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HomeMy WebLinkAbout13977RESOLUTION NO. 13977 A RESOLUTION AUTHORIZING THE USE OF LEASE- PURCHASE FINANCING FOR THE ACQUISITION OF POLICE VEHICLES PURSUANT TO THE TERMS OF A LEASE- PURCHASE AGREEMENT BY AND BETWEEN THE CITY OF PUEBLO, COLORADO MUNICIPAL BUILDING CORPORATION, AS LESSOR, AND THE CITY OF PUEBLO, COLORADO, AS LESSEE; AUTHORIZING OFFICIALS OF THE CITY TO TAKE ALL ACTION NECESSARY TO CARRY OUT THE TRANSACTIONS CONTEMPLATED HEREBY WHEREAS, the City of Pueblo, a Municipal corporation (hereinafter “City”) is a Colorado home rule City duly organized and existing under and by virtue of Article XX of the Colorado Constitution and is authorized thereby to purchase and lease personal property for its municipal purposes for the benefit of the City and its inhabitants and to enter into contracts with respect thereto; and WHEREAS, the City desires to enter into a lease-purchase financing (the “Financing”) for the acquisition of certain police vehicles which constitute personal property necessary for the performance of the Police Department’s duties; and WHEREAS, pursuant to the Financing, the City is to enter into a Lease Purchase Agreement (the “Lease”) with City of Pueblo, Colorado Municipal Building Corporation (the “Corporation,” and in simultaneously therewith the Corporation is to enter into a Purchase and Assignment Agreement (the “Assignment”) with the Branch Banking and Trust Company (“BB&T”), assigning the Corporation’s right to receive rents and other benefits under the Lease to BB&T; and WHEREAS, City Council, as the governing body of the City, deems it for the benefit of the City and for the efficient and effective administration thereof to enter into the Lease in order to achieve the acquisition of the police vehicles described therein and on the terms and conditions therein provided; and WHEREAS, the funds made available under the Lease will be applied to the acquisition of the police vehicles in accordance with the terms of such Lease Purchase Agreement; and WHEREAS, the City Council intends to declare its official intent for federal income tax purposes, pursuant to 26 CFR § 1.150-2, to reimburse the City for any eligible capital expenditures with the proceeds of the Financing; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. The City is hereby authorized to obtain lease-purchase financing through one or more lease-purchase agreements with the Corporation for up to and including twenty-seven (27) vehicles (the “Equipment”) for use by the Police Department to be acquired during the 2018 fiscal year, including all equipment, software, warranties, and service contracts accessory thereto and/or associated therewith. SECTION 2. The principal amount to be financed shall not exceed One Million, Five Hundred Twenty- Five Thousand Dollars ($1,525,000), the interest component of rental payments to be made by the City shall accrue at a rate not to exceed three percent (3.00%), and the term of any Lease hereunder shall not exceed sixty-six (66) months. Rental payments may be made annually, semi- annually, or at any other convenient interval as determined by the Director of Finance. SECTION 3. The Council hereby finds and determines, pursuant to the City’s home rule powers and the laws of the State of Colorado, that the acquisition of the Equipment is necessary, convenient, and in furtherance of the governmental purposes of the City and in the best interests of the City and its citizens; and the Council hereby authorizes the acquisition of the Equipment by means of lease-purchase financing. The City hereby declares its current need for the Equipment. It is hereby declared to be the present intention and expectation of the Council that each Lease will be renewed annually until title to all of the Equipment is acquired by the City pursuant to the Lease; but this declaration shall not be construed as contractually obligating or otherwise binding the City. SECTION 4. The Lease is expressly made subject to sufficient appropriations being made therefore in each fiscal year after 2018. Nothing contained in this Resolution or the Lease, no any other instrument, shall be construed with respect to the City as incurring a pecuniary liability or charge upon the general credit of the City or against its taxing power, nor shall the breach of said agreements approved by this Resolution impose any pecuniary liability upon the City except to the extent that the City is required to make the rental payments for fiscal year 2018. Nothing in this Resolution is intended, nor shall it be construed, to create any multiple-fiscal year direct or indirect debt or financial obligation whatsoever of the City. SECTION 5. The Lease, in substantially the form filed in the office of the City Clerk prior to the final adoption of this Resolution, is in all respects approved, authorized and confirmed. The President of the City Council is hereby authorized and directed to execute and deliver, and the City Clerk is hereby authorized and directed to affix the seal of the City to, and attest, each Lease hereunder in substantially the form filed with the City Clerk, with such changes as are not inconsistent with the intent of this Resolution and are approved by the City Attorney. The Council hereby designates the City Manager and the Finance Director to act as “Authorized Officers” under the Lease. Prior to the execution of the Lease, the description and price of the Equipment subject to the Lease and the schedule of rental payments allocated to the Equipment under the Lease shall be approved by a certificate executed by the Finance Director (the “Final Terms Certificate”). SECTION 6. The City Manager and Director of Finance of the City are each hereby designated to act as authorized representatives of the City for purposes of the Lease Purchase Agreement until such time as the City Council shall designate any other or different authorized representatives for purposes of said agreement. The City shall accept the appointment of the Corporation to act as its agent solely for the purpose of acquiring the Equipment. The City will do all things necessary to effect the acquisition of the Equipment free and clear of any encumbrances and subject the same to any security interests as may be contemplated under the Lease. SECTION 7. The Council hereby determines and declares that, after execution and delivery of the Lease, the rental payments due thereunder will represent the fair value of the use of the Equipment and the purchase price, as defined therein, will represent, as of any date upon which the City may exercise its option to purchase such Equipment, the fair purchase price of such Equipment. The Council further hereby determines and declares that, after the execution and delivery of the Lease, the rental payments due thereunder will not exceed a reasonable amount so as to place the City under an economic or practical compulsion to renew the Lease or to exercise its option to purchase the Equipment pursuant to the Lease. In making such determinations, the Council has given consideration to the cost of acquiring and installing the Equipment, the uses and purposes for which the Equipment will be employed by the City, the benefit to the citizens of the City by reason of the acquisition and use of the Equipment pursuant to the terms and provisions of each Lease, the City’s option to purchase the Equipment, and the expected eventual vesting of title to, or other indicia of ownership of, the Equipment in the City. The Council hereby determines and declares that, after execution and delivery of each Lease, the maximum duration of the portion of the Lease allocable to any item of Equipment separately identified in the payment schedule appended thereto will not exceed the weighted average useful life of such item of Equipment. SECTION 8. The City Clerk is hereby authorized and directed to attest all signatures and acts of any official of the City in connection with the matters authorized by this Resolution. The President of the City Council and the Authorized Officers are hereby authorized to execute and deliver for and on behalf of the City any and all additional certificates, documents and other papers and to perform all other acts that they may deem necessary or appropriate in order to implement and carry out the transactions and other matters authorized by this Resolution. SECTION 9. This Resolution shall become effective immediately upon final passage. INTRODUCED May 29, 2018 BY: Robert Schilling MEMBER OF CITY COUNCIL APPROVED: PRESIDENT OF CITY COUNCIL ATTESTED BY: ACTING CITY CLERK City Clerk’s Office Item # R-1 Background Paper for Proposed Resolution COUNCIL MEETING DATE: May 29, 2018 TO: President Christopher A. Nicoll and Members of City Council CC: Sam Azad, City Manager VIA: Brenda Armijo, Acting City Clerk FROM: Chief Troy Davenport, Chief of Police Michael Bennett, Deputy Chief of Police Brett A. Wilson, Police Captain SUBJECT: A RESOLUTION AUTHORIZING THE USE OF LEASE-PURCHASE FINANCING FOR THE ACQUISITION OF POLICE VEHICLES PURSUANT TO THE TERMS OF A LEASE-PURCHASE AGREEMENT BY AND BETWEEN THE CITY OF PUEBLO, COLORADO MUNICIPAL BUILDING CORPORATION, AS LESSOR, AND THE CITY OF PUEBLO, COLORADO, AS LESSEE; AUTHORIZING OFFICIALS OF THE CITY TO TAKE ALL ACTION NECESSARY TO CARRY OUT THE TRANSACTIONS CONTEMPLATED HEREBY SUMMARY: This Resolution authorizes the City to enter into a lease/purchase financing for the acquisition of twenty-seven 2018 Police Interceptor SUV’s and related equipment to be used by the Police Department. PREVIOUS COUNCIL ACTION: Not applicable. BACKGROUND: Branch Banking and Trust Company’s (“BB&T”) proposal for the lease/purchase of new police vehicles was selected by the City’s Committee of Awards as being the proposal most advantageous to the City. FINANCIAL IMPLICATIONS: Under the lease, BB&T has agreed to finance the lease/purchase of twenty-seven 2018 Police Interceptor SUV’s at the rate of 3.0% over 66 months. Lease payments reflecting reductions in principal and interest are to begin in 2019. During the lease period, the vehicles may be purchased any time with no penalty. At the end of the lease term, the vehicles become the unencumbered property of the City. In order to comply with Art. X, Sec. 20 of the Colorado Constitution (TABOR), the lease is not a multi-year fiscal obligation. The City retains the option of discontinuing lease payments at the end of any fiscal year without incurring any penalty. BOARD/COMMISSION RECOMMENDATION: Not applicable. STAKEHOLDER PROCESS: Not applicable. ALTERNATIVES: City Council could deny this Resolution. RECOMMENDATION: Approve the Resolution. Attachments: Lease/Purchase Agreement, Project Fund Agreement