04/01/85 Board of Public Works Minutes

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REGULAR MEETING APRIL 1, 1985 Reserve. Account Earnings Semi-annual interest earnings for South Bend $17.250.00 Semi-annual interest payment by City -12,945.00 Semi-annual net earnings for South Bend $ 4,305.00 Due to this positive arbitrage effect, the net effective lease rate will fall to 7.93% from completed many municipal leases 8.63%. using similar Marquette has techniques to reduce the "face rate" of a lease. In fact, Marquette has so much confidence in this approach that we guarantee that South Bend will realize a maximum net effective lease rate of 8.40%, and we're certain that your true rate will fall below that level. The $300,000 reserve escrow account balance will be returned to Marquette at the end of the 5-year lease term. Net Lease: South Bend will pay all costs and bear all obligations normally associated with ownership of equipment, to include all applicable taxes, maintenance, insurance, repairs and compliance with all laws. Financial Statements: This offer is subject to Marquette's receipt of the City's financial statements for the last 3 fiscal years. This offer is not subject to Marquette's acceptance of the City's financial condition. Additional Costs: Marquette's offer contains no additional costs other than those specifically identified in the proposal and the accompanying escrow and lease agreements. Marquette will not charge legal costs (other than your internal legal costs), placement, escrow, underwriting, sales commissions, administrative and printing fees. Pro -Rate Changes: Marquette realizes that South Bend's anticipated equipment needs may change and the City's cash needs may change accordingly prior to the funding of the lease. Therefore, Marquette will adjust its escrow funding amounts in accordance with your needs. The reserve escrow account deposit will equal 15% of the equipment escrow account deposit ($2,000,000 x 15% _ $300,000). Prepayment Option: South Bend will have the option to prepay the entire lease on any payment date for 102% of the then outstanding principal balance. South Bend may also purchase the equipment for $1.00 after payment the tenth semi-annual lease payment. Proposal Acceptance: If terms and conditions are acceptable, it is requested that the City sign and return the proposal to Marquette prior to May 1, 1985. This transaction must be completed and escrow must be funded by May 24, 1985. It was noted that Municipal Financial Corporation, Suite 200, 21001 West Watertown Road, Waukesha, Wisconsin,.advised that they decline to present a proposal at this time. Mr. Vance advised that his office will be looking not only at the interest rates quoted but also the options suggested by the companies. He further advised that he anticipated that a review of the proposals would take approximately three (3) to four (4) weeks.