. She said the map contained a red line that indicated the Urban Services Boundary as discussed in the latest round of the Strategic Growth Plan, and was the line beyond which the Town would not extend utilities nor would they consider any annexation. Ms. Hauth said the parcels noted in green were parcels that Habitat had an interest in, which was significant beyond that red line. John Sehon, representing Habitat, stated that Habitat had finished 23 homes in the Fairview community with another ten planned for the next year, and they continued to look for additional lots in Fairview. He said the single most critical item for Habitat besides funding was the availability of land, and they had found that many times they had to pay top dollar for that land because it had to be purchased as they needed it. Mr. Sehon said they had begun negotiations with landowners to purchase adjacent parcels just north and west of Locust and Tulip Tree in the Fairview community to be banked for future needs. Mr. Sehon said the proposed Urban Services Boundary as currently noted on the map did not include all the property Habitat would like to potentially acquire. He said that should Habitat be May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 12 of 88 able to acquire the property for land banking, it might be possible for Habitat to enter into a development agreement with a for -profit builder or sell off some of the property in the future to help offset Habitat infrastructure expenses and by creating mixed- income neighborhoods. Mr. Sehon said he understood that the Town would prefer to see development south of Town, but from a cost standpoint it almost became cost prohibitive for Habitat to acquire property south of Town. Mr. Sehon said they wanted to ask that the Town address that proposed Urban Services Boundary line now before the intergovernmental agreement was executed since it was not now known how the agreement could be amended once it was executed. 8:50:04 PM Commissioner Lloyd said her concern was that there was some property that had recently been brought into the Town and that had received water and sewer and the Town had still not been paid for it. She said her point was that if Habitat expected the Town to extend water and sewer service to their property the Town would be unable to do so. Mr. Sehon stated he had spoken to Mr. Peterson and Mr. Keel, and understood that if they were able to acquire the property they were negotiating for that it would require a pump station to service that property. He said they would hope that in the next three to four years that they would be able to acquire some stimulus funding to begin to build that pump station. Mr. Sehon said Mr. Keel had indicated that the Town would prefer a larger pump station rather than a small one since they cost the same to maintain, and it would be Habitat's intent not to ask the Town to pay for it. Mr. Peterson said regarding Commissioner Lloyd's concern, they had used up all of the capacity in that area which was a good thing. So, he said, if anyone was worried about a major proliferation of roads in the area the infrastructure was just not there. Mr. Peterson said as far as overall planning, it would allow the Town to maximize their investment in that area. He said as long as Habitat could acquire funding to make the connection, the Town would not need to make any further investment. 8:52:31 PM Mayor Stevens asked how many acres were noted in the green area on the map. Mr. Sehon said the entire area was about 200 acres. Mayor Stevens said it appeared that about half of that acreage was on the opposite side of the red line. Mr. Sehon stated that was correct. Commissioner Hallman said he was really torn, noting he understood the burden of trying to find land and at a price that was affordable. But at the same time, he said, the Town had been working on the Strategic Growth Plan for four or five years and Habitat's request went against everything they had set out to do with that Plan. Commissioner Hallman said with having to add a pump station instead of having gravity flow sewer and the traffic impact and access to those neighborhoods with the limited options, he would be willing to try to help Habitat find land elsewhere. He said to try to change the Urban Services Boundary now would be difficult, noting the Board of County Commissioners was looking at a land swap between the Town's ETJ and the Town giving the County back those western portions. Commissioner Hallman said he feared that having to add in Habitat's request would slow the process and would look like a land grant on the Town's part. He said he was uncomfortable with doing that, and did not believe he could support Habitat's request. May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 13 0188 8:54:22 PM Commissioner Gering agreed with Commissioner Hallman, noting that much work had gone into the Strategic Growth Plan, and Habitat was asking the Town to make an exception to an agreement that had not yet been formed. He said he believed that was a bad way to start a partnership with the County. Commissioner Dancy stated she was in agreement with Commissioner Gering's comments as well as Commissioner Hallman's. She said it was difficult for her to say that, since she wanted very much to support Habitat. 8:54:57 PM Commissioner Lowen said he fully supported what Habitat was doing, noting it was one of the best things that had happened in the Town for many years. But, he said, he agreed with the statements his colleagues had said. He said trying to change the agreement now would not be a good way to go, noting that traffic and the number of houses that could be placed on that 200 acres had to be considered. Commissioner Lowen asked if it was Habitat's intent if they were able to and bank that property to provide additional roads and to move traffic through the heart of the Fairview community and out to US 70. Mr. Sehon said not all of that property was owned by the same landowner, noting that the current red line on the map had been negotiated with the County. He said everything except the one piece to the north and to the northwest was currently inside the boundary. Mr. Sehon said they were not asking to develop that property now, but believed they would be in a stronger position to move forward if the other pieces were also inside that red line. He said when talking with County Planning he had not sensed a reluctance to consider their request. 8:57:24 PM Mayor Stevens said he suspected if the Town Board felt strongly about it that it could possibly be negotiated with the County. Commissioner Hallman asked what the mechanisms were for making adjustments to the agreement. Ms. Hauth said that was part of the problem, noting that the process to amend the intergovernmental agreement had not yet been put in place and did not provide any specificity for how one would go about amending the lines once both parties signed the document. She said at present there were no provisions for amendments, because the point was to set the lines in stone as much as any Boards could do so. Ms. Hauth said the County Commissioners had not yet voted on the intergovernmental agreement, and the Town had not yet placed its signature on any document. She said the map that had been provided in February to the Board was meant to be the final maps, and a change such as Habitat was suggesting would be a drastic change. 8:59:35 PM Commissioner Hallman said he remembered the discussion regarding ridge lines, in that if a ridge line split a property that they would bring the line back to the next logical property line. He said his point was that the line had not been drawn arbitrarily, but had been drawn based on the ridge line. Mayor Stevens said to summarize the discussion, the Town Board wanted to support Habitat in any way possible, noting they incredibly appreciated the good work they had done in Town. But, he said, there was a strong consensus for support of the Strategic Growth Plan, and the request that Habitat was making was not compatible with that Plan. May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 14 of 88 Commissioner Lowen said he would certainly be willing to see what Habitat could do with the part of the property that was within the line, and asked would that still require a pump station. Mr. Sehon replied that it would. He added that earlier in the evening the Board had discussed a development with various sized units at various rents, noting that a Habitat development would bring to the Town the same amount of tax revenue as that development but would serve a different but great need of the community. D. Discuss and give direction to staff about improving the appearance of overhead wires in the downtown district 9:04:02 PM Commissioner Gering stated he had placed this item on the agenda, noting that the downtown area was cluttered with numerous overhead lines that were parallel, that crossed each other, and that crossed streets at multiple locations. He stated that any kind of consolidation would be an improvement, and wanted the Board to ask staff to investigate with the utility companies how consolidation might be accomplished. Commissioner Gering said at present the utility lines were chaotic, with six of more lines in some places running parallel and crossing each other at odd places and connecting between buildings and cross streets at odd places. He said his question was how feasible was it to reduce the visual clutter and at what expense. Commissioner Dancy said she believed the cost might be prohibitive, noting putting lines underground was not even a possibility. She said one issue was that the various utility providers were very possessive of their utility poles, and that might prove to be a hindrance to any improvement. Mr. Peterson said when they had looked at that issue seven or eight years ago the points that Commissioner Gering had made was the conceptual alternative that Duke Power had said would give them the most "bang for their buck." He said Duke had said then that some of the lines could be rerouted to eliminate a portion of the clutter, as well as moving some of the lines off of Churton Street and some of the east /west crossings to go behind the buildings in the downtown area. Mr. Peterson said it would not be cheap, but believed that would be about the only way to improve the aesthetics without going to the drastic expense of putting the lines underground. He said relocating service from the sides of buildings to the back of buildings would make that more achievable. 9:08:20 PM Commissioner Gering said he was not talking about relocating the poles, he was only talking about consolidating the lines in some manner. He agreed that providing service from the backs of buildings made sense, but said even tying the lines together to make one large line would be better than six lines dangling over the street. Mayor Stevens said the Board could direct staff to make a few inquiries to see what the response might be. He said that would at least give them some information to work with. Mr. Peterson said they could get in touch with their contact at Duke Power to begin that process. He said Duke was well- versed enough to be able to say that Sprint needed to do one thing, that Time Warner needed to do another, and so forth. Mr. Peterson indicated that would be a practical and inexpensive first step. May 11, 2009 Regular Meeting Approved: June 8. 2009 Page 15 of 88 9:10:12 PM Commissioner Hallman said if nothing else, going forward from this point the Town could tell utility providers that whenever a line was hung it had to be done according to certain criteria. Mayor Stevens stated that could be discussed once staff provided some data for the Board to work with. He said those preliminary inquiries would get them started. Item 11.F Removed from Consent Agenda: Consider Approval of Reservoir Refinance Contract with BB &T 9:11:24 PM Mr. Siler said that the contract in the packet was a draft and not the final document, and there were a couple of unresolved issues. He said the draft contract mentioned a five -year no -call provision, which they had negotiated down to three years. Mr. Siler said the draft contract mentioned a 1% prepayment of the principle balance penalty throughout the life of the agreement. He said it also mentioned title insurance on the property, noting that the loan they currently had with the Bank of America did not have title insurance. Mr. Siler said title insurance on that tract of land would be very expensive, noting there were 47 properties that would need to have title searches. He said they had worked out an agreement with the title insurance company to provide a very limited title search. Mr. Siler said what he had thought was a resolved issue on Friday now appeared not to be resolved. He said the bank representative had now indicated a change of heart, noting they were now insisting on title insurance on the loan, estimated at a one -time cost of $6,000. Mr. Siler said that amount could not be amortized into the loan because the LGC had already approved the application process. Mr. Siler said the last issue had to do with the Town insuring the reservoir for casualty loss. He said the reservoir did not have property insurance on it, noting it could not be obtained and they had communicated that to the bank. Mr. Siler said they had checked with companies outside of the League to see if the property was insurable, and it was not. He said the thinking was that fire would not destroy it, that wind would not blow it over, and therefore there was nothing to insure. Mr. Siler said the only potential damage that could be suffered would be a lack of maintenance or an unlikely earthquake, so he believed what they were seeing was the bank's uneasiness with the Town's current economic condition and were wanting some insurance that if the reservoir dam were to fall or need repair that the Town would have the means to repair or rebuild. Mr. Siler said the request as of this afternoon was that the Town take their total Fund expenditures, both the General Fund and the Water Fund, and agree at all times to keep in reserve 10% of that total for unexpected repairs on the reservoir. 9:15:47 PM Mr. Hornik stated that proposal had arrived by email just after 5 p.m. today, so they had had no opportunity to discuss it or respond to it. He said the issue about the title insurance was relatively easy, noting that Investors Title Insurance Company had said this morning that with respect to the 36 parcels of the 47 that had been taken by Imminent Domain, they would only require a title search to the date the Town acquired it to the present date. Mr. Hornik said for the other 11 parcels, whereas they would normally require a title search back at May I I, 2009 Regular Meeting Approved: June 8. 2009 Page 16 of 88 least 40 years, they would require that the search go back only one chain in the link of ownership. So, he said, with that search Investors Title was willing to insure title to the property, noting he believed the premium for that had been quoted at $2,390. 9:18:36 PM Mr. Siler pointed out that they could still close on the refinance on the 15 and the bank would give the Town an additional 30 days to get the Title policy to them. Mr. Hornik said in lieu of title insurance, the bank had said if the Town would indemnify them and defend them if any claims were ever made on the title, then that would be good enough. He said it had been ten years since the Town had acquired the property and no claims had been made in that time regarding title to the property, so that was a low risk proposition. Mr. Hornik said if even one claim was made on the property it would cost much more than $6,000 to defend that claim, so it seemed to him that since it was doable to do the title insurance to avoid any indemnification issue then that was a worthwhile investment. Mr. Hornik said the problematic issue was how to deal with the casualty insurance. He said he had talked with Bob Epting, OWASA's counsel, who had indicated that their investigation had shown that no dams were insurable. Mr. Hornik said the problem was that the Town had general casualty insurance and property insurance that insured the Town's property, but there was no specific insurance that would cover a structure that was in a floodplain or a floodway. He said the dam had no other value other than to hold back the water, so insurance companies just did not provide insurance for that type of thing. He said that Mr. Siler had done everything possible to locate that kind of insurance, but there was nothing. 9:20:48 PM Commissioner Lowen asked if that information had been relayed back to the bank; that is, that what they were requiring was not available and did not exist in other places and the Town had no way to obtain it. Mr. Hornik stated it was his personal belief that if this had come up three years ago that title insurance would not have been an issue, but the underlying criteria for banks was much different now than just a year or a year- and -a -half ago. Mr. Peterson stated if they had to get insurance it would cut into the $20,000 per year average savings the refinancing would have provided. Mayor Stevens said the one -time fee for the title insurance seemed to be acceptable, but the requirement for the insurance appeared to be bureaucratic. He said he understood the bank might have concerns, but it was not like the Town was in danger of going out of business. 9:22:35 PM Mr. Hornik stated the request had come in late this afternoon and he had not yet had a chance to talk to Bob Jessup about it. He said he believed he needed to explore with him exactly what he meant about the covenant to establish and maintain the unrestricted Fund Balance. He said they were basically asking the Town to carve out $1.4 million. Commissioner Gering asked was there any reason that that made sense for the Town. Mr. Peterson responded no, noting it would put the Town in jeopardy to tie up that large amount of their Fund Balance and it would also impact their ability to borrow money for other projects. He said as much as they would like to save the $20,000 annually, his inclination at this point was May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 17 of 88 that if they could not work out the issues in a favorable manner that they just go on to the next bidder. Mr. Peterson said the worst case scenario was to just let the opportunity go and continue on as they were now. 9:24:07 PM Mayor Stevens said he understood that the industry was in disarray and the bank had to readjust, but the Town just could not readjust based on those requirements. He said they had done some very significant deposits with BB &T. Mr. Siler agreed, noting those amounted to over $1.5 million in CD's. Mr. Hornik said that Bob Jessup's email used language that led him to believe that perhaps there was some way to work something out, but could not go into that until he had an opportunity to talk with him. He said he would be contacting Mr. Jessup first thing tomorrow morning to explore alternatives. Mr. Siler stated another point was that they could not tie up General Fund money for Water Fund use. Mr. Hornik agreed. Mr. Peterson said what they were looking at was if they went forward with the closing on the 15 then they may have to have a special meeting in the next 30 days, or, would have to delay the closing. Mr. Siler said they would have to talk with BB &T, noting the quoted rate was due to expire on or around the 15 9:26:23 PM Mayor Stevens asked could the Board approve the refinancing with the title insurance. Mr. Hornik said he believed the big issue was the casualty insurance, and was not sure how to deal with that. Mayor Stevens said they could either call a special meeting or simply say they were not going forward with the refinancing because of BB &T's unreasonable request. Mr. Hornik said he would hope by noon tomorrow that he would have some more definitive information from Mr. Jessup. Mr. Peterson stated the Town Board could call a special meeting with 24 hours notice, but 48 hours notice was safer. Commissioner Lowen said then the worst case scenario would be they would have to reschedule the closing and try for the same rate. Mr. Hornik said it was an unusual situation that the property they were using for collateral for the loan was a reservoir and a dam, noting that was not an everyday transaction. 9:30:06 PM Mayor Stevens asked could they authorize the refinance with the current terms and just dropping the casualty insurance issue; that is, to negotiate that away and proceed. If not, he said, they could call a special meeting. Mayor Stevens said he believed they would also have to be prepared to walk away. Mr. Peterson said practically speaking if the dam were to collapse at some time in the future, they would likely go thirsty. He said they could rely in the short term on emergency transmission and would still get some pull from Lake Orange although it would be full of sediment. Mr. Peterson said they did keep some Capital Facility Fees in reserve and they could May 1 1, 2(109 Regular Meeting Approved: June 8, 2009 Page 18 of 88 educate the bank about that, and that they had Fund Balance policies in both funds and they could allocate money from the General Fund policy if they so chose, but they did not want to commit to doing that. Mr. Peterson said from a construction standpoint, if they had to repair the dam it would be a small portion although not cheap and much more manageable. So, he said, he believed the bank was overreacting to the situation. Mr. Peterson said they had $1.2 million in the bank today in Capital Facility Fees which at this point was earmarked to be used to expand the reservoir or to expand the water plant, so those funds would not be siphoned off. He said by the time they reached that point there would likely be only a couple of years left on the loan. Mr. Peterson said $1.2 million would be a substantial amount to put into repair costs if it were needed. Commissioner Dancy asked was that $1.2 million in Capital Facility Fees in BB &T. Mr. Siler responded it was in the NC Capital Management Trust. But, he said, BB &T did have nearly $1.6 million in Town dollars in CD's. 9:33:10 PM Upon a motion by Commissioner Gering, seconded by Commissioner Dancy, the Board moved to approve the draft Contract for the Reservoir Refinance with BB &T with the allowance that the Town would pay for the title insurance but not including insuring the dam by a vote of 5 -0. The motion was declared passed. Item 11.K Removed from Consent Agenda: Consider Approval of Special Use Permit extensions for single- family and townhouse portions of Waterstone and the construction 9:33:42 PM Commissioner Gering said he recalled when they had first negotiated the Master Plan with the Waterstone developers that the reason they needed a large portion of the Town's Economic Development District devoted to residential was to provide the rooftops that would support a large amount of retail, principally big box retail, and that people investing in big box retail used formulas that were based on rooftops and distance and so forth. He said he had found it at that time unfortunate that something like 25% of their Economic Development District in Waterstone would be dedicated to residential, but he accepted it to get the benefit of the rest of the Waterstone development. Commissioner Gering said now they knew that UNC Hospitals would potentially be moving in and displacing all of that high intensity retail and believed the equation was changing. He said he would like to understand with the Waterstone developers if there was still a need for that much residential, or whether that should be reconfigured along with other parts of Waterstone that might also need to be reconfigured to consider the total impact of UNC Hospitals moving in. Commissioner Gering said he had pulled this item from the Consent Agenda because he believed they needed to have that discussion with the Waterstone developers, and having the SUP come up at this time for renewal gave them the opportunity to have that discussion, or to at least postpone the decision until they could have the larger discussion of the impact of UNC Hospitals at Waterstone. May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 19 0188 9:35:46 PM Mayor Stevens asked about the deadline. Ms. Hauth stated that July 1 was the extension that was given for the townhome and single family portion. She said that the commitment to begin Cates Creek Parkway which was not a part of the SUP had expired on April 1. Commissioner Hallman said he had similar concerns as Commissioner Gering, noting it seemed that the whole Master Plan had changed substantially enough that it no longer represented what they had had originally. He said of course their circumstances had changed, and he was not sure they could support another CCRC which was in the plan. Commissioner Hallman said he certainly wanted the opportunity to optimize the plan, including beginning the Cates Creek Parkway. Ms. Hauth said there were financial guarantees that the Parkway would be constructed. 9:36:55 PM Commissioner Dancy said the timing appeared to be awkward in that the SUP extension expired in July and they were presently tied up with the budget. Commissioner Gering said if that was a real concern then they could extend the SUP to the end of the year. Mr. Hornik stated that two years was a maximum for an extension, not a minimum, so if they needed to buy some time then they could extend it until the end of the year. Commissioner Lloyd said she had asked UNC Hospitals was there some way that they could build in a way that would provide the Town with some tax revenue, and the response was that it was up to the Waterstone developers, noting they could build a hotel that could be used by patients' families or even restaurants. She said perhaps the developers would consider that, adding that Commissioner Gering was correct that Waterstone was no longer using the development as an Economic Development District. Commissioner Lloyd said people who worked at the hospital or taught a Durham Tech might want to live there, but they would need to have businesses to help support their needs. She said the Town Board had worked long and hard on that development proposal, and they should be able to see some income from it. 9:40:46 PM Mayor Stevens agreed there were a number of things at play right now, and believed it would be better to extend the deadline to the end of the year. Commissioner Lowen agreed, noting that just by extending it to the end of the year would generate some discussion with the developers. Mr. Peterson said it would also give the Town time to talk with their legislative delegation regarding the Special Assessment District, noting that whether it passed or not would still generate some dialogue with the developers. Upon a motion by Commissioner Gering, seconded by Commissioner Lowen, the Board moved to extend the construction initiative timeframe for parcels 1, 2, and 3 of Cates Creek Parkway in Waterstone to December 31, 2009 by a vote of 5 -0. The motion was declared passed. 13. CLOSED SESSION May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 20 o1'88 9:42:37 PM Upon a motion by Commissioner Dancy, seconded by Commissioner Lowen, the Board moved to go into Closed Session to discuss Property Acquisition for the Fleet Maintenance Facility by a vote of 5 -0. The motion was declared passed. A. Closed Session as authorized by North Carolina General Statute Section 143 318.11 (5) regarding Property Acquisition for Fleet Maintenance Facility 14. ADJOURN Upon returning to Open Session, and upon a motion by Commissioner Dancy, seconded by Commissioner Gering, the Board moved to adjourn the meeting at 10:00 p.m. by a vote of 5 -0. The motion was declared passed. Respectfully submitted, Donna F. Armbrister, MMC Town Clerk Whereas, Sylvester V. Brown was hired December 18, 1973 to work at the Hillsborough Waste- water Treatment Plant, which he helped build during construction of the current plant; Whereas, Sylvester V. Brown will be retiring June 1, 2009; Whereas, these years of service have been marked by exemplary and dedicated effort toward the proper operation of the wastewater treatment plant to meet NC Division of Water Quality discharge permit limits; jEle t .egolbeb, that the Hillsborough Town Board, acting through its members, Commis- sioners Frances L. Dancy, Michael Gering, L. Eric Hallman, Evelyn P. Lloyd, Brian J. Lowen, and Mayor Tom Stevens, now take this means of expressing to Sylvester V. Brown, their deep apprecia- tion for his unfeigned and faithful service in providing wastewater treatment to the Town of Hillsbor- ough. Michael Gering, Mayor Protem Frances L. Dancy, Commissioner 9n utitneee (Mewl 9 Rowe fleteienta ant my Rand and canoed 04, ieat to lie L. Eric Hallman, Commissioner Evelyn P. Lloyd, Commissioner Brian J. Lowen, Commissioner Awn the c Xacigof iUsiborough, Anti Carolina BESOLUTION Of QGomtnenbation affixd- ReS Avv90S .2.f7 Tom Stevens, Mayor (Inez t: Date: May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 2 I of 88 RESOLUTION 20090511 -11.B RESOLUTION AUTHORIZING THE ORANGE COUNTY FY 2009 -2010 HOME PROGRAM DESIGN BE IT RESOLVED, by the Hillsborough Town Board of Commissioners, as a member of the Orange County HOME Consortium, approve the following activities for the 2009 -2010 HOME Program. Homebuver Assistance Funds would be allocated to the Orange Community Housing and Land Trust to assist first time homebuyers earning less than 80 percent of the area median income to purchase homes county- wide Funds would be provided as a grant to the Land Trust. (Requested amount: $100,000) $139,033 Funds would be allocated to Orange County Habitat for Humanity to provide deferred payment zero interest second mortgages for six homes throughout Orange County. Homes would be sold to households earning between 30 percent and 80 percent of the area median income. (Requested amount: $60, 000) 60,000 Housing Rehabilitation Funds would be allocated to the Orange Person Chatham Mental Agency on behalf of the Chrsyalis Foundation and Community Alternatives for Supportive Abodes (CASA) for the repair of 23 properties owned by the Chrysalis Foundation. These units are currently leased to individuals that are disabled and/or chronically homeless. (Requested amount: 200, 000) $162,000 Operational Support Funds would be allocated to Orange Community Housing and Land Trust as a Community Housing Development Organization for administrative expenses. (Requested amount: $30, 000) 30,000 New Construction Funds would be allocated to Inter -Faith Council for pre development costs associated with the construction of Project Community House a new men's residential facility for homeless men in the community. (Requested amount: $400,000) $185,000 Funds would be allocated to 1labitat for Humanity to provide funding for infrastructure development in the Phoenix Place project located on Purefoy Road in Chapel Hill. Habitat plans to build at least 50 dwelling units for sale to first -time homebuyers earning less than 60% of the area median income. (Requested amount: $250, 000) $250,000 May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 22 of 88 Program Administration TOTAL FY 2009 -2010 HOME PROGRAM FUNDS This the I Ith day of May 2009. TomS RESOLUTION 20090511 -11.B Rental Assistance Funds would be provided for rental assistance for approximately 25 low- income families leasing standard property in Orange County. The program will operate in a similar manner to the Section 8 Program and provide rental subsidies for a period of two years to families at or below 50% of the area median income. This is an extension of the Homeless Outreach work of Housing for New Hope. (Requested amount: $50, 000) $50,000 73,331 $949,364 BE IT FURTHER RESOLVED, that the Town Manager is hereby designated as the authorized representative of the Town to act in connection with the submission of this plan and to provide such additional information as may be required by the U.S. Department of Housing and Urban Development. yens, Mayor May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 23 of 88 RESOLUTION AUTHORIZING THE SUBMISSION OF THE 2009 -2010 ANNUAL UPDATE OF FY 2005 -2010 CONSOLIDATED HOUSING PLAN FOR ORANGE COUNTY, NORTH CAROLINA BE IT RESOLVED, by the Hillsborough Town Board of Conunissioners, that the Commissioners authorizes the Town Manager to submit the Orange County Consolidated Plan for Housing and Community Development Programs Annual Update to the U.S. Department of Housing and Urban Development, including all understandings, assurances, and certifications required therein. BE IT FURTHER RESOLVED, that the Manager is hereby designated as the authorized representative of the Town to act in connection with the submission of the Annual Update and to provide such additional information as may be required by the U.S. Department of Housing and Urban Development. This the I Ith day of May 2009. Tom eti'ens, Mayor RESOLUTION 20090511 -11.0 May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 24 of 88 April 2, 2009 Honorable Mayor and Board of Town Commissioners Town of Hillsborough Post Office Box 429 Hillsborough, North Carolina 27278 We are pleased to confirm our understanding of the services we are to provide the Town of Hillsborough for the year ending June 30, 2009. We will audit the financial statements of the govemmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information, which collectively comprise the entity's basic financial statements of the Town of Hillsborough as of and for the year ending June 30, 2009. Accounting standards generally accepted in the United States provide for certain required supplementary information (RSI), such as management's discussion and analysis (MD&A), to accompany the Town of Hillsborough's basic financial statements. As part of our engagement, we will apply certain limited procedures to the Town of Hillsborough's RSI. These limited procedures will consist principally of inquiries of management regarding the methods of measurement and presentation, which management is responsible for affirming to us in its representation letter. Unless we encounter problems with the presentation of the RSI or with procedures relating to it, we will disclaim an opinion on it. The following RSI is required by generally accepted accounting principles and will be subjected to certain limited procedures, but will not be audited: 1) Management's Discussion and Analysis. 2) Required supplementary information. Supplementary information other than RSI also accompanies the Town of Hillsborough's financial statements. We will subject the following supplementary information to the auditing procedures applied in our audit of the basic financial statements and will provide an opinion on it in relation to the financial statements: 1) Combining and individual fund financial statements and schedules. 2) Schedule of expenditures of federal and state awards. 1) Introductory information. 2) Statistical data. DIXON H UG H ESALL Certified Public Accountants and Admsors The following additional information accompanying the basic financial statements will not be subjected to the auditing procedures applied in our audit of the financial statements, and for which our auditor's report will disclaim an opinion. 1829 Eastchester Drive, PO Box 2646 High Point, NC 27261 -2646 Ph. 336.889.5156 Fx. 336.889.6168 w vw.dixon- hughes.com May 1 1.2009 Regular Meeting Approved: June 8, 2009 Page 25 of 88 11.A Praxity MEMBER• GLOBAL ALLIANCE OF INOEPENDFNI FIRMS Town of Hillsborough April 2, 2009 Page two Management Responsibilities May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 26 of 88 Audit Objectives The objective of our audit is the expression of opinions as to whether your basic financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information referred to in the first paragraph when considered in relation to the basic financial statements taken as a whole. The objective also includes reporting on Internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements in accordance with Govemment Auditing Standards. Internal control related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program in accordance with the Single Audit Act Amendments of 1996 and OMB Circular A -133, Audits of States, Local Govemments, and Non Profit Organizations. The reports on internal control and compliance will each include a statement that the report is intended solely for the information and use of management, the body or individuals charged with governance, others within the entity, specific legislative or regulatory bodies, federal awarding agencies, and if applicable, pass- through entities and is not intended to be and should not be used by anyone other than these specified parties. Our audit will be conducted in accordance with U.S. generally accepted auditing standards; the standards for financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States; the Single Audit Act Amendments of 1996; and the provisions of OMB Circular A -133, and will include tests of accounting records, a determination of major program(s) in accordance with OMB Circular A -133, and other procedures we consider necessary to enable us to express such opinion and to render the required reports. If our opinions on the financial statements or the Single Audit compliance opinions are other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed opinions, we may decline to express opinions or to issue a report as a result of this engagement. Management is responsible for establishing and maintaining internal controls, including monitoring ongoing activities; for the selection and application of accounting principles; for the fair presentation in the financial statements of the respective financial position of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Town of Hillsborough and the respective changes in financial position and, where applicable, cash flows in conformity with U.S. generally accepted accounting principles; and for federal award program compliance with applicable laws and regulations and the provisions of contracts and grant agreements. Management is responsible for the financial statements and all accompanying information as well as all representations contained therein. Town of Hillsborough April 2, 2009 Page three Audit Procedures General May 11, 2009 Regular Meeting Approved: June 8. 2009 Page 27 of 88 As part of the audit, we will prepare a draft of your financial statements, schedule of expenditures of federal and state awards, and related notes. You are responsible for making any decisions that involve management functions relating to the financial statements, schedule of expenditures of federal and state awards, and related notes and for accepting full responsibility for such decisions. You will be required to acknowledge in the management representation letter that you have reviewed and approved the financial statements, schedule of expenditures of federal and state awards, and related notes prior to their issuance and have accepted responsibility for them. Further, you are required to designate an individual with suitable skill, knowledge, or experience to oversee any nonaudit services we provide and for evaluating the adequacy and results of those services and accepting responsibility for them. Management is responsible for making all financial records and related information available to us, including identifying significant vendor relationships in which the vendor has responsibility for program compliance and for the accuracy and completeness of that information. Management's responsibilities include adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud or illegal acts affecting the government involving (1) management, (2) employees who have significant roles in intemal control, and (3) others where the fraud or illegal acts could have a material effect on the financial statements. Your responsibilities include informing us of your knowledge of any allegations of fraud or suspected fraud affecting the govemment received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the entity complies with applicable laws, regulations, contracts, agreements, and grants. Additionally, as required by OMB Circular A -133, it is management's responsibility to follow up and take corrective action on reported audit findings and to prepare a summary schedule of prior audit findings and a corrective action plan. Management is responsible for establishing and maintaining a process for tracking the status of audit findings and recommendations. Management is also responsible for identifying for us previous audits or other engagements or studies related to the objectives discussed in the Audit Objectives section of this letter. This responsibility includes relaying to us corrective actions taken to address significant findings and recommendations resulting from those audits or other engagements or studies. You are also responsible for providing management's views on our current findings, conclusions, and recommendations, as well as your planned corrective actions. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or govemmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. Because the determination of abuse is subjective, Govemment Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Town of Hillsborough April 2, 2009 Page four Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements or noncompliance may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements or major programs. However, we will inform you of any material errors and any fraudulent financial reporting or misappropriation of assets that come to our attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. We will include such matters in the reports required for a Single Audit. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, funding sources, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will require certain written representations from you about the financial statements and related matters. Audit Procedures Internal Controls May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 28 of 88 Our audit will include obtaining an understanding of the entity and its environment, including intemal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and detecting errors and fraud that are material to the financial statements and to preventing and detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Our tests, if performed, will be less in scope than would be necessary to render an opinion on intemal control and, accordingly, no opinion will be expressed in our report on intemal control issued pursuant to Government Auditing Standards. As required by OMB Circular A -133, we will perform tests of controls over compliance to evaluate the effectiveness of the design and operation of controls that we consider relevant to preventing or detecting material noncompliance with compliance requirements applicable to each major federal award program. However, our tests will be less in scope than would be necessary to render an opinion on those controls and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to OMB Circular A -133. An audit is not designed to provide assurance on internal control or to identify significant deficiencies. However, during the audit, we will communicate to management and those charged with governance intemal control related matters that are required to be communicated under AICPA professional standards, Govemment Auditing Standards, and OMB Circular A -133. Audit Procedures Compliance As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the Town of Hillsborough's compliance with applicable laws and regulations and the provisions of contracts and agreements, including grant agreements. However, the objective of those procedures will not be to provide an opinion on overall compliance and we will not express such an opinion in our report on compliance issued pursuant to Govemment Auditing Standards. Town of Hillsborough April 2, 2009 Page five Audit Administration, Fees, and Other May 1 I, 2009 Regular Meeting Approved: June 8, 2009 Page 29 of 88 OMB Circular A -133 requires that we also plan and perform the audit to obtain reasonable assurance about whether the auditee has complied with applicable laws and regulations and the provisions of contracts and grant agreements applicable to major programs. Our procedures will consist of tests of transactions and other applicable procedures described in the OMB Circular A -133 Compliance Supplement for the types of compliance requirements that could have a direct and material effect on each of the Town of Hillsborough's major programs. The purpose of these procedures will be to express an opinion on the Town of Hillsborough's compliance with requirements applicable to each of its major programs in our report on compliance issued pursuant to OMB Circular A -133. We understand that your employees will prepare all cash, accounts receivable, or other confirmations we request and will locate any documents selected by us for testing. At the conclusion of the engagement, we will complete the appropriate sections of and sign the Data Collection Form that summarizes our audit findings. We will provide copies of our reports to the Town of Hillsborough; however, it is management's responsibility to submit the reporting package (including financial statements, schedule of expenditures of federal awards, summary schedule of prior audit findings, auditors' reports, and corrective action plan) along with the Data Collection Form to the designated federal clearinghouse and, if appropriate, to pass- through entities. The Data Collection Form and the reporting package must be submitted within the earlier of 30 days after receipt of the auditors' reports or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audits. At the conclusion of the engagement, we will provide information to management as to where the reporting packages should be submitted and the number to submit. The audit documentation for this engagement is the property of Dixon Hughes PLLC and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to the cognizant agency or its designee, a federal agency providing direct or indirect funding, or the U.S. Government Accountability Office for purposes of a quality review of the audit, to resolve audit findings, or to carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of Dixon Hughes PLLC. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other govemmental agencies. The audit documentation for this engagement will be retained for a minimum of five years after the report release or for any additional period requested by the Town of Hillsborough. If we are aware that a federal awarding agency, pass- through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. Our fee for these services will be $48,100. Our invoices for these fees will be rendered as work progresses and are payable on presentation. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. This engagement and any actions that may arise shall be governed by the laws of the state of North Carolina and be brought in the judicial districts in which the North Carolina headquarters of Dixon Hughes PLLC is located. Town of Hillsborough April 2, 2009 Page six Govemment Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of the contract. Our 2008 peer review and letter of comment accompanies this letter. We appreciate the opportunity to be of service to the Town of Hillsborough and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, DIXON HUGHES PLC John A. Frank, CPA Member of the Firm /ct RESPONSE: This letter correctly sets forth the understanding of the Town of Hillsborough. By: Title: Date: May 11, 2009 Regular Meeting Approved: June 8. 2009 Page 30 of 88 Baton Rouge, Louisiana October 3, 2008 8550 United Plazo Blvd, Suite 1001 P&N Postlethwaite Netterville A Prd•uionol Accounting Corporation Auocioted Officer in Principal Cann of Ow United Stow www.pncpo.com To the Members of Dixon Hughes, PLLC and the Center for Public Company Audit Firms Peer Review Committee We have reviewed the system of quality control for the accounting and auditing practice of Dixon Hughes, PLLC (the firm) applicable to non -SEC issuers in effect for the year ended February 29, 2008. The firm's accounting and auditing practice applicable to SEC issuers was not reviewed by us since the Public Company Accounting Oversight Board (PCAOB) is responsible for inspecting that portion of the firm's accounting and auditing practice in accordance with PCAOB requirements. A system of quality control encompasses the firm's organizational structure and the policies adopted and procedures established to provide it with reasonable assurance of complying with professional standards. The elements of quality control are described in the Statements on Quality Control Standards issued by the American Institute of Certified Public Accountants (the AICPA). The design of the system, and compliance with it, are the responsibilities of the firm. Our responsibility is to express an opinion on the design of the system, and the firm's compliance with that system based on our review. Our review was conducted in accordance with standards established by the Peer Review Committee of the Center for Public Company Audit Firms and included procedures to plan and perform the review that are summarized in the attached description of the peer review process. Our review would not necessarily disclose all weaknesses in the system of quality control or all instances of lack of compliance with it since it was based on selective tests. Because there are inherent limitations in the effectiveness of any system of quality control, departures from the system may occur and not be detected. Also, projection of any evaluation of a system of quality control to future periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the system of quality control for the accounting and auditing practice' applicable to the non -SEC issuers of Dixon Hughes, PLLC in effect for the year ended February 29, 2008, has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICPA, and was complied with during the year then ended to provide the firm with reasonable assurance of complying with applicable professional standards. 1 Baton Rouge, LA 70809 Tel: 225.922.4600 May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 31 01'88 Fox: 225.922.4611 Attachment to the Peer Review Report of Dixon Hughes, PLLC Description of the Peer Review Process Overview Firms enrolled in the AICPA Center for Public Company Audit Firms (the Center) Peer Review Program have their system of quality control periodically reviewed by independent peers. These reviews are system and compliance oriented with the objectives of evaluating whether: The reviewed firm's system of quality control for its accounting and auditing practice applicable to non -SEC issuers has been designed to meet the requirements of the Quality Control Standards established by the AICPA. The reviewed firm's quality control policies and procedures applicable to non -SEC issuers were being complied with to provide the firm with reasonable assurance of complying with professional standards. A peer review is based on selective tests and directed at assessing whether the design of and compliance with the firm's system of quality control for its accounting and auditing practice applicable to non -SEC issuers provides the firm with reasonable, not absolute, assurance of complying with professional standards. Consequently a peer review on the firm's system of quality control is not intended to, and does not, provide assurance with respect to any individual engagement conducted by the firm or that none of the financial statements audited by the firm should be restated. The Center's Peer Review Committee (PRC) establishes and maintains peer review standards. At regular meetings and through report evaluation task forces, the PRC considers each peer review, evaluates the reviewer's competence and performance, and examines every report, letter of comments, and accompanying response from the reviewed firm that states its corrective action plan before the peer review is finalized. The Center's staff plays a key role in overseeing the performance of peer reviews working closely with the peer review teams and the PRC. Once the PRC accepts the peer review reports, letters of comments, and reviewed firms' responses, these documents are maintained in a file available to the public. In some situations, the public file also includes a signed undertaking by the firm agreeing to specific follow -up action requested by the PRC. Firms that perform audits or play a substantial role in the audit of one or more SEC issuers, as defined by the Public Company Accounting Oversight Board PCAOB), are required to be registered with and have their accounting and auditing practice applicable to SEC issuers inspected by the PCAOB. Therefore, we did not review the firm's accounting and auditing practice applicable to SEC issuers. P &N May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 32 of 88 Planning the Review for the Firm's Accounting and Auditing Practice Applicable to Non -SEC Issuers To plan the review of Dixon Hughes, PLLC, we obtained an understanding of (1) the nature and extent of the firm's accounting and auditing practice, and (2) the design of the firm's system of quality control sufficient to assess the inherent and control risks implicit in its practice. Inherent risks were assessed by obtaining an understanding of the firm's practice, such as the industries of its clients and other factors of complexity in serving those clients, and the organization of the firm's personnel into practice units. Control risks were assessed by obtaining an understanding of the design of the firm's system of quality control, including its audit methodology, and monitoring procedures. Assessing control risk is the process of evaluating the effectiveness of the reviewed firm's system of quality control in preventing the performance of engagements that do not comply with professional standards. Performing the Review for the Firm's Accounting and Auditing Practice Applicable to Non -SEC Issuers Based on our assessment of the combined level of inherent and control risks, we identified practice units and selected engagements within those units to test for compliance with the firm's system of quality control. The engagements selected for review included engagements performed under the Government Auditing Standards, audits performed under FDICIA, and audits of Employee Benefit Plans. The engagements selected for review represented a cross section of the firm's accounting and auditing practice with emphasis on higher -risk engagements. The engagement reviews included examining working paper files and reports and interviewing engagement personnel. The scope of the peer review also included examining selected administrative and personnel files to determine compliance with the firm's policies and procedures for the elements of quality control pertaining to independence, integrity, and objectivity; personnel management; and acceptance and continuance of clients and engagements. Prior to concluding the review, we reassessed the adequacy of scope and conducted a meeting with firm management to discuss our findings and recommendations. May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 33 of 88 LGC -205 (Rev 1/1/2008) File in Triplicate. CONTRACT TO AUDIT ACCOUNTS of Town of Hillsborough, North Carolina Governmental Unit On this 2 nd day of April 2009 Dixon Hughes PLLC Auditor Post Office Box 2646. High Point. North Carolina 27261 -2646 the Auditor, and the Board of Aldermen Audi- 048.100 M Mailing Address the Town of Hillsborough Governing Board Governmental Unit to as the Governmental Unit, agree as follows hereinafter referred to as hereinafter refencd I. The Auditor shall audit all statements and disclosures required by generally accepted accounting principles and additional required legal statements and disclosures of all funds and/or divisions of the Governmental Unit for the period beginning July 1 2008 and ending June 30 2009 The non -major combining, and individual fund statements and schedules shall be subjected to die auditing procedures applied in the audit of the basic financial statements and an opinion will be rendered in relation to (as applicable) the governmental activities. the business -type activities, the aggregate discretely presented component writs, each major governmental and enterprise Pond, and the aggregate remaining fund information (nonmajor government and enterprise Ponds, the internal service fund type, and the fiduciary fund types). 2 At a minimum, the Auditor shall conduct hisiser audit and render his/her report in accordance with generally acccplcni auditing standards. The Auditor shall perform the audit in accordance with Government Auditing Standards if required by the State Single Audit Implementation An, as codified in G.S. 159 -34. If required by OMB Circular A -133 and the Stale Single Audit Implementation Act, the auditor shall perform a Single Audit. This audit and all associated workpapers may be subject to review by Federal and State agencies in accordance with Federal and Slate laws, including the staffs of the Office of State Auditor (OSA) and the LGC. If the audit andlor workpapers arc found in this review to be substandard, the results of the review may be forwarded to the North Carolina State Board of CPA Examiners. 3. This contract contemplates am unqualified opinion being rendered If financial statements are not prepared in accordance with generally accepted accounting principles (GAAP), or the statements fail to include an disclosures required by GAAP, explain that departure from GAAP in the space below: 4. This contract contemplates on unqualified opinion being rendered The audit shall include such tests of the accounting records and such other auditing procedures as are considered by the Auditor to be necessary in the circumstances. Any limitattnn.r or restrictions in scope which would lead to u qua/if/ration .should be fully explained In an ulmchment to this contract. The audit will have no scope hmitations except' 5. If this audit engagement is subject to the standards for audit as defined in Government Auditing Standards July 2007 revisions, issued by the Comptroller General of the United Stales, then the Auditor warrants by accepting this engagement that he has met the requirements for a peer review and continuing education as specified in Goernment Auditing Standards. The Auditor agrees to provide a copy of their most recent peer review report he the Governmental Unit and the Secretary of the Local Govemmenl Commission prior to the execution of the audit contract. (See Item 21.) 6. It is agreed that time is of the essence et this contract. All audits are to be performed and the report of audit submitted by October 31 2009 7. It is agreed that generally accepted auditing standards include a review of the Governmental Unit's system of internal control and accounting as same relates to accountability of funds and adherence to budget and Mw requirements applicable thereto; that the Auditor will make a written report, which may or may not be a part of the written report of audit, to the Governing Board setting forth his findings, together with his recommendations for improvement. That written report must include all matters defined as "significant deficiencies and material weaknesses" in AU 325 of the AICPA Professional Standards. The Auditor shall file a cony of )hat report with the Secretary of the Local Government Commission. 8. All local government and public authority contras for annual or special audits, bookkeeping or other assistance necessary to prepare the Unit's records for audit, financial statement preparation, any finance- related investigations. or any other audit related work in the State of North Carolina require the approval of the Secretary of the Local Government Commission. invoices for Services rendered under these contracts shall not be Paid by the Governmental Unit until the invoice has been approved by the the '.vertu .illi tG.S. 159 -34 and 1157 -447) All invoice s should be submitted in triplicate to the Secretary of the Local Government Commission. The original and one copy will be returned to the Auditor. Approval is not required on contracts and invoices for system improvements and similar services of a non auditing nature. 9. In consideration of the satisfactory performance of the provisions of this agreement, the Governmental Unit shall pay to the Auditor, upon approval by the Secretory of the Local Government Commission the following fee which includes any cost the Auditor may incur from work paper or peer reviews or any other quality assurance program required by third parties (Federal and State grantor and oversight agencies or other organizations) as required under the Federal and State Single Audit Acts: Year-end bookkeeping assistance IFor nua'tr subject to Government Auditing Standards, this Ls limited to bookkeeping services permitted by revised Independence Standards) N/A Preparation of the financial statements Included In above audit fee 10. After completing his audit, the Auditor shall submit to the Governing Board a written report of audit. This report shall include, at least- Management's Discussion and Analysis, the financial statements of the governmental unit and all of its component units and notes thereto prepared in accordance with generally accepted accounting principles. combining and supplementary information requested by the client or required for full disclosure under the law, and the Auditot's opinion on the material presented. The Auditor shall famish the requited number of copies of the report of audit to the Governing Board as soon as practical after the close of the accounting period. May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 34 of 88 I 1. The Auditor shall file with the Local Government Commission two copies of the report of audd, including one copy of the federal Data Collection Fonn, if a federal single audit is conducted. In addition, if the North Carolina Office of the State Auditor designates certain programs to be audited as major programs, a turnaround document and a representation letter addressed to the State Auditor shall be submitted to the Local Government Commission. Two copies of the report of audit should be submitted if the audit is performed only under the provisions of the State Single Audit Implementation Act or a financial audit is required to be perfrmed in accordance with Government Auditing Standards. Three copies of the audit should be submitted for Councils of Governments. Two copies of the audit should be submitted for tax levying Municipalities. Othtawise, one copy shall be submitted. Copies of the report shall be filed with the Local Government Commission when (a prior to) submitting the invoice for the services rendered. All copies of the report submitted must be bound. The report of audit, as filed with the Secretary of the Local Government Commission, becomes a matter of public record for inspection and review in the offices of the Secretary by any interested parties. Any subsequent revisions to these reports must be sent to the Secretary of the Local Government Commission. These audited financial statements are used in the preparation of Official Statements for debt offerings (the auditors' opinion is not included), by municipal bond rating services, to fulfill secondary market disclosure requirements of the &aunties and Exchange Commission, and other lawful purposes of the government, without subsequent consent of the auditor. 12. Should circumstances disclosed by the audit call for a more detailed investigation by the Auditor than necessary under ordinary circumstances, the Auditor shall inform the Goveming Board in writing of the need for such additional investigation and the additional compensation required therefore. Upon approval by the Secretary of the Local Government Commission, this agreement may be varied or changed to include the increased time and/or compensation as may be agreed upon by the Governing Board and the Auditor 13. If an approved contract needs to be varied or changed for any reason, the change must be reduced to writing, signed by bah parties, preaudiled if necessary, and submitted to the Secretary of the Local Government Commission for approval. No change shall be i 1 rt v t v n'n_ B nd h -11111 .1111 1.1 14. Item 15 may be completed by referencing the engagement letter and attaching a copy of the engagement letter to the contract to incorporate the engagement tenor into the contract. In case of conflict between the terms of the engagement letter and the terms of this contract, the terms of this contract will control. Engagement letter terms are deemed to be void unless the conflicting terms of this contract are specifically deleted in Item 21 of this contract. Engagement letters containing indemnification clauses will not be approved by the Local Government Commission. 15. There are no special provisions except I See attached engagement letter. 16. A separate contract should not be made for each division to be audited or report to be submitted. A separate contract mug be executed for each component unit which is a local government and for which a separate audit report is issued 17. The cannel should be executed and submitted jn triplicate to the Secretary of the Local Government Commission. The mailing address is 325 North Salisbury Street, Raleigh, Nonh Carolina 27603 -1385. The physical address is 4505 Fair Meadow Lane, Suite 102, Raleigh. North Carolina 27607 -6449. 18 19 20. 21 Firm Upon approval, the original contract will be returned to the Governmental Unit, a copy will be forwarded to the Auditor, and a copy retained by time Secretary of the Local Government Commission. The audit should not be stand before the contract is annroved. There arc no other agreements between the panics hereto and no other agreements relative hereto that shall be enforceable unless entered into in accordance with the procedure set out herein and approved by the Secretary of the Local Government Commission. If this audit engagement is not subject to Government Auditing Standards. then Item 5 shall be listed as a deleted provision in Item 22. An explanation must be given for deleting this provision. All of the above paragraphs are understood and shall apply to this a(peement, except the following nutnbered paragraphs shall be deleted. (See Item 16.) Dixon Hughes PLLC By 1 John A. Frank, CPA (Please type or pnnt name) (S re of authorized audit firm representative) Date April 2, 2009 Approved by the Secretary of the Local Government Comnuasloe as provided in Article 3, Chapter 159 of the General Statutes or Article 31, Pan 3, Chapter 115C of the General Statutes Dale For the Secretary, Local Government Commission (Signature) By (Signature ofhfavnt/C,Juu con of goveming board) Date By (Please type or print name and title) (Chair of Audit Committee please type or punt name) Signature of Audit Committee Chairperson) Date (If unit has no aura comma. this scram should be marked `N /A Thin nsuwnant has been preauditod in the manner requited by The Local Government Budget and Fiscal Control Act or by the School Budget and Fiscal Control Act Governmental Unit Finance Officer (Please type or paint name) Date (Signature) (Preaudit Certificate must be dated.) May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 35 of 88 To establish and fund an auxiliary police expense line 3. Expenditures 10 -20 -5130- 5700 -740 Community Policing CapitalNehicles 10 -20- 5120- 5700 -740 Police /Investigations CapitalNehicles 10 -20- 5110- 5700 -740 Police /Patrol CapitalNehicles To fund the purchase of a 2009 Ford Escape for Community Policing BUDGET AMENDMENTS May, 2009 GENERAL FUND BEFORE ADJ. AFTER 1. Revenue 10 -00- 3900 3900 -000 Fund Balance 909.878 31.025 940.901 Expenditure 10 -71- 4200 5982 -000 Admin.- Transfer to Capial Project Fund 31.023 31.023 To fund the additional cost of the Municipal Operations Site land purchase (aka Collins Property) 2. Expenditures 10 -20- 5110- 5300 -571 Police Patrol Misc. /Auxiliary Officers 500 500 10 -20- 5110 -5300 -330 Police Patrol Departmental Supplies 14.500 (500) 14,000 14.50 14.500 19,100 19,100 40,000 (5,300) 34,700 79,275 (13,800) 65,475 119.275 119.275 4. Expenditures 10-20-5350-5300-310 Fire Protection Gasoline /Diesel 50 50 10 -20- 5350 5300 -130 Fire Protection Utilities 10.150 (50) 10,100 10.15Q 10.150 To establish and fund, solely for budegtary purposes, an expense line for fuel in the Fire Department 5. Expenditures 10 -30- 5900 -5300 -150 Stormwater Landscaping 10 5900 5300 165 Stromwater Maintenance /Infrastructure To establish and fund a landscaping expense line May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 36 of 88 2,000 2,000 6.200 (2,000) 6,200 8.200 8 200 WATER FUND 6. Expenditures 30 -80- 8140- 5300 -336 Water Distribution Non Capital Outlay 1,875 1,875 30 -80- 8140- 5700 -741 Water Distribution Capital /Equipment 4,500 (1,875) 2,625 4.500 4.500 To fund the purchase of a fork lift for water distribution and collection 7. Expenditures 30- 80- 8200 -5300 -336 Waste Water Coll. Non Capital Outlay 1,875 1,875 30- 80- 8200 -5700 -741 Waste Water Coll. Capital /Equipment 154,500 (1,875) 152,625 154.500 154.500 To fund the purchase of a fork lift for water distribution and collection GENERAL CAPITAL IMPROVEMENT FUND 8. Revenues 60 -70- 3870- 3870 -100 Transfer From General Fund 60 -70- 3980 3980 -101 Municipal Operations Site Loan Expenditure 60 -10- 4200 5700 -735 Municipal Operations 600.000 50.623 650.623 To fund the additional cost of the Municipal Operations Site land purchase (aka Collins Property) GOLD PARK/RIVERWALK PROJECT 9. Revenue 65 -00- 3850 3850 -000 Interest Earned Expenditure 65 -10- 6200 -5700 -571 Miscellaneous /Contingency To fund interest earned through March, 2009 WATER AND SEWER CAPITAL RESERVE FUND 10. Revenue 70 -00- 3850- 3850 -000 Interest Earned Expenditures 70 -80- 6900 5700 -730 Capital Improvement -Water 70 -80- 6900 5700 -731 Capital Improvement -Sewer To fund interest earned through March, 2009 May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 37 of 88 155,900 31,023 186,923 600,000 19.600 619.600 755.90Q 50.623 806.523 5.189 69 5.25$ 158.189 69 158.258 244.791 10.347 255.138 $1,217,845 7,958 1,225,803 365.417 2.389 367,806 $1.583.262 10.347, 1.593 609 GENERAL CAPITAL RESERVE FUND 11. Revenue 71 -00- 3850 3850 -000 Interest Earned 8.256 2.37Z 10.628 Expenditures 71 -20 -6900- 5700 -740 Waterstone Capital Improv Police 71,766 450 72,216 71- 20- 6900 -5700 -741 Waterstone Capital Improv Fire 205,021 1,282 206,303 71- 20-6900 -5700 -742 Waterstone Capital Improv Wtr Tower 101,469 640 102,109 378.256 2.372 380.626 To fund interest earned through March, 2009 VERIFIED: APPROVED: //'O J /9 Ale i LA, Al, Donna F. Armibrister, Town Clerk May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 38 of 88 WHEREAS: gE.oGu io to oo9,A5 ic Resolution Providing Final Approval of Terms and Agreements For Town's 2009 Installment Financing To Refinance Prior Obligations The Town of Hillsborough has previously determined to undertake the refinancing of the following outstanding Town obligations related to the purchase of land for, and construction of. the West Fork Reservoir: The outstanding balance of the Town's General Obligation Water Bonds, Series 1998; and The remaining balance owed by the Town under a 1999 installment financing agreement with Bank of America, N.A. The Board has previously made a prelitninary determination to undertake this refinancing through an installment contract, as authorized under Section 1 60A-20 of the North Carolina General Statutes, with Branch Banking and Trust Company (the "Bank The Town's Finance Officer has made available to this Board the draft agreements listed on Exhibit A (the "Agreements which will implement the financing plan. BE IT RESOLVED by the Board of Commissioners of the Town of Hillsborough, North Carolina, as follows: 1. Determination To Proceed with Project The Board confirms its decision to carry out the refinancing through an installment financing with the Bank. Under the financing plan, the Bank will make funds available to the Town for use in paying off the existing obligations. The Town will repay the amount advanced, with interest, over time. The Town will grant to the Bank a mortgage -type interest in property constituting the West Fork Reservoir (as previously pledged in the 1999 financing) to secure the Town's repayment obligation. 2. Approval of Agreements; Direction To Execute Agreements The Board approves the forms of the Agreements submitted to this meeting. The Board authorizes and directs the Mayor and the Town Manager, or either of them, to execute and deliver the Agreements. The Agreements in their respective final forms must be in substantially the forms presented, with such changes as the Mayor or the Town Manager may approve. The execution and delivery of any document by an authorized Town officer will be conclusive evidence of the approval of any such changes. The Agreements in final form, however, must provide for the amount financed not to exceed $5,525,000, for a financing term not to extend beyond December 31, 2019, and for annual interest rates not to exceed 3.69 May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 39 of 88 3. Authorization to Officers To Complete Closing The Board authorizes and directs the Finance Officer and all other Town officers and employees to take all proper steps to complete the financing pursuant to the Agreements and as contemplated by this resolution. The Board authorizes and directs the Finance Officer to hold executed copies of all documents and instruments authorized or permitted by this resolution in escrow on the Town's behalf until the conditions for their delivery have been completed to such officer's satisfaction, and thereupon to release the executed copies of such documents and instruments for delivery to the appropriate persons or organizations. Without limiting the generality of the foregoing, the Board specifically authorizes the Finance Officer to approve changes to any documents previously signed by Town officers or employees, provided that such changes do not conflict with this resolution or substantially alter the intent of the document from that expressed in the form originally signed. The Finance Officer's authorization of the release of any such document for delivery will constitute conclusive evidence of such officer's approval of any such changes. In addition, the Finance Officer is authorized and directed to take all appropriate steps for the efficient and convenient carrying out of the Town's on -going responsibilities under the Agreements. This authorization includes, without limitation, contracting with third parties for reports and calculations that may be required under the Agreements. 4. Prepayment of Prior Obligations The Board authorizes and directs the Finance Officer, on the Town's behalf, to take all appropriate action as such officer may consider desirable in connection with the prepayment of the 1998 general obligation bonds and the 1999 financing contract obligations, including (a) distributing a Conditional Notice of Redemption of the 1998 bonds, (b) giving notice of prepayment of the 1999 obligations, and (c) making a final irrevocable call for redemption and prepayment of such of the current obligations as the Finance Officer (after consultation with the LGC) deems beneficial to the Town. Any prior actions toward such ends are ratified and confirmed. S. Resolutions As To Tax Matters The Town will not take or omit to take any action the taking or omission of which will cause its obligations to pay principal and interest (the "Obligations under the Financing Agreement described in Exhibit A to be "arbitrage bonds," within the meaning of Section 148 of the "Code" (as defined below), or "private activity bonds" within the meaning of Code Section 141, or otherwise cause interest components of the installment payments to be includable in gross income for federal income tax purposes. Without limiting the generality of the foregoing, the Town will comply with any Code provision that may require the Town at any time to pay to the United States any part of the earnings derived from the investment of the financing proceeds. In this resolution, "Code" means the United States Internal Revenue Code of 1986, as amended, and includes applicable Treasury regulations. May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 40 of 88 6. Obligations are `Bank Qualified" The Town designates its payment Obligations as "qualified tax- exempt obligations" for the purpose of Code Section 265(b)(3), which provides certain tax advantages for financial institutions providing financing to the Town. 7. Miscellaneous Provisions All Town officers and employees are authorized and directed to take all such further action as they may consider necessary or desirable in furtherance of the purposes of this resolution. All such prior actions of the Town officers and employees are ratified, approved and confirmed. Upon the absence, unavailability or refusal to act of the Town Manager, the Mayor or the Finance Officer, any other of such officers may assume any responsibility or carry out any function assigned in this resolution. All other Board proceedings, or parts thereof, in conflict with this resolution are repealed, to the extent of the conflict. This resolution takes effect immediately. 1 certify that the foregoing resolution was duly adopted at a meeting of the Board of Commissioners of the Town of Hillsborough, North Carolina, duly called and held on May 11, 2009, and that a quorum was present and acting throughout such meeting. Such resolution remains in full effect as of today. Dated this //,4( day of May, 2009 ..�6 p�u a n► 4us� 4.% tl'% t onna F. Armbrister s OG Town Clerk G" Town of Hillsborough, North Carolina gn ''�•.y CARO May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 41 of 88 Exhibit A Draft Agreements (a) A draft dated May 1, 2009, of a Financing Agreement and Deed of Trust to be dated on or about May 1, 2009, from the Town to a deed of trust trustee for the Bank's benefit, providing for the advance of funds to the Town for the Town's undertaking of the refunding, and providing for a real estate security interest to secure the Town's obligations under such Agreement. (b) A draft dated May 1, 2009, of an Escrow Agreement to be dated on or about May 1, 2009, between the Town and an Escrow Agent, providing for the custody and investment of financing proceeds and procedures for the application of such funds to the payment of the Town obligations being refunded. May I I. 2009 Regular Meeting Approved: June 8. 2009 Page 42 of 88 SHLF REVISED Draft of May 5, 2009 Prepared By and Return After Recording To: Robert M. Jessup Jr. Sanford Holshouser LLP 209 Lloyd St., Suite 350 Carrboro, NC 27510 This instrument has been pre- audited in the manner required by The Local Government Budget and Fiscal Control Act. By: Finance Officer Town of Hillsborough, North Carolina FINANCING AGREEMENT AND DEED OF TRUST STATE OF NORTH CAROLINA ORANGE COUNTY THIS FINANCING AGREEMENT AND DEED OF TRUST (this "Agreement is dated as of May 1, 2009, and is granted by the TOWN OF HILLSBOROUGH, NORTH CAROLINA, a public body of the State of North Carolina (the "Town to F. Louis Loyd, III, a citizen and resident of Mecklenburg County, North Carolina (the "Deed of Trust Trustee for the benefit of BRANCH BANKING AND TRUST COMPANY "BB &T RECITALS: The Town has the power. pursuant to Section 160A -20 of the North Carolina General Statutes, to enter into installment contracts to finance and refinance the purchase or improvement of real or personal property, and to secure its obligations under such contracts by security interests in all or a portion of the property purchased or improved. This May I I. 2009 Regular Meeting Approved: June 8. 2009 Page 43 of 88 Agreement provides for BB &T to advance $5,525,000 to the Town to enable the Town to refinance its previous funding for the acquisition and construction of the Facilities (as defined below) on and for the Site (as defined below), and provides for securing the Town's obligations under this Agreement by creating certain security interests in favor of BB &T. This Agreement secures current advances of $5,525,000. The current scheduled date for final repayment is on or about October 15, 2019. NOW, THEREFORE, (1) in consideration of the execution and delivery of this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged; (2) to secure the Town's performance of all its covenants under this Agreement, including the repayment of amounts advanced and to be advanced, together with interest on all such advances as provided in this Agreement or any amendments hereto, and all charges and expenses of collection (including court costs and reasonable attorneys' fees and expenses); and (3) to charge the Mortgaged Property, as defined below, with such payment and performance. the Town hereby sells, grants and conveys to the Deed of Trust Trustee, his heirs and assigns forever, in trust, with power of sale, the following (collectively, the "Mortgaged Property"): (a) (i) the property described in Exhibit A, (ii) any other real property acquired by the Town with the proceeds made available to the Town pursuant to this Agreement, and (iii) all real property hereafter acquired by the Town in exchange for, or in consideration of the exchange of, or with the proceeds from any disposition of, all or any part of any property described in this subparagraph, and in all cases together with all easements, rights, liberties, rights -of -way and appurtenances belonging to any such property (collectively, the "Site and (b) the improvements described in Exhibit B and all other improvements and fixtures now or hereafter attached or appurtenant to or used in or on those improvements or the Site, including (i) all renewals and replacements thereof and all additions thereto, (ii) all articles in substitution thereof, (iii) all building materials for construction or repair of such improvements upon their delivery to the Site, and (iv) all proceeds of all the foregoing in whatever form resulting from the loss or disposition of the foregoing, including all proceeds of and unearned premiums for any insurance policies covering the Site and such improvements, proceeds of title insurance and payments related to the exercise of condemnation or eminent domain 2 May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 44 of 88 authority, and all judgments or settlements in lieu of any of the foregoing (collectively, the "Facilities TO HAVE AND TO HOLD the Mortgaged Property with all privileges and appurtenances thereunto belonging, to the Deed of Trust Trustee, his heirs and assigns forever, upon the trusts, terms and conditions and for the purposes set out below, in fee simple in trust; SUBJECT, HOWEVER, to the encumbrances described in Exhibit C (the "Existing Encumbrances BUT THIS CONVEYANCE IS MADE UPON THIS SPECIAL TRUST: if the Required Payments (as defined below) are paid in full in accordance with this Agreement, and the Town shall comply with all of the terms, covenants and conditions of this Agreement, this conveyance shall be null and void and shall be canceled of record at the Town's request and cost, and title shall revest as provided by law. BUT IF, HOWEVER, THERE SHALL OCCUR AN EVENT OF DEFAULT UNDER THIS AGREEMENT, then BB &T shall have the remedies provided for in this Agreement, including directing the Deed of Trust Trustee to sell the Mortgaged Property under power of sale. THE TOWN COVENANTS AND AGREES with the Deed of Trust Trustee and BB &T (and their respective heirs, successors and assigns), in consideration of the foregoing, as follows: ARTICLE 1 DEFINITIONS; INTERPRETATION Unless the context clearly requires otherwise, capitalized terms used in this Agreement and not otherwise defined shall have the following meanings: "Additional Payments" means any of BB &T's reasonable and customary fees and expenses related to the transactions contemplated by this Agreement, any of BB &Ts expenses (including attorneys' fees) in prosecuting or defending any action or proceeding in connection with this Agreement, any required license or permit fees, state and local sales and use or ownership taxes or property taxes which BB &T is required to pay as a result of this Agreement, inspection and re- inspection fees, and any other amounts payable by the Town (or paid by BB &T on the Town's behalf) as a result of its covenants under this Agreement (together with interest that may accrue on any of the above if the Town shall fail to pay the same, as set forth in this Agreement). May 11, 2009 Regular Meeting Approved: June 8, 2009 Page 45 of 88 "Amount Advanced" has the meaning assigned in Section 2.02. "Bond Counsel Opinion" means a written opinion (in form and substance acceptable to BB &T) of an attorney or firm of attorneys acceptable to BB &T. "Budget Officer" means the Town officer from time to time charged with preparing the Town's draft budget as initially submitted to the Governing Board for its consideration. "Business Day" means any day on which banks in the State are not by law authorized or required to remain closed. "Closing Date" means the date on which this Agreement is first executed and delivered by the parties. "Code" means the Internal Revenue Code of 1986, as amended, including regulations, rulings and revenue procedures promulgated thereunder or under the Internal Revenue Code of 1954, as amended, as applicable to the Town's obligations under this Agreement and all proposed (including temporary) regulations which, if adopted in the form proposed, would apply to such obligations. Reference to any specific Code provision shall be deemed to include any successor provisions thereto. "Construction Agreements" means any contracts with contractors related to the construction of the Facilities. "Escrow Fund" means the fund of that name established under an Escrow Agreement dated as of May 1, 2009, between the Town and and escrow agent. "Event of Default" means one or more events of default as defined in Section 8.01. "Event of Nonappropriation" means any failure by the Governing Board to adopt, by the first day of any Fiscal Year, a budget for the Town that includes an appropriation for Required Payments, or the Governing Board's amendment of the annual budget to remove an appropriation for Required Payments, in each case as contemplated by Section 3.05. "Existing Encumbrances" means the encumbrances described in Exhibit C. "Fiscal Year" means the Town's fiscal year beginning July 1, or such other fiscal year as the Town may later lawfully establish. "Governing Board" means the Town's governing board as from time to time constituted. "Installment Payments" means the payments payable by the Town pursuant to Section 3.01. May I I, 2009 Regular Meeting Approved: June 8, 2009 Page 46 of 88 "LGC" means the North Carolina Local Government Commission. "Mortgaged Property" means the Mortgaged Property, as defined above. "Net Proceeds," when used with respect to any amounts derived from claims made on account of insurance coverages required under this Agreement or any condemnation award arising out of the condemnation of all or any portion of the Mortgaged Property, means the amount remaining after deducting from the gross proceeds thereof all expenses (including attorneys' fees and costs) incurred in the collection of such proceeds, and after reimbursement to the Town or BB &T for amount previously expended to remedy the event giving rise to such payment or proceeds. "Payment Dates" means the dates indicated in Exhibit D. "Permitted Encumbrances" means, as of any particular time, (a) the Existing Encumbrances; provided, however, that the "Bank of America Deed of Trust" identified in Exhibit C will not be deemed to be a Pennitted Encumbrance after November 15, 2009; (b) liens for taxes and assessments not then delinquent, (c) this Agreement, and (d) easements, rights -of -way and other such minor defects or restrictions as normally exist with respect to property of the same general character as the Mortgaged Property which will not impair the Town's intended use of the Mortgaged Property. "Plans and Specifications" means all plans and specifications for the Facilities prepared by architects, engineers and other consultants. "Prime Rate" means the interest rate so denominated and set by Branch Banking Trust Company (whether or not such Bank. or any affiliate thereof, is at any time the beneficiary under this Agreement) as its "Prime Rate," as in effect from time to time. "Required Payments" means Installment Payments and Additional Payments. "Section 160A -20" means Section 160A -20 of the North Carolina General Statutes, as amended, or any successor provision of law. "State" means the State of North Carolina. "Town" means the Town of Hillsborough, North Carolina. "Town Representative" means the Town's Manager or Finance Officer, or such other person or persons at the time designated, by a written certificate furnished to BB &T and signed on the Town's behalf by the presiding officer of the Town's Governing Board, to act on the Town's behalf for any purpose (or any specified purpose) under this Agreement. May 1 I, 2009 Regular Meeting Approved: June 8, 2009 Page 47 of 88