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File Number: 16-368 <br />equipment installation. Proposals were received from Bank of America, Holman Capital, <br />Municipal Finance Corp., Pinnacle Public Finance, PNC Equipment Finance and Signature <br />Public Funding Corp. Proposals were evaluated based on interest rate, business terms and <br />experience. Bank of America provided the most favorable bid. The bid allows for a one year <br />construction period and 15 years amortization of the principal amount financed. Semi-annual <br />lease payments are expected to average $212,707 based on the lease rate in effect on the <br />bid date. The effective interest rate on June 1 was 2.19%. The interest rate is based on the <br />10 year Interest Rate Swap, which is published on daily financial media sites. <br />Financing Structure <br />Over the years, the City had used certificates of participation and lease revenue bonds to <br />finance the construction and retrofitting of its public facilities. Certificates of participation are a <br />variation of the general lease-purchase financing method that had been commonly used in <br />California. Due to a perceived preference for private placement, tax-exempt leases in today’s <br />market, the financing will be structured as a tax-exempt lease. For the proposed lease, the <br />Bank will lease the equipment to the City. The City will make these payments to the Bank <br />from its General Fund. Leased equipment is the collateral for the Agreement payments <br />during the intended 16 year lease period. <br />The Financing Team <br />Staff worked with the firms listed below to bring this financing transaction to the Council for <br />approval. Therefore, the resolution of issuance to be adopted by the Council directs staff to <br />enter into agreements for services with the following firms in the following capacities: <br />Name of Firm Capacity <br />Bank of America, N.A. Lessor <br />Jones Hall, APLC Lease Counsel <br />Bank of America, N.A. Escrow Agent <br />The Bank was chosen via a request for proposals. The Bank was deemed to be the strongest <br />lessor from a group of six proposals received by the City. The primary reasons for the Bank’s <br />selection are its pricing, experience, and structuring creativity. <br />Jones Hall, APLC (JH), has been the City’s bond counsel dating back to 1979. JH ranks <br />among the top three bond counsel in the number of state and local bond issues in California <br />during each of the past ten years. Similarly, during the past ten years, JH has been among <br />the top two as disclosure counsel. A bid was solicited from another Lease Counsel firm but <br />was more expensive and therefore was not selected. <br />Bank of America, NA will serve as the lease escrow agent. The Bank is one of the top <br />municipal lease trustees in the country. The Bank also serves the City with three local <br />branches. <br />All fees associated with issuing the Equipment Lease/Purchase Agreement will be paid from <br />financing proceeds. <br />Sources and Uses of Funds <br />Staff proposes the following sources and uses of funds for the Lease financing transaction. <br />Page 2 City of San Leandro Printed on 7/13/2016 <br />153