HomeMy WebLinkAboutDocumentation_Regular_Tab 8E_7/22/1993 1.-2 ,7N, VILLAGE OF TEQUESTA
Post Office Box 3273 • 357 Tcqucsta Drive
A -P:`'p 0.% Tequesta,Florida 33469-0273 • (407)575-6200
. Fax: (407)575-6203
V:itk pp
C7 .
N COO'
MEMORANDUM
TO: Village Council
FROM: Thomas G. Bradford, Village Manager --/- '
DATE: July 15, 1993
SUBJECT: Village Council Discussion of A Ten Year
Lease—Purchase Plan for Fire Apparatus
At the Finance and Administration Committee Meeting of July 8,
1993, the Committee requested that a discussion with the full
Village Council occur regarding the financing option proposed by .
Liberty National Leasing Company, whereby both the pumper and
aerial truck would be acquired by a ten year lease-purchase
program. This proposal would require a $65,000 down payment this
fiscal year. The Village start-up budget would be exceeded by this
amount as these funds were not contemplated.
Additionally, the annual payment thereafter would be an estimated
$66, 415 . 00 . This amount exceeds the Village Fire-Rescue budget by
approximately $6,415. 00. -
Even though the start-up budget (FY 1993) and proposed FY 1994
would exceed my original estimates, Liberty National estimates that
the Village would save approximately $113, 000 . 00 in interest
expense if this option is pursued. On the down side, when
considering this option, please understand that none of these •
additional funds can be recouped via Jupiter Inlet Colony. The
maximum funding that I can obtain from Jupiter Inlet Colony is that
which has been budgeted ($151, 190.00) .
If the Village Council is interested in this option, appearing
below are some sources for the funding:
1) Secure .the $65, 000 down payment from the General Fund
Undesignated Fund Balance and amend the FY 94 Budget upward to
handle the annual payments .
2) Put to good use the Village ownership of the Tequesta Water
Department and make a contribution from Water Department
Recycled Paper
To Village Council
RE: Ten Year Lease-Purchase Plan
July 15, 1993
Page 2 -
Retained Earnings to the fire apparatus acquisition in an
amount sufficient to cause the projected FY 1994 budget to
not be exceeded. The Finance Director will have this exact -
dollar figure available at your meeting.
My recommendation in this regard would be to utilize the Ten Year
Lease-Purchase option for both trucks provided that:
a) No attempt is made to secure additional funding from
Jupiter Inlet Colony in order to maintain our proposed
contractual relationship.
b) That the size of the down payment made is such that the
projected FY 1994 budget is not exceeded.
TGB/mk
, .
Liberty National Leasing Company e... of
A SubMdary of Lanny National Bark i • . �A
June 8, 1993
f
Mr. Bill C. Kascavelis Gib/ . Q
Director of Finance
Village of Tequesta
357 Tequesta Drive
Tequesta, Florida 33469
Dear Bill :
Please find enclosed a new proposal based on our meeting June
4, 1993 regarding the financing of your fire trucks . We
appreciate the opportunity to serve the Village of Tequesta
and pledge our utmost attention.
Liberty National Leasing Company is a wholly owned subsidiary
of a 137 year old regional bank out Louisville, Kentucky. I
cover the State of Florida out of our office in Tampa. We
are now servicing over seventy-five municipal leases with
over sixty government entities in Florida alone. We would be
happy to provide references upon request.
We have responded to your request using today',s interest
rates. While I am not expecting any significant changes in
market conditions, you might want to add $300 .00 to payments
2 - 12 to allow for possible rate increases. This would
allow for an upward rate swing of 10 basis points.
It is my opinion that the shorter ten year term and the lease
purchase financial instrument hold several advantages over
the twenty year bond alternative. The shorter term will
allow
you to pay off the equipment ten years earlier than the bond
resulting in a savings of approximately $113, 033 .00 in
interest expense. This number represents over 18% of the
cost of the equipment.
The lease purchase financial product offers more flexibility
than the bond. In a situation where the Village would need
to prepay, refinance, or switch collateral in the event of
damage to the truck, a bond would be quite restrictive.
Typically, a bond does not allow for prepayment in the early
portion of the term, and will always need to recoup any up
front fees amortized into the transaction. The lease
purchase on the other hand is very easy to work with. I have
highlighted some important characteristics below:
550 N. Reo Street, Suite 300,Tampa, Florida 33609-1013 813/287-5118 •
1 . Collateral exchange is very simple in the event of
damage to the fire equipment
2 . Partial prepayment can be made without penalty in
the event the Village comes across excess funds .
3 . Complete prepayments can be made without penalty
after the second year . There is a 2% penalty the
first two years of the term.
4 . Refinancing or restructuring is also very simple.
Understanding that you also have budgetary considerations, I
hope that you are able to take advantage of the benefits I
have highlighted above. We certainly welcome the opportunity
to serve your equipment financing needs.
Please feel free to call on me if I can provide additional
information. I would be available to attend your council
meeting July 15, 1993 at your request. We appreciate this
opportunity and look forward to working with you .
Best regards,
Brad Meyers
Assistant Vice President
cc: Tom Bradford, City Manager .
Jim Weinand, Fire Chief
mai
Liberty National Leasing Company
A Subsd ary of Eberly Nabooal Bank
LEASE PROPOSAL
JUNE 8, 1993
LESSOR: LIBERTY NATIONAL LEASING COMPANY
550 NORTH REO STREET, SUITE 300
TAMPA, FLORIDA 33609
LESSEE: VILLAGE OF TEQUESTA
357 TEQUESTA DRIVE
TEQUESTA, FLORIDA 33469
EQUIPMENT: (2) FIRE TRUCKS
EQUIPMENT COST: $ 616, 800 . 00
INTEREST RATE: 6 . 143% •
FUNDING DATE: SEPTEMBER 30, 1993
PAYMENT # PAYMENT AMOUNT DUE DATE(S)
1 $ 65, 000 . 00 9/30/93
2 - 12 $ 66,415 . 00 10/01/1993 - 10/01/2003
PROPOSAL EXPIRATION DATE: JULY 8, 1993
CREDIT APPROVAL: THIS IS A PROPOSAL ONLY, AND DOES NOT
REPRESENT A COMMITMENT TO LEASE. FINAL ACCEPTANCE WILL .BE
SUBJECT TO CREDIT APPROVAL BY THE SENIOR FINANCE COMMITTEE OF
LIBERTY NATIONAL LEASING COMPANY.
LIBERTY NATIONAL LEASING COMPANY
BY: Vt.likirivri, DATE: G - S-- 9
•
550 N. Reo Street.Suite 300.Tamoa. Florida 33609-1013 813/287.5118