SR-040996-6I
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PURCH PW DH: br. f:\flnance\purch\stfrpts\srlease APR - 9 1996
CouncIl MeetIng Apnl 9,1996 Santa Monica, CA
TO Mayor and Crty CouncIl
FROM CIty Staff
SUBJECT RecommendatIon to Refinance EXIsting Lease No 1050 with Munrcrpal ServIces
Group, Inc for the Lease/Purchase Financing of Five {5} Custom-Burlt Triple
CombinatIon Fire Trucks
Introductron
This report concerns the recommendatron to refrnance exrstrng Lease No. 1 050 with
Municipal Services Group, Inc for the lease/purchase flnancrng of fIve (5) custom-burlt triple
comblnatron fire trucks for the FIre Department, rn the total amount of $269,910 75 per year,
including Interest, over the remainIng four (4)-year lease penod.
Back~round
On June 28, 1994, City Council awarded Bid #2495 to Municipal Servrces Group, Inc for the
lease/purchase frnancrng of fIve (5) new and unused custom-buIlt tnple combrnatron fIre
trucks In the amount of $271,760 83 per year, including Interest, over a frve-year penod at an
rnterest rate of 5 29 % To date, one yearly payment has been made at the brd award amount
of $271,760 83
Due to a drop In Interest rates, the City can refinance the remainder of thIS lease/purchase
finanCing agreement WIth MUniCIpal ServIces Group, Inc The Interest rate would be lowered
from 5 29 % to 4 55 % whrch would reduce the yearly payment from $271,76083 to
$269,910 75per year for the remaining four (4) yearly payments
APR - 9 1996
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Staff conducted a survey of other lease-purchase financing firms and finds the 4 55% rate to
be the lowest available at thiS time Staff has evaluated the refinancing documents and finds
that It IS In the best Interest of the City to refinance thiS lease/purchase agreement.
Budr;:!et/Flnanclal Impact
By refmanclng thiS lease/purchase agreement, $1,850 08 per year would be saved for a total
of $7,400.32 over the remaining four years In the Capital Improvement Program Budget, In
account number 01-730-313-20096-8900-99069"Flre Vehicles Lease Payment"
Recommendation
It IS recommended that Lease No 1 050 With MuniCipal SerVices Group, Inc for the
lease/purchase fmanclng of five (5) custom-built triple combmatlOn fire trucks be refinanced at
an annual mterest rate of 455% With yearly payments of $269,910 75 over the remamlng
four (4) years of the agreement
Prepared By Pam Wortham, Purchasmg Agent
Diane Howell, Buyer
April 1, 1996
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