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HomeMy WebLinkAbout10481RESOLUTION NO. 10481 A RESOLUTION APPROVING A MUNICIPAL LEASE AGREEMENT BETWEEN THE CITY OF PUEBLO, A MUNICIPAL CORPORATION, AND U.S. BANK NATIONAL ASSOCIATION RELATING TO THE LEASE - PURCHASE OF FIRE FIGHTING EQUIPMENT AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME WHEREAS, the City of Pueblo, a municipal corporation (the "City ") is a political subdivision of the State of Colorado (the (State ") and is duly organized and existing pursuant to the Constitution and laws of the State. WHEREAS, pursuant to applicable law, the City Council of the City ( "City Council ") is authorized to acquire, dispose of and encumber real and personal property, including, without limitation, rights and interest in property, leases and easements necessary to the functions or operations of the City. WHEREAS, the City Council hereby finds and determines that the execution of a municipal lease- purchase agreement ( "Equipment Lease') in the principal amount not exceeding $523,113.00 for the purpose of acquiring certain fire fighting equipment ( "Equipment) described in the Equipment Lease is appropriate and necessary to the functions and operations of the City. WHEREAS, U.S. Bank National Association ( "Lessor ") shall act as Lessor under said Equipment Lease. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that SECTION 1. Either the President of the City Council or in his absence the Vice - President of the City Council (Each an "Authorized Representative') acting on behalf of the City, is hereby authorized to negotiate, enter into, and execute the Equipment Lease in substantially the form set forth in the document presently before the City Council, which document is available for public inspection at the office of the City Clerk. Each Authorized Representative acting on behalf of the City is hereby authorized to negotiate, enter into, execute, and deliver such other documents relating to the Equipment Lease as the Authorized Representative deems necessary and appropriate. All other related contracts and agreements necessary and incidental to the Equipment Lease are hereby authorized. SECTION 2 By a written instrument signed by any Authorized Representative, said Authorized Representative may designate specifically identified officers or employees of the City to execute and deliver agreements and documents relating to the Equipment Lease on behalf of the City. SECTION 3. The aggregate original principal amount of the Equipment Lease shall not exceed $523,113.00 and shall bear interest as set forth in the Equipment Lease and the Equipment Lease shall contain such options to purchase by the City as set forth therein. SECTION 4. The City's obligations under the Equipment Lease shall be subject to annual appropriation or renewal by the City Council as set forth in the Equipment Lease and the City's obligations under the Equipment Lease shall not create or constitute or be construed as creating or constituting a general obligation or indebtedness or a multiple fiscal year direct or indirect debt or other financial obligation whatsoever of the City under the Constitution or laws of the State. SECTION 5. This Resolution shall take effect immediately upon its adoption and approval. INTRODUCED August 22, 2005 BY Michael Occhiato Councilperson APPROVED: PRESIDENT CITY C IL ATTESTED BY: CITY CLERK Background Paper for Proposed RESOLUTION /&Q. # /0C/ 8/ AGENDA ITEM # S DATE: August 22, 2005 DEPARTMENT: Fire -Greg Miller TITLE A RESOLUTION APPROVING A MUNICIPAL LEASE AGREEMENT BETWEEN THE CITY OF PUEBLO, A MUNICIPAL CORPORATION, AND U.S. BANK NATIONAL ASSOCIATION RELATING TO THE LEASE - PURCHASE OF FIRE FIGHTING EQUIPMENT AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO EXECUTE SAME. ISSUE Should the City of Pueblo enter into a lease- purchase agreement for the acquisition of firefighting equipment? RECOMMENDATION Approval of resolution BACKGROUND Bid proposals were received by City Purchasing for the purchase of a 1250 GPM-4 door fire pumper and a heavy -duty fire rescue vehicle. Proposals have been reviewed and a vendor selected. FINANCIAL IMPACT The cost of the equipment will be $653,113.00. The City will pay $130,000.00 down payment from funds already in the 2005 budget. Lease amount will be $523,113.00. Payment schedule is as follows August 2005 $130,000.00 Down Payment (already in budget) January 2006 $184,500.00 Lease Payment January 2007 $184,500.00 Lease Payment January 2008 $184,500.00 Lease Payment City's obligation under the equipment lease shall be subject to annual appropriation and renewal by the City Council. August 29, 2005 MUNICIPAL LEASE - PURCHASE AGREEMENT 1. LEASE U.S. Bank National Association, ( "Lessor ") hereby leases to City of Pueblo, a Municipal Corporation, whose address is 1 City Hall Place, Pueblo, Colorado, 81003 ( "Lessee ") the personal property, (the "Equipment ") described in Exhibit " A " , attached hereto and made a part hereof, or in any subsequent schedules which may hereinafter be made a part hereof, upon the following terms and conditions. 2. TERM AND RENT The term of, and the rental amount ( "Rental Amount ") due under this Municipal Lease Purchase Agreement ( "Agreement ") shall be as set forth in Exhibit "B ", or in any subsequent schedules which may hereafter be made a part hereof. Any past due payment of rent shall bear interest at the rate of 4.05% per annum. The Rental Amount includes specified amounts of principal and interest. Lessee covenants to pay all Rental Amounts when due, and to perform all other covenants contained in this Agreement. 3. INSPECTION BY LESSEE Lessee shall inspect the Equipment within forty-eight hours after receipt thereof. Unless Lessee within said period of time gives written notice to Lessor specifying any defect in or other proper objection to the Equipment, Lessee agrees that it shall be conclusively presumed, as between Lessor and Lessee, that Lessee has fully inspected and acknowledged that the Equipment is in good condition and repair, and that Lessee is satisfied with and has accepted the Equipment in such condition. 4. ALTERATIONS Lessee is hereby given the right to make alterations, additions or improvements to the Equipment, so long as the value of the Equipment is not reduced thereby. All additions and improvements of whatsoever kind or nature made to the Equipment shall immediately become the property of Lessor and subject to the terms of this Agreement. 5. MAINTENANCE AND REPAIR Lessee, at its own cost and expense, shall keep the Equipment in good repair, condition and working order and shall furnish any and all parts, mechanisms and devices required to keep the Equipment in good mechanical and working order. 6. LOSS AND DAMAGE Lessee hereby assumes and shall bear the entire risk of loss of and damage to the Equipment, whether or not insured from any and every cause whatsoever. No loss of or damage to the Equipment or any part thereof shall impair any obligation of Lessee under this Agreement, which shall continue in full force and effect. In the event of loss or damage of any kind whatever to the Equipment, or any part thereof, Lessee at the option of Lessor shall place the same in good repair, Page 1 of 8 condition and working order or pay Lessor in cash the then unpaid Rental Amount due under this Agreement, together with accrued interest to the date of payment. Upon such payment this Agreement shall terminate with respect to the Equipment or part thereof so paid for and Lessee thereupon shall become entitled to such equipment. 7. SURRENDER OF EQUIPMENT Upon termination of this Agreement, Lessee shall (unless Lessee has acquired title thereto pursuant to either paragraph 6 or Exhibit `B" hereof) return the Equipment to Lessor in good repair, condition and working order, ordinary wear and tear resulting from proper use thereof alone excepted, by delivering the Equipment at Lessee's cost and expense to such place as Lessor shall specify within the county in which the Equipment was delivered to Lessee or to which Equipment was moved with the written consent of Lessor. 8. INSURANCE Lessee, at its own expense, shall keep the Equipment insured for such risks and in such amounts as Lessor shall require with carriers acceptable to Lessor, shall maintain a loss payable endorsement in favor of Lessor affording to Lessor such additional protection as Lessor shall require, and shall maintain liability insurance satisfactory to Lessor. All such insurance shall name Lessor and Lessee as co- insureds, and the policies shall provide that they may not be canceled or altered without at least ten days prior written notice to Lessor and the loss payable endorsement shall provide that all amounts payable by reason of loss or damage to the Equipment shall be payable only to Lessor. Lessee shall deliver to Lessor evidence satisfactory to Lessor of all such insurance. If loss or damage occurs under circumstances in which Lessee is not in violation of the terms of any such policies, and if Lessee has fulfilled its obligations under Paragraph 6 of this Agreement, and is not otherwise in default under this Agreement, Lessor will pay to Lessee so much of any insurance proceeds received by Lessor as a result of such loss or damage as will fully reimburse Lessee for the net expense it incurs in fulfilling its obligations under said Paragraph 6. Should Lessee fail to maintain insurance as herein provided, then Lessor shall have the right, after demand upon Lessee, and without releasing Lessee from any obligation hereunder, to effect the same, and to pay and expend whatever amounts in its absolute discretion it may deem necessary therefor. All sums so paid or expended by Lessor shall be an indebtedness of the Lessee to Lessor and bear interest at the rate of rPrime plus 2% per annuml 9. TAX EXEMPTION AND BANK QUALIFICATION Lessee hereby represents that it has taken all action necessary to cause the interest received by any holder of this Agreement to be exempt from federal income taxation under the Internal Revenue Code of 1986, as amended. Lessee has designated the lease payments as " tax exempt obligations" as defined in Section 265(b) (3) (B) of the Internal Revenue Code of 1986, as amended. 10. TAXES The Rental Amounts have been established taking into account the exemption of the Equipment from personal property tax. Lessee shall file all certificates or other documents necessary to insure that the Equipment will be exempt from property tax. 11. ASSIGNMENT BY LESSOR Page 2 of 8 It is understood and agreed that Lessor's interest in this Agreement may be assigned, mortgaged, or otherwise transferred or encumbered, all without notice to Lessee. In such event the assignee's right, title and interest in this Agreement, to the Rental Amounts provided herein and in the Equipment, shall be free from all defenses, set -offs or counterclaims of any kind or character, which Lessee may be entitled to assert against Lessor. It is agreed that such assignee does not assume any obligation of Lessor herein named. Lessee may separately claim against Lessor as to any matter which Lessee may be entitled to assert hereunder. 12. INDEMNITY Lessee shall indemnify Lessor against, and hold Lessor harmless from any and all third -party claims, actions, suits or proceedings, costs, expenses, damages and liabilities, including attorneys' fees, arising out of, connected with, or resulting from the Equipment, including without limitation the manufacture, selection, delivery, possession, use, operation or return thereof. Lessee further covenants and agrees to indemnify Lessor against any loss, cost or expense incurred by Lessor or Lessor's assignee, (whether before or after termination or expiration of this Agreement or any assignment or other transfer of the Agreement to any other person, firm or corporation) as a result of being the Lessor, or Lessor's assignee, under the Agreement, if such loss, cost, or expense is incurred as a result of any federal income tax assessed against interest received by the holder of this Agreement, which is currently deductible under the Internal Revenue Code of 1986, as amended, including rules and regulations promulgated thereunder ( "the Code "). It is the intent and purpose of the parties hereto that the profit of Lessor, or Lessor's assignee, with respect to the payment of interest to it on the Agreement shall not be diminished by any change in the tax exempt status of said interest. 13. DEFAULT The default by Lessee under any term, covenant or condition of this Agreement which is not cured within ten days after written notice thereof from Lessor, shall, at the option of Lessor, terminate this Agreement and Lessee's right to possession of the Equipment. Upon termination of the Agreement, Lessor may without notice to or demand upon Lessee, take possession of the Equipment and lease or sell the same or anyportion thereof, as Lessor shall elect, and apply the proceeds of any such sale or renting, after deducting all costs and expenses incurred in connection with the recovery, repair, storage and renting of the Equipment, in payment of any obligations due from Lessee to Lessor hereunder, Lessee remaining responsible for any deficiency. Lessor shall also, in an event of default, be entitled to exercise all of the rights of a secured party under the Uniform Commercial Code. 14. EFFECT OF WAIVER No delay or omission to exercise any right, power or remedy accruing to Lessor upon any breach or default of Lessee under this Agreement shall impair any such right, power or remedy of Lessor nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of Lessor of any breach or default under this Agreement, or any waiver on the part of Lessor of any provision or condition of this Agreement, must be in writing and signed by Lessor. All remedies, either under this Agreement or by law, or otherwise afforded to Lessor, shall be cumulative and not alternate. Page 3 of 8 15. WARRANTIES Lessee acknowledges that this Agreement is a lease of the Equipment which the Lessee itself has selected and that Lessor makes no warranties, express or implied regarding the condition, quality, durability, capability, suitability, fitness for intended purpose or merchantability of the Equipment Lessee agrees to rely solely upon any warranties with respect to the Equipment provided by the manufacturer or vendor thereof. No defect in or unfitness in the Equipment, or failure of a manufacturer or vendor to perform, shall relieve Lessee of its obligation to pay Rental Amounts or to perform any other obligations under this Agreement. 16. ATTORNEY FEES In the event of any action at law or suit in equity in relation to this Agreement, the prevailing party will pay to the non - prevailing party a reasonable sum for its attorney fees, at trial and on any appeal. 17. OWNERSHIP Title to and possession of the Equipment shall, during the term of this Agreement, be in the Lessee, except that Lessee hereby grants to the Lessor a security interest in the Equipment, which security interest shall be evidenced by financing statements or recorded title interests, as appropriate. Upon payment of all of the Rental Amounts, and the performance of all other obligations under this Agreement, Lessee shall become the owner of the Equipment free and clear of all claims of the Lessor and Lessor shall provide to Lessee such termination or other documents evidencing ownership solely in the Lessee. 18. NOTICES Any communications between Lessor and Lessee, payments, and notices provided herein to be given or made, may be given or made by mailing the same to Dennis Sonnek, US Bank National Association, EPMNS9GB, 101 E. 5i Street, St. Paul, MN 55101 AND TO Lessee addressed: City Manager, City of Pueblo, 1 City Hall Place, Pueblo, CO 81003 with a copy to: Thomas E. Jagger, City Attorney, 503 N. Main Street, Suite 127, Pueblo, CO 81003, or to such other addresses as either party may in writing hereinafter indicate. Lessee shall file such notices with public agencies as may be required to preserve tax exemption of the interest portion of the Rental Amounts. 19. NONAPPROPRIATION Notwithstanding any other provision of this Agreement, the parties expressly stipulate that all payments required of Lessee hereunder are subject to the appropriation of funds by Lessee's governing body on a fiscal year basis. Lessee has received a budget appropriation sufficient to make all payments scheduled during the present fiscal year. In the event that, in any future fiscal year, Lessee's governing body does not appropriate funds for payments under this Agreement, Lessee shall notify Lessor promptly upon the adoption of budget omitting such appropriation. Lessee shall thereupon pay to Lessor any funds which have been appropriated and unpaid for the then current fiscal year, and shall peaceably surrender the Equipment to Lessor in good condition. All fiscal obligations of Lessor shall thereupon be extinguished, and this Agreement shall terminate. Failure of Lessee's governing body to appropriate funds despite a good faith request by officers of Lessee for such appropriation shall not constitute a default under this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this lease as of this 22n day of August, Page 4 of 8 2005. LESSOR U.S. Bank Neal Association Um I , .tR LESSEE City of Pueblo, a Municipal Corporation By Title: President of the City Cou%il Page 5 of 8 EXHIBIT "A" DESCRIPTION OF PROPERTY Quantity Description of Vehicles, Equipment and Price Delivered Apparatus in Pueblo Colorado 4- Person, 4 -door "Saber" Fire Pumper $301,790.00 1250 GPM, with Air Cond Pierce Manufacturing 4- Person, 4 -door, Heavy Duty "Saber" $351,323.00 Rescue Unit, with Air Cond Pierce Manufacturing TOTAL $653,113.00 Page 6 of 8 EXHIBIT "B" PAYMENT SCHEDULE A. RENT The Rental Amount due under this Agreement which Lessee unconditionally promises to pay the Lessor, or its assigns, is Five Hundred Twenty -Three Thousand One Hundred Thirteen Dollars ($523,113.00) together with the interest at the rate of 4.05% per annum on the unpaid balance, or the stipulated value, in the case of prepayment. B. ACCELERATED PAYMENTS Any of the above Rental Amounts may be accelerated at Lessee's option and have the interest thereon adjusted accordingly. The Agreement will be at the stipulated value, if applicable. C. OPTION TO PURCHASE Lessee shall have, and is hereby granted, an option to purchase the Equipment at the expiration of this Agreement for the nominal price of 1.00, provided further that Lessee's right to so purchase the Equipment shall be conditional upon a complete and full performance of Lessee's undertakings as provided in this Agreement and also conditional upon full payment by Lessee to Lessor of the entire Rental Amount including interest due on this Agreement. D. SCHEDULED RENTAL PAYMENTS Lessee agrees to, and shall pay the total Rental Amount in the following installments, each due on or before the date shown: PAYMENT SCHEDULE Non -bank Qualified Accrual Date: August 29, 2005 Amount: $523,113.00 Rent Date Rent Interest Principal Termination Payment Portion Portion Value 31- Jan -06 523,113 184,500 9,122 175,378 347,735 31- Jan -07 347,735 184,500 14,083 170,417 177,318 31- Jan -08 177,318 184,500 7,181 177,318 1 APPROVED AND AGREED TO this day of 2005, as a Schedule to that certain Agreement dated the day of 200_, by and between the parties hereto, and hereby made a part thereof. LESSOR U.S. Ban` Title: Page 7 of 8 PROPERTY ACCEPTANCE The undersigned Lessee, under that certain Municipal Lease - Purchase Agreement dated August 29, 2005, with (U.S. Bank National Association), as Lessor, hereby acknowledges receipt in good condition of all the Equipment described on Exhibit "A" to the Municipal Lease- Purchase Agreement, hereby accepts the Equipment and hereby certifies that the Lessor has fully and satisfactorily performed all covenants and conditions to be performed by it under the Municipal Lease - Purchase Agreement. Dated: August 24 2005. 2 0J A N // / �� .�� I VA Title: President of Ci Council Page 8 of 8