DATE: June 1, 2016
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Russell Truell, Assistant City Administrator
SUBJECT:
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Report on Bank Leasing Requests for Proposal
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Purpose
The purpose of this memo is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning proposals from various financial institutions for equipment leasing in the Fiscal Year 2016-2017 budget.
Background
Because of the extremely low interest rate environment, the City has elected to use bank leasing as a method of acquiring certain vehicles, equipment and technology purchases over the last five years. Leasing such equipment allows City departments to put new processes and equipment into service more quickly than deferring until sufficient funds are available for outright purchase.
For the Fiscal Year 2016-2017 budget that is in the adoption process, slightly over $2 million in equipment and vehicles are proposed to be leased. Several weeks ago, Public Financial Management (PFM), our financial advisory firm, released a Request for Proposals to over a dozen banks. Those proposals are due on June 8 and will be analyzed by PFM for the lowest and best bid.
Award for the procurement will be brought to the Board of Mayor & Aldermen later in the month.
Financial Impact
The financial impact of leasing has averaged slightly over one percent per year in interest expense. The additional interest expense in partially offset by placing new equipment in service earlier than could have been done otherwise, thereby saving repair and maintenance costs on older equipment. Information technology projects that are leased allow implementation and savings from automation and efficiency.
Recommendation
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Staff will present the results of the RFP process and recommend concurrence with the recommendation from PFM.