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CITY COUNCIL AGENDA ITEM NO. 03

Meeting Date: August 22, 2000

Subject/Title: Authorize the City Manager to amend the Lease/Purchase agreement with Municipal Finance Corp. for the Lease/Purchase financing of seven police vehicles and associated equipment.

Submitted by: Finance Department (Bridgen)

Approved by: Jon Elam, City Manager


RECOMMENDATION
Staff respectfully recommends the passage of Resolution approving an additional lease schedule, in the amount of $200,000, to the lease/purchase agreement between the City of Brentwood and Municipal Finance Corporation.

PREVIOUS ACTION
On August 24, 1999 resolution No. 99-191 was approved for the financing of several pieces of heavy equipment. On February 8, 2000 resolution No. 2014 was approved authorizing the purchase of eight (8) police service vehicles and associated equipment. One (1) vehicle was purchased with interest and money left over in the original financing agreement.

BACKGROUND
The advantages to amending this Lease/Purchase Agreement are locking into a low interest rate and saving administrative costs for completing applications, legal fees and document fees. In order to comply with California Law, the agreement provides for termination if council fails to appropriate funding in any given fiscal year. 

Staff requested quotes from Municipal Finance Corporation and the Department of General Services GS $Mart (California state contractors for financing). Municipal Finance Corporation quoted an interest rate of 5.63% and the lowest DGS contractor quoted rate was 5.62%. Financing with Municipal Finance will be less paperwork since we are just amending the original agreement, saving money in staff time.

These financing rates are based upon the lease being designated a bank qualified tax-exempt obligation. This means that the City reasonably believes it will issue less than $10,000,000 in tax-exempt debt during calendar year 2000.

The lease payments are budgeted in the Vehicle Replacement fund.


RESOLUTION NO. 

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AUTHORIZING THE CITY MANAGER TO AMEND THE LEASE/PURCHASE AGREEMENT WITH MUNICIPAL FINANCE CORPORATION FOR THE LEASE/PURCHASE FINANCING OF SEVEN (7) POLICE VEHICLES AND ASSOCIATED EQUIPMENT AS APPROVED BY RESOLUTION 2014.


WHEREAS, the Brentwood City Council has determined that a need exists for the financing of various equipment budged in the 2000-2001 fiscal year, as set forth in detail in the staff report accompanying this resolution; and

WHEREAS, the City reasonably anticipates that it and its subordinate entities will not issue tax-exempt obligations in the face amount of more than $10,000,000 during the current calendar year; and

WHEREAS, the City wishes to finance the costs of the equipment through the execution and delivery of an additional lease schedule to the existing Lease/Purchase Agreement between the City and Municipal Finance Corporation; and

NOW, THEREFORE, BE IT RESOLVED by the City Council of Brentwood, that in consideration of the above premises the City Council authorizes the City Manager to enter into the additional lease schedule and other related documents, in the amount of $200,000, for the 2000-2001 fiscal year.

BE IT FURTHER RESOLVED by the City Council of Brentwood that the additional lease financing is designated as a “qualified tax-exempt obligation” pursuant to Section 265(b) of the Internal Revenue Code.

PASSED and adopted by the City council of the City of Brentwood, at its regular meeting of August 22, 2000, by the following vote:

AYES:
NOES:
ABSENT:
ABSTAIN:

City Administration
City of Brentwood City Council
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Brentwood, CA 94513
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E-mail allcouncil@brentwoodca.gov