AGENDA #4d

 

MEMORANDUM

 

TO:                  Mayor and Town Council

 

FROM:            W. Calvin Horton, Town Manager

 

SUBJECT:       Calling a Public Hearing to Consider Using Installment Contract Financing to Purchase Additional Land for Town Operations Center

 

DATE:             May 28, 2003

 

 

The memorandum provides information on a proposed schedule and process required to purchase additional land for the proposed Town Operations Center to use installment contract financing.  This financing would require an application be submitted to and approved by the N. C. Local Government Commission (LGC).

 

The attached Resolution would begin this process with the Council making a preliminary determination to proceed with installment financing for this project and authorizing a public hearing on June 9 to consider the financing of this project in an amount not to exceed $350,000.

 

BACKGROUND

 

On April 14, the Council authorized the purchase of 13.17 acres of additional land for the proposed Town Operations Center.  The Town has negotiated a firm contract with a purchase price of $342,117, depending on the final survey.  We recommend purchasing the property located at 7106 Millhouse Road, using an installment financing contract authorized by General Statue 160A-20 in the same manner as the purchase of the original land for this Center.  The contract would involve borrowing funds from a private financial institution to be repaid over a specific term.

 

Installment purchases for equipment over short periods of time do not require approval by the Local Government Commission; however, the purchase of land and purchases with more than 5-year payment maturities do require approval by the LGC.   Below is information on a proposed schedule and approval process that would be required in order to complete the purchase of land for this project using an installment contract.

 

DISCUSSION AND RECOMMENDED SCHEDULE

 

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

 

Dates                          Steps

 

May 28                        Council makes determination to proceed with financing, calls a public hearing to consider such financing, and publishes notice of hearing 10 days prior to the  hearing.                          

 

June 9                          Council holds public hearing on June 9, adopts resolution authorizing the filing of an application for the financing with the LGC on June 11, and authorizes staff to solicit financing proposals.

                                   

June 10                        Town files application with LGC and solicits financing proposals.

 

June 23                        Council approves financing proposals with financial institution, subject to LGC approval

                       

July 1                           LGC approves financing.         

 

July 7                           Closing and delivery of funds to Town

 

We estimate that payments on this purchase would be about $45,000 in the first year and decline about $1,200 annually thereafter.  The annual payments could be funded initially from the additional State-shared revenues expected this year that we previously recommended that the Council allocate for replacing the debt service reserve used last year to help balance the budget.                                                      

RECOMMENDATION

 

That the Council adopt the attached resolution expressing intent to use installment financing for the purchase of additional land for the proposed Town Operations Center, call for a public hearing on June to consider such financing, and authorize publication of a notice regarding the hearing.

 

 

A RESOLUTION CALLING A PUBLIC HEARING TO CONSIDER THE PURCHASE OF LAND USING INSTALLMENT CONTRACT FINANCING (2003-05-28/R-3)

 

WHEREAS, the Town Council authorized the purchase of additional land identified by Tax Map Reference as 7.18..4, at 7106 Millhouse Road, to be used for a Town Operations Center, and

 

WHEREAS, the Town Council wishes to consider the purchase of said land 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,

 

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 June 9  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 28^th day of May, 2003.