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File Number: 11 -321 the City acquire two new fire engines utilizing Alameda County Fire Department's bid. Q611911 �1[a]0I The bid price by Golden State Fire Apparatus for each 2010 Pierce Arrow XT unit is $485,545, inclusive of costs for inspection, delivery, and sales tax. In addition, the City will receive a prepayment discount of $23,837. The total amount of the purchase and the related financing for the two engines is $971,090. The Finance Committee recommends that the City finance the purchase of the new fire engines (fire engines only, not any equipment required to properly outfit the unit upon delivery) through a five -year lease /purchase agreement. The City has used lease /purchase financing in the past, most notably to acquire other fire apparatus and computer hardware and software. Generally, the lender (bank, financing or leasing company) purchases the equipment and then leases it to the City for a specified period. At the end of the lease period the lender sells the equipment to the City for $1 and the City becomes the legal owner The Finance Committee recommends that the City Council approve a lease /purchase agreement with Oshkosh Capital. Oshkosh Capital is affiliated with the fire engine manufacturer and acts as a financing partner. Staff reviewed the terms of the proposed lease /purchase and finds it most competitive and best meets the interests of the City. Staff also obtained quotes from Capital One Public Finance and Holman Capital (JP Morgan Chase reviewed the acquisition but declined to offer a quote). For the five -year financing, the quoted rates ranged between 2.20% and 2.45 %, with Oshkosh providing the best rate. Also, Pierce offered an additional prepayment discount with Oshkosh financing. The lease would be for a period of five years, and the annual payments would be approximately $207,200. Funds will initially be appropriated for annual lease payments in 2012 -13. The first payment is due one year after commencement of the lease. Golden State Fire has indicated the engines are expected to be delivered to the City by July 2012. City Council Committee Review and Action The Finance Committee reviewed this matter at its meeting on October 21, 2011. Fiscal Impact Funds will initially be appropriated for annual lease payments in 2012 -13. The first payment is due one year after commencement of the lease. NIW 0[a] IR &I [a] 0 Staff recommends that the City Council approve the resolution authorizing acquisition of two replacement pumper fire trucks and financing through a lease purchase agreement with Oshkosh Capital. The resolution authorizes the City Manager to execute the lease purchase agreement and other documents necessary to finance the acquisition. City of San Leandro Page 2 Printed on 11/1/2011