REPORT TO THE CITY COUNCIL
September 10, 2015
FROM: BRIAN R. MARSHALL, Director
Department of Transportation
BY: JOSEPH AYERZA, Fleet Manager
Fleet Management Division
SUBJECT
Title
Approve an extension of a five year lease/purchase financing agreement with Kansas State Bank in the amount of $2,957,066 to acquire police vehicles and hardware
Body
RECOMMENDATION
Staff recommends Council award an extension of the five year lease/purchase financing agreement with Kansas State Bank in the amount of $2,957,066, at an annual interest rate of 3.389 percent, to acquire 50 police vehicles, 14 police motorcycles, upfit hardware, 2 prisoner transport vans, 2 crime scene bureau vans, and authorize the Assistant Controller to execute related documents.
EXECUTIVE SUMMARY
The Police Department is in need of replacing 50 vehicles, 14 motorcycles, 2 prisoner transport vans, and 2 crime scene bureau vans, with related upfit hardware. The vehicles have reached the end of their economic lives and replacement of the vehicles is critical for the Police Department to effectively and efficiently provide public safety services within the city of Fresno.
BACKGROUND
The Police Department seeks replacement vehicles of marked units, specialty assigned units, and motorcycles that are past their economic life spans. Over the last few years, poor economic conditions have required the life span of a patrol car to be extended from five years to seven years. Some vehicles, such as the vans, have been in use for more than the extended seven-year period. Though improvements in vehicle technology and reliability have made using the vehicles for longer than recommended possible thus far, several vehicles in the fleet are still the old technology Ford Crown Victoria vehicles that are nine years or older. Additionally, several Dodge Chargers are seven years old and have accrued well over 100,000 miles. These vehicles have reached the end of their economic lives and must be replaced.
The funding for one lease payment in FY16 in the amount of $323,960 has been approved in the current year budget. The award amount will fund the purchase cost of the base vehicles, motorcycles, as well as all the hardware needed to upfit the vehicles into fully functional units. The City of Fresno is in the third and final year of acquiring 50 police vehicles per year under a lease/finance agreement. The payment schedules for each of the three parts (FY14, FY15, and FY16) are all planned on a 5-year term, with payments made twice per year. The City of Fresno has appropriated funds each year in the approved budgets for the payments and plans to continue this until the final payment is made. The appropriations are planned under Fleet Acquisitions.
Council may award the five-year lease/purchase financing agreement on the same terms and conditions as the existing agreement with Kansas State Bank for the amount of $2,957,066 or the Council may reject the proposal. If the proposed extension is rejected, the financing will require a new RFP with required reviews and approvals resulting in a delay of approximately ninety days.
ENVIRONMENTAL FINDINGS
This is not a “project” pursuant to CEQA Guidelines Section 15378.
LOCAL PREFERENCE
Kansas State Bank was the only financial institution to respond to City’s Request for Proposals in 2013.
FISCAL IMPACT
The funding to cover the FY16 lease payments has been included in the City’s FY16 adopted budget. Only one lease payment will be made in FY16. Beginning in FY17, lease payments will be made twice per year at $323,960 each, or $647,920 annually, for a total of nine additional payments over the remainder of the 4 ½ year term. The interest rate for this financing is 3.389 percent, which is identical to the original agreement awarded in FY14. Total interest paid over the term of the financing will be $282,534. Assets will be owned by the City at the end of the five-year term.
Attachments:
KSB Equipment Lease-Purchase Agreement Part 3
KSB Lease Schedule A-3
KSB City Attorney Opinion