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City of San Leandro <br />Meeting Date: July 18, 2016 <br />Staff Report <br />Agenda Section:File Number:16-368 CONSENT CALENDAR <br />Agenda Number:8.I <br />TO:City Council <br />FROM:Chris Zapata <br />City Manager <br />BY:David Baum <br />Finance Director <br />FINANCE REVIEW:David Baum <br />Finance Director <br />TITLE:Staff Report for a Resolution Authorizing the Execution and Delivery of an <br />Equipment Lease/Purchase Agreement with Respect to the Acquisition, <br />Purchase, Financing and Leasing of Certain Equipment for the Public Benefit; <br />Authorizing the Execution and Delivery of Documents Required in Connection <br />Therewith; and Authorizing the Taking of All Other Actions Necessary to the <br />Consummation of the Transactions Contemplated by this Resolution <br />SUMMARY AND RECOMMENDATIONS <br />Staff recommends that the City Council approve the resolution and documents required to <br />execute and deliver an equipment lease/purchase agreement (Agreement) with Bank of <br />America, National Association (Bank), as lessor, to finance energy and water conservation <br />equipment (Equipment) to be installed at City facilities pursuant to the Energy Services <br />Agreement to be entered into with Climatec plus costs related to the installation and financing <br />of the Equipment, up to an amount of $5,500,000. Annual lease payments on the 16 year <br />Agreement are not expected to exceed $450,000. The Agreement is an appropriation lease, <br />which means that the City will need to budget and appropriate lease payments in each year. <br />In the event the City elects not to so budget and appropriate lease payments in a given year, <br />Bank of America, as lessor, will have the right to remove the leased equipment. <br />DISCUSSION <br />On May 16, 2016, the City Council approved an Installation Agreement and other contracts to <br />be financed with a tax-exempt lease selected through a competitive bid process. Climatec, <br />chosen through a competitive bid process, will install upon, onto, or within City facilities up to <br />$5,270,455 of energy and water saving equipment. Climatec has further guaranteed sufficient <br />annual savings to pay the financing costs related to the equipment acquisition and installation. <br />Total energy and water savings are projected to be $8.0 million over 16 years. Whereas, total <br />debt costs are projected to equal $6.5 million over 16 years. This results in a net present <br />value savings of $1.5 million over 16 years. <br />On June 1, 2016, staff received six proposals from financial institutions offering to finance the <br />Page 1 City of San Leandro Printed on 7/13/2016 <br />152