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TO: |
Roger L. Stancil, Town Manager |
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FROM: |
Kenneth C. Pennoyer, Director of Business Management |
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SUBJECT: |
Award of Bids for Financing of Vehicle Replacement for the 2007-08 Fiscal Year |
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DATE: |
March 17, 2008 |
PURPOSE
The purpose of this memorandum is to authorize acceptance of the low bids from RBC Centura Bank of 2.82% for financing over seven years of the Town’s proposed $1,227,500 vehicle replacement purchases for 2007-08 and to authorize acceptance of the low bid from RBC Centura Bank of 2.46% for financing over four years of the Town’s proposed $360,000 vehicle replacement purchases for 2007-08.
BACKGROUND
In accordance with the Town’s Vehicle Replacement Plan requests for proposals for financing the purchases of vehicles were sent to eight financial institutions on February 25, 2008 and responses were requested on March 7, 2008. The proposals specified quotes for seven-year fixed rate installment payments on $1,227,500 for vehicles with an expected useful life averaging seven years and $360,000 for vehicles with an expected life averaging 4 years.
Responses received from financial institutions on March 7, 2008 were as follows:
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4 Year Term ($360,000) |
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7 Year Term ($1,227,500) |
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Financial Institution |
Interest Rate |
Total Principal, Interest and Fees |
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Interest Rate |
Total Principal, Interest and Fees |
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Comerica Leasing Corp. |
2.990% |
$384,638.16 |
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3.452% |
$1,392,285.86 |
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BB&T Leasing Corp. |
2.590% |
381,293.84 |
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3.040% |
1,372,005.46 |
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De Lage Landen |
3.200% |
386,399.84 |
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3.350% |
1,387,249.64 |
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RBC Centura |
2.460% |
380,310.16 |
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2.820% |
1,361,343.52 |
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Suntrust Leasing Corp. |
2.880% |
382,045.05 |
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3.090% |
1,374,457.88 |
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Wachovia Bank |
2.925% |
383,356.00 |
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0.000% |
No Bid |
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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 bids from RBC Centura of 2.82% for the seven-year financing with total interest and fees of $ 1,361,343.52 and 2.46% for four-year financing with total interest and fees of $ 380,310.16.
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 Council adopt the attached resolution authorizing the execution of financing contracts with RBC Centura Bank for $1,227,500 for vehicles to be repaid over seven-years and for $360,000 for vehicles to be repaid over three-years