03-14-2017 CC RPT 21 - Laserfiche WebLink

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Capital Lease Financing • Page 2 BACKGROUND: The City's various departments have periodic needs for equipment acquisitions that are typically funded through capital lease financings of a short to medium term. On October 6, 2015, City Council approved the Community and Economic Development Department's acquisition of the planning and building software, POSSE, and related equipment for up to $3 million using lease purchase financing. On July 14, 2015, City Council approved the Police Department's request to acquire equipment in able to join the County's radio system for up to $7 million including all related radio equipment and switching costs to join the County's system and to use a lease purchase funding mechanism to pay for it. Subsequently, the costs of the system were below the $7 million initially authorized by Council and on March 3, 2016, the Council approved the PD to take any savings from this purchase and apply this savings to purchase a new records management system. On October 25, 2016, City Council approved the award of the new records management system (called RMS) for $1,304,070 and approved additional funds for implementation and upgrades of the records management system, thus approving a total allocation for the radio and records management system of $7.7 million. On December 12, 2016, the Board of Public Utilities approved the heavy equipment inventory replacements and approved the participation in the Lease Purchase Program being set up for the other departments with a total allocation not to exceed $2.3 million. After finalizing the costs for all these purchases, of the approximately $13 million in authorized allocations only approximately $10.5 million is needed for the lease- purchase financing. DISCUSSION: In December 2016, after determining the needs of these various projects and the final costs, the Finance Department issued a Request for Proposal (RFP) to privately place a lease financing for capital equipment and software. The RFP was sent to more than 25 financial institutions, including Riverside banks, and seven responses were received. Based on the criteria set forth in the RFP, it was determined that the proposal submitted by Bank of America - Merrill Lynch (now called Banc of America Public Capital Corp) provides the lowest cost of borrowing. Equipment and Detailed Costs The proposed lease financing will allow the City to acquire the following equipment: 1. $5,119,000 Radio Hardware /Software (Public Safety) 2. $1,310,000 Records Management Software (Public Safety) 3. $1,510,000 POSSE Software (Community and Economic Development) 4. $2,305,000 Water System Heavy Vehicles (RPU)