HomeMy WebLinkAboutAgenda Statement 1985/08/13 Item 8 2 ,
COUNCIL AGENDA STATEMENT
Item 8
Meeting Date 8/13/85
ITEM TITLE: Resolution /2/d7 Approving Lease With Option to Purchase
Agreement with GELCO Municipal Services Company and
Appropriating Funds ��oo
SUBMITTED BY: Director of Finance4 (4/5ths Vote: Yes X No )
REVIEWED BY: City Manager 11, 6-*
On May 28, 1985, the City Council authorized staff to pursue lease financing
of the TeleCom Plus NEAX 2400 Telecommunications System. The Finance
Department has solicited bids from interested third party financial
institutions and the lowest and most responsible bid was submitted by GELCO
Municipal Services Company.
RECOMMENDATION: Adopt resolution approving agreement and appropriating
funds.
BOARDS/COMMISSIONS RECOMMENDATION: Not Applicable.
DISCUSSION:
The financing of the City' s new phone system was originally planned to be
through the California Cities Financing Corporation. However, at the last
minute, the financing fell through when one of the cities involved in the
equipment financing withdrew from the bond issue. The City Council ,
therefore, authorized staff to pursue lease financing of the new phone system
as an alternative to CCFC.
Solicitation of Bids
Twelve firms were contacted that specialize in municipal lease purchase
financing and asked to submit bids to finance the $300,000 Telecommunications
System. Bids were received from ten firms as follows:
# of Quarterly Total Effective
Pay- Payment of Interest
Firm Term ments Amount Payments Rate
GELCO Municipal Services 5 yrs 20 $18,423.00 $368,460.00 8.17%
Municipal Leasing Corporation 5 yrs 20 $18,680.00 $373,600.00 8.75%
Security Pacific 5 yrs 20 $18,747.79 $374,955.80 8.90%
ComLease 5 yrs 20 $18,754.76 $375,095.20 8.92%
E.F. Hutton 5 yrs 20 $18,756.75 $375,135.00 8.99%
Prudential Bache 5 yrs 20 $18,972.00 $379,440.00 9.40%
Rauscher Pierce Refsnes 5 yrs 20 $19,008.61 $380,172.20 9.48%
Leasource 5 yrs 20 $19,035.00 $380,700.00 9.54%
San Diego Trust & Savings Bank 5 yrs 20 $18,650.00(1 ) $373,000.00 9.70%
U.S. Leasing 5 yrs 20 $19,358.00 $387,160.00 10.25%
(1 ) S.D. Trust & Savings quoted quarterly payments in advance. All other firms
quoted quarterly payments in arrears (at end of quarter) .
Page 2, Item 8
Y Meeting Date 8/13/85
Recognizing the time value of money, i .e. , a dollar today is worth more than a
dollar in the future, staff recommends that the new phone system be financed
through a lease with GELCO Municipal Services Company rather than paying cash
for the acquisition. Since The City would not be paying cash but would be
financing the acquisition over a five year period, it means that we have use
of the funds for investment purposes for five years which helps to reduce the
cost to the City.
Lease Agreement
The lease with option to purchase agreement proposed to be entered into with
GELCO Municipal Services Company has the following terms:
Equipment: NEAX 2400 Telephone System
Finance Structure: Lease with Option to Purchase
Amount to be Financed: $300,000
Term: Five (5) Years
Interest Rate: 8.17%
Payment Mode: Quarterly in Arrears
Payment: $18,423 per Quarter
FISCAL IMPACT:
In March 1985, the City Council appropriated $298,410 for acquisition of the
new phone system. Under this proposal , Chula Vista will receive $300,000 from
GELCO to fund the phone acquisition. The $300,000 will be repaid to GELCO
over a five-year period in the form of quarterly lease payments.
Lease Payments to be made by the City are in the amount of $73,692 per year
for five years. For the remainder of FY 1985-86, the City will be obligated
to make three quarterly payments totaling $55,269. This requires
appropriation of $55,269 from the unappropriated balance of the City' s General
Fund Reserve.
WPC 0298G
fAIW
by th3 C:ty Coj-:cil of
Chula Vista, C :itornia
Dated �'/ �
DORSEY & WHITNEY .
A Partnership Including Professional Corporations
2200 FIRST SANK PLACE EAST
MINNEAPOUS, MINNESOTA 55402
(612)340-2600
TELEX 29-0805
TELECOPI ER (812 1 340-2868
Gelco Municipal Services Company _
Three Gelco Drive / - fe?
Eden Prairie, Minnesota 55344 / 4
r
Re: Lease with Option to Purchase Agreement dated
as of August 12, 1985 , by and between Gelco
Municipal Services Company, a division of
Gelco Corporation (Gelco) , and the City of
Chula Vista, California (Lessee)
Gentlemen:
We have acted as special counsel to you with respect
to the Lease described above. In that capacity we have
reviewed copies of the Lease, the Exhibits attached thereto
and a Certificate of Acceptance, dated as of October 14 ,
1985, confirming the delivery to and the acceptance by Lessee
of the equipment to be delivered under the Lease as set
forth on Lease Exhibit A (the Equipment) . We have 'also
examined and relied upon the legal opinion of Mr. Charles
R. Gill, Assistant City Attorney and counsel to Lessee,
dated August 19, 1985, relating to Lessee and the Lease .
The Lease provides that it will be in effect for
a term commencing on August 12 , 1985 , and ending on October
'14 , 1990 . Under the Lease Gelco is leasing the Equipment
to Lessee, and Lessee has undertaken to pay to Gelco Rental
Payments with respect thereto aggregating $341, 317 . 60, compris-
ing principal payments of $277, 910 .49 and interest on deferred
principal payments of $63 , 407 . 11. The Rental Payments are
payable at the' times and in the amounts as set forth on
Lease Exhibit B. The Rental Payments are payable exclusively
from moneys to be legally appropriated and provided therefor
by Lessee . In the sole event that moneys are not so
appropriated and provided with respect to the Equipment,
Lessee may, by written notice to Gelco, discontinue the
Lease at the end of any fiscal year of Lessee (July 1 through
June 30 ) then in effect. If Lessee discontinues the Lease
at the end of any such fiscal year in the manner provided
therein, the Lease is terminated without penalty or liability
on the part of Lessee to pay any Rental Payments coming
due after the fiscal year then in effect, but in such event
Lessee has the obligation to transfer title and deliver
the Equipment to Gelco at the time and in the manner provided
in the Lease. In the event Lessee does not discontinue
the Lease and pays all Rental Payments due in accordance
therewith, the rights of Gelco in the Equipment are terminated.
•
DORSEY & WHITNEY
fi
Lessee has an option to purchase Gelco ' s interest in the
Equipment without penalty on each Rental Payment Date for
the Purchase Option Price as specified on Lease Exhibit C .
From our examination of such proceedings and
documents, and in reliance on the legal opinion described
above, assuming the genuineness of the signatures thereon
and the accuracy of the facts and conclusions stated therein,
and based upon federal laws, regulations , rulings and decisions
in effect on the date hereof, it is our opinion that the
amount of each Rental Payment designated as and comprising
interest as set forth on Lease Exhibit B is not includable
in gross income of the recipient for United States income
tax purposes .
We express no opinion as to compliance by you
with state or federal securities laws applicable to disposition
of your rights under the Lease to any financial institution
or other investor.
Dated October 29 , 1985 .
Very truly yours,
[111)-17-14;3.64/-V14
Fleet
Management
•
Three Gelco Drive
Eden Prairie, MN 55344
612-828-1000
e; .v p .
i
NOTICE OF ASSIGNMENT
Gelco Municipal Services Company, a division of Gelco
Corporation (Lessor/Assignor) , hereby gives notice of
an Assignment and Security Agreement between Lessor/
Assignor, and First Union National Bank, (Assignee)
in which Lessor/Assignor assigned to Assignee all of
its rights in and to the Lease Rental Payments and
other amounts due under a Lease with Option to
Purchase. Agreement dated as of August 12, 1985 by and
between Lessor/Assignor and Chula Vista, California
(Lessee) . Lessor/Assignor hereby requests , gives
notice and instructs Lessee that all Rental Payments.
hereafter coming due pursuant to the Lease be made
payable and remitted to Assignee .
Gelco Municipal Services Company, a division of Gelco
Corporation (Lessor/Assignor)
By ‘ ;.L..477421 .!..■
Its Vice President
Date October 29 , 1985
clj :notassg—Oa
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.... ...... , Th city
e - ,of CirulaVisf-a
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Finance Department (619) 691-5051
tICT.21=1=LIMISPIIIIII
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. • • •
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' .. . . ACKNOWLEIIGMENT OF ASSIGNMENT - -- --"'---
. .
... . . . . . . .
• • • • - ' •
The City of Chula Vista, California (Lessee) as party to a Lease
„t.#04,wit4fraptlamtce...Purchaise..Aweepterkt,..(Agreement),>., dat.ed_ as of
...
August TZ, T985 between. Lessee'ineGeTda*NturricipaT Services - —
Company, a divisforr of GeTca Corporation: (Lessor) , hereby acknow- ' -.-
ledges receipt of a.Notice of Assignment, dated October 29, 1985
. .
whereby Lessor gave notice of its assignment to First Union
National Bank of its right to receive all Rental Payments due
from Lessee under the Agreement. Pursuant to the Notice of
Assignment from Lessor, Lessee agrees to deliver all Rental
Payments coming due under the Agreement to First Union National
Bank the Assignee'. .4-- - -"I' " - '- .' - ..
..,
. _ .
Dated: . October 30, 1985
' . • •
. .
. . .
/ , / • .
By: i ..4k..,...r.4- ../.44.41.4. ..- ' • • • •
• . . 1 Lyman Christop er - . . . • .
- • Its Director of Finance ..*' -.• ' ' ' • ' '- ' • ' ,
••
•. . . •
. .
. .
.. -
. .
. . . ,
•
276 F-ourth Avenue Chula Vista,Catifornia 92010 1
“ ,
_Q1Q® ■I I i C E ' `�� Iei�°1 1 ► C`._"J ! � ► lrl —' ;Il- ISSUE DATE(MMIDDJYYL
i ( 9/24/85 nic
�0 6 e r t F Driver Co m p a ny, Inc. THIS CERTIFICATE IS ISSUED AS A•MATTER OF INFORMATION ONLY AND CONFERS
NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AMEND,
10 1 Birch S.t. r Suite 230 EXTEND DR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELow .
fewport Reach, CA 92660
COMPANIES AFFORDING COVERAGE
714) 955-0270
cLRY A Planet Insurance Company
Fi or CHULA VISTA
LtitRY B Employers Reinsurance Corporation
mber of the San Diego Co. CitieRY C
sk Management Authority
o J. Farris/ City of Vista COARNY D
0. Box 1988 , Vista, CA 92083
COMPANY E
LETTER
AGES
S IS TO CERTIFY THAT POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUEDTO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED.
TWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY
ISSUED OR MAY PERTAIN,THE INSURANCE AFFORDED BY THE POUCIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,EXCLUSIONS,AND CONDO
NS OF SUCH POUCIES.
TYPE OF INSURANCE POLICY NUMBER'ERIC NE POLICY EGDIRATION LIABILITY.LIMITS IN THOUSANDS,
DATE(MM/CONY) DATE(MMVaaYY) EACH AGGREGATE
ENERAL UABIUTY OCCURRENCE
IBOODDILY $ $
COMPREHENSIVE FORM
PREMISES/OPERATIONS KL 5973188 4/1/8 5 4/1/86 PROPERTY
UNDERGROUND DAMAGE $ $
EXPLOSION&COLLAPSE HAZARD
PRODUCTS/COMPLETED OPERATIONS
CONTRACTUAL BI&PD
INDEPENDENT CONTRACTORS COMBINED $9 , 900,
•
BROAD FORM PROPERTY DAMAGE
PERSONAL INJURY Excess of $100, 000 Self-Insured RetentionpERsoNALINJuRy $ Incl .
ITOMOBILE LIABILITY • eaoU.Y $ b
INJURY ANY AUTO (PER FERSOI)
ALL OWNED AUTOS(PRIV.PASS.) Included i n • eooLY.
Rum,ALL OWNED AUTOS/OTHER PATHSAN) ahov,. policy AcaoBM $ P•':*
HIRED AUTOS
PROPERTY $
NON-OWNED AUTOS •
PROPERTY
GARAGE LIABILITY •
BI&PD
COMBINED $ * •
5SS LIABILITY
UMBRELLA FORM K R 67 0 5 9 5 6 4/1/85 4/1/86 WMBNED $ 4 , 001 $ 4, 00C
OTHER THAN UMBRELLA FORM
STATUTORY
YORKERS'COMPENSATION
AND C-22442—Q 1/1/85 1/1/86 ' ' s (DISEASE-POLICY LIMIT)
EMPLOYERS' LIABILITY Excess o f$100 , 000 Self-Insured R e t e n t i o $ (DISEASE-EACH EMPLOYEE.
ER
TION OF OPERATIONS/LOCATIONSNEHICLES/SPECIAL ITEMS
respects: Leased NAEX Telecommunication System
valued at $300 , 000 effective August 12 , 1985 . ,;
.itional-Insured Endorsement to follow
• • • . • •
co 1 un1cipa ervices
SHOULD ANY OF THE ABOVE DESCRIBED POUCIES BE CANCELLED BEFORE THE EX-
'e e G e l c o Drive PI1 DATE THEREOF, THE ISSUING COMPANY WILL. ENDEAVOR TO
n Prarrie , Min. 55344 MAIL 1 U DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED O THE
LEFT,BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR UABILITY
OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES.
AUTHORIZE REPRESENTATIVE
't!Z
•- , •:• •:.tl •i
E P ISSUE DATE MM/D
1C RTIFIC h-� OF i � NCB a ,r)
N, 11-8-85 nic.
UCEFI
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS
NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AMEND,
EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
lert F . Driver Company, Inc .
(1 Birch Street , Ste . 230 COMPANIES AFFORDING COVERAGE
Tort Beach, CA 92660
4) 576-0271
CRY A See attached schedule
COMPANY B
ED LETTER
y of Chula Vista
ber City of San Diego County coLEMER Y C •
ies Risk Management Authority COMPANY
0 Camino Del Mar LETTER D
Mar, California 92014
COMPANY E
LETTER
AGES
I IS TO CERTIFY THAT POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POUCY PERIOD INDICATED.
WITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY
SSUED OR MAY PERTAIN,THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,EXCLUSIONS,AND CONDI-
iS OF SUCH POLICIES.
TYPE OF INSURANCE POLICY NUMBER Paw EFFECTIVE POLICY ExpIRATION UABIUTY LIMITS IN THOUSANDS
DATE(MMW(Y) DATE(MMAMNY) EACH AOOAEf9ATE
NERAL LIABILITY OCCURRENCE_
BIODIILLY Y $ $
COMPREHENSIVE FORM
PREMISES/OPERATIONS
PERTY
UNDERGROUND DAMAGE $ $
EXPLOSION&COLLAPSE HAZARD •
OPERATIONS
CONTRACTUAL ■ COMBINED $ $
•
INDEPENDENT CONTRACTORS
BROAD FORM PROPERTY DAMAGE
PERSONAL INJURY - PERSONAL INJURY $
TOMOBILE UABILITY BODILY
wry
ANY AUTO $
ALL OWNED AUTOS(PRIV. PASS.) BADLY
ILL OWNED AUTOS CRAM
{
uINY
PRN. PASS.
BRED AUTOS
•
ION•OWNED AUTOS • • DAMAGE
IARAGE UABIUTY
• COMBINED $
•
ESS LIABILITY
IMBRELIA FORM &MaED $ $
ITHEi THAN•UMBRELLA FORM
ORKERS'COMPENSATION STATUTORY
AND
$ (EACH ACCIDENT)
EMPLOYERS'LIABILITY $ • (DISEASE-POLICY OMIT)
• (DISEASE-EACH EMPLOYEE)
$15,000,000 LOSS LIMIT
)perty Insurance See Attached Schedule 12-30-84 12-30-85 per occurrence. AL1
rick with afianriarri
LION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ifEMS Exclusions. Flood Included.
;d NAEX Telecommunication System valued at $300,000 • Earthquake Excluded
Give August 12, 1985, ADDITIONAL NAMED INSURED AND Annul Aggregate applies tc
PAS IIVDORSFI�1T TO FOLLIDW .. .-.- • "V • • _ T F • _- _ •• .•
ATE HOLDER CANCELLATION
Union National Bank SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EX-
Union Plaza, Corp-9 PIRATLQN DATE THEREOF,, THE ISSUING COMPANY WILL ENDEAVOR TO
MAIL ,V DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE
.otte, NC 28288 LEFT,BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY
OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES.
AUTHO- • • REPRESENTA
� ` ✓
s f'°r I
SCHEDULE OF INSURANCE COMPANIES
PRIMARY $5, 000 , 000
Transit Casualty
IF4o514
$2 , 500 , 000
Utica.
PMMOIM01261
2 , 500 , 000
EXCESS $10 , 000 , 000 Excess of $5, 000, 000
Allianz Underwriters FCS022535
Covenant Mutual $2 , 500 , 000 .
CIM501253
Transit Casualty 2, SOO , Opp
IF40515 2 , 500 ,-000
United Fire and Cas . U1M460110
2 , 500 , 000.
DEDUCTIBLES:
5% Earthquake
$25, 00-0 Flood
$ 5, 000 Vehicles
$ 1 , 000 All Other Perils
•
• 'J
•
•
•
ORM Form 438BFU NS
(Rev. May 1, 1942)Z
LENDER'S LOSS PAYABLE ENDORSEMENT
Loss or damage, if any, under this policy, shall be paid to the Payee named on the first page of this policy, its successors and
, hereinafter referred to as "the Lender", in whatever form or capacity its interests•may appear and whether said interest be
in said Lender in its individual or in its disclosed or undisclosed fiduciary or representative capacity,or otherwise, or vested in a
e or trustee of said Lender.
The insurance under this policy, or any rider or endorsement attached thereto, as to the interest only of the Lender, its succes-
id assigns, shall not be invalidated nor suspended: (a) by any error, omission, or change respecting the ownership, description.
ion,or location of the subject of the insurance or the interest therein,or the title thereto; (b) by the commencement of foreclosure
sings or the giving of notice of sale of any of the property covered by this policy by virtue of any mortgage or trust deed; (c)
breach of warranty,act,omission,neglect,or non-compliance with any of the provisions of this policy,including any and all riders
hereafter attached thereto, by the named insured, the borrower, mortgagor, trustor, vendee, owner, tenant, warehouseman,eus-
occupant,or by the agents of either or any of them or by the happening of any event permitted by them or either of them,or their
or which they failed to prevent, whether occurring before or after the attachment of this endorsement,or whether before or after
which under the provisions of this policy of insurance or of any rider or endorsement attached thereto would invalidate or sus-
he insurance as to the named insured, excluding herefrom, however, any acts or omissions of the Lender while exercising active
I and management of the property.
In the event of failure of the insured to pay any premium or additional premium which shall be or become due under the terms of
ilicy or on account of any change in occupancy or increase in hazard not permitted by this policy, this Company agrees to give
n notice to the Lender of such non-payment of premium after sixty (60) days from and within one hundred and twenty (120)
.iter due date of such premium and it is a condition of the continuance of the rights of the Lender hereunder that the Lender
io notified in writing by this Company of the failure of the insured to pay such premium shall pay or muse to be paid the premium
(thin ten (10) days following receipt of the Company's demand in writing therefor. If the Lender shall decline to pay said premium
itional premium,the rights of the Lender under this Lender's Loss Payable Endorsement shall not be terminated before ten (10)
fter receipt of said written notice by the Lender.
Whenever this Company shall pay to the Lender any sum for loss or damage under this policy and shall claim that as to the
d no liability therefor exists, this Company, at its option, may pay to the Lender the whole principal sum and interest and other
edness due or to become due from the insured, whether secured or unsecured. (with refund of all interest not accrued). and this
any, to the extent of such payment, shall thereupon receive a full assignment and transfer, without recourse, of the debt and all
and securities held as collateral thereto.
If there be any other insurance upon the within described property,this Company shall be liable under this policy as to the Lender
e proportion of such loss or damage that the sum hereby insured bears to the entire insurance of similar character on said property
policies held by,payable to and expressly consented to by the Lender. Any Contribution Clause included in any Fallen Building
: Waiver or any Extended Coverage Endorsement attached to this contract of insurance is hereby nullified,and also any Contribu-
.lause in any other endorsement or rider attached to this contract of insurance is hereby nullified except Contribution Clauses for
anpliance with which the insured has received reduction in the rate charged or has received extension of the coverage to include
is other than fire and compliance with such Contribution Clause is made a part of the consideration for insuring such other hazards.
.ender upon the payment to it of the full amount of its claim, will subrogate this Company (pro rata with all other insurers con-
ing to said payment) to all of the Lender's rights of contribution under said other insurance.
This Company reserves the right to cancel this policy at any time, as provided by its terms, but in such case this policy shall
ue in force for the benefit of the Lender for ten (10) days after written notice of such cancellation is received by the Lender and
then cease.
This policy shall remain in full force and effect as to the interest of the Lender for a period of ten (10) days after its expiration
an.acceptable policy in renewal thereof with loss thereunder payable to the Lender in accordance with the terms of this Lender's
Payable Endorsement. shall have been issued by some insurance company and accepted by the Lender.
Should legal title to and beneficial ownership of any of the property covered under this policy become vested in the Lender or
ents, insurance under this policy shall continue for the term thereof for the benefit of the Lender but, in such event, any privileges
ons of this
ed by this Lender's Loss Payable Endorsement which are not also granted thr
the issued un her the er as trade onditio property.
and/or under other riders or endorsements attached thereto shall not apply
plc notices herein l al Riven by o the ofr connection this eos this Lender's Loss
Endorsement;ha be mad to ordi eed the to the Lender t its office or branch described on the page oft policy.
wed:
bard of Fire Underwriters of the Pacific.
.alifornia Bankers' Association.
Committee on Insurance. •
•