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Home My WebLink About10136RESOLUTION NO. 10136 A RESOLUTION APPROVING A TAX EXEMPT LEASE /PURCHASE AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND KEY GOVERNMENT FINANCE INC. RELATING TO THE ACQUISITION OF GOLF CART EQUIPMENT AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME WHEREAS, in January of 2004, a Golf Pass Holders Group identified and recommended operating and capital improvements for the two municipal golf courses during their evaluation of the 2004 golf fee increase proposal, and WHEREAS, the lease /purchase of new golf cart equipment for each course was identified as one of the needed and recommended capital outlay improvements, and WHEREAS, the City Council has determined that a true and real need exists for the acquisition of the golf cart equipment described in the Tax Exempt Lease /Purchase Agreement, and WHEREAS, the financing of the acquisition and lease purchase of the golf cart equipment was authorized by Ordinances No. 7138 and No. 7139, and WHEREAS, the City has taken the steps necessary, including legal bidding requirements, under applicable law and Charter provisions to arrange for the acquisition of the golf cart equipment, NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The Tax Exempt Lease /Purchase Agreement between Pueblo, a Municipal Corporation and Key Government Finance Inc. dated as of June 14, 2004 (the "Agreement "), a copy of which is attached hereto, has been approved as to form by the City Attorney. The Agreement and all terms and provisions thereof are deemed to be in the best interest of the City for the acquisition of the golf cart equipment and are hereby approved. The President of the City Council is authorized to execute and deliver the Agreement in the name of the City and any related documents necessary to the consummation of the transactions contemplated by the Agreement, and the City Clerk is directed to affix the seal of the City to the Agreement and attest same. SECTION 2. The City Council hereby represents that the reasonable anticipated amount of qualified tax - exempt obligations, which have been and will be issued by the City will not exceed $10,000,000.00 in calendar year 2004. Accordingly, the City hereby designates the Agreement as a qualified tax- exempt obligation for the purposes of Section 265(b)(3) of the Internal Revenue Code. .qFrTIr)N The obligation of the City to make Rental Payments under the Agreement is subject to annual renewal and annual appropriation by the City Council. No provision of this Resolution or the Agreement or the acquisition of the Golf Cart Equipment shall be construed or interpreted as creating or constituting or giving rise to a multiple - fiscal year direct or indirect City debt or other financial obligation whatsoever nor a general obligation of the City within the meaning of any constitutional, charter or statutory debt limitation, nor a mandatory charge or payment obligation against the City beyond a fiscal year for which City has appropriated funds to make any such payment obligation. .q FrTInN d The City Council hereby determines that the Rental Payments due under the Agreement do not exceed a reasonable amount so as to place the City under an economic compulsion not to terminate the Agreement or to exercise its option to purchase the Golf Cart Equipment pursuant to the Agreement. .q FrT10N This Resolution shall become effective upon final approval and passage. INTRODUCED June 14, 2004 BY Michael Occhiato Reno 1013(0 D �j � / � ED `+ Background Paper for Proposed RESOLUTION AGENDA ITEM # L DATE: June 14, 2004 DEPARTMENT: PARKS & RECREATION, RICH ZAJAC, DIRECTOR MIKE ZAREMBA, GOLF COURSE MANAGER TITLE A RESOLUTION APPROVING A TAX EXEMPT LEASE /PURCHASE AGREEMENT BETWEEN PUEBLO, A MUNICIPAL CORPORATION AND KEY GOVERNMENT FINANCE INC. RELATING TO THE ACQUISITION OF GOLF CART EQUIPMENT AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME ISSUE Should City Council approve a four -year Lease /Purchase Agreement with Key Government Finance Inc. for the acquisition of 142 new golf carts, two (2) beverage carts, two (2) ball - picker carts and two (2) A.D.A. golf carts for the two municipal golf courses? RECOMMENDATION Approval of this Resolution. BACKGROUND In January of 2004, a Golf Pass Holders Group identified and recommended certain additional operating and capital improvements for the two municipal courses, which included the replacement of the City golf cart equipment at each course. The existing cart equipment is over four years old and has become unreliable. On April 26, 2004, City Council approved and passed Ordinances No. 7138 and No. 7139 which respectively amended the operating budgets of Elmwood and Walking Stick Golf Courses and provided the funding for the financing and acquisition of new golf cart equipment. Bids were received on April 28, 2004 for 142 new gas golf carts, two (2) beverage carts, two (2) ball - picker carts, and two (2) A.D.A. golf carts which included four year maintenance and service. A bid summary is attached. FINANCIAL IMPACT The City will be entering into a tax - exempt purchase agreement with a $1.00 buyout at the end of the four -year term to acquire the golf cart equipment. The lease /purchase agreement allows for the early buyout of the contract with no penalty to the City. The City will pay $65,567.18 per year lease payment to be paid out of the golf courses' annual operating budgets. These funds are contingent on the availability of annual appropriation by the City Council. In the event of non - appropriation of funds in any given year, the City will not be held liable to complete the lease /purchase contract and the golf cart equipment will be surrendered. Per the low bid, the total cost of the four -year lease /purchase agreement is $262,268.72. Funds were made available by the City Council passage of Ordinances of No. 7138 and No. 7139, which amended the Elmwood and Walking Stick operating budgets for the financing and acquisition of the golf cart equipment. City of Pueblo Bid Summary Pane 1 of I ESID NO.: 04-049 EZGO Textron Masek Golf Car Co. DATE: U4=104 TIMIR* 10:00 AM GUMMUDITY: -- Golf Carts & Utility Vehicles Lease/purchase DESCRIPTION TOTAL COST TOTAL COST Cost of Goff Carts: Unit Price $ x 142 $496,574.00 $501,686.00 (Trade -In Value for 142 used carts) -$298,200.00 4269,800.00 Total Cost of 142 golf carts less trade-in $198,374.00 $231,886.00 Service Schedule - Four (4) Year Cost: Cost per car $_ per yr x 142 carts x 4 years $14,200.00 $0.00 Total Ex pense to City of Goff Carts Cost of Utility Vehicle w/ Beverage Unit $212 Ll $231,886.00 Unit Price $ x 2 $22,990.00 $19,620.00 (Trade-In Value for 2 used beverage units) 45,500.00 -$7,000.00 Total Cost of 2 beverage units $17,490.00 $12,620.00 Service Schedule - Four (4) Year Cost: Cost per car $_ per yr x 2 beverage units x 4 years $200.00 $0.00 Total Expense to City of Be $17,690.00 $I2 620.00 Cost of Utility Vehicle wl Ball Picker Unit Unit Price —x2 $13,376.00 $12,054.00 (Trade-In Value for 2 used ball picker units) 45,500.00 43,000.00 Total Cost of 2 ball picker units $7,876.00 $9,054.00 Service Schedule - Four (4) Year Cost: Cost per car $_ per yr x 2 ball picker units x 4 years $200.00 $0.00 Total Expense to gh y of Ball Picker Units $8 076.00 $9,054.00 Cost of A.D.A. Approved Golf Cart: Unit Price $, x 2 $9,904.00 $12,390.00 Service Schedule - Four (4) Year Cost: Post per car $. per yr x 2 A.D.A carts x 4 years $200.00 $0.00 Total =Se to of A.D.A. Goff Carts $10104.00 $12,390.00 Lease/Financing Options: Annual Percentage Rate 3.50 3.30 Annual Payment Factor 0.0264792500 02632271000 Closing or Other Costs $0.00 $0.00 Total Cost of Lease/Purchase $233,644.00 $265,950.00 Annual Lease Payment $61,867.18 $70,W5.30 Service Contract Payment ($14,800) divided by 4 years $3,700.00 F--WAWI $0.00 Total Annual Payment including service Contract Equipment Delivery will be made no later than $65,567.18 Tt 6 wks after PO $70,005.30 45 days alter PO AddendumE X X AM prices as submitted—Evaluation Committee will determine if bidder has met bid requirements.