CITY COUNCIL AGENDA ITEM
Memo Date: December 10, 2024
Agenda Date: November 27, 2024
Prepared By: Rebecca Bowman, MBA, CGFO, CGFM, Finance Director
Through: Stockton Whitten, City Manager
Requested Action:
title
Accept a Bank of America Proposal for lease financing to purchase capital equipment, Approve Resolution 24-108 for a Master Lease Agreement with Bank of America for debt proceeds up to a maximum of $2,600,000; Approve a Resolution Amending the FY25 Budget BAF # 25-015-A in the Amount of $309,793 for Critical I.T. Infrastructure; Approval authorizing the Authorized Officials stated in the Resolution and City Attorney to execute documents necessary to complete the debt financing. Further, approval authorizing the City Manager’s authority to make necessary budgetary changes of debt proceeds and debt payments and equipment costs to correspond to Bank of America’s proposal
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BACKGROUND:
During the FY2025 budget adoption process, the City Council approved the use of debt proceeds to purchase capital equipment. The Finance Director and the City Manager worked with the City’s Financial Advisor, PFM Associates, to obtain and evaluate quotes for the lease financing of capital equipment. Proposals were provided from several banks, with Bank of America providing the most favorable interest rate and terms for the City. The full list of proposals is attached to the agenda item as Exhibit A. A station alerting system for the Fire Department was not included in the FY2025 Adopted Budget and so BAF # 25-015 budgets for the debt proceeds and cost of the alerting system. Bank of America proposed two different terms and interest rates of six years at 3.5995% and 10 years at 3.8250%, with the terms of the lease amounts being matched to the expected lives of the equipment being purchased. The purchase of a fire truck will be under the ten year lease due to the extended life of the fire truck.
Bank of America provided a formal proposal that was accepted on October 25, 2024. Their proposal is Exhibit B of this agenda item. Staff has since worked through the City Attorney, Bond Counsel, the financial advisor and Bank of America to develop the formal Master Lease Agreement and related resolutions. The exact costs to record the debt issuance are not certain at this time and therefore staff is unable to prepare an exact budget adjustment. Staff is requesting approval for the City Manager to approve necessary budgetary adjustments related to this financing to be able to proceeds with the transaction consistent with the City Council’s decision to proceed with the financing. Staff will bring the necessary budget adjustments to City Council at a later date for transparency and final ratification.
Staff is requesting approval of a Bank of America Proposal for a lease financing to purchase capital equipment, Approve Resolution 24-108 for a Master Lease Agreement with Bank of America for debt proceeds up to a maximum of $2,600,000 and authorizing the Authorized Officials stated in the Resolution and City Attorney to execute documents necessary to complete the financing. Further, authorizing the City Manager’s authority to execute documents related to the financing and to make any necessary budget adjustments.
STRATEGIC PLAN CONNECTION:
Fiscal sustainability
BUDGETARY IMPACT:
Budgeted Yes
If not budgeted, is amendment/transfer attached? Yes
Critical IT Infrastructure: BAF 25-015-A
Debt Proceeds
001-0000-384-00-00
Amount $309,793
IT Hardware
001-2201-522.64-15 CA2502
Amount $309,793
(The rest of the projects being funded were already included in the budget)
Total Debt Proceeds not to exceed $2,600,000
PREVIOUS ACTION:
City Council approved debt financing for certain capital equipment in the FY2025 Adopted Budget via Resolution #24-089 on September 17, 2024.
RECOMMENDED MOTION:
Recommendation
Accept a Bank of America Proposal for lease financing to purchase capital equipment, Approve Resolution 24-108 for a Master Lease Agreement with Bank of America for debt proceeds up to a maximum of $2,600,000; Approve a Resolution Amending the FY25 Budget BAF # 25-015-A in the Amount of $309,793 for Critical I.T. Infrastructure; Approval authorizing the Authorized Officials stated in the Resolution and City Attorney to execute documents necessary to complete the debt financing. Further, approval authorizing the City Manager’s authority to make necessary budgetary changes of debt proceeds and debt payments and equipment costs to correspond to Bank of America’s proposal.