AGENDA #4d
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Bids for Installment Contract for Land Purchase
DATE: June 23, 2003
The attached resolution would authorize the Manager to accept the low bid, installment purchase contract with RBC Centura for the purchase 13.17 acres of additional land for the proposed Town Operations Center. The bid offers to finance the cost of the land purchase over a ten-year period at a fixed interest rate of 2.65%.
The attached budget ordinance would amend the current Public Works Bond Fund project budget by $345,000 to account for the capital costs of this purchase in accord with required accounting principles.
After a public hearing on June 9, 2003, the Council adopted a resolution authorizing the Manager, Finance Director and Town Attorney to complete steps necessary to obtain approval of an installment contract for the purchase of additional land for proposed Town Operations Center. The resolution authorized the filing of an application with the Local Government Commission and the issuance of requests for financing proposals from financial institutions.
The Town’s application for the financing was submitted to the Commission on June 10. Upon detailed review of the proposed transaction, staff of the Local Government Commission has determined that approval of the Commission is not required because the total payments due for this purchase over the next ten years is less than $500,000, and no capital improvements are anticipated in connection with this specific financing. Therefore, our application to the Commission for approval of this purchase has been withdrawn.
The Request for Financing Proposals was distributed to financial institutions on June 12, and proposals were returned to the Town on June 17.
The proposals for financing requested a fixed interest rate and even principal payments over a ten-year period.
On June 17, five responsive proposals were received from financial institutions as follows:
|
Financial Institution |
Interest Rate |
Total Principal & Interest |
Fees |
Total Cost |
|
2.65% |
$ 394,996 |
$ 5,350 |
$ 400,346 |
|
|
Branch Banking & Trust |
3.09% |
$ 403,681 |
- |
$ 403,681 |
|
Bank of America |
2.95% |
$ 401,793 |
$ 2,500 |
$ 404,293 |
|
3.90% |
$ 420,448 |
- |
$ 420,448 |
|
|
Ashford Capital Corporation |
3.925% |
$ 420,456 |
- |
$ 420,456 |
Based on the above proposals RBC Centura offers the lowest interest rate and total cost with a bid of 2.65%% for the ten-year term.
The attached Resolution would authorize the Manager and Finance Director to enter into a installment purchase contract with RBC Centura for purchase of the additional land. The resolution confirms that the Town does not expect to issue more than $10 million in tax-exempt debt during the calendar year. This expectation allows financial institutions to bid lower rates for governmental lease-purchase contracts.
Upon approval by the Council, we anticipate closing the financing proposals and the purchase of this property by June 30, 2003.
That the Council adopt the attached resolution authorizing the Manager and Finance Director to execute a lease-purchase agreement with RBC Centura for the purchase of additional land for the Town Operations Center, and enact the attached budget ordinance reflecting the appropriate accounting for the capital purchase of this land.
A RESOLUTON AUTHORIZING AN INSTALLMENT CONTRACT FOR THE PURCHASE OF ADDITIONAL LAND FOR THE PROPOSED TOWN OPERATIONS CENTER (2003-06-23/R-5)
WHEREAS, the Town of Chapel Hill solicited and received competitive proposals from financial institutions for the lease-purchase of additional land for the proposed Town Operations Center; and
WHEREAS, RBC Centura offers the lowest interest rate of 2.65% for this purchase;
NOW, THEREFORE, BE IT RESOVED by the Council of the Town of Chapel Hill that the Council authorizes the Town Manager to enter into a contract with RBC Centura on behalf of the Town for the lease-purchase of additional land for the proposed Town Operation Center at a fixed interest rate of 2.65% for a ten-year term.
BE IT FURTHER RESOLVED that the aforesaid contracts by and between the Town of Chapel Hill and Branch Banking & Trust, together with the amounts to be paid thereunder, be and the same are hereby designated as qualified tax-exempt obligations of the Town of Chapel Hill for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.
BE IT FURTHER RESOLVED that the Council does not reasonably expect that the Purchaser (and any subordinate entities) will issue more than $10,000,000 in qualified tax-exempt obligations pursuant to such Sections 265(b)(3)(ii) during the current calendar year.
This the 23rd day of June, 2003.
AN ORDINANCE TO AMEND THE CAPITAL PROJECTS ORDINANCE FOR RENOVATIONS AND IMPROVEMENTS TO PUBLIC WORKS FACILITIES FUNDED FROM 1996 BONDS (2003-06-23/O-2.1)
BE IT ORDAINED by the Council of the Town of Chapel Hill that, pursuant to Section 13.2 of Chapter 159 of the General Statutes of North Carolina, the following capital project established for Public Works Facility renovations funded from 1996 bonds approved by the voters in November 1996 is hereby amended as follows:
The capital projects as authorized by bond referenda approved in November, 1996 and as determined by the Town Council, includes the capital costs of renovating and adding facilities to support Public Works operations.
The Manager of the Town of Chapel Hill is hereby directed to proceed with implementation of these projects within terms of funds appropriated here.
Revenues anticipated to be available to the Town to complete the project are amended as follows:
Current Revised
Budget Budget
Installment Contract Proceeds 0 345,000
Amounts appropriated for the project are amended as follows:
Current Revised
Budget Budget
Public Works Renovations and Improvements $545,667 $ 890,667
The Manager is directed to report annually on the financial status of the project in an informational section to be included in the Annual Budget, and shall keep the Council informed of any unusual occurrences.
This the 23rd day of June, 2003.