HomeMy WebLinkAboutItem 5e - Authorization to Enter a Lease Agreement with JP Morgan Chase for Purchase of a Type 1 Fire Engine Item 5e
Department: 8
Cost Center: 8506
For Agenda of: 11/4/2025
Placement: Consent
Estimated Time: N/A
FROM: Todd Tuggle, Fire Chief
Prepared By: Nicole Vert, Business Analyst
SUBJECT: AUTHORIZATION TO ENTER A LEASE AGREEMENT WITH JP
MORGAN CHASE FOR THE PURCHASE OF A TYPE 1 FIRE ENGINE
RECOMMENDATION
1. Authorize the City Manager or designee, Finance Director or designee and City
Attorney or designee to execute all related documents on behalf of the City to execute
a three-year agreement with JP Morgan Chase Bank, N.A. with an interest rate not to
exceed 5.00%, and purchase agreement with Pierce Manufacturing to accomplish the
lease purchase of a Type 1 Fire Engine; and
2. Authorize a Budget Amendment Request (BAR) for $63,680.17 from Fire Impact Fee
Revenue Fund to the project account number 2000554; and
3. Adopt a draft resolution entitled “a Resolution of the City Council of the City of San
Luis Obispo, California, approving the lease purchase finance agreement of a fire
engine through JP Morgan Chase Bank, N.A. and approving the final form of financing
documents and official actions.” (Attachment A)
POLICY CONTEXT
The recommended actions are consistent with the City’s Capital Financing and Debt
Management Policy Section 10 which states that the City’s debt management practices
are “fiscally prudent, consistent with State and Federal law, and reflective of the most
opportune financing strategies to deliver on the needs and goals of the community and
the City organization.” In accordance with this policy, debt should be incurred for one-
time capital expenditures and not ongoing operations.
DISCUSSION
Background
Emergency vehicles are a vital part of the service delivery for the City of San Luis Obispo
Fire Department. The Type-1 fire engine is a critical piece of equipment for rapid response
to all emergencies. A fire engine pumper (“fire engine”) has a standard lifespan of 10,000
hours and is staffed with emergency response personnel, tools, and equipment to provide
all-hazards emergency services. The City currently has four “first-out” fire apparatus,
stationed at each of the four stations around the City, and two reserve apparatus utilized
Page 65 of 349
Item 5e
when the four “first-out” are out of service for planned or unplanned maintenance.
Through the utilization of an internal apparatus committee, staff developed fire engine
specifications that were used to build the pricing for the purchase of Engine 5.
The specifications considered the community’s unique features and sought the best
overall fire engine to complement the existing apparatus fleet. The specifications also
align with the most recently purchased fire engine, Engine 4, with minor modifications
based on experience and evolving emission standards. The new fire apparatus provides
the same capabilities as previous engines but with improved safety, efficiency, reliability,
and environmental requirements.
This engine is an expansion to the Fire Department fleet and is being procured for the
planned Station 5. While the build of the new station is over 2 years away, the le ad time
for a new engine from order date to delivery is currently 45 -51 months, necessitating
placing the order now. Fire apparatus are outfitted with equipment necessary to serve the
calls being responded to, from medical equipment such as cardiac monitor s to chainsaws
and hoses for fire emergencies. Historically, new engines are largely outfitted with
equipment from the apparatus it is replacing. This engine will require the purchase of new
equipment as it is not a replacement. The estimated cost of the new equipment is
$250,000, inclusive of inflationary adjustments to ensure the budget is sufficient. The
equipment purchases are not part of the lease financing described below.
Lease Purchase Recommendation
Council authorized the issuance of a purchase order on April 15, 2025 for the sole source
purchase of a Pierce Enforcer Type 1 Engine Fire Apparatus. At the time of approval ,
staff was working through the process of finding the most favorable terms of a lease with
external lenders but had not finalized any agreements.
The City has strategically used lease options as a way of reducing significant variations
in the costs of replacing vehicles or other specialty equipment. A lease-purchase
agreement is a debt financing method that allows for payment over a set term with the
ability to use the apparatus immediately. Under the lease-purchase agreement, the City
makes regular payments that include both principal and interest and spreads the cost
across several fiscal years and at the end of the term ownership of the apparatus transfers
to the City. The City facilitates the lease process by coordinating with the selected
financing institution to finalize the terms, p repare the necessary documentation, and
obtain required approvals. Once authorized by Council, staff executes the lease
agreement, coordinates vendor payments, and ensures compliance with budget and
procurement requirements throughout the term of the lease.
The City utilizes an established master lease agreement with JPMorgan Chase bank from
2018 that was approved by Council on August 21, 2018, when it approved the purchase
and lease agreement for an engine in line with the City’s procurement policy that requires
Council approval of purchases over $200,000. This master lease establishes the overall
terms and conditions under which the City may lease-purchase equipment over time. The
add-on schedule creates new repayment schedule specific to the current needs of the
Page 66 of 349
Item 5e
City but the rate methodology and legal provisions remain consistent. Creating an add-
on to this master lease streamlines the process and allows the City to finance additional
as needed equipment under the terms and conditions of the existing lease without
negotiating a new agreement each time and the add-on agreement does not supersede
the original 2018 agreement. If the City were to pursue a new standalone lease, the terms
would not differ or improve from those terms already established under the existing
master lease.
Due to the high cost of the fire engine, staff proposes debt financing the vehicle. The
proposed annual lease payments are within the budgeted amounts in the financial plan,
discussed in more detail in the ‘Fiscal Impact’ section of this report.
Previous Council or Advisory Body Action
On August 21, 2018 Council approved the purchase and lease agreement (Attachment
B) for a Pierce Arrow PUC Type 1 Fire Engine.
On April 15, 2025 Council authorized the issuance of a purchase order for a sole source
purchase of a Type I Fire Engine.
Public Engagement
This item is a consent item for the November 4, 2025, City Council meeting and will follow
all required postings and notifications. The public will have an opportunity to comment on
this item at or before the meeting.
CONCURRENCE
The Finance Department concurs with the Fire Department’s recommendation to finance
the apparatus purchase with JP Morgan Chase Bank.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in
this report, because the action does not constitute a “Project” under CEQA guidelines
Sec. 15378.
FISCAL IMPACT
Budgeted: Yes Budget Year: 2025-26
Funding Identified: Yes
Page 67 of 349
Item 5e
Fiscal Analysis:
Funding Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $0 $0 $0 $
State
Federal
Fees (Fire Impact
Fees)
$63,680.17 $63,680.17 $0
Other: Capital
Outlay
$1,500,000 $1,061,810.92 $438,189.08
Total $1,563,680.17 $1,125,491.09 $438,189.08 $
Funding for the purchase of Engine 5 was initially programmed into the Capital
Improvement Plan (CIP) beginning with adoption of the FY 2024-25 Budget Supplement,
and additional funding is included in the CIP through FY 2029 -30, as shown in the table
below. In addition, there is an available balance of $63,680.17 in the Fire Impact Fee
Fund, which is eligible for use to purchase fire apparatus to support new development.
Given that the development of Fire Station 5 and associated equipment and apparatus is
required in order to support new development in the southern portion of the city, use of
the impact fee funds is appropriate for this purchase. A total of $1,563,680.17 is available
to support the purchase of Engine 5.
Capital Improvement Plan- Project No. 2000554
FY 2024-25 $150,000
FY 2025-26 $300,000
FY 2026-27 $300,000
FY 2027-28 $300,000
FY 2028-29 $300,000
FY 2029-30 $150,000
Subtotal $1,500,000
Fire Impact Fee Fund $63,680.17
Total Funding Available $1,563,680.17
The new engine will require outfitting with new equipment including but not limited to
cardiac monitor, hoses and fittings, extrication equipment and other items necessary for
a front-line apparatus. The total cost of the engine including the equipment and debt
service is $1,375,491.10. That cost is made up from the price of the engine, the debt
service cost of $57,052.09 and the equipment cost of $250,000. The equipment is not
included in the lease and will be purchased with the remaining funding available in the
project budget after the purchase of the Engine and associated interest costs, upon
delivery of the engine.
Page 68 of 349
Item 5e
The original quote for the engine was $1,244,287.76. A lease agreement means JP
Morgan Chase will pay South Coast the full amount of the engine upon order and the City
will make payments to JP Morgan Chase to repay the lease. This full payment to South
Coast results in a price discount of $161,700, for a final quote on the engine of
$1,068,439.01 (Attachment C).
Staff collaborated with JP Morgan Chase to establish lease terms that best meet the City’s
needs (Attachment D). The amortization schedule below outlines the repayment of the
financing through JP Morgan Chase. The agreement provides an estimate of an interest
rate at 4.615%1; the final rate will be locked in upon Council’s approval of the financing
and includes an advance payment of $259,742. This includes the $63,680.17 from the
Fire Development Impact Fee Fund and $196,061.83 from the approved Capital
Improvement Project budget. The remaining balance of $808,697.00 will be repaid over
three years, in equal quarterly payments of $78,704.46. The total interest paid will be
$57,052.09 for a total lease cost of $1,125,491.09. The total debt service cost of the
engine is $1,125,491.09, which is $118,796.67 below the original cost of the engine’s
original quote of $1,244,287.76.
.
1 Staff is requesting authority from Council to execute the lease purchase agreement up to an interest rate
of 5.00%, due to the fact that the rate will not be locked in until after Council’s approval of this item.
Page 69 of 349
Item 5e
Based on the available funding and the anticipated debt service amounts included in the
amortization schedule, there is sufficient funding in each year of the CIP and Fire Impact
Fee Fund to support the upfront payment of $259,742 and quarterly debt service
payments each year. Based on the amortization schedule above, it is expected that
$420,570.74 will remain to support outfitting of Engine 5 with new equipment upon
delivery of the engine after the lease agreement is complete, which is currently estimated
to cost $250,000. Although sufficient budget is available for the engine purchase u sing
the Fire Impact Fee Revenue Fund to support the engine purchase will allow for remaining
budget to be returned to the Capital Impact Fee Fund. This approach provides greater
flexibility for other capital needs and helps relieve budgetary pressure on future CIP
allocations.
Total Funding Available $1,563,680.17
Debt Service Costs $1,125,491.09
Equipment $250,000.00
Remaining Funding $170,570.74
ALTERNATIVES
Council could decide not to approve the debt financing of the fire engine. This would
cause delays of other projects as budget would be pulled from other areas to cover the
entire cost up front.
Page 70 of 349
Item 5e
Council could request alternative payment plans. The recommended amortization
schedule, which includes an upfront payment of $259,742 and a three-year repayment
term, maximizes funds currently available to make annual payments, while also
minimizing interest costs to the City.
ATTACHMENTS
A- Draft Resolution Approving the Lease Purchase Financing Proposal
B- 2018 Fire Engine Lease Agreement
C- Pierce Quote for Fire Engine
D- Add-on to Master Lease Agreement
Page 71 of 349
Page 72 of 349
R ______
RESOLUTION NO. _____ (2025 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING THE LEASE PURCHASE OF A
FIRE ENGINE FROM JPMORGAN CHASE BANK, N.A. AND
APPROVING THE FINAL FORM OF FINANCING DOCUMENTS AND
OFFICIAL ACTIONS
WHEREAS, the City of San Luis Obispo provides fire protection services, which
includes equipment that must be replaced from time to time.
WHEREAS, pursuant to applicable law, the City of San Luis Obispo may acquire
and encumber real and personal property, including, without limitation, rights and interest
in property, leases and easements necessary to the functions or operations of the City.
WHEREAS, the City Council has considered a Lease Purchase Financing
Proposal offered by JPMorgan Chase Bank, N.A. and desires to authorize the execution
of the lease in the amount of $1,068,439.00.
WHEREAS, the final form of the legal documentation relating to the financing has
been prepared and the City Council wishes at this time to approve the final financing plan
and the final form of such legal documentation .
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows/or that:
SECTION 1. The City Council hereby approves the Add-on Lease Agreement
relating to the financing of a fire engine, between the City and JPMorgan Chase Bank,
N.A. in the form attached hereto as Attachment D, along with any changes therein or
additions thereto deemed advisable by a the City Manager or Finance Director as an
Authorized Officer; an Authorized Officer is hereby authorized and directed to attest, the
final form of the Add-on Lease Agreement
SECTION 2. The Mayor, the City Manager, the Director of Finance, the City Clerk,
Finance Director and City Manager are each authorized and directed in the name and on
behalf of the City to make any and all assignments, certificates, requisitions, agreements,
notices, consents, instruments of conveyance, warrants and other documents, which they
or any of them deem necessary or appropriate in order to consummate any of the
transactions contemplated by the agreements and documents approved under this
Resolution. Whenever in this Resolution any officer of the City authorized to execute or
countersign any document or take action, such execution, countersigning or action may
be taken on behalf of such officer by any person designated by such officer to act on his
or her behalf in the case such officer is absent o r unavailable.
Page 73 of 349
Resolution No. _____ (2025 Series) Page 2
R ______
Upon motion of Council Member ___________, seconded by Council Member
___________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _______________ 20 25.
___________________________
Mayor Erica A. Stewart
ATTEST:
______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk
Page 74 of 349
Item 12
J.P.Morgan
JPMorgan Chase Bank, N.A.
Submission to
City of San Luis Obispo
Bid for Tax-Exempt Bank Qualified Lease Purchase
Financing For Acquisition of a Fire Truck
July 17, 2018
J. P. Morgan Equipment Finance Contact:
Rebecca Lowe, Executive Director
Senior Territory Manager
JPMorgan Chase Bank, N.A.
560 Mission St., FL 04, San Francisco, CA 94105
Telephone: 925-212-1065
rebecca.a.lowe@jpmorgan.com
JPMorgan Chase Bank, N.A. Contact:
Lou Mastro, Executive Director
Relationship Executive
JPMorgan Chase Bank, N.A.
3 Park Plaza Floor 09-STE 900, Irvine CA 92614
Telephone: 949-833-4746
lou. mastro@jpmorgan.com
Packet Pg. 426
mailto:rebecca.a.lowe@jp
morgan.com
Page 75 of 349
City of San Luis Obispo
Tax-Exempt Bank Qualified Municipal Lease Purchase
Summary of Terms and Conditions
July 17, 2018
Item 12
J.P. Morgan is pleased to submit the following equipment financing proposal. This document is for
discussion purposes only and is contingent upon the Lessee's compliance with the requirements of the
Internal Revenue Code of 1986 ("Code"), as amended, and all applicable state laws related to Lessee's
ability to enter into a tax-exempt lease-purchase financing for the intended purposes. The final terms and
conditions are subject to credit approval and may be different from the terms and conditions outlined below.
TRANSACTION SUMMARY
Lessee:
Lessor:
Transaction:
Use of Proceeds:
Financing Amount:
Bank Qualified:
Commencement Date:
TRANSACTION DETAILS
Financing Term:
Payment / Frequency:
Interest Rate:
Adjustment to Rate:
City of San Luis Obispo
JPMorgan Chase Bank, N.A. or any affiliate of JPMorgan Chase Bank, N.A., its
successors and/or assigns ("JPMorgan Chase" /"Lessor"/ or "Bank").
Fixed-rate, fully amortizing, tax-exempt lease-purchase agreement
("Agreement").
To finance a Fire Truck, the legal title of which will vest with Lessee during
the term of the Agreement. All equipment proposed for financing will be
subject to final review and acceptance by Lessor prior to closing.
Estimated to be $673,096 (Additional Financing Amount shall be available
upon mutual consent of Lessee and Lessor)
This proposal assumes that Lessee will not issue more than $10 million in tax
exempt obligations this calendar year and that the Lessee will designate this
lease as a "qualified" tax-exempt obligation.
Anticipated to be on or around August 15, 2018 or a mutually agreed upon
date.
A)Five (5) Years
B)Seven (7) Years
C)Ten (10) Years
Equal quarterly payments of principal and interest in arrears, commencing
August 15, 2018, which allows for the equipment to be delivered. Please see
sample amortization schedules attached.
A)3.185%
B)3.199%
C)3.272%
The Interest Rate and Payment will be subject to the index below based
upon the then current 3-year Interest Rate Swap (mid) ("Index Rate") for
Option A, the then current 4-year Interest Rate SWAP (mid) ("Index Rate")
for Option B, and the then current 5-year Interest Rate SWAP (mid) ("Index
Rate") for Option C as published in Bloomberg, which was 2.875%, 2.885% 8:
J.P.Morgan
Packet Pg. 428 Page 76 of 349
Prepayment:
Disbursement of
Proceeds:
Security:
Appropriation:
OTHER TERMS
Documentation:
Conditions
Precedent:
Item 12
2.885% as of July 17, 2018. The Interest Rate will be the applicable Swap
Rate multiplied by the Bank's Tax Exempt Factor of 79.00% plus a Spread,
as outlined below. For every change (increase or decrease) in the Index
Rate a corresponding adjustment will be made to the Interest Rate to
maintain Lessor's economics. The final Interest Rate and Payment will be
agreed to 3 days prior to closing.
Option A
Interest Rate= (Index Rate x 79.00%) + spread
3-Year Swap= (2.875% x 79.00%) + 0.9138% = 3.185%
Option B
Interest Rate= (Index Rate x 79.00%) + spread
4-Year Swap= (2.885% x 79.00%) + 0.9199% = 3.199%
Option C
Interest Rate= (Index Rate x 79.00%) + spread
5-Year Swap= (2.885% x 79.00%) + 0.9929% = 3.272%
Upon request, if the City would like to secure the Interest Rate, a Rate Lock
transaction is available and can be discussed.
Lessor reserves the right to adjust the pricing proposed in order to maintain
Lessor's anticipated economic return as a result of material adverse change.
The Financing may be prepaid without penalty, in whole but not in part,
prior to maturity, on any payment date after the initial 12 months from
Commencement, subject to 30 days prior written notice. If Lessee prepays
the financing prior to the 12th month from Commencement, the payment
may be subject to a fixed rate / "make whole" break funding charge.
The transaction will fund via an initial escrow deposit, to a mutually
agreeable escrow agent, equal to the full Financing Amount. Disbursements
will be made to vendors or as reimbursements to Lessee (in compliance with
Treasury Reg. 1.150-2) as funds are required.
Lessee will grant Lessor a first priority security interest in the financed
equipment. UCC I and UCCII filings will be completed as applicable.
This Agreement shall be subject to appropriation. The Agreement will
require appropriation for payment for any and all equipment on a lease
schedule. Appropriation for partial payment or for select assets within a
schedule will not be permitted.
The terms of this financing will be evidenced by agreements, instruments
and documents ("Lease Documents") usual and customary for a Tax-Exempt
Lease Purchase. The Lease Documents must be acceptable to Lessor and its
counsel.
Lessee shall be responsible for its own expenses related to review of the
lease documents and delivery of opinion of counsel.
Usual and customary conditions to issuance of the financing including
acceptable legal documentation which will include an opinion of counsel
that the financing is valid, binding and enforceable. Additionally,
documentation will provide that interest earned by the Lessor in this
transaction will be excluded from gross income for federal tax purposes.
J.P.Morgan
Packet Pg. 429 Page 77 of 349
&
Item 12
Usual representations and warranties for like situated Lessees and the
Facility's type and tenor, including, without limitation, absence of material
adverse change, absence of material litigation, absence of default or
potential default and continued accuracy of representations.
Representations and warranties relating to Absence of Sovereign Immunity
(or waiver of sovereign immunity, if applicable) will also be required for all
governmental entities.
All maintenance and insurance are the responsibility of Lessee. Lessee shall
bear all risk of loss or damage of the Equipment and will be responsible for
keeping the Equipment insured with companies satisfactory to Lessor.
Lessor, its parent and/or affiliates, its successors and assigns must be named
as loss payee and additional insured as applicable, on all insurance policies.
Evidence of such insurance must be satisfactory to Lessor.
The Lessee hereby consents to the adjudication of any and all claims
pursuant to Judicial Reference as provided in California Code of Civil
Procedure Section 638, and the judicial referee shall be empowered to hear
and determine any and all issues in such Reference whether fact or law.
The documentation shall contain representations and warranties that the
Lessee has implemented and maintains in effect policies and procedures
designed to ensure compliance by the Lessee, its subsidiaries and their
respective directors, officers, employees and agents with Anti-Corruption
Laws and applicable Sanctions, and the Lessee, its subsidiaries and their
respective officers and employees and to the knowledge of the Lessee, its
directors and agents, are in compliance with Anti-Corruption Laws and
applicable Sanctions in all material respects. None of (a) the Lessee, any
subsidiary or any of their respective directors, officers or employees, or (b)
to the knowledge of the Lessee, any agent of the Lessee or any subsidiary
that will act in any capacity in connection with or benefit from the credit
facility established hereby, is a Sanctioned Person. No Borrowing or credit
facility, use of proceeds or other transaction contemplated by this
Agreement will violate any Anti-Corruption Law or applicable Sanctions.
Lessee hereby expressly and irrevocably waives any immunity (including
sovereign, crown or similar immunity) and any defenses based thereon from
any suit, action or proceeding or from any legal process in any forum with
respect to Lease.
All aspects of the credit(s) being discussed including this Term Sheet and
any Lease Documents would be governed by the laws of the State of
California.
This proposal will expire if acceptance does not occur by July 31, 2018
(unless extended in writing by Lessor).
J.P. Morgan confirms that it will not use confidential information obtained
from you by virtue of the potential transaction contemplated by this
proposal or our other relationships with you in connection with the
performance by J.P. Morgan of such services for other companies. You also
acknowledge that J.P. Morgan will not use in connection with the potential
transaction contemplated by this preliminary proposal, or furnish to you,
confidential information obtained from other companies.
J.P.Morgan
Packet Pg. 430 Page 78 of 349
Item 12
Municipal Advisor Disclosures and Disclaimers: The Lessee acknowledges
and agrees that (i) the transaction contemplated herein is an arm's length
commercial transaction between the Lessee and the Bank, (ii) in connection
with such transaction, the Bank is acting solely as a principal and not as an
advisor including, without limitation, a "Municipal Advisor" as such term is
defined in Section 15B of the Securities and Exchange Act of 1934, as
amended, and the related final rules (the "Municipal Advisor Rules"), agent
or a fiduciary of the Lessee, (iii) the Bank is relying on the Bank exemption
in the Municipal Advisor Rules, (iv) the Bank has not provided any advice or
assumed any advisory or fiduciary responsibility in favor of the Lessee with
respect to the transaction contemplated hereby and the discussions,
undertakings and procedures leading thereto (whether or not the Bank, or
any affiliate of the Bank, has provided other services or advised, or is
currently providing other services or advising the Lessee on other matters),
(v)the Bank has financial and other interests that differ from those of the
Borrower, and (vi) the Lessee has consulted with its own financial, legal,
accounting, tax, and other advisors, as applicable, to the extent it deemed
appropriate.
Please feel free to contact me at (925) 212-1065 if you have any questions, or would like to discuss this
proposal in greater detail. Upon receipt of the accepted proposal, we will promptly begin the approval
process so that we may be in a position to finalize this transaction with you. Thank you for allowing us to
be of service!
Yours sincerely,
Executive Director Executive Director
City of San Luis Obispo
Accepted Date: ____________ _
By:---------------
Title: ________________ _
Option: ________________ _
SAMPLE AMORTIZATIONS TABLES
Option A -60-month
J.P.Morgan
Packet Pg. 431 Page 79 of 349
Date
8/15/2018
11/15/2018
2/15/2019
5/15/2019
8/15/2019
11/15/2019
2/15/2020
5/15/2020
8/15/2020
11/15/2020
2/15/2021
5/15/2021
8/15/2021
11/15/2021
2/15/2022
5/15/2022
8/15/2022
11/15/2022
2/15/2023
5/15/2023
8/15/2023
Total
Item 12
Loa n Amortization
Average rate ..................................................... 3.185%
starting debt
balance takedowns service interest
-673,095.08 --
673,095.08 -36,539.14 5,359.52
641,915.46 -36,539.14 5,111.25
610,487.57 -36,539.14 4,861.01
578,809.44 -36,539.14 4,608.77
546,879.07 -36,539.14 4,354.52
514,694.46 -36,539.14 4,098.25
482,253.58 -36,539.14 3,839.94
449,554.38 -36,539.14 3,579.58
416,594.82 -36,539.14 3,317.14
383,372.82 -36,539.14 3,052.61
349,886.29 -36,539.14 2,785.97
316,133.12 -36,539.14 2,517.21
282,111.19 -36,539.14 2,246.31
247,818.36 -36,539.14 1,973.25
213,252.47 -36,539.14 1,698.02
178,411.36 -36,539.14 1,420.60
143,292.82 -36,539.14 1,140.97
107,894.65 -36,539.14 859.11
72,214.62 -36,539.14 575.01
36,250.49 -36,539.14 288.64
730,782.77 57,687.69
Option B -84-month
Loa n Amortization
ending
principal balance
-673,095.08
31,179.62 641,915.46
31,427.89 610,487.57
31,678.13 578,809.44
31,930.37 546,879.07
32,184.61 514,694.46
32,440.88 482,253.58
32,699.19 449,554.38
32,959.56 416,594.82
33,222.00 383,372.82
33,486.53 349,886.29
33,753.17 316,133.12
34,021.93 282,111.19
34,292.83 247,818.36
34,565.88 213,252.47
34,841.12 178,411.36
35,118.54 143,292.82
35,398.17 107,894.65
35,680.03 72,214.62
35,964.13 36,250.49
36,250.49 -
673,095.08
J.P.Morgan
Packet Pg. 432 Page 80 of 349
Date
8/15/2018
11/15/2018
2/15/2019
5/15/2019
8/15/2019
11/15/2019
2/15/2020
5/15/2020
8/15/2020
11/15/2020
2/15/2021
5/15/2021
8/15/2021
11/15/2021
2/15/2022
5/15/2022
8/15/2022
11/15/2022
2/15/2023
5/15/2023
8/15/2023
11/15/2023
2/15/2024
5/15/2024
8/15/2024
11/15/2024
2/15/2025
5/15/2025
8/15/2025
Total
Item 12
Average rate ..................................................... 3.199%
starting debt ending
balance takedowns service interest principal balance
-673,095.08 ---673,095.08
673,095.08 -26,926.62 5,383.08 21,543.54 651,551.54
651,551.54 -26,926.62 5,210.78 21,715.83 629,835.71
629,835.71 -26,926.62 5,037.11 21,889.51 607,946.20
607,946.20 -26,926.62 4,862.05 22,064.57 585,881.63
585,881.63 -26,926.62 4,685.59 22,241.03 563,640.60
563,640.60 -26,926.62 4,507.72 22,418.90 541,221.70
541,221.70 -26,926.62 4,328.42 22,598.20 518,623.50
518,623.50 -26,926.62 4,147.69 22,778.93 495,844.57
495,844.57 -26,926.62 3,965.52 22,961.10 472,883.47
472,883.47 -26,926.62 3,781.89 23,144.73 449,738.74
449,738.74 -26,926.62 3,596.79 23,329.83 426,408.91
426,408.91 -26,926.62 3,410.21 23,516.41 402,892.50
402,892.50 -26,926.62 3,222.13 23,704.49 379,188.01
379,188.01 -26,926.62 3,032.56 23,894.06 355,293.95
355,293.95 -26,926.62 2,841.46 24,085.15 331,208.79
331,208.79 -26,926.62 2,648.84 24,277.78 306,931.02
306,931.02 -26,926.62 2,454.68 24,471.94 282,459.08
282,459.08 -26,926.62 2,258.97 24,667.65 257,791.43
257,791.43 -26,926.62 2,061.69 24,864.93 232,926.50
232,926.50 -26,926.62 1,862.83 25,063.79 207,862.71
207,862.71 -26,926.62 1,662.38 25,264.24 182,598.47
182,598.47 -26,926.62 1,460.33 25,466.29 157,132.19
157,132.19 -26,926.62 1,256.66 25,669.95 131,462.23
131,462.23 -26,926.62 1,051.37 25,875.25 105,586.98
105,586.98 -26,926.62 844.43 26,082.19 79,504.80
79,504.80 -26,926.62 635.84 26,290.78 53,214.02
53,214.02 -26,926.62 425.58 26,501.04 26,712.98
26,712.98 -26,926.62 213.64 26,712.98 -
753,945.30 80,850.22 673,095.08
Option C -120-month
Loan Amortiza tion
Average rate ..................................................... 3.272%
J.P.Morgan
Packet Pg. 433 Page 81 of 349
starting debt
Date balance takedowns service
8/15/2018 -673,095.08 -
11/15/2018 673,095.08 -19,798.32
2/15/2019 658,802.68 -19,798.32
5/15/2019 644,393.36 -19,798.32
8/15/2019 629,866.17 -19,798.32
11/15/2019 615,220.16 -19,798.32
2/15/2020 600,454.34 -19,798.32
5/15/2020 585,567.73 -19,798.32
8/15/2020 570,559.35 -19,798.32
11/15/2020 555,428.21 -19,798.32
2/15/2021 540,173.29 -19,798.32
5/15/2021 524,793.58 -19,798.32
8/15/2021 509,288.07 -19,798.32
11/15/2021 493,655.73 -19,798.32
2/15/2022 477,895.51 -19,798.32
5/15/2022 462,006.38 -19,798.32
8/15/2022 445,987.27 -19,798.32
11/15/2022 429,837.12 -19,798.32
2/15/2023 413,554.87 -19,798.32
5/15/2023 397,139.43 -19,798.32
8/15/2023 380,589.71 -19,798.32
11/15/2023 363,904.62 -19,798.32
2/15/2024 347,083.04 -19,798.32
5/15/2024 330,123.86 -19,798.32
8/15/2024 313,025.95 -19,798.32
11/15/2024 295,788.18 -19,798.32
2/15/2025 278,409.41 -19,798.32
5/15/2025 260,888.48 -19,798.32
8/15/2025 243,224.23 -19,798.32
11/15/2025 225,415.49 -19,798.32
2/15/2026 207,461.07 -19,798.32
5/15/2026 189,359.78 -19,798.32
8/15/2026 171,110.42 -19,798.32
11/15/2026 152,711.79 -19,798.32
2/15/2027 134,162.66 -19,798.32
5/15/2027 115,461.79 -19,798.32
8/15/2027 96,607.95 -19,798.32
11/15/2027 77,599.88 -19,798.32
2/15/2028 58,436.33 -19,798.32
5/15/2028 39,116.03 -19,798.32
8/15/2028 19,637.68 -19,798.32
Total 791,932.64
interest
-
5,505.91
5,389.00
5,271.13
5,152.30
5,032.49
4,911.71
4,789.94
4,667.17
4,543.40
4,418.61
4,292.81
4,165.97
4,038.10
3,909.18
3,779.21
3,648.17
3,516.06
3,382.87
3,248.60
3,113.22
2,976.74
2,839.14
2,700.41
2,560.55
2,419.54
2,277.39
2,134.07
1,989.57
1,843.90
1,697.03
1,548.96
1,399.68
1,249.18
1,097.45
944.48
790.25
634.77
478.01
319.97
160.64
118,837.56
Item 12
ending
principal balance
-673,095.08
14,292.40 658,802.68
14,409.32 644,393.36
14,527.18 629,866.17
14,646.02 615,220.16
14,765.82 600,454.34
14,886.61 585,567.73
15,008.38 570,559.35
15,131.15 555,428.21
15,254.92 540,173.29
15,379.70 524,793.58
15,505.51 509,288.07
15,632.34 493,655.73
15,760.22 477,895.51
15,889.14 462,006.38
16,019.11 445,987.27
16,150.14 429,837.12
16,282.25 413,554.87
16,415.44 397,139.43
16,549.72 380,589.71
16,685.10 363,904.62
16,821.58 347,083.04
16,959.18 330,123.86
17,097.91 313,025.95
17,237.77 295,788.18
17,378.77 278,409.41
17,520.93 260,888.48
17,664.25 243,224.23
17,808.74 225,415.49
17,954.42 207,461.07
18,101.29 189,359.78
18,249.35 171,110.42
18,398.63 152,711.79
18,549.14 134,162.66
18,700.87 115,461.79
18,853.84 96,607.95
19,008.06 77,599.88
19,163.55 58,436.33
19,320.31 39,116.03
19,478.35 19,637.68
19,637.68 -
673,095.08
J.P.Morgan
Packet Pg. 434 Page 82 of 349
Extension
One (1 )
1,144,163.00$
100% Prepayment Discount (161,700.00)$
APPARATUS COST 982,463.00$
Sales Tax @ 8.750%85,965.51$
Performance Bond -$
Consortium Fee Not Applicable -$
California Tire Fee 10.50$
1,068,439.01$
Less 100% pre-payment at Contract Signing 1,068,439.01$
BALANCE DUE AT DELIVERY $0.00
require no money down and no payments for one (1) year if desired.
Discount for the 100% pre-payment option includes discounts for the chassis, interest, aerial
(if applicable), and flooring charges.
Any item added after this option is elected will come at additional cost and will be added to the
final invoice.
b)If your department signs up for a lease-purchase with Pierce Financial Solutions. This would
*
*
a)If your department makes a 100% cash pre-payment at contract signing.
85,965.51$
Not Required -$
10.50$
TOTAL PREPAY PURCHASE PRICE 1,068,439.01$
1,068,439.01$
$0.00
100% PRE-PAYMENT DISCOUNT SHOWN ABOVE IS AVAILABLE IN TWO WAYS:
-$
982,463.00$
San Luis Obispo City
100% Pre-Payment Option
January 16, 2025
If a 100% pre-payment were made at contract signing, the following discount would be applied to
the final invoice:
Each
Enforcer Type-1 Pierce Ultimate
Configuration Engine Fire Apparatus 1,144,163.00$
(161,700.00)$
Page 83 of 349
The proposal for fire apparatus conforms with all Federal Department of Transportation (DOT) rules and
regulations in effect at the time of bid, and with all National Fire Protection Association (NFPA) guidelines
for Automotive Fire Apparatus as published at time of bid, except as modified by customer specifications
Any increased costs incurred by the first party because of future changes in or additoinas to said DOT or
NFPA standards will be passed along to the customer as an addition to the price set forth above. Unless
accepted within 30 days from the specified date, the right is reserved to withdraw this proposition.
Respectfully Submitted,
South Coast Fire Equipment, Inc.
Sales Representative
I, _Daniel Clancy /s/ - Purchasing Analyst - City of San
Luis Obispo, authorized representative of the City agrees to
purchase the proposed product(s) and agree to the terms and
conditions of this proposal and the specifications hereto
attached.
Signature:____________________________________
Title:_______________ Date:____________________
The Seller will document any such updated price for the customer's approval before proceeding and
provide an option to cancel the order without charge if the updated price is not accepted.
Bryden Newell
Force Majeure - South Coast Fire Equipment shall not be responsible nor deemed to be in default on
accountof delays in performance due to causes which are beyond the seller's and manufacturer's control and
make the seller's performance impracticable, including but not limited to wars, insurrections, strikes, riots, fires,
storms, floods, other acts of nature, explosions, earthquakes, accidents, any act of government, delays in
transportation, inability to obtain necessary labor supplies or manufacturing facilities, allocation regulations or
orders affecting materials, equipment, facilities or completed products, failure to obtain any required license or
certificates, acts of God or the public enemy or terrorisim, failure of transportation, epidemics, quarantine
restrictions, failure of vendors (due to causes similiar to those within the scope of the clause) to perform their
contracts or labor troubles causing cessation, slowdow, or interruption of work.
Cancellation/Termination. In the event this Agreement is cancelled or terminated by a party before
completion, South Coast Fire Equipment (SCFE) may charge a cancellation fee. The following charge
schedule based on costs incurred may be applied: (a) 10% of the Purchase Price after order is accepted and
entered by Manufacturer; (b) 20% of the Purchase Price after completion of approval drawings, and; (c) 30%
of the Purchase Price upon any material requisition. The cancellation fee will increase accordingly as costs are
incurred as the order progresses through engineering and into manufacturing. SCFE endeavors to mitigate any
such costs through the sale of such Product to another purchaser; however Customer shall remain liable for
the difference between the Purchase Price and, if applicable, the sale price obtained by SCFE upon sale of the
Product to another purchaser, plus any costs incurred by SCFE to conduct any such sale.
Due to global supply chain constraints, any delivery date contained herein is a good faith estimate as of the
date of this order/contract, and merely an approximation based on current information. Delivery updates will be
made available, and a final firm delivery date will be provided as soon as possible.
Persistent Inflationary Environment: If the Producer Price Index of Components for Manufacturing
(www.bls.gov Series ID: WPUID6112) ("PPI") has increased at a compounded annual growth rate of 5.0% or
more between the month Pierce accepts the order (Order Month") and a month 14 months prior to the then
predicted Ready For Pickup date ("Evalution Month"), then pricing may be updated in an amount equal to the
increase in PPI over 5.0% for each year or fractional year between the Order Month and the Evaluation Month.
Page 84 of 349
City of San Luis Obispo
Add-on to Master Lease Agreement dated August 31, 2018
Financing For Pierce Enforcer Pumper
September 26, 2025
J. P. Morgan Equipment Finance Contact:
Rebecca Lowe, Executive Director
Senior Territory Manager
JPMorgan Chase Bank, N.A.
1390 S Main Street, Fl 2
Walnut Creek, CA 94596
Telephone: 925-212-1065
rebecca.a.lowe@jpmorgan.com
JPMorgan Chase Bank, N.A. Contact:
Sean Hennessy, Executive Director
Relationship Executive
JPMorgan Chase Bank, N.A.
300 S. Grand Avenue, Fl 3
Los Angeles, CA 90071
Telephone: 213-621-8187
lou.mastro@jpmorgan.com
Page 85 of 349
September 26, 2025
Emily Jackson
Finance Director
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Dear Emily:
J.P. Morgan Chase Equipment Finance is pleased to propose to the City of San Luis Obispo an
equipment financing to support the City’s purchase of one (1) Pierce fire truck in an amount up to
$1.068439.01, subject to the following terms and conditions described herein (the “Term Sheet”). The terms
and conditions are based on the City’s selection of a 3yr financing term with an advance payment of
$259,742. The final interest rate will be determined based on the interest rate formula detailed in the Term
Sheet.
The proposed terms are submitted to you in our capacity as a Lessor in an arm’s length commercial
transaction. J.P. Morgan is acting solely as a principal and not as a “Municipal Advisor” as defined in Section
15B of the Securities and Exchange Act of 1934, as amended, and the related final rules (the "Municipal
Advisor Rules") or any other agent or fiduciary capacity. JPMorgan is providing this information to you in
reliance on the Bank exemption in the Municipal Advisor Rules and is not recommending that you take acti on
or refrain from taking action or providing any advice. See “Municipal Advisor Disclosures and Disclaimers”
in the Summary of Terms for further information relating to same.
Should you have any questions about any aspect of this Term Sheet, please do not hesitate to contact
me at (925) 212-1065. Thank you and we look forward to continuing to work with the City of San Luis Obispo
and your financing team.
Yours sincerely,
Rebecca Lowe
Rebecca Lowe
Executive Director
Equipment Finance
1390 S Main St, Floor 02
Walnut Creek, CA 94596
Email – rebecca.a.lowe@jpmorgan.com
Rebecca Lowe
Executive Director
Sean Hennessy
Executive Director
Page 86 of 349
City of San Luis Obispo
Tax-Exempt Municipal Lease Purchase
Summary of Terms and Conditions
September 26, 2025
J.P. Morgan is pleased to submit the following equipment financing Term Sheet. This document is
for discussion purposes only and is contingent upon the Lessee’s compliance with the requirements of the
Internal Revenue Code of 1986 (“Code”), as amended, and all applicable state laws related to Lessee’s
ability to enter into a tax-exempt lease-purchase financing for the intended purposes.
TRANSACTION SUMMARY
Lessee:
City of San Luis Obispo
Lessor: JPMorgan Chase Bank, N.A. or any affiliate of JPMorgan Chase Bank, N.A., its
successors and/or assigns (“JPMorgan Chase”/“Lessor”/ or “Bank”).
Transaction: Fixed-rate, fully amortizing, tax-exempt lease-purchase agreement
(“Agreement”).
Use of Proceeds: To finance one (1) Pierce Enforcer Type 1 Fire Engine, the legal title of which
will vest with Lessee during the term of the Agreement . All equipment
proposed for financing will be subject to final review and acceptance by
Lessor prior to closing.
Financing Amount: $1,068,439.01
Bank Qualified: This Term Sheet assumes that Lessee will issue less than $10 million in tax-
exempt obligations this calendar year and that the Lessee will designate this
lease as a “bank qualified” tax-exempt obligation.
Commencement Date: Anticipated to be on or around October 30, 2025 or a mutually agreed upon
date.
TRANSACTION DETAILS
Financing Term: Three (3) Years
Payment / Frequency: Equal quarterly payments of principal and interest after an advance payment
of ($259,742), commencing October 30, 2025. (see sample amortization
schedule attached)
Interest Rate: 4.615%
Adjustment to Rate: The Interest Rate and Payments will be subject to the index Formula below
based upon the then current 2-year SOFR Swap Rate (“Index Rate”), which
was 3.435% as of September 26, 2025. The Interest Rate will be the Index
Rate multiplied by the Bank’s Tax Exempt Factor of 79% plus a Spread, as
outlined below. For every change (increase or decrease) in the Index Rate a
corresponding adjustment will be made to the Interest Rate to maintain
Lessor’s economics. The final Interest Rate and Payment will be locked
upon Council approval. Page 87 of 349
Interest Rate = (Index Rate x 79%) + spread
2-Year Swap = (3.435% x 79%) + 1.9014% = 4.615%
Lessor reserves the right to adjust the pricing proposed in order to maintain
Lessor’s anticipated economic return as a result of material adverse change.
Prepayment:
The Financing may be prepaid in whole but not in part, prior to maturity, on
any payment date after the initial 12 months from Commencement, subject
to 30 days prior written notice. Prepayment may be subject to a fixed rate
/ “make whole” break funding charge.
Disbursement of
Proceeds:
The transaction will fund upon delivery of an acceptable performance
bond in which JPMorgan Chase has been added as “additional insured” under
the Obligee Rider.
Security: Lessee will grant Lessor a first priority security interest in the financed
equipment. UCC I and UCCII filings will be completed as applicable, as well
as Lessor shall be named as lienholder in all titled vehicles.
Appropriation: This Agreement shall be subject to appropriation. The Agreement will
require appropriation for payment for any and all equipment on a lease
schedule.
OTHER TERMS
Documentation:
The terms of this financing will be evidenced by agreements, instruments
and documents (“Lease Documents”) usual and customary for a Tax -Exempt
Lease Purchase. The Lease Documents must be acceptable to Lessor and its
counsel. Existing Master Lease documents dated August 31, 2018 shall be
used for this financing. In addition, Lessee shall provide written confirmation
that Lessor has been added, as Additional Obligee, to the Lessee’s
performance bond. Performance bond provider shall be mutually agreeable
to Lessee and Lessor.
Lessee shall be responsible for its own expenses related to review of the
lease documents and delivery of opinion of counsel.
Conditions
Precedent:
Usual and customary conditions to issuance of the financing including
acceptable legal documentation which will include an opinion of counsel
that the financing is valid, binding and enforceable. Additionally,
documentation will provide that interest earned by the Lessor in this
transaction will be excluded from gross income for federal tax purposes.
Representations
and Warranties:
Usual representations and warranties for like situated Lessees and the
Facility’s type and tenor, including, without limitation, absence of material
adverse change, absence of material litigation, absence of default or
potential default and continued accuracy of representations.
Representations and warranties relating to Absence of Sovereign Immunity
(or waiver of sovereign immunity, if applicable) will also be required for all
governmental entities.
Maintenance &
Insurance:
All maintenance and insurance are the responsibility of Lessee. Lessee shall
bear all risk of loss or damage of the Equipment and will be responsible for
keeping the Equipment insured with companies satisfactory to Lessor.
Lessor, its parent and/or affiliates, its successors and assigns must be named
Page 88 of 349
as loss payee and additional insured as applicable, on all insurance policies.
Evidence of such insurance must be satisfactory to Lessor.
Waiver of Jury Trial: The Lessee hereby consents to the adjudication of any and all claims
pursuant to Judicial Reference as provided in California Code of Civil
Procedure Section 638, and the judicial referee shall be empowered to hear
and determine any and all issues in such Reference whether fact or law.
Anti-Corruption Laws
and Sanctions:
The documentation shall contain representations and warranties that the
Lessee has implemented and maintains in effect policies and procedures
designed to ensure compliance by the Lessee, its subsidiaries and their
respective directors, officers, employees and agents with Anti-Corruption
Laws and applicable Sanctions, and the Lessee, its subsidiaries and their
respective officers and employees and to the knowledge of the Lessee, its
directors and agents, are in compliance with Anti -Corruption Laws and
applicable Sanctions in all material respects. None of (a) the Lessee, any
subsidiary or any of their respective directors, officers or employees, or (b)
to the knowledge of the Lessee, any agent of the Lessee or any subsidiary
that will act in any capacity in connection with or benefit from the credit
facility established hereby, is a Sanctioned Person. No Borrowing or credit
facility, use of proceeds or other transaction contemplated by this
Agreement will violate any Anti-Corruption Law or applicable Sanctions.
Waiver of Immunity: Lessee hereby expressly and irrevocably waives any immunity (including
sovereign, crown or similar immunity) and any defenses based thereon from
any suit, action or proceeding or from any legal process in any forum with
respect to Lease.
Governing Law: All aspects of the credit(s) being discussed including this Term Sheet and
any Lease Documents would be governed by the laws of the State of
California.
Term Sheet Expiration: This Term Sheet will expire if acceptance does not occur by October 9, 2025
(unless extended in writing by Lessor).
Please feel free to contact me at (925) 212-1065 if you have any questions, or would like to discuss this
Term Sheet in greater detail. Upon receipt of the accepted Term Sheet, we will promptly begin the
documentation process in anticipation of the City’s Council meeting on October 21, 2025 .
Thank you for allowing us to be of service!
Yours sincerely,
Rebecca Lowe Sean Hennessy
Executive Director Executive Director
City of San Luis Obispo
Accepted Date: _____________________________
By: ________________________________________
Title: ______________________________________
Page 89 of 349
SAMPLE AMORTIZATIONS TABLE
3 Year – advance payment
Loan Amortization
Rate.....................................................4.615%
starting debt ending
Date balance takedowns service interest principal balance
10/30/2025 - 1,068,439.00 259,742.00 - 259,742.00 808,697.00
1/30/2026 808,697.00 - 78,704.46 9,330.34 69,374.12 739,322.88
4/30/2026 739,322.88 - 78,704.46 8,529.94 70,174.52 669,148.35
7/30/2026 669,148.35 - 78,704.46 7,720.30 70,984.16 598,164.19
10/30/2026 598,164.19 - 78,704.46 6,901.32 71,803.14 526,361.05
1/30/2027 526,361.05 - 78,704.46 6,072.89 72,631.57 453,729.48
4/30/2027 453,729.48 - 78,704.46 5,234.90 73,469.56 380,259.92
7/30/2027 380,259.92 - 78,704.46 4,387.25 74,317.21 305,942.70
10/30/2027 305,942.70 - 78,704.46 3,529.81 75,174.65 230,768.05
1/30/2028 230,768.05 - 78,704.46 2,662.49 76,041.98 154,726.08
4/30/2028 154,726.08 - 78,704.46 1,785.15 76,919.31 77,806.77
7/30/2028 77,806.77 - 78,704.46 897.70 77,806.77 -
Total 1,125,491.09 57,052.09 1,068,439.00
Page 90 of 349