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Brentwood City Commission Agenda

Meeting Date:	03/09/2020
Resolution 2020-22 - Authorizing the Issuance, Sale, and Payment of a $2,600,000 Capital Outlay Note for the Purchase of Real Property
Submitted by:	Kristen Corn, Legal
Department:	Legal

Information

Subject

Resolution 2020-22 Authorizing the Issuance, Sale, and Payment of a $2,600,000 Capital Outlay Note for the Purchase of Real Property

Background

As staff has continued to work through the process for the purchase of the property for the future Windy Hill Park, we consulted with bond counsel regarding proper recording of the transaction to the Tennessee Comptroller of the Treasury. As you know, the contract for sale provides that the initial payment of half of the purchase price of the property will be made by the City to the sellers at the closing, and the other half will be made no later than January 31, 2021.

Because this transaction essentially creates a short-term debt for the City between the original closing date and the second payment, it was recommended by bond counsel that the City use a real estate capital outlay note instead of a deed of trust (commonly known as a mortgage). State law is clear that the City may incur debt by way of a capital outlay note backed by full faith and credit of the City.

This note gives the sellers the same or better security for the second payment, and it does not change the financial structure of the agreement or the City's payment in any way--the obligation is still in an amount up to $2,600,000 with a 0% interest rate payable by January 31, 2021. Although the financial impact to the City is no different, state law provides that the issuance of a capital outlay note has to be approved by the Board of Commissioners by resolution. Staff will also submit the note to the Office of the Comptroller for its approval.

Should you have any questions, please contact the City Manager or the City Attorney.

Staff Recommendation

Staff recommends the Board approve Resolution 2020-22.

Previous Commission Action

Ordinance 2020-02 - Authorizing the Acquisition of 52 (+/-) Acres Located on Old Smyrna Road

Fiscal Impact

Attachments
Resolution 2020-22
Signed Resolution