Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/07/2000 - FIRST READING OF ORDINANCE NO. 160, 2000, AUTHORIZ AGENDA ITEM SUMMARY ITEM NUMBER: 18 FORT COLLINS CITY COUNCIL DATE: November 7, 2000 STAFF: Jim O'Neill SUBJECT: First. Reading of Ordinance No. 160, 2000, Authorizing the Purchasing Agent to Enter into an Agreement for the Financing by Lease-Purchase of Vehicles and Equipment. RECOMMENDATION: Staff recommends adoption of the Ordinance on First Reading. FINANCIAL IMPACT: The cost of the items to be lease-purchased is $1,077,962 . Payments at the 5.95% interest rate will not exceed $250,838 in 2001. Money for the first year lease-purchase payments is included in the 2001 budget. The effect of the debt position for the purpose of financial rating of the City will be to raise the total City debt by I%. This lease is based on a lease placed with Safeco Credit Company on May 1, 1998 and carries a lower interest rate than that lease. Staff believes acceptance of this interest rate is in the City's best interest. EXECUTIVE SUMMARY: This Ordinance will authorize the Purchasing Agent to enter into a lease-purchase financing agreement with Safeco Credit Company at an interest rate of 5.95%. The agreement shall be for an original term from the execution date of the agreements to the end of the current fiscal year. The agreement shall provide for renewable one-year terms thereafter, to a total term of five (5) years, subject to annual appropriation of funds needed for lease payments. The total lease terms,including the original and all renewal terms,will not exceed the useful life of the property. This lease-purchase financing is consistent with the financial policies of the City of Fort Collins. BACKGROUND: All equipment has been purchased following the City's purchasing ordinances and procedures to ensure that the City realizes all cost savings. The vehicles and equipment financed under the agreement will comply with applicable City policies, and will be in accordance with the goal of optimizing City resources without impacting service to the community. DATE: November 7, 2000 2 ITEM NUMBER- 18 Traffic Operations is requesting the procurement of LED traffic signal lamps through the lease purchase program to replace incandescent traffic signal lamps with LEDs. The total cost of the request is $392,569 .The purpose of the proposal is to conserve energy, improve safety and reduce overall traffic signal system costs. LEDs (Light Emitting Diodes)are solid-state semi-conductor devices that convert electrical energy directly into light. The advantages of LEDs traffic signal lamps are: • LEDs use an average of 85% less electricity to produce the same light output as an incandescent lamp and generates far less wasted heat. They have a life expectancy of five to ten years and can potentially last up to fifteen years versus an incandescent traffic signal lamp which has a life expectancy of 12 to 15 months. • They improve visibility by shining brighter than incandescent lamps,especially in poor weather or bright sunlight. LEDs eliminate the need for a colored lens; therefore lens cleaning is not needed. • The long life and durability of LEDs equates to a reduction in burned out lamps. With fewer outages there are fewer chances of a motorist being confused. Also, fewer outages means traffic signal personnel are not changing lamps as often. • If electric power is cut to an intersection because of inclement weather or some other emergency, unlike conventional incandescent lamps, short-term backup battery power is feasible with LED traffic signals lamps,During a power outage; the signal could revert to a flashing red mode for several hours. Traffic Operations staff will look into this in 2001. Based on the results of staff research, this request will reduce overall electrical costs of the traffic signal system by approximately 90%. Current yearly electrical costs are$110,445. The anticipated yearly savings will be approximately$99,000. Annual lease payments will come from the electrical savings. An "Equipment Request"justifying the replacement of each vehicle or piece of equipment is on file with Fleet Services. The fleet manager has researched each request, and approved them based on current and projected maintenance costs, fuel economy, downtime, and relevant safety factors. All vehicle and equipment has been purchased following the City's purchasing ordinances and procedures to ensure that the City realizes all cost savings. Lease-Purchase: The City's lease-purchase policy provides that: "The City of Fort Collins uses lease-purchase for the provision of new and replacement equipment, vehicles and rolling stock in order to ensure the timely replacement of equipment and vehicles. This method may also be used to acquire real property. Members ofthe management staffhave developed an equipment needs schedulefor rolling stock which encompasses the demands of operating departments. This schedule is used to project equipment needs for each budget year." DATE: November 7, 2000 3 ITEM NUMBER: 18 Advantages of a lease-purchase over a cash purchase are: • Decreasing the impact of inflation on the purchase of new and replacement equipment. • Resolving the problem of capital replacement needs backlog. • Conserving operating reserves. • Reducing the initial impact of the cost to user departments by enabling costs to I be spread over the useful life of the equipment. • Safeguarding the opportunity to use cash assets to earn higher interest than the interest cost of lease-purchasing. It should be noted that the City may terminate the equipment leases on an annual basis,so that future City Councils will have the option to continue or discontinue the lease-purchasing of this equipment. According to the State of Colorado House Bill 90-1164, local governments are required to identify as part of their budgets: (1) the total expenditures during the ensuing fiscal year for all lease purchase agreements involving real and personal property; and (2) the total maximum payment liability under all lease purchase agreements over the entire terms of the agreements, including all optional renewal terms. Staff recognizes that the State does not include lease-purchase in the legal definition of debt; however, rating agencies include lease-purchases in calculating the City's debt burden. The proposed Ordinance authorizes the lease-purchase financing of the following: Line Department Qt Description Y P Total Cost Term 1 Traffic Operations 1 LED Traffic Signal Lams 392,569 5 2 En inee ng 1 2000 Ford F-150 24,513 5 3 Cemetery 2 72"Toro Mower Deck 9,580 5 4 Cemetery 1 Vault Trailer 12,000 5 5 Operations Services 1 Copier 10,504 5 6 Fleet Services 1 2000 Toyota Prius Sedan 20,520 5 7 Fleet Services I 200KW Cummins Diesel Generator 59,390 5 8 Fleet Services 1 2001 Jeep Cherokee 29,686 5 9 Fleet Services 1 2001 Toyota Prius Sedan 23,000 5 10 Police Patrol 16 2001 Police Patrol Vehicles 382,400 5 11 Police Patrol 16 Vehicle Police Equipment 63,900 5 12 Police Patrol 8 Vehicle Computers & CAD Equipment 26,800 5 13 Police Investigations 1 2001 Van 23,100 5 Total Lease Financing $1 077 962 ORDINANCE NO. 160, 2000 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE PURCHASING AGENT TO ENTER INTO AN AGREEMENT FOR THE FINANCING BY LEASE-PURCHASE OF VEHICLES AND EQUIPMENT WHEREAS, the City is authorized under the provisions of Colorado Constitution Article XX, §6,its home rule charter and Title 31,Article 15,Part 8,C.R.S.,to acquire necessary equipment and other property for its governmental and proprietary purposes under the provisions of a long-term rental or leasehold agreement with an option to purchase such equipment or property and to provide for the payment of said property from any available municipal income; and WHEREAS, the City has received a proposal from Safeco Credit Company to lease equipment to the City,consisting of the following: Line Department Qty Description Total Cost Term 1 Traffic Operations 1 LED Traffic Signal Lams 392,569 5 2 Engineering 1 2000 Ford F-150 24,513 5 3 Cemetery 2 72" Toro Mower Deck 9,580 5 4 Cemetery 1 Vault Trailer 12,000 5 • 5 Operations Services 1 Copier 10,504 5 6 Fleet Services 1 2000 Toyota Prius Sedan 20,520 5 7 Fleet Services 1 200KW Cummins Diesel Generator 59,390 5 8 Fleet Services 1 2001 Jeep Cherokee 29,686 5 9 Fleet Services 1 2001 Toyota Prius Sedan 23,000 5 10 Police Patrol 16 2001 Police Patrol Vehicles 382,400 5 11 Police Patrol 16 Vehicle Police Equipment 63,900 5 12 Police Patrol 8 Vehicle Compute s & CAD Equipment 26,800 5 13 Police Investigations 1 2001 Van 23,100 5 Total Lease Financin $1 077 962 WHEREAS,the City Council has determined that it is in the best interest of the City to lease the above-described equipment from Safeco Credit Company,which is also providing financing for the equipment acquisition; and WHEREAS, the City desires to enter into a lease-purchase agreement with respect to the leasing and financing of the equipment; and WHEREAS,the useful life of the equipment is longer than the maximum lease-purchase term of five (5) years; and WHEREAS, the City has determined that the lease payments to result from the proposed arrangement will require payments by the City in the sum of$62,710 per quarter,and that payments in that amount are reasonable and proper and represent the fair rental value of the Equipment; and WHEREAS, no lease payments will be required in 2000 and funds for the 2001 lease payments are included in the 2001 budget; and WHEREAS, Article V, Section 9, of the Charter of the City of Fort Collins permits the Council to make supplemental appropriations by ordinance at any time during the fiscal year, provided that the total amount of such supplemental appropriations, in combination with previous appropriations for that fiscal year,does not exceed the then current estimate of actual and anticipated revenues to be received during the fiscal year. NOW,THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the Purchasing Agent be,and hereby is,authorized to enter into a lease- purchase agreement for the above-described equipment with Safeco Credit Company in accordance with the following terms and provisions: a. The agreement shall be for an original term from the execution date of the agreement through December 31, 2000. The agreement shall provide for renewable one-year terms thereafter up to a total term of five (5) years, subject to annual appropriation of funds needed for lease payments. The total lease terms,including the original and all renewal terms,shall not exceed the useful life of the property. b. The City shall make equal quarterly payments throughout the term of such agreement but subject to annual appropriation of funds needed for such payments. C. If the City leases the equipment for the original term and all renewal terms, the payment to Safeco Credit Company will total the sum of the principal, $1,077,962 plus interest at a fixed rate equal to 5.95% per year, which is a reasonable amount. d. The City shall have the option to purchase part or all of the equipment on any quarterly payment date of any term. The option to purchase shall be exercised by paying the quarterly payment due on said date and the unpaid principal due after said date. e. If the City renews the agreement for all the renewal terms and makes all payments during said terms,the City shall be deemed to have exercised the option to purchase said equipment. 2 f. The agreement shall constitute only a current expense of the City and shall not be construed to be a debt or pledge of the City's credit or revenues. Section 2. That the amount of Four Hundred Ninety Six Thousand, Two Hundred Dollars ($496,200) to be provided under the lease-purchase agreement is hereby appropriated for expenditure in the General Fund from unanticipated revenue for the acquisition of the Police equipment and vehicles described above, in accordance with the terms and provisions of the lease- purchase agreement. Section 3. That the amount of One Hundred Thirty Two Thousand,Five Hundred Ninety Six Dollars ($132,596)to be provided under the lease-purchase agreement is hereby appropriated for expenditure in the Equipment Fund from unanticipated revenue for the acquisition of the Fleet Services vehicles and equipment described above, in accordance with the terms and provisions of the lease-purchase agreement. Section 4. That the amount of Four Hundred Seventeen Thousand,Eighty Two Dollars ($417,082)to be provided under the lease-purchase agreement is hereby appropriated for expenditure in the Transportation Services Fund from unanticipated revenue for the acquisition of the Transportation Services vehicles and equipment described above,in accordance with the terms and provisions of the lease-purchase agreement. Section 5. That the amount of Twenty One Thousand, Five Hundred Eighty Dollars ($21,580)to be provided under the lease-purchase agreement is hereby appropriated for expenditure • in the Cemetery Fund from unanticipated revenue for the acquisition of the Cemetery vehicles and equipment described above, in accordance with the terms and provisions of the lease-purchase agreement. Section 6. That the amount of Ten Thousand,Five Hundred Four Dollars($10,504) to be provided under the lease-purchase agreement is hereby appropriated for expenditure in the Operations Services Fund from unanticipated revenue for the acquisition of the Operations Services equipment described above, in accordance with the terms and provisions of the lease-purchase agreement. Introduced, considered favorably on first reading, and ordered published this 7th day of November, A.D. 2000, and to be presented for final passage on the 21st day of November, A.D. 2000. Mayor ATTEST: City Clerk 3 Passed and adopted on final reading this 21st day of November, A.D. 2000. Mayor ATTEST: City Clerk 4