HomeMy WebLinkAboutPR 20053: FINANCING FLOOD DAMAGE REPLACEMENT VEHICLES \, ,:___\
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Finance Department
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INTEROFFICE MEMORANDUM
Date: 12/13/2017
To: The Honorable Mayor and City Council
Through: Harvey Robinson, Interim City Manager
From: Andrew A. Vasquez, Finance Director
RE: Financing Flood Damage Replacement Vehicles
Introduction:
The intent of this Agenda Item is to seek the City Council's approval for the City Manager to
execute a financing agreement with Government Capital to fund the purchase of flood
damaged replacement vehicles for an amount of$6,079,472 at an interest rate of 2.58%over
five years.
Background:
The City has accumulated an amount of$6,079,472 in purchases of vehicles which were not
budgeted but necessary to purchase due to the loss of vehicles in the flood.
Budget Impact:
The purchase of unbudgeted vehicles has a negative impact on the budget and cash. The
finance agreement provides cash to the City and the loan does not have a prepayment penalty.
The City could pay the balance as insurance reimbursements are paid to the City in the future.
Recommendation:
The rate of 2.58 with annual payments of$1,326,048.92 over five years is expected to be
competitive. By the time this is presented to Council, The City should have another quote to
confirm if this proposal is good for approval or if the City should accept other proposals, in
which case approval of this financing should not be approved. In any case the proceeds from
this financing could be deposited in an interest bearing account to offset interest paid.
P.R. No. 20053
12/13/17 av/gt
RESOLUTION NO.
A RESOLUTION REGARDING A LEASE PURCHASE AGREEMENT
FOR THE PURPOSE OF FINANCING "FLOOD DAMAGED
REPLACEMENT VEHICLES', THE TOTAL EQUIPMENT COST IS
$6,079,472.00, WITH ANNUAL LEASE PAYMENTS OF
$1,326,048.92 FOR A FIVE (5) YEAR PERIOD; FUNDING
AVAILABLE IN ACCOUNT NO. 147-2300-901-92
WHEREAS, the City of Port Arthur desires to enter into that certain Lease-
Purchase Agreement by and between the City of Port Arthur and Government Capital
Corporation, for the purpose of financing "Flood damaged Replacement Vehicles';
and
WHEREAS, the total amount is $6,079,472.00, with annual lease payments of
$1,326,048.92 for a five (5) year period; and
WHEREAS, the City desires to designate Harvey Robinson, Interim City
Manager, as an authorized signer of the Agreement.
NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
PORT ARTHUR:
Section 1. That the City Council authorizes the Interim City Manager to enter
into a Lease Purchase Agreement with Government Capital Corporation for the purpose
of financing "Flood damaged Replacement Vehicles'; the total equipment cost is
$6,079,472.00, with annual lease payments of $1,326,048.92 for a five (5) year period,
as delineated in Exhibit "A".
Section 2. That the City of Port Arthur designates Harvey Robinson, Interim
City Manager, as an authorized signer of the Lease Purchase Agreement by and
between the City of Port Arthur and Government Capital Corporation.
READ, ADOPTED, AND APPROVED, this day of , 2017
AD, at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the
following vote: AYES:
Mayor:
Councilmembers:
NOES:
Derrick Ford Freeman, Mayor
ATTEST:
Sherri Bellard, City Secretary
AP•ROVED AS TO FORM:
-� (Lt a'T
alecia R. Ti eno, City Attorney (�
APPROVED FOR ADMINISTRATION:
Harve Robin .n, Interim City Manager
I
Al .
Andre Vasquez, CPA V
Finance Director
EXHIBIT "A"
GO /ERNM!E,N'Tr C''.AP1'TAL
December 11, 2017
City of Port Arthur
444 4th Street
Port Arthur, TX 77640
RE: Equipment Purchase
Thank you for the opportunity to present proposed financing. I am submitting for your review the
following proposed structure:
LENDER Government Capital Corporation
ISSUER City of Port Arthur
FINANCING STRUCTURE Tax Exempt Lease Purchase Financing
EQUIPMENT COST $6,079,472.00
TERM 5 Years
LEASE RATE 2.58%
ANNUAL PAYMENTS $1,326,048.92
PAYMENTS BEGINNING 12/2018 &Annually Thereafter
The above terms are subject to qualifications under 265(b)3 of the Internal Revenue Code,
underwriting approval and mutually acceptable documentation. Closing costs are 1.25% of the
project and include documentation, issuance, legal costs, and may include call features. These
costs are currently rolled into the payment amount.
All terms subject to change if funding occurs more than 14 days from proposal date.
Our finance programs are flexible and my goal is customer delight. If you have any questions
regarding other payment terms, frequencies or conditions, please do not hesitate to call.
With Best Regards,
TGwa,Clawson,
Tara Clawson
Vice President Public Finance
Direct 817-722-0242
Cell 817-988-9880
Tara.clawsonCaaovcap.com
Cc: Stephanie Cates
'True Interest Cost reflects all original issue discount, legal and other issuance costs and is the effective rate
The transaction described herein is an arm's length, commercial transaction between you and Government Capital Corporation( (i('(—).in which GCC:(i)is acting
salelr for its own financial and other interests that may differ from gouts;(ii)is not acting as your municipal advisor or financial advisor,and has no fduciari duty to you
midi respect to this transaction;and CIO is not recommending that you take an action with respect to this transaction.