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Home My WebLink About12-Finance e CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Barbara Pachon, Director Subject: Authorization to lease-purchase twenty (20) refuse trucks and three (3) street sweepers (purchases previously approved by Council) through Comerica Leasing under existing Master Lease Agreement with the City. Dept: Finance Date: January 18,2007 . MlCC Meeting Date: February 5, 2007 Synopsis of Previous Council Action: Resolution 2006-300 8/21/2006 Resolution of the Mayor and Common Council of the City of San Bernardino authorizing the execution of a purchase order to Fairview Ford for twenty (20) 2007 Autocar WX64 chassis complete with thirteen Labrie Automated sideloader refuse bodies, four McNeilus rolloff refuse bodies and three Mcneilus frontloader refuse bodies and authorizing the Purchasing Manager to solicit lease purchase rate quotes; and return to the Mayor and Cornmon Council for approval Resolution 2006-440 12/18/2006 Resolution of the Mayor and Common Council of the City of San Bernardino authorizing the execution of a purchase order to Crest Chevrolet of San Bernardino for the negotiated purchase of two (2) 2006 Schwarze M-600SE compressed natural gas broom street sweepers and one (1) Schwarze A8000 air sweeper e Recommended Motion: I. Authorize the Director of Finance to lease-purchase twenty (20) refuse trucks and three (3) street sweepers (purchases previously approved by Council) through Comerica Leasing under existing Master Lease Agreement with the City; and, 2. Authorize the Director of Finance to amend the FY 2006-2007 budget and appropriate $109,400 from the Refuse Fund balance to the following leasecpayrnent accounts: $61,600 to 527-412-5803 (Residential); $8,400 to 527-413-5803 (Commercial); and, $70,000 to~~;). . Signature Contact Person: Barbara Pachon Pbone:5242 Ward: All Supporting data attacbed: FUNDING REQUIREMENTS: Amount: FY 06-07 $525,909.85; FY 07-08 $1,051,819.70 Source: 527-412-5803,527-413-5803,527-414-5803 Finance: Council Notes: e Agenda Item No. --.1 ~ ~/.s1()7 tit tit e CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION Staff Report SUBJECT Authorization to lease-purchase twenty (20) refuse trucks and three (3) street sweepers (purchases previously approved by Council) through Comerica Leasing under existing Master Lease Agreement with the City. BACKGROUND At the August 21st, 2006 Council Meeting, the Mayor and Common Council approved the purchase of twenty (20) refuse trucks from Fairview Ford of San Bernardino (Resolution 2006- 300). At the December 18th, 2006 Council Meeting, the Mayor and Council approved the purchase of three (3) street sweepers through Crest Chevrolet of San Bernardino (Resolution 2006-440). Both purchases were negotiated purchases administered by the City's Fleet Division. The City has pre-approved "Master Lease Agreements" in place with a number of financing institutions. When lease-purchase financing is necessary, Finance obtains rate quotes from these pre-approved providers. Normally, at the time a purchase is presented to the Mayor and Council for approval, wording is included in the resolution (if the purchase is to be financed) authorizing the Finance Director to obtain rate quotes from these pre-approved institutions and award the financing bid to the company providing the lowest rate quote. However, for the purchase of the twenty (20) refuse trucks, Council requested in this specific case that staff solicit rate quotes under existing Master Lease Agreements and return to Council with the rate quote results. The resolution approving the purchase of three (3) street sweepers did not include language authorizing the Finance Department to obtain lease-purchase rate quotes. So, for the sake of . efficiency and economies of cost, both of these purchases have been combined into one proposed financing package and are being submitted to the Mayor and Council for approval. Rate Ouote Process Staff issued a request for rate quote (RFQ 07-25) to the four (4) financing/leasing companies that have existing Master Lease Agreements in place with the City. The RFQ requested lease- purchase rate quotes and an amortization schedule for seven (7) year financing with semi-annual payments for twenty (20) refuse trucks. RFQ 07-25 was sent to four companies. Four responses were received and are summarized below. Lease-Purchase Providers Comerica Leasing Corporation Koch Financial Corporation SunTrust Leasing Corporation First Municipal Leasing Corporation Semi-AnnualPavment $466,539.47 $469,866.33 $470,418.71 $470,589.21 Rate 3.715% 3.94% 3.945% 3.987% After the RFQ was issued, staff determined that it would be more efficient and cost-effective to also include the lease-purchase of the (3) three sweepers in the same package. So, the Finance Department contacted the apparent low bidder and asked if they would hold the original rate e e e quote and terms for an additional purchase. Comerica Leasing Corporation agreed to hold their 3.715% financing rate quote for the three (3) street sweepers. Comerica's quote for the purchase of the three (3) street sweepers is listed below. Lease-Purchase Provider Comerica Leasing Corporation Rate 3.715% Semi-Annual Pavment $59,370.38 The total semi-annual payment for the two purchases is $525,909.85. It is recommended that the Mayor and Common Council award the bid for financing to Comerica Leasing Corporation. FINANCIAL IMPACT Funds for the lease payments of refuse trucks were estimated and budgeted at $397,500, which is approximately $69,000 lower than the lowest rate quote. Similarly, funds for the lease payment of the street sweepers were estimated and budgeted at $19,000.00, which is approximately $40,400 lower than the lowest rate quote. This estimated lease payment included in the FY 2006-07 Adopted Budget was for two (2) street sweepers not three (3) and had a different useful life expectancy which effects the payment amount. A budget amendment appropriating funds from the Refuse Fund balance is necessary to fully budget the lease-payments. RECOMMENDATION I. Authorize the Director of Finance to lease-purchase twenty (20) refuse trucks and three (3) street sweepers (purchases previously approved by Council) through Comerica Leasing under existing Master Lease Agreement with the City; and, 2. Authorize the Director of Finance to amend the FY 2006-2007 budget and appropriate $109,400 from the Refuse Fund balance to the following lease-payment accounts: $61,600 to 527-412-5803 (Residential); $8,400 to 527-413-5803 (Commercial); and, $70,000 to 527- 4 I 4-5803 (Street Sweeping).