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 CITY COUNCIL AGENDA ITEM NO. 12

Meeting Date: November 12, 2002

Subject/Title: Approve lease/purchase financing agreement with Koch Financial in the amount of $345,100 for asphalt paving equipment approved in the 2002/03 budget.

Submitted by: Pamela Ehler, Director of Finance and Information Systems
Becky Bridgen, Purchasing Agent

Approved by: John Stevenson, City Manager


RECOMMENDATION
Approve lease/purchase financing agreement with Koch Financial in the amount of $345,100 for asphalt paving equipment approved in the 2002/03 budget.

PREVIOUS ACTION
In the 2002/03 budget for Streets and Storm Drain Operations, the funds to lease/purchase asphalt paving equipment was approved. The total budgeted/estimated amount to be financed is $345,100, with a lease term of five (5) years.

BACKGROUND
Staff requested bids from seven (7) leasing agencies, six (6) responded. The four (4) lowest bidders are listed:

Firm Rate Est. Total Interest 

Koch Financial 3.14% $21,661.86
Systems Finance Corporation 3.6% $24,831.56
Wells Fargo 3.825% $33,175.15
GE Capital Public Finance 4.0887% $28,197.50

The advantages to entering into an escrow type of Lease/Purchase Agreement are locking into a low interest rate and saving administrative costs for completing applications, copying financial statements, attorney 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.

FISCAL IMPACT 
The 2002/03 Streets and Storm Drain Operations budgeted $90,000 for the annual lease/purchase payment.

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov