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Home My WebLink About21- Finance CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: BARBARA PACHON Subject: DISPOSITION OF EIGHT (8) AMBULANCES DIRECTOR OF FINANCE PURCHASED FOR EMS PROGRAM. Dept: FINANCE DEPARTMENT 4w � � � Date: November 23, 1997 OR,iolili, )4�r F Synopsis of Previous Council action: October 7, 1996-Resolution 96-312 adopted authorizing the Fire Department to begin operating a City-run emergency transportation service. November 4, 1996 - The Mayor and Common Council authorized the City to enter into lease-purchase agreement for the purchase of (8) eight ambulances. Recommended motion: That the Mayor and Common Council authorize the following: 1. Authorize the Purchasing Manager to sell two of the eight ambulances to the Running Springs Water District for $60, 000 each; proceeds of the sale will be paid directly to the lessor in i lieu of returning two of the eight ambulances. 2. Authorize the Purchasing Manager to sell the equipment listed on the attachment to Running Springs Water District for $12,423 .56; 3 . Authorize the return of the six remaining ambulances to the lessor; 4. Authorize the Director of Finance to issue payment of $193, 709.82 to the lessor in accordance with terms of the lease-purchase agreement and concurrent with the return of the ambulances. Signature Contact person: Barbara Pachon. Director of Finance Phone: x - 5242 Supporting data attached: Staff report Ward: FUNDING REQUIREMENTS: Amount: $193,709.82 Source: 501-208-5803 EMS Fund Lease Payments Financ !_�_ Council Notes: gal Agenda Item No. STAFF REPORT SUBJECT Disposition of the City's eight ambulances lease-purchased in April of 1997 for the Emergency Medical Services (EMS) Program. BACKGROUND At the direction of Mayor and Council, the City lease-purchased eight (8) ambulances for the Emergency Medical Services Program that was scheduled to begin May 1, 1997. Delivery of all eight ambulances to the Fire Department was completed by April 1, 1997. In May of 1997, the State Supreme Court temporarily enjoined the City from implementing the EMS Program, and in July of 1997, the State Supreme Court permanently prohibited the City from implementing its own EMS Program. As a result, the City must now determine how to dispose of the eight ambulances while honoring the terms of the lease-purchase agreement, and minimizing the City's loss. The City is contractually obligated to the Lessor to do both of the following: 1. Return the eight ambulances The terms of the lease-purchase agreement stipulate that "in the event of cancellation after possession by Lessee on the basis of an adverse legal ruling, all vehicles will be returned by the Lessee within 30 day s notice of the cancellation." The City and the Lessor mutually agreed to allow the City to keep the ambulances after the thirty day period stipulated in the contract in order to allow the City to attempt to sell the ambulances and mitigate both the lessor's and the City's losses. 2. Pay one lease-payment plus 4/5 sales tax for a total of$193,709.82 The terms of the lease-purchase agreement also stipulate that in the event of "cancellation from the date of factory completion to first annual lease anniversary, one (1) full lease payment ($155,918.08) plus an amount equal to the total state sales tax on the transaction, if any, has become due and payable." This payment is due by March 31, 1998. The City has attempted to minimize both the City's and the lessor's loss exposure by advertising (for several months) the ambulances for sale at the full price originally paid by the City ($82,097.96 each). An offer from Running Springs Water District to purchase two (2) ambulances for $60,000 each is the only firm offer received by the City to date. (Running Springs Water District has also made an offer to purchase $12,423.56 in equipment from the City-see attached.) Given the results of the City's efforts to sell the ambulances, it is extremely unlikely that between now and March 1, 1998 any full price offers will be received. There is no advantage to the City in selling the ambulances ourselves instead of returning them to the vendor. It is unlikely we could sell the ambulances for more than the original purchase price paid by the City. Since the delivery of the ambulances to the Fire Department in April, modifications have been made and the ambulances have been used in training and tests by Fire Department staff in anticipation of starting the EMS Program. Even if the ambulances were in original, untouched condition it is improbable that the City could get more than the original purchase price. Whether the City sells the ambulances or returns the ambulances to the lessor and the lessor sells the ambulances, the City is still obligated to pay the $193,709.82 required at cancellation of the contract, and the lessor will suffer any loss on the difference between the original purchase price and the resale amount. The longer the ambulances remain in the City's possession, the greater the City's liability risk becomes. If damage occurs to the ambulances while in the City's possession, the City is responsible for the costs. RECOMMENDATION 1. That the Mayor and Common Council authorize the Purchasing Manager to sell two of the eight ambulances to the Running Springs Water District for $60,000 each; proceeds of the sale will be paid directly to the lessor in lieu of returning two of the eight ambulances; 2. That the Mayor and Common Council authorize the Purchasing Manager to sell the equipment listed on the attachment to Running Springs Water District for $12,423.56; 3. That the Mayor and Common Council authorize the return of the six remaining ambulances to the vendor; 4. That the Mayor and Common Council authorize the Director of Finance to issue payment of $193,709.82 to the lessor in accordance with terms of the lease-purchase agreement and concurrent with the return of the ambulances. i 6 11/18/1997 11:05 9093845281 SB CITY FIRE DEPT PAGE 02 s' i f RUNNiNq SpRINg5 WATER DISTRICT A MULTI. EROCE, INdEpENdENT SPECIAL DISTRICT 31242 F ILLTOP BOULEVARD+POST OFFICE BOX 2206 FUNNING SPRINGS,CALIFORNIA 92382 November 17, 1997 Chief Larry Pitzer San Bernardino City Fire Departlmev 200 Third St. San Bernardino, Ca. Dear Larry As you are aware,the Running Springs Water District is interested in acquiring two(2)of your Type I Modular Ambulances. Though our recent discussions we have considered using our Truck Company as a foam of"down I payment". This option does not seem to have any benefit to either the City of Sant Bernardino or t a the Running Springs Water District and shall not be considered in the following proposal. We would however like to make the 1b11owing offer; Purchase two Type I ambulances: $60,000.00 each $120,000.00 . Siguorritcs Intercom System 1,271.60 2,543.20 800 NM. Radio System 3,000.00 6,000.00 Gurney and Bracket 1,833.00 3,666.00 LSP and 02 Regulator 19218 217.36 Total $66,211.73 $132,423,56 Please realize that this proposal must lave full approval by both the San Bernardino City Council and approval of the Running Springs Water District,Board of Directors. Thank you in advance for your assistance. I am confident that these vehicles will dramatically improve the service our fire department provides. Respectfully Submitted Pat A. Dennen Fire Chief WATER(909) 867-2766 WASTEWATER(909)867-3689 Fier:(909)867-2630