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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: Barbara Pachon, Director
Subject: Resolution of the Mayor and
Common Council of the City of San
Bernardino awarding a bid for lease
purchase financing to First Municipal
Leasing Corporation for the purchase of
twelve (12) refuse trucks.
Dept: Finance
Date: March 9, 2009
MlCC Meeting Date: March 16, 2009
Synopsis of Previons Council Action:
Resolution 2009-09 1/20/2009
Resolution authorizing the execution of an agreement and issuance of a purchase order to Fairview Ford of
San Bernardino pursuant to section 3.04.010-B3 of the Municipal Code for the purchase of twelve (12)
refuse trucks complete with refuse bodies and LNG conversion to be utilized by the IWM Division; and
authorizing the Purchasing Manager to solicit lease-purchase rate quotes and award a lease-purchase to the
lowest responsible leasing company.
Recommended Motion:
I. Adopt Resolution; and,
2. Authorize the Director of Finance to amend the FY 2008-2009 budget by transferring $200,000 from
527-415-5505; $100,000 from 527-413-5014; $90,000 from 527-413-5015; and $40,000 from 527-411-
5706 to the following accounts; $305,300 to 527-412-5803 and $124,700 to 527-413-5803
~~Ai0/L<--
Si ture
Contact Person: Barbara Pachon
Phone: 5242
Ward: All
Amount: FY 08-09 $727,827.53; FY 09-10 $496,981.34
Source: 527-412-5803 and 527-413-5803
Supporting data attached:
FUNDING REQUIREMENTS:
Finance:
Council Notes:
3-/6-0'7
Agenda Ite
.dJ /6
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Staff Report
SUBJECT
Resolution of the Mayor and Common Council of the City of San Bernardino awarding a bid for
lease purchase financing to First Municipal Leasing Corporation for the purchase of twelve (12)
refuse trucks.
BACKGROUND
At the January 20, 2009 Council Meeting, the Mayor and Common Council approved Resolution
2009-09 authorizing the purchase of twelve (12) refuse trucks from Fairview Ford of San
Bernardino and also authorized the Director of Finance to solicit lease-purchase rate quotes.
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.
Rate Quote Process
Staff issued a request for rate quote (RFQ LQ 09-03) 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 with seven (7) year financing with semi-
annual payments for twelve (12) refuse trucks. Resolution 2009-09 approved the purchase of the
twelve (12) refuse trucks at a cost of $3,639, 137.64. RFQ LQ 09-03 was sent to four companies.
Four responses were received and are summarized below.
Lease-Purchase Providers
SunTrust Leasing Corporation
First Municipal Leasing Corporation
Comerica Leasing Corporation
Koch Financial Corporation
Rate
4.09%
4.95%
Semi-Annual Pavment
$302,878.19
$311,133.22
Comerica Leasing Corporation and Koch Financial Corporation responded to the RFQ LQ 09-03
with a ''No Bid". Both lease-purchase providers stated that their corporations have chosen not to
lend during the current economic situation.
SunTrust Leasing Corporation (SunTrust) was the apparent bid winner. Finance staff began the
contractual process with SunTrust to finalize a lease-purchase agreement. Unfortunately,
SunTrust was unable to credit approve the City for this lease-purchase and thus withdrew their
bid.
After SunTrust was unable to credit approve the City for this lease-purchase Finance staff began
the contractual process with First Municipal Leasing Corporation (FMLC). FMLC working with
Capital One Public Funding was able to credit approve the City. However, due to the current
economic situation the lease-purchase agreement requires different terms from the City's past
lease-purchase agreements. Outlined below are some of the differences:
r
1
. The lease-purchase agreement is a Firm Term Covenant pledging Integrated Waste
Management revenue for debt payments. Past agreements have been Non-
Appropriation agreements.
. FMLC / Capital One Public Funding used a private Bond Counsel to review the
contract.
. The City may not exercise a purchase option until March 20, 2013.
. The City is required to place a down payment of 20% ($727,827.53) of the purchase
amount into an escrow account on the day escrow is opened. The remaining funds
necessary for the purchase and applicable fees will be provided by the FMLC / Capital
One Public Funding.
The difference in terms for this lease-purchase agreement from past lease-purchase agreements
reflects the unfavorable lending market in today's economy. The terms proposed by FMLC /
Capital One Public Funding that are outlined above are designed to help minimize lending risk in
the down economy.
As part of the agreement of terms for the lease-purchase agreement with FMLC / Capital One
Public Funding they lowered their bid rate from 4.95% to 4.85% and extended their fixed interest
rate to March 20, 2009 to accommodate for Mayor and Common Council approval.
FINANCIAL IMPACT
The down payment required is $727,827.53. $300,000 was included in the FY 2008-2009
budget for debt service payments. The remaining $427,827.53 needed for the 20% down
payment will come from IWM fund expenditure savings. A budget amendment transferring the
funds is necessary and apart of the recommended motions. This lease-purchase doesn't require
any further payments this fiscal year. For FY 2009-2010 total debt service payments for this
lease-purchase will be $496,981.34. Due to the required 20% down payment, debt service
payments starting in FY 2009-2010 will be lower than staff originally projected.
RECOMMENDATION
1. Adopt Resolution
2. Authorize the Director of Finance to amend the FY 2008-2009 budget by transferring
$200,000 from 527-415-5505; $100,000 from 527-413-5014; $90,000 from 527-413-5015;
and $40,000 from 527-411-5706 to the following accounts; $305,300 to 527-412-5803 and
$124,700 to 527-413-5803