The council needs to find a new location for both the Public Works and Transportation departments because of the likelihood that their current University-owned leases will not be renewed.
"As the council well knows, we face difficulty," Town Manager Cal Horton said.
The departments are currently located on the Horace Williams property on Airport Road.
The town rents this land from the University for $1 a year, but this lease expires Dec. 31, 2006.
The University has not agreed to the town's requests to extend the lease for an additional 10 years because UNC plans to develop the land into a research and housing facility.
The failure to obtain an extension has led the town to search for new sites to house both of these municipal operations.
In an 8-1 vote Monday night, the council approved an installment contract for the purchase of a 54-acre parcel of land that is bounded by Eubanks Road, Mill House Road and Interstate 40.
This 54-acre site was selected to house the Public Works Department because it is one of the few large vacant areas in Chapel Hill.
"We were looking at areas that would have enough acreage," council member Jim Ward said.