1993 AGN JAN 19 I08 - Laserfiche WebLink

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CITY OF COLTON AGENDA REPORT For Council Meeting of January 19, 1993 Honorable Mayor and City Council Richard E. Acevedo, Finance Directo SUBJECT: Resolution Regarding Intention to Date: January 13, 1993 Participate in Tax -Exempt Financing Originated by ICRMA (Independent Cities Risk Management Association) BACKGROUND: For the last two fiscal years the City has not obligated itselffor major capital equipment items because of limited financial resources. During the time some lease purchase equipment items were acquired and are being paid for over the lease term along with interest costs computed in rates ranging from 6.5% to 11 %. Per Exhibit A, the City is obligated to pay approximately $1.0 million in lease purchases. Independent Cities Association (the liability insurance carrier for the city -a member of the joint powers authority) sponsored the formation of the Independent Cities Lease Finance Authority (ICLFA), a joint powers authority that provides lease financing to cities for capital projects. The ICLFA programs are easily accessible to ICA members, have short turn -around times from application to distribution of funds; and offer very attractive rates (in November of 1992 ICA had approximately $10.0 million in available lease funds and advertised rates of 2.5 %). FISCALIMPACT The City's general and other operating funds are paying approximately $75, 000 per year in interest costs for the existing lease obligations. The participation by the City in the ICLFA will reduce interest costs by 30-40%. Over the life of the obligations averaging 6 years, the savings could approximate $150,000. In addition, certain departments within the general fund and some other operating funds have requested capital items which could be made affordable with such low-cost funds such as the ICLFA. For this purpose, staff recommends having an available line -of -credit with ICLFA of $937,500 which aggregate sum would make the City's participation be $2,000,000. Items for selection are not identified at this time. Staffs understanding is that up to three (3) years of our equipment needs may be financed in advance of actual delivery and installation. RECOMMENDATION.• Staff recommends adoption of the attached Resolution (with Exhibit A) and recommends the City Manager be authorized to g all necessary enabling documents prior to full Council approval of actual indebtedness document . City Manager's Concurrence Attachments: Resolution & Exhibit A Page 1 of Item No. 7