AGENDA #4a

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

SUBJECT:       Amendment to Reimbursement Resolution and Calling a Public Hearing to Consider Using Installment Contract Financing to Renovate the Hargraves Center and A. D. Clark Pool

DATE:             February 11, 2002

Attached Resolution A would amend the reimbursement resolution adopted by the Council earlier last year to increase the maximum amount that may be financed for the Hargraves Center and A. D. Clark Pool renovations to an amount not to exceed $1.2 million.

Attached Resolution B would begin the installment financing process with the Council making a preliminary determination to proceed with installment financing for this project and authorizing a public hearing on February 25 to consider the financing of this project.

Attached is a copy of the reimbursement resolution adopted on April 23, 2001.  

BACKGROUND

The Town has advertised for bids for Hargraves Recreation Center and A.D. Clark Pool renovation.  Sealed bids will be publicly opened and read on February 28, 2002, with recommendations on bid selection presented to the Council in March.  Because of the timing of the bid opening, the Town will not know the exact amount to be financed at the time of the public hearing on February 25.  The adopted Capital Improvements Program includes $940,000, an amount based on the Facilities Assessment study completed in 1999.

We recommend using an installment financing contract to pay for the renovations as authorized by General Statute 160A-20.  The use of such financing was discussed during the development of the Capital Improvements Program last spring. General Statute 160A-20 allows local governments to borrow funds from private financial institutions to be repaid through installment contracts over a specific term.  Installment purchases for equipment with maturities not exceeding five years do not require approval by the N. C. Local Government Commission; however all installment contracts for building renovations and improvements require approval by the N. C. Local Government Commission.  A discussion of the schedule and approval process that would be required to complete the project renovations using an installment contract is included below.

DISCUSSION

Proposed Amendment to Reimbursement Resolution

As required by federal law, a resolution declaring the Town’s intent to reimburse expenses for the Hargraves Recreation Center and A. D. Clark Pool and Bathhouse project through an installment financing contract was adopted by the Council on April 23, 2001.  The resolution sets the maximum principle amount to be financed for the project at $940,000, the amount that is included in the current Capital Improvements Program.

Although bids for this project will not be received and opened until February 28, 2002, we are concerned that the bids for the total project and an allowance for an adequate contingency appropriation could exceed the maximum amount of $940,000 specified in the reimbursement resolution.  In order to preserve the Council’s authority to finance a higher amount for this project, if the Council so chooses, the Town’s bond counsel recommends that we amend the reimbursement resolution now to increase the total project cost that may be financed from $940,000 to a maximum amount of $1.2 million.  Attached Resolution A would amend the reimbursement resolution of April 23, 2001 to allow such an increase.

The bid documents have been written with five add alternates each of which describes a taskaAnd its price included or excluded in the project, depending on the base bid and the total that the Council wishes to spend. The Council may accept or reject any of these alternates.  They are included because of the difficulty of predicting bid prices on a renovation project in the present market.  The proposed amendment to the reimbursement resolution not does bind the Council to approve financing the higher amount for the project.  It simply preserves the Town’s flexibility and authority to finance a higher amount that is the Council’s decision.  This resolution would allow the Council to make a final decision on this matter after the bids are opened andafter approving a total budget for the project.

Proposed Financing Schedule and Steps

For this renovation, we recommend that the Council consider an installment financing contract from private financial institutions with a term of 10 years.  Below is the process and schedule recommended by the N. C. Local Government Commission to complete the proposed financing.  We would anticipate no problems with obtaining approval of the financing.

Dates                          Steps

February 11                 The Council makes determination to proceed with financing, calls a public hearing to consider such financing, and publishes notice of such hearing 10 days prior to hearing.

February 25                 The Council holds public hearing on February 25, adopts resolution authorizing the filing of an application for the financing with the N. C. Local Government Commission on February 26, and authorizes staff to solicit financing proposals.

February 26                 The Town files application with N. C. Local Government Commission and solicits financing proposals.       

March 25                     The Council approves financing proposals with financial institution.        

April 2                          The N. C. Local Government Commission approves financing.

April 8                          The Council adopts resolution approving final documents and financing terms.

Before April 22            Closing and delivery of funds to Town.

RECOMMENDATION

That the Council:

· Adopt attached Resolution A amending the maximum amount to be financed for this project.

· Adopt attached Resolution B expressing intent to use installment financing for the renovation of the Hargraves Recreation Center and the A. D. Clark Pool, calling a public hearing on February 25 to consider such financing, and authorizing publication of a notice regarding the hearing.

A RESOLUTION AMENDING THE RESOLUTION OF INTENT TO REIMBURSE EXPENSES FOR THE HARGRAVES RECREATION CENTER AND A. D. CLARKE POOL PROJECT (2002-02-11/R-2a)

WHEREAS, the Town Council of the Town Chapel Hill adopted Resolution 2001-04-23/R-12 on April 23, 2001 declaring its official intent to reimburse expenses for the Hargraves Recreation Center and A. D. Clark Pool and Bathhouse renovation project using a 10-year installment financing contract in an amount not to exceed $940,000; and

WHEREAS, the Town is concerned that bids to be received for the project and an adequate contingency appropriation for the project could exceed the maximum amount of  $940,000 as specified in the reimbursement resolution; and

WHEREAS, the Council of the Town of Chapel Hill wishes to increase its flexibility regarding the maximum amount that can be financed for this project if desired;

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill, that, the Council hereby amends its resolution of official intent to reimburse expenses by increasing the maximum amount that may be financed for this project from $940,000 to a maximum amount of $1.2 million, as desired by the Council.

BE IT FURTHER RESOLVED that the Council authorizes the Town Clerk to certify a copy of this resolution for the Local Government Commission.

This the 11^th day of February , 2002.

A RESOLUTION CALLING A PUBLIC HEARING ON FEBRUARY 25 TO CONSIDER USING INSTALLMENT CONTRACT FINANCING FOR RENOVATIONS OF THE HARGRAVES RECREATION CENTER AND THE A. D. CLARK POOL (2002-02-11/R-2b)

WHEREAS, the Town Council has authorized renovations of the Hargraves Recreation Center and the A. D. Clark Pool; and

WHEREAS, the Town Council wishes to consider using installment financing as authorized by General Statues 160A-20 and proposes to file an application with the N. C. Local Government Commission for approval of such financing for renovations of the Hargraves Center and the A. D. Clark Pool;

NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Chapel Hill, that the Council hereby calls a public hearing at 7:00 p.m. on February 25 to receive comments from citizens concerning such financing, and hereby authorizes the publication of a notice of this public hearing 10 days prior to the hearing.

This the 11^th day of February, 2002.