Finance and Budget Department

Transcription

1 Finance and Budget Department SUBJECT: Resolution authorizing the city to enter into a lease purchase agreement with Chase Equipment Leasing Inc., for the purchase of two fire trucks. MEETING DATE: December 19, 2005 City Council Report TO: Mayor and City Council FROM: Kevin Artz, Finance and Budget Director THROUGH: Charlie McClendon, City Manager PURPOSE: Staff is requesting that the City Council adopt a resolution authorizing the City to enter into a lease purchase agreement with Chase Equipment Leasing Inc, for the purchase of two fire trucks. BACKGROUND: On January 3, 2005 the City Council authorized the purchase of three fire trucks from First In, Inc. in the amount of $1,298, not to exceed $1,400,000 with additional options (see attachment A). The staff report also identified that the City would lease purchase the truck instead of an outright purchase. Delivery of the vehicle was expected to be within calendar days. The decision to lease purchase the truck is a function of cash flow in the Fire Development Fee Fund. At this time there is sufficient cash available to purchase one truck outright, however, the other two trucks will be financed under a lease purchase agreement. Chief Adams has been informed that the truck should be ready for delivery within 30 days. Therefore, staff solicited bids for lease purchase financing for the fire trucks with a 7-year term with annual payments in arrears. The following vendors submitted bids: Chase Equipment Leasing Inc. 3.84% Suntrust Leasing Corporation 3.85% National Bank of Arizona 4.52% Key Government Finance 4.55% Wells Fargo Equipment Finance 7.18%

2 Council Report December 19, 2005 Page 2 of 2 Chase Equipment Leasing Inc. submitted the lowest interest rate bid and subsequently the lowest cost to the City. The term of the lease agreement is seven years with annual payments of $149,063. In addition, the lease agreement shall be subject to annual appropriation by the City Council. BUDGET: Funds are budgeted in fund 319 Fire Development Fees, in next fiscal year and the subsequent three years of the approved Capital Improvement Plan. Funding for years five thru seven will need to be approved in subsequent Capital Improvement Plans. RECOMMENDATION: Staff recommends that Council adopt a resolution authorizing the City to enter into a lease purchase agreement with Chase Equipment Leasing Inc., for the purchase of two fire trucks. ATTACHMENTS A Council Report authorizing purchase of fire trucks B Lease Agreement

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12 RESOLUTION NO A RESOLUTION OF THE COUNCIL OF THE CITY OF AVONDALE, ARIZONA, AUTHORIZING THE CITY TO ENTER INTO A LEASE PURCHASE AGREEMENT WITH CHASE EQUIPMENT LEASING INC. FOR THE PURCHASE OF TWO FIRE TRUCKS IN THE AMOUNT NOT TO EXCEED $950,000. WHEREAS, the City of Avondale (the City ) is a duly organized and existing municipal corporation pursuant to the constitution and laws of the State of Arizona (the State ); and WHEREAS, pursuant to applicable law, the Council of the City of Avondale, (the City Council ) is authorized to acquire, dispose of and encumber real and personal property, including, without limitation, rights and interests in property, leases and easements necessary to the functions or operations of the City; and WHEREAS, the City Council hereby finds and determines that the execution of one or more lease-purchase agreements ( Equipment Leases ) in the principal amount not to exceed $950,000 ( Principal Amount ) for the purpose of acquiring the property generally described as two Pierce Quantum Pumpers mounted on a Quantum Chassis (collectively, the Property ) and to be described more specifically in the Equipment Leases, is appropriate and necessary to the functions and operations of the City; and WHEREAS, Chase Equipment Leasing Inc. ( Lessor ) is expected to act as the lessor under the Equipment Leases; and WHEREAS, the City may pay certain capital expenditures in connection with the Property prior to its receipt of proceeds of the Equipment Leases ( Lease Purchase Proceeds ) for such expenditures and such expenditures are not expected to exceed the Principal Amount; and WHEREAS, the U.S. Treasury Department regulations do not allow the proceeds of a tax-exempt borrowing to be spent on working capital and the City shall hereby declare its official intent to be reimbursed for any capital expenditures for Property from the Lease Purchase Proceeds. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF AVONDALE, as follows: SECTION 1. That the Mayor (the Authorized Representative ) acting on behalf of the City, in conjunction with the City Manager, the City Clerk and the City Attorney, is hereby authorized and directed to negotiate, enter into, execute, and deliver the Equipment Leases in substantially the form set forth in the document presently before the City Council, which document is available for public inspection at the office of the City Clerk. The Authorized Representative acting on behalf of the City is hereby authorized to negotiate, enter into, execute,

13 and deliver such other documents relating to the Equipment Lease (including, but not limited to, escrow agreements) as the Authorized Representative deems necessary and appropriate. All other related contracts and agreements necessary and incidental to the Equipment Leases are hereby authorized. SECTION 2. That, by a written instrument signed by the Authorized Representative, the Authorized Representative may designate specifically identified officers or employees of the City to execute and deliver agreements and documents relating to the Equipment Leases on behalf of the City. SECTION 3. That the aggregate original principal amount of the Equipment Leases shall not exceed the Principal Amount and shall bear interest as set forth in the Equipment Leases and the Equipment Leases shall contain such options to purchase by the City as set forth therein. SECTION 4. That the City s obligations under the Equipment Leases shall be subject to annual appropriation or renewal by the City Council as set forth in each Equipment Lease and the City s obligations under the Equipment Leases shall not constitute a general obligation of the City or indebtedness under the Constitution or laws of the State. SECTION 5. That the City Council anticipates that the City may pay certain capital expenditures in connection with the Property prior to the receipt of the Lease Purchase Proceeds for the Property. The City Council hereby declares the City s official intent to use the Lease Purchase Proceeds to reimburse itself for Property expenditures. This section of the Resolution is adopted by the City Council for the purpose of establishing compliance with the requirements of Section of Treasury Regulations. This section of the Resolution does not bind the City to make any expenditure, incur any indebtedness, or proceed with the purchase of the Property. SECTION 6. That, as to each Equipment Lease, the City reasonably anticipates to issue more than $10,000,000 of tax-exempt obligations (other than private activity bonds which are not qualified 501(c)(3) bonds ) during the calendar year in which such Equipment Lease is issued and hereby designates the Equipment Lease as a non-qualified tax-exempt obligation for purposes of Section 265(b) of the Internal Revenue Code of 1986, as amended. SECTION 7. That this Resolution shall take effect immediately upon its adoption and approval. [SIGNATURES ON FOLLOWING PAGE]

14 PASSED AND ADOPTED by the Council of the City of Avondale, December 19, Ronald J. Drake, Mayor ATTEST: Linda M. Farris, City Clerk APPROVED AS TO FORM: Andrew J. McGuire, City Attorney