HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/15/2011 - SECOND READING OF ORDINANCE NO. 023, 2011, AUTHORI 1
DATE: March 15, 2011 AGENDA ITEM SUMMARY
STAFF: Jim O'Neill FORT COLLINSCOUNCIL
Second Reading of Ordinance No. 023, 2011, Authorizing the Purchasing Agent to Enter into an Agreement for the
Lease-Purchase Financing of Vehicles and Equipment and Appropriating the Amount Needed for Such Purpose.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on March 1, 2011, authorizes the Purchasing Agent to enter
into a lease-purchase financing agreement for vehicles and equipment with Pinnacle Public Finance at 2.60 percent
interest rate. The cost of the items to be lease-purchased is$1,405,001. Payments at the 2.60%interest rate will not
exceed$225,429 in 2011. Money for 2011 lease-purchase payments is included in the 2011 budget. The effect of
this transaction position for the purpose of financial rating of the City will be to raise the total City debt by 2.5%. A
competitive process was used to select Pinnacle Public Finance for this lease.
BACKGROUND/DISCUSSION
On First Reading, additional information was requested on why some vehicles, particularly police vehicles, are listed
under Police Services and some are listed under Fleet Services. Fleet Services is responsible for replacing worn out
police cars. Police Services is responsible for purchasing new vehicles when additional officers are hired. The table
in the First Reading agenda item summary lists replacement units purchased by Fleet separately from those new units
purchased by Police because the funds to be used are appropriated separately in the Ordinance. The table below
has been revised to help achieve the City's goal of transparency in showing the real cost of programs and abiding by
the City's accounting principles.
Lease Purchase of Vehicles and Equipment(revised table)
Line Department Qty. Description Total Cost Term (yrs)
No.
1 Police Patrol 13 Crown Vic and Caprice patrol cars 299,468 5
2 Police Patrol 1 Pickup for traffic enforcement 25,002 5
3 Police Patrol 5 Chevy Tahoe patrol vehicles 157,685 5
4 Police Patrol 1 lot Equipment for new vehicles 172,700 5
5 Police Admin 1 Ford Escape hybrid 28,951 5
Police
6 Investigations 7 Detective vehicles 146,368 5
Police
7 Investigations 1 lot Equipment for new detective vehicles 10,200 5
Police Total: $840,374
City Park Nine
8 Golf 1 1 Toro FairwaV Mower 43,667 5
9 SouthRid a Golf 1 Used Toro& Jacobsen Equip. 52,200 5
10 Collindale Golf 1 Toro S ra er& mower 63 410 5
Golf Total: $159,277
11 Traffic Operations 1 1 Chassis & body for cone truck 60,350 5
Traffic Total: $ 60,350
12 Streets 1 International Tandem truck &equip 225,000 5
13 Streets 1 F550 Ford truck &equip. 120,000 5
Streets Total: $345,000
Total 5-year Financing 1 1,405,001
March 15, 2011 -2- ITEM 9
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. Copy of First Reading Agenda Item Summary- March 1, 2011
(w/o attachments)
ATTACHMENT 1
DATE: March 1, 2011 AGENDA ITEM SUMMARY
STAFF: Jim O'Neill FORT COLLINSCOUNCIL
First Reading of Ordinance No.023,2011,Authorizing the Purchasing Agent to Enter into an Agreement for the Lease-
Purchase Financing of Vehicles and Equipment and Appropriating the Amount Needed for Such Purpose.
EXECUTIVE SUMMARY
This Ordinance authorizes the Purchasing Agent to enter�into a lease-purchase financing agreement for vehicles and
equipment with Pinnacle Public Finance at 2.60 percent interest:rate. The�cost of the items to be lease-purchased
is $ 1,405,001. Payments at the 2.60%, inte-rest�rate will/notlexceed $225,429 in 2011. Money for 2011 lease-
purchase payments is included in the 201=1 bu'dget�'—The effect of this transaction position for the purpose of financial
rating of the City will be to raise the total City debt by 2.5%. A competitive process was used to select Pinnacle Public
Finance for this lease.
BACKGROUND / DISCUSSION
The agreement is for an original term from the execution date of the agreement to the end of the current fiscal year.
The agreement provides 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 prop'erty,�This:lease-purch sa a financing is consistent with the financial policies
of the City of Fort Collins. 1(( �U
All equipment shall be purchased fol lin the Cit 's puPL)halsing ordinance's and procedures to ensure that the City
s �� yam/ 1 u
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 fleet 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. Other equipment purchases have been
approved in accordance with departmental procedures.
FINANCIAL I ECONOMIC IMPACTS� ���, ���
The City's lease-purchase policy pr vides_th,2: I�J r__�
"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. rT------� IV
Advantages of a lease-purchase ove('I cash putrch�J :
• Decreasing the impact of inflation•on he�urchase of,new and replacement equipment.
• Resolving the problem of capital replacement needs backlog.
• Conserving operating reserves.
March 1, 2011 -2- ITEM 14
• 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 Section 29-1-103 C.R.S., 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 Ci 's debtburienu� H
The proposed Ordinance authorizes the lease-purchase financing of the following:
New/
No. Department Qty. Description Repl. Total Cost �y�s
1 Police Patrol 6 Crown Vic and Caprice patrol cars New 143,760 5
2 Police Patrol 1 Pickup for traffic enforcement New 25,002 5
3 Police Patrol 1 Chevy Tahoe patrol vehicle New 31,667 5
4 Police Patrol 1,I0t=-E ui ment-for new-w_ehicles, n New 66,300 5
5 Police Admin i1 Ford'Esca peN h y brid )') ``\ff New 28,951 5
6 Police Investigations " rsrse d�t1 Chevy Traveetective vehicle New 24,768 5
7 Police Investigations \I�:-_;�Ford'Fusion� brid detective U New 25,416 5
8 Police Investigations 1 Dodge 1500 detective vehicle New 21,438 5
9 Police Investigations 1 lot Equip. for new detective vehicles New 5,100 5
10 City Park Nine Golf 1 Toro RM5410 Fairway Mower Repl 43,667 5
11 SouthRid a Golf 1 Used Toro 3150 Greens Mower Repl 10,900 5
12 SouthRid a Golf 1 Used Toro 4500D Rotary Mower Rep[ 24,900 5
13 SouthRid a Golf 1 Used Jacobsen Fairway Mower Repl 13,900. 5
14 SouthRid a Golf 1 Freight forequipment delivery n/a 2,500 5
15 Collindale Golf A� Toro�Mu Pro,1250 S_ra er� // New 28,125 5
16 Collindale Golf 1 MoweGroun))istrer_3500D\V/ Rep] 35,285 5
17 Fleet Services N7� Crown Vic atrol•ears llLi Repl 155,708 5
18 Fleet Services 4 Chevy Tahoe patrol vehicles Repl 126,018 5
19 Fleet Services 1 lot Patrol vehicle equipment Repl 106,400 5
20 Fleet Services 1 Dod a Caravan detective vehicle Repl 23,645 5
21 Fleet Services 1 Chevy Traverse detective vehicle Repl 24,768 5
22 Fleet Services 1 Ford Explorer detective vehicle Repl 26,333 5
23 Fleet Services 1 lot Equip. for new detective vehicles Repl 5,100 5
24 Traffic Operations 1 __Chassis_for cone truck _ _ New 31,930 5
25 Traffic Operations f1r 4bd fo cone,ne,trjck-�' New 28,420 5
I International Tandem-truck &Y
26 Streets \�1 a ui `, 1 �' J 1 ( Rep' 225'000 5
27 Streets �1�=F550 Ford'tfuck I&equip. LJ New 120,000 5
Total 5-year Financing 1,405,001
March 1, 2011 -3- ITEM 14
Departments have appropriately justified the purchase of all new and replacement vehicles and equipment.
Information on replacement units is given below. The Operations Services Director has determined that the following
units meet requirements for replacement. These units are included in the financing list, above.
Disposal
Miles/ of old
Department Old unit Age hours New units unit Notes
Police Tahoe 7 52,005 Tahoe Auction Vehicle totaled
Police Astro van 5 54,948 Tahoe Auction Vehicle totaled
�Over^
Ops & Police 3-Tahoes 7,8 �90(000 \3 Tahoes /Auction I Normal replacement
�l O`er �) I / l
Ops & Police 7-Crown Vic 5-8 (90,000 7-ful rlsize patrol IV Auction Normal replacement
Ops & Police Over--' Li `
Inv. Astro van 6 90,000 Dodge van Auction Normal replacement
Jeep Over
Police Inv. Cherokee 6 90,000 Chevy Traverse Auction Normal replacement
Ops& Police Over Ford Escape
Inv. Trailblazer 4 90,000 Hybrid Auction I Normal replacement
John Deere Used Toro Unit worn out-beyond
Golf mower 11 3941 hrs mower Auction normal replacement
Used Toro Unit worn out- beyond
Golf Toro mower 21 _ 4340 hrs, mower Auction normal replacement
Jacobsen //"',Used 1" cobsen
Golf mower 118 2448:hrs )mower�� >Auction Normal replacement
Toro 4000D „ n 1� )Ne%To�o
Golf mower 13`2521 hrs- �3500D mower Auction Normal replacement
Toro 5400D New Toro
Golf mower 10 2971 hrs RM5410 mower Auction Normal replacement
1995 IH
Streets tandem 1 16 120,000 IH Tandem Auction Condition & miles e
Note on usage: Units will accumulate additional miles/hours between now and when replacement vehicles arrive.
ENVIRONMENTAL IMPACTS
�� Cam. f r=—� /7.
Due to improvements in emissions and engine technology, new vehicles and equipment will use less fuel and produce
fewer emissions than the units being replaced. �—J' V
Some of the Police vehicles are not replacing older-units and represent an increase in fleet size,with a corresponding
increase in fuel usage and emissions. The new officers to be added by Police were approved by Council and vehicles
must be added to accommodate the increase in staffing levels. Those vehicles are as fuel efficient as can be provided
pursuant to the needs of patrol and investigation officers.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
ORDINANCE NO. 023, 2011
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE PURCHASING AGENT TO ENTER
INTO AN AGREEMENT FOR THE LEASE-PURCHASE FINANCING
OF VEHICLES AND EQUIPMENT AND APPROPRIATING THE AMOUNT
NEEDED FOR SUCH PURPOSE
WHEREAS,the City has a need for and desires to provide certain property for City purposes;
and
WHEREAS, the City is authorized by Article XX of the Colorado Constitution, the City
Charter.and Part 8 of Article 15 of Title 31, Colorado Revised Statutes, as amended(the "Act'),to
enter into rental or leasehold agreements in order to provide necessary land, buildings, equipment
and other property for governmental or proprietary purposes, and such agreements may include
options to purchase and acquire title to such leased or rented property; and
WHEREAS,the City has received a proposal from Pinnacle Public Finance to lease certain
equipment to the City, consisting of the following:
Line Department Qty. Description Total Cost Term
No. (yrs)
1 Police Patrol 6 Crown Vic and Caprice patrol cars $141,760 5
2 Police Patrol -I Pickup for traffic enforcement 25,002 5
3 Police Patrol 1 Chevy Tahoe patrol vehicle 31,667 5
4 Police Patrol 1 lot Equipment for new vehicles 66,300 5
5 Police Admin 1 Ford Escape hybrid 28,951 5
6 Police Investigations 1 Chevy Traverse detective vehicle 24,768 5
7 Police Investigations 1 Ford Fusion hybrid detective vehicle 25,416 5
8 Police Investigations 1 Dodge 1500 detective vehicle 21,438 5
9 Police Investigations 1 lot Equip. for new detective vehicles 5,100 5
10 City Park Nine Golf 1 Toro RM5410 Fairway Mower 43,667 5
11 SouthRidge Golf 1 Used Toro 3150 Greens Mower 10,900 5
12 SouthRidge Golf 1 Used Toro 4500D Rotary Mower 24,900 5
13 SouthRidge Golf I Used Jacobsen Fairway Mower 13,900 5
14 SouthRidge Golf 1 Freight forequipment delivery 2,500 5
15 Collindale Golf 1 Toro MultiPro 1250 Sprayer 28,125 5
16 Collindale Golf 1 Toro Groundsmaster 3500D Mower 35,285 5
17 Fleet Services 7 Crown Vic patrol cars 155,708 5
18 Fleet Services 4 Chevy Tahoe patrol vehicles 126,018 5
19 Fleet Services 1 lot Patrol vehicle equipment 106,400 5
20 Fleet Services 1 Dodge Caravan detective vehicle 23,645 5
21 Fleet Services 1 Chevy Traverse detective vehicle 24,768 5
22 Fleet Services 1 Ford Explorer detective vehicle 26,333 5
23 Fleet Services 1 lot Equip. for new detective vehicles 5,100 F 5
Lin
rm
Noe Department Qty. Description Total Cost �Y
rs
24 Traffic Operations 1 Chassis for cone truck 31,930 5
25 Traffic Operations 1 Body for cone truck 28,420 5
26 Streets 1 International Tandem truck& equip 225,000 5
27 1 Streets 1 F550 Ford truck& equip. 120,000 5
Total 5-year Financing 1,405,001
and
WHEREAS,the City Council has determined that it is in the best interest of the City to lease
the above-described equipment from Pinnacle Public Finance,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 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$75,143 per quarter,and that payments
in that amount are reasonable and proper and represent the fair rental value of the Equipment; and
WHEREAS, funds for the 2011 lease payments are included in the 2011 budget; and
WHEREAS, the lease of the Equipment will not constitute a"multiple-fiscal year direct or
indirect debt or other financial obligation"of the City within the meaning of Article X §20(4)(b)of
the Colorado Constitution and may therefore be entered into without voter approval; 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 is hereby authorized to enter into a lease-purchase
agreement for the above-described Equipment with Pinnacle Public Finance 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, 2011. The agreement shall provide for renewable one-year
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terms thereafter up 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, 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 Pinnacle Public Finance will total the sum of the principal, $1,405,001,
plus interest at a fixed rate equal to 2.60% 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.
Section 2. That the amount of One Hundred Fifty Nine Thousand, Two Hundred and
Seventy-seven Dollars ($159,277) to be provided under the lease-purchase agreement is hereby
appropriated for expenditure in the Golf Fund from unanticipated revenue in the appropriate funds
for the acquisition of equipment in accordance with the terms and provisions of the lease-purchase
agreement, upon receipt thereof.
Section 3. That the amount of Four Hundred Sixty-seven Thousand,Nine Hundred and
Seventy-Two Dollars ($467,972) to be provided under the lease-purchase agreement is hereby
appropriated for expenditure in the Fleet Fund from unanticipated revenue in the appropriate funds
for the acquisition of police vehicles and equipment in accordance with the terms and provisions of
the lease-purchase agreement, upon receipt thereof.
Section 4. That the amount of Three Hundred Seventy-Two Thousand, Four Hundred
and Two Dollars ($372,402) to be provided under the lease-purchase agreement is hereby
appropriated for expenditure in the General Fund from unanticipated revenue in the appropriate
funds for the acquisition of police vehicles and equipment in accordance with the terms and
provisions of the lease-purchase agreement, upon receipt thereof.
Section 5. That the amount of Sixty Thousand, Three Hundred and Fifty Dollars
($60,350)to be provided under the lease-purchase agreement is hereby appropriated for expenditure
in the Transportation Fund from unanticipated revenue in the appropriate funds for the acquisition
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of equipment in accordance with the terms and provisions of the lease-purchase agreement, upon
receipt thereof.
Section 6. That the amount of Three Hundred Forty-five Thousand Dollars ($345,000)
to be provided under the lease-purchase agreement is hereby appropriated for expenditure in the
Streets Fund from unanticipated revenue in the appropriate funds for the acquisition of equipment
in accordance with the terms and provisions of the lease-purchase agreement, upon receipt thereof.
Section 7. Any inconsistency between the provisions of this Ordinance and those of the
Act is intended by the Council. To the extent of any such inconsistency the provisions of this
Ordinance shall be deemed made pursuant to the home rule charter of the City and shall supersede,
to the extent permitted by law, the conflicting provisions of the Act.
Introduced, considered favorably on first reading, and ordered published this 1st day of
March, A.D. 2011, and to be presented for final passage on the 15th y of March, A.D. 2011.
i
Mayor
ATTEST:
%LL
City Clerk
Passed and adopted on final reading on the 15th day of March, A.D. 2011.
Mayor
ATTEST:
City Clerk
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