City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00642 6/13/2023 Consent Item 23.
Establishment of City's Pool of Tax-Exempt Equipment Lease-Financing Providers File ID: 2023-00642
Location: Citywide
Recommendation: Adopt a Resolution: 1) approving a pool of financial institutions qualified to provide tax-exempt equipment lease-financings to the City for fiscal year (FY) 2023/24 through FY2027/28; and 2) authorizing the City Treasurer to select financial institutions from the pool as needed to participate on the City’s tax-exempt equipment lease-financing projects.
Contact: Claudia Lara, Debt Analyst, (916) 808-2267, [email protected]; Ellen Hunt, Senior Debt Analyst, (916) 808-5517, [email protected]; Brian Wong, Debt Manager, (916) 808-5811, [email protected], Office of the City Treasurer Presenter: None.
Attachments:
1-Description/Analysis
2-Resolution
Additional Description/Analysis
Issue Detail: On several occasions in the past, the City Council has authorized the City Treasurer to establish a “pool” to provide tax-exempt equipment lease-financing services to the City during a five- year period, and the City Treasurer, at their discretion, has selected financial institutions from the pool to finance the City’s tax-exempt equipment lease-financing.
The current pool was established in September 2018 and is set to expire on June 30, 2023. During the timeframe the pool was in effect, while the City did not complete any tax-exempt equipment lease -financings, the City did utilize pool members to obtain informal interest rate quotes to potentially finance projects. The informal interest rate quotes allowed different City departments to perform important feasibility analyses and improve their decision making whether to finance the project, cash fund the project, or defer the acquisition/construction of the project.
File ID: 2023-00642 6/13/2023 Consent Item 23.
Policy Considerations: Not applicable.
Economic Impacts: Not applicable.
Environmental Considerations: Approval of the recommendation is not a “project” subject to CEQA because it: (a) has no potential to cause a significant effect on the environment; (b) approves a continuing administrative activity and is thus excluded from the definition of a “project”; and (c) concerns governmental fiscal activities that do not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment. (14 Cal. Code Regs. §§ 15061(b)(2), 15378(b)(4), and 15378(b)(5)).
Sustainability: Not applicable.
Commission/Committee Action: None.
Rationale for Recommendation: Establishing a pool of financial institutions that provide tax-exempt equipment lease-financing will enable the City to obtain competitive market rates. Low costs of borrowing can be passed onto City departments utilizing tax-exempt equipment lease-financing.
Additionally, the pool can provide an efficient means of obtaining financing in a pretty expeditious manner (if required by City departments) due to the structure of the master lease programs.
Financial Considerations: Not applicable.
Local Business Enterprise (LBE): Not applicable.
Background: On March 27, 2023, the Office of the City Treasurer distributed a Request for Qualifications (RFQ) to financial institutions capable of providing tax-exempt equipment lease- financing services to the City. In response to the RFQ, three financial institutions submitted Statements of Qualifications (SOQ) to the City. After a careful review of the SOQs by the Office of the City Treasurer’s staff with the objective of establishing a pool of tax-exempt equipment lease- financing providers with a variety of experience, the Office of the City Treasurer recommends that the pool consist of the following two financial institutions:
· Banc of America Public Capital Corp
· U.S. Bancorp Government Leasing and Finance, Inc.
City Treasurer’s Office staff reviewed the third SOQ and flagged the SOQ as incomplete, therefore disqualifying the SOQ.
The City Treasurer will select a financial institution from the pool to serve as the tax-exempt equipment lease-financing provider. The inclusion of the financial institutions in the pool does not
File ID: 2023-00642 6/13/2023 Consent Item 23.
guarantee that it will be selected to serve as the tax-exempt equipment lease-financing provider for any future lease financing.
RESOLUTION NO. 2023-XXXX
Adopted by the Sacramento City Council
June 20, 2023
ESTABLISHING THE CITY’S POOL OF TAX-EXEMPT EQUIPMENT
LEASE-FINANCING PROVIDERS FOR FISCAL YEARS 2023/24
THROUGH 2027/28
BACKGROUND
A. On several occasions in the past, the City Council has authorized the City Treasurer to establish a pool of tax-exempt equipment-lease financing providers.
The current pool was established in September 2018 and is set to expire on June 30, 2023.
B. The City Treasurer desires to establish a new pool to provide tax-exempt equipment lease-financing services for the City’s financing needs for fiscal year 2023/24 through fiscal year 2027/28. With such a pool in place, the City Treasurer will be better able to access specialized expertise and ensure that a competitive cost of borrowing is available for City projects. Additionally, the pool of tax-exempt equipment lease-financing providers is not intended to be exclusive, as the City reserves the right to utilize a provider that is not part of the proposed pool as appropriate.
C. On March 27, 2023, the City Treasurer distributed a Request for Qualifications (“RFQ”) to institutions capable of providing tax-exempt equipment lease-financing services to the City.
D. In response to the RFQ, three financial institutions submitted Statements of Qualifications (“SOQ”) to the City. After a review of the SOQs by staff of the City Treasurer’s Office, the City Treasurer recommends that the pool covering the period of fiscal year 2023/24 through fiscal year 2027/28 consist of the following two financial institutions: Banc of America Public Capital Corp and U.S. Bancorp Government Leasing & Finance, Inc.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Treasurer’s recommendation to establish a pool of tax-exempt equipment lease-financing providers eligible to provide the City with tax- exempt equipment-lease financing services for fiscal year 2023/24 through fiscal year 2027/28 is hereby approved, with the pool consisting of the following two financial institutions: Banc of America Public Capital Corp and U.S. Bancorp Government Leasing & Finance, Inc.
Section 2. For each new financing or refinancing project that may commence
between fiscal year 2023/24 through fiscal year 2027/28, the City Treasurer is authorized, at their discretion and in their judgment, to select from the pool or outside of the pool the tax-exempt equipment lease- financing institution(s) to provide tax-exempt equipment lease-financing services for that project.