Andrew M. Thompson

Director, Financial Services

Note: Due to time limitations this item was not addressed at the December 5, 2018, City Commission meeting.

Issue Statement:  On October 26, 2018, the City issued a request-for-proposal for external financing not-to-exceed $1,500,000 for the purpose of financing the purchase of seven (7) solid waste vehicles.  The City received and reviewed eight (8) proposals.

Recommended Action:  The City Commission pass an ordinance on first reading approving a seven-year loan term with JP Morgan Chase Bank in the amount not to exceed $1,500,000 at an interest rate of 3.010%.

The Solid Waste Fund budget approved by the City Commission for fiscal year 2019 included the purchase of seven (7) solid waste vehicles:

• Four (4) clam shell bulk loaders (2 replacement, 2 new additions)
• Two (2) front loaders for commercial services
• One (1) side loader for residential services.

The approved budget included a plan to seek external financing for these vehicles, with revenue and debt services costs being fully considered.

On October 17, 2018, the City Commission approved the purchase of the vehicles using the Florida Sheriff's Association contract pricing.  The cost of the vehicles was $1,399,700.  As part of the approval, the City Commission, also adopted a resolution providing official intent of the City to issue tax-exempt debt to reimburse itself for the purchase of these vehicles.

Working with the City's Financial Advisor, Dunlap & Associates, a request-for-proposal (RFP) for financing was prepared.   The proposal was released on October 26, with responses due on November 9th.  

The City received responses from eight (8) institutions:

• U.S. Bancorp Government Leasing and Finance, Inc.
• Signature Public Funding Corp.
• Wells Fargo Bank, N.A.
• Zions Bancorporation, N.A.
• JP Morgan Chase Bank, N,A.
• BB&T
• Capital One Public Funding, LLC
• Suntrust

Four (4) of the proposers were deemed non-responsive as they did not either comply with or return the Domestic Partnership Certification Form.  Section 2-197.1 of the City of Oakland Park's Code of Ordinances requires competitively bid contractors provide equal benefits for domestic partners. and provide benefits to domestic partners of its employees and the partner's dependents on the same basis as it provides benefits to employees' spouses and the spouses' dependents. 

As shown in the attached memorandum, a staff committee reviewed the proposals and found JP Morgan Chase Bank, N.A. to offer the most competitive terms.

The bond is secured by a covenant to budget and appropriate non-ad valorem revenues.

Principal and interest payments to JP Morgan Chase Bank would be paid monthly beginning February 1, 2019.  Final payment would be made on January 1, 2026.  With a 7-year term, this debt is considered to be medium-term, i.e. debt that is serviced over a 3 to 10 year period.  The anticipated lifespan of the vehicles is in excess of seven years.  Interest is set a 3.010%.

The applicable debt service cost is incorporated in the FY 2019 Adopted Budget.  The summary statistics and amortization schedule are attached as Exhibit B.  As shown, once principal payment begins the annual debt service cost is approximately $238,144.60. The lifetime cost of the debt service would be $1,667,012.24 which reflects both total principal ($1,500,000) and interest ($167,012.24) payments.  The draft summary statistics are attached for review.

Please note that the above number reflect the maximum not-to-exceed amount of $1,500,000.  It is anticipated the actual amount to be financed will be lower, at approximately $1,410,000.