HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/16/1999 - SECOND READING OF ORDINANCE NO. 153, 1999, AUTHORI AGENDA ITEM SUMMARY ITEM NUMBER: 8
FORT COLLINS CITY COUNCIL DATE: November 16, 1999
STAFF: Jim O 'Neill
SUBJECT :
Second 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:
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Staff recommends adoption of the Ordinance on Second Reading.
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EXECUTIVE SUMMARY:
Ordinance No. 153, 1999, was unanimously adopted on First Reading on November 2, 1999,
authorizes the Purchasing Agent to enter into a lease-purchase financing agreement with Safeco
Credit Company at 5.25 percent interest rate.
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AGENDA ITEM SUMMARY ITEM NUMBER: 14
DATE: November 2, 1999
FORT COLLINS CITY COUNCIL
STAFF: ,Tim O 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 oAke, Ordmazice o,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 $469,537.84 in 2000. Money for the first year lease-purchase payments is included in
the City Manager's 2000 recommended baTiet. Tl ect of the debt position for the purpose of
financial rating of the City wife to raise the total ty,Aebt by .4%. This lease is based on a lease
IDplaced with Safeco Credit Company on May 1, 1`�98 d carries'a lower interest rate than that lease.
Staff believes acceptance of this'interest rateis in th, ity'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 tine year.terns hereafter; to a total term of five (5) years,
subject to annual appropriatioriof funds heeded for lease payments. The total lease terms,including
the original and all renewal terms. -AU 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 t6ely 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 &i 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 purchaserof 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 Cif is able-to discontinue the equipment leases so that future City
Councils will have the option io-continue roT 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: 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 I CO2 Storage-Tank§&Related'Equipment 333,700 5
2 Police SIU 1 Dodge Durango 24,668 5
3 Police SIU 1 DodgeAntrepid'Staff Car 15,032 5
4 Police SIU 1 "Re 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 1 Chevy'/.ton,4x4,Utility Truck 24,398 5
12 Fleet Services 1 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/Cite Park 9 1 Toro Groundsmaster 3000 37,300 5
16 City Park 9 1'.i Cushmian 3 Wheel Truckster 10,000 5
17 Collindale 2' John Deere 800 Aerator 22,900 5
18 Collindale 1 Toro Workman 3200 W/Hydraulic Dump 15,200 5
19 Southridge 1 John Deere Loader/Tractor 21.350 5
20 Southridge I Jacobsen LF-3400 Fairwav Mower 32.200 5
2 i Southridge 15 Golf Carts 32,880 5
2^ Transportation I Parking Ticket Svstem 101384 5
Total s-vearFinancing $1,902,520
Total.LeaseFinancing S1,997,520
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