AGENDA #4g

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

SUBJECT:      Award of Bid for Financing of Vehicle Replacement for the 2005-06 Fiscal Year

DATE:            March 27, 2006

At the February 27, 2006 Council meeting, the Council authorized the Town Manager to seek proposals for financing of vehicle replacement for 2005-06.

The attached resolution would authorize the Town Manager to enter into installment contracts as follows: 1) Wachovia Bank, a total of $196,000 for financing vehicles with an average life of three years, and 2) Wachovia Bank, for financing vehicles and equipment with an average life of seven years totaling $1,599,500.  The current budget provides for both of these financings.  

BACKGROUND AND DISCUSSION

Requests for proposals for financing the purchases of vehicles were sent to eight financial institutions.  Responses were requested on March 20, 2006.  The proposals specified quotes for seven-year fixed rate installment payments on $1,599,500 for vehicles with an expected useful life averaging seven or more years, and three-year fixed rate installment payments on $196,000 for police vehicles with an expected life averaging three years.

Responses received from financial institutions on March 20 were as follows:

The bids received were competitive and reflect the interest rate environment in the current economy.  Based on the proposals received, we recommend accepting the low bid from Wachovia Bank of 3.67 percent for the three-year financing totaling $208,172.70 and the low bid also from Wachovia Bank of 3.73 percent for the seven-year financing totaling $1,826,772.92.

The majority of vehicles included in this purchase are available through the Town's participation in State purchasing contracts.  Some individual items will require formal bids in accord with normal bidding requirements and will be presented to the Council for approval.

RECOMMENDATION

We recommend that the Council adopt the attached resolution authorizing the execution of two financing contracts for seven-year vehicle and three-year vehicle purchases for $196,000 and $1,599,500 respectively.