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APPROVED B
FROM: OFFICE OF THE CITY MANAGER
BY: VANIAH DE ROJAS, INTERIM ASSISTANT CITY MANAGER
DAN HURLOCK, FIRE CHIEF
STEPHEN HANNAH, DIRECTOR OF FINANCE
9111IL232EMEM
;;UBJECT: INCREASE IN MEASURE S CAPITAL FUND APPROPRIATIONS AND
AUTHORIZE CASH PURCHASE OF FIRE EQUIPMENT
11 1
411 I- —Z
• -- • - • .•I
through a leasing financing option. Subsequent analysis of the proposed transaction shows that there would be significant savings through a cash purchase versus a lease purchase. The proposed action herein would complete the purchase and acquisition of this equipment.
That the City Council'.
Wralli Iva
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A fire engine is a specialized apparatus that is part of the Fire Department fleet and responds to various emergencies throughout the City and surrounding area and will, occasionally, respond to state-wide emergencies. A fire engine carries specialized equipment including hose, tools, and medical supplies and are used to respond to and mitigate calls for service, such as: fires, vehicle accidents, special rescues, medical aids, and other requests for assistance.
Two of the fire engines currently in the fleet have been in service more than 21 years and are scheduled for replacement. Due to supply chain issues and demand for new fire
INCREASE IN MEASURE S CAPITAL FUND APPROPRIATIONS AND AUTHORIZE CASH PURCHASE
OF FIRE EQUIPMENT
MAY 9, 2023
PAGE 2
apparatus, the new fire engines will take 34 months to manufacture from the time an order is placed.
At the March 14, 2023 City Council meeting, the City Council approved the purchase of two fire engines (two new Pierce Enforcer Triple Combination Pumpers) from South Coast Fire Equipment, Inc. through a lease financing option with Community Leasing Partners, a Division of Community First National Bank. South Coast Fire Equipment, Inc., is the exclusive Pierce Manufacturing representative for the Southern California region. Pierce Manufacturing holds a competitively bid Sourcewell Contract (#113021-OKC-1) that guarantees competitive pricing and is eligible for use per the City of Downey's cooperative purchasing policy.
Subsequent analysis of the lease purchase option has identified significant savings of nearly $180,000 if the City were to acquire the units through a pre -purchase cash transaction. As such, it is recommended that the lease -purchase option be passed in favor of the more fiscally prudent cash purchase.
With the City Council approval of the purchase of the two -fire engines, the City was added to the que of orders placed. Upon delivery of the two new fire engines, they will be placed in service as frontline, emergency response apparatus. The two fire engines that are currently in service as reserve apparatus, will be removed from service and the two oldest engines currently used as frontline apparatus will be placed into reserve status. Reserve apparatus are put in service anytime a frontline apparatus is taken out of service for maintenance or due to emergency response out of the City.
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The lease -purchase payment schedule would have resulted in the following payments:
Lease Purchase Price $ 2,331,873
Les 5% Down Payment (121,527)
Amount to be Financed $ 2,210,346
Payment Payment Payment
# Date Principal Interest Amount
4 5
7/1/2023 $ 461,471 $
7/1/2024
403,991
7/1/2025
425,378
7/1/2026
447,897
32,557 $
494,028
85,866
489,857
66,031
491,409
45,146
493,043
7/1/2027 471,609 23,155 494,764
$ 2,210,346 $ 252,755 $ 2,463,101
iq
INCREASE IN MEASURE S CAPITAL FUND APPROPRIATIONS AND AUTHORIZE CASH PURCHASE
OF FIRE EQUIPMENT
MAY 9, 2023
PAGE 3
Based on quoted pre -payment purchase price of - •i ••1 the potential • the$182,917.
Lease Purchase Price $ 2,331,873
Prepayment Savings per Quote $ 141,213
Lease Purchase Price $ 2,190,660
Prepayment Savings per Quote $ 141,213
Lease Interest Savings 252,755
Total Savings vs City Lease Program 393,968
Less Investment Pool Revenues lost (211,051)
Net Savings through Cash Purchase $ 182,917
Fiscal Responsibility
Quality of Life, Safety & Infrastructure
Approval of the recommended action will result in an expenditure amount of $2,190,660 from - Measure S CapitalFund, Account No. 33-4-2are sufficient 620-0940. There
unencumbered Measure S resourcesfor - • - •-r action.
ATTACHMENTS
3 100% Pre -Payment Optk:n
If a 100% pre -payment were made at contract signing, the following discount would be applied to a) If your depp"enfiii �pr�� contract signing.
b) If your department signs up for a lease -purchase with Pierce Financial Solutions. Thiswould require no money down and no payments for one (1) year if desired.
Discount for the 100% pre -payment option includes discounts for the chassis, interest, aerial (if applicable), and flooring charges.
a) If your depp"enfiii �pr�� contract signing.
b) If your department signs up for a lease -purchase with Pierce Financial Solutions. Thiswould require no money down and no payments for one (1) year if desired.
Discount for the 100% pre -payment option includes discounts for the chassis, interest, aerial (if applicable), and flooring charges.