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HomeMy WebLinkAboutRES 21-016RESOLUTION NO. 21-016 WHEREAS, on December 8, 2020, the City Council of the City of Beaumont, Texas adopted Resolution No. 20-270 approving a lease purchase agreement to reimburse the City for the purchase of one (1) Fire Pumper Truck in the amount of $757,594.00; and, WHEREAS, bids were requested for a fixed interest rate to finance the truck with the first annual payment in arrears following the purchase of the truck which was on October 22, 2020; and, WHEREAS, the total lease purchase cost including interest of $38,606.80 is $796,200.80; and, WHEREAS, bids were received for a five (5) year lease purchase agreement for the lease purchase of a Pierce Enforcer Fire Pumper Truck; and, WHEREAS, Signature Public Funding Corp, of Towson, Maryland, submitted a bid at a fixed interest rate of 1.68% and, WHEREAS, the City Council is of the opinion that the bid submitted by Signature Public Funding Corp, of Towson, Maryland, is in the best interest of the City of Beaumont and should be accepted; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BEAUMONT: THAT the statements and findings set out in the preamble to this resolution are hereby, in all things, approved and adopted; and, THAT the bid submitted by Signature Public Funding Corp, of Towson, Maryland, for a five (5) year lease purchase agreement at a fixed interest rate of 1.68% and a total lease purchase cost of $796,200.80, as shown on Exhibit "A," attached hereto, for the lease purchase of a Pierce Enforcer Fire Pumper Truck, be accepted by the City of Beaumont. THAT the City Manager be and he is hereby authorized to execute a five (5) year lease purchase agreement with Signature Public Funding Corp, of Towson, Maryland, substantially in the form attached hereto as Exhibit "A," for the purposes described herein. PASSED BY THE CITY COUNCIL of the City of Beaumont this the 26th day of January, 2021. L Ltf Lif ' , Signature Public Funding Corp. Douglas S, Dillon, Executive Sales Officer 600 Washington Avenue, Suite 305 Towson, Maryland 21204 (410) 704-0083 ddillon@sianatureny.com January 12, 2021 Mr. Patrick Bardwell, Purchasing Manager City of Beaumont, Texas 801 Main Street, Suite 315 Beaumont, TX 77701 SIGNATURE PUBLIC- UNDI NG RE: Fixed interest Rate Lease Purchase Finance Agreement Dear Mr. Bardwell: Signature Public Funding Corp. ("SPFC") is pleased to present the to City of Beaumont, Texas ("City") its proposal for the financing of new Fire Apparatus as described in the Bid Number: PF1221-12. The terms and conditions of our proposal are outlined in the attached terms sheet, and contemplate this financing to a tax-exempt issuance by the City. As a result, although not apparent in the sample lease documentation that accompanied the Bid documentation, SPFC will require the filing of IRS Form 8038-G to reflect that the lease will be a tax-exempt issuance of the City. Furthermore, the documentation may require additional terms and conditions that are usual and customary in a tax-exempt lease purchase financing contract. If you have questions about the proposal please contact me for clarification or follow-up. It is a pleasure to offer this proposal to the City and we look forward to a favorable acknowledgment. SincerelyZS. �- `� Dougon Executive Sales Officer. -2- Exhibit "A" PROPOSAL & TERMS SHEET: BACKGROUND AND PARTIES City of Beaumont, Texas LESSEE: City of Beaumont, TX (the "City" or "Lessee"), which shall be political subdivision or body corporate and politic of the State of Texas and qualify as a political subdivision within the meaning of Section 103(c) of the Internal Revenue Code of 1986, as amended (the "Code"). LESSOR: Signature Public Funding Corp., a wholly -owned subsidiary of Signature Bank ("SPFC" or "Lessor"), or its Assignee. TYPE OF FINANCING: A Lease Schedule to a Master Lease Purchase Agreement (the "Lease"). The Lease will stipulate that the Lessee is responsible for all costs of operation, maintenance, insurance, taxes (if applicable) and the like. Said Lease shall be subject to the annual appropriation of funds by Lessee's governing body. Lease Payments will be calculated an a 301360 amortization basis. The Lease will not be a general obligation of the Lessee or the State of Texas. The Lease shall be governed by the laws of the State of Texas and shall comply with all applicable State and federal laws and regulations. TAX EXEMPT STATUS: Lessee acknowledges that the total amount of tax- exempt obligations (other than private activity bonds) to be issued by Lessee during calendar year 2021 will (or may not) exceed ten million ($10,000,000.00) dollars. The Agreement will be a tax-exempt financing such that the interest component of the Lease payments will be excludable from the Lessor's gross income for federal income tax calculations and exempt from all taxation in the State. The Lessee covenants and agrees to comply with all requirements of the Internal Revenue Code of 1986, as amended, and all other applicable rules, laws, regulations and promulgations necessary to keep the interest portion exempt from such Federal and State income taxes. If as a result of the Lessee's failure to comply with the foregoing covenant or as a result of a change in laws the interest portion of the Lease payments is included in the Lessor's federal or state gross income tax calculations, then the interest due under the Lease may be adjusted for the affect of the failure or -3- change, together with any fees or penalties resulting if due to non-compliance. The Lessee will hold legal title to the Equipment, and federal tax ownership will be deemed to be with the Lessee. The Lessor has not provided, nor will it provide tax or accounting advice to the Lessee regarding this transaction or the treatment thereof for tax and accounting purposes. The Lessor is not a registered financial advisor, nor registered with the MSRB or as broker -dealer in securities. The Lessee has obtained independent tax, financial advisory, securities and accounting advice as it deems necessary. PROJECT/USE OF PROCEEDS: The "Equipment" will be new Fire Apparatus as identified in the Bid Number: PF1221-12, or as may be substituted per mutual agreement of the parties. The Equipment will be delivered by a vendor of the City's choosing. Equipment specifics like model number, MSN and options will be more fully. set forth on the Lease Schedule and/or Acceptance Certificates delivered in connection with the Lease. The `Equipment Cost" and "Lease Proceeds" is estimated to be exceed $757,594.00. The final lease proceeds will be adjusted for the final costs of the Equipment and reasonable transaction expenses agreed to be financed between the parties. TERM, INTEREST RATES, AND PAYMENTS: ":PAYMENT;: ::;iAY NTAND :: PAYMENTS' RATE*.': STRZICTURE : DiTE'`:'.': AMORTIZATION 4 1.68% Level AnnuaL 2022 See Annex A 5 1.68% Level, Annual 2022 See Annex A *Interest Rate is equal to a margin over the average life Interest Rate SWAP as of January 12, 2021. The Interest Rate is subject to an adjustment for changes in the Interest SWAP if the transaction does not close before February 28, 2021, Once set, the interest Rate will be fixed for the Term. Sample amortization tables can be found attached hereto as Annex A. in PROPOSAL & TERMS SHEET: LEASE TERMS, AMOUNT, & RATES City of Beaumont, Texas PREPAYMENT OPTIONS: The Lessee can exercise its right to prepay its obligations under the Lease in whole (partial prepayments are permitted with respect to damaged items, of Equipment or unused lease proceeds remaining in the Escrow Account) on any scheduled payment date following 30 days' notice by paying the Prepayment Price to the Lessor. Prepayment Price is equal' to the sum of: (a) the Lease Payment due on such date, (b) all other amounts due and owing under the Lease, and (c) 101% of the Remaining Principal Balance. SECURITY: The Lessee will grant Lessor a first priority and perfected security interest in the Equipment, Escrow Fund (if any), and all proceeds with respect to the foregoing. Lessor will file UCC-1 financing statements and fixture filings in order to perfect its security interest at its cost and expense; provided, however, that Lessee will provide Lessor with all reasonably requested information in 'order to make such, filings. To the extent that any portion of the Equipment consists of titled vehicles or equipment, Lessee will list Lessor as a first position lienholder on such titles. Lessee is obligated to make all Rental and other Payments due under the Lease subject to its appropriation in each Fiscal Year of sufficient amounts of legally available funds. ESCROW FUNDING: In order to assure the quoted interest Rate the Lessor has assumed funding the transaction into an escrow account if the Equipment has not delivered and funding has not taken place by February 28, 2021. The escrow account will be used to pay equipment vendors, contractors and any transaction expenses. The Escrow Agent will be Signature Bank. The Escrow Account will be governed by a standard form Of escrow agreement with such changes as may be agreed to between the parties. SPFC will review and approve escrow disbursements prior to the Escrow Agent disbursing funds. It is assumed that interest earnings, if any, will accrue for benefit of the Lessee, and that unused portions of the escrow account will be applied to the Prepayment of the Agreement. -5- If an Escrow Fund is required, the City will be responsible for any escrow fees for administrative and investment activities related to the escrow account. The Signature Bank escrow account can be provided at a one time fee of $0.00. REIMBURSEMENT: If the City intends to be reimbursed for any cost associated with the Project, the RFP or the Lease financing, intent for reimbursement from the Lease Proceeds must be evidenced and must qualify under the Treasury Regulation Section 1.150.2. INSURANCE: Lessee may choose to self -insure or provide alternate coverage on the terms and conditions acceptable to and previously approved by the Lessor. Alternatively and if the City maintains third party commercial insurance coverages, the City will furnish evidence of continuing all-risk property and casualty coverage for the greater of the Prepayment Price and/or replacement value of the Equipment and liability coverage of at least $1,000,000 per occurrence for each property and bodily injury liability, with a minimum of $3,000,000 ($5,000,000 for vehicles) aggregate for the Lease financed hereunder for the full term thereof. Such property and liability coverages shall, respectively, name Lessor as loss payee and additional insured. AUTHORIZED SIGNORS: The ' Lessee's governing body shall provide SPFC with its resolution or other evidence of authority to acquire the Equipment, enter into the Lease/financing thereof, and to execute the Lease Documentation and shall designate the individual(s) to execute all necessary documents used therein. LEGAL OPINION: The Lessee's counsel shall furnish SPFC with a validity and tax opinion covering, inter alla, the tax- exempt nature of this transaction, the authority of the City, the approval of the Project, and the approval of the documents used herein. This opinion shall be in a form and substance satisfactory to SPFC; however, such opinion may be delivered by the City's internal counsel. Upon request by Lessee and agreement of the Lessor, the tax portion of the opinion may be waived for this transaction. M LEASE DOCUMENTATION: The Lease Documentation will be in the form of documentation previously used between the Lessee and the Lessor (2018), or as an alternative in the form provided by the Lessee in along with the RFP and subject to approval by SPFC, and its counsel. The Lessee will be responsible for a $0.00 documentation fee that can be financed with Lease Proceeds. Documentation shall include all standard representations, warranties, and covenants typically associated with a transaction of this nature, including any requirements of the SPFC's credit approval. RATE LOCK EXPIRATION: Upon, award, the Lessor will set the rate, seek a rate lock and use all reasonable efforts to hold the quoted interest rate until the funding date, and no later than February 28, 2021, provided the City notifies the SPFC in writing that the proposal has been accepted, subject to governing body approval, by January 29, 2021! If funding does not take place by February 28, 2021, the Interest Rate and Payments may be adjusted based on the changes to the average life Interest Rate Swap in effect on any of the three (3) days prior to funding. Once set, the Interest Rate and Payments will remain fixed for the term. DUE DILIGENCE: The ;City shall provide to SPFC a final, executed (if available) copy of the Purchase Agreement or Invoice, three (3) years of current financial statements, budgets, demographics, and proof of appropriation for the current Fiscal Year and such other financial information relating to the ability of City, to continue the Lease as may be reasonably requested by SPFC. This proposal shall not be construed as a commitment to a lease or lend by and is 'subject to final credit approval by the Creditllnvestment Committee of Signature Public Funding Corp. and Signature Bank and approval of the; definitive lease documents in Signature Public Funding Corp.'s sole discretion. To render a credit decision, the City shall provide SPFC with the information requested above. Any and all capitalized terms not specifically defined herein shall be given their meaning under the Lease Documents. -7- PROPOSAL & TERMS SHEET:' PROPOSAL ACCEPTANCE City of Beaumont, Texas ACCEPTANCE BY CITY: The Proposal & Terms Sheet submitted by Signature Public Funding Corp., has been reviewed, agreed to, and accepted by the City of Beaumont, Texas on , 2021, AGREED AND ACCEPTED: CITY OF BEAUMONT Name: Title: -8- Annex A: Sample Amortization tables illustrating funding on February 15, 2021 4 Annual Payments Beginning One Year from Funding Date Interest Rate 1.68% Funding Annual Unamortized Prepayment Date Amount Payment Interest Principal Balance Amount 2/15/2021 757,594.00 - - - 757,594.00 765,169.94 2/15/2022 - 197,419.50 12,727M 184,691.92 572,902.08 578,631.10 2/15/2023 - 197,419.50 9,6241.76 187,794.74 385,107.34 388,958.41 2/15/2024 - 197,419.50 6,469;81 190,949.69 194,157.65 196,099.23 2115/2025 - 197,419.50 3 261.85 194,157.65 - - Total 757,594.00 789,678.00 32,084.00 757,594.00 5 Annual Payments Beginning One Year from Funding Date Interest Rate 1.68% Funding Annual Unamortized Prepayment Date Amount Payment Interest Principal Balance Amount 2/15/2021 757,594.00 - - - 757,594.00 765,169.94 2/15/2022 159,240.16 12,727.58 146,512.58 611,081.42 617,192.23 2/15/2023 - 159,240.16 10,266.17 148,973.99 462,107.43 466,728.50 2/15/2024 - 159,240.16 7,763.41 151,476.75 310,630.68 313,736.99 2/15/2025 - 159,240.16 5,218.60 154,021.56 156,609.12 158,175.21 2/15/2026 - 159,240.16 2,631.04 156,609.12 - - Total 757,594.00 796,200.80 i 38,60,6.80 757,594.00