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HomeMy WebLinkAboutPR 22226: LEASE PURCHASE AERIAL TOWER PLATFORM FIRE APPARATUS \1'1f City of r.,fl �.y urt rthur www.PortArthurTx.gov INTEROFFICE MEMORANDUM Date: November 2, 2021 To: The Honorable Mayor and City Council Through: Ron Burton, City Manager From: Kandy Daniel, Interim Finance Director RE: P.R. 22226—Lease Purchase Aerial Tower Platform Fire Apparatus Introduction: Request approval for the City Manager to execute financing documents with PNC Equipment Finance for the lease/purchase of a 2000 GPA 100' aerial Tower Platform Fire Apparatus in the amount of$1,585,280. Background: PR#22206 on this agenda requests approval of the purchase of a Tower Platform Fire Apparatus from Siddons Martin emergency Group, LLC. It has been determined that it is in the best interest of the City to Lease/Purchase this vehicle. Two bids were received for financing of the vehicle. 3 Years 5 Years 7 Years PNC Equipment Finance 1.840% 2.080% 2.500% Government Capital Corp. 2.297% 2.327% 2.367% Based upon the bids, PNC Equipment Finance is the recommended proposal at 2.08%with a five-year term and a total interest cost of$116,175.47 over the term. There would be an interest only payment at 12 months after commencement with principal and interest starting upon delivery (approximately 18 months). Budget Impact: There is no budget impact for FY2022. The lease will be funded from property taxes and paid out of the Debt Service Fund beginning in FY2023. "Remember,we are here to serve the Citizens of Port Arthur" P.O.Box 1089 X Port Arthur,Texas 77641-1089 X 409.983.8101 X FAX 409.982.6743 City of nrttV(15 www.PortArthurTx.gov Recommendation: The attached Proposed Resolution No. 22226 authorizes the City Manager to execute financing documents with PNC Equipment Finance for the lease/purchase of a 2000 GPA 100' aerial Tower Platform Fire Apparatus in the amount of$1,585,280. We recommend that the City Council approve it as presented. "Remember,we are here to serve the Citizens of Port Arthur" P.O.Box 1089 X Port Arthur,Texas 77641-1089 X 409.983.8101 X FAX 409.982.6743 P. R. NO. 22226 11/2/2021 KD RESOLUTION NO. A RESOLUTION AUTHORIZING THE APPROVAL OF A FINANCING PROPOSAL FOR $1,585,280 FROM PNC EQUIPMENT FINANCE, LLC TO LEASE/PURCHASE FIRE EQUIPMENT. WHEREAS, the City Council of the City of Port Arthur, Texas on November 9, 2021, approved the purchase of a 2000 GPA 100' aerial tower platform fire apparatus in the amount of$1,585,280; and WHEREAS, the City Council deems it in the public interest to also lease/purchase this equipment; and WHEREAS, the equipment is essential for the City of Port Arthur, Texas to perform its governmental functions; and WHEREAS,the City Council hereby finds and determines that the execution of one or more Master Lease- Purchase Agreements ("Leases") in the principal amount not exceeding the amount stated above for the purpose of acquiring the property("Equipment")to be described in the Leases is appropriate and necessary to the functions and operations of the Municipality; and WHEREAS, PNC Equipment Finance, LLC ("Lessor") shall act as Lessor under said Leases. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. That, it is hereby found and determined that the terms of the Lease Financing Proposal are in the best interest of the City of Port Arthur for the acquisition of the equipment. Section 2. That, the City Manager of the City of Port Arthur is authorized to accept the financing proposal received from PNC Equipment Finance as attached hereto as Exhibit"A", contingent on the passage of P.R.No. 22206. Section 3. That, 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 are 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. That, the aggregate original principal amount of the Leases shall not exceed the amount stated above and shall bear interest as set forth in the Leases and the Leases shall contain such options to purchase by the City of Port Arthur as set forth therein. Section 5. That, pursuant to Section 265 (b) of the Internal Revenue Code of 1986, as amended (the "Code"), Lessee hereby acknowledges that the Lease will not be considered a"qualified tax-exempt obligation" for purposes of Section 265 (b)(3) of the Code. Section 6. That pursuant to Local Government Code, Sec. 271.903. COMMITMENT OF CURRENT REVENUE. (a) If a contract for the acquisition, including lease, of real or personal property retains to the governing body of a local government the continuing right to terminate at the expiration of each budget period of the local government during the term of the contract, is conditioned on a best efforts attempt by the governing body to obtain and appropriate funds for payment of the contract,or contains both the continuing right to terminate and the best efforts conditions, the contract is a commitment of the local government's current revenues only. (b) In this section, "local government" means a municipality, county, school district, special purpose district or authority, or other political subdivision of this state. Section 7. Therefore, the attached contract is legally permissible because it contains the following provisions: (1) providing the city with the right to terminate the contract at the end of each budget year; (2) conditioning the contract on a best efforts attempt to obtain and appropriate funding for payment of the contract; or (3) containing both a right to terminate the agreement at the end of each budget year and the best-efforts language. Section 8. That, the City of Port Arthur's obligations under the Leases shall be subject to annual appropriation or renewal by the Governing Body as set forth in each Lease and the Municipality's obligations under the Leases shall not constitute general obligations of the Municipality or indebtedness under the Constitution or laws of the State, subject to the provisions of Section 271.903 of the Texas Local Government Code. READ,ADOPTED,AND APPROVED, this day of November, 2021, AD, at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: Mayor: Councilmembers: NOES: Thurman Bill Bartie, Mayor ATTEST: Sherri Bellard, City Secretary \APPROVED AS TO FORM: al Tizeno, City ttorne APPROVED FOR ADMINISTRATION: Ron Burton, City Manager ‘P l 6 'cr VANti 1/A4/4 Kandy Daniel, Interim Finance Director 14. EXHIBIT A tie p (PNC FINANCIAL SOLUTIONS EQUIPMENT FINANCE Tax Exempt Lease Purchase SALES ORGANIZATION: Siddons-Martin —Cory Frankum 10/26/2021 LESSEE: Port Arthur FD Contact information: TYPE OF EQUIPMENT: (1) Pierce Velocity Platform 100'RMAP Michele Zitko AMOUNT TO FINANCE: $1,585,280.00 Locator: B4-B230-06-07 CUSTOMER DOWNPAYMENT: $0.00 155 East Broad St TRADE-IN: $0.00 Columbus, OH 43215 DELIVERY TIME: Approximately 17-18 mos Ph: (800) 820-9041 ext. 2 PAYMENT MODE: Annual in Arrears . Fax:(866) 221-7894 Interest only one year after lease commencement michele.zitko@pnc.com FIRST PAYMENT DUE DATE: then P&I starting at delivery LEASE COMMENCEMENT DATE: Upon contract signing Term 3 years 5 years 7 years Number of Payments 3 Annual 5 Annual 7 Annual Payment Amount 1 @ $29,169.15 1 @ $32,973.82 1 @ $39,632.25 3 @ $543,068.02 5 @$333,696.33 7 @ $246,646.59 Rate 1.84% 2.08% 2.50% PERFORMANCE BOND:To utilize the prepay program,a performance bond is required.Said performance bond shall be paid for directly to Pierce Manufacturing or financed by PNC Equipment Finance as part of the transaction ESCROW FUNDING OPTION:At lease closing,if all the equipment has not yet been delivered,Lessor will fund an escrow account from which disbursements will be made to the equipment provider(s)upon receipt of a Requisition Request and Certificate of Acceptance from Lessee.Escrow agent will either be Lessor or third-party provider selected by Lessor and approved by Lessee. All escrow earnings will be for the benefit of Lessee. The escrow agent will assess a$250.00 account set up fee payable at closing. TYPE OF FINANCING:Tax-exempt Lease Purchase Agreement with a$1.00 buy out option at end of lease term. Said agreement shall be a net lease arrangement whereby lessee is responsible for all costs of operation,maintenance,insurance,and taxes. BANK QUALIFICATION:This proposal assumes that the lessee will be issuing more than$10 million in tax-exempt debt this calendar year. Furthermore,it is assumed that the lessee will not designate this issue as a qualified tax-exempt obligation per the tax act of 1986. LEGAL TITLE:Legal title to the equipment during the lease term shall vest In the lessee,with PNC Equipment Finance perfecting a first security interest AUTHORIZED SIGNORS:The lessee's governing board shall provide PNC Equipment Finance with its resolution or ordinance authorizing this agreement and shall designate the individual(s)to execute all necessary documents used therein. LEGAL OPINION:The lessee's counsel shall furnish PNC Equipment Finance with an opinion covering this transaction and the documents used herein.This opinion shall be in a form and substance satisfactory to PNC Equipment Finance. VOLUNTEER FIRE DEPARTMENTS: If Lessee is a Volunteer Fire Department,a public hearing under the requirements of Section 147(f)of the Internal Revenue Code of 1986 shall be conducted to authorize this transaction. It is recommended that a notice of the public hearing be published 10 to 14 days in advance of the public hearing. This proposal will be valid for seven(7)days from the above date and Interest rate will be set three business days prior to closing.Proposal is subject to final credit approval by PNC Equipment Finance and approval of the lease documents in PNC Equipment Finance's sole discretion.To render a credit decision,lessee shall provide PNC Equipment Finance with their most recent three years'audited financial statements,copy of their most recent interim financial statement,and current budget. ailea Accepted by: Proposal submitted by !I"" Amortization Report City of Port Arthur Compounc Annual Nominal Annual Rate: 2.08% Cash Flow Data - Loans and Payments Event Date Amount Number Period End Date 1 Loan 11/1/2021 1,585,280.00 1 2 Payment 11/1/2022 Interest Only 1 3 Payment 5/1/2023 333,696.33 5 Annual 5/1/2027 TValue Amortization Schedule-Normal,360 Day Year Date Payment Interest Principal Loan 11/1/2021 1 11/1/2022 32,973.82 32,973.82 0 2 5/1/2023 333,696.33 16,578.51 317,117.82 3 5/1/2024 333,696.33 26,377.77 307,318.56 4 5/1/2025 333,696.33 19,985.55 313,710.78 5 5/1/2026 333,696.33 13,460.36 320,235.97 6 5/1/2027 333,696.33 6,799.46 326,896.87 Grand Totals 1,701,455.47 116,175.47 1,585,280.00 Last interest amount increased by 0.01 due to rounding. EXHIBIT B This exhibit will be presented to the City Council at the meeting, prior to consideration and approval.