Title
Resolution to Approve a Six Month Extension of the Existing Installment Purchase Agreement with Bank of Ann Arbor to Finance the Purchase of 350 S. Fifth Avenue ($3,500,000.00) (8 Votes Required) (Roll Call Vote Required)
Memorandum
The resolution before you is to approve the extension of an existing installment purchase agreement (IPA) for $3,500,000. The City entered into an IPA with Bank of Ann Arbor in 2003 to fund the acquisition of the property at 350 S. Fifth Avenue, the former YMCA site. The IPA was extended for a five year period on December 16, 2008. The extension matures on December 16, 2013. This resolution approves a six month extension to the existing IPA, at the same interest rate, with no prepayment penalty.
An installment purchase agreement is similar to a commercial loan. Michigan Public Act 99 of 1933 grants authority to municipalities to enter into such agreements. The City of Ann Arbor has used this financing vehicle in the past to finance the purchase of a fire truck, various pieces of rolling stock, and the YMCA property. The benefits of using an installment purchase agreement, instead of a traditional general obligation bond, are lower issuance cost, faster funding process, decreased documentation requirements, and a generally competitive interest rate.
In addition, the resolution provides for the increase of the FY2014 General Debt Service Fund expenditure budget by $3,500,000 in order to pay off the principal of the loan at such time as the real property is sold.
Passage of this Resolution is recommended.
Staff
Prepared by: Matthew V. Horning, Treasurer
Reviewed by: Tom Crawford, Financial & Administrative Services Area Administrator
Approved by: Steven D. Powers, City Administrator
Body
CITY OF ANN ARBOR
COUNTY OF WASHTENAW
STATE OF MICHIGAN
RESOLUTION AUTHORIZING EXTENSION OF
INSTALLMENT PURCHASE AGREEMENT
(ANN ARBOR YMCA BUILDING ACQUISITION PROJECT)
At a regular meeting of the City Council of the City of Ann ...
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