AGENDA #4r

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

SUBJECT:      Award of Bid for Financing of Vehicle and Computer Replacements for the 2004-2005 Fiscal Year

DATE:                        June 15, 2005

At the May 23, 2005 Council meeting, the Council authorized the Manager to seek proposals for financing of vehicle and computer replacements for 2004-05.

The attached resolution would authorize the Manager to enter into installment contracts as follows: 1) Banc of America Leasing & Capital, LLC, a total of $406,000 for financing vehicles and computer equipment with an average life of three years, and 2) Banc of America Leasing & Capital, LLC for financing vehicles with an average life of seven years totaling $472,400.  The current budget provides for both these financings.  

BACKGROUND AND DISCUSSION

Requests for proposals for financing the purchases of vehicles and computer equipment were sent to eight financial institutions.  Responses were requested on June 3, 2005.  The proposals specified quotes for seven-year fixed rate installment payments on $472,400 for vehicles with an expected useful life averaging seven or more years, and three-year fixed rate installment payments on $214,000 for police vehicles and $192,000 for computer equipment with an expected life averaging three years.

Responses received from financial institutions on June 3 were as follows:

The bids received were competitive and reflect the low interest rate environment in the current economy.  Based on the proposals received, we recommend accepting the low bid from Banc of America Leasing & Capital, LLC of 3.02% for the three-year financing totaling $427,692 and the low bid also from Banc of America Leasing & Capital, LLC of 3.30% for the seven-year financing totaling $532,886. 

The majority of vehicles and computer equipment 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 and computer equipment purchases for $472,400 and $406,000 respectively.

A RESOLUTION AUTHORIZING THE TOWN MANAGER TO EXECUTE LEASE-PURCHASE CONTRACTS FOR VEHICLE AND COMPUTER EQUIPMENT REPLACEMENT PURCHASES FOR THE 2004-2005 FISCAL YEAR (2005-06-15/R-15)

WHEREAS, the Town of Chapel Hill solicited and received competitive proposals from financial institutions for the financing of a variety of vehicles and computer equipment for various departments; and

WHEREAS, Banc of America Leasing & Capital, LLC offers the lowest total interest cost of 3.02% for the three-year term for the purchase of vehicles totaling $214,000 and computer equipment totaling $192,000; and

WHEREAS, Banc of America Leasing & Capital, LLC offers the lowest total interest cost of 3.30 % for the seven-year term for the purchase of vehicles totaling $472,400;

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council authorizes the Town Manager to enter into a contract with Banc of America on behalf of the Town for the financing of vehicles and computer equipment totaling $406,000 at a fixed interest cost of 3.02 % for a three-year term with total principal, interest and fees cost of $427,692.15, and to enter into a contract with Banc of America on behalf of the Town for the financing of additional vehicles totaling $472,400 with a fixed interest rate of 3.30 % for a seven-year term with total principal and interest cost of $532,885.53;

BE IT FURTHER RESOLVED that the aforesaid contracts by and between the Town of Chapel Hill, various State contract and other vendors, and Banc of America Leasing & Capital, LLC, together with the amounts to be paid thereunder, be designated as qualified tax-exempt obligations of the Town of Chapel Hill for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.

BE IT FURTHER RESOLVED that the Council does not reasonably expect that the Purchaser (and any subordinate entities) will issue more than $10,000,000 in qualified tax-exempt obligations pursuant to such Sections 265(b)(3)(ii) during the current calendar year.

This the 15^th day of June, 2005.