AGENDA #7
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Hearing on Installment Financing Contract for the Town Operations Center
DATE: March 21, 2005
The purpose of this public hearing is to receive citizen comment on a proposed installment financing of the Town Operations Center up to approximately $25,500,000.
BACKGROUND
The Public Works and Transportation Departments are located on the Horace Williams tract, on land that is leased from the University of North Carolina. The lease expires on December 31, 2006.
In December 2002, the Council approved a contract with Corley Redfoot Zack for the development of a site analysis, needs assessment, concept plan, and preliminary cost projection for new Public Works and Transportation facilities. On June 9, 2003, the Council agreed to finance the Public Works portion of the project through the use of Certificates of Participation. On October 27, 2003, the Council approved a concept plan and preliminary budget for the project. On November 24, 2003, the Council approved a budget ordinance for the Public Works/Housing components of the project. On April 14, 2004, the Council approved a Special Use Permit for the project.
The first construction on the site began in October 2004, including site clearing, grading and stormwater erosion control work. This work continues.
The project’s designers and Town staff have been working on developing and refining the project’s design since the Council approved the Special Use Permit. During this process, we have been guided by the values of sustainable development, environmental sensitivity and fiscal prudence.
The notice of this public hearing was published in the Chapel Hill News on Sunday, March 6. A copy of the notice is attached.
DISCUSSION
The proposed financing for the Town Operations Center would be secured by a lien on the new Town Operations Center (and the associated land) and the Town’s promise to repay the financing. The Town may also use financing proceeds to provide any necessary reserves and to pay financing costs.
We have identified grant funding commitments from State and Federal agencies for approximately $17.3 million of the Transit center cost. The local match for these grants totals approximately $1.8 million and is being accumulated in our transit capital reserve fund. We estimate that we need up to approximately $25,500,000 to finance the project as it is currently proposed. The borrowing would cover the costs of land purchases ($840,000), site work ($2,030,000), the building itself ($21,500,000), the costs of financing the project ($330,000), and a reserve for the possibility of costs coming in above budget ($500,000). We would not borrow for the reserve amount if bids come in as expected.
NEXT STEPS
April 5 The Council is scheduled to adopt a resolution approving the Certificates of Participation and the financing documents.
April 6 Application for financing submitted to the Local Government Commission.
May 3 Receive bids; receive Local Government Commission approval for financing.
May 9 The Council approves the bid for Town Operations Center Building construction.
May 11 Sale of Certificates of Participation.
May 26 Closing of Sale and receipt of funds.
RECOMMENDATION
We recommend that the Town Council proceed with the financing of approximately $25,500,000 in Certificates of Participation for the Town Operations Center.
ATTACHMENT
1. Advertisement in the Chapel Hill News on March 6, 2005 (p. 3).
Notice of Public Hearing
Town of Chapel Hill, North Carolina
Installment Financing Contract for Town Operations Center
The Chapel Hill Town Council will hold a public hearing on Monday, March 21, 2005, at 7:00 P.M. (or as soon thereafter as the matter may be heard). The purpose of the hearing will be to take public comment concerning a proposed installment financing contract by which the Town may finance up to approximately $25,500,000 to pay costs related to the planned Town Operations Center. The hearing will be in the Council Chamber, Chapel Hill Town Hall, 306 North Columbia Street, Chapel Hill , North Carolina.
The proposed financing would be secured by a lien on the new Town Operations Center (and the associated land) and the Town’s promise to repay the financing, but there would be no recourse against the Town or its property (other than the pledged facility and the associated land) if there were a default on the financing.
The Town may also use financing proceeds to provide any necessary reserves and to pay financing costs.
All interested persons will be heard. The Town’s plans are subject to change based on the comments received at the public hearing and the Council’s subsequent discussion and consideration. The Town’s entering into the financing is subject to obtaining approval from the North Carolina Local Government Commission.
Persons wishing to make written comments in advance of the hearing or wishing more information concerning the subject of the hearing may contact Kay Johnson, the Town’s Finance Officer, at Town Hall, 306 North Columbia Street, Chapel Hill, NC 27516 (telephone 968-2706).