REPORT TO THE CITY COUNCIL
June 11, 2015
FROM: KERRI L. DONIS, Fire Chief
Fire Department
SUBJECT
Title
RESOLUTION - Modifying of Resolution No. 2015-49 relating to the Master Equipment Lease Purchase Agreement with Community First National Bank.
Body
RECOMMENDATION
Staff recommends Council adopt the modified resolution authorizing the execution and delivery of the equipment lease purchase agreement that was approved by Council on March 26, 2015.
EXECUTIVE SUMMARY
On March 26, 2015, Council approved a Master Equipment Lease-Purchase Agreement (Agreement) with Community First National Bank in an amount not to exceed $7,150,000. This Agreement provided financing for the lease-purchase of fire apparatus on a ten-year term, and equipment and light vehicles for a five-year term. This equipment is being purchased to replace existing equipment that is at or near the end of its useful life span.
The March 26th staff report and accompanying required documents included Resolution 2015-49 which contained an incorrect reference to a maximum term for lease financing not to exceed seven (7) years. The correct maximum term for lease financing should reflect ten (10) years. As such, staff is recommending approval of a corrected resolution to correspond with the financing terms of the executed Agreement.
BACKGROUND
The Fire Department fleet contains over 110 fire apparatus, specialty, and light vehicles. During the economic downturn, vehicle replacements were deferred and in FY 2105, the department placed orders for eight new fire engines, two fire trucks and eight light vehicles that had been authorized in prior budget years.
As the City does not currently have a master lease agreement in place, a formal Request for Proposal process was conducted with proposals sent out to over thirty financial institutions and posted on Planet Bids. Community First National Bank was the only respondent, but their proposal was deemed responsive and responsible. The Finance Department reviewed the proposal response, performed reference checks and determined that the quoted rates are very competitive at around 2 percent for the five-year light vehicle and equipment lease period, and 2.5 percent for the fire trucks and engines which are leased over a ten-year period. The department presented the Agreement and other required documents to Council for approval on March 26, 2015.
Unfortunately, one of the required documents, Resolution 2015-49, contained an incorrect reference to a maximum term for lease financing not to exceed seven (7) years. The correct maximum term for lease financing should reflect ten (10) years as defined in the Request for Proposal and defined in the executed Agreement. Also, Community First National Bank requested that that all equipment purchased under the agreement was listed in the resolution. As such, staff is recommending approval of a modified resolution to correspond with the financing terms of the executed agreement and financing appropriations estimates included in the FY 2016 Proposed Budget and five-year General Fund projections for replacement of the Fire Department fleet.
The City Attorney has reviewed and approved as to form.
ENVIRONMENTAL FINDINGS
This is not a "project" for the purposes of CEQA pursuant to CEQA Guidelines, Section 15378(b)(5), as it is an administrative activity that will not result in direct or indirect physical changes to the environment.
LOCAL PREFERENCE
Local preference was not implemented because this item involves modification of an existing resolution.
FISCAL IMPACT
There is no impact to the General Fund related to approval of this Resolution. Sufficient funding for the total estimated first-year lease payment of $525,200 is included in the proposed FY 2016 budget. Thereafter, the estimated annual obligation of $881,000 will be requested in each succeeding budget year accordingly.
Attachments
Resolution-Modifying Resolution 2015-49 Relating to the Master Equipment Lease Agreement