HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/02/1999 - FIRST READING OF ORDINANCE NO. 153, 1999, AUTHORIZ AGENDA ITEM SUMMARY ITEM NUMBER: 14
DATE: November 2, 1999
FORT COLLINS CITY COUNCIL STAFF: Jim 0 1 Neill
SUBJECT:
First Reading of Ordinance No. 153, 1999, Authorizing the Purchasing Agent to Enter into an
Agreement for the Lease-Purchase of Vehicles and Equipment and Appropriating Funds Related
Thereto.
RECOMMENDATION:
Staff recommends adoption of the Ordinance on First Reading.
FINANCIAL IMPACT:
The cost of the items to be lease-purchased is$1,997,520. Payments at the 5.25%interest rate will
not exceed $469,5337.84 in 2000. Money for the first year lease-purchase payments is included in
the City Manager's 2000 recommended 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 .4%. 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 5.25 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 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 underthe 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 2, 1999 2 ITEM NUMBER: 14
An"Equipment Request"justifying the replacement of each vehicle and related equipment or other
rolling stock 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 vehicles,rolling stock and other 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 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 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 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 is able to discontinue 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-I 164,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: November 2, 1999 3 ITEM NUMBER: 14
The proposed Ordinance authorizes the lease-purchase financing of the following:
Line Term
No. Department Qty. Description Total Cost (yrs)
1 Police Patrol 38 Laptop Computers 95,000 3
Total 3-year Financing $95,000
Line Term
No. Department Qty. Description Total Cost (yrs)
I Water Production 1 CO2 Storage Tanks& Related Equipment 333,700 5
2 Police SIU 1 Dodge Durango 24,668 5
3 Police SIU I Dodge Intrepid Staff Car 15,032 5
4 Police SIU l Grand Prix 19,375 5
5 Police Patrol 38 Patrol Vehicles 862,115 5
7 Police Patrol 1 lot Police Patrol Vehicle Equipment 182,110 5
8 Fleet Services 2 Dodge Intrepid Staff Cars 30,064 5
9 Fleet Services 1 Dodge Durango 26,854 5
10 Fleet Services 1 Jeep Grand Cherokee 29,901 5
11 Fleet Services 1 Chevy'/.ton..4x4,Utility Truck 24,398 5
12 Fleet Services I Ford Supercab Pickup 25,741 5
13 Fleet Services 2 Midsize Pickup 32,000 5
14 Cemetery 2 Toro Turf Sweepers 23,548 5
15 Golf/City Park 9 1 Toro Groundsmaster 3000 37,300 '_
16 City Park 9 1 Cushman 3 Wheel Truckster 10.000 5
17 Collindale 2 John Deere 800 Aerator 22,900 5
18 Collindale 1 Toro Workman 3200 W/Hvdraulic Dump 15,200 5
19 Southridge I John Deere Loader/Tractor 21350 5
20 Southridge 1 Jacobsen LF-3400 Fairway Mower 32,200 5
21 Southridge 15 Golf Carts 32,880 5
22 Transportation 1 Parking Ticket Svstem 101,184 5
I
Total 5-year Financing S1.902.520
Total Lease Financing 51,997,520
lip
a
ORDINANCE NO. 153, 1999
OF THE COUNCIL OF THE CITY OF FORT COLLINS
• AUTHORIZING THE PURCHASING AGENT TO ENTER
INTO AN AGREEMENT FOR THE
LEASE-PURCHASE OF VEHICLES AND EQUIPMENT
AND APPROPRIATING FUNDS RELATED THERETO
WHEREAS, the City is authorized under the provisions of 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 ("Safeco") to
lease equipment to the City, consisting of the following:
Line Term
No. Department Qty. Description Total Cost (yrs)
1 Police Patrol 38 Laptop Computers 95,000 3
Total 3-year Financing $95.000
Line Term
No. Department Qty. Description Total Cost (yrs)
. 1 Water Production 1 CO2 Storage Tanks&Related Equipment 333,100 5
2 Police SIU 1 Dodge Durango 24,668 5
3 Police SIU 1 Dodge Intrepid Staff Car 15,032 5
4 Police SIU I Grand Prix 19.375 5
5 Police Patrol 38 Patrol Vehicles 862,115 5
7 Police Patrol 1 lot Police Patrol Vehicle Equipment 182,110 5
8 Fleet Services 2 Dodge Intrepid Staff Cars 30,064 5
9 Fleet Services 1 Dodge Durango 26,854 5
10 Fleet Services I Jeep Grand Cherokee 29,901 5
11 Fleet Services I Chew%ton,44. Utility Truck 24.398 5
12 Fleet Services I Ford Supercab Pickup 25,741 5
13 Fleet Services 2 Midsize Pickup 32,000 5
14 Cemetery 2 Toro Turf Sweepers 23,548 5
15 Golf/City Park 9 1 Toro Groundsmaster 3000 37,300 5
16 City Park 9 1 Cushman 3 Wheel Truckster 10.000 5
17 Collindale 2 John Deere 800 Aerator 22,900 5
18 Collindale I Toro Workman 3200 W/Hvdraulic Dump 15,200 5
19 Southridge I John Deere Loader/Tractor 21,350 5
20 Southridge I Jacobsen LF-3400 Fairway Mower 32,200 5
21 Southridge 15 Golf Carts 32.880 5
22 Transportation 1 Parking Ticket System 101,184 5
Total s-vear Financing $1.902,520
. Total Lease Financing $1,997,520
WHEREAS,the City Council has determined that it is in the best interest of the City to lease
the above-described equipment from Safeco, 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$117,384.46 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 1999, and funds for the 2000 and 2001
payments are included in the City Manager's recommended budget for those years; 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, 1999. The agreement shall provide for
renewable one-year terms thereafter up to a total term of five (5) years,
subj ect 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,
$1,997,520, plus interest at a fixed rate equal to 5 25%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.
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.
Section2. That the amount ofONE MILLION ONE HUNDRED AND NINETY EIGHT
THOUSAND AND THREE HUNDRED DOLLARS ($1,198,300)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,upon receipt thereof.
Section 3. That the amount of TWENTY THREE THOUSAND, FIVE HUNDRED
AND FORTY-EIGHT DOLLARS ($23,548)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 equipment described above, in accordance with the terms and
provisions of the lease-purchase agreement, upon receipt thereof.
Section4. That the amount ofONE HUNDRED SEVENTY-ONE THOUSAND, EIGHT
HUNDRED AND THIRTY DOLLARS ($171,830) to be provided under the lease-purchase
agreement is hereby appropriated for expenditure in the Golf Fund from unanticipated revenue for
the acquisition of the Golf/CiTy Park 9,Collindale and Southridge vehicles and equipment described
above, in accordance with the terms and provisions of the lease-purchase agreement, upon receipt
thereof.
Section 5. That the amount of ONE HUNDRED AND ONE THOUSAND, ONE
HUNDRED AND EIGHTY-FOUR DOLLARS($101,184)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 vehicles and equipment described
above, in accordance with the terms and provisions of the lease-purchase agreement,upon receipt
thereof.
Section 6. That the amount of THREE HUNDRED THIRTY THREE THOUSAND,
SEVEN HUNDRED DOLLARS ($333.700)to be provided under the lease-purchase agreement is
hereby appropriated for expenditure in the Water Fund from unanticipated revenue for the
acquisition of the Water Production vehicles and equipment described above, in accordance with
the terms and provisions of the lease-purchase agreement. upon receipt thereof.
Section 7. That the amount of ONE HUNDRED SIXTY EIGHT THOUSAND.NINE
HUNDRED AND FIFTY-EIGHT DOLLARS ($168,958)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 described above, in accordance with the terms and
provisions of the lease-purchase agreement, upon receipt thereof.
Introduced, considered favorably on first reading, and ordered published this 2nd day of
November, A.D. 1999. and to be presented for final passage on the 16th day of November, A.D.
1999.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading this 16th day of November, A.D. 1999,
Mayor
ATTEST:
City Clerk