HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 07/17/2001 - SECOND READING OF ORDINANCE NO. 110, 2001, AUTHORI lie AGENDA ITEM SUMMARY ITEM NUMBER: 10
FORT COLLINS CITY COUNCIL DATE: July 17, 2001FROM:
Jim O'Neill
SUBJECT:
Second Reading of Ordinance No. 110, 2001, Authorizing the Purchasing Agent to Enter into an
Agreement for the Financing by Lease-Purchase of 800 MHz Radio Equipment.
RECOMMENDATION:
Staff recommends adoption of the Ordinance on Second Reading.
EXECUTIVE SUMMARY:
Ordinance No. 110, 2001, which was unanimously adopted on First Reading on June 19, 2001,
authorizes the Purchasing Agent to enter into a lease-purchase financing agreement with
Motorola, Inc., for the lease-purchase financing of 800 MHz radio equipment, including the
lipnecessary software, programming, installation and support.
AGENDA ITEM SUMMARY ITEM NUMBER: 20
FORT COLLINS CITY COUNCIL DATE: June 19, 2001
STAFF: Jim O'Neill
SUBJECT:
First Reading of Ordinance No. 110, 2001, Authorizing the Purchasing Agent to Enter into an
Agreement for the Financing by Lease-Purchase of 800 MHz Radio Equipment.
RECOMMENDATION: Tr
Staff recommends adoption of the Ordinance on First Reading .z
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FINANCIAL IMPACT:
The cost of the items to be lease-purchased rs $;318,977. Payments at the 5.77% interest rate
will not exceed $294,649.09 in 2001. Money first-,first year lease-purchase payments is
included in the 2001 budget. The effect of the debt position for the purpose of financial rating of
the City will be to raise the to :ity debt by 1.2"/o. Motorola, Inc. has offered the lease
financing a highly competitive, ` aff believes acceptance{of this interest rate is in the City's
best interest.
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EXECUTIVE SUMMAIRY-
This O{ mance authorizes the mPtnthasmg Agent to enter into a lease-purchase financing
agreen,knt with Motorola, Inc., a �w'/o^urterest rate for the lease-purchase financing of 800
MHz, io equipment, including the necessary software, programming, installation and support.
The Ecement 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 ten (10) ye , subject to annual appropriation of funds needed for lease
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paym the total lease terms'-including the original and all renewal terms, will not exceed the
useful li ythe property. This lease-purchase financing is consistent with the financial policies
of the City is Fottailins.
BACKGROUND:
All equipment will be purchased following the City's purchasing ordinances and procedures to
ensure that the City realizes all cost savings.
The 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.
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DATE: June 19, 2001 2 ITEM NUMBER: 20
Over the next several years the City will be migrating all radio equipment to 800 MHz
technology. Currently, City departments, including Police, use UHF radio frequencies which are
incompatible with surrounding agencies. The State of Colorado, Poudre School District,
Loveland, and Greeley are using or transitioning to 800 MHz technology using the Motorola
infrastructure. In 2000, Council approved Motorola as the sole-source provider of 800 MHz
equipment, in order to increase compatibility within the City and with other agencies.
Lease-Purchase: A(
The City's lease-purchase policy provides that:
The City of Fort Collins uses lease-purchase for the provisittn of new ail replacement
equipment,vehicles and rolling stock in order to ensure the timel replacement of�uipmem and
vehicles. This method may also be used to acquire real property¢, m staff has
developed an equipment needs schedule for rolling stock which encompas ands of
operating departments. This schedule is used to proJeft9ase.
needs for each b az. ,
The type of lease that the City uses is termed a core i Upon the payme -of all
lease payments, the leased property is transQe d to the C The annual installments are
subject to appropriation by the Council each yeaf.',,,:ftft
Advantages of a lease-purchase over a cash purchase""are?;
* �h �`ai 1 i ^ �as,i —
Decreasing the,7tnpac 'of tnflation on the'purchase of new and replacement
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equipment ,,
* Resolving ibF problem of capital r p�lac Went needs backlog.
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* Conserving operating reserves.
* Reduetng the initial impact of the cost to user departments by enabling costs to
5be spread over the „ �L�fe of the-"equipment.
* Safeguarding the opportunity to use cash assets to earn higher interest than the
interest cost of leaf-purchasing.
It sh a noted that the City is able to discontinue the equipment leases so that future City
Coun have the option,to continue or discontinue the policy of lease-purchasing City
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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.
Although under state law, lease-purchases are not included in the legal definition of debt, rating
agencies include lease-purchases in calculating the City's debt burden.