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INTEROFFICE- MEMORANDUM
8801.-108
TO: THE HONORABLE MAYOR AND COMMON COUNCIL
FROM: WARREN A. KNUDSON, I>IRECTOR OF FINANCE
SUBJECT: LEASE/PURCHASE WITH PACIFICORP CORPORATION
DATE: JANUARY 15 , 1988 (7320)
COPIES: CITY ADMINISTRATOR; CITY ATTORNEY; CITY TREASURER
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BACKGROUND
At the meeting of the Mayor and Common Council of January 4,
1988, staff was directed to present the best alternative to
finance the furniture and furnishings for City Hall .
The method suggested had been a lease-purchase with Pacifcorp
Corporation. The City Attorney ' s office expressed concern
about the lease-purchase mechanism and the matter was
referred to bond counsel . Staff was directed to further
investigate bank loans , the lease-purchase mechanism, and any
other viable mechanism to finance the furniture .
Another item to be considered was the typesetting equipment
for the Print Shop which was planned for lease-purchase .
FINDINGS
Lease-Purchase
The City Attorney ' s office has worked with Pacificorp to
formulate a viable lease-purchase transaction . The problems
related to acceptance and repossession, etc . , have been
worked by John Wilson of the Attorney' s office . According to
Mr . Wilson, as of today, problems still exist which would
involve certification that has been requested from
Pacificorp ' s bond counsel . These items can probably be
resolved within a short time .
The current rate offered by Pacificorp is 8. 11% .
Bank Loan
The attached memo from the City Treasurer indicates that a
loan is available at prime rate (currently 8.75% ) . In his
opinion this is the best bank loan that could be obtained .
yS
J #
INTEROFFICE MEMORANDUM: 8801-L08
LEASE/PURCHASE WITH PACIFICORP CORPORATION
January 15 , 1988
Page 2
ABAG
Shortly after the January 4 meeting , staff became aware of
funds being available from ABAG (Association of Bay Area
Governments) as a result of the credit pooling arrangement
they offer for governmental agencies . ABAG, which is head-
quartered in Oakland , has funds to offer at a current cost of
7 .5% . The rate is adjusted quarterly and over the past five
years has averaged 7 .5% .
ABAG has issued lease revenue bonds which have had the
necessary legal approvals of their bond counsel . Dennis
Barlow of the City Attorney' s Office has reviewed ABAG' s
documents and concurs that our participation in ABAG would be
feasible .
The necessary direction to staff would be to authorize the
filing of an application for the City's participation in
ABAG. After the application has been processed
(approximately 2 weeks) , staff will bring back to the Mayor
and Common Council the necessary resolution to enable City
participation and authorize execution of the necessary
documents .
ABAG staff indicates that these documents can be completed
prior to the end of February when the funds will be needed .
RECOMMENDED ACTION
Direct staff to submit an application for participation in
ABAG' s financing program and bring back to the Mayor and
Common Council the necessary documents to complete the
process . The items to be financed will be the City Hall
furniture and furnishings and the Typesetting equipment in
the total amount of approximately $400 ,000 .
Staff will be available to answer any questions that might be
presented on January 19 . At that time the City Attorney may
have further information regarding their legal research.
G)a..—
WARREN A. KNUDSON
Director Of Finance
Attachments
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C I T Y OF S A N B E R N A R D I N O
INTEROFFICE MEMORANDUM
8801-202
TO: WARREN KNUDSEN, Director of Finance
FROM: CRAIG A. GRAVES, City Treasurer
SUBJECT: Loan Alternative for City Hall Furniture
DATE: January 13, 1988 (7318)
COPIES: Mayor Wilcox; James Penman; Ray Schweitzer
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On the meeting of January 4, 1.988, the Mayor and Common
Council directed this Office in concert with the City Attor-
ney, City Administrator and yourself to secure the best loan
as one alternative to lease purchasing. First Interstate
Bank has authorized the funding of a three year loan at prime
rate. Prime rate is the lowest rate major commercial banks
offer to their best customers. Prime rate is currently at
8. 75%.
Sincerely,
CR A. GRAVES
C ' y Treasurer
I
� Q Q
COUNCIL ACTION CORRESPONDENCE
To James F. Penman Subject Lease/Purchase with
City Attorney Pacificorp Corporation
Date January 6, 1988
Meeting Date January 4, 1988 Agenda Item No. 11
Action
The proposed resolution of the City of San Bernardino authorizing the execution
of an agreement with Pacificorp Capital, Inc. , relating to equipment was presented.
The Mayor and Common Council directed the City Administrator, City Treasurer,
Director of Finance and City Attorney to locate and secure the best bank loan
on the best terms, and determine if there is a viable lease/purchase option
available and provide the Mayor and Common Council with the best alternative
on January 19, 1988.
SC:re
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cc: City Administrator �r�'/��,��
Finance SHAUNA CLARK
City Treasurer City Clerk