HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/16/1999 - SECOND READING OF ORDINANCE NO. 36, 1999, AUTHORIZ AGENDA ITEM SUMMARY ITEM NUMBER: 9
DATE: March 16, 1999
FORT COLLINS CITY COUNCIL STAFF
• Jim O'Neill
SUBJECT: .
Second Reading of Ordinance No. 36, 1999, 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. 36, 1999, was unanimously adopted on First Reading on March 2, 1999 and
authorizes the Purchasing Agent to enter into a lease-purchase financing agreement with Safeco
Credit Company at a 4.61 percent interest rate. The agreement shall be for an original term from the
execution date of the agreement 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.
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AGENDA ITEM SUMMARY ITEM NUMBER: 20
DATE: March 2, 1999
FORT COLLINS CITY COUNCIL
STAFF: Tim O 1 Neill
SUBJECT:
First Reading of Ordinance No. 36, 1999, Authorizing the Purchasing Agent to Enter into an
Agreement for the Financing by Lease-Purchase of Vehicles and Equipment.
RECOMMENDATION:
Staff recommends adoption ofthe Ordinance on�First Reading
FINANCIAL IMPACT:
The cost of the items to be lease-purchased is $580,851. Payments at the 4.61% interest rate will
not exceed$100,662 in 1999. Money for the first year lease-purchase payments is included in the
City Managers 1999 recomm9d&cT'hudgif. The' ffebt o e 4 bt position for the purpose of
financial rating of the City wifflie to rais0the total C lydebt b 09%. This lease is based on a lease
placed with Safeco Credit Company on May 1, 98 and came lower interest rate than that lease.
Staff believes acceptance of this riite"rest ate-is in thi City's beftinterest.
EXECUTIVE SUMMARY:
This Ordinance will authorize the Purchasing Agent to enter into a lease-purchase financing
agreement with Safeco Credit Company at a 4.61 percent interest rate. The agreement shall be for
an original term from the executien~date of thL—, tgreement to ne end-of the current fiscal year. The
agreement shall provide for re"hewable one-yea�te s, "erea`fteepl to a total term of five (5) years,
subject to annual appropnatio of funds ded i r 1 e payments. The total lease terms,including
i the original and all renewal terins-will net-exceet the usefu 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:
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: March 2, 1999 2 ITEM NUMBER: 20
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--purc e forthe r v�sionRof new and replacement equipment,
vehicles and rolling stock in order to ensure the time lj replacement of equipment and vehicles. This
method may also be used toacqure 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 thr mpact of infl riatio R he purchase of new and replacement
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* 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 th pr rtuu Tto - ets-td-earn higher interest than the
interest cost of ase-pffurciasing
It should be noted that the Ci is-41e to discontinue the equpment leases so that future City
Councils will have the option to continue or discontinue the policy of lease-purchasing City
equipment.
According to the C.R.S. 29-1-103(3)(a), 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: March 2, 1999 3 ITEM NUMBER: 20
The proposed Ordinance authorizes the lease-purchase financing of the following:
Line Department Qty. Description Total Cost Term
No. (yrs)
1 Forestry 1 Ford%-ton pickup with dump body 19,392 5
2 Forestry 1 Ford %z-ton extracab pickup with radio 23,049 5
3 Southridge Golf I John Deere 2653A Triplex Mower 19,360 5
4 Southridge Golf 1 Toro 3200 Workman Truckster 14,884 5
5 Collindale Golf 12 Yamaha G16A Golf Cars 26,304 5
6 Collindale Golf 1 Jacobsen Greens King IV Mower w, 15,952 5
7 Collindale Golf 1 Jacobsen LF-3400 Triplex Mower 31,082 5
8 Collindale Golf 1 q. Toro 72;' Mowen 17,063 5
9 City Park Nine 1 ' .Toro 455D Mower s; 30,311 5
10 Police Patrol 5 Ford Crown Victoria Patrol Cars 108,014 5
11 Police Patrol 1 lot Patrol Car Equipment 48,535 5
12 Police Invest. 2 Ford Taurus Staff Cars 29,698 1 5
13 Police Invest. 1 Dodge Intrepid Staff Car 15,032
14 Police Invest. 2 Chevy Lumina Staff Cars 30,762 5
15 Police Invest. 1 Dodge Durango 26,854 5
16 Engineering I Ford 4x4, extracab pickup 25,155 5
17 Cemetery 1 Toro 325D, 72" Mower 17,668 5
18 Cemetery 2 . ?Toios320O Workman Truck.stei•s 7- 36,354 5
19 Fleet Services 1 7-passepger Minivan � ' , 19,382 5
20 Fleet Services 1 GEMS1000 Software Conversion 26,000 1 3
" —Total Financing $580,851