REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, MBA, Finance Director/City Controller
Finance Department
SUBJECT
Title
Approve the First Amendment to Master Equipment Lease Purchase Agreement to increase the borrowing capacity.
Body
RECOMMENDATION
Approve the first amendment to the Master Equipment Lease Purchase Agreement to increase the borrowing capacity to meet existing and future needs of the City
EXECUTIVE SUMMARY
The City of Fresno (City) currently has a Master Equipment Lease-Purchase Agreement (MELPA) with Banc of America Public Capital Corporation (BAPCC) for financing equipment purchases. On January 13, 2022, Council awarded a three-year contract with two one-year extensions. The City would like to amend the original agreement by increasing the borrowing capacity from an aggregate amount of $35 million to an aggregate amount of $55 million. The capacity increase will enable staff to fund approved equipment and vehicle purchases, including anticipated future needs. The need is also largely related to the accelerated pace of fleet acquisition through the General Services Department’s work to meet demand.
BACKGROUND
A MELPA is a common form of financing that the City has utilized for several years to lease-purchase fire apparatus, police vehicles (including helicopters), telecommunications, computers, building improvements, and software licenses. The MELPA does not approve the purchase of this equipment nor authorize the financing of any equipment. It simply provides a mechanism to fund equipment once approval for purchase and authorization to finance is given by the City Council.
On January 13, 2022 after going through an extensive request for proposals process for lenders, the City approved a new Master Equipment Lease-Purchase Agreement with BAPCC. 359 firms were asked to submit a proposal; including local firms; 16 of whom have previously solicited the City for these types of services. Out of all that outreach, only BAPCC submitted a proposal. BAPCC was the company that serviced the City’s previous MELPA. BAPCC’s proposal offered the same rapid timelines for financing that were in the previous MELPA, with interest rates that were lower than those in the previous MELPA with the City.
The proposed First Amendment to the MELPA with BAPCC will provide for lease financing of City needs up to a maximum aggregate leasing amount of $55 million. Capacity needs have been recently accelerated, in part, due to vehicle financings requested by Fleet. Rates will continue as stated in the original Agreement and letter agreement to the MELPA. The City Attorney’s Office has reviewed the First Amendment and approved to form. It is on file with the City Clerk’s Office for review.
ENVIRONMENTAL FINDINGS
By the definition provided in the California Environmental Quality Act Guidelines Section 15378 this item does not qualify as a “project” and is therefore exempt from the California Environmental Quality Act requirements.
LOCAL PREFERENCE
Local preference would have been considered in the evaluation of the documents and pricing. However, BAPCC was the only respondent to the proposals for the Agreement. BAPCC does not have a local presence.
FISCAL IMPACT
Approving the First Amendment to the MELPA allows City Departments to finance certain equipment through lease-purchase under this agreement, subject to meeting any competitive procurement, budgeting, and appropriation requirements. There is no concurrent fiscal impact. Not approving the First Amendment will require the City to reconsider certain acquisitions or find alternative funding sources or methods to purchase items; including items that the Council has already appropriated in the Fiscal Year 2024 budget.
Attachment: First Amendment to the Master Equipment Lease Purchase Agreement
Master Equipment Lease Purchase Agreement