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HomeMy WebLinkAboutEquipment Lease Agreement - PNC Equipment Finance - City Department Vehicles and Equipment1316 COUNTY -CITY BUILDNG' 227 W. JEFFERSON BOULEVARD Sot.rm BEM). INDIANA 46601-1930 CITY OF SOUTH BEND PME BU'FI'IGIEG, MAYOR BOARD OF PUBLIC WORKS May 8, 2018 Alan Zuelke PNC Equipment Finance, LLC 155 E Broad Street Columbus, 014 43215 RE: Equipment Lease Agreement Dear Mr. Zuelke: NIONE 574/235-9251 FAx 57'4/ 235-9171 The Board of Public Works, at its meeting held on May 8, 2018, approved the above referenced agreement regarding financing for various City department vehicles and equipment in the amount of $,6,115,434. Enclosed please find a copy of the agreement for your records. If you have any further questions regarding this matter, please call this office at (574) 235- 9251. Sincerely, Linda M. Martin, Clerk Enclosure c: Ben Dougherty, Administration and Finance GARY A, GILOT SUZANNA M. FRITZBERG ELIZABETH A. MARADIK JAMES A. MUELLER THERESE J. DORAU PN: C EQUIPMENT FINANCE April 30, 2018 Ms. Jennifer Hockenhull City Controller City of South Bend Department of Administration and Finance 227 W. Jefferson Boulevard South Bend, IN 46601 RE: Request for Proposal's —Tax Exempt Municipal Lease Financing — Lease Purchase Financing (the "FP"") Dear Ms. Hockenhull, �PNC Equipment Finance, LLC for itself, its successors and assigns, is pleased to submit this tax-exempt Lease Purchase Agreement Proposal (the "Proposal") to City of South Bend for the purchase of Capital Equipment and Vehicles (further described! below). Our Proposal is as follows: LESSEE: City of South Bend LESSOR: PNC Equipment Finance, LLC TYPE OF FINANCING: Tax-exempt Lease Purchase Agreement (the "Agreement") with $1,00 buyout option at end of lease term. Said Agreement shall be a net lease arrangement whereby Lessee is responsible for all costs of operation, maintenance, insurance and taxes. NON-BANIK QUALIFICATION: This Proposal assumes that the Lessee, will be issuing more than $10 million in tax-exempt debt during calendar year 2018. Furthermore, it is assumed that the Lessee will NOT designate this issue as a qualified tax- exempt obligation pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "'Code"). A portion of each Lease Payment allocated as "interest" will be excludable from the gross income for federal income tax purposes pursuant to Section 103(a) of the Code. TYPE OF EQUIPMENT/PROJECT: Building Department $ 43,780.00 Code Enforcement $ 78,940.00 Fire Department $1,550,534.00 Information Technology $ 217,124.00 Police Department $1,495,968.00 Solid Waste Department $1,192,960.00 Streets and Traffic & Lighting Department $ 910,990.00 Venues, Parks & Arts Department $ 600,000.100 Water Works Department $ 25,138.00 Total Equipment Cost $6,115,434.00 Alll prices, terms, conditions and selection are solely by Lessee. City of South Bend Request for Proposals —Tax. Exempt Municipal Lease Financing- Lease Purchase Financing April 30, 2018 FINANCED AMOUNT: $6,115,434.00 PAYMENT MODE/FREQUENCY: Semi -Annually in Arrears (first payment due January, 2019) LEASE TERM: Five (5) years (will consider 4 year carve out on Technology Equipment) LEASE RATE: 2.961% LEASE RATE FACTOR: 0.10883003 LEASE PAYMENTS, Ten (10) Principal and Interest Payments of $665,542,87, IESCROW FUNDING: At lease closing, Lessor shall fund the entire Financed Amount into an escrow account from which disbursements will be made to the existing Lessor and to equipment provider(s) as directed. Escrow agent will either be Lessor or third -party provider selected by Lessor and approved by Lessee. All escrow earnings will be for the benefit of Lessee. A set-up fee for Lessor's escrow arrangement will be $250.00, due at lease closing. INSURANCE: The Lessee shall furnish confirmation of all risk physical damage insurance coverage for the full cost ofthe property. in addition, Lessee shall provide $2 million combined single limit property damage and bodily injury insurance covering the property. Lessor shall be named as loss payee and additional insured on such coverage. INDEXED FINANCING RATE: After May 18, 2'018, Lessor reserves the right to adjust the Lease Rate to current market conditions prior to documentation and funding. The Lease Rates offered herein shall be indexed to the 5-year interest rate swap as published at httos://www,tlieice,com/marketdata/reDortsJI80 /US Rates 1100) ("ICE"). On April 26, 2018, the ICE 5-year interest rate swap is 2.935%. The lease rate used to establish the periodic lease payments shall be adjusted, up or down, by the change in the interest rate swap times 0.79 and then added or subtracted to the base Lease Rate indicated herein to determine the lease rate for the lease schedule, three business days prior to lease funding. AUTHORIZED SIGNERS: The Lessee's governing board shall provide Lessor with its resolution or ordinance authorizing this Agreement and shall designate the individuals) to execute the Agreement used therein. LEGAL OPINION: The Lessee's counsel shall furnish Lessor with an opinion covering this Agreement. This opinion shall be in a form and substance satisfactory to Lessor at Lessee's cost. TAX OPINION: The Lessee's bond! counsel shall furnish Lessor with a tax opinion covering this Agreement, This opinion shall be In a form and substance satisfactory to Lessor at Lessee's cost. City of South Bend Request for Proposals —Tax Exempt Municipal Lease Financing- Lease Purchase Financing April 30, 2018 LEGAL TITLE: Legal title to the equipment during the lease term shall vest in the Lessee, with Lessor perfecting a first security interest through uniform commercial code filing or any other such instruments as may be required by law. Upon performance of the terms and conditions of the Agreement, the Lessee shall have the option to purchase all equipment for $1.00. DOCUMENTATION: Lessor shall provide the Agreement. Lessor recommends a Lease Schedule under the existing Master Equipment Lease -Purchase Agreement dated May 15, 2012 as executed between Lessee and Lessor for this transaction. PREPAYMENT OPTION: So long as Lessee is not in default of the Agreement, Lessee shall have the option of paying off this transaction according to the Termination Values listed on the Amortization Schedules as provided in this Proposal. Partial prepayments will not be permitted under this Agreement. PROPOSAL EXPIRATION: This Proposal will automatically expire at the end of business on June 15, 2018 unless accepted in writing by Lessee or extended in writing by Lessor. The Agreement must be fully executed and to the satisfaction of Lessor by such date. After May 18, 2018, Lessor reserves the right to adjust the interest rate according to the Indexed Financing Rate. This Proposal is subject tofinal credit approval by Lessor and approval of Agreement in Lessor's sole discretion. To render a credit decision, Lessee shall provide Lessor with its two most recently audited financial statements and a copy of its most current year's budget. trust that you will find the contents of this Proposal to your satisfaction, If you should have any questions please contact me at 614-463-6580 or toll free at 866-215-9619 ext. 2. Sincerely, PNC Equipment Finance, LLC Alan zuelke Vice President PNC Equipment Finance, LLC 155 E. Broad Street Columbus, OH 43215 City of SombBend Request foxprmms |o—Tax Exempt Municipal! Lease Financing- Lease Purchase Financing April 30, 2018 ACCEPTED BY: City ofSouth Bend board of P,&jk. Warka By: Title: Dote: ' Compound Period:: Semiannual Nominal Annual Rate: 1961% AMORTIZATION SCHEDULE - Normal Amortization, 360Day Year Termination Date Payment Interest Principal Balance Value Loan 5/18/2018 6,115,434.00 NocaN 1 1/14/2019 665,542.87 119\63415 545,988.72 5,569,525.28 No call 2 7/14/2819 665,542.87 82,456.82 583,086.05 4,986,439.23 No call 3 1/14/2020 665,542.87 73,824.23 591,718.64 4,394,720.59 No call 4 7/14/2020 665,542.87 65,063.84 600,479M 3,784,241.56 3,908,888.81 5 1/14/2021 665,542.87 56,173.75 889,369M 3,184,872,44 3,288,418.61 6 7/14/2021 665,542.87 47152.84 618,3901.83 2,566,481.61 2,643^476.06 7 1/14/2022 665,542.87 37,996.76 627,546.11 1,938,835.50 1,997,103.57 A 7/14/2022 665,542.87 28,706.94 636,836.93 1,302,898.57 1,341,161.53 9 1/14/2023 665,542.87 19,277.57 646,265.30 655,033.27 675,508.27 10 7/14/2023 665^542.87 9,709.60 655,833.27 0.00 1.00 SrandTota|s 6,655,428.70 539,984.78 6,115,434.010 City of South Bend, Indiana Request for Proposals - Tax Exempt Municipal Lease Financing April 24, 2018 Date: April 24, 2018 City of South Bond, Indiana Various new vehicles and equipment per the attached Equipment Specification List, The Equipment Specification List is a general description of the vehicles and equipment to be purchased. It is expected that modifications to this listing may be necessary. Cost: South Bend Vehicles and Equipment: Building Department - $43,780 Code Enforcement - $78,940 Fire Department - $1,560,534 Information Technology - $217,124 (requesting option for a 4-year carve out) Police Department - $1,495,968 Solid Waste - $1,192, 960 Streets and Traffic & Lighting Department - $910,990 Venues, Parks & Arts - $600,000 Water Works - $25,138 Total - $6,116,434 se Payments: Five year term (except as noted on attached Equipment Specification List). Lessee shall make to (10) equal, consecutive semi-annual payments beginning on January 14, 2019, Payments will be on January 141h and July 14th. rest Rate: The interest rate and semi-annuat lease payments will be provided by the lessor in its proposal. The City requests a fixed interest rate and semi-annual lease payment that is guaranteed not to change if closing occurs by May 18, 2018. :hase Option: At the end of the lease, the Lessee will have the option to purchase the equipment for one dollar ($1.00). Approval Date: Tuesday, May 8, 2018 by the City of South Bend Board of Public Works (Agenda Items due date May 1, 2018) (Agenda Review date May 3, 2018) of Closing/Escrow Funding: Friday, May 18, 2018 ISecuritylinsurance: The Lessor will retain title to the equipment throughout the term. The Lessor shall retain a first priority security interest in the equipment until the Lessee has performed all duties required under the lease. Lessee will provide appropriate proof of insurance upon request. The Lessor will secure title after the lease term is completed. dor Payment Tax Reporting The Lessor or escrow trustee shall be responsible for any Form 1099 tax reporting on payments made to vendors from the escrow account. myment: The Lessee shall be allowed to prepay the tease at any payment due date. A prepayment penalty, if any, will be stated by the Lessor in its proposal, Fund Source: Funding through user charges, property taxes, income taxes, gas taxes and other revenue. Lease: The tease will be a net obligation and all costs and responsibilities associated with ownership including maintenance, insurance, licenses and other items shall be home by the Lessee. As a governmental unit, the City of South Bend is exempt from sales, use and property taxes. tract: Contract subject to review by the City of South Bend's Legal Department and City Controller. ow Funding: The Lessor will establish an escrow account for the payment of equipment purchased under this lease agreement. Any interest earnings from the escrow account will be for the benefit of the Lessee. �. Documentation or other closing fees, if any, will be stated in the Lessor's proposal. irtization Schedule: A principal and interest amortization schedule will be provided by the Lessor with the proposal. lification: Non -Bank qualified (more than $10,000,000.00 in debt will likely be issued during 2018) iosal Due Date: Monday, April 30, 2018 at 5:00 P.M. EST )oral Format: E-mail proposals only. Please reply to jhockenh@soulhbendin.gov tact: Jennifer Hockenhull, City Controller City of South Bend Department of Administration and Finance 227 W. Jefferson Boulevard South Bend, Indiana 46601 Telephone (574) 235-9822 Fax (574) 235-9928 OOo O doovdtidddro(6o(v(dom n 0 664] 0 0 000000000(O (O O O O O O O O O O N O 41 ai [O C4 y m h g (0 W M 0 I 0 0 Y O 0 0 W O N Ol W O W Cl47 N O LQ O M r N r !•1 V O F (� M a M m FA (0 47 N a W W W m O 4) to Y N O N I� 1- M N f+ N r M M N Id.(0 O N r N h (f3 O (A O O O O O) 0 0 0 0 0 0 0 0 4 Q 0 h W Am(�oMONO !� N o W 100 N 0 W (0 m c �? marr(n N to acnornmoLQLgC M Q F[� LO �n M N M m N mM � t, N 4 O (9 W m N m R NNNIMl�M�rN.- .-I� W 3 d r0 r m mmmm a V O N O N 0 a,0 a O O N N 0 0 N Cal 0 F $M1V N a [O Q1 m m tiOCj r ;4jv �[f V'NNA V sFa (�+ My.v rcn Lo Q W 4A O O � 4A m m m a a a a m m❑ m m m a m y z� zzzgzzzzzzz;zzzz z a z z N O C � o m R3 « C_ C LL N E `m a v w a w m O f6 ii V C U N i > J U a co0 m E N u m d N O N ?m �O7a acN mc FMesy- 4 aa en mi 'EXQ r o o�y3 LLLL U a ;N m tG U x n`m mmcE bm� a 0 =O00 a -o dn -No 5ma 7��mZWmprau (>U �wO = o a 0. 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(O (6 fC 16 16 10 16 10 16 N W (0 (0 l0 (O W l0 U U U U U U U U U U U U U U U U U w � a d V � � c O 41 G O > O L C F- O CO Na © s f0 f9 '� a `� otl c El C va '9Tb' �' (�$'�aaasc�n�asu aonn n n L an d ¢ L°o, o c o 0 U m U ii a ti a u1 u1 y N ul ul l- � 9i 5 F ,11 BOARD OF PUBLIC WORKS AGENDA ITEM REVIEW REQUEST FORM Date May 2, 2018 Name Benjamin Dougherty Department Admin & Finance BPW Date May 8, 2018 Phone Extension 7678 ❑ Professional Services ❑ Bid Opening ❑ Quote Opening ❑ Chg Order No. ❑ Ease./Encroach. M Other: Equipment Lease Financina ❑ Amendment ❑ Bid Award ❑ Quote Award ❑ C/O & PCA No. ❑ Traffic Control ❑ Req. to Advertise ❑ Title Sheet ❑ PCA ❑ Resolution ❑ Claim Company or Vendor Name PNC Equipment Finance, LLC ❑ Yes ❑ if Yes, Approved by Purchasing New Vendor ® No MBE/WBE Contractor ❑MBE Completed E.-Verify Form Attached ❑Yes ❑ WBE __ _ ❑ No Project Name 2018 Vehicle and Equipment Lease Financing #1 Project Number None Funding Source Departmental budgets Account No. Various Amount $6,115,434 Terms of Contract Lease financing for vehicles and equipment in amount of $6,115,434. Interest rate of 2.961 %. Subject to negotiation of final terms and documents. Purpose/Description . For. Chan e Orders Onl' nt of Amount ❑ Increase $ ❑ Decrease $ Previous Amount $ Current Percent of Change: % New Amount $ Total Percent of Change: Time Extension: Dispersal After Approval Copy Original ❑ ❑ ❑ ❑ n F-1