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Home My WebLink AboutPR 14701: CHASE EQUIPMENT LEASING - PURCHASE/LEASE FIRE EQUIPMENT To: Steve Fitzgibbons, From: Rebecca Underhill, Date: Apri128, 2008 Subject: Proposed Resolution 14701 Proposed Resolution No. 14701 authorizes the City Manager to execute financing documents to lease/purchase the new fire engine. The purchase of this $449,144 pumper was authorized on Mazch 1 I, 2008. The Finance Director solicited bids from. five banks for this transaction, and three bids were received as follows: 5 year 7 year 10 near Chase Equipment Leasing 3.09% 3.33% 3.61% Wachovia 4.07 % 4.22% 4.47% Wells Fargo 3.416% 3.849% 4.199% Based upon these bids, Chase Equipment is the recommended proposal, at the ten yeaz term. Memorandum City of Port Arth ur, Texas Finance Department City Manag Director of~ce Z:\Finance\Resolutions\Lease Agreement-Chase One.doc J P. R. NO. 14701 JJA: 4128108 RESOLUTION NO. _~ A RESOLUTION AUTHORIZING THE APPROVAL OF A EQUPNIENT LEASING TO LEASOE/PURCHASE FIRE QUIPMENT WHEREAS, the Cit}° Council of the City of Port Arthur, Texas on Mazch 11, 2008; approved the lease/purchase of a 1500 GPM Pierce Velocity Fire Engine in the amount of $449,144; and WHEREAS, the City Council deems it in the public interest to also lease/purchase this equipment; and W1iEREAS, the equipment is essential for the City of Port Arthur, Texas to perform its governmental functions; and WHEREAS, the City of Port Arthur has taken and is taking the necessary steps to arrange for the acquisition of the equipment; and WHEREAS, t~heFOtRyEofBE I ~uSOLVED BYnTHEtCITY COUNCIL OF THE CITYeOF PORT NOW THE ARTHUR: Section 1. It is hereby found and determined that the terms of the Lease Financing Proposal is in t e best interest of the City of Port Arthur for the acquisition of the equipment. Section 2. The City Manager of the City of Port Arthur is authorized to accept the financing proposal received from Chase Equipment as attached hereto as Exhibit "A". Section 3. The Financing Documents and the acquisition (lease/purchase) and financing of the equipment under the terms and conditions as described in the Financing Documents are hereby approved in substantially the same form as attached hereto as Exhibit "B", and with such changes as aze requested by the City Attorney. The City Manager is authorized to execute, acknowledge and deliver the Financing Documents with any changes, insertions and omissions therein as may be approved by the officers who execute the Financing Documents, such approval to be conclusively evidenced by such execution and delivery of the Financing Documents. The City Secretary is authorized to affix the official seal of the City of Port Arthur to the Financing Documents and attest the same. Section 4. Pursuant to Section 265 (b) of the Internal Revenue Code of 1986, as amended (the "Code''), Lessee hereby specifically designates the Lease as a "qualified tax-exempt obligation" for purposes of Section 265 (b)(3) of the Code. READ, ADOPTED, AND APPROVED, this- day of May, 2008, AD, at a Regulaz Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: Mayor: Z_1FinancelResolu[ionslLease ggreemeat-Chase One.(]OC :; Mayor Councilmembers: NOES: ATTEST: Teri Hanks, Acting City Secretary AS TO FORM: UW Q ~~ Mark Sokolow, City ttorney /' o ~ ~~ p,~~~%C~/I' ~~ APPROVED FOR ADMINISTRATION: S ve Fitzgibbons, City Manager j-Q C ~. Rebecca Underhill, Finance Director Z:\Finance\Resolu[ions\Lease Agreement-Chase One.doc EXHIBIT "A" {: 1111 Polaris Parkway, Suite K3 Columbus, OH 43240 CHASE April 22, 2008 Rebecca Underhill, CPA Director of Finance City of Port Arthur, Texas P.O. Box 1089 Port Arthur, Texas 77642 RE: Tax-exemptLease-Purchase Proposal Dear Ms. Underhill: Chase Equipment Leasing Inc. ("CELI"), for itself, its successors, and assigns, is pleased to submit this financing proposal to the City of Port Arthur (the "Lessee"). This letter is a proposal only and is contingent upon the Lessee's compliance with the requirements of the Internal Revenue Code of 1986, as amended, and all applicable state laws related to Lessee's ability to enter into atax-exempt lease-purchase financing for the intended purposes. The terms and provisions of this financing are subject to credit and business approval in accordance with Chase Equipment Leasing Inc.'s internal procedures, as well as certain conditions set forth below: TRANSACTION: Fixed-rate, fully amortizing, privately placed tax- exempt lease-purchase agreement ("Agreement") with $1.00 buyout at end of term. LESSEE: City of Port Arthur LESSOR: Chase Equipment Leasing Inc. ESTIMATED FINANCING AMOUNT: $449,144 BANK QUALIFIED: This proposal assumes that Lessee will not issue more than $10 million in tax-exempt obligations this calendar year and that the lessee will designate this lease as a "qualified" tax-exempt obligation. USE OF PROCEEDS/TITLE: To finance the. acquisition of Pierce 1500 gpm pumper truck, the legal title of which shall vest in the Lessee during the term of the Agreement. SECURITY: CELI shall obtain a lien on the financed equipment. The Agreement shall be subject to annual appropriation. EXPECTED FINANCING TERM: A) Five (5) Years B) Seven (7) Years C) Ten (10) Years PAYMENT MODE/FREQUENCY: Payments shall be made annually in arrears. c~ City of Port Arthur Apri122, 2008 Page 2 PROPOSED INTEREST RATE: PROPOSED LEASE PAYMENTS: A) 3.09% B) 3.33% C) 3.61% A) Five (5) payments of $98,324.80 B) Seven (7) payments of $72,989.71 C) Ten (10) payments of $54,305.54 INTEREST RATE: Interest rates for each financing request are indexed to the treasury constant maturities for the preceding week as published in the Federal Reserve Statistical Release H.15. The interest rate for each schedule will be determined by the following calculations: The interest rate. will be fixed upon (acceptance or funding, whichever applies), based upon: A) Sixty-eight percent (68%) of the sum of the most recently published weekly average 5-year Treasury Constant Maturity yield in the Federal Reserve Statistical Release H.15, plus 1.78% per annum. B) Sixty-eight percent (68%) of the sum of the most recently published weekly average 7-year Treasury Constant Maturity yield in the Federal Reserve Statistical Release H.15, plus 1.77% per annum. C) Sixty-eight percent (68%) of the sum of the most recently published weekly average 10-year Treasury Constant Maturity yield in the Federal Reserve Statistical Release H.15, plus 1.71% per annum. Td illustrate, if a 5 year option was accepted and funded by April 30, 2008, the rate would be fixed at 3.09%, calculated as follows: (2.76% + 1.78%) x 0.68 = 3.09%. INTEREST RATE LOCK: The above proposed Interest Rate and Financing Payments are valid through and including MaY 9, 2008. If funding does not occur on or before such d~ the proposed' interest rate and financing payments are subject to adjustment to reflect changes in market conditions. DOCUMENTATION: CELI or its counsel shall prepare Documentation {~ City ofPort Arthur Apri122, 2008 Page 2 PROPOSAL EXPIRATION: This proposal will expire if funding does not occur by May 9, 2008. If acceptance and funding have not occurred by this date, the Financing Rate and Payment Amounts will be adjusted according to market conditions. This proposal is subject to credit and documentation approval at CELI's sole discretion. To render a credit decision, Lessee shall provide CELI with three (3) years of audited financial statements, a copy of the budget for the current fiscal year and other information as may be requested by CELI's Municipal Credit Group. We appreciate your interest in Chase Equipment Leasing Inc. and look forward to your favorable response. Should you have any questions regarding this proposal or need additional information, please contact me at 614-213-4494 or via email at michele.cosko@chase.com. Sincerely, Chase Equipment Leasing Inc. ~tc~.ec.P eoSK~ ~4 ~~^^~'~jp.~ Leasing Sales Representative, Public Finance ACCEPTED BY: ay: Name: Title: Date: CITY OF PORT ARTHUR EXHIBIT B This exhibit will be presented to the City Council at the meeting, prior to consideration and approval. "~ -f "'`~'~Z ~~dL~ W~'~-c ~`Q ~ J~~ ~ ~~ d~ Z:\Finance\Resolutions\Lease Agreement-Chase One.doc