Title
Resolution to Approve an 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)
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, the former YMCA site. The IPA expires on December 16, 2008. This resolution approves a five year extension to the existing IPA, at the same interest rate, with no prepayment penalty after the first year.
An installment purchase agreement is essentially equivalent 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 and decreased documentation requirements.
The Treasury Unit solicited bids from seven banks and received two responses, which are tabulated below:
Bank Rate
Bank of Ann Arbor* - 3.89%
Chase Equipment Leasing, Inc. - 6.14%
Banc of America Public Capital Corp - (did not submit bid)
Citizen’s Bank - (did not submit bid)
Comerica Bank - (did not submit bid)
Fidelity Bank - (did not submit bid)
Ann Arbor Commerce Bank (did not submit bid)
* Recommended bank
Passage of this Resolution is recommended.
Staff
Prepared by: Matthew V. Horning, Treasurer
Reviewed by: Tom Crawford, Financial & Administrative Services Area 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...
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