RESOLUTION NO._______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COMMERCE, CALIFORNIA, APPROVING PURCHASE AND LEASE AGREEMENTS OF TWO 2025 OVER-THE-ROAD BUSES WHEREAS, the City’s existing over-the-road buses are primarily used to transport passengers (i.e., seniors, park and recreation program participants, and dignitaries) on various excursion trips throughout the year. Bus numbers 304 & 305 were purchased in 2007 and have exceeded their useful life. The useful life span for large over-the-road coaches is 12 years or 500,000 miles, per FTA Circular 5010.1D. Due to the age of the buses referenced below, they have become less reliable and expensive to maintain; and WHEREAS, as a result, the City needs new excursion buses. It should be noted that the City’s previous purchase for its over-the-road buses was through a lease-to-own program; and WHEREAS, this rule requires public fleets of heavy-duty vehicles operating in the South Coast Air Quality Management (District) to acquire alternative-fuel heavy-duty vehicles when procuring or leasing them to reduce air toxic and criteria pollutant emissions. This rule applies to all government agencies located in the District, including federal, state, regional, county, and city government departments and agencies, and any special districts such as water, air, sanitation, transit, and school districts, with 15 or more heavy-duty vehicles; and WHEREAS, the City staff researched the possibility of purchasing excursion buses with electric or CNG fuel types. However, due to the limited luggage capacity caused by the electric battery packs and CNG vessel storage containers, the City has no other option but to stick with the diesel MCI buses to continue their transportation services. Based on the factors mentioned above, the City received a waiver from SCAQMD to purchase clean diesel MCI buses (Exemption B); and WHEREAS, per the Master Tax Exempt Lease/Purchase Agreement, the City shall enter a seven (7) year lease-to-purchase agreement with Wells Fargo Bank. The proposed lease-to-purchase financing structure will allow the City to buy the buses over time through the operating side of the City’s budget while preserving the City’s CIP budget for other immediate needs; and WHEREAS, A complete breakdown of the lease payments is as follows:
Payment No.
Due Date
Annual Lease Payment
1 1-Oct-24
$240,763.52
2 1-Nov-24
$240,763.52
3 1-Dec-24
$ 240,763.52
4 1-Jan-25
$ 240,763.52
5 1-Feb-25
$ 240,763.52
6 1-Mar-25
$ 240,763.52
7 1-Apr-25
$ 240,763.52
The annual cost is approximately $240,763.52 during the term of the lease, and WHEREAS, the above lease payment structure will enable the City to purchase newer, more efficient buses without incurring a large upfront ($1,411,036.84) capital expenditure. The City will own the buses at the end of the lease term. There is no upfront cost associated with the proposed lease, and the agreement shall commence upon receipt of the first annual lease payment of $240,763.52.
The buses shall be covered by the manufacturer (Motor Coach Industries) with a standard warranty for the first three years, and the City is responsible for routine maintenance and insurance; and WHEREAS, The lease price above reflects the net trade-in value of $87,000 for the City’s existing over-the-road buses, which are being replaced:
Unit #YearLicense #MakeCAPACITYFUELVIN #30420071067207MCI56 PASSENGERSDIESEL2M93JMPA27W06390730520071067208MCI56 PASSENGERSDIESEL2M93JMPA47W063908 WHEREAS, the City has purchased six over-the-road coaches directly from MCI over the past thirty-eight years. It has been satisfied with its customer service, equipment reliability, and proven reputation in the transportation industry for standing behind its product. For over 50 years, Wells Fargo Bank has helped Cities of all sizes acquire equipment to increase efficiencies and enhance overall profitability.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF COMMERCE DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The City Council of the City of Commerce hereby finds and declares that the foregoing recitals are true and correct, and incorporates them herein as findings and as a substantive part of this Resolution.
Section 2. The Purchase Agreement with MCI and Master Lease Agreement with Wells Fargo are hereby approved. The Mayor is authorized to sign the Agreements for and on behalf of the City.
Section 3. The net trade-in value of the City’s two (2) replacement over-the-road buses to MCI for $87,0000 is approved.
Section 4. The Mayor is authorized to execute this Resolution for and on behalf of the City of Commerce.
Section5. The City Clerk shall certify the adoption of this Resolution.
PASSED, APPROVED, and ADOPTED this 8th day of October 2024.
Hugo A. Argumedo, Mayor
Attest:
Lena Shumway, City Clerk