AGENDA #2

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

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

 

DATE:             February 25, 2002

 

 

The purpose of this public hearing is to receive comments from citizens on the proposed use of an installment contract to finance major renovations to the Hargraves Center and A. D. Clark Pool and Bathhouse.

 

The attached resolution would declare findings by the Council that a proposed installment contract is a necessary and expedient method to finance the proposed renovations, and would authorize the Manager, Finance Director and Attorney to file an application with the North Carolina Local Government Commission for approval of the project and a proposed financing contract.   The application to the Commission would be filed on February 26 for consideration by the Commission on April 2, 2002.

 

BACKGROUND

 

On February 11, 2002, the Council began the process necessary to obtain approval from the Local Government Commission of a proposed installment contract to finance the renovations to the Hargraves Center and A.D. Clark Pool and Bathhouse.   The Council adopted a resolution calling for a public hearing on February 25 (as required by the Commission) to consider the renovations of the Hargraves Center and A. D. Clark Pool using an installment contract.  Notice of the public hearing was published in the Chapel Hill Herald on February 15 , 2002, as required by procedures of the Commission.

 

DISCUSSION

 

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.  We believe that the budget amount to be financed is reasonable for the project scope.

 

We propose to use an installment contract for the purchase, with a maturity of 10 years.  Payments would begin in fiscal year 2002-03 and would be dependent upon the actual amount financed and the interest on the financing.

 

After hearing from citizens during the public hearing, the Council could proceed with the process necessary to obtain approval of this proposed purchase by adopting the attached resolution in a format prescribed by the Commission.  The resolution would state the Council’s findings that an installment contract is a necessary and expedient method for financing this project, and authorize the Manager, Finance Director and Attorney to file an application to the Commission for approval of the proposed financing contract.  We propose to file the application with the Commission on February 26.

 

In accord with the schedule established to complete the approval process, we would solicit proposals from financial institutions for the financing of the project mid-March, and submit recommendations on the award of the construction contract and the financial contract to the Council for this project on March 25.

 

The Local Government Commission is scheduled to consider the Town’s application on April 2.  The Council is scheduled to adopt a resolution approving the final documents and financing terms on April 8.  We propose to close the financing agreement and receive the funding before April 22.

 

RECOMMENDATION

 

We recommend that the Council adopt the attached resolution stating its findings that an installment contract is a necessary and expedient method for the proposed renovation of the Hargraves Center and A. D. Clark Pool, and authorizing an application to the Local Government Commission for approval of the proposed financing.

 

 


 

A RESOLUTION AUTHORIZING THE FILING OF AN APPLICATION FOR APPROVAL OF A FINANCING AGREEMENT AUTHORIZED BY NORTH CAROLINA GENERAL STATUTE 160A-20 (2002-02-25/R-1)

 

WHEREAS, the Town of Chapel Hill, North Carolina desires to renovate the Hargraves Center and the A. D. Clark Pool and Bathhouse in an amount not to exceed $1.2 million to better serve the citizens of the Town; and

 

WHEREAS, the Town desires to finance the Project by the use of an installment contract authorized under North Carolina General Statute Chapter 160A, Article 3, Section 20; and

 

WHEREAS, findings of fact by the governing body must be presented to enable the North Carolina Local Government Commission to make its findings of fact set forth in North Carolina General Statute Chapter 159, Article 8, Section 151 prior to approval of the proposed contract;

 

NOW, THEREFORE, BE IT RESOLVED by  the Council of the Town of Chapel Hill that the Council, meeting in a regular session on the 25th day of February, 2002, makes the following findings of fact:

 

l. .       The proposed contract is necessary and expedient in order to take advantage of an opportunity to complete the renovation of the Hargraves Center and the A. D. Clark Pool and Bathhouse in a timely manner.

 

2.   The proposed contract is preferable to a bond issue for the same purpose because timing is of the essence in order to begin the renovations promptly, and the amount of up to $1.2 million is more than can be prudently raised from currently available appropriations, unappropriated fund balances, and non-voted bonds in a timely manner.

 

3.   The cost of financing under the proposed contract is expected to be approximately the same as the cost of issuing general obligation bonds.

 

4.      The sums to fall due under the contract are found to be adequate and not excessive for the proposed purpose.

 

5.   The debt management policies of the Town are found to have been carried out in strict compliance with applicable law and will be continued in the future.

 

6.   The increase in taxes necessary to meet the sums to fall due under the anticipated contract is estimated to be less than .4 cents per $100 valuation and is not deemed to be excessive.

 

7.      The Town is not in default in any of its debt service obligations.

 

8.   The attorney for the Town has rendered an opinion that the proposed Project is authorized by law and is a purpose for which public funds may be expended pursuant to the Constitution and laws of North Carolina.

 

BE IT FURTHER RESOLVED that the Manager, Finance Director, and Attorney are hereby authorized to act on behalf of the Town in filing an application with the North Carolina Local Government Commission for approval of the Project and the proposed financing contract and actions not inconsistent with this resolution.

 

This the 25th day of February, 2002.