AGENDA #5g
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Bids for Installment Contract for Public Works Land
DATE: April 23, 2001
Resolution A would authorize the Manager to accept the low bid, installment purchase contract with Branch Banking & Trust, for the purchase of land for a Public Works operational facility, subject to the approval by the North Carolina Local Government Commission.
The bid offers to finance the cost of the land purchase over a ten-year period at a fixed interest rate of 4.91%. Payments would be $133,085 in the first year, beginning in 2001-2002, and decline by about $4,500 annually over the next ten years. Funding for semi-annual payments is included in the Manager’s proposed budget for 2001-2002.
On April 9, 2001, 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 land for a new Public Works operation facility. 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 April 10. The Request for Financing Proposals was distributed to financial institutions on April 11, and due to be returned to the Town by April 18. After initial consideration and approval by the Council, the financing proposals must also be approved by the Commission.
The proposals for financing requested a fixed interest rate and even principal payments over a ten-year period.
On April 18, four responsive proposals were received from financial institutions as follows:
|
Financial Institution |
Interest Rate |
Principal & Interest |
Fees |
Total Cost |
|
4.91% |
1,131,997 |
2,000 |
1,131,997 |
|
|
First Union |
4.97% |
1,134,832 |
- |
1,134,832 |
|
Wachovia |
5.66% |
1,194,925 |
2,500 |
1,197,425 |
|
5.69% |
1,192,611 |
- |
1,192,611 |
Based on the above proposals, Branch Banking & Trust offers the lowest interest rate and total cost with a bid of 4.91% for the ten-year term.
The attached Resolution would authorize the Manager and Finance Director to enter into a lease-purchase contract with Branch Banking & Trust for purchase of the Public Works land, subject to final approving of the financing by the N. C. Local Government Commission. 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, the resolution would be forwarded to the Local Government Commission for consideration on May 1.
That the Council adopt the attached resolution authorizing the Manager and Finance Director to execute a lease-purchase agreement with Branch Banking & Trust for the purchase of Public Work land, subject to approval of the financing by the Local Government Commission.
A RESOLUTION AUTHORIZING A LEASE-PURCHASE AGREEMENT FOR THE PURCHASE OF LAND FOR A PUBLIC WORKS OPERATIONS FACILITY (2001-04-25/R-11)
WHEREAS, the Town of Chapel Hill (the "Town") has previously determined to undertake a project for the acquisition of 54 acres of land for a Public Works operations facility and the Finance Officer has now presented a proposal for the financing of such Project;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that:
1. The Town hereby determines to finance the Project through Branch Banking and Trust Company (`BB&T"), in accordance with the proposal dated April 17, 2001. The amount financed shall not exceed $900,000.00, the annual interest rate (in the absence of default or change in tax status) shall not exceed 4.91%, and the financing term shall not exceed ten (10) years from closing.
2. All financing contracts and all related documents for the closing of the financing (the "Financing Documents") shall be consistent with the foregoing terms. All officers and employees of the Town are hereby authorized and directed to execute and deliver any Financing Documents, and to take all such further action as they may consider necessary or desirable, to carry out the financing of the Project as contemplated by the proposal and this resolution. The Financing Documents shall include a Financing Agreement and Deed of Trust and an Escrow Agreement as BB&T may request.
3. The Finance Officer is hereby authorized and directed to hold executed copies of the Financing Documents until the conditions for the delivery of the Financing Documents have been completed to such officer's satisfaction. The Finance Officer is authorized to approve changes to any Financing Documents previously signed by Town officers or employees, provided that such changes shall not substantially alter the intent of such documents or certificates from the intent expressed in the forms executed by such officers. The Financing Documents shall be in such final form, as the Finance Officer shall approve, with the Finance Officer's release of any Financing Document for delivery constituting conclusive evidence of such officer's final approval of the Document's final form.
4. The Town shall not take or omit to take any action the taking or omission of which will cause its interest payments on this financing to be includable in the gross income for federal income tax purposes of the registered owners of the interest payment obligations. The Town hereby designates its obligations to make principal and interest payments under the Financing Documents as "qualified tax‑exempt obligations" for the purpose of Internal Revenue Code Section 265(b)(3).
5. All prior actions of Town officers in furtherance of the purposes of this resolution are hereby ratified, approved and confirmed. All other resolutions (or parts thereof) in conflict with this resolution are hereby repealed, to the extent of the conflict. This resolution shall take effect immediately; provided however, that the actions authorized hereby are subject to approval of this financing by the N. C. Local Government Commission.
This the 23rd day of April, 2001.