HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/21/2000 - SECOND READING OF ORDINANCE NO. 160, 2000, AUTHORI AGENDA ITEM SUMMARY ITEM NUMBER: 9
FORT COLLINS CITY COUNCIL DATE: November 21, 2000
FROM: Jim O'Neill
SUBJECT:
Second 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 Second Reading.
EXECUTIVE SUMMARY:
This Ordinance,which was unanimously adopted on First Reading on November 7,2000,authorizes
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.
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 o CeOrditCe�;)rfrit?eadying
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 siti r t f' cial rating of the City will be
to raise the total City debt by 1 . Thi a is e n I ed with Safeco Credit Company
on May 1, 1998 and carries a wer int st rat h t leas Staff believes acceptance of this
interest rate is in the City's bes e
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 executi a o e a e n o e of the current fiscal year. The
agreement shall provide for r ewable a-yea a re to a total term of five (5) years,
subject to annual appropriatio fund eded r e paym s. The total lease terms,including
the original and all renewal terms, note ed t eful li a 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 t a01am
Pyft
to fifteen years versus
an incandescent it fic sipectancy 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 t to ers o c se i ement weather or some
other emergency, like co entio esce amps, short-term backup
battery power is fe le w' h D fi ignals la s,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"justif ' r e is r piece of equipment is on file
with Fleet Services. The fleetnanagdrgas res d ch st, and approved them based on
current and projected maintenlIce cost el e n y, down e, 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
be spread over the e q ' t.
• Safeguarding theLortun"as"i
t assets to higher interest than the
interest cost of le
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 r d pe onal"the
the total maximum payment
liability under all lease purch agre is o the agreements, including all
optional renewal terms.
Staff recognizes that the State does not inc ude 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 Qty Description Total Cost Term
1 Traffic Operations 1 LED Traffic Signal Lams 392,569 5
2 Engineering o F- 24,513 5
3 Cemetery 2 _71 Toro o eck 9,580 5
4 Cemetery 1 t TrAffers 12,000 5
5 Operations Services I Co ier 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 Computers & CAD Equipment 26,8001 5
13 Police Investigations 1 2001 Van 23,100 5
Total Lease Financing $1 077 962