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HomeMy WebLinkAbout12482RESOLUTION NO. 12482 A RESOLUTION AUTHORIZING THE EXECUTION OF AN EQUIPMENT LEASE/PURCHASE AGREEMENT WITH RESPECT TO THE USE, PURCHASE, AND LEASING OF CERTAIN EQUIPMENT FOR THE PUBLIC BENEFIT; AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AND AUTHORIZING THE TAKING OF ALL OTHER ACTION NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION WHEREAS, Pueblo, a Municipal Corporation (the "Lessee"), a body politic and corporate duly organized and existing as a home rule city of the State of Colorado, is authorized by the constitution and laws of the State of Colorado to purchase, acquire and lease personal property for the benefit of the Lessee and its inhabitants and to enter into contracts with respect thereto; and WHEREAS, the Lessee desires to lease certain equipment previously acquired under a lease purchase agreement with a cost not to exceed $1,450,254.54 constituting personal property necessary for the Lessee to perform essential governmental functions (the "Equipment"); and WHEREAS, in order to use such equipment, the Lessee proposes to enter into that certain Equipment Lease/Purchase Agreement (the "Agreement") with Banc of America Public Capital Corp (or one of its affiliates) (the "Lessor"), the form of which has been presented to the governing body of the Lessee at this meeting; and WHEREAS, the City Council, as the governing body of the Lessee, deems it for the benefit of the Lessee and for the efficient and effective administration thereof to enter into the Agreement and the documentation related to the refinancing of the Equipment for the purchase, acquisition and leasing of the equipment to be therein described on the terms and conditions therein provided; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The form, terms and provisions of the Agreement, a true copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved in substantially the form presented at this meeting, with such insertions, omissions and changes as shall be approved by the President of City Council and the City Attorney, the execution of such documents being conclusive evidence of such approval. SECTION 2. The President of City Council is hereby authorized and directed to execute, and the City Clerk is hereby authorized and directed to attest, the Agreement and any related Exhibits attached thereto and to deliver the Agreement (including such Exhibits) to the respective parties thereto, and the City Clerk is hereby authorized to affix the seal of the Lessee to such documents. SECTION 3. The City Manager, Director of Finance and other officers and employees of the Lessee shall take all action necessary or reasonably required by the parties to the Agreement to carry out, give effect to and consummate the transactions contemplated thereby (including the execution and delivery of Acceptance Certificates and any tax certificate and agreement, as contemplated in the Agreement) and to take all action necessary in conformity therewith, including, without limitation, the execution and delivery of any closing and other documents required to be delivered in connection with the Agreement. SECTION 4. Nothing contained in this Resolution, the Agreement nor any other instrument shall be construed with respect to the Lessee as incurring a pecuniary liability or charge upon the general credit of the Lessee or against its taxing power, nor shall the breach of any agreement contained in this Resolution, the Agreement or any other instrument or document executed in connection therewith impose any pecuniary liability upon the Lessee or any charge upon its general credit or against its taxing power, except to the extent that the Rental Payments payable under the Agreement are special limited obligations of the Lessee as provided in the Agreement. SECTION 5. The City Manager and Director of Finance of the Lessee are each hereby designated to act as authorized representatives of the Lessee for purposes of the Agreement until such time as the governing body of the Lessee shall designate any other or different authorized representative for purposes of the Agreement SECTION 6. If any section, paragraph, clause or provision of this Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution. SECTION 7. This Resolution shall become effective upon final passage and approval. INTRODUCED: September 10, 2012 BY: Chris Nicoll COUNCIL PERSON Background Paper for Proposed R ESOLUTION DATEAGENDA ITEM # M-1 September 10, 2012 : DEPARTMENT: FINANCE DEPARTMENT SAM AZAD, DIRECTOR OF FINANCE LAW DEPARTMENT THOMAS J. FLORCZAK, CITY ATTORNEY TITLE A RESOLUTION AUTHORIZING THE EXECUTION OF AN EQUIPMENT LEASE/PURCHASE AGREEMENT WITH RESPECT TO THE USE, PURCHASE, FINANCING AND LEASING OF CERTAIN EQUIPMENT FOR THE PUBLIC BENEFIT; AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS REQUIRED IN CONNECTION THEREWITH; AND AUTHORIZING THE TAKING OF ALL OTHER ACTION NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION ISSUE Should the City Council approve an equipment lease/purchase agreement for the use, purchase, financing, and leasing of equipment related to energy performance contract measures at City buildings and facilities which would refinance the existing lease purchase to achieve lower lease payments? RECOMMENDATION Approval of the Resolution. BACKGROUND On June 27, 2011 the City Council authorized the lease, purchase financing agreement with All American Investment Group. This Resolution would modify and refinance the lease purchase transaction to achieve reduced lease payments. FINANCIAL IMPACT The original total cost of the lease/purchase agreement with AAIG was $2,071,969 based on an annual percentage rate of 3.97%. The City will refinance the remaining $1,769,182.80 on an annual percentage rate of 2.71% over a 14 year term beginning in FY2013. The refinancing of this lease-purchase agreement will lower the annual payments by an average of $10,500. The lease payments will be paid from utility savings in the annual operating budget of the General Fund and Enterprise Funds that have buildings and facilities included within the project. A critical part of the financing plan is that the energy savings are being guaranteed by JCI based on an operation procedure developed for each building and facility. In the event the energy savings do not provide sufficient funds in the operating budget for the annual lease-purchase payment, and the City has complied with the operation procedures, JCI is guaranteeing payment of any shortfall. In the event of non-appropriation of funds in any given year, it shall not constitute a default under the lease purchase and the City will not be responsible for payment of further lease payments under the lease/purchase agreement. However, in such event, the equipment will be surrendered to the leasing company and the City’s credit rating would be adversely affected.