SL Logo

City Council

Agenda Request

Agenda Of:

09-07-10

Agenda Request No:

iii-a

Initiated By:

Bryan Guinn

Budget Manager

Responsible Department:

Budget & Research

Presented By:

Jennifer Brown

Budget & Research Director

Department Head:

Jennifer Brown

Budget & Research Director

 

 

Additional Department. Head (s):

N/A

Subject / Proceeding:

Consideration and Action on Resolution No. 10-42 Authorizing the Execution and Delivery of Equipment Schedule No. 03 to the Master Lease Agreement in Connection with the Purchase of Fire Equipment from Suntrust Equipment Finance & Leasing Corp.

 

Exhibits:

Repayment Schedule

Resolution 10-42

Clearances

Approval

Legal:

Eugenia Canoeacsig

Assistant City Attorney

Executive Director:

N/A

Purchasing:

Todd Reed

Purchasing ManagerTodd Reed - initials_2

Asst. City Manager:

Karen GlynnINITIAL

Budget:

Bryan Guinn Bryan Guinn - initials

Budget Manager

City Manager:

Allen BogardSIGNATUR

Budget

Expenditure Required:  $

264,945 per year

Current Budget:  $

264,945 beginning in FY11

Additional Funding:  $

0

Recommended Action

Staff recommends approval of Resolution No. 10-42 authorizing the City Manager to execute documents with SunTrust Equipment Fin. Leasing, Inc. for the financing of two fire trucks and related equipment.

Executive Summary

City Council approved the purchase of Ladder 4 at the October 20, 2009 City Council meeting using the lease/purchase method of financing. This will be a replacement of Ladder 4 which has met the 10 year replacement policy.  The expenditure is detailed below:

 

Expenditure Summary

Actual Cost

Truck

$967,020

Equipment

55,652

Inspection

20,870

H-GAC Fees

2,000

Total

$1,045,542

 

City Council approved the purchase of Engine 7 on December 15, 2009. Engine 7 will be housed at Station #7. This will be a Custom Class “A” Spartan/Crimson fire engine with similar specifications to previous purchases. The expenditure is detailed below:

 

Expenditure Summary

Actual Cost

Truck

$254,403

Equipment

396,347

Inspection

10,750

H-GAC Fees

2,000

Total

$663,500

 

Based on the approvals, the city moved forward with the order of these vehicles and worked to secure financing.

Instead of bidding the financing for each truck separately, staff secured one bid for lease/purchase financing to minimize administrative fees. On July 29, 2010 the City received and opened sealed bids from 10 institutions. All bidders were to include the following information: required information on escrow funding, escrow and other fees, estimated interest rate to be earned on the escrow account, three references of municipal equipment financing, and the timeframe to secure their interest rate--with the knowledge that the bid was anticipated to be awarded at the September 7, 2010 City Council meeting.

 

The apparent low bid was SunTrust Equipment Fin. Leasing, with an interest rate of 2.43%.  Since the City has a Master Lease Agreement with Sun Trust dated October 27, 2000, the documents that need to be executed related to this lease agreement are reduced; the additional financing can be treated as an amendment to the Master Lease Agreement with a new Equipment Schedule #3 describing the equipment being financed, and a new  lease payment schedule related to the amended equipment schedule.

 

The following is a summary of the bids received:

 

Bidder

Interest Rate

SunTrust Equipment Fin. Leasing

2.43%

Municipal Leasing Consultants

2.67%

BB&T

2.77%

Midwest Leasing

2.78%

Chase

2.79%

Systems Finance Corp.

2.83%

Municipal Services Group

3.33%

California First National Bank

3.98%

Wells Fargo Brokerage Svcs, LLC

4.17%

EPlus Group

4.99%

 

The estimated interest cost on the $1,709,042 principal is $145,573.28 over the 7 year period for total payments of $1,854,615.28 paid in semi-annual payments of $132,472.52.

 

Upon execution of the financing documents, funds will be deposited into an escrow account that will be opened in the City’s name. Upon delivery and acceptance of each vehicle, funds will be disbursed from the escrow account to the vendor for payment on each vehicle. Fire Department staff anticipates delivery of Ladder 4 in September 2010 and delivery of Engine 7 in spring 2011.

 

Staff recommends the City Council approve Resolution No. 10-42 authorizing the City Manager to execute lease and escrow documents with SunTrust Equipment Fin. Leasing for the financing of the fire trucks and related equipment.

 

Exhibits

 

 

REPAYMENT SCHEDULE

 

 

 Payment

Payment

Payment

Principal

Interest

Prepayment

Number

Date

Amount

Component

Component

Price*

0

9/7/2010

0.00

0.00

0.00

1,726,132.42

1

11/7/2010

132,472.52

125,543.89

6,928.63

1,599,333.09

2

5/7/2011

132,472.52

113,135.37

19,337.15

1,485,066.37

3

11/7/2011

132,472.52

114,516.93

17,955.59

1,369,404.27

4

5/7/2012

132,472.52

115,915.38

16,557.14

1,252,329.73

5

11/7/2012

132,472.52

117,330.90

15,141.62

1,133,825.53

6

5/7/2013

132,472.52

118,763.70

13,708.82

1,013,874.19

7

11/7/2013

132,472.52

120,214.01

12,258.51

892,458.04

8

5/7/2014

132,472.52

121,682.02

10,790.50

769,559.20

9

11/7/2014

132,472.52

123,167.96

9,304.56

645,159.56

10

5/7/2015

132,472.52

124,672.05

7,800.47

519,240.79

11

11/7/2015

132,472.52

126,194.50

6,278.02

391,784.34

12

5/7/2016

132,472.52

127,735.55

4,736.97

262,771.44

13

11/7/2016

132,472.52

129,295.41

3,177.11

132,183.07

14

5/7/2017

132,472.52

130,874.33

1,598.19

0.00

Grand Total

1,854,615.28

1,709,042.00

145,573.28

 

 

 

 

 

 

RESOLUTION NO. 10-42

 

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SUGAR LAND, TEXAS, AUTHORIZING THE EXECUTION AND DELIVERY OF EQUIPMENT SCHEDULE NO. 03 TO THE MASTER LEASE AGREEMENT (NO. 00596)  ENTERED INTO ON OR ABOUT OCTOBER 27, 2000, AN ESCROW AGREEMENT, AND RELATED INSTRUMENTS IN CONNECTION WITH THE PURCHASE OF FIRE EQUIPMENT FROM SUNTRUST EQUIPMENT FINANCE & LEASING CORP.

 

 

WHEREAS, the City of Sugar Land, Texas (Lessee) entered into a Master Lease Agreement with SunTrust Equipment Finance & Equipment Leasing Corp. (Lessor) on or about October 27, 2000 to purchase certain equipment; and

 

WHEREAS, the Lessee desires to obtain certain fire equipment (Equipment) described in Equipment Schedule No. 03 to the Master Lease Agreement (collectively, the Lease) with the Lessor, the form of which has been available for review by the Lessee’s City Council prior to this meeting; and

 

WHEREAS, the Equipment is essential for the Lessee to perform its governmental functions; and

 

WHEREAS, the funds made available under the Lease will be deposited with SUNTRUST BANK (Escrow Agent) pursuant to an Escrow Agreement between Lessee and the Escrow Agent (Escrow Agreement) and will be applied to the acquisition of the Equipment in accordance with the Escrow Agreement; and

 

WHEREAS, Lessee has taken the necessary steps, including those relating to any applicable legal bidding requirements, to arrange for the acquisition of the Equipment; and

 

WHEREAS, the Lessee proposes to enter into the Lease with the Lessor and the Escrow Agreement with the Escrow Agent substantially in the forms made available to Lessee’s City Council;  NOW, THEREFORE,

 

 

BE IT RESOLVED BY THE CITY COUNCIL

OF THE CITY OF SUGAR LAND, TEXAS:

 

            Section 1.  That the terms of the Lease and the Escrow Agreement (collectively, the Financing Documents) in the forms presented to this meeting and incorporated into this Resolution are in the best interests of Lessee for the acquisition of the Equipment

 

            Section 2. That the City Council approves the Financing Documents and the acquisition and financing of the Equipment under the terms and conditions as described in the Financing Documents.

 

 

            Section 3. That the Lessee’s City Manager is authorized to execute, acknowledge and deliver the Financing Documents and any associated papers, instruments, opinions, certificates, affidavits, and other documents in connection with the purchase of the Equipment.  The Lessee’s City Secretary is authorized to affix the official seal of Lessee to the Financing Documents and other documents and to attest the same.

 

            Section 4.  That this Resolution has not been repealed or amended and remains in full force and effect.

 

            Section 5.  That the Lease and Escrow Agreement executed on behalf of Lessee shall be the same as presented at this meeting of the City Council, excepting only such non-substantive changes, insertions and omissions as shall have been approved by the City Manager.

 

            Section 6.  That this meeting of the City Council is held in accordance with all applicable legal requirements, including open meetings laws, on the 7th day of September, 2010, the date this Resolution was introduced and adopted.

 

           

                        APPROVED on   _______________________________ , 2010.

 

           

           

                                                                                                _________________________

                                                                                                James A. Thompson, Mayor

 

ATTEST:

 

 

 

_____________________________

Glenda Gundermann, City Secretary

 

Reviewed for Legal Compliance:

 

eacsig