AGENDA #4k

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

SUBJECT:       Resolution Awarding Refunding Bonds Sold on March 12

DATE:             March 25, 2002

 

 

The attached resolution, prepared by the Town’s bond counsel, would award the Town’s refunding bonds sold on March 12 to the lowest bidder, First Union National Bank. Adoption of the resolution would be the final action required by the Council to complete the refunding bond sale.

 

Eight bids were received for the refunding bonds, ranging from 3.754% to 3.972%.  First Union’s bid was determined to be the lowest bid at a proposed interest rate of 3.754%.

 

The final savings from the refunding bonds, net of issuance costs, was calculated by our financial advisor to be $148,000 over the next eight years.

 

RECOMMENDATION

 

That the Council adopt the attached resolution awarding the refunding bonds to First Union National Bank at an interest rate of 3.754%.

 

ATTACHMENT

 

1.         Bids received on March 18, 2002 on Chapel Hill $3,380,000 General Obligation Refunding Bonds, Series 2002 (p. 5).

A RESOLUTION AWARDING THE BONDS AND DESIGNATING THE TOWN OF CHAPEL HILL, NORTH CAROLINA AS PAYING AGENT FOR THE $3,365,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2002 (2002-03-25/R-9)

 

WHEREAS, on March 4, 2002, the Town Council of the Town of Chapel Hill, North Carolina (the “Town”) adopted a resolution (the “Bond Resolution”), which provided for the issuance of the Town’s General Obligation Refunding Bonds, Series 2002 in an aggregate principal amount not to exceed $3,380,000 (the “Bonds”), the proceeds of which will be used to refund the Town’s General Obligation Public Improvement Bonds, Series 1992 in the original aggregate principal amount of $5,000,000 (the “Prior Bonds”); and

 

WHEREAS, during the sale of the Bonds on March 12, 2002, the aggregate principal amount of the Bonds was established at $3,365,000, the principal amortization of the Bonds was determined as hereinafter provided and the Bonds were sold to First Union National Bank (“First Union”); and

 

WHEREAS, the Town Council now desires to amend and supplement the Bond Resolution in certain respects, approve the form of the Bonds and certain other documents, award the Bonds to First Union National Bank and authorize the execution and delivery by the Town of an Escrow Agreement with First Citizens Bank & Trust Company, as Escrow Agent.

 

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill as follows:

Section 1.         The Town shall issue its General Obligation Refunding Bonds, Series 2002 in an aggregate principal amount of $3,365,000 pursuant to and in accordance with the Bond Order adopted by the Town Council on March 4, 2002 and, except as amended and supplemented by this Resolution, in accordance with the resolution with respect to the Bonds adopted by the Town Council on March 4, 2002 (the “Bond Resolution”).

Section 2.         The Bonds shall be payable in annual installments on February 1 of each year commencing on February 1, 2003 through and including February 1, 2010 in the following amounts:

 

Maturity Date            Principal Amount

 

02/01/2003

          $255,000

02.01/2004

            230,000

02/01/2005

            230,000

02/01/2006

            250,000

02/01/2007

            245,000

02.01/2008

            815,000

02/01/2009

            800,000

02/01/2010

            540,000

 

 

            Section 3.         The form of the Notice of Sale, Bid Form and Official Statement used in connection with the sale of the Bonds on March 12, 2002, copies of which have been provided to the Town Council, are hereby approved and ratified by the Town Council.

 

            Section 4.         Notice of the sale of the Bonds was duly distributed calling for sealed bids to be received by the Local Government Commission, at its office in the City of Raleigh, North Carolina, until 11:00 a.m., North Carolina time on Tuesday, March 12, 2002, at which hour bidding was closed and the bids described below were found to have been filed offering to purchase the Bonds and to accord in all respects with the terms of the notice, each bid being accompanied by an official bank check, a cashier’s check, a certified check or a treasurer’s check for $67,300 payable unconditionally to the order of the State Treasurer of North Carolina.

 

Section 5.         That the bid offering to purchase the Bonds at the lowest true interest cost

to the Town, such cost being determined by deducting the amount of premium bid from the aggregate amount of interest upon all the Bonds from April 1, 2002 until their respective maturities, was the bid by First Union National Bank offering to pay $3,365,000, plus a premium of $4,307.75, plus accrued interest for the Bonds, and naming for the Bonds the interest rates set forth below under the heading “INTEREST RATES NAMED IN BID”, such true interest cost being 3.7541%.

 

           

Maturity

Date

Principal

Amount

Interest Rates

Named in Bid

 

02/01/2003

$255,000

3.0000

02/01/2004

230,000

3.0000

02/01/2005

230,000

3.0000

02/01/2006

250,000

3.2500

02/01/2007

245,000

3.5000

02/01/2008

815,000

3.7500

  02/01/2009

800,000

4.0000

02/01/2010

540,000

                       4.0000

 

Copies of the additional Bids received are described in Exhibit “A” attached hereto and incorporated herein by reference.

 

Section 6.         It is hereby determined that under the terms of the Notice of Sale with respect to the Bonds the bid of First Union National Bank should be accepted and the acceptance thereof is in the best interests of the Town.

 

Section 7.         The Bonds are hereby awarded to First Union National Bank at the price set forth in Section 5 above offered for the Bonds and at the rates of interest named in said bid as set forth above under the heading “INTEREST RATES NAMED IN BID” in Section 5 above, and the Bonds shall be issued bearing interest at those rates.

 

Section 8.         The Bonds shall be prepared and executed by the Mayor and Town Clerk of the Town substantially in the form and manner set forth in the Bond Resolution, as amended by the terms of this Resolution, with a certificate of authentication to be added thereto and executed by the Director of Finance of the Town.  Bonds in typewritten form shall be delivered to or upon the order of The Depository Trust Company, New York, New York upon payment of the purchase price and accrued interest no later than April 8, 2002.

 

Section 9.         The Town of Chapel Hill, North Carolina is hereby designated and appointed by the Town to act as Paying Agent for the Bonds.

 

Section 10.       The officers and agents of the Town are hereby authorized and directed to do all acts and things necessary to carry into effect the provisions of this Resolution.

           

Section 11.       This Resolution shall be in full force and effect immediately upon its passage.

 

This the 25th day of March, 2002.

ATTACHMENT 1

 

 

 

 

 

 

BIDS RECEIVED ON MARCH 18, 2002

 

 

CHAPEL HILL

$3,380,000 GENERAL OBLIGATION REFUNDING

BONDS, SERIES 2002