CITY COUNCIL AGENDA ITEM
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
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.
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.
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
The lease payments are budgeted in the Vehicle Replacement fund.
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;
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;
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: