HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/01/2014 - SECOND READING OF ORDINANCE NO. 045, 2014, AUTHORIAgenda Item 4
Item # 4 Page 1
AGENDA ITEM SUMMARY April 1, 2014
City Council
STAFF
Gerry Paul, Director of Purchasing & Risk Management
SUBJECT
Second Reading of Ordinance No. 045, 2014, Authorizing the Purchasing Agent to Enter into an Agreement for
the Financing by Lease-Purchase of Vehicles and Equipment and Appropriating the Amount Needed for Such
Purchases.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on March 18, 2014, authorizes the lease-purchase of
vehicles and equipment for the cost of $2,941,469. Payments at the 2.4% interest rate will not exceed
$313,029.11 in 2014. Money for 2014 lease-purchase payments is included in the 2014 budget. The effect of
the debt position on the City’s financial rating will be to raise the total City debt to 2.38%. A competitive
process was used to select Pinnacle Public Finance for this lease. A 2014 Finance Department analysis of
current and historical equipment lease financing arrangements showed that lease-purchase is in the best
interest of the City given the normal spread between lease rate and reinvestment rate.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. First Reading Agenda Item Summary, March 18, 2014 (PDF)
2. Ordinance No. 045, 2014 (PDF)
Agenda Item 12
Item # 12 Page 1
AGENDA ITEM SUMMARY March 18, 2014
City Council
STAFF
Gerry Paul, Director of Purchasing & Risk Management
SUBJECT
First Reading of Ordinance No. 045, 2014, Authorizing the Purchasing Agent to Enter into an Agreement for
the Financing by Lease-Purchase of Vehicles and Equipment and Appropriating the Amount Needed for Such
Purchases.
EXECUTIVE SUMMARY
The purpose of this item is to request the lease-purchase of vehicles and equipment for the cost of $2,941,469.
Payments at the 2.4% interest rate will not exceed $313,029.11 in 2014. Money for 2014 lease-purchase
payments is included in the 2014 budget. The effect of the debt position on the City’s financial rating will be to
raise the total City debt to 2.38%. A competitive process was used to select Pinnacle Public Finance for this
lease. A 2014 Finance Department analysis of current and historical equipment lease financing arrangements
showed that lease-purchase is in the best interest of the City given the normal spread between lease rate and
reinvestment rate. Staff believes acceptance of this lease rate is in the City's best interest.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
This Ordinance authorizes the Purchasing Agent to enter into a lease-purchase financing agreement with
Pinnacle Public Finance at 2.4% interest rate. 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
property, which is greater than five years in each instance. This lease-purchase financing is consistent with
the financial policies of the City of Fort Collins.
All equipment shall be 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 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 / ECONOMIC IMPACT
The City's lease-purchase policy provides that:
ATTACHMENT 1
Agenda Item 12
Item # 12 Page 2
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 vehicles and equipment.
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.
With each lease payment, the purchase price for the City’s purchase of the equipment or vehicle is reduced.
The annual lease payments 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 under the terms of the lease-
purchase agreement. Future City Councils will retain the option to continue or discontinue the policy of lease-
purchasing City equipment.
A 2014 Finance Department analysis of current and historical equipment lease financing arrangements
showed that lease-purchase is in the best interest of the City given the normal spread between lease rate and
reinvestment rate.
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. Although a lease-purchase is not
considered “debt” under the Taxpayers’ Bill of Rights, rating agencies include lease-purchases in calculating
the City's debt burden.
The proposed Ordinance authorizes the lease-purchase financing of the following vehicles and equipment, the
weighted average useful life of which is greater than five (5) years:
Description Quantity Cost
Golf - New and Replacements
Toro Greensmaster 3300 Triflex 2 61,962.00
Toro Workman HDX-D Utility Vehicle 2 48,076.00
Yamaha Electric Carts for Southridge 73 258,100.00
Yamaha Gas Carts for Southridge 3 11,700.00
Yamaha Electric Carts for Collindale 15 53,100.00
Yamaha Electric Carts for City Park 15 53,100.00
Yamaha Gas Carts for City Park 5 19,500.00
Golf Fund Total: 505,538.00
Streets – Replacements
Cab/Chassis Tandem Plow Truck 1 104,808.00
Cab/Chassis Tandem Plow Truck 1 129,800.00
Agenda Item 12
Item # 12 Page 3
Description Quantity Cost
Dump Body for Plow truck 1 113,750.00
Dump Body for Plow truck 1 113,750.00
Spreader and Tank 2 112,150.00
6 way Folding V- Plow 1 18,539.00
Loader Bucket Attachment 1 16,275.00
Compact Sweeper 1 139,100.00
Portable Belt Conveyor 1 126,000.00
Streets Total: 874,172.00
Traffic – Replacements
1/2 ton Pick-up Truck 1 25,600.00
Cab/Chassis for Bucket Truck 1 35,000.00
Body for Bucket Truck 1 85,000.00
Traffic Total: 145,600.00
Transportation Fund Total: 1,019,772.00
Parks - Replacement Vehicles
Small Pick-up truck - 4wd 2 52,800.00
Snowplow equipment 2 9,000.00
1 ton Cab/Chassis 1 24,969.00
Zero Turn Mower with decks 2 29,500.00
Parks Total: 116,269.00
Forestry - Replacement Vehicle
1/2 ton Pick-up truck - 2WD 1 23,500.00
Forestry Total: 23,500.00
Operation Services - Replacement Vehicle
1/2 ton Cargo Van 1 24,000.00
Additional equipment & shelving 1 2,500.00
Operations Services Total: 26,500.00
Police Patrol - Replacement Vehicles
Ford Utility Police Interceptor AWD 15 400,050.00
Patrol vehicle equipment 15 138,500.00
Patrol vehicle equip. - Vinyl wrap 17 11,250.00
Ram 1500 SSV 2 52,100.00
Patrol vehicle equipment 2 24,400.00
Patrol New Officer Vehicle Total: 626,300.00
Investigations - Replacement Vehicle
1/2 ton Pick-up truck 1 27,000.00
Patrol vehicle equipment 1 3,500.00
Investigation New Officer Vehicle Total: 30,500.00
Patrol - New Officer Vehicles (KFCG)
Ford Utility Police Interceptor AWD 7 186,700.00
Patrol vehicle equipment 7 77,000.00
Patrol vehicle equip. - Vinyl wrap 7 4,700.00
Patrol New Officer Vehicle Total: 268,400.00
Investigations - New Officer Vehicle
Ford Utility Police Interceptor AWD 1 26,670.00
Patrol vehicle equipment & vinyl wrap 1 11,660.00
Investigation New Officer Vehicle Total: 38,330.00
Police Patrol - Traffic - Replacement Vehicle
Ford Utility Police Interceptor AWD 1 26,670.00
Agenda Item 12
Item # 12 Page 4
Description Quantity Cost
Patrol vehicle equipment 1 9,300.00
Investigation New Officer Vehicle Total: 35,970.00
General Fund Total: 1,165,769.00
Information Technology
Dell Latitude E6440 75 104,070.00
Dell OptiPlex 7010 100 88,000.00
Dell Precision T3610 4 5,140.00
Panisonic Toughbooks 25 41,060.00
Dell Monitor Stands 40 2,240.00
Dell Venue 11 Tablets 5 6,630.00
Logitech Keyboards 54 600.00
Dell USB Mouse 50 670.00
Power Strips/ Surge Suppressor 200 1,980.00
Data & Communications Fund Total: 250,390.00
Lease Total: 2,941,469.00
Departments have appropriately justified the purchase of all new 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.
Department Old unit: Age:
Miles /
hours: New unit:
Disposal
of old
unit: Notes:
Golf Various 8-9 n/a Yamaha
electric carts
Trade-in Replacing gasoline
carts at the end of
their normal service
life with electric carts
Streets 2080 18 152,450
miles
International
7600 SFA
6x4
Auction Due for replacement
Streets 2087 17 130,690
miles
International
7600 SFA
6x4
Auction Cracked frame
Streets 4203 34 n/a Tink 720
Claw
Auction Due for replacement
Streets 3206 16 3106
Hours
Compact
Sweeper
Auction Excessive
maintenance and
major repairs required
Traffic 2233 14 108,500 ½ ton
pickup
Auction Due for replacement
Traffic 22401 12 10,148
Agenda Item 12
Item # 12 Page 5
Department Old unit: Age:
Miles /
hours: New unit:
Disposal
of old
unit: Notes:
Parks 2490 29 84,046
miles
1 ton
cab/chassis
Auction Excessive
maintenance and
major repairs required
Parks 2444 15 70,491
miles
small pick
up
Auction Excessive
maintenance and
major repairs required
Parks 2551 16 85,168
miles
Small pick
up
Auction Excessive
maintenance and
major repairs required
Police –
Patrol
17 units 6 -14 All over
90,000+
Utility
Interceptor –
AWD
Auction Due for replacement
Police -
Investigations
21076 8 129,290
miles
Toyota
Sienna
Auction Due for replacement
Note on usage: Units will accumulate additional miles/hours between now and when replacement vehicles
arrive.
ENVIRONMENTAL IMPACTS
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.
The new officers to be added by Police were separately 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.
- 1 -
ORDINANCE NO. 045, 2014
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING THE PURCHASING AGENT TO ENTER INTO AN AGREEMENT
FOR THE FINANCING BY LEASE-PURCHASE OF VEHICLES AND EQUIPMENT
AND APPROPRIATING THE AMOUNT NEEDED FOR SUCH PURCHASES
WHEREAS, the City has a need for and desires to provide certain real and personal
property for City purposes; and
WHEREAS, the City is authorized by the Colorado Constitution, Article XX, §6, its
home rule 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
equipment to the City, consisting of the following (the “Equipment”):
Description Quantity Cost
Golf - New and Replacements
Toro Greensmaster 3300 Triflex 2 61,962.00
Toro Workman HDX-D Utility Vehicle 2 48,076.00
Yamaha Electric Carts for Southridge 73 258,100.00
Yamaha Gas Carts for Southridge 3 11,700.00
Yamaha Electric Carts for Collindale 15 53,100.00
Yamaha Electric Carts for City Park 15 53,100.00
Yamaha Gas Carts for City Park 5 19,500.00
Golf Fund Total: 505,538.00
Streets - Replacements
Cab/Chassis Tandem Plow Truck 1 104,808.00
Cab/Chassis Tandem Plow Truck 1 129,800.00
Dump Body for Plow truck 1 113,750.00
Dump Body for Plow truck 1 113,750.00
Spreader and Tank 2 112,150.00
6 way Folding V- Plow 1 18,539.00
Loader Bucket Attachment 1 16,275.00
Compact Sweeper 1 139,100.00
Portable Belt Conveyor 1 126,000.00
Streets Total: 874,172.00
Traffic - Replacements
1/2 ton Pick-up Truck 1 25,600.00
Cab/Chassis for Bucket Truck 1 35,000.00
Body for Bucket Truck 1 85,000.00
Traffic Total: 145,600.00
Transportation Fund Total: 1,019,772.00
- 2 -
Parks - Replacement Vehicles
Small Pick-up truck - 4wd 2 52,800.00
Snowplow equipment 2 9,000.00
1 ton Cab/Chassis 1 24,969.00
Zero Turn Mower with decks 2 29,500.00
Parks Total: 116,269.00
Forestry - Replacement Vehicle
1/2 ton Pick-up truck - 2WD 1 23,500.00
Forestry Total: 23,500.00
Operation Services - Replacement Vehicle
1/2 ton Cargo Van 1 24,000.00
Additional equipment & shelving 1 2,500.00
Operations Services Total: 26,500.00
Police Patrol - Replacement Vehicles
Ford Utility Police Interceptor AWD 15 400,050.00
Patrol vehicle equipment 15 138,500.00
Patrol vehicle equip. - Vinyl wrap 17 11,250.00
Ram 1500 SSV 2 52,100.00
Patrol vehicle equipment 2 24,400.00
Patrol New Officer Vehicle Total: 626,300.00
Investigations - Replacement Vehicle
1/2 ton Pick-up truck 1 27,000.00
Patrol vehicle equipment 1 3,500.00
Investigation New Officer Vehicle Total: 30,500.00
Patrol - New Officer Vehicles (KFCG)
Ford Utility Police Interceptor AWD 7 186,700.00
Patrol vehicle equipment 7 77,000.00
Patrol vehicle equip. - Vinyl wrap 7 4,700.00
Patrol New Officer Vehicle Total: 268,400.00
Investigations - New Officer Vehicle
Ford Utility Police Interceptor AWD 1 26,670.00
Patrol vehicle equipment & vinyl wrap 1 11,660.00
Investigation New Officer Vehicle Total: 38,330.00
Police Patrol - Traffic - Replacement Vehicle
Ford Utility Police Interceptor AWD 1 26,670.00
Patrol vehicle equipment 1 9,300.00
Investigation New Officer Vehicle Total: 35,970.00
General Fund Total: 1,165,769.00
Information Technology
Dell Latitude E6440 75 104,070.00
Dell OptiPlex 7010 100 88,000.00
Dell Precision T3610 4 5,140.00
Panasonic Toughbooks 25 41,060.00
Dell Monitor Stands 40 2,240.00
Dell Venue 11 Tablets 5 6,630.00
- 3 -
Logitech Keyboards 54 600.00
Dell USB Mouse 50 670.00
Power Strips/ Surge Suppressor 200 1,980.00
Data & Communications Fund Total: 250,390.00
Lease Total: 2,941,469.00
and;
WHEREAS, the City Council has determined that it is in the best interests 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 $156,514.56 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 2014 lease payments are included in the 2014 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 City Charter 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; and
WHEREAS, City staff has determined that the appropriation described in this Ordinance
will not cause the total amount appropriated in the respective fund to exceed current estimates of
actual and anticipated revenues to be received in those funds 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:
- 4 -
a. The agreement shall be for an original term from the execution date of the
agreement through April 30, 2015. The agreement shall provide for
renewable one-year 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 the 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, $2,941,469.00, plus interest at a fixed rate equal to 2.40% per
year, which is a reasonable amount.
d. The City shall have the option to purchase part or all of the Equipment on
the date of any scheduled quarterly payment during 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, as to any or all of the
Equipment.
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 the 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 Five Hundred Five Thousand, Five Hundred and
Thirty-Eight Dollars ($505,538) 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 vehicles and equipment in accordance with the terms and provisions
of the lease-purchase agreement, upon receipt thereof.
Section 3. That the amount of One Million, Nineteen Thousand, Seven Hundred and
Seventy-Two Dollars ($1,019,772) 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 of vehicles and equipment in accordance with the terms and
provisions of the lease-purchase agreement, upon receipt thereof.
Section 4. That the amount of One Million, One Hundred Sixty-Five Thousand,
Seven Hundred and Sixty-Nine Dollars ($1,165,769) 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 equipment in accordance with the terms
and provisions of the lease-purchase agreement, upon receipt thereof.
- 5 -
Section 5. That the amount of Two Hundred Fifty Thousand, Three Hundred and
Ninety Dollars ($250,390) to be provided under the lease-purchase agreement is hereby
appropriated for expenditure in the Data & Communications 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 6. 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 18th day of
March, A.D. 2014, and to be presented for final passage on the 1st day of April, A.D. 2014.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 1st day of April, A.D. 2014.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
hours
AT20S
Bucket
Truck
Auction Due for replacement
Forestry 2456 23 90,124
miles
½ ton
pickup
Auction Due for replacement
Parks 34003 10 2,791
hours
Zero Turn
mower
Auction Excessive
maintenance and
major repairs required