HomeMy WebLinkAbout10-03-2017 Item 10 - Authorization to release RFP for Street Sweeper and Dump Truck and authorize Finance Director to execute financing
Meeting Date: 10/3/2017
FROM: Xenia Bradford, Finance Director
Daryl Grigsby, Public Works Director
Prepared By: Tim Bochum, Public Works Deputy Director
Isaac Shuck, Fleet Supervisor
SUBJECT: STREETS MAINTENANCE DUMP TRUCK, TRANSFER DUMP TRAILER,
AND SWEEPER TRUCK, SPECIFICATION NO. 91589 & 91595 REQUEST
FOR PROPOSAL TO FINANCE
RECOMMENDATION
Authorize the release of a Request for Proposals seeking a lender to finance approximately
$600,000 loan for the purchase of a street sweeper and dump truck.
DISCUSSION
Background
The replacement of the heavy-duty dump truck, transfer dump trailer, and street sweeper truck
used daily by the Streets Maintenance staff, was approved as part of the 2017-19 Financial Plan
in Fiscal Year 2017-18. Each unit is used daily by the Streets Maintenance Division and critical
for asphalt and paving operations.
The street sweeper and the dump truck were proposed to be purchased through debt financing
with the financial plan. This action seeks authorization to open a Request for Proposals to receive
competitive financing in the amount of approximately $600,000. The current quotes obtained by
Public Works department amount to $565,000 for the two items, which is lower than the adopted
estimated budget for this project. The final cost to purchase the dump truck and the street
sweeper will be determined by the financing agreement and the interest rate.
The lender will be competitively chosen based on the results from the Request for Proposals for
debt financing and staff will return to Council for authorization to complete the purchase of the
street sweeper and the dump truck and to execute all documents for the debt financing.
Cooperative Purchase versus Local Purchase
Heavy Duty Dump Truck and Transfer Dump Trailer
Staff recommends a purchase to Gibbs Truck Center of Santa Maria in the amount of
$256,204.06 for one 2018 International HX Series heavy duty dump truck including a Reliance
transfer dump set.
Pursuant to City purchasing guidelines, staff explored use of a multi-year cooperative purchasing
agreement with the National Joint Powers Association (NJPA) Contract No. 08176-NVS, to
purchase a heavy-duty dump truck outfitted with a transfer dump set. This resulted in a quote in the
amount of $256,204.06 through its approved dealer, Gibbs Truck Center of Santa Maria, for a dump
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truck and transfer dump set that met City specifications. There is no local dealer within the City
limits for comparative pricing.
Street Sweeper
Staff recommends a purchase to Schwarze Industries, Inc. in the amount of $303,052.06 for a 2018
Freightliner M2 heavy duty truck outfitted with a Schwarze M6 Avalanche sweeper unit.
Pursuant to City purchasing guidelines, staff explored use of a multi-year cooperative purchasing
agreement with the Houston-Galveston Area Council (HGAC) Buy Contract No. SW04-16, to
purchase a heavy-duty truck outfitted with a street sweeper unit. This resulted in a quote in the
amount of $303,052.76 through its approved dealer, Sweeper Shop, for a heavy-duty truck with a
street sweeper unit that met City specifications. There is no local dealer within the City limits for
comparative pricing.
FISCAL IMPACT
Lease Purchase
The City has strategically used lease options as ways to reduce significant variations in the costs
of replacing vehicles or other specialty equipment. Due to the high cost of the dump truck and
sweeper, staff proposed and Council approved debt financing of these two vehicles in the 2017-
19 Financial Plan (FY 2017-18) to stabilize the annual costs needed to be paid from the Fleet
Fund. Staff is seeking the authorization to advertise for a financed purchase agreement for the
acquisition of the new dump truck and sweeper truck. These purchases are budgeted and
approved for replacement as part of the 2017-18 Financial Plan. In the 2017-19 Financial Plan,
page A1-28 the estimated debt financing to acquire these vehicles. The proposed annual lease
payments are within the budgeted amounts in the financial plan and the proposed financing was
reviewed by PFM, the City’s independent financial advisor. The purchase costs for each vehicle
listed in the table below are within the approved 2017-19 Financial Plan budget estimates. The
total costs include final up fitting accessory costs installed by City Fleet staff.
Project 91589
Adopted
Budget Fiscal Year Purchase Cost
Total Cost
(Includes Final
Up Fitting)
Heavy Duty Dump Truck 290,000 17-18 $256,204.06 $260,000.00
Transfer Dump Trailer Included 17-18 Included Included
Project 91595
Adopted
Budget Fiscal Year Purchase Cost Total Cost
Sweeper Truck 305,000 17-18 $303,052.06 $305,000.00
ALTERNATIVES
Deny Funding and Purchase. The City Council could choose to deny advertisement for
requests for proposals to finance the dump truck and the street sweeper or defer to a later time.
Staff does not recommend this option as the replacements were approved as part of the 2017-18
Financial Plan. The vehicles above have met their useful target life in both years and mileage.
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Denying or deferring the purchase could result in costly maintenance and repairs due to aging
vehicles.
Attachments:
a - San Luis Obispo RFP Financing update
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50 California Street
Suite 2300
San Francisco, CA
94111-2552
415-982-5544
415-982-4513 fax
www.pfm.com
September 26, 2017
Request for Proposals
To: Interested Parties
From: Public Financial Management, Inc.
Re: Request for Proposals – Approximately $600,000 Loan (Specification #91627)
City of San Luis Obispo – Equipment Financing
The City of San Luis Obispo (the “City”) is seeking a lender to provide approximately
$600,000 in financing to for the purchase of a street sweeper and dump truck (the “Loan”).
The Loan will be secured by lease payments payable from the General Fund of the City.
Outstanding lease revenue bonds of the City are currently rated AA by both Fitch and S&P.
The City of San Luis Obispo
San Luis Obispo is one of the principal cities of the Central Coast of California. Located
about 200 miles northwest of Los Angeles and 235 miles southeast of San Francisco, the
City has a population of approximately 48,000 and an area of 13 square miles. It is the
largest city by population in San Luis Obispo County and is also the county seat. The City is
a full service municipality, providing public safety, public utilities, transportation, leisure,
cultural, social, and community development services to its residents. It is also home to
California Polytechnic State University.
The Loan
The City is seeking proposals from commercial banks and other qualified institutions to
provide the Loan with a lease/leaseback structure. The Loan will be used to purchase a
street sweeper and dump truck. The equipment will be the underlying leased assets. Any
financing proposal should take into account that procurement of the equipment may take
up to six months from the time financing closes and that lease payments cannot be made
until the City has received the equipment.
Key Financing Terms Sought by the City Include:
• Tax-exempt
• Amortization generating level annual debt service
• Fixed interest rate(s) quoted at terms of:
o Three years
o Five years
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City of San Luis Obispo
Request for Proposals
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• Ability to prepay prior to maturity
• No debt service reserve fund
Proposal Requirements
Please see Appendix A for the direct loan proposal requirements.
Financial Information
To assist you in the preparation of your proposal, the City’s Comprehensive Annual
Financial Reports for the fiscal year ending June 30, 2016 and for prior years, as well as the
2016-17 Adopted Budget, can be found on the City’s website at:
http://www.slocity.org/government/department-directory/finance-and-it/online-
documents
Requirement to Register as a Proposer
All proposers must register using BidSync (www.BidSync.com).
Submission Requirements (Hard and PDF copies)
Hard copies of Proposals must be received at the City’s Finance Department at 990 Palm
Street, San Luis Obispo, CA 93401 and PDF versions must be received by the individuals
listed below no later than 3:15 p.m. PT on October 5 2017. Please email the PDF version
of the proposal to the individuals listed below:
Sarah Hollenbeck Patrick Malloy Kevin Dong
Managing Director Senior Analyst Senior Analyst
Public Financial Management,
Inc.
Public Financial Management,
Inc.
Public Financial Management,
Inc.
(415) 982-5544 (415) 982-5544 (415) 982-5544
hollenbecks@pfm.com malloyp@pfm.com dongk@pfm.com
Communication Regarding this RFP
Questions regarding this RFP must be submitted via BidSync on or before the date and time
listed below. All other communications regarding this RFP should be directed to the
contracts listed above. Attempts by or on behalf of a prospective or existing vendor to
contact or influence any member of the selecting committee, any member of the City
Council or any employee of the City with regard to the acceptance of a proposal may lead to
elimination of that vendor from further consideration.
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City of San Luis Obispo
Request for Proposals
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Schedule
The tentative schedule of events for the financing is as follows:
Distribution of Request for Proposals October 04, 2017
Deadline for questions regarding the RFP October 09, 2017 at 2:00 p.m.
Answers to Questions Posted October 12, 2017
Deadline for Proposal submission October 18, 2017 at 3:00 p.m.
Public Opening of Proposals October 18, 2017 at 3:15 p.m.
Public Opening Location: Council Hearing Room, 990 Palm
Street, San Luis Obispo, CA 93401
Anticipated Closing October 31, 2017
Other Information
Please state the period for which your proposal is firm and any closing conditions that are
assumed. The City will use its best efforts to answer any questions and provide additional
information requested in connection with your response to this Request for Proposals. The
information provided in this Request for Proposals or in connection with it should be
considered confidential and should be appropriately controlled. The City reserves the right
to seek additional information from any and all responding parties. The City reserves the
right to reject any and all proposals, to waive minor informalities in the proposals, and to
enter into any arrangement deemed by the City to be in its best interest regardless of price
or other particular factors. The City will not be liable for any costs incurred by any parties
in replying to this request.
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Appendix A: Proposal Requirements
1. Experience with Similar Financings
Briefly describe your recent (past 24 months) experience with similar financings
involving California municipalities. Provide the following information in summary
form:
Include the following information for up to five (5) of the most recent similar
financings:
(a) Name of borrower
(b) Amount of financing
(c) Sale/funding date
(d) Rating (if any)
(e) Maturity term (describing any prepayment ability, restriction or
penalty)
(f) Interest mode (fixed or variable) and rates
(g) Financial covenants and security
2. Organizational Capacity and Assigned Personnel
Please describe your organization’s capacity to provide the proposed funding.
Where is your institution headquartered? What office will be serving the City on this
transaction? Provide summary resumes highlighting the appropriate experience and
expertise of your key personnel that would be assigned to this transaction.
3. Interest Rates
A. Interest Rates: Identify your proposed interest rates for the financing. If the rates
are not fixed at the time of your proposal submission, explain when the rates will be
locked and how such rates are determined. Provide an example of the calculation
with the resulting rates based on market conditions as of September 20, 2017.
B. Principal Payments: Indicate your preferred principal payment schedule
(monthly, annual, etc.) and any alternatives you might consider.
C. Prepayment Terms: Identify your proposed prepayment terms, including any
lockout period, prepayment dates and price(s).
D. Reporting Covenants: Identify any reporting requirements you will require on the
financing.
If you would like to provide your response for this section in the form of a proposed
term sheet, you may do so.
4. Notice of Litigation/Regulatory Action
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Provide information regarding any filed, pending or threatened litigation or
regulatory action during the last five years against your firm or related firms
involving any Federal, State or local government unit or instrumentality or Federal,
State, local, or industry regulatory body or instrumentality. Provide information
about any Internal Revenue Service, Securities and Exchange Commission, or other
government entity inquiries or subpoenas that your firm
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has had in the past 24 months related to direct purchases of tax-exempt and taxable
municipal securities.
5. Potential Conflicts of Interest
Please indicate any current or historical engagement or relationship that could be
deemed to represent or create a conflict of interest with the City if your firm were
selected for this financing.
6. References
Please provide the names, addresses, and telephone numbers of up to three (3)
persons from institutions for whom you have provided financing on similar
transactions who may be contacted by the City or its financial advisor.
7. Proposed Financing Fees and Upfront Costs
A. Purchaser Fees: Indicate your fees for the financing structure(s) proposed in 3
above.
B. Counsel Fees: Identify who would serve as your counsel on this transaction and
provide a fee estimate including a “not to exceed” amount. Please note that the
primary legal documents will be drafted by Orrick, Herrington & Sutcliffe LLP, the
City’s bond counsel.
The City reserves the right to negotiate fees with any proposer.
8. Contingencies
Identify any and all contingencies of your proposal. If your firm is selected to work
with the City, how much time do you anticipate a full commitment to take?
9. Authorization and Signatures
A completed Signature Page included as the final page to this Request for Proposals
(reproductions are acceptable), signed by an authorized representative of your firm,
must accompany your Proposal.
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