02-02-1993 - Lease/Purchase of Fire Truck11
TO
FROM
0
City Council and City Manager
Fire and Finance Department
is City of West Covina
Memorandum
AGENDA
ITEM NO. C-8
suarEcr: DATE 2- 2- 93
LEASE/PURCHASE OF FIRE TRUCK
SUMMARY: The Fire Department has a fire engine in need of
replacement. We are requesting authorization to
lease/purchase a replacement unit.
BACKGROUND:
Unit F-27 was purchased in 1981 and has served the City well. Due
to the truck's age, and obsolescence of equipment, we are
experiencing various mechanical problems to the point that it is no
longer economical to keep the unit as first line response vehicle.
In FY1990-91 the maintenance cost was $19,096.00, plus $19,325.00
annual depreciation value for a total of $38,421.00. The FY1991-92
cost was $31,240.00, plus the annual depreciation value of
$19,325.00 for a total of $50,565.00. The current year-to-date
maintenance cost is $9,081.00, plus depreciation value of $6,441.00
for a total of $15,522.00.
This unit has not been too reliable as a first line unit because of
its excessive down -time. Each day that this vehicle is out of
service, our personnel must transfer to a reserve unit that has
already been retired from first line duty. The Maintenance
Department fully agrees with the need to replace and retire this
unit to reserve status.
The San Bernardino Fire Department recently purchased a Seagrave
Pumper through a bid process that is at least as stringent as that
of the City of West Covina. Their Bid Number F92-017 was awarded
to the O'Neil Seagrave Company. The purchase price for the vehicle
meeting West Covina Fire Department standards is $228,348.00, plus
tax. Section 2-333.(I) of the City's Municipal Code authorizes the
City Council to waive formal bidding procedures for purchases when
another local agency has obtained the bid pursuant to formal
contract procedures at least as rigorous as those of our City.
Due to the fact that there is a 10 to 12 month delivery date from
the date of the order, we need to place the order now.
FISCAL IMPACT:
Using San Bernardino's bid, the cost of the. unit will be
$228,348.00, plus tax. The method selected for the financing of
the trucks is the tax-exempt lease/purchase method. We have used
this same methodology successfully in the past two purchases of
fire trucks. Staff solicited bids from three financing companies
for a five-year lease/purchase for $25.0,000 with quarterly payments
commencing March 1, 1994.' The responses were as follows:
Vendor
Total Net Lease Payments
Smith Mitchell Leasing Services $315,199
Group, Ltd. (Los Angeles, California)
John Hancock Freedom Securities $292,037
(Denver, Colorado)
La Salle National Bank $291,838
(Denver, Colorado)
r
0
I
City Council and
City Manager
-2- = February 2, 1993
Since the actual purchase price will be $228,348 plus tax of
$18,839 or $247,187, La Salle National Bank, the lowest bidder, has
sized the financing at $247,187 which would reduce the total net
lease payments to $288,554 which includes $41,367 in interest or,
5.39% per year. Presently we are paying $84,000 per year for
the lease/purchase of two fire trucks that will end in October of
1993. In March of 1994, it is proposed that this lease/purchase
begin at $57,711 per year. Funding for this expenditure will be
budgeted in the FY1993-94 Budget.
RECOMMENDATION:
It is staff's recommendation
a)
that the City Council:
Find that the use of the City of,San Bernardino Is Bid Number
F92-017 from the O'Neal Seagrave Company eliminates the need
of a formal bid process
b) Adopt the following resolution and authorize staff to
negotiate and execute the Lease/Purchase Agreement.
I
RESOLUTION NO. 89ac7
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF WEST COVINA AUTHORIZING STAFF TO NEGOTIATE
AND THE MAYOR TO EXECUTE A LEASE/PURCHASE
AGREEMENT WITH LA SALLE NATIONAL BANK FOR THE
FINANCING OF THE ACQUISITION OF A FIRE PUMPER
TRUCK..
a-0elo 0
Abrah W. Koniaj
Finance Director
AWK/srg
LEAPURFR.AGN
AW
Richard E. G r e e e
Fire Chief