HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/18/2000 - SECOND READING OF ORDINANCE NO. 32, 2000, AUTHORIZ AGENDA ITEM SUMMARY ITEM NUMBER:
DATE: April 18, 2000
FORT COLLINS CITY COUNCIL STAFF:
Jim O'Neill
SUBJECT:
Second Reading of Ordinance No. 32, 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:
Ordinance No. 32, 2000, which was unanimously adopted on First Reading on April 4, 2000,
authorizes the Purchasing Agent to enter into a lease-purchase financing agreement with Safeco
Credit Company at 5.85 percent interest rate. 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 terns thereafter, to a total term of seven (7) 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.
AGENDA ITEM SUMMARY ITEM NUMBER: 11
FORT COLLINS CITY COUNCIL DATE: April 4, 2000
STAFF: Jim O'Neill
SUBJECT:
First Reading of Ordinance No. 32, 2000, Authorizing the Purchasing Agent to Enter into an
Agreement for the Financing b Lease-Purchase of Vehicles and Equipment.
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RECOMMENDATION:
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Staff recommends adoption ofithe Ordinance o first Reading
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FINANCIAL IMPACT:
The cost of the items to be lease-purchased is $573,592. Payments at the 5.85% interest rate will
not exceed $64,866 in 2000. Money for the first year lease-purchase payments is included in the
2000 budget. The effect of e` z o one r o nancial rating of the City will
be to raise the total City debt .n less .5 0 a is ed on a lease placed with Safeco
Credit Company on May 1, 1 8 an 'es o r interest. to than that lease. Staff believes
acceptance of this interest rate i e Ci est ' rest.
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EXECUTIVE SUMMARY:
This Ordinance authorizes the Purchasing Agent to enter into a lease-purchase financing
agreement with Safeco Credit Co y a 85 pe ent interest r t . The agreement shall be for
an original term from the exe:' ion a r` ag e t end of the current fiscal year.
The agreement shall provide renew ` le on ' e s after, to a total tern of seven (7)
years, subject to annual appro ; do d m ee d for lea payments. The total lease terms,
including the original and all renewal terms, will not exceed a useful life of the property. This
lease-purchase financing is consistent with the financial policies of the City of Fort Collins.
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BACKGROUND:
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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.
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
DATE: April 4, 2000 2 ITEM NUMBER: 11
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 f�r the provision of new and replacement
equipment, vehicles and rolling stock in order tgseniiure the timely replacement of equipment and
vehicles. This method may also be,used to acquire:real property. Members of the management
staff have developed an equipment needs schedule for rolling stock which encompasses the
demands of operating departments. This schedule is used to project equipment needs for each
budget year.
The type of lease that the City uses is termed a conditional sales lease. With each rental payment
the City builds equity and assumes risk in the asset over the term of the lease. The annual
installments are subject to appropriation by the Council each year.
Advantages of a lease-purchase era c h p h t
�.
* Decreasing th �mpact�d i 0 on the . chase 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 useful life of the equipment.
* Safeguarding tkfopp ty tus c` as"I ts o earn higher interest than the
interest cost 411 aase purr' asmg i
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It should be noted that the City is toiscontmue the equipment leases so that future City
Councils will have the option to continue or discontinue the policy of lease-purchasing City
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.
DATE: April 4, 2000 3 ITEM NUMBER: 11
The proposed Ordinance authorizes the lease-purchase financing of the following:
Exhibit A
Equipment to be Lease-Purchased:
Line Department Cty. Description Total Cost Term(yrs)
No.
1 1 Forestry 1 1 Galion/Hood 8000 37,5301 7
2 (Forestry 1 1,.;J Freightliner CahlGh,Issis , I 56,235 7
1 3 1 Collindale Golf 'I Jacobsen HR-51'1:1 k&ghUpwer 1 43,5201 5
4 1 SouthRidge Golf „ 1 1 Toro Workman 3Q00 Teuckstit 20,1021 5
5 1 SouthRidge Golf 1 1 John Deere 160C Aercore 17,3641 5
6 1 PD-Investigations 1 ,.]2006Forcl�rov/n;fjctoria 20,9371 5
7 1 PD-Investigations 1 12000 Chevy Astro Van 1 19,6581 5
8 1 Streets 1 2 1 Tandem axle trucks and equipment 1 260,0001 5
9 Fleet Services I 1 11999 15-passenger van 21,9001 5
10 Fleet Services 1 2 12000 Dodge Intrepid Staff Cars 36,4111 5
11 Fleet Services 1 3 1 Hot Water Parts Washers 17,9401 5
12 Fleet Services 3 Pro-M Work Stations 1 7,5451 5
13 Fleet Services 5 System One Parts Washers 1 14,4501 3
Total Lease Financing $573,592
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