CI'n' of
Item No. 9
AGENDA REPORT
DATE: April 28, 2025
TO: Honorable Mayor and City Council
FROM: Grant Malinowski, Fire Chief
SUBJECT: Fire Department Engine Replacement
RECOMMENDATION:
That the City Council:
1. Review options and provide direction on the procurement of two (2) new KME Severe Service Pumper Fire Engines; and
2. If the prepay option is selected, approve a FY25 budget adjustment and a change order to the existing Fire Apparatus Solutions purchase order in the amount of $2,150,580; and
3. Authorize the Mayor to execute any necessary agreements to carryout Council direction.
BACKGROUND/DISCUSSION:
According to industry standards, fire engines are considered reliable for 10 years or 100,000 miles in frontline service, and an additional 10 years or 100,000 miles in reserve service.
Several engines in the Yucaipa Fire Department (YFD) have already surpassed or are approaching these limits. As these vehicles age, they experience more frequent breakdowns, higher maintenance costs, and reduced reliability during emergencies.
Replacing these engines ensures that YFD continues to provide timely, effective emergency response and avoids escalating costs tied to aging equipment.
Staff recommends procuring two (2) new KME Severe Service Pumper Fire Engines to replace aging vehicles. New engines take approximately 24 months to build. Ordering now puts expected delivery in May 2027, at which point current frontline engines will be past their useful life.
This recommendation is consistent with the intent of Measure S to support our public safety services.
Procurement Options
Engines would be purchased using competitively bid pricing through Sourcewell Contract #113021.
Lease terms are offered through Leasing 2 Inc. at a fixed 4.86% interest rate.
Annual
Option Description Total Cost
Cost
Prepay 2 engines
$2,150,580
None
2 engines paid on delivery
$2,402,742
None
Phased (FY27+FY28), paid on delivery
$1,201,371 (FY 27) + TBD (FY 28)
None
Lease to own — 5-Year 1$2,651,165
$530,233
Lease to own — 7-Year
$2,772,280
$396,040
Lease to own — 9-Year
$2,895,489
$321,721
Options Analysis
Option 1. Prepayment offers a discount but locks up City funds for two years. Investment returns over this period are expected to offset the discount, making this option neutral from a financial standpoint.
Option 2. Pay on delivery preserves the City's cash reserves while achieving the same long-term benefit.
Staff s recommends this option over the prepay option.
Option 3. A phased purchase (1 now, 1 next year) aims to hedge against current market headwinds.
Industry consolidation and rising input costs have made this a challenging time for buyers. By delaying the second engine purchase, the City may benefit if trade negotiations improve supply chain conditions or reduce material costs. While that outcome is uncertain, it is certain that present conditions are unfavorable for making large capital purchases.
Options 4 — 6. Lease terms are offered through Leasing 2 Inc. at a fixed 4.86% interest rate. Lease to own introduces interest costs that weaken the City's ability to manage its ongoing structural deficit. Leasing is not recommended.
Existing Fleet
Here is a summary of our existing fleet and the service plan for each when we receive the new engines:
Unit ID Year Make
Mileage Status 2027 Status
ME-551 2016 KME
93,400 Frontline Reserve
ME-552 2012 KME
123,038 Frontline Reserve
E551A 2003 Pierce
200,000+
Reserve Retire
E552A
2002
Pierce
190,000
Reserve
Retire
FISCAL IMPACT:
The Fire Fund is projected to have a cash balance of $5 million as of June 30, 2025. Any direction to purchase new engines would result in a commensurate rise in budgetary expenditures to and reduction of cash balances in the Public Safety Fund when the payment is made. (Eg. Prepayment of $2,150,580 would increase FY25 expenditures in the Public Safety Fund and reduce its cash balance by the same amount, leaving a balance of approximately $3 million.) Attachment(s):
1. FAS KME Pumper Quote
2. Leasing 2 Inc. Quote
Approved by -
ATTACHMENT 1
41ie P+PPararGs
'�VolatioO' 017605 Sycamore Ave., Rialto, CA 9Q876.14562 Manzanita Drive, Fontana, CA 993350 Rialto Office No.: (909) 879-7854 • Fontana Office No.: 800-9.28-1O.RS • Website: FASService.Org -------------------------------------------------------------------------------------- February 27, 2025
Yucaipa Fire Department
34259 Wildwood Canyon Rd.
Yucaipa, CA 92399
(909) 795-3048
Chief Malinowski,
KME Fire Apparatus is pleased to provide you with this proposal for one (2) KME Custom Pumpers per our attached specification. The price, terms and conditions for the proposed apparatus are as follows:
Option 1- No Prepayment
Description
Each Price
Qty
Extended
KME Severe Pumper
$1,138,163.00
2 $2,226,326.00
Sales Tax
$88,207.63
2 $176,415.27
Total
$1,266,370.63
2 $2,402,741.27
Option 2 -100% Prepayment
Description
Each Price
Qty
Extended
KME Severe Service Pumper
$1,138,163.00
2 $2,226,326.00
Prepayment Discount
($115,214.00)
2 ($230,428.00)
Sales Tax 7.75%
$79,278.55
2 $154,682.10
Total
$1,102,227.55
2 $2,150,580.10
This price is valid for 60 days.
Performance Bond available upon request. Please calculate at $4.00 per thousand dollars.
Terms: Net 30 after PO if prepaid. Net 15 after delivery if not prepaid.
Delivery: 27-30 months after order
Contingency fund: $25,000 per unit included in price above for equipment installation. Any unused funds will be credited back to the Department.
We appreciate the opportunity to offer this proposal to Yucaipa Fire Department.
Respectfully,
&-a4da'y �Omez
KME FERRARA)6 KV
REV Fire Group z smear
41{e P+PParar�
G
'(Polatio''S 01762 S Sycamore Ave., Rialto, CA 92976.1456Q Manzanita Drive, Fontana, CA 92s55* Rialto Office No.: (909) 879-7354 - Fontana Office No.: 800-sf8-IOSB • Website: FASService.Org -------------------------------------------------------------------------------------- Brandon Gomez — California Sales
KM E FERRARA ZK41F TM • • 2=VLR �R
REV Fire Group smear --
ATTACHMENT 2
LEASE FINANCING PROPOSAL
Requested by
Fire Apparatus Solutions
Brandon Gomez
Representing
I<MIEA
/ZR0UP
Presented To (As Lessee)
City of Yucaipa, CA
Proposal Date:
April 22, 2025
Equipment Description:
(2) KME
Custom Pumpers
Commencement Date:
May 15,
2025
Option 1
Option 2
Option 3
Equipment Cost:
$2,276,326.00
$2,276,326.00
$2,276,326.00
Prepay Discount:
$230,428.00
$230,428.00
$230,428.00
Sales Tax:
$158,557.10
$158,557.10
$158,557.10
Amount Financed:
$2,204,455.10
$2,204,455.10
$2,204,455.10
Lease Term:
5 Years
7 Years
9 Years
First Payment Date:
5/15/27
5/15/27
5/15/27
Payment Frequency:
Annual
Annual
Annual
Interest Rate:
4.78%
4.78%
4.78%
Payment Amount:
$530,233.01
$396,040.00
$321,721.14
Qualifications:
1. Pricing: This is a lease proposal for the payment stream(s) indicated above. If any of the information identified above are not correct, please advise us so that we can determine if a new proposal is required. Other important elements of this proposal are:
a) Rate Expiration: Signing this proposal does not in itself lock in your rate. This lease must be credit approved, contracts properly signed, and the lease funded by Leasing 2 within thirty days from the date of this proposal to protect the rates quoted. b) Closing Costs: There will be no up -front costs of any kind charged by Lessor including closing costs, points, administrative costs, etc.
Your attorney may charge you to review the lease documents and complete the opinion letter required with our lease documentation. The dealer has not included the cost of a performance bond which would be approximatley $4400. This can be added to the financing if Option 1- 3 is selected.
c) Fixed Rates: Rates are fixed for the entire term.
2. Type of Lease: This is a lease -purchase type of financing. After all the lease payments are made, Lessee will own the equipment without further cost.
3. Financial Reporting: All city, county and tax districts (including fire districts) will be expected to provide GAAP audited financial reports. All non -for profit corporations (vfd's) will be expected to provide IRS 990 federal tax returns. If you do not maintain these types of financial reports, please contact us to discuss.
4. Vendor Payable I Escrow Account (where applicable): In the event that the truck(s) and/or equipment are not ready to be delivered, proceeds of this lease will be held in a vendor payable account until delivery/acceptance. This is an interest bearing account to Lessee.
5. Credit Approval and Documentation: This is a proposal only, and does not represent a commitment to lease. This financing is subject to credit review and approval and execution of mutually acceptable documentation, including the opinion of lessee's counsel opining that the agreement is legal, valid and binding, obligation of Lessee.
Financing by:
Leasing 2, Inc.
Contact:
Rick Carney
Phone:
813-258-9888 x16
Email:
[email protected]
Web:
vwwv.leasing2.com
REQUEST TO PROCEED:
When you are ready to proceed with Leasing 2 towards finalizing this lease financing arrangement, please indicate so by signing below and completing the requested information. We will immediately email you our application. Thank you for your confidence and consideration.
Proposal date: April 22, 2025
Upcoming Governing Body meeting date for lease approval:
City of Yucaipa, CA
Name of Lessee
Authorized Signature
Printed Name Of Authorized Signature
Contact Name
(if Different ThanAuthorized Signature)
Financial Contact Name
(Can be Treasurer or Clerk)
Option Chosen: (where applicable)
Date
Last month of your budget year?
Contact Phone
Contact Phone
Title
Contact Email
Contact Email
Please complete the above information and fax or email all pages of the proposal to 813-258-9333 / [email protected]
ASSOCIA110N FOR
G. OVER NM FNTAL
1.1_ASING & FINANCE.
** Important: A Resolution will be required with the lease contract ** In the event that you require board action to sign this proposal, please call us so that we may forward the preferred form for the meeting.
Are you ready to move forward with Leasing 2?
Here is a quick overview of our process
Signed Proposal - When you are ready to move forward with Leasing 2, email a scan of the completed and signed 1posal back to Leasing 2.
Credit Application - A credit application and request for current financial reports will be emailed to the designated 7tacts upon receipt of the signed proposal. The credit application should be completed and returned promptly to protect jr quoted interest rates. Credit approval usually comes within a few days receipt of the completed credit application.
Financing Agreement -Once credit approval is accomplished, the financing agreement will be emailed for review and nature. Once the contracts are signed and returned, we are ready for closing.